AQUINO AND THE PHILIPPINES: PERFORMANCE AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90R00961R000500090001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 23, 2016
• Document Release Date: November 14, 2013
• Sequence Number: 1
• Publication Date: September 1, 1986
• Content Type: REPORT

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Director of
Central
Intelligence
MASTER FILE COPY
DO NOT-GIVE OUT
OR MARK ON
Aquino and the Philippines:
Performance and Prospects
Special National Intelligence Estimate
eta e
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et-re
SNIE 56-3-86
September 1986
Copy 552
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS,
EXCEPT AS NOTED IN THE TEXT.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and the Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
A microfiche copy of this document is available from OIR/DLB
(482-7177); printed copies from CPAS/IMC (482-5203; or AIM request
to userid CPASIMC).
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SNIE 56-3-86
AQUINO AND THE PHILIPPINES:
PERFORMANCE AND PROSPECTS
Information available as of 3 September 1986 was used in
the preparation of this Estimate, which was approved by
the National Foreign Intelligence Board on 10 September
1986.
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CONTENTS
Page
SCOPE NOTE
1
KEY JUDGMENTS
3
DISCUSSION
9
Introduction
9
Consolidating Personal Authority
9
Improving the Economy
10
Reforming the Armed Forces
11
Combating the Communist Insurgency
12
Overall Prospects For Political Change
13
Will There Be a Coup?
14
Alternate Outcome
14
Implications for the United States
15
III
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SCOPE NOTE
In March 1986 the National Foreign Intelligence Board approved
SNIE 56-2-86, Philippines: Challenges Facing the Aquino Govern-
ment, and directed that a new Estimate be prepared in six months to
evaluate the performance of and prospects for the new Aquino regime.
This Estimate evaluates Aquino's performance thus far and her pros-
pects over the next 12 months for overcoming the challenges posed by
domestic politics, the economy, reforming the armed forces, and
counteracting the insurgency. It also addresses the implications of these
findings for the United States.
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KEY JUDGMENTS '
A number of critical problems confront President Aquino that,
unattended, threaten to derail her government and adversely affect
major US interests. Most of these she inherited from the previous
regime, which after more than a decade of essentially one-man rule had
left the country in disarray. Given the magnitude of these problems, we
believe the situation will probably grow worse in the Philippines during
the next year. The most fundamental such problems Aquino faces
include:
? A political system perceived by many Filipinos to be unrespon-
sive to their hopes and needs.
? Two-thirds of the population living in poverty with an economy
sluggishly coming out of four years of dismal performance, and
a number of structural and policy hurdles still awaiting solution.
? A persistent and entrenched Communist insurgency that, Marcos's
departure notwithstanding, continues to increase its influence in
the countryside in the face of ineffective government
countermeasures.
A military that is underfunded, inadequately equipped and
trained, unable to deal effectively with the military threat posed
by the insurgents, and apprehensive about Aquino's ability to
govern.
' The Director of the Bureau of Intelligence and Research, Department of State, questions the
analytical underpinings of this Estimate and does not concur in the pessimistic thrust of the Key
Judgments. The paper misjudges what can be realistically accomplished in an early time frame to deal
with rural problems and the insurgency. While the Philippine Communist insurgency is the major threat
in the long run, he believes the paper overstates its immediacy and leaves the impression that unless Pres-
ident Aquino at once places as top priority the implementation of an integrated counterinsurgency plan
the situation could within the year dangerously erode.
He believes that Aquino's current efforts to stimulate economic growth, reform the economy, and in-
stitutionalize political stability are necessary preconditions for an effective attack on the insurgency.
Indeed, although the paper makes no comparison with the past, Aquino's reform of the senior military is a
greater contribution to managing the insurgency than all of Marcos's efforts of the past five years.
Severely limited economic resources?Marcos's legacy to his successor?constrain the social and political
components of a comprehensive plan, and the Philippine military establishment itself disagrees as to
what needs to be done. Without much greater US direct assistance, it will be difficult for Aquino to do
more than limit the spread of the insurgency in the short term.
The paper virtually ignores the serious challenge to political stability of the ambitions of Defense
Minister Enrile; nor does it adequately discuss Aquino's difficulties in dealing with a military that
includes elements?primarily those tied to Enrile?who are interested in undermining her. Finally, the
paper underestimates her accomplishments, given the political malaise and economic mess she inherited,
and holds Aquino to a standard seldom achieved anywhere at this point in a democratic transition.
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Aquino and her largely inexperienced cabinet and advisers recog-
nize these problems for the most part and, with varying degrees of
attention and success, are trying to solve them by:
? Dismantling the agricultural monopoly structures of the Marcos
era, particularly in coconut and sugar.
? Negotiating an IMF credit agreement (approximately $500
million) to finance the Philippines' structural reform program.
? Committing her government to divestment of governmental
financial institutions whose deficits severely drain public fi-
nances, although we expect slow going.
? Enacting a tax reform package to enhance revenues and
improve economic efficiency.
