SPECIAL REPORT OFFICE OF CURRENT INTELLIGENCE THE PHILIPPINES UNDER MACAPAGAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004000060004-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 19, 2016
• Sequence Number: 4
• Content Type: REPORT

elpase 2006/08/24: CIA-RDP79-00927AO04000060004-0
M
26 April 1963
OCI No. 0277/63C
MIIIIIII
Copy No.
78
SPECIAL REPORT
OFFICE OF CURRENT INTELLIGENCE
THE PHILIPPINES UNDER MACAPAGAL
CENTRAL INTELLIGENCE AGENCY
ARCHIVAL Rrr,-
`q'Cy-- ARCHIV
GROUP I Excluded from automatic
downgrading and declassification
i
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26 April 1963
THE PHILIPPINES UNDER MACAPAGAL
During his 15 months as President of the Phil-
ippines, Diosdado Macapagal has consolidated his.
political position, pressed a domestic reform pro-
gram, and pursued a larger role for his country in
Asian affairs. In the process he has transformed
an initially hostile Congress into a friendly one.
Macapagal's most ambitious foreign venture--the
challenge to Britain's Malaysian Federation plans--
brought him in a short-lived flirtation with Indo-
nesia, but his government apparently intends to
move with greater caution in coming months. Within
the basic framework of a policy of close cooperation
with the United States, he often takes a line of
independence.
Macapagal's Rise to Power Liberals was still insecure.
I The average Philippine poll-
Macapagal assumed the pres- 1 tician, however, tends to gravi-
idency in January 1962 after 1 tate toward the party in power.
a career that had, since 1946,
regularly involved him in
foreign affairs. Thanks to two
wealthy benefactors and his own
determination, he had risen
from peasant origins in central
Luzon into a private law prac-
tice. From 1946 to 1949 he held
legal posts in the Foreign
Affairs Department. For the
next eight years he was a
Liberal Party representative in
the lower house, and became
chairman of its Foreign Rela-
tions Committee. In 1957 he
won election to the vice-pres-
idency against a Nacionalista
landslide, and four years later
won the presidency by a sizable
majority after campaigning on
a reform program.
Despite his own victory,
Liberals carried neither the
House of Representatives nor
the Senate, and Macapagal's
position as leader of the
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This tendency, plus Macapagal's
astute use of power to dispense
patronage and his vigorous
action in fulfilling his anti-
corruption campaign pledge,
gradually attracted hostile
politicians to his side. The
lower house now stands at
MACAPAGAL
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approximately 58 to 46 in his
favor, and this month he won
nominal control of the Senate
by 13 seats to 11.
As President, Macapagal
has run a highly personal show.
Now 53, he keeps in his own
hands the wide range of decision-
making power available to the
chief executive. He is
hypersensitive to criticism,
his circle of confidants is
small, and personal loyalty
plays a major role in his
selection of advisers and
lieutenants. Although lacking
the ability to inspire the
people to identify themselves
emotionally with him, he seems
to be developing an image as
one who can lead his country
to economic improvement and to
new international stature.
Domestic Progress
In pursuing his program
for economic progress, Macapagal
has repeatedly re-emphasized
that the major responsibility
lies with private business,
which he has sought to stimu-
late. Last year's unfriendly
Congress passed only four out
of 14 measures he had certified
as urgent. However, prospects
for the program this year are
considerably improved.
Macapagal has carried on
the preceding administration's
program to abolish controls on
foreign trade. During his term,
foreign exchange and tariff
rates have been amended and the
peso freed to promote a more
open market economy. As a
result, the trade account im-
proved in 1962, and international
reserves increased moderately.
The peso, formerly pegged at the
artificial rate of two to the
dollar, has held for several
months at 3.9.
North Borneo and Malaysia
Macapagal's effort to
assert Philippine influence in
international affairs and par-
ticularly to raise his country's
prestige in Asia has been most
manifest in pressing claims
to North Borneo and opposing
the projected Malaysian federa-
tion.
When chairman of the House
Foreign Relations Committee,
Macapagal had twice introduced
resolutions urging the govern-
ment to back what were at that
time only unofficial claims to
North Borneo. He entered office
coincident with the accelera-
tion of a desultory press
campaign on the subject. This
had begun the previous year
when Malayan Prime Minister
Rahman proposed a federation
that would include North Borneo
along with Sarawak, Brunei,
Singapore, and Malaya.
After the lower house
formally urged the government
to assert a claim to sovereignty,
Macapagal in June 1962 sent a
note to London claiming both
sovereignty over North Borneo
and proprietary rights on be-
half of the heirs of the Sultan
of Sulu--from whom a British
citizen acquired rights to the
area in 1878. This latter
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angle was particularly attrac-
tive to southern congressmen
who sensed the possibility of
a cash settlement.
