THE PHILIPPINES: A YEAR AFTER LIFTING MARTIAL LAW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83B00227R000100050005-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 21, 2016
• Document Release Date: July 10, 2008
• Sequence Number: 5
• Publication Date: February 1, 1982
• Content Type: REPORT

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Intelligence
The Philippines:
A Year After Lifting
Martial Law
An Intelligence Assessment
State Dept. review completed
..Secret
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Directorate of Secret
The Philippines:
A Year After Lifting
Martial Law
Information available as of 19 January 1982
has been used in the preparation of this report.
of the Office of East
Asian Analysis. Comments and queries are
welcome and may be directed to the Chief, Malaysia,
Singapore, Islands Branch, OEA,
Intelligence Officer for East Asia
Secret
EA 82-10023
February 1982
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The Philippines:
A Year After Lifting
Martial Law
Key Judgments One year after the lifting of martial law, progress toward greater
democracy in the Philippines remains limited. President Marcos continues
to politicize the judiciary and to keep the interim National Assembly weak,
and he retains nearly unlimited executive powers. His use of power in the
new political environment has been restrained so far, but he has been quick
to warn the media, the moderate opposition, labor unions, and student
groups against overstepping their bounds. 25X1
Poor economic performance continues, creating an unfavorable climate for
political liberalization. Many of the business elite have been alienated by a
government bailout operation that benefits corporate empires owned by
Marcos's political allies. The weak economy has forced Marcos to surren-
der control over important components of economic policy to his techno-
crats, who are implementing World Bank- and IMF-initiated policy
reforms that squeeze the business elite even further. An unintended result
of the reform program is that the government is more vulnerable than ever
to charges by radical groups that it is the pawn of foreign interests.
Marcos probably intends to maintain a firm grip on the instruments of 25X1
political control over the near term in the hope that the mere appearance of
liberalization will be sufficient to keep the opposition divided. He is
simultaneously gambling that the economy will improve and eventually
help turn back the recent growth in domestic insurgencies and disaffection
among the middle class and the industrial elite. In the meantime, his
domination of the political arena is causing defections to extremist groups
that may prove more formidable adversaries in the long run.
The United States will be increasingly caught up in Philippine political 25X1
developments over the next year or so. On top of current controversy over a
pending bilateral extradition treaty and the activities of Marcos's oppo-
nents in the United States, negotiations for the 1983-84 review of the
military bases agreement are rapidly approaching. Marcos wants to
maintain his government's stable image but could be forced to take
repressive measures if his opponents succeed in turning base negotiations
into a nationalistic cause celebre. In the course of pursuing its strategic in-
terests, the United States may inadvertently work to put political liberal-
ization on hold.
Secret
EA 82-10023
February 1982
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The Philippines:
A Year After Lifting
Martial Law
Repackaging Martial Law
In an emotional ceremony at Malacanang Palace,
Marcos ended eight years of martial law in January
1981. Citing economic gains and progress in restoring
law and order, the President took what many observ-
ers hoped would be the first step toward restoring
democracy. To ensure his continued dominance in a
strong executive branch, however, Marcos held a
plebiscite in April to amend the 1973 Constitution.
The amendments instituted a French-style mixed
presidential-parliamentary system with a six-year
presidential term. Marcos was reelected to the presi-
dency in June in an election that virtually all major
opposition groups boycotted and criticized as a fraud.
25X1
Marcos's broad executive powers and his ability to
limit dissent have not changed over the last year.
Although the lifting of martial law may have en-
hanced Marcos's political image abroad, he retains
crucial powers:
? To suspend the writ of habeas corpus for all crimes
against national security.
? To issue any order he may deem necessary to meet a
crisis, including the powers of preventive detention,
closing down the media, and controlling admissions
to schools.
? To issue-and probably antedate-presidential de-
crees, in effect retaining broad legislative powers he
held under transitory provisions of the 1973 Consti-
tution.
? To transfer cases from civilian courts to military
tribunals established during martial law. Although
the tribunals are to be dismantled once about 50
remaining cases are concluded, this is unlikely to
happen soon.
Neutralizing the National Assembly
Although the end of martial law signaled the transfer
of legislative authority to the National Assembly,
Marcos can circumvent its power through the con-
tinuing use of presidential decrees. During martial
law all presidential decrees, proclamations, orders,
acts, and instructions became law unless explicitly
overturned by the interim National Assembly-called
into session only at the discretion of the president.
Over 1,000 decrees became law in this manner. The
opposition claims that as many as 250 of the decrees
are secret-that is, they are listed merely by number
in the official gazette, with their texts unpublished.
Although the exact number of such decrees is un-
known, we believe the claim is generally true.
