Title

The failure of the martial law regime in the Philippines

Author(s)

Chan, Wing-suet, Kitty; s`

Citation

Issue Date

1989

URL

http://hdl.handle.net/10722/29451

Rights

Creative Commons: Attribution 3.0 Hong Kong License

THE

FAILURE IN

OF

THE

MARTIAL

LAW

REGIME

THE

PHILIPPINES

Chan Wing-suet, Kitty

M.A. Dissertation

Submitted as part of the M.A* by coursework in the field of Comparative Asian Studies

University of Hong Kong Faculty of Arts 1989

DECLARATION I hereby declare that this thesis represents my own work and that it has not been previously submitted to this or any other institution in application for admission to a degree, diploma or other qualification.

Chan Wing^Suet, Kitty

ACKNOWLEDGEMENTS Many persons provided invaluable assistance to make the

study possible. First of all, I wish to thank my supervisor Dr. Norman G. Owen who has supplied me with abundant materials on the subject matter. His constructive criticisms and helpful suggestions have contributed much to the improvement of this case study I am working. Special thanks also go to my husband, Wai Kin, whose unfailing support and encouragement has enabled me to accomplish this assignment. Lastly, I must thank my friend, Dr. Maurice G.T. Teo who has given me valuable information about the topic because he has been an eye-witness of the martial law regime.

TRRT.E OF CONTENT ACKNOWLEDGEMENTS ABSTRACT INTRODUCTION CHAPTER ONE : CONSTITUTIONAL AUTHORITARIANISM IN THE PHILIPPINES - THE POWER BASIS OF THE MARCOS REGIME - GOALS AND POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME - EVALUATION OF THE POLITICAL PERFORMANCE OF THE MARTIAL LAW REGIME " - CONCLUSION CHAPTER TWO : INDUSTRIAL DEVELOPMENT IN THE NEW SOCIETY - ECONOMIC POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME IN THE URBAN SECTOR - EVALUATION OF THE ECONOMIC PERFORMANCE OF THE MARTIAL LAW REGIME - CONCLUSION CHAPTER THREE : AGRICULTURAL DEVELOPMENT IN THE NEW SOCIETY - ECONOMIC POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME IN THE RURAL SECTOR - EVALUATION OF THE ECONOMIC PERFORMANCE OF THE MARTIAL LAW REGIME - CONCLUSION CHAPTER FOUR : THE END OF MARTIAL LAW

PAGE i ii 1

9 9 12 19 25 34 34 39 52

64 64 69 74 85 85 89 99

- COMPARISON OF THE PHILIPPINE POLITICAL STRUCTURE BEFORE AND AFTER THE LIFTING OF MARTIAL LAW - DIFFERENT INTERPRETATIONS FOR THE LIFTING OF MARTIAL LAW - CONCLUSION

ABBREVIATION LIST OF TABLES - TABLE ONE - TABLE TWO SELECTED STATISTICS ON DOLLAR INFLOWS/ OUTFLOWS IN THE PHILIPPINES NET FLOW OF FOREIGN DIRECT INVESTMENT AND REMITTANCES OF PROFITS, EARNINGS AND DIVIDENDS

PAGE 109

110

111

- TABLE THREE : ANNUAL GROWTH RATES BY SECTOR, 19611980 (%) - TABLE FOUR - TABLE FIVE TABLE SIX PHILIPPINE DEVELOPMENT IN INTERNATIONAL PERSPECTIVE PERCENTAGE SHARE OF TOTAL FAMILY INCOMES OF DIFFERENT INCOME GROUPS

112

113 114

REAL WAGE RATES OF LABORERS IN INDUSTRIAL ESTABLISHMENTS IN MANILA AND SUBURBS 114

- TABLE SEVEN : TERMS OF TRADE FOR RICE PRODUCERS, 197282 BIBLIOGRAPHY

115
116

ABSTRACT This paper is divided into four main parts, dealing with the period of martial law (Sept. 1972 - Jan. 1981) in the Philippines under President Ferdinand E. Marcos. The main theme is to look

at the objectives of the martial law regime and evaluate the policies that were undertaken during this period to see any inconsistency between the avowed aims and results. In other words, the yardstick to measure the success or failure of the martial law regime depends on the performance of the policies and their correlation with the proclamation by President Marcos. Chapter One deals with the restructuring of political system under Marcosf s martial law government The avowed goals of the government were the elimination of the threat of a leftistrightist overthrow and democratization of the political system. Hence, the performance of the government toward these ends is the major concern. Chapter Two and Three focus on the economic policies undertaken by President Marcos in the urban and rural sectors respectively. The feasibility of export-led

industrialization in modernising the country and the involvement of the World Bank, IMF, TNCs and foreign countries in the Philippine economy are examined upon in Chapter Two specifically. Chapter Three emphasizes on the implementation of the land reform programme and the credit system Masagana 99 for the peasantry. At the same time, the development of export crops under the guidance of the cronies and the infiltration of agribusiness transnational corporations in the fruit products are outlined. An overall assessment is made on the performance of the economic policies

and t h e i r c o r r e l a t i o n w i t h

the P r e s i d e n t ' s

stated goals to

enhance economic growth and s o c i a l e q u i t y . Chapter Four attempts to compare t h e p o l i t i c a l s i t u a t i o n of t h e P h i l i p p i n e s before and a f t e r the l i f t i n g of m a r t i a l law. The evidence i n d i c a t e s t h a t the l i f t i n g of m a r t i a l law was j u s t a cosmetic change to prolong the r u l e of Marcos, Tvvo major conclusions emerge ficm the a n a l y s i s : f i r s t , t h e Marcos r e g i m e f a i l e d to f u l f i l t h e d e c l a r e d g o a l s of t h e New S o c i e t y and actually second, that personal to impose ambitions martial of Marcos had The m a j o r

induced

him

law.

b e n e f i c i a r i e s included the r u l i n g e l i t e , President Marcos and h i s wife, Imelda Romualdez Marcos, and h i s grand c o a l i t i o n of

supporters l i k e c r o n i e s , technocrats and the m i l i t a r y .

xix

INTRODUCTION I, BACKGROUND LEADING TO THE PROMULGATION OF MARTIAL LAW AND ITS INTERPRETATION By Proclamation 1081, President Ferdinand E. Marcos declared martial law in the Philippines on September 21, 1972. He stated that the Government of the Republic of the Philippines was imperilled by the danger of "an armed insurrection and 1 rebellion". By virtue of the powers invested upon the President by Article VII, Section 10, Paragraph (2) of the 1935

Constitution, he therefore placed the entire Philippines under martial law. The danger which the President perceived was a leftist-rightist overthrow of the government. He claimed that there was an armed rebellion led by the Maoist New Peoplers Army (NPA) with an estimate of 1,028 armed "regulars" under its command."6 At the same time, he also referred to the violent disorder caused by the Muslim dissidents in Mindanao and Sulu. A third challenge to Marcos came from his political opponents who attempted a right-wing conspiracy to assassinate the President.J The situation had become anarchic as cases of bombings of public buildings, demonstrations by students, and kidnappings increased. The unstable political atmosphere seemed to justify the imposition of martial law by Ferdinand E. Marcos.

It was true that the insurgent strength on the left had been growing since the New People's Army was organised in 1969. However, the number of communist guerrillas in 1972 was less than 8 00, according to interviews with the Chief of Staff of the Armed Forces of the Philippines.^ Thus, the imniinent threat perceived

by Marcos might well have been overestimated. Considering the challenge from the right, it was difficult to prove the validity of his statement but foreign and Philippine observers felt it was unlikely to be the case.

t :

One writer has even asserted that "...

threat from the right, which Marcos portrayed in equally dire terms, was "understood. just as remote. And these facts were widely

Furthermore, on September 15, 1972 Senator Aquino revealed to the Senate the alleged plans for "Oplan Sagittarius", which
*7

would impose martial law on the country.'

Though this was denied

by Marcos later, as a matter of fact the plan was known by the Philippines- Armed Forces in advance. Hence one may say the imposition of martial law was a premeditated scheme. The incident that happened on the night of September 22 by which Defence Secretary Juan Ponce Enrile's car was ambushed without any

injuries certainly heightened the tense atmosphere. After Enrile had defected from the Marcos government, however, he acknowledged that the incident had been staged."

From t h e a b o v e d i s c u s s i o n ,

one can see c o n s i d e r a b l e

discrepancies between the o f f i c i a l and u n o f f i c i a l accounts of the political crises that the P h i l i p p i n e government faced in l a t e

1972. In a d d i t i o n , a major point t h a t one must remember was the constitutional prohibition on Marcos from s e c u r i n g the

p r e s i d e n t i a l post for the t h i r d time and the p o s s i b i l i t y t h a t h i s l i f e - l o n g enemy, Benigno A q u i n o , would b e elected as h i s

successor. Thus, t h e r e were two c r i s e s t h a t confronted Marcos the f i r s t was a n a t i o n a l crisis, which had been g r o s s l y

e x a g g e r a t e d by Marcos h i m s e l f , and t h e second was a p e r s o n a l crisis, b e c a u s e P r e s i d e n t Marcos could n o t remain in o f f i c e

beyond 1973. The p o s s i b i l i t y of a new c o n s t i t u t i o n was not a sure winning bet to s u s t a i n Marcos s power, as Marcos could not assume t h a t he would get a favourable v o t e to support a new c o n s t i t u t i o n without d r a s t i c a l l y changing the p o l i t i c a l environment. Hence the question these one tray ask at t h i s p o i n t i s : how could Marcos r e s o l v e with one strike? The answer is m a r t i a l law.

crises

President Marcos, as a determined chief executive,

a c t i n g under

r e a l or imagined n a t i o n a l c r i s i s , with the support of m i l i t a r y force managed to put an end to t h e Old Society and to e s t a b l i s h an a u t h o r i t a r i a n regime i n s t e a d . declared martial law l e g i t i m a t e l y H e emphasized t h a t he had on the basis of t h e old

c o n s t i t u t i o n and t h a t the broad powers he wielded were subject to checks and balances by the c o u n t r y ' s Supeme Court.^

The fact that the "Do-Nothing" Congress stood helplessly by, unable to deal with the crisis effectively, probably convinced many people to accept martial law as the only alternative The Congress had been discredited already because of its practice of congressional delay in passing the annual appropriations act in exchange for support on legislative measures, undermining the efficiency of the government administration. Other weaknesses of the Congress include absenteeism m congressional

in sessions^

involvement in the graft and corruption issue.

The next question is how relevant were the economic conditions in the Philippines in 1972 to the promulgation of martial law? The economy was suffering from stagnation and serious inflation. The prices of all basic commodities increased sharply. The internal debt was 6 billion pesos and the external debt was high as $1.9 billion. Moreover, there was declining confidence in both domestic and international business circle in the Philippine economy due primarily to perceived instability and increasing capital flight abroad.^ To make the situation even

worse, the typhoons in 1972 brought serious flooding, causing over 400 deaths (from drowning or cholera) and widespread

destruction. There was acute food shortage and inflation. The desperation caused by these events might partly explain why there was an increase in kidnappings, robberies and m u r d e r s Y e t , by far, I think the political crisis was perceived by Marcos to be more important than the economic difficulties of the day because

Marcosfs personal interest was at stake and his own self-

justification, Proclamation 1081, put more emphasis on political

chaos

To sum up, by looking at the political and economic conditions in the Philippines preceding martial law and

evaluating the conflicting accounts of the cause for martial law5 it is clear that martial law was a means to let Marcos prolong his personal rule over the country. Indeed, the genuine cause for martial law was the ambition of Marcos to cling to power.

Through it, Marcos was able to accumulate huge profits for the family rather than for enriching the nation, II. THE PROBLEM As my emphasis is on the failure of the martial law regime in the Philippines, I will focus on Marcos1 s "New Society" declared aims or 1 ideology1 (as I term it here) of the provision of an efficient bureaucracy in a peaceful environment, elimination of social inequality, etc., to examine the actual policies or programmes that were undertaken during that period, the problems and difficulties that evolved, and the outcome of the reform programme* In other words, I intend an examination of the feasibility of the rationale/ideology of Marcosfs vision of a better society. As I have discussed above, it really throws doubt upon the sincerity of Marcos in his claim to reform the country in the interest of the Filipinos. Secondly, by a cost-.and-benefit analysis, I intend to illustrate who were beneficiaries of the changes that had

happened - the governor or the governed* My basic conclusion is that martial law enabled the dominance of the elite family alliance headed by Ferdinand Marcos and his wife, Imelda

Romualdez Marcos, over the other rival national elites and the traditional local elites.

FOOTNOTES 1. P r o c l a m a t i o n 1081, Marcos, The in t h e book w r i t t e n by F e r d i n a n d E. Revolution in the Philippines

Democratic

(Englewood C l i f f s , 1974), p.243. 2. Marcos, op. c i t . , p.254.

3. Daniel B. Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism, Neocolonialism, Dictatorship and Resistance (Quezon City, 1987), p.167. The official source in 1972 asserted that President Marcos had uncovered a plot engineered by his political rivals Vice President

Eugenio Lopez and Sergio Osmena, Jr. 4. William H. Overholt, "The Rise and Fall of Ferdinand Marcos", Asian Survey, Vol.26, No.11 (Nov.1986), p.1140. Overholt

based his findings on interviews he had conducted on 15 research trips to the Philippines during the Marcos era. Detailed citation of interviews remained inhibited because of the sensitive nature of much of the material. 5. Schirmer.& Shalom, op. cit., p.167. 6. Overholt, op. cit., p.1140. 7. Lela Garner Noble, "Politics in the Marcos Era", in Crisis in the Philippines, ed. John Bresnan (Princeton, 1986), p.84. The leakage of the plot came through sources in the Philippine Armed Forces* 8. Ibid, p.165, 9. New York Times, Jan. 21, 1973, p.l. . 10. Robert B. Stauffer, The Philippine Congress: Causes of

Structural Change (Beverly Hills, 1975), p A 22: "Two-thirds of

the time of congressmen during the regular sessions are spent in attending to the needs of their constituents or to social activities." 11. Alex Bello Brillantes, Jr., Dictatorship & Martial Philippine Authoritarianism pp.5-6, 12. Noble, op. cit., p.81. in 1972 (Quezon City, Law -

1987) ,

CHAPTER ONE : CONSTITUTIONAL AUTHORITARIANISM IN THE PHILIPPINES INTRODUCTION When Marcos imposed martial law, with the backing of the military, he justified the move in terms of saving the Republic from anarchy or a leftist-rightist overthrow, and of remaking the Filipino society, polity and economy. The central theme of this chapter concerns the political sphere, namely the reshuffling of political power under Marcosfs martial law regime. Firstly, a brief survey of the power basis of President Marcos will be

given. Secondly, an assessment of the performance of the new political institutions or machineries that aimed to improve efficiency of the bureaucracy as well as other measures to enforce civil order will be considered. Finally, there is an attempt to ascertain the genuine motives that worked behind these policies and examine the beneficiaries, that is, the ruler or the ruled, under the authoritarian regime. I.THE POWER BASIS OF THE MARCOS REGIME President Ferdinand E. Marcos, with the close collaboration of his wife, Mrs Imelda Marcos, who as First Lady and. Governor of Metro Manila since 1975 was de facto assistant president, stood at the apex of the power structure. -A grand coalition of military, technocrats, cronies, relatives of both the President and Mrs. Marcos and the bureaucracy formed the pillars of support for Marcos. There was a concentration of power in the hands of one man - President Marcos - whose acts were beyond reach of the courts as the writ of habeas corpus was suspended. Externally,

the U.S. government also gave support to Marcos by a rapid increase of economic and military assistance during the period of martial law.

The decision to impose martial law was made with the agreement and participation of a group of the Presidents senior officers. Under such context, the military assumed very important roles to maintain political stability and sustain the

authoritarian regime. As Marcos's power base was the 'Solid North1 and the support of his fellow Ilocanos^", the reliance on Ilocano enlisted men in the post-1972 years was almost

indispensable. The trend of "Ilocanization" of the officer corps, which began in pre-martial law days, continued, especially at its high levels. Also, the massive concentration of forces in or near the capital, Manila, was designed to ensure the absolute security for the presidential family and other important members of the regime.2

After 1972, the military became an active, privileged and essential force to back up the Marcos government. There was the provision of a generous budget to the armed forces in order to keep the military satisfied and ensure its loyalty to the new government. The size of the armed forces also expanded greatly.

With their growth came rapid promotions and pay increases and the assumption by the military of numerous civilian functions.J

Another

arm of

the Marcos

regime was

the

Filipino

technocrats who shared a developmental vision for the Philippines. They had received training in the U.S. business schools

10

and economics departments before.1^ Responsible only to the President, the technocrats assisted the President in his exercise of tremendous executive and legislative powers.-' Besides that,

they were given ample opportunities to test their developmental ideas and professional knowledge in the economic programs that were in progress during martial law* The cronies who were friends and relatives of the first family further enriched themselves during the martial law period. Marcos won their loyalty by the distribution of economic rewards and favourable terms. The details about the cronies will be discussed in Chapter Two and Three. From the first days of martial rule, sanctions were imposed on all public servants to make the bureaucracy loyal and responsive to Marcos. Also, local officials held office by presidential appointment and hence created a closely-knitted working team under the directives of the President. Externally, the U.S. government supported martial law by increasing its economic and military assistance to the Philippine government. "Military aid totalled $166.3 million in the four year period (FY 1973-1976), 106 percent more than the total assistance of $80.8 million in the preceding four-year period (FY 1969-1972) .1,6 Also, the U.S.-dominated financial institutions

trebled loans to the Marcos regime. From 1973 to 1981, the Marcos regime received more than $2.6 billion distributed in 61 Similarly, the American Chamber of Commerce welcomed O u with undisguised enthusiasm the declaration of martial law. projects."^

11

Both the U.S. government and U.S. big businesses found the Marcos regime friendly toward foreign investments and the latter

willingly opened the whole country's wealth to full foreign exploitation.17

II. GOALS AND POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME

The aims of the New Society can be found in the statement that accompanied the martial law declaration : We will eliminate the threat of a violent overthrow of our Republic. But at the same time we must now reform the social, economic and political institutions in our

country ... to remove the inequities of that society, the cleanup of government of its corrupt and sterile elements, the liquidation of the criminal syndicates, [and to encourage] economy.10 the systematic development of our

The first step was the restoration and maintenance of peace and order. Marcos took immediate action and arrested thousands of people. They included right-wing oligarchs accused of conspiracy; outspoken political opponents; journalists; members of labor, for

student or peasant organizations. The political opponents,

instance Eugenio Lopez, Jr. and Sergio Osmena III, were kept in continued detention,^ usually without a trial and charged with "subversion". At the same time,

the alleged crime of

demonstrations and strikes were prohibited, large quantities of private weapons were confiscated, and foreign travel was banned for five years. Moreover, summary procedures were introduced to

12

cope with street crimes and other crime. Furthermore, stern and repressive measures were taken against some critical members of the clergy. The critical elements came from the younger members of the clergy who had been rather active in social work among poor plantation workers and subsistence farmers. They disapproved of the tough handling of

some clergymen and the regime !s overt disregard for basic human rights. The military raided a long list of Catholic institutions scattered throughout the country. Many were arrested, some imprisoned, some were tortured and many more intimidated. With regard to national defense, in the countryside away from greater Manila, the armed forces faced an increasingly menacing problem, namely the growth of the NPA and the Muslim rebellion in Mindanao and Sulu. The size of the armed forces expanded enormously to deal with these insurgencies. "From 55,000 soldiers in 1972, the Armed Forces of the Philippines (AFP) rose to a strength of 164,000 in 1977. By the end of 1983, AFP strength was estimated to be in the neighbourhood of 250,000. Martial law had provoked Muslim resistance because firstly, power remained exclusively in the Christian hands, namely the martial law leaders. Secondly, the regimefs moves to collect guns from civilians meant that compliance would remove the possibility of eventual resort to force."'" A During the early martial-law

years, clashes with Muslim rebel forces consumed much of the energy of the Philippine Armed Forces. Yet, the Muslim rebels continued to grow in their organizational strength and capability

13

to mount large-scale attacks against government forces with the moral and material support of Libya and Sabah,^ Side by side with its military operations, the government also pursued "a

policy of attraction", that is, by granting full amnesty to all Muslim rebels who surrendered. In 1976, Marcos also negotiated an agreement with the Moro National Liberation Front (MNLF) at Tripoli, The Tripoli Agreement signified a partial victory for Marcos.16 Thereafter, the divisions which appeared among the

MNLF leadership also weakened its challenge upon the Marcos government "P As the Moro rebellion appeared to be on the wane, the growing strength of the NPA in South Mindanao posed a serious challenge* to the AFP They were organised as numerous bands of highly mobile guerrilla units operating in highlands and forested terrain. Although the NPA was inferior to the AFP numerically, the former's strategy and communication system in the field were more or less equal to that of the latter. However, the revolutionary Communist Party of the Philippines (CPP) and its NPA suffered a temporary setback with the capture of party head Jose Maria Sison in late 1977. Nonetheless, the martial law regime failed to halt the growth of the NPA. The 1,000 communist guerrillas in 1972 gradually extended its size and base to four key regions of the country by 1975 and approximately five to ten thousand guerrillas by 19 8 0. A The cleanup of the bureaucracy began swiftly at the inception of martial law. The President ordered the mass summary

14

dismissal from the public service and irresponsible government

of all dishonest, incompetent officials and employees.

