AQUINO'S ASSASSINATION: IMPLICATIONS FOR STABILITY IN THE PHILIPPINES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00302R001001600002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: August 13, 2009
• Sequence Number: 2
• Publication Date: September 15, 1983
• Content Type: SNIE

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Director of Secret
Central
Intelligence r
Aquino's Assassination:
Implications for Stability
in the Philippines
Special National Intelligence Estimate
Secret
SNIE 56-83
I S September 1983'
Copy ~t apt O
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S N I E 56-83
AQUINO'S ASSASSINATION:
IMPLICATIONS FOR STABILITY
IN THE PHILIPPINES
Information available as of 15 September 1983 was
used in the preparation of this Estimate.
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
' The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and
the Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the' Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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CONTENTS
Page
SCOPE NOTE ............................................................................................................ 1
KEY JUDGMENTS .................................................................................................... 3
DISCUSSION .............................................................................................................. 5
Recent Developments ............................................................................................. 5
The Assassination of Aquino .............................................................................. 5
Factors for Concern ...........................................................................:................ 6
Near-Term Prospects for the Marcos Government .............................................. 8
Meeting the Opposition Challenge .................................................................... 8
Reasserting Control of the Government Apparatus ......................................... 9
Averting Financial Crisis .................................................................................... 9
Relations With the United States ........................................................................... 10
President Reagan's Visit ..................................................................................... 10
Fallout From Congressional Review of the MBA ............................................ 10
Expectations of US Financial Assistance ........................................................... 10
The Elections and Bevond ..................................................................................... 11
Deviations From Our Baseline Assessment ........................................................... 11
ANNEX A-Marcos and Aquino: A Retrospective View ........................................ A-1
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ANNEX B-The Key Succession Players ................................................................. B-1
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SCOPE NOTE
Benigno Aquino's assassination . in Manila on 21 August 1983 has
triggered new concerns both in the United States and abroad about the
Philippines' near-term political stability. US security interests go beyond
concern about access to Subic Bay Naval Base and Clark Airfield. US
commercial banks have some $6 billion in loans outstanding to the
country and US private investment totals $1.6 billion.
This Special National Intelligence Estimate focuses on the political
and economic repercussions since the assassination and the ability of the
Marcos government to function effectively over the next six to nine
months. During this period, President Reagan is scheduled to visit
Manila, and the Philippines will hold National Assembly elections.
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KEY JUDGMENTS
The Marcos government has weathered the initial storm over
Benigno Aquino's assassination, and its prospects for continuing to do so
are reasonably good over the next few months. Aquino's death,
however, will leave the domestic political environment, the country's
external finances, and Philippine foreign relations unsettled for some
time:
- A fair contest in the May 1984 National Assembly elections
would be a major step in liberalizing politics and revitalizing the
center of the political spectrum. However, opposition groups are
weighing plans to boycott the elections and engage in civil
disobedience instead of participating.
- The assassination could sour the government's already shaky
external financial position, resulting in payments arrearages on
the $23 billion foreign debt. Even if the government handles
financial decisions adroitly during the next six to nine months,
foreign debt rescheduling now appears likely.
- The assassination has left government credibility severely shak-
en, and a commission appointed by Marcos to investigate
Aquino's death is unlikely to restore public confidence. The full
story behind the assassination remains unknown. Three possibil-
ities as to the responsible element are: the government itself,
Aquino's enemies from his home province, or the Communist
New People's Army. Fragmentary evidence points to some
element of the military, but the Intelligence Community cannot
make a judgment at this time about who bears ultimate
responsibility. (s rrF)
Manila expects its relations with Washington to be adversely
affected by the Aquino assassination over the short term:
- Manila fears that President Reagan will cancel his scheduled
November visit at a time it needs the legitimizing effects that
such a visit would confer.
- Manila almost certainly expects the recently concluded review
of the US-Philippine Military Bases Agreement to undergo
intensive scrutiny when the US Congress considers the $900
million assistance package next year.
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- Manila probably expects increased Congressional criticism of its
human rights policies. Ruling party officials already feel domes-
tic pressure to make concessions to opposition groups, and they
probably anticipate additional pressure from Washington.
- Manila may intensify its recent efforts to obtain emergency
balance-of-payments assistance from Washington even though
senior government officials, including Imelda Marcos, have
already been told that Manila does not qualify for some forms
of assistance.