? Attempting by her own personal honesty and sincere efforts to
establish higher standards of official conduct.
? Creating a commission to draft a new constitution and pledging
to hold early elections.
? Appointing qualified individuals to the supreme court and other
top government posts.
? Reactivating the National Security Council, which could pro-
vide an organizational base for coordinating the national coun-
terinsurgency effort.
? Reforming the armed forces under Chief of Staff Ramos, who
has retired most overstaying generals, and placed professional-
ism and ability as the primary requisites for promotion of new
officers.
? Reducing human rights abuses by the military, primarily by
putting the military in a defensive posture.
If President Aquino's efforts?especially taking into account the
serious problems she inherited and her moves to restore political
pluralism?were compared with the situation found in most other
Third World countries, we would be relatively optimistic about the
longer term prospects for the Philippines. However, in our view, the
growing Communist insurgency and related unhappiness of many in the
military has sharply reduced the time Aquino has to act for revitalizing
the economy, reducing internal political infighting, and initiating a
comprehensive counterinsurgency program. Indeed, the key question
over the next year is whether President Aquino can address urgent
economic and security problems before the insurgency acquires such
momentum as to make its defeat substantially more difficult and
uncertain.
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Accordingly, the challenges she faces require immediate attention:
Personal infighting and divergent policy views in Aquino's
government are impeding decisionmaking on many problems.
Her non-Communist opponents could win substantial support in
local elections making the political situation more fragmented.
? Many of her economic and political policies are focused primar-
ily on the issues affecting the cities, whereas the needs of the ru-
ral poor remain for the most part unaddressed.
? Some elements of the military, and particularly some of the
reformist officers who supported Aquino in February, are
becoming increasingly disgruntled and impatient with her
policies, and some coup plotting persists.
Given the slow progress on all fronts and increasing threats to
peace and order, we cannot rule out the possibility that the military will
intervene to reshape the government and redirect its policies, or, in
extreme circumstances, even to overthrow Aquino:
? We believe the likely threat comes from reformist officers
within the military. We believe they would prefer to cooperate
with the President, but if the perception continues to grow that
her policies are jeopardizing national security, or in some cases
if personal and political interests were seriously challenged, they
have both the will and capability to conduct a coup.
? Even with the support of some civilian technocrats, the military
is ill-suited to provide competent administration. And, if in the
unlikely event the military tries to take over, it could well result
in discord and political collapse, with the Communists being the
primary beneficiary.
But the most serious challenge, and one that makes progress on the
many other problems so time urgent, is the growing threat posed by the
Communist insurgency. Although the Communists suffered some initial
setbacks when Aquino first came to power, we believe they will
continue to improve their position over the coming year:
? Aquino's victory did not seriously damage the Communist-led
New People's Army (NPA) in the countryside?there have been
no significant defections to the government.
? The failure to develop a coordinated civilian-military strategy
against the insurgents and the defensive posture of the New
Armed Forces of the Philippines (NAFP) are already allowing
the CPP to expand its range of activities and the NPA to project
its influence into new areas.
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? The Communists, who have already had considerable success in
increasing their influence in the labor movement, plan to
contest the forthcoming elections, and their supporters and
sympathizers could win some significant electoral victories at
the local and possibly even the provincial level.
The urgent need we see for Aquino to get her government together
and move forward on the economy and a counterinsurgency strategy is
based in large measure not only on our conclusion of the magnitude and
imminence of the threat which the insurgency represents, but also on
our judgment that she offers the best chance of establishing stability and
democracy in the Philippines:
? She is a political moderate who enjoys widespread personal
popularity.
? Aquino also recognizes the mutual benefits of warm relations
with the United States and has so far worked to preserve them.
? Any alternative government would not have a broad base of
popular support, would lack legitimacy, and would be no better
able to handle Philippine problems than Aquino.
? The failure of her government or its overthrow would destroy
the hope of many Filipinos that -people power" and a peaceful
revolution can solve the problems confronting the Philippines.
? Such disillusionment would likely lead to the Communist Party
winning new adherents.
The present situation in the Philippines could improve. Several
developments could favorably alter our now pessimistic forecast:
? If Aquino's supporters won a decisive victory in the forthcoming
local elections, it could help to strengthen her mandate and
stabilize the political situation.
? If Aquino began to demonstrate greater leadership of her
government, it could begin to more effectively implement
policies and begin to address hitherto neglected problems.
? If the government pressed forward with economic reforms, for
example, even though the tangible benefits might take years to
realize, the psychological benefits for the government could be
enormous, or if substantial outside help?of various kinds?
were forthcoming.
Unfortunately, we have little confidence that her present course will
lead to such dynamic improvement.
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We believe that, unless the Aquino government does something to
address the grievances associated with the insurgency more decisively
and realistically, the time she bought for the Philippines when she came
to power will be lost with little to show for it. The reforms she has artic-
ulated, even if fully implemented, would come to naught if the
Communists, as we expect, continue to gain ground. Therefore, we
believe it critical that Aquino:
? Focus more attention and energy on the rural areas and,
especially, the sense of injustice and mistrust that has increasing-
ly come to characterize the attitudes of the rural population
toward Manila.