Presidential Decree No . 6 prescribed rules and regulations regarding discipline in the government service,^"y Apart from the changes made in the bureaucracy, President Marcos also carefully nurtured his control over the local governments. All local government executives were made appointees of the President and forces were nationalized. Moreover, Marcos

local police

eliminated congressional corruption by dissolving the institution and appointed to high office a group of technocrats like Vicente Paterno and Cesar Virata. All these drastic steps together with the presence of these world-class technocrats inspired confidence among people at home and governments abroad.

According to the official view, the mass media of the Old Society were considered to be negative, irresponsible, corrupt the

and subservient to the oligarchs who controlled them. Hence

martial law authorities took steps to reform and control the media. Censorship and licensing of the media were introduced.

Also relatives and friends of the Marcos family set up their own newspapers, radio and television stations.

In January 1973, Marcos called a referendum to ratify a new constitution to replace the 1935 Constitution. The new

constitution stated clearly the authority and the role of the President, the National Assembly, the Prime Minister and the

Cabinet, the Judiciary and the Bill of Rights,etc. The President could dissolve the National Assembly and appoint all officers and

15

employees in his office. The National Assembly possessed legislative power and discussed appropriations bill and the Prime Minister might exercise veto power to the bill passed by the National Assembly, The bill would be reconsidered by the National Assembly and, if approved by two-thirds of all its members, should become a law and the Prime Minister would have to act
on

according to it.

The executive power should be exercised by

the Prime Minister with the assistance of the Cabinet. The Prime Minister would be the commander-in-chief of all armed forces and he might suspend the writ of habeas corpus when the public safety required it. The judicial power should be vested in the Supreme Court and other inferior courts established by law. The Supreme Court would decide on the constitutionality of a treaty, executive agreement or law. The members of the Supreme Court and judges of inferior courts should be appointed by the Prime Minister. For the Bill of Rights, the major provisions included protection of life, liberty and property of people by law. However, the privilege of the writ of habeas corpus would be suspended in cases of invasion, insurrection, rebellion or imminent danger. As the Philippines was under martial law during the period Sept. 1972 to Jan. 1981, President Marcos suspended the writ of habeas corpus and held the post of Prime Minister at the same time, thereby exercising executive, legislative, military and administrative power equivalent to that of a dictator. The 1973 Constitution was proclaimed ratified by the President on the basis of a report that 95 percent of the voters from citizen

16

22
assemblies had favoured it*

As for the judiciary, it lost a considerable part of its autonomy. Under the 1973 Constitution, the Prime Minister had

ultimate power over the entire judiciary because he might remove any judge or official in the Department of Justice,, weakened and subordinate position, In its

the judiciary could only

survive by adapting to its new martial law environment* In other words, the Supreme Court would ratify the President's acts and abdicate its role as a constitutional watchdog.

With the decline of the influence of the courts and press, Marcos set up a few participatory institutions to enable the Filipinos to take part in local and national politics. There were citizen assemblies or barangays, a Legislative Advisory Council, 21 and a National Assembly called Interim Batasang Pambansa (IBP) . As Marcos argued that the democracy, "crisis government1' had advanced the aims and

it would be necessary to examine

functions of these new institutions.

The barangays,

first created in 1973, were designed as

"bodies to broaden citizens participation, support the public administration in the delivery of services, and act as agents of development implementing small-scale infrastructure projects in the neighbourhood. Each barangay had a population varying

between 100 and 500 families and all barangay residents of fifteen years of age or over would participate in its meetings (at least twice a year) to discuss issues of local or national

17

concern.25 Clearly, the aims of the barangays were to promote democracy and development at the grass-root level. Even youths aged 15 or above could be represented on the barangay councils through the barangay youth organization (Kabataang Barangay) To create a favourable image for his regime both at home and abroad, Marcos created a partially elected Legislative Advisory Council or Batasang Bayan in 1976. It was a quasi-legislative body; the President still retained legislative power and could issue decrees whenever he believed the Legislative Council was not performing well.-' Marcos was sensitive to the increasing demand of the politically-conscious Filipinos for the calling of Interim National Assembly and in June, 1978 the Interim Batasang Pambansa met for the first time.. He also created the Kilusang Bagong Lipunan (New Society Movement) to stand for election to the IBP. On the opposition camp, regime opponents established Lakas ng Bayan (People's Power) or Laban (Fight) headed by ex-Senator Benigno Aquino, Jr., who was still in jail, to compete for seats in Metro Manila. Candidates who were not associated with Laban and reflected local concerns also opposed the KBL in several regions. It gave an impression of a fair competition for powers. In the end the KBL won the majority votes in Manila and elsewhere . For the functions of IBP itself, the IBP was to legislate within limits set by and on matters determined or approved by Marcos.
28

It meant in effect the body was dominated by Marcos who

18

combined both posts as the Prime Minister and President . Marcos could remove the interim body and not vice versa. Moreover, it could not ratify treaties, or repeal or amend the decree passed by the President. To sum up, the studies on Legislative Advisory Council and IBP indicated that Marcos!s power was above them and these two bodies were powerless to check over the President.

III. EVALUATION OF THE POLITICAL PERFORMANCE OF THE MARTIAL LAW REGIME One major reason why the martial law regime was able to obtain citizen acquiescence or acceptance and support was its guarantee of peace and order. Hence an assessment of the capability of the Marcos regime to provide public security would be essential in this study. Initially street robberies in broad daylight had been reduced because of the massive round-up of private firearms. However, cases of burglaries increased until their figure had offset the decline in street robberies. Then street robberies began to increase again from 1975 onward.^ Thus, the efforts to combat crime seemed to be largely futile though the actual figure was not accurately known. With regard to national defense, the Marcos governments effort to control or eliminate the militant enemies of communist and Muslim insurgencies produced rather frustrating results. Generally speaking, Marcos was more capable in controlling the Muslim insurgency than the comrainists in the late martial-law years. The Tripoli Agreement lasted for a short while and

19

Government/MNLF negotiations and the ceasefire broke down in 1977. Then the MNLF carried out successful operations against AFP units again. The main reason that made the Muslim rebels quiescent from late 1977 onward was the disunity between top MNLF leaders Nor Misuari and Hashim Salamat who competed for the post as Chairman and the Bangsa Moro Liberation Organization (BMLO) which challenged the MNLFfs role as representative of Muslims in
on

the Philippines. u The role played by Marcos was to manipulate the conflict to his favour by recognizing the claim of BMLO as formal representative of Muslim society. Also, the role played by the Philippine Armed Force was a minor one. Far from subduing the rebels, the indiscipline and corruption of the armed forces aggravated the conflict between Muslim and Christian leaders. Although a relatively minor force when Marcos declared martial law, by 1980 the NPA insurgency had become active in many parts of the country. The inability of the Philippine military to control the communists could be explained by two major reasons. First, there were strategic mistakes and errors committed by Marcos. The competent, small unit, intelligence-oriented strategy used by the armed forces in the past was changed to rely on massed heavy artillery against the guerrilla groups in the , , , southern Philippines. 31 This strategy was totally ineffectual and failed to exterminate the NPA. Moreover, Marcos installed relatives and people from Ilocos region in senior and important posts, concentrated in the environs of Manila. The ill effects of this tendency was to make assignments and promotions based on favouritism and personal loyalty rather than on competence*

20

Loyalty in turn was rewarded by a growing tolerance of corruption and arbitrary use of power. Thus, though the size of the military had increased, incompetence and corruption prevailed. Another bad effect of undue preference to promote the Ilocanos was the lowering of morale of those officers and soldiers outside Manila assigned to the life-threatening task of fighting the communist and Muslim insurgencies. They were frustrated to see that the war with the Muslims had weakened the central core of the armed forces while Marcos kept the most effective units in Manila for political security. Therefore, the AFP was helpless but to witness the growth of the NPA.

Second, the growth in strength of the NPA was due partly to the middle class leadership of the party. Through indoctrinations and clear directions, they were effective in organizing

peasants, trade unionists and the urban poor. Moreover, the tactic of high mobility of guerrilla units which operated in difficult highlands and forested terrain made it easy for them to attack or retreat. Furthermore, they became more popular among the Filipinos because of the deteriorating living and working conditions produced as a result of Marcos*s domestic policies. Though Marcos launched land reform measures and rural development projects, the rural unemployed youth still had no access-to agricultural land, either as owners or tenants3 because of the rising population."^ In the highlands of the interior and in the frontier regions of the outlying islands, the NPA offered arms, training and leadership to tribal peoples who had lost their land to agri-business developers or to the government's hydroelectric

21

projects. jA

In the cities, the communists appealed to the

squatter settlers who lost their homes due to governments urban redevelopment projects. Among the workers, the communist

movement's grass-root support became widened as Marcos government prohibited labour strikes and insisted on low-wage policies. Under Marcos, the government's prospect of checking the growth of the NPA and the communist movement, let alone defeating it, did not seem promising. The claim by the New Society leaders to have broken the back of Communist dissidence and Muslim secession might have appeared valid in the years 1976-77 when negotiations between the Marcos government and Muslim secessionists seemed to have produced an agreement that both sides accepted a cease-fire while the leadership of the CPP was weakened because its top leader was being captured* In the long run, the threat still remained formidable. One can say that the martial law regime was lucky enough not to face a combined attack from the communists and the Muslim rebels (due to differences in ideology and personality), otherwise the regime would be in great difficulty to sustain itself. The efforts put on improving administrative efficiency did not bring about the desired result. During the first year of the regime, the bureaucrats behaved very well as there were the summary dismissal of many government officials and employees."'4 However, the practices of dishonesty, inefficiency and irresponsibility of some bureaucrats reappeared during the regime's second year. Furthermore,' efforts to promote greater
22

efficiency were half-hearted and piecemeal in nature. The ministers were often world-class managers, but underneath them the staff remained corrupt and incompetent. President Marcos had stated "the fundamental task of drastic political reform is to democratize the entire political system.ttmJJ In fact, the ruling elite possessed greater power

than before and did not live up to this promise. For instance, Marcos closed down the once powerful Congress and ruled by decree. So the country was deprived of countervailing institution to exercise any checks or balances if power was abused by an allpowerful ruler. Another aspect of the loss of democracy was the restrictions on free speech and assembly. There was the creation of regulatory commissions like the Media Advisory Council to supervise news dissemination and guidelines for the press to follow. In 1974, official supervision of the press came to an end. In their place, the print media were required to set up self-regulatory councils to oversee the.activities of their newspapers and other publications. The problem with the restructured press was that it became timid and uncritical of Marcos government and of government policies, therefore its credibility became low. Then- the news media that established itself under martial law was not broad based in ownership. Rather it was controlled by relatives or friends of Marcos* Hence the defect of some pre-martial law news media, namely the concentrated and oligarchic structure of

23

media control remained. Anyway, Marcos did not relax press control very much.

During much of the martial law era, Marcos argued that his move to "crisis government" advanced democracy and he pointed to the new participatory institutions like barangays and voting in national referenda. However, one would certainly doubt the

reliability of barangay referendum as meaningful representation of citizens in decision-making. For example, the two referenda in 1973 approved martial law with an overwhelming favourable

response (90 to 95 per cent) 36 , regarded as

unreasonable if not

impossible figures in the western world. Any sceptical Filipino would treat this as a farcical process because voters were not registered and balloting was done publicly by mere handraismg. For the system of citizens1 assemblies, the Legislative Advisory Council and the Interim Batasang Pambansa, their

existence was more symbolic than beneficial to the Filipinos. As the barangay officials were appointed, thus loyalty was directed to the government. The barangays exerted functions of control by acting as 'the eyes and the ears1 of the government and served as extended arms of the government in the implementation of its projects.^0 As for the Legislative Advisory Council and the IBP,

both could neither share power with the President nor check upon the decrees of the President. Moreover, the 1973 Constitution

also ensured the legal validity of all presidential decrees.

24

One common criticism given by the opponents on the martial law regime concerning democracy was the violation of human

rights. The allegations included arbitrary killings, mysterious "disappearances," tortures, arbitrary arrests, etc. These were

abuses made by members of the Armed Forces of the Philippines, the Integrated Civilian Home Defense Forces (ICHDF), the

Integrated National Police (INP) and irregular paramilitary units operating with official sanction, Marcos was skilful to cover up all the misdeeds of ill-treating political prisoners by creating an illusory image of its regime as a humane authoritarian one. For instance, domestic and foreign media men were invited to a detention centre to look at the conditions of the detainees. Another instance would be in latter part of 1974, when Macros passed a number of presidential acts with the effect of releasing some prominent political detainees, all priests and nuns, and giving amnesty to Filipino political exiles.^ Nevertheless, the total number of political detainees who still remained in prison was not accurately known.^ the measure of leniency Besides, there was no way to ensure toward political offenders was

effectively enforced or not.

IV. CONCLUSION

The analysis above indicates that the political performance of the martial law regime in re-establishing administrative efficiency and in democratizing the political system was in no way satisfactory. With regard to discipline in public service, apparently President Marcos did not persist in his move to

25

eliminate

all

the

detestable habits

of

corruption

and

irresponsibility in the public service.

The reason seems to be

that the reorganization of the government machinery was to ensure the consolidation of presidential power with the installation of his own men there rather than a genuine attempt to create an efficient and honest bureaucracy. Hence, the main emphasis was put on eliminating those who did not side with Marcos rather than on purging corrupt elements prevailed in the entire bureaucracy. Similarly, the restrictions of the press reflected the concern of the President to reduce the influence of his political opponents and to prevent any criticism of his martial law government.

As a master political tactician, Marcos wanted to foster an image of constitutionality and legitimacy for the martial law regime. Thus, he made strenuous efforts in holding a series of referenda. For instance, the 1973 Constitution was ratified by a referendum through citizen assemblies, instead of through the

plebiscite required under the then existing 1935 Constitution. Through election fraud and manipulation, Marcos was able to sustain his one-man rule. The barangay, the Legislative Advisory Council and the Interim Batasang Pambansa were created as the showcase of 'democracy1 and demonstrated the regimefs desire to

institutionalise itself.

The violation by the government of civil liberties and human rights and the abuses of the military, such as indiscriminate

arrests without court warrant of people and their subsequent

26

disappearance,

as reported by Amnesty

International would

continue since Marcos was anxious to keep his dictatorial power over the country

The major beneficiaries of martial

law certainly were

President Marcos and his wife who were able to govern with enormous power during the martial law era. Marcos was able to prolong his rule without any constitutional limitations. Then, under the patronage of President Marcos, officers status. the higher military

and cronies were able to acquire new-found power and For instance, the President had closed his eyes to

growing corruption among the military, symbolised by colonels and their wives driving Mercedes-Benz automobiles. The wealth and privilege of the cronies will be discussed in Chapter Two and Three.

The preoccupation of most people, especially those who lived in small towns and rural areas who needed to fight for their subsistence, was the provision of a viable economy and to

implementation of welfare programmes by the Marcos regime

improve their living conditions. Thus, the economic performance of the authoritarian regime, to which we now turn, for its continued existence. counted a lot

27

FOOTNOTES
1. Robin Abell Lim, "Critiques of Marcos x s Philippines",

Australian Outlook, Vol.31, No.2 (Aug. 1977), p.333. Also see Carl H. Lande, "The P o l i t i c a l C r i s i s " , in C r i s i s in the

Philippines, ed. John Bresnan (Princeton, 1986), p. 136: "Most heavily infused with Ilocanos were the security and

intelligence forces based in or near Manila." 2. Larry A. Niksch, Region, "The Armed Forces of the A s i a - P a c i f i c

The Philippines: Uncertainties After the Aquino 1984), pp.22-

Assassination", Pacific Defence Reporter (Feb. 23.

The Ilocanos became the majority in important military the

o r g a n i z a t i o n s l i k e the P r e s i d e n t i a l Guard B a t t a l i o n ,

National I n t e l l i g e n c e and Security Authority (NISA), the Metropolitan command of t h e Philippine of the Constabulary

(METROOCM) the Manila u n i t

I n t e g r a t e d National

Police, and the 2nd Anry Division. 3. Jose Veloso Abueva, Society1", ed. "Ideology and P r a c t i c e in the T Tw Se

in Marcos and Martial Law in the P h i l i p p i n e s ,

David A. Rosenberg (New York, 1979), p.39, explained the "a prominent and strategic role as

role of military clearly,

the p r e s i d e n t ' s power base and right arm in law enforcement, counterinsurgency, action, containment of c i v i l i a n opposition, activities, as w e l l civic as in

and d e v e l o p m e n t a l

r e i n f o r c i n g the p e o p l e ' s o r i e n t a t i o n toward the n a t i o n a l community."

28

4. These technocrats shared similar educational experiences with t h e i r World Bank and IMF c o u n t e r p a r t s and t h e y b e l i e v e d t h e m s e l v e s to b e the e x p e r t in development p l a n n i n g . Moreover, the American development experts imparted their

d e v e l o p m e n t a l i d e a s to t h e F i l i p i n o t e c h n o c r a t s ,

further

convincing the l a t t e r of the need to implement development programs. See Robert Framework B. for Stauffer, Peripheral (Fall 1977),
f

"Philippine Development", pp.372-374 for

Authoritarianiam:

P a c i f i c A f f a i r s , Vol.50, details. 5. A b u e v a , op. cit., advisers,

No.3

p.40.

The

technocrats

acted

as

"presidential

government executives,

d r a f t e r s of

p r e s i d e n t i a l decrees, and advocates and defenders of the Nfevv Society." 6. Pedro V. Salgado, O.P., The Philippine Economy - History and Analysis (Quezon City, 1985), p . 5 9 . 7. I b i d .

8. The American Chamber of Commerce sent a telegram to President Marcos within one week of the onset of martial law congratulating him on his success, assuring him of their confidence and pledging their cooperation with the Philippine government. 9. See .Ferdinand E. Marcos, Notes on the New Society of the Philippines (Manila, 1974), p.121: "One of the first steps taken by government was the establishment of a 'free flow1 policy, in which foreign investments may be repatriated any

29

time, profits remitted and withdrawn."