Although the ruling party's strong political machine and the
government's extensive security apparatus are capable of dealing with
opposition activity and the Communist insurgent threat in the months
ahead, Aquino's assassination and its aftermath have intensified long-
standing concerns about the Philippines' stability:
- Communists may be the main beneficiaries of the assassination.
They have already stepped up propaganda efforts in an effort to
capitalize on Aquino's death, and these are producing gains in
recruitment among the young. Over half the population is
under 18 years of age.
- Marcos's health problems could recur. Even the suspicion he is
in failing health will renew succession iockeying at the highest
levels of the ruling party. An orderly succession thus remains in
serious question.
- Unless he is implicated in Aquino's assassination, General Ver
will remain the dominant figure in the defense establishment.
He and the military more than ever figure to be key players in
the post-Marcos era.
- A consequence of the country's foreign debt problems is that the
economy will have difficulty recapturing its former growth
momentum in the years ahead, complicating the domestic
political picture
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DISCUSSION
Recent Developments
The Assassination of Aquino
1. The assassination of opposition leader Benigno
Aquino has raised new questions both at home and
abroad about Philippine political stability and a possi-
ble erosion of President Marcos's ability to manage the
domestic political environment. Aquino's death comes
at a time when Filipinos have begun to prepare for the
1984 National Assembly elections-the first since in-
terim legislative elections in 1978. It has focused
international attention on the Philippines' longstand-
ing problem of weak political institutions and chronic
succession jockeying, revived international discussion
of the morality of Marcos's rule, and renewed debates
about the increasing concentration of power in the
hands of the small circle surrounding him. The econo-
my also is experiencing severe financial strains and
high unemployment, and domestic speculation about
Marcos's health is rife.
2. The procession of Aquino's body to and from his
home in Tarlac Province and the funeral procession
both featured an unprecedented outpouring of public
sympathy. Press reports confirm that millions of Fili-
pinos participated in these events, making them the
largest public gatherings since martial law was im-
posed in 1972. Each carried distinctly antigovernment
overtones.
3. Philippine opposition leaders have expressed
their bitterness and frustrations with unprecedented
vehemence and have made no effort to conceal their
suspicion of government complicity in Aquino's assas-
sination. (See inset.) Reporting
indicates that the majority of the po itica opposition-
and possibly the majority of the population-shares
this perception. (See annex A.) Although opposition
charges that Marcos is polarizing the political environ-
ment by driving Filipinos to the far left of the political
spectrum are not new, they are now being repeated
with new conviction.
Who Shot Aquino?
Three theories have emerged about Aquino's assassi-
nation, but there is no definitive evidence that would
confirm any one of them. The first theory is that one of
Aquino's numerous economic rivals or political enemies
from Tarlac .Province hired Aquino's assassin for re-
venge. This account is advanced by some sources of the
US Embassy. The second theory is that the Communist
New People's Army engineered Aquino's death to
bring down the Marcos government.
International attention since the assassination has
focused, however, on the possibility that the govern-
ment engineered Aquino's death. Most of these stories
argue that a senior government official, possibly one
with access to the First Lady or President Marcos,
orchestrated Aquino's death unilaterally in~ the belief it
would serve the President's interests. Many believe that
such a plot could have been designed by armed forces
personnel. It is argued, for example, that the assassin
had extraordinary intelligence data to aid him in his
mission (such as foreknowledge that Aquino would be
diverted by security guards from the ramp most disem-
barking passengers use), suggesting government com-
plicity.
Alleged eyewitness accounts claiming that govern-
ment security forces killed Aquino have been discredit-
ed. Similarly, we have no evidence that a film depict-
ing the entire assassination exists, as charged by some
journalists
It is possible that the true story behind Aquino's
assassination will be uncovered by Philippine authori-
ties. They appear to be focusing on fragmentary evi- 25X1
dence that points to the military. However, at this
juncture, the Intelligence Community cannot make a
judgment about who bears ultimate responsibility. ~~
4. The Marcos government is attempting to absolve
itself of guilt in Aquino's death, but without much
success. We believe the government started its investi-
gation of the murder with some vigor, but it has
handled public relations poorly. An independent com-
mission of inquiry along the lines of the Warren
Commission postponed its first meeting three times,
selected a lawyer with close links to the ruling party as
its deputy general counsel, and has had great difficulty
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filling its membership with credible public figures.
Filipinos appear to expect little from the investigation,
and popular views of the commission's potential for
independent inquiry are polarized along the lines of
existing political loyalties.
