THE COMMUNIST INSURGENCY IN THE PHILIPPINES: CRISIS LOOMING ON NEGROS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00590R000200280001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: December 21, 2010
• Sequence Number: 1
• Publication Date: May 1, 1985
• Content Type: REPORT

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Directorate of
Intelligence
Looming on Negros
The Communist Insurgency in
the Philippines: Crisis
EA 85-10095
May 1985
Copy 3 6 7
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Directorate of Secret
Intelligence
The Communist Insurgency in
the Philippines: Crisis
Looming on Negros
This paper was prepared by
Islands Branch,
Office of East Asian Analysis. Comments and
queries are welcome and may be directed to the Chief,
Southeast Asia Division
Secret
EA 85-10095
May 1985
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The Communist Insurgency in
the Philippines: Crisis
Looming on Negros
Key Judgments The Communist Party and its military wing, the New People's Army
Information available (NPA), are swiftly capitalizing on growing discontent among workers in the
as of 29 April 1985 severely depressed sugar industry on the Visayan Island of Negros-which
was used in this report.
has long been a target for the radical left. We judge that later this year Ne-
gros may become, after Mindanao, the second politically important island
in the archipelago where Communist control rivals that of the government:
? The party is successfully recruiting from the large numbers of unem-
ployed sugar workers, and its ranks will probably swell further if-as we
believe likely-over 70 percent of Negros's 350,000 sugar workers lose
their jobs during the next few months.
? The party's influence among labor groups is strong enough to foment
widespread violence in Negros's cities-a development that would fit in
with the party's current strategy nationwide, which calls for an increase
in urban violence this year.
? Clashes between government troops and the NPA will, we believe,
increase in frequency, underscoring the dramatic rise in NPA strength on
Negros and its capability to initiate more sophisticated military opera-
tions.
Despite the trouble looming on Negros, President Marcos shows no
inclination to improve the counterinsurgency effort by bolstering the
military or dismantling the sugar-marketing empire of his political ally,
Roberto Benedicto. Such steps would over the short term undermine his
political power bases-in the military by reducing the power of loyalists
such as General Ver, and more broadly by suggesting that he will not stand
by old political cronies. Marcos has prevented Acting Chief of Staff Ramos
from making reforms that would improve the military's counterinsurgency
performance there and elsewhere in the- country where the NPA insurgen-
cy is gaining ground. Government efforts that are taken to ease the plight
of the sugar workers are largely cosmetic.
Insurgent control over Negros would entail stiff political costs for Marcos,
in our judgment, as he attempts to shore up the ruling party's prospects for
local elections next year. Negros's slide toward strategic stalemate would
probably cost him much of the support of the island's influential sugar
planters. It would also be a major embarrassment because Marcos has been
publicly asserting that the government is gaining the upper hand over the
insurgency nationwide. More fundamentally, it would mark a major defeat
for the government in the psychological war with the Communists.
iii Secret
EA 85-10095
May 1985
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Bacolod?
Region
Bago.'
(western '\,,/`isayas,
Negros
Occidental
Negros
r
Bais;
Oriental-,-
Region VII-,"
Dumaguetea
n a0 Visayss)
T/$ !I
Bacolo
0 50 100 150 Kilometers
0 50 100 150 Miles
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Surgarcane-growing
region
o Province capital
Province boundary
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The Communist Insurgency in
the Philippines: Crisis
Looming on Negros
Gains by the NPA
The Communist Party and its military wing, the New
People's Army (NPA), are stepping up political and
military operations on the Visayan Island of Negros
to capitalize on growing discontent among workers in
the severely depressed sugar industry.
the party's military gains this
year in Negros Occidental, the island's troubled
sugar-producing province, are second only to its prog-
ress on the southernmost island of Mindanao-where
the insurgents have been intensifying military and
political operations since 1980.
party recruitment efforts within the
last six months have been aided considerably by
layoffs in the industry
Indications of expanding NPA military operations
began to surface late last year.'
the NPA has opened two
guerrilla fronts in sout ern border areas between the
Provinces of Negros Occidental and Negros
Oriental-a development we believe signals the start
of more frequent and larger military operations by the
insurgents.2
Bolder NPA operations near urban areas, in our view,
underscore the improvement in its capabilities. Re-
peated sabotage of electric powerlines near Bacolod-
one of the few examples of economic sabotage by the
guerrillas nationwide-has kept parts of the provin-
cial capital without electricity for months at a time.