* frozen1 dollars allowed to be

10. Statement accompanying Proclamation 1081, quoted from Lela Garner Noble, "Politics in the Marcos Era", in Crisis in the Philippines, ed. John Bresnan (Princeton, 1986), p. 85. 11. Eugenio Lopez, Jr., and Sergio Osmena III came from two prominent families in the country who fell out with President Marcos. They were accused of plotting the assassination of the President. 12. Lim Yoon Lin, "An Overview of the Philippines", Southeast Asian Affairs (1974) , p.175. 13. Salgado, op. cit., p.58 14. Daniel B* Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism, Neocolonialism, Dictatorship and Resistance (Quezon City, 1987), pp.194-195. 15. Lande, op. cit., p.137, explained the background for the Muslim rebellion. The Muslims strongly resisted the southward migration of Christian Filipino settlers, which threatened to turn Muslims into a minority group in their homeland* Calling themselves the Moro National Liberation Front, the Muslim secessionists' aim was to establish an independent "Bangsa Moro Republik". 16. Schirmer & Shalom, op.cit., p. 196. Though Marcos granted the Muslims substantive concessions in the Tripoli Agreement, he managed to reduce the influence of Islamic Conference and the Libyans, the strong supporters of MNLF. Marcos could implement the agreement according to his discretion.

30

17. Ibid, pp.197-198, provides details about Muslim leadership.

the split among

18. William H. Overholt, "The Rise and Fall of Ferdinand Marcos", Asian Survey, Vol.26, No.11 (Nov.1986), p.1147. 19. Mauricio 0. Bas, Sr., Philippine Martial Law (New York, 1984), p.117. 20. Ferdinand E. Marcos, The Democratic Revolution in the Philippines (Englewood Cliffs, 1974), p.227. 21. Ibid, p.221. 22. Abueva, op. cit., p.38. 23. The Interim Batasang Pambansa was a parliamentary body, created by a 1976 referendum amending the 1973 Constitution, and had limited powers. 24. Jurgen Rliland, "Political Change, Urban Services and Social Movements: Political Participation and Grass-Roots Politics in Metro Manila", Public Administration and Development, Vol.4 (1984), p.331. 25. Jurgen Kuland, "Authoritarianism at the Grass-Roots: Urban Neighbourhood Organizations in Metro Manila", Asian Journal of Public Administration, Vol.8, No.l (June 1986), p. 9. The basic organizational structure of the barangay system include the Barangay Assembly, the Barangay Council and the Barangay Captain. The Barangay Assembly was vested with powers to hold referenda on local issues. The Barangay Captain was the executive head of the neighbourhood and responsible for the enforcement of the laws and ordinances operative in the barangay. The Barangay Council was also responsible for

31

the adoption and implementation of r e s o l u t i o n s as

well as

for c a r r y i n g out a d m i n i s t r a t i v e and developmental f u n c t i o n s , 26. I b i d , p. 15: "the Kabalaang Barangay was o r i g i n a l l y created by PD No.684 ventilation to enable p a r t i c i p a t i o n issues, of y o u t h
T

in

the

of v i t a l

both local

and n a t i o n a l

a f f e c t i n g w e l f a r e and the future of t h i s c o u n t r y / " 27. David Wurfel, "Martial Law in the P h i l i p p i n e s : The Methods of Regime Survival", 1977), p . 2 3 . 28. K i t G. Machado, "The P h i l i p p i n e s Asian 1978 Survey, Authoritarian Vol.19, No.2 P a c i f i c A f f a i r s , Vol.50, No.l (Spring

Consolidation

Continues",

(Feb. 1979), p.134." 29. Overholt, op. c i t . , p.1146. 30. Schirmer & Shalom, op. cit.," pp. 197-198. 3 1 . Overholt, op. c i t . , p.1147. 32. See Lande, op. c i t . , p. 133; the d e t a i l s about land reforms w i l l be described in Chapter Three. 33. I b i d . 34. Bas, op. c i t . , p . 1 1 7 . 35. F e r d i n a n d E. M a r c o s , N o t e s on t h e New S o c i e t y of t h e P h i l i p p i n e s (Manila, 1973), p . 7 0 . 36. Wurfel, op. c i t . , p . 9 . 37. Rliland, " A u t h o r i t a r i a n i s m at t h e G r a s s - R o o t s " , p. 16 f o r 1973 to vote on a

d e t a i l s of f i r s t referendum held on Jan. new c o n s t i t u t i o n and approve m a r t i a l law. 38. R u l a n d ,

" P o l i t i c a l C h a n g e , U r b a n S e r v i c e s and S o c i a l "In the Tondo Foreshore the barangays

Movements", p . 3 3 1 :

32

became

t h e e y e s and t h e e a r s 1

of the government

by

e s t a b l i s h i n g a network of 'informers 1 who closely co-operated with the m i l i t a r y b y r e p o r t i n g to it alleged activities*" 39. Lim Yoon L i n , "The P h i l i p p i n e s - Marcos' ilNlew S o c i e t y ' " , S o u t h e a s t A s i a n A f f a i r s ( 1 9 7 5 ) , p. 116 f o r t h e d e t a i l o f p o l i t i c a l detainees, 40. Ibid. 4 1 . Salgado, op. cit., p.58: "The Defence Minister Juan Ponce Subversive*

E n r i l e s a i d in 1980 t h a t 60,000 p e o p l e had been a r r e s t e d since the start of m a r t i a l l a w . " However, many c r i t i c s

doubted the accuracy of t h i s f i g u r e .

33

CHAPTER TWO : INDUSTRIAL DEVELOPMENT IN THE NEW SOCIETY INTRODUCTION President Marcos specifically emphasised "the

democratization of wealth and property" and "the conquest of mass poverty" as the major aims of the New Society/ This chapter

will focus on the economic policies carried out by Marcos in the urban setting. First, the execution of his wide-ranging economic policies, which included the promotion of export-oriented industrialization, revision of the foreign investment rules,

expansion of the infrastructure and large-scale government projects and their encompassing problems 'will be discussed. Second, there will be an evaluation of the strength and weakness of Marcos's economic policies and their correlation with the Presidents stated goals to enhance economic growth and social equality. Lastly, there will be an examination of the motives that explain why these policies were introduced and implemented. I. ECONOMIC POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME IN THE URBAN SECTOR From the start of martial law, President Marcos tried to restore the confidence of businessmen both at home and abroad toward the Philippine economy* The existence of a stable authoritarian regime helped to rebuild the confidence of foreign investors and they quickly responded with whole-hearted support. Also, Marcos appointed a group of top-class technocrats like Cesar Virata as Minister of Finance and Vicente Paterno as head

34

of t h e Board of I n v e s t m e n t s .

Their p r e s e n c e was c r i t i c a l in

i n s p i r i n g c o n f i d e n c e on t h e p a r t of f o r e i g n governments and a t t r a c t e d the support of i n t e r n a t i o n a l b a n k s . 2 t h e P r e s i d e n t announced t h e dual p o l i c i e s A t the same time, of i n c e n t i v e and

p r o t e c t i o n of foreign c a p i t a l . By these a c t i o n s , Marcos had shown to t h e f o r e i g n b u s i n e s s capital. ^ community t h a t h e welcomed f o r e i g n

Export-led industrialization was considered a natural course to take by the early 1970s due to the failure of the strategy of import substitution by late 1960s. The problems then were the stagnation of Philippine industry due to the limitation of a restricted domestic market and the capital-intensive character of much of the manufacturing sector which provided limited employment opportunities for the growing population.^ As past experience illustrated very clearly the inadequacy of agricultural products to provide sufficient export earnings to cover the economy1s import needs, the alternative would have to be the emergence of manufacturing exports for foreign exchange earnings. This strategy was strongly advocated by the World Bank, fervently supported by the Filipino technocrats and executed by Marcos during the martial-law years. The characteristics of the new strategy are that it is labour-intensive and relies on manufactured exports like garment, electrical and electronic equipment and handicrafts to obtain foreign exchange earnings. Henceforth, Philippines industrial economy'became heavily dependent on world, markets and thus

35

highly

vulnerable to

global economic flactation, as shown in

1975, when the world prices for the Philippines' key exports, sugar and coconuts, declined drastically. The oil price increases also led to increased costs of imports like mineral fuels, machinery, etc. Moreover the deepening international recession stopped the growth of export markets in the West and the advanced capitalist countries began to erect tariff barriers against labour-intensive manufactured imports from the Third World. To tackle all these problems, the martial law regime attempted several measures. To combat its balance of payments deficit, the clear solution was to raise its exports and lower imports. Thus, on the one hand, the government tried to woo foreign investments in order to speed up its industrial development and on the other hand it tried to promote its goods to new markets like the socialist and Arab countries. The reduction of oil imports meant that both government and private cutdowns were necessary and greater efforts had to be made by government to tap the resources of energy at home. Above that, the quickest way for Marcos government to solve the immediate difficulty of trade deficits seemed to be foreign borrowing. The Philippines could afford to borrow heavily in the early 1970s because the real interest rates were low and so foreign loans increased tremendously. "According to Central Bank figures, the foreign loans increased by US$632 million, or 27%, in the first nine months of 1974, to US$2,990 million."5 This massive loan chiefly came from

36

the World Bank and International Monetary Fund (IMF), As a result, international bodies like IMF could interfere in the

domestic policies of the Philippines by supervising a wide variety of Philippine economic decisions. An outstanding example was Marcos!s acceptance of the Structural Adjustment Loan (SAL) issued by the World Bank in 1979 to save the financial difficulties of the country. Floating the SAL enabled the Bank to push through a series of measures, including the liberalization of commodity import procedures, tariff reform, an "appropriate" exchange rate policy, etc. In short, the SAL was a final offensive against Philippine protectionism and its acceptance by the martial law government implied that the economic sovereignty of the country rested almost entirely in the hands of the World Bank.6 To make the programme of export orientation a reality, a companion policy had to be adopted, namely full encouragement of foreign investments which would serve to fill in the domestic shortages of capital, foreign exchange and technical knowhow. The Philippines became more open to transnational business. Attractive incentives included the right to repatriate capital and remit earnings, generous tax concessions, compensation in case of any expropriation, provision of cheap labour? etc. For example, the Bataan Export Processing Zone (BEPZ) was an

industrial estate with 58 export enterprises (the majority of these were units of transnational corporations) which enjoyed most of the preferential treatments mention here.^ In brief, the whole package of incentives was characterised by liberalization

37

rather than restrictions in defining the areas where foreigners could undertake economic activities/ Despite impressive revisions of the foreign investment laws, red tape and corruption continued to hamper foreign investment. Indeed, during the Marcos years the Philippines became the lesser favoured site for foreign investment in Pacific Asia.53 In 1979, President Marcos and his newly appointed Minister of Trade and Industry announced the launching of eleven major industrial projects. This meant that the government began to build the basis for heavy industry. The projects included aluminium and copper smelters, a petrochemical complex, an integrated steel mill, an integrated pulp and paper mill, and others which involved great capital spending. Between 1972 and 1975, a huge portion of government revenue was spent for infrastructure projects which were designed to

support both agricultural and industrial development. They included highways, roads, bridges, airports, hospitals, schoolhouses, housing schemes, irrigation facilities, modern buildings for government offices, trade and cultural buildings, etc. Again, the only way to finance these various projects was through foreign borrowings. The function of roads, bridges, highways, airport and maritime facilities was to facilitate easy and fast commercial, educational and cultural intercourse among the inhabitants living in various island provinces, cities and towns of the Philippines* Indeed, the martial law regime took pride in having constructed modem buildings for government offices, trade

38

and cultural activities because they were a sign of modernization and projected cultural Image for the country, 10 Just as the construction of the Cultural Center of the Philippines, the Folk Arts Theatre, the Philippine International Convention Center was under the leadership of Mrs. Marcos, the First Lady and her family friends were directly involved in the construction of fifteen luxury hotels* They were financed by huge loans from international and domestic sources.1'1- Hotel building in turn gave impetus to the tourism industry. Tourism could bring in foreign exchange and create employment.

II.

EVALUATION OF THE ECONOMIC PERFORMANCE OF THE MARTIAL LAW REGIME First of all, I would analyse the strengths and weaknesses

of the strategy of export-oriented industrialization (EOI) , as it represented a major change in economic policies in the 1970s which brought about a lot of controversies and had deep impact upon the lives of the Filipinos. In the first place, EOI had been promoted as a means to acquire substantial foreign exchange for internal development But one should take note of the segmented character of the industrialisation that took place under this system of export orientation. Most of the ^on-traditional1 exports were products processed mainly under international subcontracting arrangements,

39

that i s , these products were made based on the orders of Transnational Corporations (TNCs) in Europe and J a p a n , which

c o n t r o l l e d the f i n a l marketing.

12

These firms which made the

o r d e r s could a l s o d i c t a t e the p r i c i n g of the raw m a t e r i a l s , intermediate products and the f i n a l products. "They engage in

what is known as t r a n s f e r p r i c i n g , which they can e a s i l y do because they are dealing with local subcontractors who have a l i m i t e d say in the world market, and who are dependent on them

for the technological designs as well as raw m a t e r i a l s . "

13 Thus,
import

t h e i r o n y was t h a t w h i l e export e a r n i n g s were r i s i n g ,

payments were r i s i n g even f a s t e r , which led to the widening b a l a n c e - o f ~ t r a d e d e f i c i t (Table One). To sum up, EOI did not c o n t r i b u t e meaningfully to Philippine foreign exchange earnings b e c a u s e of t r a n s f e r p r i c i n g imports. 14 and dependence on raw m a t e r i a l

A strong claim by the World Bank proponents of EOI was that it could g e n e r a t e employment o p p o r t u n i t y w i t h the growth of labour-intensive, 1970. In reality, non-traditional manufactured exports after

EOI-based employment was more unstable than

t r a d i t i o n a l manufacturing employment because it was dependent on t h e f l u c t u a t i n g i n t e r n a t i o n a l market. For i n s t a n c e , in 1979

" s t a g f l a t i o n " curbed the growth in the export markets of advanced i n d u s t r i a l countries, approximately 340,000 F i l i p i n o workers were laid off and the f i g u r e of l a y o f f s i n c r e a s e d by 300,000 in

1981. 1 5

40

Another virtue of EOI, as stated by the World Bank, was its promise to bring in more foreign capital than the system of import substitution. Again, one should be careful in noting that the TNCs, operating worldwide, had limited investment plans in the Philippines. Statistics show that foreign investors took out more dollars than they brought in, which implied that they deprived the country of funds for new jobs, funds that were generated in the country in the first place (Table One) . In Table Two, one can see that foreign direct investment did bring in initial inflows. However, the truth was that it subsequently brought outflows in the form of interest, profit and repatriated capital. Nonetheless, the World Bank argued that the foreigners were investing more; as indicated by the figure in 1980, investment by foreign firms was 500 percent more than the annual

average for the 1970s. Actually this was an illusion because these new investments by foreign firms derived mainly from local profits or borrowings from domestic capital sources. From the discussion of the strengths and weaknesses of EOI above, one can see that the negative effects outweighed the positive ones in the case of the Philippines. Moreover, another disadvantage of the adoption of EOI to the Filipinos was that this industrialization required Philippine labour to be as cheap, docile and productive as possible. Thus between the years 1972 and 1980, real wages of skilled and unskilled workers went down by 36.3% and 46.6%, respectively (Table Six), The provision of

cheap labour certainly satisfied the desire of foreign investors. Last but not least, the low-level technology transfer was also a

41

demerit of EOI. Most of the goods manufactured under international subcontracting were low-technology ones like garments or parts of technologically complex products like car

components. The export-oriented manufacturers spread their production processes around the world according to the international division of labour. So Philippines engaged in labour-intensive jobs while the more highly skilled, capital- and technology-intensive work remained within the advanced capitalist countries Therefore Philippines failed to gain access to more sophisticated technology required to put together an integrated industrial production process. After analysing the merits and demerits for the Philippines to engage in the export of labour-intensive manufactures during the martial law period, it would be fair enough to look at the economic performance of the Marcos regime with the adoption of the EOI strategy. A closer look at the economic performance of the Marcos regime clearly demonstrated the vulnerability of the exportoriented growth strategy. There were short-lived price rises of the two major export crops, namely sugar and coconuts, in 1973 and thus the Philippines achieved a surplus in its balance of trade. However, by 1975, the prices of the three top Philippine foreign earners - sugar, coconut and copper - fell sharply"^ due to a drop in demand from its principal markets, the United States, Europe and Japan which experienced economic slowdown in the latter half of 1 974.17 The weakened economic base was then

42

hard hit by the sharp rise of the OPEC oil price as the country had to depend on oil imports. Meanwhile, the prices of capitalintensive machinery and transport equipment, dominated mainly by Western and Japanese producers, rose almost threefold.18 All

these brought the balance-of-payment deficit of $1.3 billion in 1978. Finally, apart from the adverse conditions mentioned above, the protectionist policy adopted by the advanced capitalist economies also discredited the model of export-led

industrialization. The Philippines was hard-hit particularly as new barriers were erected against the "non-traditional, labourintensive manufactures11 like garments and textiles in the years 1978 to 198 0.19 A final assessment of the effectiveness of the EOI strategy is based upon its contribution to economic development of the country. The share of manufacturing in GNP failed to rise significantly. In Table Three, one can see the failure of the manufacturing industry to grow significantly faster than other sectors of the economy though the former had been feverishly promoted in the 1970s. Moreover, there was a chronic imbalance between imports and exports. Then the mounting balance-of-payment deficit led the government to increase overseas borrowings. Already the government was deeply in debt because it had to pay off installments of the already existing debt (Table One) . To conclude, the adoption of export-oriented industrialization was a failure in the Philippines because of its inability to resolve the balance-of-payment deficit of the country and deliver the

43

export earnings needed to pay off for all the loans borrowed by the government to finance the infrastructure and other supportive projects required by the above industrial programme. By comparison, the success of H.K., Singapore, Taiwan and Korea in pursuing the EOI strategy deserves attention. This

difference in outcome can be explained by the fact that the Philippines was a latecomer to establish export platforms. This meant that she was less competitive with more experienced neighbours like other Asian states mentioned above. Furthermore, it was bad luck that the commitment of Philippines to EOI should coincide with economic recession, shrinking markets and rising protectionism. Apart from these two reasons that may help in explaining the economic fiasco, the responsibility of the leader, President Marcos in encouraging the export-led industrialization throughout the martial law period should be taken into consideration. As the fortunes of Philippine economy hinged upon the vicissitudes of the international economy, the President should have had some understanding of the risks involved and possible undesirable repercussions related to the stated strategy. A concrete example was the recession and inflation in 1975 which brought economic difficulties to the Filipinos, when Marcos put the blame on " the evident vulnerability of the national economy to international economics, especially because of its newly bolstered export orientation."20 The guilt of Marcos was that he understood the problem but still he refused to give up the EOI strategy. Instead, he plunged the country further into disaster by foreign borrowing.