? Accept a comprehensive counterinsurgency strategy. Thus far,
Aquino has rejected good advice from the military and others
on an overall political-military strategy. Rather, she is apparent-
ly influenced by those advisers who believe that, if the present
cease-fire negotiating strategy does not work, then the -military
can be unleashed--a concept out of touch with Philippine
realities.
Thus far, Aquino has attempted to be responsive to suggestions and
complaints from the United States and appreciative of our help in such
areas as high-level affirmations of public support, efforts to spur foreign
investment and pledges of financial assistance. Indeed, in few other
countries does the United States have as much opportunity to influence
the outcome of events. Assuming sufficient political will in the Philip-
pines, specific key areas where the United States could attempt to bring
its limited influence to bear include:
? Persuading the military to forgo political ambitions and coun-
terproductive coup plotting.
? Applying US expertise to help on rural development problems
that feed the insurgency.
? Quietly helping the government devise an effective counterin-
surgency strategy.
? Encouraging US and other foreign investors to play a more
active role in the Philippines' economic reconstruction.
We reiterate, however, that the effectiveness of US efforts will depend
first on President Aquino's ability to form consensus within her
government on a national agenda.'
2 The Director, Defense Intelligence Agency; the Director of Naval Intelligence, Department of the
Navy; the Assistant Chief of Staff, Intelligence, Department of the Air Force; and The Director of
Intelligence, Headquarters, Marine Corps are concerned that this Estimate avoid any impression that the
proposed US assistance measures, while potentially very important, will necessarily be fully acceptable to
the Philippine Government or decisive in themselves in reversing the situation, especially in light of the
Philippine Government's continuing inability to effectively address key problem areas. Furthermore, the
military elements undertaking coup plotting are unlikely to be deterred by US persuasion given the
deteriorating security climate this Estimate forecasts.
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Regardless of what happens, continuing challenges to the Aquino
government are certain to have important implications for the United
States over the next year. Among the most significant of these are:
? The Philippines will request and expect to receive greater US
economic support. If substantially more assistance is not forth-
coming, some of Aquino's advisers, and perhaps the President
herself, will interpret this as evidence that the United States is
not supportive of the new government and still harbors sympa-
thies for Marcos.
? Philippine nationalism, which has a decidedly anti-US tone, is
likely to continue to grow. It will focus on opposing the US
military facilities in the Philippines, calling for a nuclear-free
Philippines, and alleging US economic exploitation.
? US facilities in the Philippines will become increasingly
controversial. The Philippine Government is now reviewing US
agreements with Greece, Spain, and other countries, and we
should anticipate a considerably higher price tag and much
more difficulty in achieving a new agreement.
? There is a good possibility that an antinuclear resolution may
be adopted, either in the new constitution or by the new
legislature. Such a resolution could put greater pressure on the
United States with respect to our use of the facilities, and, in a
worst case, it could create a situation similar to that which has
developed between the United States and New Zealand.
? The Soviet Union is making overtures to the Philippines for
improved relations but, during the period of this Estimate,
Aquino and other Philippine leaders are likely to remain
suspicious of Soviet intentions and are likely to avoid any
substantial improvement in ties to the Soviets.
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DISCUSSION
Introduction
1. President Aquino faces critical challenges that
were reviewed in SNIE 56-2-86, Philippines: Chal-
lenges Facing the Aquino Government, specifically:
consolidating her personal authority, improving the
economy, reforming the armed forces, and coping
with the insurgency. Since her accession, the successes
have been relatively few, and the problems, for the
most part, have worsened. In the months ahead, the
prospects are high that the challenges will continue
and become even more difficult.
Consolidating Personal Authority
2. President's Aquino's personal popularity remains
strong, but she has yet to translate popularity into an
organized, viable means of making decisions and
getting them implemented on a nationwide basis. In
those areas where she has taken strong action she has
sown the seeds of controversy, something which could
come to haunt her in the future. Specifically, she
declared a revolutionary government and abolished
the Batasan (Philippine parliament); directed the tem-
porary appointment of officers-in-charge to replace
Marcos officials at the provincial and local levels; and
appointed, rather than had elected, members of the
Constitutional Commission (CONCOM).
3. Her leadership extends mainly to the upper and
middle class in the urban areas. Though she has
expressed concern over the well-being of her people,
her government's policies have focused on the issues
affecting the cities, whereas the needs of the rural poor
remain for the most part unaddressed. Unless she is
able to broaden and deepen her mandate through
effective political organization, her regime will in-
creasingly typify the oligarchic systems of the past.