Marcos thus can tap an unpublicized and unchal- 25X1
lengeable inventory of his own rules, though circum-
stances in the past year have not required him to do so
extensively. He can detain and try political opponents
for unspecified crimes, and he has invoked an unpub-
lished decree on subversion in the case against opposi-
tion leader Benigno Aquino, who currently resides in
the United States. Moreover, decrees allow the Presi-
dent to circumvent the legislature in matters clearly
not of an emergency nature, as happened recently
when Marcos granted a tax amnesty by presidential
decree. 25X1
Nonetheless, Marcos's use of these powers has been
restrained. The lifting of martial law has been accom-
panied by an increased level of tolerance for certain
opposition activity. Student demonstrations have oc-
curred with some frequency-and for the most part
without incident. The press, although largely con-
trolled by people loyal to Marcos, has been more vocal
on political issues than it had been
Politicizing the Judiciary 25X1
Marcos has further rendered the court system politi-
cally beholden to the executive branch over the past
12 months. Through the Judiciary Reorganization
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Act of 1980, signed into law in August 1981, Marcos
can fire all judges-ostensibly to streamline the judi-
ciary and remove incompetent or corrupt justices.
Rehiring will take place only after each judge is
investigated, and Marcos will make all final decisions
on reappointments to the bench.
According to conversations with officials in the US
Embassy, even pro-Marcos judges are appalled by this
blatant takeover of the judicial system. Some who did
not feel the independence of the judiciary was threat-
ened during martial law now are highly critical of the
President's actions.
The failure of the courts to develop as an institutional
counterweight to presidential power is illustrated by
the record of the Supreme Court since martial law
was lifted. Although the Supreme Court warned the
military against violating individual human rights in a
decision last September, one justice admitted that the
decision lacked teeth and could not be enforced. Since
then the court has affirmed the authority of military
courts to try cases pending from the period when
martial law was in effect, has upheld antisubversion
laws, and has reaffirmed the suspension of the writ of
habeas corpus in certain cases, although it will contin-
ue to hear individual cases that seek a review of the
writ
25X1
The Economy and Liberalization
An economy deteriorating along with the recession in
industrialized countries has created a poor climate for
political reform. In 1981 the economy posted a lower
growth rate-officially 4.7 percent-than any record-
ed under martial law.' Tight money policies and stable
international oil prices enabled Manila to nearly halve
inflation to an annual rate of about 12 percent late in
1981 but at the cost of high interest rates and rising
unemployment. Over 9 percent of the labor force of 18
million is now officially out of work, and at least one-
third of those who are working are seriously underuti-
lized. Unemployment in metropolitan Manila, more-
over, hit 26 percent last December, about twice the
level of mid-1980.
' For the past two years, Philippine government economic data have
been at odds with industrial production data published by private
research institutes. Economic growth thus may have been lower
than indicated in 1981 official statistics, and probably was only
Not assuaged by a hike in the minimum wage last
March to just under $4 a day, labor has taken
advantage of the lifting of martial law to express pent-
up grievances. The country experienced 138 strikes in
the first four months of 1981, with 111 in politically
strategic Manila. A liberal new labor code provided 25X1
impetus to strike activity throughout 1981, and walk-
outs were up 400 percent from the same period in
1980. Marcos retains control over industrial relations,
however, should he decide he needs to enforce labor
discipline. The new labor code still outlaws strikes in
strategic industries, and the President has the right to
deem any strike "against the national interest" while
forcing compulsory arbitration. He has used this
power sparingly thus far, probably to avoid appearing
heavyhanded at a time of presumed political reform.
25X1
Corporate bankruptcies were more numerous and
more spectacular during 1981 than at any other time
in recent years. A financial crisis early in the year
required a controversial bailout of several large corpo-
rations, including four of the country's top 15 busi-
nesses. Distressed firms faced slow sales and rising
`raw material costs at a time that escalating interna-
tional interest rates were boosting repayment obliga-
tions on their foreign debts. Philippine banking au-
thorities began a $650 million rescue operation in
exchange for equity positions in many of the firms.
Other firms were forced by the government to merge
with healthier corporations to increase equity capital.
Marcos surrendered authority over the program to his
technocrats to reassure nervous foreign creditors and
investors that corporate financial affairs would be put
The bailout operation-which Marcos and his techno-
crats genuinely believe is necessary to head off a
major business crisis and protect the country's foreign
credit rating-nevertheless has alienated members of
the Philippine business elite because Marcos's associ-
ates were assured a continuing flow of credit at a time
the Central Bank was denying it to other borrowers.
The technocrats, moreover, further alienated industri-
al oligarchs by pursuing IMF- and World Bank- 25X1
sponsored economic reforms with particular vigor.