44

The method of massive foreign borrowings could not save the country in the long run. It was unwise for Marcos to rely on foreign borrowing for the following reasons. Firstly, overseas borrowing would be a sensible strategy providing that the return on investment projects exceeded the cost of borrowed funds and that export earnings were sufficient to finance the repayments. In the case of the Philippines, the economic position of the country kept on declining. Secondly, there was the danger of heavy reliance of the Philippine government upon foreign borrowing when the real interest rates rose high in the 1980s. Between 1978 and 1982 interest payments on foreign loans rose four-fold, from $400 million to over $1.6 billion. A Thirdly, terms imposed by the World Bank and other lenders on floating loans to the Philippines ran counter to the interest of Filipino businessmen, for example, the liberalization of imports through tariff reduction attached to the SAL program loan in 1979. When Marcos liberalized the econoniy, the home-oriented products were struggling for survival due to foreign competition in the domestic market. It was a disaster to the small Filipino capitalists who relied solely on the domestic market for profitmaking. Certainly, the industrial policy was biased against local industries because it looked outward as the basis for industrial advance. The gradual removal of incentives, subsidies and protective tariffs left the ordinary Filipino businessmen without any favourable condition to prosper. This also explained why many of them were forced by circumstances to become junior partners or sub-contractors for transnational corporations. In other words,

45

it wiped out the possibility of developing the class of independent bourgeoisie who might be functional in contributing to the self-sustained industrial growth. The generous concessions that the government offered to foreign investors invited criticisms. The warning given by some Filipino economists was that the martial law regime should be cautious and selective in accepting foreign investment. The danger of economic domination would come about if the government indiscriminately accepted a sustained inflow of foreign investment . To some extent, the provision of generous foreign investment" incentives were offset or "regulated" by numerous presidential decrees and restrictive practices that created monopolies and near-monopolies in most parts of the economy. These new monopolies, backed by the government but set up as private national cartels under the cronies, were designed to control domestic industrial production and to handle every aspect of the nation*s prime commodities, from financing to production to shipping. The demerits of such a system of crony capitalism was first of all, the destruction of the Philippine system of independent entrepreneur ship and the discouragement of legitimate investors who could not compete with Marcos1 favoured associates. Thus, it undermined the investors' confidence in the government's ability to generate a productive economy. Second, cronies might work more

46

for their private interests than for the good of the nation. Unlike the history of economic success contributed by the

Japanese zaibatsu, the cronies were more interested in enriching themselves in the short run than in building lasting industrial empires in the Philippines. Third, managers of the monopolies

were not accountable for their decisions to other industry participants. 23 Fourth, the cronies might not be competent

entrepreneurs. A typical example was a major financial crisis in early 1981 which nearly brought the bankruptcy of large private firms - many of which were so-called crony conglomerates.^1" The government's decision to bail these firms out by injecting equity from the government-owned banks aroused open criticism from other
or

sectors desperately in need of resources. J

Hence, it

was not

unreasonable to conclude that crony capitalism made a negative contribution to the Philippine economy. The construction of major industrial plants also invited severe criticisms. At the outset, it was inappropriate and reckless for the government to engage in these aggressive industrial projects because they would involve greater capital spending

which was not based upon domestic capability but on borrowing from abroad 26 at a time of high interest rates. Thus, these capital-intensive projects would lead to the regime's rising huge debt and they would not help to relieve unemployment very much. Moreover, the cost of such projects would be tremendous and it

exhausted the scarce public-resources. There was also the danger that the country would be left with high cost basic industries

47

which, in turn would raise the cost in other productive sectors, thereby rendering the potential export industries , , uncompetitive. 27 Finally, many of these huge projects were ' utterly unsuited for the nation1s skills and comparative advantage. Though there was insufficient information publicly available to evaluate the projects, still there was a widespread belief that at least petrochemicals, aluminium and steel projects were unlikely to be viable.28 Indeed, the government should have promoted employment by focusing investment on labour-intensive industries. With regard to the infrastructure, there was positive contribution of these public projects to the country. The major benefits were that it created jobs for the people and brought business to the housing-and-construction industry and dealers of construction materials. Nevertheless, cultural and arts buildings were too many, considering the country's poor economy. True, the value of these buildings was to project the country's cultural image and to make the Filipinos proud of their country; yet the numbers were very much out of proportion to the realities. They were also not the basic needs of the vast majority of Filipinos, who lived in the rural areas. Concerning the construction projects like luxury hotels, convention centers, medical research on various diseases, etc., they were just showcases that flourished in the Metro Manila area and intended by the regime to give an illusion of progress.

48

As a final analysis, though tourism promotion could provide the country with a ready source of foreign exchange economically, much of it was actually spent on importing luxury goods for the tourists. Another "undesirable outcome of tourism was the problem of- dramatic rise in prostitution.29 Apparently, the government

had done little to curb the trade despite the nominal illegality of prostitution in the Philippines. Marcos introduced a series of wide-ranging economic policies in the martial law era with the aim of enhancing economic growth. Hence, a general survey of the Philippines1 economic performance would be essential to test the progress toward the stated goal. Generally speaking the economy grew at an average annual rate of approximately 4.7 percent in the 1960s but raised slightly to 6 percent in the 1970s (Table Three) . In Table Four, a more comprehensive analysis has been given by comparing Philippine performance directly with her neighbours in Asia* The comparison shows that Philippines was the slowest growing nation among the non-socialist countries, though her.record on health and literacy was relatively good. In short, the growth rate of the Philippines was not impressive if one considers the manpower, land, high literacy rate, rich natural resources and the strenuous efforts put in various industrial programmes. Another strong claim of the regime was its goals of "democratization of wealth", income distribution and improved levels of living. In terms of income distribution, Table Five shows that the poor got a decreasing share of the national income

49

from 1971 to 1981 whereas the rich increased their share. The statistics indicate that in 1981, the top 10 percent of families received twice the income of the bottom 60 percent, so the gap between the rich and the poor became wider. Table Six indicates that both skilled and -unskilled wage earners in Manila suffered sharp declines in their living standards, with the former earning in 1980 less than two-thirds what they did in 1972 and the latter about half. The low-wage policy and serious inflation were the major causes which affected the living standard of the workers directly. Yet, the government considered the depression of the wages of Filipino workers was necessary to attract foreign investors, ignoring the claims of democratization of wealth and reduction of poverty. Moreover, unemployment remained a serious problem but the official unemployment rate did not reflect the
on

real situation.
Also, t h e r e was a steady decline in the n u t r i t i o n a l l e v e l s of t h e nation after martial law. Between 1972-78, figures

i n d i c a t e d t h a t the per capita caloric intake of F i l i p i n o s had dropped s i g n i f i c a n t l y . I n 1979, t h e d a i l y average i n t a k e of

f a r s h o r t of t h e U.N. Food and 31 A g r i c u l t u r e Organisation's reccmmaxled nurrimnn level of 2,350. The F i l i p i n o s were the worst fed people in the /SEAN countries (see Table F o u r ) , an embarrassing contradiction to the

F i l i p i n o s was 1,670 c a l o r i e s ,

j u s t i f i c a t i o n of the a u t h o r i t a r i a n regime t h a t i t s p o l i c i e s brought b e n e f i t s to the people.

development

50

From the gathering of data from above, Philippines did experience slow economic growth in martial law period but on the question of equity, it was largely a failure because Marcos was apparently not conscious of the urgency to help the desperate and to solve the problem of mass poverty* In Marcos f s view, he argued that the Filipinos were not denied equity in growth and participation in productive labour or equal opportunity m education. It was true that m manual

labour work, there was equal chance for every Filipino but it certainly became a more difficult job to have access to upper level bureaucracy because of the practice of graft and nepotism. Though equal opportunity in education was available, there was a declining share of education in public expenditure. By the early 1980s, its share was only one-third of that in 1965. In early 1980s Philippines was troubled by high overseas debts, the distribution of income was grossly unequal and much of the manufacturing sector was inefficient. What would be the factors leading to the deteriorating economic performance? The first, and I think a factor of lesser importance, namely the external factors originated from the international recession, the adoption-of protectionism by European markets against Philippine manufactured exports and rising interest bill on the external debt. Yet other countries- had" encountered similar problems and performed much better, which confirms my view that domestic factors played a more decisive' role for the faltering economic performance.

51

Here, I emphasize the responsibility of the Marcos regime because of its expansive economic activity in the country since 1972. Firstly, much government resource management had been inefficient. The list of large projects of doubtful economic viability in the public sector was extensive. They included hotel construction, fshowcasef projects like the Cultural Center Complex, land reclamation schemes, nuclear power plant, the eleven major industrial projects and the largest export processing zone. Secondly, there was the continuation of a heavy reliance on foreign trade and borrowing which left the country highly dependent on international economic conditions. Indeed, the refusal to undertake positive adjustment measures when, the international situation was no longer favourable to Philippine industrial strategy further aggravated the economy. Thirdly, there was the squandering of government resources and borrowed funds by the corrupt ruling family and the manipulation by the cronies in the economic sphere.

III. CONCLUSION Why did Marcos persistently cling to the EOI strategy when all the important criteria for a viable export-led growth ceased to exist by the second half of the 1970s? I think the greed of the ruling clique with the borrowed funds helps to explain this to a large extent. The distribution of the World Bank's loans helped to enrich Marcos and Ms friends by channelling the World Bank projects, state funds and commercial bank loans to his own

52

and f a v o u r e d c o m p a n i e s .

Of course,

one c a n n o t deny t h e

p o s s i b i l i t y t h a t President Marcos might have seme f a i t h in the feasibility of t h i s industrial strategy because of the

" b e g i n n e r ' s luck". f a v o u r Marcos,

In 1973 the i n t e r n a t i o n a l market seemed to for P h i l i p p i n e agricultural

"as h i g h p r i c e s

exports turned the trade d e f i c i t of $120 m i l l i o n in 1972 to a surplus of $270 m i l l i o n in 1973"

3Zf

even though t h i s year was the

high p o i n t and the one bright spot of the martial law economy. Also, t h e r e are two reasons which can possibly explain the enthusiasm of the m a r t i a l law regime to launch these c a p i t a l intensive i n d u s t r i a l p r o j e c t s in spite of t h e i r inappropriate-

n e s s . Che suggestion is that it was a desperate e f f o r t by Marcos to gain some legitimacy as an economic n a t i o n a l i s t . This may

be a v a l i d answer but I b e l i e v e more s t r o n g l y in the second r e a s o n - t h a t t h r o u g h t h e s e huge p r o j e c t s , Marcos could win g r e a t e r amount of foreign loan for personal advantage and then siphon off much of the foreign borrowing to Swiss bank accounts. Similarly, the motive for erecting the luxurious

accommodations can be e x p l a i n e d by t h e f a c t t h a t t h e c a p i t a l invested in these h o t e l s was mainly loans fiom international

sources and opened up new opportunities for l a r g e - s c a l e graft for Mrs. Marcos and her family friends. Mixh has been w r i t t e n about t h e r e p u t e d l y enormous gains in personal wealth t h a t Marcos and h i s w i f e , as well as t h e i r respective extended families, have achieved since m a r t i a l law* OD

53

Thus,

the

families

of Marcos and h i s w i f e were

the

b e n e f i c i a r i e s of the economic p o l i c i e s t h a t were undertaken during m a r t i a l law. public sector's role They reaped p r o f i t s through the expanded in the national economy. "Imelda Marcos

c o n t r o l l e d public and private funds equal to 5C% of the t o t a l government b u d g e t , w i t h l i t t l e a c c o u n t a b i l i t y . " above,
37

As shown

Mrs. Marcos was i n f l u e n t i a l in Manila's redevelopment and

A

h o t e l c o n s t r u c t i o n . Other projects she sponsored and for

which

she secured public and private funds actually financed many of her extravaganzas. Instead of forcing the favoured i n d u s t r i a l groups to become more competitive and e f f i c i e n t in increasing domestic and national protect competition, his friends 1 Marcos issued many decrees conglomerates from domestic interto

designed and

foreign

competition. be seen in

The granting of favour to these cronies could also the government guarantees for p r i v a t e overseas

borrowings and loans from state-owned banks were channelled to the v a s t conglomerates. What could be offered as an answer to the nepotism p r a c t i s e d by the ruling regime? As the growth of wealth and p o l i t i c a l power of the c r o n i e s evolved from Marcos, the

former would dedicate t h e i r loyalty to him alone. Therefore, t h i s group constituted the most r e l i a b l e pillar of support for

Marcos r s a u t h o r i t a r i a n regime Using t h e i r positions of leaders h i p or c o n n e c t i o n w i t h the government, Marcos and h i s close a s s o c i a t e s had amassed wealth through control of the banks, which in turn controlled the major corporations. Recently, there are

54

well-documented reports which revealed how Marcos and his cronies were systematically draining vast amounts of money from the Philippines and transferring them overseas. 39 In short 3 martial

law helped to centralize corruption in the hands of Marcos and his cronies. Other groups who stood to benefit were the technocrats and the higher military officers with their newly established power and status. Although accurate figures were not given by government on income distribution since 1971, indirect references did indicate that the wealth of these groups made them become the expanded upper middle class in the country.^ The international agents - the World Bank, IMF, TNCs as well as foreign governments also benefited from the economic policies launched by President Marcos, It was largely the efforts of the World Bank and IMF that pushed the Philippines onto a path of economic liberalization and export-led growth. By liberalization, the World Bank would create a favourable climate for U.S. foreign investment by removal of tariff barriers to imports* At the same time, the World Bank fostered the EOI strategy which geared

toward satisfying the demand of markets in the United States, Japan and Western Europe. In particular, the Bank was responsive to the needs of the United States, which controlled more than 20 percent of total voting power in the institution. 41 the profit gained by the Most often,

Americans in the Philippines would not

be reinvested in the country.

55

By floating loans and aid, international agencies like the IMF and its sister institution, the World Bank began supervising a wide variety of economic decisions like tariff reduction and devaluation* which were to the interest of the rich foreign nations. Marcos acquiesced to these pressures in view of the country's escalating debt requirement and the need for an assurance of the Bank's support for his authoritarian regime. The Bank welcomed Marcos1 centralization of power with the faith that it was necessary for a strong, unobstructed effort in national development. The main beneficiaries of the EOI strategy were Western and Japanese transnational firms which exploited Philippines cheap

labour force (the lowest wage rates in ASEAN) and the latter were producing light consumer goods like the making of shoes and garments or assembly of semi-conductor and watch parts, for the need of foreign industrial nations/ 3 The TNCs enjoyed industrial peace in the Philippines because PD 823 prohibited strikes in "vital" industries which in practice included all businesses. Furthermore, the establishment of attractive infrastructure like the BEPZ by the Marcos regime with the provision of attractive tax benefits, guaranteed docile, poorly paid labour suited the interests of the TNCs. In other words, this "proper" local environment fulfilled the profit motive of the TNCs; in turn, they provided generous support to the authoritarian regime.

56

"A fundamental o b j e c t i v e of U.S.

f o r e i g n p o l i c y was to

promote the development of U.S. business, in the form of investment and commerce a b r o a d . " 4 4 So, the American government

supported l o c a l businessmen who wanted to invest surplus capital in the developing countries in order to reap greater p r o f i t s . Up till 1976, the American share of f o r e i g n investment in the

P h i l i p p i n e s was predominant and much of it was linked to t r a n s national economy corporations (oil, and concentrated in key sectors production, of the and

automobile

banking

communications).^

Thus U.S. economic i n t e r e s t s became tied with

the fortunes of the Marcos regime. As a b r i l l i a n t and t a c t f u l politician, Marcos managed to win the goodwill among foreign

businessmen and i n t e r n a t i o n a l bankers by generous provisions on foreign investment coupled with p o l i t i c a l s t a b i l i t y . Meanwhile, the urban F i l i p i n o s had to continue their

struggle to maintain t h e i r subsistence. The country was infested by h i g h o v e r s e a s d e b t s and unequal d i s t r i b u t i o n of income, government resources were drained by corruption, and problems of unemployment and underemployment remained as a hard fact in the l i v e s of the people. Would t h e p e o p l e a u t h o r i t a r i a n regime? remain obedient s u b j e c t s under the one. The

The answer was a n e g a t i v e

discontent of the masses grew to such a peak that there was a widespread boycott of the same time, 1981 p r e s i d e n t i a l e l e c t i o n s . At the

there was the growing strength of the revolutionary

57

nationalist underground opposition, the National Democratic Front (NDF) . NDF forces even helped the discontented workers to organize militant labour unions like Bukluran and Kapatiran in direct confrontation with the repressive government. The workers were hard-pressed by continuous decline of real wages and the right to go on strike was seriously curtailed by presidential decrees. Frequently they held strikes in violation of the ban on strikes in "vital" industries and the government repression failed to contain the workers1 movement. All these were overt expression of disapproval of the martial law government which failed in its declared aims of eradicating poverty and improving the distribution of income and wealth.

58

FOOTNOTES 1. Jose Veloso Abueva, in Marcos "Ideology and Practice in the in t h e 'New

Society1",

and M a r t i a l Lav

Philippines,

e d . D a v i d A . R o s e n b e r g (New Y o r k , 1 9 7 9 ) , p . 5 7 . 2. See Robert for B. Stauffer, "Philippine Development, Authoritarianism: Pacific Affairs,

Framework

Peripheral

Vol.50, No.3 (Fall 1977), pp.372-374, for d e t a i l s . 3. Charles W. Lindsey, "In Search of Dynamism Foreign Investment in t h e P h i l i p p i n e s under M a r t i a l Law", Vol.56, No.3 (Fall 1983), p.479. 4. Walden Bello, Debacle : David Kinley and Elaine Elinson, Development Pacific Affairs,

The World Bank in the Philippines (San Francisco,

1982), p. 129. 5. I i m Yoon Lin, "The Philippines-Marcos 1 Wew Society 1 ", Southeast Asian A f f a i r s (1975), p.125. 6. See Bello et a l . , op. c i t . , Chapter Six, pp. 165-181. 7. Daniel B. Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism, Neocolonialism, Dictator-

ship and Resistance (Quezon City, 1987), p.234. 8. L i n d s e y , o p . c i t . , p . 4 7 9 . For i n s t a n c e , in 1973 P r e s i d e n t Marcos r a t i f i e d a Treaty of Amity, Commerce, and Navigation w i t h Japan by which a r e a s p r e v i o u s l y closed to foreign -

investment - commercial banking, the r i c e and corn industry, o i l exploration, e t c . were opened. 9. William H. Overholt, "Die Rise and Fall of Ferdinand Marcos", Asian Survey, Vol.26, No. 11 (Nov. 1986), p. 1145. 10. M a u r i c i o 0. Bas, 1984),pp. 120-121* Sr., P h i l i p p i c Martini t (New York,

11. B e l i n d a A. Aquino. P o l i t i c s of Plunder - The P h i l i p p i n e s Under Macros (Quezon City, 1987), p.48. 12. R e n e E. Ofreneo, "Contradictions in Export-led of

Industrialisation:

The Philippine Experience 11 , Journal

Contemporary Asia, Vol.14, No.4 (1984), p.491. 13. I b i d . 14. See B e l l o , op. c i t . , p.151: "In 1970 the Philippine import b i l l for raw materials and intermediate goods (excluding o i l ) was $ 4 3 2 . 1 m i l l i o n . By 1979, t h i s b i l l had grown to $2.5 b i l l i o n or 40.5 percent of a l l of the country's imports." 15. I b i d , p. 154. A great number of those laid off were, in garment and e l e c t r o n i c s manufacturing - the backbone of EOI strategy. 16. Bello, op. c i t . , p. 48: "The value of exports dropped by 15 p e r c e n t , from $2.7 b i l l i o n to $2.3 b i l l i o n , between 1974 and 1975. The d e c l i n e was e s p e c i a l l y d r a m a t i c in t h e c a s e of sugar, t h e second largest foreign exchange earner." 17. Lim, op. c i t * , p.124. 18. Bello, op. c i t . , . p . 4 8 . 19. I b i d . 20. Abueva, op. c i t . , p . 6 1 . 21. Hal H i l l & S i s i r a Jayasuriya, and C r i s i s (Canberra T 1985), p*65. 22. Pedro V. Salgado, -P-.-P.>. The Philippine) EconomyIlialory and Analysis (Quezon City, 1987), p.84 provides concrete examples of government measures to p r o t e c t t h e c r o n i e s 1 interest, -PhiJ.ippift#s:Growth,-M)t

such as monopolies in t h e sugar and coconut i n d u s t r i e s , paper, aluminium and videocassettes.