(s NF NC)
4. Aquino's appointments to key positions reflect
the diverse basis of her regime. On the one hand, there
are Defense Minister Enrile and Chief of Staff Ramos,
and on the other, human rights activists such as
Executive Secretary Arroyo and Labor Minister San-
chez. The conglomeration of old-style politicians and
technocrats, friends and relatives, former Marcos sup-
porters, and oppositionists to Marcos represents the
wide range of the forces that ultimately combined to
bring Aquino to power, but is ill-suited for the formu-
lation and implementation of public policy. 3 Bitter
rivalries and factionalism have undermined coherent
policy. For example, the appointment of local officials
has caused significant strain between Vice President
Laurel's UNIDO group and Minister of Local Govern-
ment Pimentel, who has favored the PDP-Laban party
in his choices. Also, a number of these appointments
have resulted in the replacement of comparatively
good and effective Marcos-era officials with ineffectu-
al ones.
5. Among the most bitter controversies in the cabi-
net is that between Defense Minister Enrile (who is
widely feared and suspected of harboring presidential
ambitions) and more long-standing Aquino supporters
such as Arroyo, Presidential Spokesman Saguisag, and
others. Enrile improved his status by helping to end
the abortive Tolentino coup in July, but is widely
suspected, perhaps by Aquino herself, of knowing
about the coup attempt in advance, of failing to head
it off, and perhaps of even being involved in instigat-
ing it. It is likely Enrile has greater ambitions, and his
continued presence in the cabinet will be a continuing
source of controversy.
6. Many of Aquino's other government appoint-
ments, notably to the supreme court and the CON-
COM, are positive?she has selected qualified individ-
uals. However, without stronger leadership at the top,
there will continue to be infighting, drift, and, corre-
spondingly, a worsening of the situation.
7. Aquino's appointment of the Constitutional
Commission, which is supposed to have a draft com-
pleted and ready for submission to a plebiscite this fall,
could help to promote legitimacy and stability. The
present draft constitution seeks to restore democratic
institutions by strengthening the bicameral legislature,
by limiting executive powers to declare martial law
and to rule by presidential decree, and by strengthen-
ing guarantees for civil rights. However, the CON-
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COM debates have also become contentious over issues
such as foreign investment, land reform, and the US
facilities. At an early stage, a committee actually
approved a measure that required the United States to
give up the facilities. We expect the moderates will
defeat efforts to include such a provision in the final
draft constitution submitted for plebiscite. "Nationa-
list" and leftist groups, however, have pledged to
oppose the ratification of the constitution if the recom-
mendations they favor are overruled.
8. Moreover, the adoption of the constitution and
the holding of local elections could actually work
against Aquino, at least in the short term. Many of her
political rivals are better organized than she is and can
be expected to make significant gains in local elec-
tions, thereby creating an even more fragmented
situation than now exists. Such a situation might be
good for greater democracy, but would undermine the
consensus needed to attack other serious problems.
9. The prospects are becoming increasingly poor
that Aquino will be able to deal effectively with the
corruption issue despite her own personal honesty and
sincere efforts to establish higher standards of official
conduct. Some progress has been made in uncovering
the abuses of the Marcos era, and in reducing the most
blatant forms of graft and corruption practiced by
government officials. But she has been reluctant to
press for a complete crackdown because of political
realities, including Enrile's and others' sensitivities.
10. An even greater test of her ability will be the
restoration of a sense of justice among the poor.
Perhaps the greatest contributor to Marcos's downfall
was the vast majority's perception that under Marcos
the system had become unfair and unjust. This direct-
ly contributed to the surge of "people power" which
challenged him at the polls and then in the streets.
With the new government came a strong hope that
justice and fairness would be restored. To their credit,
the Commission on Good Government headed by
Salonga, and the Committee on Human Rights headed
by Diokno have apparently struck a responsive chord
with the public. However, some of their activities have
aggravated political factionalism. The military, for
example, is angry that the government has singled out
the Philippine armed forces for alleged human rights
abuses, while ignoring those of the New People's
Army. Unfortunately for Aquino, while there is no
question about her personal integrity and commitment
to justice and fairness, the perception may be growing
that her government cannot achieve the hoped-for
results. To overcome this situation the government
needs to:
? Rebuild effective local political institutions by
adequately financing and staffing them with
competent and concerned administrators.
? More rapidly refurbish and expand the judicial
system, particularly in the rural areas.
? Continue to reduce the reality and perception of
human rights abuses by the NAFP.
? Narrow the gap in the standard of living between
rich and poor.
But we are concerned that progress is not being made
to these ends, and that Aquino's support may be
weakening.
11. Thus far, President Aquino has taken no signifi-
cant steps to institutionalize "people power." Her
support remains basically limited to the groups that
were instrumental in her original campaign for the
presidency. But even among these supporters, some
problems are emerging. Specifically:
? The Catholic Church remains supportive but in
recent months has become less politically active.
Some leaders have become increasingly con-
cerned about drift in her government.
Labor also has been generally supportive but has
become increasingly polarized between the
Trade Union Congress of the Philippines and the
more militant Communist-dominated May 1st
Movement (KMU); labor unrest and strikes have
been growing.