5. For its part, the government is blaming Commu-
nist terrorists for Aquino's death. Most Filipinos, after
hearing the government blame the Communist Party
of the Philippines (CPP) and its military arm, the New
People's Army (NPA), for a wide range of crimes
during the last several years, regard this charge with
skepticism. Nonetheless, we agree with the govern-
ment's contention that the Communists have much to
gain from Aquino's death. Stepped-up activity by the
National Democratic Front, the overtly non-Commu-
nist front organization of the CPP, ' is already in
evidence on college campuses. We see no evidence yet
of increased activity by the NPA in the countryside
since the assassination, but this would become appar-
ent only after several weeks.
6. Aquino's death has overshadowed several other
recent and possibly more serious developments bear-
ing on domestic stability; concern about the succession,
the effectiveness of the government, and the economy
has been growing since early 1983.
7. Succession jockeying appears to have intensified
as a result of health problems Marcos experienced in
early August. We do not know all of the details of
Marcos's illness, but it appears to have been his most
serious medical episode yet and left some members of
the ruling elite badly shaken. (See inset.) Palace securi-
ty measures were greatly increased, the government
began a misinformation campaign which claimed
Marcos had gone into seclusion to finish writing two
books, and Marcos remained inaccessible to his senior
deputies and the US Ambassador for nearly two weeks.
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8. Several close associates of the President appar-
ently assumed the worst about his condition. Long-
time associate Eduardo Cojuangco reportedly moved
to an accommodation with Imelda Marcos, formerly
an economic and political rival, and Defense Minister
Juan Ponce Enrile attempted a similar maneuver.
Despite constitutional provisions that established an
Executive Committee to serve as an interim govern-
ment, many politicians inside the ruling party assumed
Imelda Marcos would take the reins of power in the
event the President became incapacitated
See annex
9. Serious infighting had already surfaced in the
defense establishment. Longstanding tensions between
Defense Minister Enrile and General Ver (reportedly
Marcos's cousin) broke out into open conflict in late
July when,
summoned Enrile into his office to question his loyalty
and to inform him of an impending reorganization of
the defense establishment.
10. Marcos's appointment of Ver as Chief of Staff
of the armed forces in 1981 has itself been the source
of rifts in the military. We believe the President
appointed Ver because of his unquestioning loyalty,
despite the fact that Deputy Chief of Staff Fidel
Ramos was probably the favorite of career military
officers. Divided loyalties within the military contin-
ue. Since Ver assumed the post, however, he has
consolidated control of the military by placing officers
loyal to him in key military units and in headquarters
staff positions.
11. Marcos's health problems and Aquino's assassi-
nation appear to have complicated internal debate
about how to deal with the country's financial prob-
lems. The government invited several US financial
consultants to examine Central Bank financial records
before Aquino's death, and they warned Manila that a
restructuring of the $23 billion foreign debt would be
required to prevent payments arrearages some time in
the next year. Before the release of comprehensive
data on the country's short-term foreign debt early in
1983, most foreign financial institutions had assumed
that government finances were reasonably well man-
aged despite broader problems with the country's
external accounts. The new data, however, doubled
previous estimates of the short-term debt, and we
believe it now totals nearly $9 billion. Central Bank
liquidity, moreover, is severely strained and the Bank's
own short-term debt of $2.2 billion requires immedi-
ate attention if the government is to avert a foreign
exchange crisis. (See table 1.)
12. Manila has implemented new financial auster-
ity measures in an effort to cope. Fourth-quarter 1983
government spending will be sharply cut back, and the 25X1
1984 government budget plans a 34-percent reduction
in capital outlays. Nonetheless, Manila's 8-percent
devaluation of the peso in June appears to have been
too modest to ease pressures on Central Bank foreign
exchange reserves. The Bank has been forced to sell
$100 million in gold since May and reportedly ran
Table 1
The Philippines: The Foreign Debt
at a Glance, June 1983
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$18.5 billion, excluding interbank
borrowing; $22.7 billion otherwise.
$14 billion. Two-thirds owed to
private banks, 40 percent at floating
rates.
Average maturity 10 years. $1.3
billion due this year, over $1.5
billion in 1984.
$1.4 billion in 1983, over $1.5 bil-
lion next year.
$4.5 billion in revolving credits and
other trade financing. Commercial
bank short-term debt slightly over
$2 billion. Central Bank owes about
$2.2 billion.