60

23. See B e r n a r d o V i l l e g a s , C r i s i s in t h e P h i l i p p i n e s , 1986), pp.164-165 for d e t a i l s .

"The E c o n o m i c C r i s i s 1 1 ,

in

ed. John Bresnan ( P r i n c e t o n ,

24. Schirmer & Shalom, op. c i t . , p.175 gives examples of Disini Group, Herdis Group, financial crises Silverio Group, etc., which suffered

and e v e n t u a l l y were b a i l e d out by t h e

government in 1980s. 25. Hal H i l l , "The Philippine Ejoonomy under Marcos: A Balance

Sheet", Australian Outlook. Vol.36, No.3 (1982), p.38. 26. See Robert B. (Dependent) Southeast (London, accept Stauffer, "The Philippine P o l i t i c a l Eccocmy: in

State Capitalism in the Corporatist Mode",

A s i a , ed. Richard Higgott & Richard Robinson 1985), p.257: "Marcos regime is w i l l i n g to in these

approximately one-third with the

foreign ownership other two-thirds and t h e

industrial projects, between p r i v a t e government." 27. H i l l , op. c i t . , p . 3 5 . 28. Ibid, p.27.

divided

Filipino

capital

Philippine

29. Schirmer & Shalom , op. cit., pp. 182-187 present several studies of the prostitution problem. 30. See Ofreneo, op. cit., pp.488-489: "The official unemployment rate of 4 to 5 per cent is a paper unemployment rate, which even our technocrats do not take seriously... A 1979 ILO study, using the inadequate income and disguised unemployment concepts, estimates that the actual unemployment rate stands somewhere between 20 to 25 per cent." 31. Robert B. Stauffer, "Philippine Martial Law - Transnational

Politics

of an A u t h o r i t a r i a n Regime",

Current

Affairs

B u l l e t i n . Vol.55, No.10 (March 1979), p.27. 32. Abueva, op. c i t . , p.62.

33. Hill & Jayasuriya, op. cit., p.52. 34 . Bello, op. cit., p.42. 35 . Ibid, p.60. 36. See Primitivo Mijares, The Conjugal Dictatorship of Ferdinand and Imelda Marcos (San Francisco, 1976) . He states that Imelda financed many of her extravaganzas by squeezing both domestic and multinational corporations as well as extracting government revenues. 37. Overholt, op. cit., p. 1148: "As Minister of Human Settlement, she possessed the right to seize any urban property without recourse." 38. See Hill'& Jayasuriya, op. cit., p.56: "Many individuals benefited from discretionary government intervention through the establishment of statutory authorities and command lending in the state banking sector." 39. See Aquino, op. cit., pp.31-35* 40. Stauffer, "Philippine Martial Law - Transnational Politics of an Authoritarian Regime", p.25: "Sales of heavy consumer goods (automobiles, refrigerators, air conditioners, TVs, etc.) have increased sharply since martial law" reflecting the purchasing power of these newly wealthy groups. 41. Bello, op. cit., p.32. 42. See Salgado, op. cit., pp.65-67 for the advantage of adopting tariff reduction and pp. 80-82 for the merits of-practising

62

devaluation in the Philippines to the western nations.

43. Ibid, pp.67-68. 44. Laura Jeanne Henze, "U.S.-Philippine Economic Relations and

Trade Negotiations", Asian Survey, Vol.16, No.4 (April 1976), p.329. 45. Robert L. the Youngblood, "Philippine-American Relations Under (Spring

New S o c i e t y 1 , p.53.

P a c i f i c A f f a i r s , V o l . 5 0 , No.l examples of the

1977),

Two t y p i c a l

overwhelming

influence of American corporations were the oil industry and banking.

63

CHAPTER

THREE

AGRICULTURAL

DEVELOPMENT IN THE NEW SOCIETY

INTRODUCTION The efforts that the martial law regime gave to the rural sector deserve serious attention because a majority of the Filipinos stayed in the countryside. Therefore, increase in agricultural productivity, particularly in the two major cereal crops, rice and maize, could help to feed the rising population while the export crops like sugar and coconuts could help to generate foreign exchange. In 1970s, there was significant growth of fruit products industry (primarily bananas and pineapples) for export revenue. In the first part of the discussion, a brief outline of the agricultural development which include land reform - land redistribution, Masagana 99, associated agrarian reforms such as infrastructure and irrigation projects will be given. The expansion of export agriculture in the Philippines will also be taken into consideration. Secondly, there will be an evaluation of Marcos T s economic policies in the rural sector and their correlation with the official goal to promote social equity and productivity in the countryside. Lastly, an attempt will be made in analysing Marcosfs course of actions.

I. ECONOMIC POLICIES UNDERTAKEN BY THE MARTIAL LAW REGIME TN TEE RURAL SECTOR The serious attention President Marcos placed on land reform was well expressed in the statement he publicly declared on October 1972 : "Land reform is the only gauge for the success or

64

failure of the New Society. If land reform fails, there is no New Society." Indeed, unlike the policy expressed in the

Agricultural Land Reform Code of 1963, which limited the scope of land reform to selected areas as land reform districts, the martial law edict nominally placed the whole country under land reform. By the Presidential Decree on 21 October 1972, it aimed at emancipating about 700,000 rice and corn farmers from bondage to the soil and transferring to them titles of ownership of land which they cultivated.1 Under the decree, the tenant farmer was entitled to own a family-sized farm of five hectares of land. However, the owners-to-be must meet certain requirements, before actually owning the land. They must pay for the land over a 15year period, join the government-sponsored rural cooperatives samahang nayon- or farmers' organizations, contribute to a fund that would guarantee the amortization payment of any member who might default, adopt modern farming practices and pay taxes on the land.3 Land reform was just one aspect of the government's
11

integrated11 approach to rural development. Other components of

the "reform package" included the provision of infrastructure like subsidized irrigation systems, feeder roads and electrical power, easy loans to small farmers and establishment of the samahang nayon to help these small farmers to pool resources and strengthen their bargaining position*4 Apparently these agrarian policies represented a bold and serious attempt by the government to uplift the peasantry and to bring about a more equitable land distraction pattern. In 1974, Operation Leasehold (IK)) was

65

l a u n c h e d to g i v e f i x e d - l e a s e h o l d s t a t u s to share t e n a n t s of landowners who owned seven h e c t a r e s or l e s s . The World Bank e n t h u s i a s t i c a l l y supported Marcos1 promise to a l t e r the feudal system of land tenure by giving credits, ment. 5 Moreover, advice and encourage-

the World Bank, the United States Agency for

I n t e r n a t i o n a l Development (USAID) and the Asian Development Bank also provided development* Along w i t h land t r a n s f e r , the m a r t i a l law regime also loans to support P h i l i p p i n e s infrastructural

launched Masagana 99 (M99) which was an important component of the comprehensive package of assistance to reform beneficiaries* It was a nationwide c r e d i t program started in IVfy 1973, with the aim to help tenant farmers and smallholders in increasing farm production and incomes by adopting new rice technology composed of modern high y i e l d i n g v a r i e t i e s (HYVs), chemical f e r t i l i z e r s ,

p e s t i c i d e s and h e r b i c i d e s . The r o l e of the government was to supply low i n t e r e s t c r e d i t and subsidized i n p u t s and also to establish floor p r i c e scheme to maintain producer p r i c e s .

The

vigorous extension campaign and the subsidized input package of the program did i n v i t e rapid adoption at the beginning. To sum up, by i n t e g r a t i n g land r e d i s t r i b u t i o n with other rural p r o j e c t s , the government expected peasants r living conditions to improve

and the country to become s e l f - s u f f i c i e n t in rice and com, i s , to achieve the goals of social equity and productivity.

that

The Philippine government also gave a push to the production of commercial crops in the 1970s. During the mid-1970s, both

66

c u l t i v a t e d area and production expanded and reached h i s t o r i c a l l y high l e v e l s . into the The government invited foreign agribusiness to ccme to p a r t i c i p a t e in expanding export

Philippines

a g r i c u l t u r e through j o i n t ventures. Also the government took over t h e m a r k e t i n g f u n c t i o n s as well as seme of the p r o c e s s i n g in sugar and coconut o i l . Both sugar cane and coconuts enjoyed a bocm in the mid-1970s when w o r l d p r i c e s r o s e to a high l e v e l . In 1974, with the Sugar

e x p i r a t i o n of the Laurel-Langley Agreement and the U.S. Act, b o t h crops l o s t t h e p r i v i l e g e d access to U.S.

domestic

market and t h e i r American quota, and r e l u c t a n t l y entered into the highly competitive world market. The deteriorating world market price f o r t h e s e two crops coupled with government p o l i c i e s

created adverse e f f e c t s on producer incentives. The Marcos regime c r e a t e d monopolies for the sugar and coconut i n d u s t r i e s and placed them under h i s close associates, Roberto Benedicto in the sugar industry and Eduardo Cojuangco and Juan Ponce E n r i l e in the coconut industry. The stated reasons for the establishment of monopolies were f i r s t l y , the need to replace e x p l o i t a t i v e foreigners and corrupt Chinese intermediaries in the business and secondly, to improve the welfare of poor farmers. 8

Under Benedicto, the Philippine Sugar Ccmmissicn (Philsucom) and i t s t r a d i n g arm, t h e N a t i o n a l Sugar Trading Corporation

(Nasutra) e f f e c t i v e l y monopolized sugar trading domestically and internationally.9 Similarly, the coconut monopoly was run by through the control of

Marcos s f r i e n d s , Cojuangco and Enrile,

67

agencies

like

the

Philippine

Coconut

Producers

Federation

(COCOFED), the U n i t e d Coconut P l a n t e r s Bank (UCPB) and the Philippine Coconut Authority (PCA). They v i r t u a l l y controlled the exportation of copra, processing and exportation of coconut o i l . As the President decreed levies on the coconut farmers, the levy money then COCOFED* In the 1970s, f r u i t products, unlike sugar and coconuts were almost completely dominated by agribusiness transnational came under t h e i r control through the supervision of

corporations and primarily produced for the world market. Three American t r a n s n a t i o n a l firms, Del Monte Corporation, United Fruit Company and Castle and Cooke, banana and p i n e a p p l e in the had predominant control over the Large p l a n t a t i o n s were outer islands like

businesses.*0

established

less

densely populated

Mindanao, As the p l a n t a t i o n s expanded to meet r i s i n g world demand, so the TNCs pushed outward against small landholders who did not wish to lease t h e i r land. Here the role of the Marcos government was supportive of the TNCs and helped in clearing the way f o r the p l a n t a t i o n s . organizations, One of the state's administrative

the National Development Company, was used to small landowners and s e t t l e r s who and t h e i r local joint-

i n t i m i d a t e or d i s p o s s e s s occupied areas that

foreign investors

venture p a r t n e r s had chosen for the production of pineapples, bananas, e t c . Moreover, under Marcos, a g r i c u l t u r a l workers were k e p t in d i s c i p l i n e and r e c e i v e d v e r y low pay. They were not allowed to organize t h e i r own independent unions. Usually they received the l e g a l l y mandated minimm daily wage though many, did

68

n o t e v e n r e c e i v e t h e l e g a l miniirium. The c l o s e c o o p e r a t i o n b e t w e e n t h e T N G and t h e P h i l i p p i n e government environment can be s i m p l y e x p l a i n e d . for investment and The TNCs s o u g h t a s a f e they entered joint-

sometimes

v e n t u r e p r o j e c t s with the government.

The g o v e r n m e n t s o u g h t

g r e a t e r r e v e n u e s from a g r i c u l t u r a l e x p o r t s , h e n c e it had t o r e l y o n t h e TNCs f o r t h e i r t e c h n i c a l e x p e r t i s e t o r a i s e p r o d u c t i v i t y and t h e i r m a r k e t s for export purpose.

II.

EVALUATION OF THE B3QN0MC [PERFORMANCE OF THE MARTIAL LAW REGIME Concerning the implementation of the land reform, t h e r e

arose serious problems. F i r s t l y , many tenants were unwilling to become amortizing owners because of the new financial burdens they would face. The higher costs include amortization payments, taxes, farm cooperative dues, and other costs. Only a f t e r 15

years were they likely to enjoy much greater income than as share tenants. For a tenant receiving the average-size rice unit of 1.8 hectares, annually. the amount of these costs would be around 1,300 pesos Based on a research done in a relatively prosperous the average yearly income of a tenant Hence, there

province of Nueva Ecija,

farmer was estimated at about 1,500 pesos in 1976/ were a g r e a t number of d e f a u l t s

on amortization payments,

especially when the tenants faced a bad harvest. There were many cases when beneficiaries began illegally selling their land back to t h e i r former landlords.

69

Secondly, there was widespread evasion by landowners and they continued to obstruct land redistribution. Some large landowners resisted openly and with force. Threats and harassments were used to force the tenants to sign as farm labourers or even outright evictions of tenants. Subtle resistance to agrarian

reform was very common. Landowners subdivided their farms among their children in order to break up large holdings, converted rice and corn lands into export crops and turned arable lands into subdivisions for residential purpose, etc.*^ Apart from looking at the problems in implementation of land reform, one can also examine the result of land transfer. For the government, its principal yardstick to measure success in redistribution of land was to count the number of tenants who had received land-transfer certificates. By mid-1979, the government claimed 242,000 tenants had received certificates of land transfer (CLT's). Actually, these certificates were not land titles but recognition of right of the tenant to become an "amortizing owner" paying for the land in 15 annual installments before he got full title to it. In reality, by mid-1979f only 70,315 tenants tilling 134,666 hectares had begun the process of amortizing ownership. 13 Many peasants who had started the

amortization process ran into financial problems and defaulted on their payments. The outcome was that those peasants who had overdue payments risked losing their land to the government, which in the long run became the countryfs largest landowner. As an illustration of the limited extent of success of land redistribution, in 1980, effective owners or those who had

70

received

" e m a n c i p a t i o n p a t e n t s " for t h e i r lands was a small

14

figure of 1,700 t e n a n t s .

The major d i f f i c u l t y in implementing the Masagana 99 program was the heavy cost of farm inputs. Since the farmers lacked the operating capital varieties, tractors heavily to s t a r t the c u l t i v a t i o n of h i g h - y i e l d i n g pesticides,

g e n e r o u s i n p u t s such as f e r t i l i z e r s ,

and other machinery compelled the from government-supported credit

farmers to borrow institutions. Then,

f r e q u e n t l y , production was hampered by bad weather, poor management and i r r i g a t i o n problems. The occurrence of natural disaster would also lead to crop f a i l u r e , thereby the prospect of repayment f o r t h e debt became dimmer. E v e n t u a l l y t h i s led to the p a u p e r i s a t i o n of many small farmers. With mounting arrears and bad debts, the t h i s threatened the p a r t i c i p a t i o n , farmers in t h e programs. ^ in p a r t i c u l a r , Furthermore, of a

smaller

disadvantage with the adoption of labour-saving devices such as tractors and threshers as well as chemical and agronomic

innovations was the reduction of labour absorption in the r u r a l sector. For the p r a c t i c e of monopolies in sugar and coconuts, major c r i t i c i s m accountable. one

was t h a t t h e i r management was not p u b l i c l y

The operations of the funds were closed to public

s c r u t i n y . For example, coconut farmers were forced to pay a levy b u t t h e b e n e f i t s went to cronies who c o n t r o l l e d m i l l i n g and t r a d i n g f a c i l i t i e s . The cronies could use the coconut levy money any way they liked through the control of IXIB and could enact policies and 1 e g
A A

ion favouring t h e i r -interest throu A i the

PCA.

16

A second example was the manipulation of price by the

cronies. In times of high sugar prices, Philsucom could fix the price to be paid the sugar producers well below the world price, thereby the cronies could pocket the remainder with no effective check from the public. 17 Similarly, the ruling elite in the

coconut monopoly paid half the world market price for farmers1 crop, thus reducing the earnings of farmers and siphoning off a large portion of farmers1 incomes for the former. The disastrous outcome was a decrease in farmers1 standard of living.

In the fruit products industry, a great disadvantage to the Filipino labour force was that the American transnational firms paid low wages to the Filipino workers. Yet, Del Monte and Dole were not content with the already cheap legal wages. Not only did the two companies pay "beginners" lower than the prescribed minimum wage but worse, experienced workers were considered only
it0

as "beginners" or "non-regulars" for as.long as possible.

These wage levels were insufficient to meet^the minimum daily nutritional requirements of workers1 families. 9 As a result the health, educational and housing needs of workers and their families suffered severely. A general survey of the economic performance in the agrarian sector showed that agricultural growth was generally satisfactory in the last decade. During the 1970s, production of rice grew by
4.9 percent annually as'-compared to 4.3 percent in the 1960s. Output growth was mainly due to higher y i e l d s and also some expansion of cultivated land (particularly in sparsely populated : 72

i s l a n d s such as Mindanao and Palawan). On a closer look, output of r i c e rose from 5.3 million tons in 1970 to 8.2 million tons in 1982. B y 1977, t h e P h i l i p p i n e s was a b l e to proclaim s e l f small q u a n t i t i e s in

s u f f i c i e n c y in r i c e and even to export subsequent y e a r s . 7 Thus,

the Marcos government achieved the

t a r g e t of r a i s i n g productivity in r i c e . However, in assessing the fulfillment of the goal of equity, the scope of land t r a n s f e r did not l i v e u p to the expectation. In the f i r s t p l a c e , there was a limited coverage of crop lands redistribution for

- only r i c e and maize farmers whose landlords

owned more than 7 h e c t a r e s , which meant that 60 percent of the tenant farmers would not obtain land ownership. Nevertheless, these people became e n t i t l e d for fixed leasehold s t a t u s . covered only 13.7 p e r c e n t of the t o t a l force.A It left the m a j o r i t y of the They

a g r i c u l t u r a l labour agricultural lands

(including the large sugar, coconut and banana e s t a t e s ) outside the scope of t h e p r o g r a m . It c a n n o t be regarded as a

comprehensive reform because of the exclusion of seme 4 million impoverished rural p o o r who a r e u n e m p l o y e d or l a n d l e s s 23

a g r i c u l t u r a l wage labourers. Production of rice

grew r a p i d l y

after

the

government

launched the Masagana 99 program. No doubt, Masagana 99 was a s u c c e s s in r a i s i n g output and y i e l d s , but as an a n t i - p o v e r t y e f f o r t , it was a near t o t a l f a i l u r e . As I have mentioned earlier^ t h e e s c a l a t i n g c o s t s o f f e r t i l i z e r s and o t h e r i n p u t s o f h i g h

73

technology led thousands of tenants into financial difficulties. In actual fact, the Masagana 99 program only covered limited rice area which minimized its effectiveness. "In 1973-74, at its peak, the Masagana 99 program covered 40 per cent of rice area; by 1977-78, it covered less than 10 per cent and was confined mostly to the better-off farmers. "2A This reflected the bias against

smaller farmers because credit was not extended to small farms since these farms were mainly subsistence and would not generate sufficient income to repay the loan. Just like rise of productivity of rice, output of maize rose from 2 million tons in 1970 to 3.3 million tons in 1982.25 Unlike rice, however, increased production was mainly due to the extension of land area rather than higher yields. The trend of maize production remained as subsistence oriented. For export crops, output of sugar and coconuts during the mid-1970s reached historically high levels. Unfortunately, gains in foreign exchange earnings were not steady, depending upon the demand in world market. Pineapples and bananas emerged as new export crops with potential for further expansion. There were great expansion of the plantations which catered for world market.