? Business, while supportive, is also becoming more
critical of Aquino's attitudes toward trade liber-
alization, and is disappointed with her statements
that business is to blame for the ongoing high
level of strike activity.
12. While her traditional supPort base remains es-
sentially intact, it has been weakened, and Aquino has
not proven effective in broadening it. The government
is still developing its approach to the question of
Muslim autonomy and various Muslim groups are
becoming increasingly alienated. Even though Aquino
included some KBL representation on CONCOM,
many Marcos supporters remain disaffected.
Improving the Economy
13. A critical factor in the success or failure of the
new regime is how it deals with the economy. Some
relief is in sight with a possibility of a 6-percent
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increase in GNP in 1987. But, the magnitude of
Manila's problems are immense. Even if the Philip-
pine GNP could sustain a 5-percent per year growth
rate, by 1993 per capita GNP would still be lower
than it was in 1981.
14. The Aquino government has apparently negoti-
ated an IMF standby credit agreement (approximately
$500 million) as the financing umbrella for her struc-
tural reform program. She has started to dismantle the
agricultural monopoly structures, particularly in coco-
nut and sugar. She has committed her government to
divestment of governmental financial institutions
whose deficits severely drain public finances, although
we expect it to be slow going. The Aquino government
has also enacted a tax reform package to enhance
revenues and improve economic efficiency.
15. An important economic policy reform?further
depreciation of the peso?is unlikely to be taken by
the Aquino government, even though this could con-
tribute to the rural economy. The exchange rate is one
of Manila's most powerful economic policy tools.
According to CIA's econometric simulations, the 1983
depreciation of the peso by 50 percent has been the
single most important factor in helping to stabilize the
economy over the past two years. It has resulted in an
improvement in the current account from a $3.2
billion deficit in 1982 to a small surplus last year. It has
also aided exporters by directly raising the peso reve-
nues from both commodity and manufactured exports.
16. Foreign investment rules have not been liberal-
ized because of the opposition to foreign investment
by several of Aquino's key advisers. An effort by
Minister of Trade and Industry Concepcion to stream-
line the Board of Investments and ease bureaucratic
red tape for foreign investors has been stymied. The
foreign investment provisions of the new draft consti-
tution are similar to those of the previous constitution.
17. Neither foreign nor domestic investment are
likely to grow until there is greater investor confidence
in the government, and there are no signs that this is
improving. Just returning domestic investment to its
1981 level would require $4 billion in new capital;
most of this money would have to come from abroad
since the government is running a huge budget deficit
and private savings have been negative for the past
two years. Yet foreign investors are worried about the
insurgency and put off by the hostile attitude of
Aquino's advisers toward investment; domestic inves-
tors share the concern about peace and order and are
put off by her seeming pro-labor and anti-business
attitude. The result is that little or no investment is
being made.
18. While there may be some growth of aggregate
GNP over the next year, because of the conditions
outlined above, we believe that the economy is not
likely to substantially improve. Under such conditions:
? The government will have severely limited funds
with which to address serious economic problems
such as unemployment. This could contribute to
greater political and social tension, thereby bene-
fiting the insurgency.
The capital urgently needed for Philippine eco-
nomic recovery is not likely to be forthcoming,
and difficulties between the government and
business are likely to be exacerbated.
? There are likely to be increasing demands for US
aid.
Reforming the Armed Forces
19. One of the most promising signs for the Aquino
government is its effort to reform the armed forces.
Among the accomplishments that bode well for the
future are:
? Most generals past retirement age have been
retired, and professionalism and ability have
become the primary requisites for promotion of
new officers.
? The military leadership, notably General Ramos,
has cooperated with Aquino and has, thus far,
been supportive of and loyal to her.
? Human rights abuses by the armed forces have
been reduced.
20. Nevertheless, there continue to be areas of
concern. The Philippine military budget, continuing
past trends, has been reduced-15 to 20 percent in
1986?and is not likely to be increased to any major
degree in 1987. US military assistance is being in-
creased 100 percent?from $50 million in FY 1986 to
$100 million in FY 1987?and will be spent in needed
areas. But there will be insufficient funds to meet the
requirements for better pay, training, and logistics. To
date there have been only modest efforts to address
serious underlying deficiencies, and counterinsurgency
planning has been unimpressive.
21. Of even greater concern is the serious disillu-
sionment within the military over Aquino's perfor-
mance. Many officers have become openly critical of
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Key Military Deficiencies of NAFP
? Organizational/Command and Control?The ex-
istence of two ground forces, the Army and the
Constabulary, whose responsibilities are not clear-
ly delineated, generates rivalry and leads to poor
coordination, in the field. The 36,000-strong Con-
stabulary, deployed primarily in small detach-
ments in rural areas, contributes little to security
and of ten invites NPA guerrilla attack. The opera-
tional command chain is obscured by numerous
operational and administrative headquarters ele-
ments whose authority is of ten unclear. At the
local level, commanders often tend to be more
responsive to political officials than the military
hierarchy.