Ripe for the Harvest
The Communist Party has long recognized the poten-
tial benefits of exploiting chronic political, social, and
economic inequities on Negros-especially among the
region's sugar workers
egros was among the first areas
of the country-in addition to Mindanao, Central and
Southern Luzon, and the Eastern Visayans-where
the party concentrated political organization and re-
cruitment efforts in the early-to-mid-1970s. Recruit-
ment drives among sugar workers accelerated when
world sugar prices began to decline in 1981. Since
then, steady party proselytizing efforts in rural areas
and front activities in urban sectors have produced a
well-organized and firmly entrenched political appa-
' The New People's Army has engaged government security forces
in remote areas of Negros since 1980. Until last year, NPA activity
was for the most part limited to small groups of guerrillas-eight to
20-ambushing isolated military personnel to grab firearms, its
chief method of acquiring weapons. In rural areas, NPA assassina-
against low-level government and military officials.
ratus on Negros.
Most of Negros's 2.7 million people depend on the
sugar industry for their livelihood. The US Embassy
reports economic conditions have deteriorated to crisis
proportions. Local labor leaders have reported that
living conditions among the workers and their families
have sunk to the point where many workers are
subsisting on sugarcane juice or depending on soup
kitchens set up by local priests. Earlier this year,
' A guerrilla front is a combat zone where NPA regulars attack
government forces. The Philippine military had identified only one
guerrilla front on the island prior to November 1984.
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The Visayan Island of Negros is located in the
central Philippines and is divided into two provinces:
Negros Occidental and Negros Oriental, with a popu-
lation of 1.9 million and 819,000, respectively. The
economies of both provinces are largely based on
agricultural production, with sugar the key crop.
Most of the sugar is produced and processed in
Negros Occidental. Negros Oriental, the smaller and
less developed province, has a more diversified agri-
cultural base and produces sugar, rice, and coconut
products.
Negros has been one of the most politically conserva-
tive regions in the country, dominated by a local
oligarchy of wealthy families for generations. Before
President Marcos declared martial law in 1972,
sugar growers enjoyed considerable clout in national
politics and every Philippine president was careful to
cultivate the sugar bloc.
President Marcos had already established a strong
following among planters when he made his initial
bid for the presidency in 1965. According to the US
Embassy, many planters had hoped that Marcos
would provide special benefits to the sugar industry
while keeping a tight lid on the island's embryonic
labor movement. They also wanted the traditional
patron-client relationship-through which they con-
trolled workers'political activity-to continue.
Instead, many of these families watched theirfor-
tunes decline as Marcos set out to destroy the power
of the sugar bloc and largely replace its influence
with personal and politically loyal associates whom
he allowed to acquire large tracts of land on Negros.
One such new "sugar baron" was Roberto Benedicto,
a Marcos crony placed in control of the sugar
industry and the local ruling party organization.
Under Benedicto's corrupt administration much of
Negros's former political order has disintegrated
and,according to the US Embassy, the bulk of its
sugar wealth has been transferred out of the province
to Manila and overseas.
Despite widespread resentment of many sugar grow-
ers about Benedicto's role in the industry since 1977,
they continue to provide financial and political sup-
port to Marcos, according to the Embassy. Some of
the island's conservative planters appear to believe
that Benedicto's mismanagement of the industry is a
necessary cost to keep a lid on labor unrest. For
others, Marcos's ruling party is the only alternative
to economic and physical reprisal from Benedicto.
Although Benedicto is still the key political actor on
Negros, his control is growing increasingly tenuous in
the face of falling sugar earnings, rising labor unrest,
and a growing Communist insurgency. In last year's
voting for the National Assembly, for example,
Benedicto-as the ruling party s regional chairman-
was forced to resort to blatant fraud and violence to
deliver five of Negros Occidental's seven National
Assembly seats, according to the US Embassy. Bene-
dicto's tactics, however, failed to prevent candidates
from the moderate opposition from capturing two
seats. Negros Oriental's three National Assembly
seats were all won by ruling party candidates with the
aid of the ruling party chairman in that province.
There were 183 elected seats at stake nationwide.
In any case, the surviving oligarchic families still
play a substantial role in provincial politics. Even
though much of their clout in Manila has been
weakened during Marcos's rule, they provide essen-
tialfinancial assistance to the ruling party at election
time. For that reason, Marcos will have to weigh the
costs of allowing the deteriorating security situation
there to further alienate Negros's sugar growers as
provincial elections approach in 1986.