About $700 million annually, net of
Central Bank reserve asset
earnings.
$1.7 billion in foreign exchange
reserves, about two months' im-
ports. $592 million in gold holdings.
Liquidity net of short-term obliga-
tions: $153 million.
US banks: $6 billion. Largest US
nine hold about $4 billion. Non-US
commercial banks hold about $5
billion, of which about $2 billion
owed to Japanese banks. US Gov-
ernment holds over $900 million,
Japan just over $800 million, with
multilateral creditors holding about
$2.5 billion.
About $3.4 billion in 1983, or
roughly 8 percent of GNP, 64 per-
cent of merchandise exports.
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down foreign exchange reserves by $200 million in
August to meet its obligations. In the meantime, first
half balance-of-payments data show that the current
account deficit reached $1.6 billion, matching the
deficit recorded in the same period in 1982-when it
reached a record 9 percent of GNP for the year. (See
table 2.
Near-Term Prospects for the Marcos Government
13. Aquino's assassination adds a serious, and possi-
bly critical, complication to Marcos's management of
domestic politics, the economy, and foreign relations
during the next few months.
Meeting the Opposition Challenge
14. On the domestic front, Marcos must prepare for
National Assembly elections next May. The elections
Table 2
The Philippines: Balance of Payments
will be an internationally recognized test of his will-
ingness to liberalize domestic politics and to bolster the
center of the political spectrum. After several months
of debate within the ruling party, Marcos has yet to
decide on election rules and party accreditation. His
challenge is to find a way to simultaneously ensure a
victory by the ruling party, induce participation by
the moderate opposition so as to legitimize the victory
the ruling party is likely to win, and appear fair in
setting the rules of the game.
15. senior
ruling party officials say they are considering ges-
tures-such as unlimited party accreditation-de-
signed to bring the opposition into the elections and
possibly into the government. One alternative under
consideration is awarding the opposition several cabi-
net portfolios. Party officials say they are under
a Projected.
b Including errors and omissions.
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considerable pressure from the Church and business
community to promote reconciliation in the aftermath
of the assassination, but it remains to be seen how far
the ruling party is prepared to go. In any case, given
ruling party control of the election machinery, the
party is probably strong enough to withstand the
opposition challenge even with more liberal election
rules.
16. Since the assassination, the moderate opposition
appears as disorganized as ever and without a replace-
ment for the charismatic Aquino. Press reports say that
some opponents of the re ime are planning civil
disobedience, and say the
opposition may boycott the elections. This would cost
Marcos the legitimizing factor he so dearly wants, but
it would also ensure the moderate opposition's irrele-
vance in the country's near-term political future.
17. Amore formidable challenge for Marcos could
come from the radical opposition. Student demonstra-
tions have occurred already and can be expected to be
repeated. Student protests have degenerated into vio-
lence on two occasions, resulting in the shooting death
of one student after Aquino's funeral. Government
security forces are capable of dealing with this sort of
unrest, but an overreaction by them could prompt a
more serious public backlash. During the funeral,
Manila went to extraordinary lengths to prevent this
from happening, and ordered police and Constabulary
forces to treat the public "with kid gloves" even when
provoked. Nonetheless, the anniversary of the imposi-
tion of martial law on 21 September is a potential
flashpoint; ~Marcos's birthda on 11 September passed
without incident~~
18. Increased violence in the countryside by the
NPA appears likely, in any case, as National Assembly
elections approach. Government security forces can
almost certainly contain the insurgent threat, but new
NPA initiatives would increase the likelihood of a
strong response by the armed forces, and this, as in the
past, could lead to abuses of civilians. A side effect of
this action would be a further loss of popular support
for the government. Simultaneous offensives by the
NPA, radical students, and radical church workers,
moreover, could tax government security forces.
Reasserting Control of the Government Apparatus
19. With his recent health problems apparently
under control, Marcos is likely to reassert his authority
over government business quickly. If his track record
is any guide, he will resume regular public appear-
ances to dispel continuing rumors about his health.
20. He seems certain to complete his shakeup of the
defense establishment. According
Marcos's reorganization has already
s arp y re uced the authority of the Ministry of
Defense in favor of the Chief of Staff. Marcos re-
moved Enrile's ministry from routine military deci-
sionmaking, such as determining troop deployments,
assignments, and promotions, and strengthened the
President's command of the armed forces via the
Chief of Staff. Ver was given control over most major
military decisions and reports directly to the President,
who can approve or disapprove of his actions.