? Training?Except for the Marines, there is no
standardized individual training, and unit training
is almost nonexistent. Training facilities of ten lack
the most basic training aids. Although the NAFP
has many capable training personnel, training was
a low priority for the previous leadership, and
training programs were consistently underfunded.
? Logistics/Equipment/Maintenance?The logistic
system is unwieldy and unreliable. Field com-
manders are often forced to rely on personal
contacts in GHQ to obtain necessary supplies.
Effects of the poor distribution system are com-
pounded by poor procurement and accounting
procedures and inadequate maintenance, which
result in equipment being cannibalized or dead-
lined rather than repaired. For example, 16 S-76
helicopters acquired in 1983 are operating with
almost no spare parts, and their operational status
is expected to decline significantly.
? Mobility?Limited air and naval resources give
the armed forces only a marginal capability to
move units between regions. The shortage of
trucks and helicopters (in part a result of poor
maintenance practices) often leaves units unable to
react to tactical engagements in a timely fashion.
Less than 30 medium-lift helicopters are normally
available to the entire NAFP to support counterin-
surgency operations. Moreover, mobility assets
have traditionally been mismanaged; helicopters,
for example, are of ten relegated to a VIP transport
role.
? Intelligence ?While collection of tactical intelli-
gence is adequate, dissemination is poor. Numer-
ous competing intelligence organizations duplicate
efforts and fail to share results. Intelligence report-
ing tends to go up administrative or service chains
rather than operational chains. At the regional and
national levels, synthesis and analysis of intelli-
gence are generally poor, and show a tendency to
merely compile statistical data.
her policies toward the CPP/NPA and human rights
abuses, which they believe favor the Communists and
discriminate against the military. They also are con-
cerned that the government has failed to develop a
cohesive counterinsurgency plan and believe much
more decisive action is needed. Some of these officers,
principally activist members of the reform movement
who helped instigate the February revolt, are engaging
in contingency planning to intervene in the govern-
ment if trends do not improve
Combating the Communist Insurgency
22. Overall, the prospects for the development of
an integrated counterinsurgency strategy are poor.
Some modest steps have been taken. For example, a
number of government officials seem to have devel-
oped an increased awareness of the depth of the
insurgency problem; at the local level, some com-
manders are cooperating with government officials to
coordinate counterinsurgency activities. Also, Aquino
has reactivated the National Security Council, which
could accord an organizational base for coordinating
the national counterinsurgency effort, provided the
personalities (Enrile and Arroyo are two of the five
members) can eventually work together. A number of
troubling factors, however, more than offset these few
positive signs, including:
? Aquino and her closest advisers continue to take
a short-term approach toward countering the
insurgency, relying almost exclusively on negoti-
ations as their strategy and resisting suggestions
from the NAFP and the United States for a more
comprehensive package of political, economic,
and military measures. Moreover, their reluc-
tance to develop a fully integrated civil-military
approach to the insurgency is often coupled with
promises to "unleash" the military if their negoti-
ating strategy fails. If this is truly their view?
and we fear it is?a serious problem exists. It
indicates that they neither appreciate the dimen-
sions of the CPP/NPA threat nor fully compre-
hend what is required to mount a successful
counterinsurgency strategy.
Some senior military and civilian officials are
suspicious of and mistrust each other, which
precludes cooperation against the insurgency.
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? The government lacks resources to implement
even the most modest programs.
? The government faces political turbulence and
stagnation at many local levels. As previously
noted, a number of Aquino's appointed officials
are unwelcome in the areas to which they have
been sent; this has precluded effective civil-
military cooperation at the local level against the
insurgency
23. Given these difficulties, we believe Aquino and
her advisers will continue to take a -muddle through"
approach to counterinsurgency in the mistaken hope
that either the insurgents will lay down their arms or
the military will be able to contain their growth. In
fact, reliable reporting indicates that government inac-
tion is just what the CPP/NPA is counting on.
24. The insurgents intend to take advantage of
cease-fire talks by increasing their ranks and expand-
ing their influence in the countryside while, for the
most part, the NAFP and civilian officials remain idle.
When Marcos was initially overthrown, the CPP and
its associates, the NPA, NDF, and others sustained
some setbacks because of their failure to predict
Aquino's success and join in her movement. Despite
party discord and leadership changes, however, there
are few indications of serious ruptures in the CPP, and
we believe its strategy remains essentially unchanged.
We judge the Communists will:
? Posture for negotiations with the Aquino govern-
ment to enhance their "moderate- image, which
buys time to expand their political and military
power.
? Participate in upcoming elections where they
have the potential to win some significant elec-
toral victories at the local and possibly even the
provincial level. They plan to participate covert-
ly through front groups, and in some cases by
supporting other candidates who are sympathetic
to their cause.
? Continue their propaganda attack against the
.'system," the United States, and NAFP abuses.