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Negros produces 60 percent of the nation's sugar
output and accounts for about 8 percent of the
Philippines' export revenue. Philippine economists
estimate that up to 90 percent of the province's
economy is directly or indirectly related to sugar.
The fortunes of Negros's sugar industry have fluctu-
ated with world sugar prices prospering in 1980
when prices hit 30 cents a pound and slumping when
prices slipped to their current level of 4 cents. Until
recently, sugar growers were insulated from the full
impact of declining world prices for sugar because
they are paid a blend of the world price and prices in
the protected domestic retail market. The expiration
last year offavorable long-term export contracts,
however, will drop the average export price to about 9
cents, compared with an average of 17 cents a pound
in 1984. Philippine economists estimate that domes-
tic planters must earn about 14 cents a pound to
make a profit.
The World Bank identifies sugar workers as a major
Philippine poverty group. Their livelihood is highly
vulnerable to several factors, including changes in
world sugar prices and political struggles between
rumors that extensive layoffs were imminent sparked
serious labor unrest among sugar workers-including
the burning of cane fields in southern regions of the
island.
As a result, we believe the party is well positioned to
reap the benefits of its organizational efforts among
sugar workers on the island. According to the US
Embassy, the president of Negros's largest sugar
labor union-claiming membership of over 70,000
workers-was recently appointed General Secretary
of the national leftist labor organization, Kilusang
May Uno (The May First Movement). The KMU
claims a national membership of over 1 million, and
most political observers believe it is heavily penetrated
sugar planters and the sugar-marketing monopoly
controlled by presidential crony, Roberto Benedicto.
Sugar on Negros is grown for the most part on large
farms worked by permanent resident laborers who
are paid less than the statutory minimum agricultur-
al wage. Widespread rural underemployment during
the industry's four-month slack season also compli-
cates chronic income inequities on Negros. As a
consequence of this economic structure, the top 10
percent of all households on Negros receive one-third
of all income while two-thirds of the families fall
below the poverty threshold.
Philippine economists estimate that the country's
sugar production will decline by 30 percent this year
as export prices remain below production costs,
forcing growers to take fields out of production. The
decline is aggravated by lengthy delays in payments
to producers by the National Sugar Trading Corpo-
ration (NASUTRA) and the slow recovery from the
effects of a devastating drought in 1983. The US
Embassy reports that the sugar recession will hit
hardest on the permanent resident workers, who
depend almost entirely on current cash income to pay
for their food and other necessities.
by the Communist Party.' In the past two years, it has
organized and participated in several large-and oc-
casionally violent-demonstrations nationwide. In
Bacolod, for example, the KMU turned out 80,000
protesters for a single labor rally last year-the
largest number ever to turn out in a provincial capital.
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the NPA.
opposition leaders for the government to take steps to
improve the economic situation and reverse gains by
The Government's Response ...
... On the Military Front. The counterinsurgency
effort on Negros, in our judgment, suffers the same
weaknesses that characterize it elsewhere in the na-
tion. The program suffers from lack of logistic sup-
port, equipment shortages, and communications prob-
lems. Morale among the troops-especially those in
combat areas-continues to suffer because of low pay,
infrequent troop rotation, and constant shortages of
basic equipment. Morale problems within the officer
corps also developed during General Ver's tenure as
Chief of Staff.
There is growing concern in Manila among some
senior government and military officials over the
deteriorating security situation on Negros. Defense
Minister Enrile told reporters in March that insurgent
strength on the island had grown by nearly 40 percent
last year and the situation was "worrisome." Acting
Chief of Staff Ramos recently told US officials that
the NPA is concentrating its forces on Negros-in
addition to Mindanao-and is "rolling up" Philippine
militia in both of these areas. Recent widespread
domestic press coverage of insurgent gains on Negros
and of impending layoffs in the sugar industry, more-
over, has heightened public awareness of the situation
there. the publicity has
produced calls from business groups, the church, and
Accord-
ing to press reports, Ramos has placed a colonel in
charge of Sugarland, who will control all troops on
Negros in an attempt to better coordinate counterin-
surgency efforts there.