The inflow of $200 million in World Bank loans for
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industrial restructuring and a two-year $472 million
standby credit from the IMF required measures that
hit many businessmen hard. Tariff reductions, a
deteriorating exchange rate, and a market-determined
interest rate policy are proving especially troublesome
to businesses selling in the domestic market
Despite almost certain benefits over the long term,
economic reform may be alienating other important
presidential constituencies. Because urban unemploy-
ment is concentrated in manufacturing, the sector
targeted by World Bank and IMF reform measures,
the reforms have won Marcos few friends in the
countryside, where falling international prices for
Philippine agricultural products, particularly coco-
nuts, have hurt living standards. An effort by Prime
Minister Cesar Virata in September 1981 to reform
the coconut industry produced protests and mass
demonstrations by farmers. One short-term result of
economic reform, therefore, is that many Filipinos
now associate the World Bank, the technocrats, and
the government itself with economic policies that
make their lives more difficult.
Decline of the Political Middle 25X1
The lifting of martial law has done little to improve
the fortunes of the moderate opposition. The presiden-
tial election held last June was boycotted by most
major opposition groups after Marcos refused their
demands for better access to the media and more time
to campaign. After his reelection, some opposition
leaders questioned the wisdom of abstaining from
elections that might have strengthened their position
for future contests
25X1
The opposition remains fragmented and incapable of
resolving party squabbles. The precarious unity of an
umbrella organization of political groups opposed to
Marcos-the United Democratic Organization
(UNIDO)-was again tested in December when the
25X1
formation of two new opposition parties caused fur-
ther bickering. Reuben Canoy, a leader of the Minda-
nao Alliance,' was actually expelled for his role in
forming the Social Democratic Party, viewed by other
members of the opposition as a strawman for the
President. The other new party, the Philippine Demo-
cratic Party, claims to have UNIDO's blessing.
In an attempt to mend the splits in UNIDO, ex-
Senator Salvador Laurel visited the United States
recently to confer with US-based opposition leaders
about converting UNIDO into a full-fledged party. If
performance is any guide, such an amalgam will
probably be unable to agree on tactics and policies for
unseating Marcos. The government, moreover, has
hinted that broad coalition parties will not be accred-
ited, preventing their participation in elections.
The moderate opposition also remains divided by 25X1
simple geography-a separation that Marcos readily
exploits. During martial law, many of the established
opposition leaders fled to the United States either to
escape political or financial harassment or because
they believed they could lobby for Philippine democ-
racy more effectively from outside the country
Foremost among the US-based opposition is former25X1
Senator Benigno Aquino, the one man credited with
having the political acumen and personal magnetism
to defeat Marcos in a free election. Aquino's fortunes
have waned, however, since Marcos released him from
prison in 1980 to go to the United States for heart
surgery. When Aquino failed to return to the Philip-
pines as agreed after his health improved, and instead
extended his stay to accept a fellowship at Harvard,
he lost some credibility. His continued absence from
the Philippines-especially his failure to -return to
lead the opposition during the 1981 presidential elec-
tion-has led many Filipinos to further question his
commitment. 25X1
' The Mindanao Alliance is a moderate opposition party based
primarily in Christian areas of Mindanao. Its formation in 197
began as a challenge to established regional political leaders.
25X1
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Marcos is trying to keep the opposition in the United
States off-balance through scare tactics and threats of
criminal proceedings. He has painted some of the US-
based opposition as terrorists and may hope to indi-
rectly exploit an extradition treaty between the Unit-
ed States and the Philippines now awaiting US Senate
approval. Although the treaty clearly protects those
accused of political crimes, the Manila press has
implied that extradition of political opponents will be
automatic once the treaty passes. In conjunction with
government efforts to move a major case against
opposition leaders forward, the press accounts intimi-
date a good many political opponents. Moderates are
lobbying hard against the extradition treaty and are
particularly concerned that the US executive branch
will have final authority to determine the legitimacy
of extraditable offenses. Their fears are aggravated by
perceived strong US support for the Marcos regime.
25X1
Polarization of Politics
While Marcos outmaneuvers the moderate opposition
at every turn, his actions and the weak economy are
encouraging groups at the extremes of the political
spectrum. The Communist New People's Army
(NPA) and its National Democratic Front (Natdem)
organizations increasingly are looked upon as an
attractive political alternative, especially by the
young. Their propaganda-cloaked in nationalistic
trappings and critical of the role of foreign investors,
foreign private banks, the IMF, and the World
Bank-is finding a receptive audience among those
dissatisfied with their financial plight. The boycott of
the 1981 election that the moderate opposition called
for was in many areas engineered by NPA and
Natdem groups long active at the grass-roots level.
Moderate opposition groups are reporting defections
to the left and have felt compelled to adopt more
hardline rhetoric."