III. CONCLUSION

The first reason given for land reform was "social justice and the common good." Here I would reiterate the claim of the Marcos regime, namely t*e equity of A altii 26 , which had a strong
74

appeal to the poor peasantry.

The second reason for the land reform under the Nav Society must be understood against the Philippines economy in the 1960s. There was a growing i n a b i l i t y of a g r i c u l t u r e to s a t i s f y the demand for staple food in the country. "In 1960, the Philippines i m p o r t e d $2 m i l l i o n worth of r i c e , the c o u n t r y ' s b a s i c food s t a p l e ; by 1972, the import figure had risen to $34 million. 1 ' 2 7 The shortage of r i c e was due to the expansion of the cultivated area for cash crops export, r e p l a c i n g food crops and

concentration of land on a few landlords which s t i f l e d the f u l l p r o d u c t i v e power of P h i l i p p i n e a g r i c u l t u r e . In other words,

another important objective of Philippine land reform since 1972 was to increase a g r i c u l t u r a l productivity, especially in view of the r i s i n g population.

The t h i r d r e a s o n was suggested by a c r i t i c , Benedict J. K e r k v l i e t who f e l t t h a t the c r i s i s government wanted to win support of landless peasantry and to prevent the resurgence of s o c i a l u n r e s t as the Huk rebellion in 1950s. Therefore, the land r e d i s t r i b u t i o n program was adopted to pacify the discontented

peasants. 29 *

After examining the reasons for land reform, it would be important to review briefly the outcome of agrarian reforms to test the validity of the stated reasons given above.

75

The growth in crop p r o d u c t i o n f u l f i l l e d the goal of the martial law regime to r a i s e p r o d u c t i v i t y , yet c l e a r l y the

implementation of land reform did not a t t a i n the result of upl i f t i n g the f a r m e r s ' l e v e l of l i v i n g . "Rice producers faced

u n f a v o u r a b l e terms of t r a d e and p r o d u c t i v i t y gains were not adequate to compensate for "unfavourable price movements; hence p r o f i t a b i l i t y of r i c e p r o d u c t i o n has not r i s e n in l i n e with productivity." far short
30

(see Table Seven).

Also the equity

goal f e l l

of bringing about any significant redistribution of

land or income. Clearly, the land reform excluded the rural poor in the program of land r e d i s t r i b u t i o n and there was continued exclusion of export cropland from r e d i s t r i b u t i o n . Indeed, rural

p o v e r t y c o n t i n u e d to deepen and the number of l a n d l e s s n e s s increased. Moreover, i n f l a t i o n also hit the countryside, just

l i k e the u r b a n c e n t r e s , labourers crop

so t h a t r e a l wages of l a n d l e s s farm

and those a g r i c u l t u r a l workers who served in export continued to d e c l i n e .

31

sectors

The s t r e s s on export

a g r i c u l t u r a l crops had nothing to do with the basic needs of the p e a s a n t r y at a l l . agribusiness firms, A t t h e same t i m e , t h e m a s s i v e e n t r y of land and

application of machinery on the

expansion of export crops in backward rural areas were pushing marginal farmers out of the land and limiting the number of jobs t h a t could be created in the countryside. To sum up, the martial law government accelerated the rate of economic growth in the 1970s but the record on equity was poor.

By looking at the record, Marcos regime had implemented land r e f o r m s more extensively and vigorously Am , its predecessors,

yet in the end Marcos failed to correct agrarian i n j u s t i c e or to

i ?

bring about social equity. This fact r a i s e s doubts about Marcos s i n t e n t i o n s in launching the agrarian reforms. There is sufficient e v i d e n c e h e r e to q u e s t i o n the s i n c e r i t y of Marcos T s claim of introducing it for the sake of r e d i s t r i b u t i n g wealth to help the l a n d l e s s p e a s a n t . F i r s t l y , t h e r e was a s t r o n g c o n t r a s t of an unimpressive pre-martial law record by the same leader on land reform* Marcos himself did argue that the l i m i t a t i o n lay in the fact that the Congress had refused to support his land reform

program in the a p p r o p r i a t i o n of needed funds. The record did i n d i c a t e that the amount appropriated between 1965 and 1972 was small (PI.3 b i l l i o n ) , yet the amount that the executive branch a c t u a l l y r e l e a s e d for spending was l e s s than 520 m i l l i o n (32 percent).

Secondly, there was greater i n t e n s i t y in carrying out land r e f o r m s in those a r e a s of Luzon which were the centres of

a g r a r i a n u n r e s t . These were crucial for a Manila government which placed great importance for national security.

Thirdly,

the landed wealth of the r u l i n g p a r t y was not

included in land reform program. Marcos was one of the largest landholders in the country. touch his vast holdings*
33

But the land reform program did not

The exemption of land devoted to

commercial export crops could be explained by the fact that the regime dared not to harm the i n t e r e s t s of groups engaged in foreign and local agribusinesses as they constituted its key

77

political

support.

Similarly,

many of Marcos supporters had a

stake in land, thus Marcos drew back from h i s original plans for more f a r - r e a c h i n g l a n d reform. Small h o l d i n g s of l e s s than

f i f t e e n h e c t a r e s were the predominant type of landholding in the r u r a l a r e a s . The small landlords included many of the technocrats who came from l a n d o w n e r s 1 family while other self-made

p r o f e s s i o n a l s l i k e t e a c h e r s , army personnel, c i v i l servants might have invested t h e i r small savings in land. This was a mass group f o r Marcos power base which he could not a f f o r d to a l i e n a t e . Hence, Marcos solved t h i s c o n t r a d i c t i o n by r e s t r i c t i n g land reform to a modest number of large landholdings.

From a l l these a n a l y s i s , I think the most important reason for Marcos to implement the agrarian reform was to protect the regime against r u r a l unrest rather than r e d i s t r i b u t e substantial w e a l t h and power to t h e v i l l a g e r s . This was because of the

p r a c t i c a l consideration that the regime wished to obtain maximum s e c u r i t y e s p e c i a l l y in the f i r s t years of i t s existence. One must not forget that the j u s t i f i c a t i o n for martial law in the f i r s t place was to counter an alleged threat of revolution by conniunist groups in the countryside.

Thus, the f i r s t b e n e f i c i a r y of the agricultural policies of the regime was himself, President Marcos, who kept control in the countryside. He made use of agrarian reform as a means to foster the government s s t a b i l i t y and l e g i t i m a c y w i t h minimum

c o n c e s s i o n s to t h e r u r a l m a s s e s . The regime would push land distribution only far enough to keep p o t e n t i a l peasant unrest 78 : 'V J

below a tolerable level. Its concern for the peasantry was only superficial* The second group that reaped profits would be the cronies that controlled the export crop industries. It was widely believed that Cojuangco and Benedicto had accumulated great wealth through their control of coconut and sugar industry respectively. There was strong belief that Cojuangco used his profits in the coconut industry to buy up the controlling shares in San Miguel Corporation, the biggest food and beverage conglomerate in the country. The sugar producers even claimed that Nasutra funds were being siphoned abroad to finance business activities unrelated to the sugar industry. Later revelations did show that Benedicto possessed extensive real estate interests in California and other places in the United States.^ The real beneficiaries of rural reform program like Masagana 99 which emphasised the application of modem technology were mainly some big landlords and farmers with efficient irrigation facilities. Relatively speaking, the little improvement for a few rural people was in sharp contrast to the continued poverty and oppression for most. Another group of beneficiaries of the Masagana 99 was the outsiders, the fertilizer and insecticide producers and distributors of the rich foreign nations. The government's land policy required the participants to plant the new high-yield varieties of rice with much input of fertilizers and insecticides manufactured by the industrial 'nations. The industrial nations 79

also got profit from the construction of water systems needed by the HYVs since the Philippine government bought irrigation machines and many materials like cement, iron etc, from abroad.^ The TNCs also reaped benefits because they could exploit the cheap labour force in the Philippines to expand their banana and pineapple production and amass huge profits.

FOOTNOTES L Lim Y o o n L i n , "An Overview of t h e Philippines",Southeast

A s i a n A f f a i r s (T974 - ). p . 1 8 1 . 2. J e s u c i t a L . G . and P r e s e n t " , Sodusta, "Land Reform in t h e P h i l i p p i n e s : Past The

Southeast Asian A f f a i r s ( 1 9 8 1 ) . p.264.

Samahang Nayon is d e f i n e d as a "corporate body composed p r i m a r i l y of small farmers residing and/or farming within the geographical l i m i t s of a barrio for the purpose of improving the q u a l i t y of l i f e of the barrio people". 3. Benedict J. Kerkvliet, "Land Reform in the Philippines Since

the Marcos Coup", Pacific Affairs, Vol.47, No.3 (Fall 1974), p.287. 4. B e n e d i c t J. K e r k v l i e t , in "Land Reform: E m a n c i p a t i o n or Marcos and Martial Law in the

Counterinsurgency?",

P h i l i p p i n e s , ed. by David A. Rosenberg (New York, 1979), p.116. 5. Walden Bello, David Kinley and Elaine Elinson, Development Debacle: The World Bank in the Philippines (San Francisco,

1982), p . 7 3 . 6. Hal H i l l & S i s i r a Jayasuriya, The Philippines- Growth and C r i s i s (Canberra, 1985), p.24. 7. K e r k v l i e t , p.116. "Land Reform: Emancipation or Counterinsurgency?", Debt

8. William H. Overholt, "The Rise and Fall of Ferdinand Marcos", Asian Survey, Vol.26, No. 11 (Nov. 1986) , p.1144. 9. Gary Hawes, The Philippine State and Marma Ppqimp -

Politics of Export (New York, 1987), p.95. The power of the

81

Philsucom

and Nasutra included "... not only sole authority

to trade sugar, domestically and internationally, but also the power to set the price at which it purchased from planters and millers and to set the millers for the milling of sugar." 10. See Pedro V. Salgado, P.P., The Philippine Economy - History .and Analysis-(Quezon City, 1985), pp.94-95, mentions the raw sugar

price it paid

entrenched power of foreign investors in fruit product before martial law. Thus it was difficult for Marcos government to seize control in banana and pineapple businesses. .11. Daniel B. Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism. Neocolonialism. Dictatorship
arid

Resistance

(Quezon Citv. 1987), p.180.

12. Kerkvliet, "Land Reform in the Philippines Since the Marcos Coup", p.293 . 13. Bello, op. cit., p.74. 14. Ibid.
15. Hal H i l l , "The Philippine Economy Under Marcos: A Balance

Sheet". Australian Outlook . Vol.36, No.3 (1982), p.34. 16. Salgado, op. c i t . , p. 100. The coconut levy money was given to GOGQFED and the OOOCFED deposited the money in the UCPB, giving the l a t t e r huge financial power. The PCA laid down the laws and p o l i c i e s on a l l coconut matters. 17. I b i d , p.99: " I n t h e sugar p r i c e boom from J a n u a r y to

September 1974, Philex, predecessor of Philsucom, was buying sugar from the l o c a l producers at P134 per p i c u l , per picul in the US." and

s e l l i n g it at P470 18. I b i d , p . 9 6 .

82

19. Hawes, op. cit., p.123. 20. Hill & Jayasuriya, op. cit., p.21. 21. Ibid, p.24 . 22. Ibid, p.49. 23. Kerkvliet, "Land Reform: Emancipation or Coxmterinsurgency?", p. 13 0. Insufficient information prevents an accurate estimate for the number of landless peasantry. Based on census data report of 1970, the number of those engaged in "agriculture, forestry, hunting, and fishing" was 4.5 million of which

the vast majority was engaged in agriculture, hence Kerkvliet estimates that 4 million of these people were agricultural labourers'. 24. Hill & Jayasuriya, op. cit., p.24. 25 . Ibid, p.28.
26. See Ferdinand E. Marcos, Notes on the New Society Philippines p.106. 27. Bello, op. c i t . , p.17. II (National Media Production Center, of the

1976),

28. Hill, op. cit., p.32. The author mentions that population growth dropped from 3 percent in the 1960s to 2.7 percent in the 1970!s and then to 2.4 percent in 1980. 29. Kerkvliet, "Land Reform: Emancipation.or Counterinsurgency?11, p.117. 30. Hill & Jayasuriya, op. cit., p.27. 31. Robert B. Stauffer, "Philippine Martial Law - Transnational
rnrrpntaffairs

Politics of an Authoritarian Regime",

Bulletin, Vol.55, No.10 (March 1979), p.27. 32. Kerkvliet, "Land Reform in the Philippines Since the Marcos 83

Coup", p.290. 33. Ibid, p.291: "... he and his family are reported to own, among others, 20,000 hectares in Cagayan province, 10,000

hectares in Isabela province, the Carlota sugar estate and sugar centrals in Negros Occidental, and several hundred

hectares in Davao and other parts of Mindanao." 34. Belinda A. Aquino, Politics of Plunder - The Philippines Under Marcos (Quezon City, 1987), pp,42-45. 35. Salgado, op. cit., p.88.

84

CHAPTER FOUR. : THE END OF MARTIAL LAW

INTRODUCTION When P r e s i d e n t M a r c o s d e c l a r e d m a r t i a l l a w in September 1972 h e g a v e t h e p u b l i c t h e i m p r e s s i o n t h a t m a r t i a l l a w was j u s t temporary emergency m e a s u r e " / martial rule law r u l e , end "a

H e n c e , in t h e f i r s t few y e a r s o f

t h e q u e s t i o n o f when t h e P r e s i d e n t ' s one-man often appeared in the international press*

would

P r e s i d e n t M a r c o s s r e p l y o n t h i s i s s u e was t h a t it w a s a m a t t e r f o r t h e F i l i p i n o p e o p l e t o d e c i d e and t h a t h e f a v o u r e d " c o n s e n t by t h e p e o p l e 1 ' . A t l o n g l a s t , , o n 17 J a n u a r y , Thus, 1981, Marcos

p r o c l a i m e d t h e l i f t i n g of m a r t i a l law. this chapter

t h e m a i n theme o f

is to examine the l i f t i n g of m a r t i a l law in the First, a c o n t r a s t o f t h e P h i l i p p i n e p o l i t i c a l system l i f t i n g of martial law w i l l be portrayed.

Philippines. b e f o r e and Second,

after the

a n e v a l u a t i o n of t h e r e a s o n s f o r M a r c o s t o end m a r t i a l an o v e r a l l assessment of the m a r t i a l

law w i l l be given. F i n a l l y , law regime w i l l be attempted.

COMPARISON OF

THE PHILIPPINE POLITICAL STRUCTURE BEFORE AND

AFTER THE LIFTING OF MARTIAL TAW The p o l i t i c a l s y s t e m t h a t was e r e c t e d i n t h e m a r t i a l l a w e r a w a s c h a r a c t e r i s e d b y a one-man r u l e . executive, The lifting legislative, of m a r t i a l military and P r e s i d e n t Marcos e x e r c i s e d administrative functions.

law did not b r i n g d r a s t i c

r e d u c t i o n of

M a r c o s ' p o w e r s . The P r e s i d e n t ' s p o w e r s t o l e g i s l a t e and t o d e t a i n any p e r s o n he c o n s i d e r e d s u b v e r s i v e remained. 85 Moreover, all his

proclamations, decrees, orders and instructions that were issued under m a r t i a l law were s t i l l e f f e c t i v e . Under m a r t i a l law, executive branch. Marcos presided over the Cabinet, the

He held both p o s t s ,

P r e s i d e n t and Prime

Minister at the same time. After the l i f t i n g of martial law, the Cabinet was r e s h u f f l e d because Marcos claimed t h a t it was

necessary to wipe out the corrupt elements in the bureaucracy. A Also some m i n i s t r i e s were mergedA and Finance Minister Cesar

Virata was appointed to the post of Premier. Apparently Virata played a v i t a l r o l e in the presidential succession and assuring c o n t i n u i t y of t h e government. Also he could serve a counterbalancing r o l e by r e v e r s i n g a p r e s i d e n t i a l veto on any

l e g i s l a t i o n w i t h the backing of t w o - t h i r d s Assembly. ^

of the National

However, in r e a l i t y , the President could remove the

Prime M i n i s t e r at any time and so Marcos s power s t i l l r u l e d supreme. V i r a t a s service would be instrumental in establishing the Philippine Government's c r e d i b i l i t y with i n t e r n a t i o n a l

lending i n s t i t u t i o n s such as the World Bank and the International Monetary Fund. Loans were floated continuously into the country.

The r o l e of Parliament was more symbolic than real under Marcos even a f t e r m a r t i a l law was l i f t e d . There was the openijig of a powerless assembly called Interim Batasang Pambansa in 1978 which l e g i s l a t e d according to the dictate of Marcos. Then the

adoption of a modified parliamentary system knom as Batasang Pambansa a f t e r the l i f t i n g of martial law was claimed by Marcos to be the i d e a l p o l i t i c a l system for Philippines. However, the

86

effectiveness of the National Assembly as an independent legislative branch was largely curtailed by the predominance of Marcos f s Kilusang Bagong Lipunan (KBL) members, who readily adopted the legislation supported by the regime* The manipulation of votes and elections was practised both before and after the end of martial law. For instance, the local elections held in January 1980 produced a 98% victory for Marcosfs Kilusang Bagong Lipunan, The incredible election success for Marcos caused widespread criticisms of vote-buying, ballot box stuffing, intimidation, violence and corruption/ When Marcos decided to hold the presidential election on June 1981, he gave an appearance that he would really commit himself to liberal democratic rule. The opposition parties were given a chance to run in the election campaign. On a closer look, things did not seem to favour the opposition. Marcos had set down a number of rules which would affect the performance of the opposition candidate in the election campaigns : lfhe allowed the opposition only 28 days to organize and campaign, restricted opposition access to the media, refused a new registration of
8 voters, and c a r e f u l l y controlled the Commission on Election."

The r e a c t i o n of the United Democratic Opposition (UNIDO), the only organized opposition, was to boycott the election. They

could see t h a t they could not possibly win the highest post while Marcos c l e a r l y had the upper h a n d . 9 presidential The s i g n i f i c a n c e of the other two

e l e c t i o n was further reduced when the

"hand-picked" candidates were unable to compete with Marcos at a l l . 1 0 The landslide v i c t o r y of Marcos, with 88% of the votes,

87

again drew strong p r o t e s t s over alleged election manipulation and voter i n t i m i d a t i o n . ^ In the m a r t i a l law era, the use of repression was considered as an a p p r o p r i a t e tool for ruling. This policy was kept on after the formal termination of martial law and Marcos preserved the elaborate network of spies, Technically, informers and paramilitary troops. though charges of

b a s i c r i g h t s were r e s t o r e d ,

a u t h o r i t a r i a n r u l e s t i l l existed. The report given by an Amnesty I n t e r n a t i o n a l Mission to the Republic of the P h i l i p p i n e s in November 1981 concluded t h a t t h e r e were s t i l l v i o l a t i o n s of fundamental human r i g h t s , which included the right to l i f e , the r i g h t to s e c u r i t y of person a r r e s t and detention. ^ be p r o h i b i t e d , and the r i g h t a g a i n s t a r b i t r a r y

Strikes in v i t a l industries continued to

so labour would remain chained to low wages and

inhuman working conditions. There was no s u b s t a n t i a l d i f f e r e n c e s in the mass media before and a f t e r the end of martial law. Most of Manila's main newspapers and broadcasting stations were s t i l l owned by Marcos1 supporters. Thus the press remained p a r t i a l to the regime and

kept anti-Marcos attacks within l i m i t s . Lastly, m i l i t a r y force remained an important power basis of Marcos both before and a f t e r the termination of martial law. The t i e s between the President and the m i l i t a r y was a close one. The Marcos years enlarged the size and involvement of the military in civilian functions.