(Other press indicates that
Negros Oriental, currently in RUC 7, will be trans-
fered into RUC 6, presumably along the lines of
Ramos's proposal. Thus far we have no firm indica-
tion which, if either, plan will be adopted. In any case,
according to the Defense Intelligence Agency, the
1984 task force made no measurable difference in
counterinsurgency operations. Moreover, task forces
formed during the last few years in other regions
where the insurgency is worsening-such as Northern
Luzon and Mindanao-have failed to make signifi-
cant inroads
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Earlier this year Ramos tried to institute several other
reforms in the military on Negros in the hope of
improving the government's counterinsurgency
performance:
Civic action programs sponsored by the military to
gain the support of local officials in the counterinsur-
gency effort have also had little success.F_
... On the Political Front. Marcos has done little to
improve local government administration on the is-
land. numer-
ous mayors from Negros either reside permanently in
Manila or in their heavily guarded homes on Negros.
In either case, they have little contact with the local
population. In many areas on the island, the local
civilian authorities have been supplanted by military
commanders or the insurgents.
or timely fashion.
Government relief programs to ease the plight of the
sugar workers are moving ahead slowly and the
money allocated is probably too small to have much
impact. Part of the government's problem is that strict
austerity measures worked out with the IMF limit
budget expenditures. Marcos has proposed an emer-
gency assistance program that provides for $2.5 mil-
lion in loans to unemployed workers for the purchase
of rice from government warehouses. We judge the
program will be of little help for most workers. For
one thing, the allocations work out to roughly $7 per
worker-a sum that would only buy enough rice to
feed a family of four for two weeks. In addition, the
social security system that would administer the
program, in our judgment, is poorly managed, and
loans are not likely to be administered in an efficient
Looking Ahead
Although the Communist Party is unlikely to control
all key rural and urban areas on the island by year's
end, we believe that its strategy will propel it well
toward that goal. As a result, Negros later this year,
in our judgment, has at least an even chance to join
Mindanao and become the second politically strategic
island in the archipelago where Communist influence
rivals that of the central government. A contributing
factor will be that the economic situation almost
certainly will worsen during the rest of this year
because up to 70 percent of Negros's 350,000 sugar
workers may lose their jobs as depressed world prices
for sugar and rising production costs force producers
to take fields out of production.' At a minimum,
unemployment is certain to worsen in the next month
when sugar mills close for the four-month off-season
and sugar workers are without income. Manila has
already placed military units on Negros on the highest
alert status in anticipation of layoffs. We believe the
government's fears are well founded.
' International commodity experts see no immediate improvement
in the world sugar market, and they do not expect a recovery of the
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The Sugar Monopoly and
Agricultural Reform
The economic crisis in the sugar industry has been
severely aggravated by the control over pricing and
marketing exercised by Roberto Benedicto, a long-
time political ally and personal associate of President
Marcos. Sugar planters have become increasingly
critical of Benedicto's management of the industry.
He controls nearly all aspects of the industry through
his domination of the policymaking Philippine Sugar
Commission (PHILSUCOM), the National Sugar
Trading Corporation (NASUTRA), the Republic
Planters Bank, which provides financing for the in-
dustry, and the Philippine Sugar Corporation, which
owns most cane crushing mills.
According to the US Embassy, Benedicto's total
control over sugar marketing and pricing-aided by
legal provisions shielding NASUTRA from govern-
ment audit-have allowed him and his associates to
reap enormous profits. The US Embassy reports that
Benedicto has made more than $1 billion in the last
few years through trading with overseas sugar bro-
kerage houses that he owns. This arrangement, along
with numerous others that he has set up, has helped
Benedicto acquire more than 50 corporations, includ-
ing shipping companies, banks, newspapers, and a
television network. Benedicto's financial fiefdom,
according to the Embassy, is a substantial-and
growing-drain on the country's economy.
The country's leading financial aid donors, including
the World Bank, the United States, and Japan-
along with Philippine business leaders, opposition
politicians, and sugar growers and millers-are pres-
suring for reforms to reduce Benedicto's control over
Marcos's reaffirmation of Benedicto's control over the
domestic industry also makes us pessimistic about the
island's prospects. In our view, Benedicto's failure to
implement reform will assure that his marketing
arrangements continue to discriminate against sugar
producers and independent millers. Stalling on re-
forms sought by the IMF and World Bank, moreover,
has already prompted foreign aid donors to temporar-
ily withhold financial assistance-a development that
will further aggravate Negros's economic decline.
the sugar industry. Marcos responded by announcing
in February that the industry would be reorganized,
converting NASUTRA into a private firm and estab-
lishing a new sugar commission with broad industry
representation. Marcos's move prompted Eduardo
Cojuangco-another key presidential crony who con-
trols the coconut industry-to rally disgruntled
growers and millers in an effort to use the new
commission to wrest control of the industry away
from Benedicto. Marcos stacked the deck in favor of
Benedicto, however, by approving election rules for
the commission that favor Benedicto's slate. As a
result, Cojuangco withdrew his challenge. Marcos
also recently shielded Benedicto from close scrutiny
by the National Assemby, when several assemblymen
attempted to hold him accountable for irregularities
in sugar trading. One charge leveled against him by
assemblymen concerned a highly profitable transac-
tion in which Benedicto sold low-cost imported sugar
on the protected domestic retail market.