Marcos's awareness of the dangers of political polar-
ization may have been one of the factors that led him
to lift martial law. Over the past year, moreover, his
4 The Communist Party's growing appeal also reflects basic organi-
recognition of the threat posed by the NPA has led
him to increase government countermeasures in areas
where insurgent activity is greatest. These steps and
the restrained use of his still considerable powers hold
some promise of moderating the growth of extremism.
Nevertheless, the possibility of a resumption of the
bombings that plagued Manila in late 1980 cannot be
discounted. The April 6th Liberation Movement,
which claimed responsibility for those incidents,
threatened to bomb the International Film Festival
held in Manila in January. The Movement may have
selected this target because it is clearly associated
with the Marcos family. Construction of the Interna-
tional Film Palace and sponsorship of the festival have
been pet projects of Mrs. Marcos's. Although the
bombing did not occur and the government believes
the movement was quashed following a wave of
arrests more than a year ago, Marcos nonetheless was
concerned enough to institute strict security precau-
tions. 25X1
Even major figures in the traditionally conservative
Catholic Church have spoken out over the past year.
Cardinal Jaime Sin recently defended rebel priests
who have gone over to the NPA and claimed that they
are merely "identifying with the people around
them." His remarks prompted government rebuttals
in the press that attempted to link at least seven
priests to subversive organizations
The presence of the military in much of the country-
side is resented and abets political polarization. The
military, having become a dominant force in rural
areas during martial law, retains considerable respon-
sibility for preserving the peace and is particularly
visible in areas of insurgency. Human rights abuses 25X1
by the military continue. Further detracting from the
military's image is the recent emergence of extremist
vigilante groups that are reportedly linked to senior
officers, including Defense Minister Enrile. The mas-
sacre of 45 civilians in Samar last September was
reportedly committed by a quasi-official group of
former and present members of the military called the
Lost Command)
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The Year Ahead
The economy will turn in another substandard per-
formance in 1982. This alone will slow progress on
political liberalization. The ongoing economic reforms
are long-term measures that impose short-term pain
without any immediately obvious benefits. Even a late
year upsurge in the industrial economies would pro-
vide Manila no relief until mid-1983. Unemployment
and underemployment will remain at current high
levels and sales will remain slow for the corporate
In the political arena, there are some signs that
Marcos will encourage the development of moderate
political parties that he can control. But he has yet to
demonstrate that he is prepared to do more than let
disorganized moderate opponents lend credibility to
his claim of running a democratic government. Even
if it gains accreditation, the opposition would find
Marcos's control over the media a formidable obsta-
cle. The President's recent decisions to review televi-
sion and radiobroadcast permits was a pointed re-
minder to media owners that they would be wise to
remain loyal to the first family
Local elections slated to be held by July 1982 will test
Marcos's willingness to allow new parties to organize
and court a grass-roots following. A recent decision by
the ruling party, which may withstand expected court
challenges, forbids local candidates to run under their
party banner-thereby frustrating plans by the oppo-
sition to use local elections to prepare for legislative
elections in 1984. 25X1
Another key test of Marcos's intentions will be the
issue of party accreditation. The Presidential Adviser
for Political Affairs, Leonardo Perez, claims that the
National Assembly may soon enact legislation that
will make party accreditation easier. One of the new
parties presumably will gain accreditation at that
time, but Marcos has already hinted that another of
the new parties may not.
Beyond 1982
Over the medium term, the growing list of Marcos's
potential enemies could create new obstacles to politi-
cal liberalization. Combined with the financial bailout
of his friends, Marcos's manipulation of the judiciary,
the National Assembly, and the executive branch has
offended formerly neutral political constituencies. Al-
most certainly this includes some flagging middle
class support for the government. Even the well-
heeled district of Makati in Manila, for example,
turned out to be an area where the June 1981 election
boycott was particularly successful. Disaffection has
yet to be channeled into an opposition capable of 25X1
unseating the government, however. Marcos thus
remains confident he controls domestic politics and
need liberalize only at a pace he finds acceptable. F_
A factor that will influence Marcos's calculations is
the scheduled review in 1983-84 of the US military
bases agreement. Manila has begun to prepare its
negotiating strategy and the demands it will press 25X1
when negotiations formally get under way. Manila
apparently believes its position is very strong because
of recent expressions of support from the United 25X1
States and continued US strategic interest in the
25X1
Marcos will want to avoid unfavorable developments
on the domestic scene that could undermine Manila's
perceived negotiating posture by raising doubts on the
US side about the stability of his regime. He could be
forced into taking repressive measures, however, be-
cause anti-US sentiment will probably dominate op-
position rhetoric as negotiations begin. From this
perspective, Marcos's desire for a calm political envi-
ronment during the base negotiations may lead him to
defer liberalization while taking pains to ensure that
an appearance of progress prevails.
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