21. Marcos must still weather the investigation into
Againo's death. The government will probably have
difficulty absolving itself of blame in the eyes of most
Filipinos, regardless of the investigation's findings, and
this will complicate the ability of the government to
resume business as usual. Failure to absolve the gov-
ernment of blame would at the very least keep
international attention focused on Marcos's human
rights olicies as National Assembly elections ap-
proach.
Averting Financial Crisis '
22. The government's most formidable challenge in
the weeks ahead will be averting a financial crisis that
could severely disrupt an already weak economy.
Accordin many foreign commer-
cial creditors aye resigne emselves to a reschedul-
ing of the Philippines' foreign debt and are cutting
their loan exposure to minimize losses. This, and the
tendency of smaller US and West European banks to
refuse to roll over maturing credits because of con-
cerns about stability, could compound the govern-
ment's liquidity problems.
23. The government must still complete its internal
debate about how to deal with the liquidity crisis.
report that several alternative ways to
reschedule the debt are being considered. A reschedul-
ing in the next few months, however, would prove
especially embarrassing to the government as a visit by
the US President and elections approach. Manila could
decide to proceed through the end of the year without
rescheduling, but such a risky strategy would rapidly
deplete Central Bank reserves. The government,
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moreover, will face new problems when the Central
Bank's traditional foreign borrowing season approach-
es in January. If the Bank finds the international
market unreceptive to a new iumbo loan proposal-as
seems likely-debt rescheduling would not be far off.
President Reagan's Visit
24. Marcos looks forward to President Reagan's visit
to Manila in November. He is aware that considerable
international attention will be focused on the visit, and
he had expected it to enhance his international status
as a statesman and put the stamp of legitimacy on his
government at home.
25. Marcos now almost certainly fears that events
connected to Aquino's death may force the cancella-
tion of the visit. He is aware of the debate in the
United States over his human rights record in the
aftermath of Aquino's death. He is also certainly
aware that some US officials are arguing that the
President should not associate himself too closely with
Marcos and should not risk the uncertain security
situation in Manila. A cancellation of the visit, howev-
er, would seriously diminish the credibility of the
Marcos government at home and reduce its effective-
ness at a time important decisions must be made about
economic management and domestic politics.
also suggest that many US banks
wou mterpre a cancellation as a sign that Washing-
ton lacked confidence in the Marcos government,
leading them to withdraw credit lines.
26. At the same time, the visit poses some risks for
Marcos. Student radicals have already met to plan
demonstrations for President Reagan's visit. The CPP
reportedly has said that it would consider temporary
cooperation with moderate opponents of the govern-
ment in order to embarrass Marcos on such an occa-
sion, although this probably portends no lasting alli-
ance between the regime's moderate and radical
opponents. In any case, a visit by the US President will
rekindle some of the antigovernment sentiment that
was evident during Aquino's funeral, and many Filipi-
nos will use the event to protest close links between the
United States and Marcos.
Fallout From Congressional Review of the MBA
27. Marcos almost certainly understands that his
US-based opponents will press lobbying efforts with
the US Government to cool relations with Manila.
Anti-Marcos demonstrations at the United Nations and
in several US cities have already occurred since
Aquino's assassination, and Marcos probably believes
that this sort of action will intensify with the US
Congress in session. Marcos probably fears that the
recently concluded review of the US-Philippine Mili-
tary Bases Agreement will come under special scrutiny
when Congress examines the $900 million base assist-
ance package next year. He regards the package as
something of a victory, because it nearly doubled the
amount in the 1980-84 agreement and allowed him to
demonstrate to a domestic audience that he could
make Washington treat him as an equal in the US-
Philippine security relationship. He would react
strongly to any Congressional attempt to alter the
assistance package.
Expectations of US Financial Assistance
28. Manila wants a bridge financing arrangement
from Washington that would tide it over until exports
pick up some time in 1984.
the government's ability to pay its oil bills
was in doubt, and that only US financial assistance
would avert default. Although the release of some US
aid funds has been accelerated, Manila almost certain-
ly knows that it does not qualify for special US
financial assistance programs, such as the Exchange
Stabilization Fund.