25. The CPP has strongly emphasized self-reliance
in the past, but it may be undergoing a shift in its
approach. Some recent reporting indicates that the
Communists are now willing to accept external mate-
rial support. The decision may be designed to gain
increased legitimacy abroad, to prepare for anticipat-
ed increases in US support for the NAFP, or as a ploy
to strengthen arguments of NAFP hardliners in an
effort to further aggravate civil-military tensions. We
have not seen signs of weapons and equipment being
supplied by any outside power, and we are uncertain
what kind of aid would be sought and how it would be
used. If, however, the insurgents were to begin acquir-
ing substantial amounts of arms, their capabilities
could rapidly and significantly improve.
Overall Prospects For Political Change
26. We believe that the situation is likely to get
worse in the Philippines over the next year, and that:
? Personal infighting and serious policy differences
in the cabinet will continue to inhibit
decisionmaking.
? The Communist insurgency will likely expand
gradually, though it will not be strong enough to
overthrow the government during the period of
this Estimate.
? There are better than even prospects that some
political shakeup will occur.
27. We believe there is a high probability that the
personality conflicts and internal infighting among
some of Aquino's cabinet members will eventually
result in some of them either resigning or being fired.
Aquino has a broad representation in her cabinet, but
personality and policy conflicts are deep and bitter.
Aquino appears to be growing weary of the infighting
and could decide to replace certain of her cabinet
ministers as a means of achieving greater unity. No
matter who leaves, some of Aquino's support base will
undoubtedly be alienated and this could offset any
gains in cabinet and government unity:
? If Aquino were to replace figures such as San-
chez, or more importantly, Pimentel, Arroyo,
Diokno, or Salonga?as desired by some military
reform leaders?it would alienate some of those
who have given her strong support in the past.
? But, if Aquino were to fire Enrile, key military
leaders who support him might perceive it as a
move by people they consider to be "leftists" and
"Communists" to capture Aquino. Such a per-
ception would increase the prospects for a coup.
28. We judge that various political factions will
likely pose a formidable challenge to Aquino's author-
ity in the local and congressional elections planned for
next year. Several groups are already gearing them-
selves up for these elections, including some former
Marcos supporters, Laurel's UNIDO, and supporters of
Enrile, among others. They have the potential to win a
significant number of seats in the new legislature and,
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because of the limitations on executive power embod-
ied in the draft constitution, could become a formida-
ble obstacle to Aquino's exercise of power. While such
a development could be healthy from the standpoint
of developing democracy, it would undermine the
consensus needed to attack other problems confronting
the government. Given the threat posed by the Com-
munists, fragmentation and bickering at the center
could play into the hands of the insurgents.
attempted coup in July failed miserably and demon-
strated that few Filipinos desire a return of the
Marcos regime. Other divergent elements might con-
template action against the government, but the
support of the military would be required to achieve
success. Aquino's still strong popular support will
constitute a formidable obstacle to would-be coup-
mongers.
Will There Be a Coup?
29. We cannot rule out the possibility that the
military might intervene to oust Aquino. If there were
to be a coup attempt it would most likely be instigated
by Enrile-associated reformist officers in concert with
Enrile and other sympathetic elements within and
outside the NAFP. But we believe that the military
would prefer to cooperate with the President and
would first try to find alternative means to affect the
government. They could try to force Aquino to change
the composition of her government and to adopt
policies that they favor, notably the adoption of an
integrated counterinsurgency strategy. If unsuccessful,
they might then attempt to coerce Aquino into accept-
ing a power-sharing deal in which she remained a
figurehead President, but others?including but not
exclusively the military?exercised significant power.
We judge that Aquino would resist such attempts.
And, if the perception continued to grow that Aquino's
policies were jeopardizing national security, or in some
cases if personal and political interests were seriously
challenged, there are those within the military who
have both the will and capability to conduct a coup.
Military intervention could also be triggered by a
miscalculation on the part of either side. Even with
support of some civilian technocrats, however, the
military is ill-suited to provide competent administra-
tion. And, if in the unlikely event the military tries to
take over, it could well result in discord and political
collapse, with the CPP/NPA being the primary
beneficiary:
? The NAFP is not united and would not be a
cohesive actor. Conflicts exist among key officers
over the reform movement, promotions, and
personal loyalties. Some officers are also still
loyal to Marcos.
? The NAFP has been inept in prosecuting the
insurgency in the past. They are not likely to do
any better if they attempt to take on a greater
role in running the government.
30. We believe that pro-Marcos loyalists lack the
strength and ability to overthrow the government.
Former Marcos vice-presidential candidate Tolentino's
31. In spite of our generally pessimistic forecast, we
still believe that an Aquino government offers the best
chance over the long term of establishing stability and
democracy in the Philippines. An alternative govern-
ment in which the military seized power would not
have a broad base of popular support, would lack
legitimacy, and would be no better able to handle
Philippine problems than Aquino. And, the failure of
her government or its overthrow would destroy the
hope of many Filipinos that -people power- and a
peaceful revolution can solve the problems confront-
ing the Philippines. This disillusionment would likely
lead to increasing polarization in the political system,
and the Communist claim that the system itself is at
fault would gain credibility with many more Filipinos,
and the Communist Party (CPP) would likely win new
adherents.