13 Similarly the

budget for the Ministry of

N a t i o n a l Defense in

1981 was the top among a l l government 88

ministries.

The a l l o c a t i o n of enormous funds for the military

i m p l i e d t h a t a f t e r m a r t i a l law was over, the m i l i t a r y s t i l l e n j o y e d t h e f a v o u r of t h e P r e s i d e n t . A s a sign of d e d i c a t i o n toward the government,

1/

it worked very hard to

arrest

the

government c r i t i c s .

The P r e s i d e n t was able to mobilize p o l i t i c a l power through instruments bureaucracy like the military, retained t h e mass media and t h e the crucial

Marcos

for himself a l l

instruments of d i c t a t o r s h i p , therefore martial law was l i f t e d in name only,

11, DIFFERENT INTERPRETATIONS FCR THE LIFTING OF MARTIAL TAW A n i n t e r e s t i n g q u e s t i o n t h a t r e q u i r e s d e e p t h o u g h t is why martial First, reasons l a w r e g i m e c a m e t o a n end a f t e r a d e c a d e o f e x i s t e n c e . we may look at President Ferdinand Marcos!s announced

f o r l i f t i n g m a r t i a l law* I n a n e m o t i o n a l c e r e m o n y a t

M a l a c a n a n g P a l a c e o n J a n u a r y 17, 1981 Marcos a n n o u n c e d : The m a r t i a l law n e c e s s i t y has passed. It h a s served

w e l l t h e p u r p o s e s o f a b e l e a g u e r e d p e o p l e . It c a n n o t g o on, f o r a people must m a t u r e and m u s t g r o w from o u t e r 15

d i s c i p l i n e to inner discipline. In h i s J a n . the martial social order:

17 s p e e c h , Marcos p r o c l a i m e d t h e s u c c e s s e s t h a t judicial and

law r e g i m e had achieved in p o l i t i c a l , First,

spheres.
ff

t h e r e was t h e m a i n t e n a n c e of law and had disarmed 250 criminal syndicates,

the

authorities

89

defused t h r e a t s of subversion, sedition, rebellion and secession and dismantled 200 p r i v a t e armies, which yielded 650,000 f i r e arms."1 Second, he c i t e d the s u p p r e s s i o n of the armed the

oppositions with the collapse of the old coinmunist party, Partido Komunista ng P i l i p i n a s , rebels.

and the n e u t r a l i s a t i o n of

"rightist-leftist" "terminated" President and

The MNLF in the south had been got amnesty, 1 7 The

37,000 Muslim r e b e l s

s t a t e d that there was f a i r j u s t i c e for the Filipinos (local council) courts. Also, there was

through the barangay

channel offered for popular p a r t i c i p a t i o n through voting in local e l e c t i o n s . Last of a l l , he said that under martial law the poor had been r e a c h e d by n u t r i t i o n and h e a l t h and family planning p r o g r a m m e s . F r o m a l l these statements, one may conclude that

with the elimination of aimed opposition, p o l i t i c a l s t a b i l i t y and betterment of the poor, the aims of the martial law government had been accomplished and thus Marcos l i f t e d martial law. However, there was a great discrepancy between what Marcos had said and the general picture of deterioration of Philippine s o c i e t y and economy in 1981,
MOID

M i l i t a r i l y , the armed struggle waged by the MA and the

Bangsa Amy against the Armed Forces of the Philippines had been going on for a long time with no sign of victory on either side. Both these groups had been able to hold on their own against the government. Politically, system. Marcos had failed to democratize the entire the i n d e f i n i t e detention of prisoners

There were s t i l l

90

with no formal charges, fake referenda, irresponsible mass media

i ?

which were monopolised by Marcos s cronies and r e l a t i v e s , powerless representative

and

i n s t i t u t i o n s like Legislative Advisory

Council and the Interim Batasang Pambansa to check Marcos. The prevalence of corruption in the bureaucracy, which undermined

a d m i n i s t r a t i v e e f f i c i e n c y , also continued. Economically, the New Society had failed to eradicate mass poverty. The r e a l wage d e c l i n e of s k i l l e d and u n s k i l l e d wage low n u t r i t i o n a l level of the

earners was appalling as was the

u r b a n poor and p e a s a n t masses The equity goal also f a i l e d because income* Wealth was unevenly d i s t r i b u t e d . It went to the areas t h e r e was no s i g n i f i c a n t r e d i s t r i b u t i o n of land or

s p e c i a l l y f a v o u r e d by the P r e s i d e n t or to the s t r a t e g i c a l l y important c i t i e s . "The Marcos regime invested firnds heavily in

the I l o c o s provinces from which the President's family derived. It also invested quite heavily in Manila, as Mrs. Marcos promoted beautification; Mindanao to in central Luzon for strategic reasons; combat the guerrillas."19 Similarly, and in prices

i n c r e a s e s in 1981 were contained in the Metropolitan Manila area t h r o u g h p r i c e s u b s i d i e s on b a s i c commodities. However, subsidies incidence were not extended to the countryside where such the

of poverty was h i g h e s t . 2 0 This

reflected the major

considerations

of t h e m a r t i a l law government on i s s u e s and thus Manila was far

problems r e l a t e d to security and s t a b i l i t y ,

more important than r u r a l countryside. This also vividly showed t h a t c t e s p i t e . . A important goals of . . .
:

the New so C 1 et y ^ to provide '

' 'j \_ v", -

. :

9i

b e n e f i t s to interests ignored. By l a t e worst.

the underprivileged and to remove inequities,

the

and welfare of the rural population were completely

1980, the Philippine economy took a turn for the

Mounting f o r e i g n debts and high i n t e r e s t r a t e s made

recovery d i f f i c u l t . Mismanagement of quasi-government firms and unfavourable external trades further aggravated the situation. To add to the already dangerous situation, Marcos1 friend and crony Dewey Dee absconded, leaving the Philippines with a debt of over US$70 m i l l i o n . This led to more public outcry on the regime f s

continued "subsidies" to the incompetence and profligacy of the cronies* Thus, all these contradictions make one doubt the truth of the s t a t e d reason given by Ferdinand Marcos for l i f t i n g

m a r t i a l law. Here I propose two alternative hypotheses for the l i f t i n g of m a r t i a l law. F i r s t l y , it was a response to the external pressure from the West, especially the United States, which demanded that the c r i s i s government give due respect to human r i g h t s . Secondly, the i n t e r n a l pressures coming from a whole l e f t - t o - r i g h t spectrum of opposition groups against the failure of martial law regime's

p o l i c i e s compelled Marcos to cone to terms with normalization. First, l e t us assess the hypothesis t h a t the l i f t i n g of

m a r t i a l law was to accommodate the Western demands, principally the United States, on question of human rights in exchange for

external support to Marcos. Here, one has to be very careful in d i s t i n g u i s h i n g the reaction to the "human rights situation" in :,;:7;:.' 92

the P h i l i p p i n e s from two different sectors - the U.S. Congress and the U.S. Executive. "Since 1973, Congress has taken a strong, almost inflexible, stand against human rights v i o l a t i o n s . ' " 2 1

The Executive, however, at f i r s t had given t a c i t approval to the m a r t i a l law government because it f e l t that "the internal affairs of t h e alone". P h i l i p p i n e s were s o l e l y the concern of t h a t n a t i o n

22

However, the a t t i t u d e of the Executive changed by 1976

because it no longer believed in giving up human rights for the sake of economic and s o c i a l development. This change was

i n t e n s i f i e d by the outlook of President Jimmy Carter who insisted on human r i g h t s as an i n t e g r a l part of his foreign policy.
A

An i n s t a n c e to show the impact of U.S. pressure upon Marcos was the State Department's report on the human rights situation in the P h i l i p p i n e s given in 1976. Although President Marcos had r e a c t e d v e r y s t r o n g l y to the a c c u s a t i o n of m a l t r e a t i n g some political detainees and p r a c t i c e of t o r t u r e , ^ in the end

(between June and August 1977) he y i e l d e d and announced the r e l e a s e of 1,500 detainees. However, it would be rather dangerous to jump to the conclusion that Marcos was an obedient disciple to t h e c r i t i c i s m of the Government's perspective. In the p o l i t i c a l context of Southeast Asia, with the defeat of American forces in Vietnam and the promulgation of the Nixon Doctrine, g r e a t e r importance was attached to the massive military installations maintained by the United States in the Philipposition U.S. Rather one should t r e a t the U.S. on the human r i g h t s within a wider

93

pines.

25

Moreover,

the concern over the future of American

holdings and i n t e r e s t s in the country took precedence over the p r i n c i p l e of human r i g h t . Though the U.S. frequently expressed

i t s concern on v i o l a t i o n of human r i g h t s in the P h i l i p p i n e s , nonetheless there was a tendency to put aside moral objectives when n a t i o n a l security consideration was involved. 2 6 Hence, one

could see that the U.S. Government would not push too far on the issue of human r i g h t s . It would be unwise for the U.S. to

a n t a g o n i s e P r e s i d e n t Marcos in view of the need to get easy access to i t s Philippine military bases. The new Reagan

a d m i n i s t r a t i o n , was strongly anti-communist, pledged to military build-up and showed less concern on human rights. On the part of Marcos, he was not a yesman! to U.S. policy. His consideration would be the expected gains from the l i f t i n g of m a r t i a l law. Certainly, Marcos would get renewed support from the United States by restoring civil l i b e r t i e s in the country. This was shown by l a t e r events in 1981, in the inauguration ceremony of M a r c o s as P r e s i d e n t for a n o t h e r s i x - y e a r term in the

P h i l i p p i n e s , the Reagan Administration sent Vice-President George Bush to attend the ceremony on 30 June, 1981. George Bush even toasted Marcos by saying "we love your adherence to democratic p r i n c i p l e s and p r a c t i c e s . " 2 7 It showed the unfailing support of

U.S. for Marcos and was a great blow to the opposition who had desperately t r i e d to dissuade the United States from supporting Marcos. Furthermore, in l a t e 1981, the Reagan Government also

"removed the U.S. abstention from voting for Philippine loans in 94

the World Bank and the Asian Development Bank - a strategy of the Carter Administration to pressure the Philippines to conform to
f

basic human needs 1

standards/'28

Moreover, U.S. promised to

encourage the flow of generous funds to Philippines on development p r o j e c t s as w e l l as for s e c u r i t y a s s i s t a n c e * interpret such assistance

29

One may

as accommodation in return for the

Marcos regime s willingness to abide by the U.S. foreign policy on human r i g h t s . However, the s i n c e r i t y of Marcos in upholding human rights was in d o u b t . September 1982, D u r i n g M a r c o s s s t a t e v i s i t to the U.S. in t h e r e were "recurring questions about human

r i g h t s v i o l a t i o n s and the release of an Amnesty International r e p o r t a l l e g i n g t h a t abuses by the m i l i t a r y ,

f T

such as e x t r a 1

j u d i c i a l k i l l i n g s ( salvagings ), kidnappings ('disappearances ), and torture ('tactical interrogation 1 ), were common." " Even

though Marcos defied American findings, the fact was that nobody from the m i l i t a r y force had ever been dismissed due to human rights v i o l a t i o n s . 3 1 Judging from all these criticisms, one can

see that Marcos was not serious about the issue on human rights at a l l . As I have suggested above, U.S. did not genuinely pursue

on the human right issue in the Phillipines in the first place, which minimized i t s influence upon policy change in the Philippines. Next, we examine the proposition that Marcos^ decision on giving up martial law was a reluctant one, owing to the apparent failure of the martial law regime's policies coupled with the

95

combined p r e s s u r e of oppositionists* First of a l l ,

a review of

the growth of o p p o s i t i o n groups is important. There were two types of opponents that were in fundamental opposition to the

m a r t i a l law regime. For the f i r s t type, the military opposition came p r i n c i p a l l y from the MOD National Liberation Front and the Maoist New People rs Army, The second type of nonmilitary

opposition came from a number of groups which included Church leaders, F i l i p i n o p o l i t i c a l exiles, the surviving members of the students and worker leaders. In

Old Society opposition e l i t e , very broad terms, these

opposition groups

could again be

c l a s s i f i e d according to their ideological persuasions from right to l e f t . Many of them shared a caimm cause in protesting against a p o l i t i c a l l y corrupt and bankrupt system of government. One of the opposition groups was the National Democratic Front (NDF) which was b a s i c a l l y l e f t i s t and established in 1973 as a grand c o a l i t i o n for those who opposed to the Marcos dictatorship and to U.S. economic and p o l i t i c a l domination of the Philippines. The

r i g h t i s t opposition group was a disparate group comprising some Old Society other p o l i t i c i a n s , members personalities
33

of the Church hierarchy and ex-Senator Jovito Salonga,

prominent

like

J o s e Diokno,

etc.

They pressed for the holding of l o c a l

e l e c t i o n s and the dismantling of martial law. Since 1978, t h e r e was a growth in s t r e n g t h of the nonm i l i t a r y opposition groups owing to the worsening economic and s o c i a l s i t u a t i o n / T h e oppositionists were denouncing the government more openly but t h e i r efforts were not coordinated. Among them, workers grew to become very m i l i t a n t and their strike in

96

the export i n d u s t r i a l

s e c t o r in e a r l y 1979 alarmed both the

government and the World Bank. 34 Events which followed d e f i n i t e l y worked to the advantage of the opposition. The f a i l u r e to i n i t i a t e changes to a b e t t e r p o l i t i c a l and economic climate plus the aggravating economic c r i s i s of 1981 was one of the key reasons that prompted Marcos to l i f t martial law. The economic conditions deteriorated further during 1981. Owing to a c y c l i c a l world downturn, and low commodity p r i c e s , s h a r p d e t e r i o r a t i o n of i t s coupled with high i n t e r e s t r a t e s exports suffered a

the t r a d i t i o n a l

terms of t r a d e . 3 5

Furthermore a of

f i n a n c i a l c r i s i s was triggered off due to the disappearance Chinese businessman Dewey Dee, US$70 m i l l i o n in debt. All

who l e f t behind approximately f i n a n c i a l problems gave

these

s u f f i c i e n t reasons for the Filipinos to react violently. By that t i m e , t h e NDF had become the main f o r c e c o o r d i n a t i n g v a r i o u s sectors of the r e s i s t a n c e . Thus, "peasant struggles for land,

teachers1 student

and h e a l t h workers 1 against

s t r i k e s for higher wages, and a

protests

t u i t i o n hikes were organized into of Marcos 1

s u c c e s s f u l nationwide boycott

fake p r e s i d e n t i a l

e l e c t i o n s . " 3 6 Walden Bello concluded that "worker agitation was one of t h e key domestic f a c t o r s t h a t pushed Marcos to h i s _A7

cosmetic lifting of martial law on January 17, 1981."

By

reviewing the sequences of events between 1978-1981, there is some truth in saying that Marcos yielded to rising pressures when he lifted martial law in January 1981. I accept the second hypothesis more because of the following reasons. There was no doubt that President Marcos was unable to 97

cope with the downturn of the economy and the agitations against the authoritarian regime from different sides. The absence of long-term measures to reduce government spending, to improve efficiency in government machinery and to boost trade weakened the credibility of the Macros regime further.

The change can thus be seen as a calculated step taken by Marcos, <Ta new measure for institutionalizing Marcos xs tightening grip on power" 38 in response to the failure of many of reform

measures* Marcos lifted martial law in a manner that might be characterized as 'taking one step backward in order to take two steps forward1. Apparently, he had conceded to the popular wish of the people to put an end the authoritarian regime The intent to direct the country toward democratic rule, which most dictators would be reluctant to do, helped to build up Marcosrs image as a good ruler and won support at home and abroad. Moreover, it weakened or split the strength of opposition groups because the moderate opposition would give up the struggle and prepare to give Marcos a chance to restructure the country though the NDF persisted in their struggle. The forces of the opposition groups disintegrated shortly after lifting of martial law. They fought for their own interests independently, thereby weakening the strength to challenge Marcos, The war went on in southern Philippines between the Muslim secessionist-MNLF and Philippine government forces, but no one was winning. At the same time, the NPA extended its activities from Luzon to Visayas and Mindanao, Up till 1982, 98

there were r e p o r t s about frequent encounters and ambushes between government troops and NPA The Catholic Church also held peaceful talks w i t h t h e m i l i t a r y and the government to resolve the

question of the a r r e s t of rebel p r i e s t s and nuns. 3 9 The efforts of the opposition p o l i t i c a l parties to merge themselves into a united opposition in the Batasang Pambansa failed because of

i n h e r e n t d i f f e r e n c e s among themselves. A The a c t i o n of Marcos in l i f t i n g m a r t i a l law was only a cosmetic change, he had no intention to relinquish his dominating power over the country. The evaluation given above i l l u s t r a t e d

t h e r e was no marked difference in the authoritarian framework b u i l t up by Marcos before and after the termination of martial law, that is, 1981. President Marcos still enjoyed extensive power

a f t e r Jan.

CONCLUSION

The l i f t i n g of m a r t i a l law i l l u s t r a t e d t h r e e important p o i n t s . F i r s t , it was j u s t a cosmetic change to prolong the rule of Marcos. Being a shrewd and astute p o l i t i c a l s t r a t e g i s t , Marcos had c a l c u l a t e d the gains before he committed himself to the act of l i f t i n g . Second, though everything remained under the control

of Marcos, there was s t i l l a chance for the opposition groups to c h a l l e n g e t h e Macros regime with a b r o a d e r base of p o l i t i c a l p a r t i c i p a t i o n in the Batasang Pambansa. However, it was unlikely for the o p p o s i t i o n i s t s to j o i n hands together. The success of

Marcos in g e t t i n g 62% of the p o p u l a t i o n to vote in the 1981

99

presidential election convinced many Filipinos that the democratic opposition was impotent,41 Therefore many of them joined the camp of the radical left.42 They believed that armed struggle was more effective to bring an end to the 'Marcos Era1 than legitimate parliamentary channel. Finally, if we accept the interpretation indicated above, the lifting of martial law proves its failure rather than its success. By the study of the general performance of martial law regime in various dimensions : political, economic and social spheres, it largely confirm the hypotheses that the Marcos regime failed to fulfil the declared goals of the New Society and that personal interests of Marcos had actually induced him to impose martial law. It would be fair to assess the achievement and failure of Marcos1 martial law regime. Concerning the question of civil order, generally speaking Marcos regime succeeded to improve peace and order, compared to the chaotic situation in the sixth and seventh years of the Marcos presidency. However, the exceptions would be the rebel areas of Luzon and Mindanao. It seemed that the government troops had failed to subdue the New Peoplefs Army or the Muslim secessionists. At most, the government troops could restrict the military confrontations with the militant oppositions from spreading nationwide. Definitely the martial law leader, President Marcos had failed in his annomced goal of "democratizing the entire system" because the ruling elite possessed greater power than before martial law.

l.(

Another declared goal of the Nsv Society was the eradication of mass p o v e r t y . Hence, a look at the economic developments in the country is necessary. At f i r s t glance, the people might be impressed very much by the New Society's dramatic achievements in the b u i l d i n g of r o a d s , c o n s t r u c t i o n of modern buildings for

government o f f i c e s , trade and cultural a c t i v i t i e s in the c i t i e s . They included the Central Bank Building, International Convention Center, Theatre, Philippine etc. Center for International high-rise Trade, for Folk Arts hotels,

Modern

buildings

condominiums,

o f f i c e s and business and improvement in the especially the tourist belt.

appearance of Metropolitan Manila,

All these modern and sophisticated structures flattered the whims of a modern society. However, a l l these were "showcase" rather than i n d i c a t o r of the improvement of living standards of general mass. They were not essential or basic needs. Indeed, Marcos had mismanaged the economy, for instance, the waste of capital in

unproductive construction projects and persistence of the exporto r i e n t e d i n d u s t r i a l i z a t i o n at a time of declining world prices of i t s major export crops. The country was in financial bankruptcy by 1981, burdened by huge interest payments of foreign loans, inflation, unemployment and underemployment, balance-of-payment

d e f i c i t . 4 3 Poverty continued to plague the Filipinos. The i n f r a s t r u c t u r e created in the countryside - i r r i g a t i o n s y s t e m and t h e d e c i s i o n to make l a n d t r a n s f e r p a r t of a comprehensive package of assistance to reform beneficiaries were well-meant p r o v i s i o n s . counter-productive. However, For sane of the provisions proved the requirement that

example,

101

participants plant the new high-yield varieties of rice that required the use of fertilizers and pesticides at prices that a debt-ridden peasant could not possibly afford. The New Society's leaders had accomplished disappointingly little in the way of equalizing social reforms - particular land reform which involved a small proportion of the peasantry. With regard to the democratization of wealth, the benefits were certainly unevenly distributed. Because of the absence of

countervailing powers and effective public scrutiny as well as the grand coalition of supporters like cronies, technocrats and military, it had enabled the Marcoses to accumulate vast riches. It was merely a cloak by an ambitious strongman to sustain in power. With a New Society, politically, President Marcos was empowered to silence the opposition like Communists and Muslim rebels and prevented his deadly political rival, Benigno Aquino from being elected as his successor. Economically, he could claim further aids and loans from international agencies like the World Bank, International Monetary Fund and U.S. for his development projects in return for generous investment incentive and opportunity for profit-making to the outsiders. Moreover, Marcos could amass great profits by undertaking development projects. Socially, he wanted to win support of the mass by apparently promising an efficient bureaucracy dedicated to the needs of the people. The losers were the ordinary Filipinos who lost their civil rights and had limited opportxinity iix political participation.