29. Manila's problems with the IMF may make a
rescue package difficult to put together, and at the
same time may intensify Manila's efforts to secure US
financial assistance. The Fund has determined that
Manila is out of compliance with the conditions of the
current $375 million standby loan because of excessive
credit to the public sector. The Fund will insist that
Manila make maior changes in economic policy before
releasing further tranches under the agreement, and,
even then, no new funds will be available until mid-
November. For their part, foreign commercial credi-
tors are likely to interpret Manila's trouble with the
IMF as a sign the Fund disapproves of Philippine
economic policy. If they cut back credit lines as a
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result, the effects could quickly sour the government's
chance of averting a financial crisis~~
The Elections and Beyond
30. The factors that often produce political upheav-
al in developing countries-authoritarian rule, insur-
gent movements, skewed income distribution, govern-
ment corruption, a sagging economy beset with
financial problems, highly personalized political insti-
tutions-have long been present in the Philippines.
They have yet to topple a Philippine government,
however, and the chemistry may never be right.
Marcos retains a loyal security apparatus and an
extensive political network, and many Filipinos still
look to local party officials for solutions to their
problems. In the aftermath of Aquino's death, it is thus
too soon to say that the assassination has contributed
the critical catalyst for widespread unrest.
31. Nonetheless, Aquino's death will permanently
change Philippine politics. Even if the moderate polit-
ical opposition does not accept the CCP's reported
offer of support so as to maximize the damage that
Aquino's death will do to the government, new bridges
among Marcos's opponents appear certain to be built
and this does not bode well for the stability of the
Marcos government later in the decade. US Embassy
reporting says that Communists in the National Demo-
cratic Front are making considerable progress through
propaganda approaches to Philippine youth. The
Front is arguing that Marcos plotted Aquino's death
and, therefore, political activism within the bounds of
the law is pointless. The Front claims the radical left is
the only remaining alternative, and
believes that, whether the government ha any ro a in
the assassination or not, this message is winning the left
new recruits. This is especially disturbing from the
standpoint of long-run stability, because half the Phil-
ippine population is under 18 years of age.
Deviations From Our Baseline Assessment
32. Despite the aftermath of the Aquino assassina-
tion, rumors about Marcos's health, infighting in the
defense establishment, a growing Communist insur-
gency, and the economy's woes, the Marcos govern-
ment seems likely to weather the next year or so. The
ruling party's political machine is strong and the
opposition remains divided. Even if the ruling party
lost next May's elections, moreover, Marcos himself
does not face reelection until 1987.
33. Several developments could change this base-
line assessment for the worse, however:
- Marcos's health could take a turn for the worse.
If it deteriorates sharply, far-reaching changes in
the country's political leadership could occur
very quickly, and we cannot be certain that
constitutional provisions for the succession would
hold up. Perceptions that Marcos is not fully in
command of events could exacerbate infighting
as key interest groups scramble to protect their
interests. The loyalty of the business community
is especially critical.
suggests that the mill ary is comp ete y oya to
Marcos, but, because its role, if any, in Aquino's
death is not yet known, it is uncertain how senior
armed forces officials would react if implicated
in the investigation.
- The disruption to the domestic economy that
would ensue from a financial crisis would seri-
ously complicate the political environment. The
timing and circumstances of a financial crisis
would depend on the policy decision processes of
private foreign banks and Manila's technocrats-
both highly fluid. Financial data, however,
strongly suggest some sort of liquidity crisis
before next May's elections. If it does occur, the
immediate effects on the economy will be severe
and include sharply reduced imports, new finan-
cial problems for the private sector, slower eco-
nomic growth, and higher unemployment. The
effects will be especially severe if a rescheduling
is not undertaken before Central Bank reserves
are depleted. Key interest groups, in any case,
stand to be adversely affected at a time that
confidence in the government has already been
seriously shaken. Of all of the things that could
go wrong for Marcos, this is the most likely.
34. The key to a political crisis will be whether
Filipinos react by attacking the Marcos government.
There is no precedent for such an action, and there has
been little violence in the aftermath of the Aquino
assassination. There remains considerable antigovern-
ment sentiment, however, and we cannot say for
certain that there is no sequence of events that could
trigger widespread unrest.
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ANNEX A
MARCOS AND AQUINO: A RETROSPECTIVE VIEW
1. Much of Aquino's personal political history-and
thus some of Marcos's possible motives for neutralizing
him politically-has been obscured in the confusion
following the assassination. Although the press has
characterized Aquino as a man committed to demo-
cratic processes and integrity in government, his politi-
cal career shows that he was an opportunist, was
frequently duplicitous, and was consumed with ambi-
tion to become president
2. In many ways, Aquino and Marcos closely resem-
bled each other, and as a result each recognized the
danger the other represented. Both took the expedient,
if not ruthless, approach to their political and personal
relationships throughout their political careers. Both
switched parties when they found it advantageous.