An official of the World Bank-Manila's largest aid
donor-has told US Embassy officials that Marcos's
proposed reforms in the sugar industry are meaning-
less as long as he allows Benedicto to head the
commission. If Benedicto's past management of
NASUTRA is any guide, his corrupt practices will
probably continue because the new commission's
books will continue to be closed to government
auditors. In our judgment, Marcos's decision to
support Benedicto's fight to remain in control of the
industry closes all hope for sugar reform for the time
being.
For its part, the Communist Party already considers
labor as the most politically active sector on Negros
and is almost certain to intensify its efforts to tap
discontent among sugar workers. We believe that
violent labor unrest may escalate in coming months,
as unions penetrated by the party seek to undermine
the authority of municipal and provincial govern-
ments on Negros
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Roberto Benedicto
At 68 years of age, one of President Marcos's
closest and most trusted political associates ...
received a law degreefrom the University of the
Philippines where he was a fraternity brother of
Marcos ... has used Marcos's protection to build
a vast business empire ... Ambassador to Japan
con tttons to some areas on
Negros have deteriorated to the point where the NPA
has already formed shadow governments.
the NPA is beginning to
local criminals or abusive military personnel. This
activity occurs for the most part in the area known as
the CHICKS region, six adjacent municipalities in
southern Negros Occidental where the NPA has been
operating for some time.'
these activities are rapidly spreading to
other areas along the border between Negros Occi-
dental and Negros Oriental, where the NPA has
inflicted heavy losses on the government, causing the
military to close its less effective outposts and, in our
judgment, implicitly acknowledge the insurgents' con-
trol. In our view, this trend will continue, especially if
increased insurgent activity in urban areas-a likely
prospect-draws troops away from rural areas.
The strategy emerging on Negros is the same one that
the party has been using on Mindanao for several
years.
ready strained counterinsurgency efforts.
and we believe the similarities will grow as
conditions in the sugar industry worsen. At a mini-
mum, increased NPA activity and propaganda efforts
will continue to erode the government's control on
Negros and will undoubtedly tax the military's al-
degree of control,
has achieved a strategic stalemate,
where the Communist Party is in open contest with
the government for political and military control over
the region.' Conditions in a few areas on Negros-
notably the CHICKS region-already show a similar
Does Negros Matter?
In our judgment, insurgent control on Negros com-
bined with the failure to implement reform in the
sugar industry could cost Marcos much of the politi-
cal support he has enjoyed from the sugar bloc.
lnayauan, Cauayan, Kabankalan, and Sipalay.
' The NPA reportedly has troop stength of over 8,000 full-time
guerrillas on the island and mounts frequent company-size attacks
against government forces there. In the provincial capital of Davao,
the NPA is waging a fierce urban terrorism campaign, resulting in
the daily assassination of government and military officials. Insur-
gents also control the city's largest slum, numbering over 100,000
redistribute land and animals from planters to peas-
ants, collect taxes, and administer its own form of
social justice, which in some cases involves killing
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Among other things, Marcos is counting on regional
ruling party chairman Benedict
Ito deliver Negros for the ruling party in
local elections next year. We believe that, at a
minimum, Benedicto would have to resort to blatant
fraud to fulfill Marcos's expectations and may not
succeed even then.
At the national level, we believe Marcos would find it
all the more difficult to bolster his party's election
prospects if Negros becomes another Mindanao. De-
teriorating security on Negros will continue to under-
cut Marcos's public assertion that the government is
gaining the upper hand over the insurgents and that
the Communist Party has been decimated by the
capture of over 100 party leaders. In a more funda-
mental sense, the "fall" of Negros would provide an
important psychological defeat for the government
and further depress morale in the armed forces. It
would also confirm to the Communist Party that its
long-term strategy is on the mark.
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