State and Society in the Philippines (Chapters 8 and 9)

CHAPTERS 8 AND 9
OF STATE AND
SOCIETY IN THE
PHILIPPINES
PREPARED BY JUSTINE ACUÑA AND MICHELLE JOY MAGANGAN

This chapter mainly focuses on the Marcos period and the country’s situation from
the beginning of his regime to his fall. The chapter highlights how the state took on
different political, economic and social shapes; and how the government shifted into
dictatorial rule. This chapter also includes the different social forces and movements
that challenged the authority of the state that led to the collapse of the Marcos era.
PREPARED BY JUSTINE ACUÑA
Chapter 8
MARCOS
(1965ー1986)

“THIS NATION CAN BE GREAT AGAIN”
Ferdinand E. Marcos’ defeat of Macapagal was accomplished by the usual pattern of elite
interdependence—the help of Ilocano allies in consolidating his northern Luzon bailiwick, a
tactical alliance with the Lopez sugar-media energy dynasty, and a war chest of funds
accumulated as a member of the Senate. On the campaign trail, Marcos promised that “this
nation can be great again,” that the days of corruption and inefficiency were over.
● To make his run for president, Marcos switched from the Liberal to the Nacionalista
party, justifying his turn by a commitment to fight corruption and reform the bankrupt
political system. This tactic had first been used by Manuel Roxas when he split the
Nacionalistas to run against Sergio Osmeña as a Liberal in 1946.
● Marcos had a better grasp of two realities than most politicians.
■ He recognized the public’s yearning for economic stability and its disgust with
a Congress that passed fewer bills, made longer speeches, and paid itself
higher salaries with each passing year.
■ He appreciated the existing resources and vast powers of the office of the
presidency. Only the president could release the funds on which
congressional patronage depended, giving him leverage he would use to pass
key legislation. Marcos then set out take advantage of public sentiment and
the executive office to control Congressーsimilar tactic of Quezon.
● The three instruments at his disposal were increased public spending, executive
agencies staffed with “apolitical” technocrats, and use of 194 Chapter Eight the army to
implement development programs.
CHAPTER 9 |
MARCOS

● Marcos’s rural development strategy was to increase productivity on existing rice lands in order
to make newly opened land, especially in the interior of Mindanao, available for foreign
investment in the new export crops of bananas and pineapples. He therefore launched an
ambitious rural infrastructure program funded by local and external borrowing and
development aid.
● He built new irrigation systems, supported technological innovations, and began to upgrade
existing road systems. He also pumped credit into the rural economy through the state-owned
Land Bank.
● The rural strategy received a big boost when high yielding rice varieties were introduced by the
International Rice Research Institute at the University of the Philippines (UP). With
high-yielding rice, irrigation, credit to purchase chemical inputs, and government crop
purchase subsidizing the “green revolution,” the return of rice self-sufﬁciency became a strong
possibility.
CHAPTER 9 |
MARCOS

● In his first-term initiatives—economic liberalization, pursuit of productivity gains over
comprehensive land reform, and the use of executive and military agencies to shape
society—we see continuity with past presidents. Neither did Marcos differ in the use of
power to enrich himself, his clan, and his allies. In the patchwork state, cupidity coexists with
national commitment, and self-interest overlaps “reasons of state.” Increased government
involvement in agriculture led to overpriced rice in times of shortage, and in the
infrastructure program, officials took 196 Chapter Eight kickbacks from construction
companies owned by Marcos supporters, who built roads with inferior materials.
● But Marcos was able to deflect corruption charges. Perhaps because the label applied
equally to congressional leaders and local politicians. Marcos was able to turn the tables on
his accusers, insisting that corruption had become a system-wide problem. He had two
further advantages:
■ The green revolution helped the country attain rice self-sufficiency in 1968.
■ The anti-Marcos forces were not yet mobilized in large numbers.
CHAPTER 9 |
MARCOS