Both came from provinces with a tradition of political
violence, and both took part in it. Before martial law,
Aquino wrote in a June 1972 newspaper article that
the Philippines needed "a man on a white horse" to
provide discipline and guidance, but Marcos had the
same vision and acted first.
3. The enmity between the two men was deep,
personal, and longstanding. A backroom attempt to
reach an accommodation in 1966 degenerated into a
President
Marcos
heated, fist-shaking, shouting match. In 1968, Marcos
publicly accused Aquino of being a Communist collab-
orator and suggested that the government might indict
him for subversion. Ina 1968 speech, Aquino attacked
Imelda Marcos as a new Evita Peron anc' published a
paper with a photo of a bejeweled Imelda next to a
malnourished Filipino child. Enraged, Marcos called
Aquino a "congenital liar" and told him to "spare
women and children." Relations never improved from
that low point.
4. As part of the current political scene; we believe
that Aquino had the best chance of leading a success-
ful presidential campaign. Although technically ineli-
gible for the presidency because he no longer resided
in the Philippines, the 50-year-old Aquino still had
wide popular appeal, the backing of all opposition
leaders, and the savvy to unite rival interest groups.
After 1978, when he ran for a parliamentary seat from
a fail cell, his name attracted a large following for his
party among the urban middle class. Aquino's long
imprisonment by Marcos and his three-year exile in
the United States gave him a moral appeal to many
voters, according to a leading Philippine scholar. C
5. Aquino's rare ability to attract many different,
even rival, interest groups explains his predominance
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among the divided opposition, as well as the magnitude
of Marcos's efforts over the years to neutralize him.
Aquino worked to persuade
Filipinos and Americans that he alone could unite the
opposition and prevent the Philippines from tumbling
into violence. He recently spoke of the need for a
"national reconciliation." He carried on a dialogue with
the Marcos government as though he were an opposi-
tion spokesman, and he succeeded in creating a popular
image of himself-especially in the United States-as
the indispensable man who had to agreeree w
opposition dealings with the government.
6. Although many of his detractors considered him
opportunistic and shallow, his success in communicat-
ing with people was unquestionable, and thus his
political threat to Marcos was real. Aquino's carefully
cultivated role as a key opposition figure enabled him
to play the game he knew best, but may also have
contributed to his death. Like many Philippine politi-
cians-including Marcos-he built his career by culti-
vating patrons and negotiating alliances. Even in a
system where opportunism is an accepted way of life,
however, Aquino was considered an untrustworthy ally,
and he switched parties twice with apparent ease. n
7. Aquino consistently miscalculated his ability to
outmaneuver Marcos. When his 1975 hunger strike
failed to pressure Marcos into releasing him, Aquino
engineered aface-saving retreat. In December 1979,
Marcos temporarily released Aquino to encourage the
opposition's participation in the 1980 local elections
and give an aura of legitimacy to the exercise. Aquino
believed political pressure would force Marcos to
release him permanently and was surprised when
Marcos detained him again after the elections. 25X1
8. Nonetheless, next to Marcos, Aquino was the
most important man in Philippine politics. Although
he lived in the United States following heart surgery,
he was in constant contact with both government and
opposition elements in the Philippines. His public
statements were carried, and often attacked, by the
government-controlled press, and unceasing specula-
tion about his eventual return provided grist for
Philippine rumor mills. His political aura was such
that during the June 1981 presidential election, Mar-
cos, who was assured certain victory, prevented only
one opponent-Aquino-from running against him.
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ANNEX B
THE KEY SUCCESSION PLAYERS
1. In the immediate post-Marcos period, we believe
Marcos's successor will emerge from a select group of
people in the current political hierarchy. The winner
will be the one able to manipulate existing constitu-
tional arrangements to his or her advantage. Because
of Marcos's policy of creating competing power cen-
ters, however, no single individual at present com-
mands sufficient military, economic, and political
resources to consolidate power quickly. More likely,
alliances between two or more of these individuals will
produce a new government whose durability would be
tested over time. We believe the key players will be
First Lady Imelda Marcos, Defense Minister Juan
Ponce Enrile, Armed Forces Chief of Staff Fabian
Ver, Deputy Chief of Staff Fidel Ramos, and Prime
Minister Cesar Virata.