Neither Macapagal nor his
advisers seem to have considered
the possible international
repercussions of the issue. In
the past ten months he has
maneuvered to advance the claim
whenever possible.
He has successively sought
discussions with the UK on the
issue, proposed an alternative
to Malaysia--a "greater" Ma-
laysian confederation including
the Philippines--and connived
with Indonesia to torpedo the
federation plans. In late
October Macapagal allowed the
anti-Malaysian Brunei leader
Azahari to visit Manila--where
Azahari proclaimed the short-
lived December revolution--and
on 31 January cooperated in
his departure to Indonesia.
In the past two months,
however, Macapagal has turned
increasingly toward conciliation.
In early March he initiated
meetings of Malayan, Indonesian,
and Philippine officials point-
ing toward a "summit" meeting
before the federation goes into
being on 31 August as scheduled.
A conversation with Rahman in
early April perhaps was most
influential in inducing a new
spirit of accommodation. Soon
afterward Rahman told a press
conference that the formation
of Malaysia would not preju-
dice the Philippine claim.
This apparently eased political
pressures on Macapagal to act
hastily, and he probably recog-
nizes that the way is still
open for later recourse to the
United Nations or to the Inter-
national Court of Justice.
Flirtation With Indonesia
Beginning in November 1962,
opposition to Malaysia brought
the Philippines into a close
working relationship with
Indonesia. That month Presi-
dent Sukarno lunched with
Macapagal in Manila on the way
home from Tokyo. Both presi-
dents seemed pleased with the
meeting, and each apparently
believed he could use the
other in working toward the
same goal. Macapagal stepped
up his stand against Malaysia,
arguing that because Sukarno
would not tolerate Malaysia,
its establishment would create
instability in the area. He
insisted that Indonesia would
honor the Philippine claim,
overlooking Djakarta's stated
position that it would do so
only if the North Borneo in-
habitants wanted Philippine
administration.
Nevertheless, Azahari's
use of Manila as a propaganda
base, the Indonesian Embassy's
extensive
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activities on the Malaysian
problem, and finally the per-
sistent reports of Indonesian
involvement in the Brunei
rebellion apparently were a
startling revelation to Phil-
ippine officials. In early
March, Manila rejected Indo-
nesian overtures for joint
action, holding that each
country must oppose Malaysia
in its own way.
The Phillipine armed forces
have expressed concern over
the subversive threat to the
Philippines posed by Communists
in Indonesia and over possible
Indonesian attraction to Moslem
peoples in the southern Phil-
ippines. At the same time
Manila officials are aware that
Indonesia, especially with its
massive supplies of Soviet
arms, cannot be ignored and
seek to maintain the friendliest
relations possible. This year
Manila has assisted in the
repatriation of 1,600 Indo-
nesians illegally resident in
the Philippines, concluded a
cultural and economic rela-
tions agreement with Djakarta,
and renewed an agreement on
joint naval patrols. The armed
forces chief of staff has
exchanged visits with the
commander of the Indonesian
Army.
Ties With the US
Macapagal evidently intends
to assume a stance of greater
independence of the United
States. Such a tendency appeared
intermittently in previous
administrations, and Macapagal
probably is convinced that such
a policy will improve Philippine
standing with other Asian states.
The President gave his
greatest show of independence
after the US Congress in May
1962 defeated a $73 million
Philippine war damage compensa-
tion bill. He indefinitely
postponed a scheduled June
visit to the United States,
recalled the Philippine ambas-
sador for consultations, and
made highly critical comments
in public.
A series of nationalistic
measures followed which changed
Philippine independence day
from 4 July to 12 June, ordered
use of "Pilipino" (as the
country's government-promoted,
Tagalog-based national language
is called--and spelled) in
certain diplomatic credentials
and passports, and prescribed
the traditional barong tagalog
shirt (without coat) for
official receptions. Macapagal
stated ominously that Philip-
pine-American relations would
be re-evaluated.
There has been no follow-
up to this assertion. The
new compensation bill which
passed Congress in August
salved hurt pride.
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Before initiating nego-
tiations with the US on any
significant issue, Macapagal
now will probably wait until
he feels he clearly controls
the domestic political situa-
tion--most likely after the
November 1963 elections. The
Philippines has demanded that
it obtain partial jurisdiction
over US bases, and business
elements wish to end the
privileged position enjoyed
by US nationals and products
under the 1956 trade agreement.
Despite growing nationalism
and changes in emphasis, the
primary element in Philippine
foreign policy remains the
maintenance of a strong alliance
with the United States. There
is no substantial demand for
eliminating the US bases, and
cooperation with the United
States is widely popular.
Macapagal's personal com-
mitment to cooperation with
Washington is unquestioned.
He strongly supported the US
during the Cuban crisis last
fall. He may prefer to
reschedule his aborted 1965
visit for next year at the
earliest, in order to maximize
its usefulness in his 1965 cam-
naiLyn for re-election.
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