102

They had acquiesced to the authoritarian measures in the hope to see the implementation of much needed reforms in the country and other reconstruction that President Marocs had proudly proclaimed at the inception of martial law. However, they became more disillusioned in the end* It is disappointing to see the Philippine performance was far below what could be reasonably expected for a country with its resources and manpower standard*

103

FOOTNOTES

1. MacArthur

Corsino,

"Prospects for Normalization in the

P h i l i p p i n e s " , Southeast Asian Affairs (1980), p.260. 2. I im Yoon Lin, "The P h i l i p p i n e s - Marcos' "New S o c i e t y ' " ,

Southeast Asian Affairs (1975). p.115. 3. J e s u c i t a Sodusta & Artemio Palongpalong, "The Philippines 1981: N o r m a l i z a t i o n and A f f a i r s (1982), p.286. 4. I b i d , p.288. 5. I b i d , "The M i n i s t r i e s of Industry and Trade and Investments I n s t a b i l i t y " , Southeast in

Asian

were merged; so were Finance and Budget and the Treasury." 6. I b i d , p.289. 7. R o b e r t Politics B. S t a u f f e r , " P h i l i p p i n e of Form", Bulletin of 'Normalization': The

Concerned Asian

Scholars.

Vol. 12, No.3 (July-Sept. 1980), p. 12. 8. William Overholt, "The Rise and Fall of Ferdinand Marcos",

Asian Survey, Vol.26, No. 11 (Nov. 1986), p. 1151. 9. Sodusta & Palongpalong, op. c i t . , p.287: 'UNDO boycotted in order to drive home the opposition's objections to Marcos' over-extended stay in Malacanang and h i s consolidation of a l l resources (organizational, financial, and entertainment) at

h i s command" 10. I b i d . "The two 'hand-picked' candidates, Alejo Santos and

Bartolome Cabangbang, lacked the c h a r a c t e r and s t y l e of Benigno Aquino, J r . , UMDOs best known but absent leader." j j . Sfte Far Eastern Economic Review, 26 June 1981, quoted by

Sodusta & Palongpalong, op. c i t . , p.288. 12. Daniel B. Schirmer '& Stephen Rosskamm Shalom, Jle_Ehilippiiies. 104

Rparipr - AHisfm-y nf Colonialism. Neocolonialism, Dictatorship and Resistance (Quezon Hit v. 1987), pp.221-223. 13. Carl H. Lande, "The Political Crisis", in Crisis in the Philippines, ed. John Bresnan (Princeton, 1986), p.136. 14. Robert L. Youngblood, "The Philippines in 1982: Marcos Gets Tough with Domestic Critics", Asian Survey, Vol.23, No.2 (Feb.1983), p.212. Till 1982, "Marcos and the military

continued arresting government critics - estimated at more than 50 by September - and in December closed two opposition newspapers, We Forum and Malaya..." 15. See Far Eastern Economic Review, Vol.3, No.5 (Jan.1981), p.8.
16. I b i d . 17. Ibid. 18. I b i d . 19. Sodusta & Palongpalong, op. c i t . , pp.289-290. 20. Overholt, op. c i t . , p. 1147. By far the provinces and regions of p o l i t i c a l competitors were systematically starved. 21. M. Rajaretnam, "The Philippines: Challenge and Southeast Asian A f f a i r s (1978), p. 197. Response",

In the Foreign

Assistance Act of 1973, Congress included a new section which said that "it was the sense of Congress that the President

should deny any economic or m i l i t a r y a s s i s t a n c e to the government internment of any ..foreign country which p r a c t i c e s of that country's citizens the for

or imprisonment

p o l i t i c a l reasons." 22. Ibid, p. 198. 23. Ibid. 24. I b i d . " P r e s i d e n t Marcos has s t r o n g l y r e p u d i a t e d the U.S. 105

p o s i t i o n on humn rights and on one occasion he argued that

1

t h e r e can be no trade-offs of human rights with economic

development,'" 25, The Clark Air Base and Subic Naval Base were the largest U.S. m i l i t a r y i n s t a l l a t i o n s in Asia. U.S. could not afford to lose t h e s e b a s e s since from 1979 onward the Soviet Union had slowly established base the at a major naval complex at the former U.S. of

Cam Ranh Bay in Viet N m (about 750 miles west

Philippines). cit., p. 199: "With reference to Section Security Assistance and Aims

26, R a j a r e t n a m , op, 502B(c)

of the International

Export Control Act of 1976, which deal with htjinan rights and IJ# S * security interests, the S t a t e Department v e r y

c a t e g o r i c a l l y s t a t e d that U.S. prevail*" 27, Overholt, op. c i t . , p.1153.

s e c u r i t y i n t e r e s t s should

28* Sodusta & Palongpalong, op. c i t . , p.298. 29# See Asian Wall Street Journal. 24 November 1981, "the Philippines was promised US$40 million in development funds and US$115 million from a separate five-year security assistance package tied to the current U.S.-Philippine military bases agreement for the year ending next 30 September" quoted by Sodusta and Palongpalong, op. c i t . , p.298* 30. Youngblood, op. c i t . , p.214. 31." Ibid. from Marcos stated that 7,000 soldiers had been released the armed forces since 1972 for misconduct but Michael 17-day Amnesty mission to the "no evidence

Posner, a member of the

P h i l i p p i n e s provided a contrary statement:

106

in Philippine

m i l i t a r y reports

that showed anyone dismissed

because of human r i g h t s v i o l a t i o n s . " 32. Walden Bello, David Kinley and Debacle : The 1982), p . 8 . 33. M. Rajaretnam, "The Philippines in 1979: Towards P o l i t i c a l Change", Southeast Asian Affairs (1980), p.249. 34. B e l l o , op. c i t . , p. 158: "Defying the p r e s i d e n t i a l decree seven hundred workers Elaine Elinson, Development

World Bank in the Philippines (San Francisco,

banning s t r i k e s in export i n d u s t r i e s ,

at the Ford Body Stamping Plant launched the f i r s t strike in the h i s t o r y of the Bataan Export Processing Zone. Furious,

the government arrested 400 s t r i k e r s . " 35. Overholt, op. c i t . , p. 1149. 36. Bello, op. c i t . , p . 9 : "the groups within the NIF currently

have a t o t a l of 50,000 full-time organizers operating in two t h i r d s of the country's provinces." 37. I b i d , p.159. 38. Sodusta & Palongpalong, op. c i t . , p.285. 39. E s t r e l l a D. Solidum, "The Philippines in 1982: Consolidation towards S t a b i l i t y " , Southeast Asian Affairs (1983), p.233:

"The church o f f i c i a l s were assured that the government was not persecuting the church as an i n s t i t u t i o n but had taken a c t i o n a g a i n s t the members and l a y worker-s as ordinary citizens for their unlawful acts" (Bulletin
TnHay Daily.

Express, and Times Journal, 12 December 1982). 40. I b i d , p.231: "the i n a b i l i t y of the l e a d e r s to submerge to p a r t y needs and t h e d i s p a r a t e

personal

interests

o b j e c t i v e s of the p a r t i e s themselves." 107

41. Overholt, op. cit., p.1151. Even the democratic politicians1 decision to boycott the election could not change the result of presidential election. The democratic opposition included parties like Laban Group, Filipino Democratic Party, Social Democratic Party, etc. 42. The communist-supported National Democratic Front obtained wide popular support just as the communist NPA spread out

in many provinces. For details, refer to Overholt, op. cit., p.1152 . 43. See Lande, op. cit., p. 116 and Sodusta & Palongpalong, op. cit., p.286.

108

ABBREVIATION

AFP BMLO C P P EOI IBP IMF KBL M N L C NDF NPA SAL T N Cs UNIDO

Armed Forces of the Philippines Bangsa Moro Liberation Organization Communist Party of the Philippines Export-oriented industrialization Interim Batasang Pambansa International Monetary Fund Kilusang Bagong Lipunan Moro National Liberation Front National Democratic Front New People's Army Structural Adjustment Loan Transnational Corporations United Democratic Opposition

109

T A B L E O N E : S E L E C T E D S T A T I S T I C S O N D O L L A R I N F L O W S / O U T F L O W S XN H i E P H I L I P P I N E S

(IN MILLIONS US DOLLARS)

Year

Total Foreign Debt*

Debt Service* (Interes t+Amor t)

Interest Payments*

Foreign Investments**

Foreign Capital Outflow**

Exports***

Imports**

1976 1977 1978 1979 I M o 1980 1981 1982

5,097 6,587 8,262 9,809 12,229 14,805 17,059

858 111 1,007 1,253 1,473 1,758 2,244

233 190 111 492 673 903 1,171

106.8 136.7 134.9 75.3 221,8

-

131.1 200.3 142.0 229.6 306.4

-

2,574 3.151 3,425 4,601 5,787 5,722 4,994

a

3,634 3,915 4,743 6,141 7,726 7,954 7,800a

* Taken from Gerardo P. Sicat, Economics, National Book Store, 1983, pp 736-738 and quoted by Rene E. Ofreneo, "Contradictions in Export-led Industrialization: The Philippine Experience", Journal of Contemporary Asia, Vol.14, No. 4 (1984), p.493. ** Charles W. Lindsey and Ernesto M. Valencia, "Foreign Direct Investment in the Philippines : A Review of literature", PID3 Survey of Philippine Development Research II, T.2, ppl80-181. Foreign Capital Outflow includes r withdrawal of equity capital invested in the Philippines; remittance of profits, earnings and dividends; and management fees and copyrights and royalty payments. *** 1983 Philippine Yearbook, NCSO, pp 638-639. a CB Report to the President, January - December 1983, p.38

TABLE TW r NET FLOW OF FOREIGN DIRECT IWVEgTM^T AND REMITTANCES Of PHOFIT5, WABWIUQS. (IN US$ MIIXION)
Management Fees and Copyright and Royalty Payments (5)

bivtnwDS

Direct Investment Inflow a ' fear 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 J 976 1977 1978 1979 1980 Total Total .1968-80 Total 1973-80

Withdrawal of Equity Capital Invested in the Philippines 3 '

(i)
1.80 11.24 6.56 8.98 ' 16.96 21.37 9.60 6.30 6.17 4.28 3'. 13 1.40 82.74 64.00 116.39 90.70 130.48 131.31 62.07 221.94 997.42 920.91 \ 899.63

h)
51.30 14.50 15.53 12.38 25.99 33.67 17.91 12.34 4.25 29.61 4.12 13.42 28.73 60.39 17.53 24.62 12.08 20.52 85.07 104.35 588.31 417.03 353.29

Net Portfolio Capital Inflow (3)

Remittance of Profits Earnings, c and Dividends (4)

Total I i t ] - (l)-(2)

Total II (7)
(7) = (6)-(5)

i-

(0.73) (0.5$) 0.10 1.57 1.48 2.07 (1.53) 11.32 24J45 27.31 16.16 6.26 3.63 13.22 (0.10) 104.65 105.94 102.25

40.93 19.91 12.55 13.06 17.03 26.34 55.01 79.36 47.39 24.55 26.32 32.91 59.51 79.83 72,77 68.22 158.50 85.17 90.70 145.57 1,155.63 970.80 760.27

0.46 1.62 3.34 2.56 5.85 7.51 4.67 3.14 2.74 4.51 12.25 16.59 37.35 38.28 29.70 36.32 53.68 56.44 317.01 303.18 280.61

90.43) 23.17) 21.52) 16.46)

26.06)
39.37) 63.88) 85.30) 43.90) 48.40) 25.24) 46.46) 5.82 ( 51.77) 53.40 14.02 ( 33.84) 29.25 (100.48)

( 28.08)
(641.87) (360.98)

90.43) 23.17) 21.98) 18.08) 29.40) 41.93) 69.73) 92.81) 48.57) ( 54.54) ( 27.98) ( 50.97) ( 6.43) ( 68.36) 16.05 ( 24.26) ( 63.54) ( 7.07) (154.16) ( 84.52) (958.88) (664.16) (392.29)

( ( ( ( ( ( ( ( (

(111.68)

Source : Central Bank of Philippines, Department of Economics Research. Data for 1978 through 1980, from invisible receipts and disbursements accounts; data for other years, from balance-of-payments accounts and quoted by Charles W. Lindsey, "In Search of Dynamism : Foreign Investment in the Philippines under Martial Law", l&gific Affairs. Vol. 56, No. 3 (Fall 1983), p. 482. Notes : a Entry is that of foreign-owned direct investment, not the sum of foreign-owned and Filipino-owned capital . movements. Direct investment (columns [1] and [2]) refers to investments in firms outside of the stock exchange Portfolio investment (column [3]) refers to investments that take place through purchase arid sale on ihu stock exchange, as well as other security transactions. It would have been desirable to exclude the latter. . Entry is gross outflows, not net flows. Includes sale of Meralco

TABLE THREE : ANNUAL GROWTH RATES BY SECTOR, 1961 -1980(%)

Sector

1961-65

1965-69

1969-73

1973-77

1977-80

Agriculture Industry Mining Manuf a c turing K > Construction Utilities Services Net Domestic Product

4.6 5.8 2.7 4.8 10.8 3.0 4.6 4.8

4.0 5.5 14.6 6.6 -0.6 5.3 4.7 4.6

3.4 7.3 11.4 7.5 5.2 7.9 4.6 4.9

5.4 8.1 4.3 5.0 21.8 11.2 5.2 6.1

4.6 7.5 10.5 7.4 6.5 11.6 5.2 5.9

Source : NEDA, Statistical Yearbook of the Philippines and Philippine Economic Indicators, various issues and quoted by Hal Hill, "The Philippine Economy under Macros:A Balance Sheet", Australian Outlook, Vol.36, No."3 (1982), p.33.

TABLE FOUR : PHILIPPINE DEVELOPMENT IN INTERNATIONAL PERSPECTIVE

Country / Region 1. ASEAN Philippines Indonesia Malaysia Singapore Thailand OJ 2. Northeast Asia South Korea Taiwan^ 3. Low Income Countries'* 4. Middle Income Countries^

Average Annual Growth in GNP Per Per Capita Capita GNP, 19791 1960-1979

Life Expectancy Child Death at Birth Rate9 1979 1979

Daily Calorie Supply Per Capita (as % of requirement) 1977

Primary School Adult Enrolments as Literacy % of Age Rate (%) Group 1976 1978 J

600 370 1370 3830 590 1480 1400 230 588

2.6 4.1 4.0 7.4 4.6 7.1 6.6 1.6 2.7

62 53 68 71 62 63 72 57 54

6 14 2 1 6 5 1 17 18

97 105 117 134 105 119 120 91 96

88 62 60 75 84 93 82 51 52

105 94 94 109
82

111 100 83 84

Notes : 1. 3. 4. 5. 6.

In U.S. Dollars Figures may exceed 100 because some pupils may be above or below official primary-school age All data for Taiwan relate to one year earlier than that indicated at the head of the columns Countries with per capita GNP of $370 or less in 1979, figures weighted by population. Countries with per capita GNP between $370 and $1000 in 1979, figures unweighted.

2. Number of deaths of children aged 1-4 per thousand children in same age group.

Source: Computed from World Bank, World Development Report, 1981, (Washington, 1981) and quoted by Hal Hill The Philippine Economy under Marcos : A Balance Sheet", Australian Outlook. Vol. 36, No. 3 (1982),'p.

33.

TABLE FIVE PERCENTAGE SHARE OF TOTAL FAMILY INCOMES OF DIFFERENT INCOME GROUPS

Year 1971 1978 1979 1980 1981

Lowest 40% 11.9 10.3 10.0 9.7 9.3

Lowest 60% 24.3 22.3 22.1 21.8 21.1

Top 20% 52.6 57.7 58.0 57.4 58.6

Top 10% 37.1 41.4 42.0 40.9 42.0

Source : Ellen H. Palanca, "Poverty and Inequality: Trends and Causes," Philippines After 1972: A Multi-disciplinary Perspective, ed. Ramon C. Reyes, Budhi Papers [IVJ (Quezon City: Ateneo de Manila University, School of Arts a i Sciences, 1985), p. 109, 1975 rd data emitted because of serious problems with data collection quoted by Daniel B. Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism, Neocolonialism, Dictatorship and Resistance (Quezon City.1987.), p. 177. TABLE SIX REAL WAGE RATES OF LABORERS IN INDUSTRIAL ESTABLISHMENTS IN MANILA AND SUBURBS, 1972 = 100

Year 1972 1973 1974 1975 1976 1977 1978 1979 1980

Skilled Laborers 100.0 92.4 75.6 72.7 71.2 72.9 76.1 70.8 63.7

Unskilled laborers 100.0 90.0 72.6 72.9 72.3 70.4 68.4 60.6 53.4

Source : National Economic and Development Authority, Statistical Yearbook of the Philippines, 1982 .quoted by Daniel B. Schirmer & Stephen Rosskamm Shalom, The Philippines Reader - A History of Colonialism, Neocolonialism, Dictatorship and Resistance (Quezon City, 1987), p. 177. Note : After 1980, the Philippine government stopped publishing data on^ actual wages received, providing data on 'legislated wage rates" which, given the widespread evasion of minimum wages, are essentially worthless.

114

TABLE SEVEN : TERMS OF TRADE FOR RICE PRODUCERS 1972-82

Year

Rice Price

Non-food Price Index

Terms of trade

1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

100 114 171 181 173 178 170 186 199 220 236

100 126 166 182 ' 199 221 240 281 340 382 426

1.00 0.90 1.03 0.99 0.87 0.81 0.71 0.66 0.59 0.58 0.55

Notes :

Non-food price index based on the weighted average of consumer price indices for areas outside Metro Manila for clothing, housing and miscellaneous items.

Sources : Palacpac (1982); NEDA, Philippines Statistical Yearbook, 1983 and quoted by Hal Hill and Sisira Jayasuriya, The Philippines : Growth. Debt and Crisis (Canberra, 19%57, p. 27.

115

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