Alternative Outcome
32. While not the most likely scenario, we do not
rule out the prospect that the situation could improve.
Several developments could favorably alter our pessi-
mistic forecast including:
? The political situation stabilizes after the imple-
mentation of the new constitution and the
holding of a free election. If Aquino's supporters
won a decisive victory in the election it could be
widely viewed as a renewal of her popular
mandate and could strengthen the authority she
needs to press forward with reforms.
? Aquino demonstrates stronger leadership over
her cabinet and adopts a coherent set of nation-
al plans and programs. She would have to
combine these actions, however, with an aggres-
sive effort to build up her base of support to
compensate for those alienated by her attempts
to bring order and direction to the government.
The Philippines economy makes a substantial
recovery, creating a popular perception of gov-
ernment effectiveness. This could come about if
the government presses forward with reforms,
large amounts of foreign aid are made available,
and foreign and domestic investment are forth-
coming. However, full economic recovery will
likely take years.
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? Aquino implements a fully integrated military-
political counterinsurgency strategy that begins
to reduce the Communist threat.
Implications for the United States
33. Regardless of what happens, continuing chal-
lenges to the Aquino government are certain to have
important implications for the United States over the
next year. Among the most significant are:
? The Philippines will request and expect to re-
ceive greater US economic assistance. They take
as a given that real limits existed on US aid to the
Philippines in the last few years of Marcos's rule
and that Washington will be far more generous
now that he has been replaced by a popular new
government. At the same time, Filipino officials
will be more sensitive about the issue of base-
related aid, preferring to see it as -rent.- If
substantially more aid is not forthcoming, some
of Aquino's advisers, and perhaps the President
herself, will interpret this as evidence that the
United States is not supportive of the new gov-
ernment and still harbors sympathies for Marcos.
? Philippine nationalism, which has a decidedly
anti-US tone, is likely to continue to grow. It
will focus on opposing the US military facilities
in the Philippines, calling for a nuclear-free
Philippines, and alleging US economic ex-
ploitation.
US facilities in the Philippines will become
increasingly controversial. Although we expect
Aquino loyalists to defeat attempts to insert an
anti-base provision in the draft constitution, the
issue will be hotly debated during the ratification
period, and anti-US elements will seek to exploit
such developments for political gain. The Philip-
pine Government is now reviewing US agree-
ments with Greece, Spain, and other countries to
see how it can get a better deal on the bases. We
believe that the government will be able to hold
firm on its decision to keep its options open on
the bases, and we also believe those officials who
favor US retention of the facilities will continue
to have influence. Nevertheless, the Philippine
Government is already gearing up for tough
negotiations and we should anticipate a consider-
ably higher price tag and much more difficulty
in achieving a new agreement.
? There is a good possibility that an anti-nuclear
resolution may be adopted, either in the new
constitution or by the new legislature. While
Complications in Maintaining US Bases
The Philippine Government is likely to raise some or
all of the following issues in preparation for a review of
the bases agreement:
Hold firm on the concept that US military assis-
tance is -rent- for the bases, thereby directly tying
US access to monetary payments. This would
correspond with a greatly increased price for the
use of the facilities, and would probably be based
on a Philippine assessment of how much the
United States grants other countries where the
United States has similar facilities.
Require more Philippine control over use of the
facilities. Some Filipino leaders have called for a
new agreement which not only stipulates Philip-
pine sovereignty over the bases, but also abolishes
US exclusive use of some areas, giving Philippine
commanders greater authority over more aspects
of base operations. The Philippine Government
could also demand that a new agreement provide
the Philippines with a veto over US use of the
facilities in the event of the outbreak of hostilities
between the United States and the Soviet Union or
some other country.
? Prohibit the stationing or transit of nuclear weap-
ons on the bases. If enforced, this could complicate
the US policy of neither confirming nor denying
their presence.
? Support labor unions and worker demands for
wages and better working conditions. The KMU
has been particularly active in making new de-
mands and in stirring up labor troubles on some of
the facilities, and the Aquino government could
try to assuage nationalistic sentiment and try to get
more money by endorsing and supporting such
demands.
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such a resolution could ultimately prove to be
innocuous, it could create embarrassment and
put greater pressure on the United States with
respect to our use of the facilities. In a worst case,
developed between the United States and New
Zealand and could create severe strains in US-
Philippine relations.
? The Soviet Union is trying to recover from the
loss of face it suffered during the Marcos-Aquino
transition by making overtures to the Philippines
for improved relations. However, during the
period of this Estimate, Aquino and other Phil-
ippine leaders are likely to remain suspicious of
Soviet intentions and are likely to avoid any
substantial improvement in ties to the Soviets.
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