Imelda Marcos
2. If Imelda Marcos can retain the support of
General Ver, she will have the best chance of succeed-
ing her husband. Because of her relationship to the
President, the political skills she has developed over
the years, and the resources she commands, Mrs.
Marcos is a maior force in the ruling party's political
machine. With a personal fortune estimated at $1
billion, she has the financial clout to keep traditional
Philippine patron-client politics operating to her ad-
vantage. Unless the ruling party collapses in the
immediate post-Marcos period, her extensive network
of supporters in the bureaucracy, her many outstand-
ing political markers, and her sheer energy will be a
near-unbeatable combination in a presidential election
she almost certainly would control.
3. Nonetheless, her bid for power would be strongly
contested, and she would need to make compromises
with the technocrats and the military-two groups in
which she has limited support-in order to remain in
power. She is probably more willing to curry favor
among the officer corps than the technocrats, whom
US officials say she regards as little more than uncre-
ative accountants lacking political vision. The extent of
Mrs. Marcos's influence in the military is unknown,
but, she appears to
be trying to neutralize her opponents in the military
while dispensing privileges and largess to her favorites.
Prime Minister Cesar Virata
4. Although speculation was rampant that President
Marcos was grooming Virata as his successor when he
appointed him Prime Minister in 1981, we believe
Virata's political position has weakened considerably
since Mrs. Marcos became a member of the Executive
Committee last year. Despite his involvement in a
broad range of policy issues as head of the Executive
Committee and Finance Minister, the ruling party's
attacks on Virata's economic polices and his lack of a
political power base make his accession to the Presi-
dency unlikely. Nonetheless, Virata and the techno-
crats he represents will be courted by the presidential
aspirants because their expertise is crucial to the
confidence of foreign investors and the international
financial community. His position as head of the
interim government, moreover, will be bolstered if the
military supports the Executive Committee, as the
Constitution requires.
5. As head of the armed forces, Ver will be a
critical actor in the immediate post-Marcos period.
Since he became Chief of Staff in 1981, Ver has
consolidated his control over the armed forces by
placing loyalists in most key positions in the military
establishment. Because we are unable to measure the
degree to which Ver's politicization of the military
promotion system may be creating an undercurrent of
resentment among professional soldiers, however, we
cannot say for certain that Ver h 1 e key to the
armed forces. Ver is utterly
loyal to President Marcos and committed to protecting
the First Family. They are less certain that this loyalty
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will translate into political support for Mrs. Marcos. In
any event, US Embassy officials in Manila do not
believe that Ver has presidential_ ambitions of his own
and do not think him intellectually ca able of han-
dling the presidency
Defense Minister Juan Ponce Enrile
6. Although Enrile has tremendous political and
economic assets to bring to bear in a bid for power, we
do not believe his chances for success are good. He
does not command much support in the officer corps,
despite his position as De-
fense Minister. Enrile's political support in his home
base of Central Luzon, moreover, is weak and does not
extend nationally, according to Philippine officials.
We believe attempts by Enrile to cultivate a greater
political following would be hampered by his identifi-
cation with the imposition of martial law, last year's
crackdown against the Catholic Church, coconut mar-
keting policies that are unpopular in rural areas, and
by the personal enmity of Mrs. Marcos.
7. Enrile will still be a force to contend with,
however, because of his personal wealth and the
financial assets of close business associates which En-
rile may be able to call on in a presidential bid.
Because money is a critical factor in the traditional
patron-client system, these resources may translate yet
into a broader base ~ for Enrile in the post-Marcos
period. Perhaps with this in mind, Enrile is keeping his
lines of communication with the moderate opposition
open, Enrile
also has supporters in the ruling party and may
represent a palatable choice for those members of the
the elite who find themselves in the camp of "anyone
but Mrs. Marcos."
General Fidel Ramos
8. Although Ramos probably does not covet the
presidency, he will make an attractive ally in the
succession period because of his untarnished profes-
sional ima e and the military and police resources he
controls.~elieve that he is the only officer
who has eveloped an independent power base in the
armed forces based on personal competence and pro-
fessional respect. As a result, Ramos can also claim
some support among moderate opposition politicians.
He had indirect links to Benigno Aquino through their
mutual friend, businessman Enrique Zobel. Most ob-
servers believe that Ramos will support constitutional
mechanisms for succession.
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