● At the same time, other sources of government revenue went untapped. From 1959 to 1968,
Congress passed no tax legislation at all, despite significant structural changes in the
economy. Legislators representing sugar interests specifically rejected taxes on exports. As a
result, indirect taxation still contributed up to three-quarters of tax revenues, and even the
Omnibus Tax Law of 1969 did not address the basic need to increase the ratio of income tax
to general tax revenue. The distorted tax structure, poor collection efforts, and loss of funds
to corruption left the Philippine state with insufficient resources to pursue its development
projects.
● Nevertheless, in 1969 Ferdinand Marcos became the first Philippine president to win
reelection. His victory came at an extremely high price to the country. As much as $50
million went into the Marcos campaign, much of it public funds.
CHAPTER 9 |
MARCOS

REFORM OR RADICAL
CHANGE?
● Marcos’s reelection plunged the country into crisis. The unprecedented government deficit of
more than one billion pesos forced Marcos to float the currency in early 1970. From its peg at
two pesos to the dollar, the peso dropped to six to the dollar. Inflation, which had been stable at
about 4.5 percent through the 1960s, rose quickly.
● Activism addressing national and social themes also emerged within the Catholic Church,
whose political influence had grown with its anticommunist offensive of the 1950s.
● Activism addressing national and social themes also emerged within the Catholic Church,
whose political influence had grown with its anticommunist offensive of the 1950s. U.S.
colonialism had left the Catholic hierarchy foreign, replacing Spanish clergy with American and
European priests and nuns. The hierarchy also remained hostile to Philippine nationalism
(notably in the Rizal bill debate), which it associated with the anticlericalism of the 1896
Revolution. It was only in the 1960s that the issue of Filipinization within the Church was finally
addressed in conjunction with the call of Rome’s Vatican II council to “indigenize” the
postcolonial churches.

● In the countryside, Sison teamed up with a dissatisﬁed young Huk commander, Bernabe
Buscayno, through the mediation of anti-Marcos politicians Senator Benigno Aquino Jr.
and Congressman Jose Yap.17 Their meeting led to the formation in 1969 of the New
People’s Army (NPA), which began to receive young urban recruits ready to go to the
mountains.
● It was also a time of unabashed opportunism. Radical propaganda got a great boost
when Marcos’s discarded allies, notably the Lopez and Laurel families, sensing that he
was faltering, announced their sympathy with “the revolution” and opened their media
outlets to student radicals. The television stations and newspapers highlighted
demonstrations portraying Marcos as a “puppet” of imperialism, feudalism, and
bureaucrat capitalism.
● The intensiﬁcation of political battles outside the state was paralleled by escalating
institutional combat within. Congress had authorized a constitutional convention to
update the 1935 Commonwealth Constitution, and the directly elected delegates
included activists who sought to reshape the exercise of power. Anti-Marcos delegates
also planned to prevent him (or any immediate family member) from seeking another
term.
CHAPTER 9 |
MARCOS

● Yet despite losing battles in the media, legislature, and constitutional convention, Marcos had
the military ﬁrmly on his side. And while senior party leaders abandoned him, Marcos
maintained good relations with local power brokers by refusing to prosecute strongmen
accused of violence in the previous election.
● On September 23, 1972, invoking the Constitution, Marcos declared a state of emergency on the
basis of a “rightist-leftist” plot to overthrow the government. Antiwar demonstration at the U.S.
Embassy.. His announcement was preceded by the arrest of thousands of opponents and the
disarming of private military forces, including that of his top rival, the popular Senator Aquino.
The AFP raided and closed schools, religious establishments, newspapers, and radio and
television stations.
CHAPTER 9 |
MARCOS

THE “U.S.-MARCOS
DICTATORSHIP”
● Ferdinand Marcos’s dictatorship—the greatest dominance of state over society the Philippines
has seen—endured until 1986. In the ﬁrst two sections below, we trace the centralized state’s
initial success and later decline, examining its mechanisms of control, economic programs, and
degree of autonomy from class and sectoral interests.
● The declaration of martial law devastated Marcos’s opponents. Overnight, the entire network of
anti-Marcos forces had disappeared from the public arena. Politicians were jailed, their
patronage machines adrift and private armies demobilized. Students, academics, journalists,
businessmen, and labor and peasant organizers had also been arrested, and many who had
escaped went underground with the CPP.
● With his new powers, Marcos moved easily from the original idea of martial law as an
emergency response to crisis, to martial law as an instrument for creating a “New Society.” He
was now in a position to craft a strong state with two powerful centralizing agencies—a military
empowered during his ﬁrst term and technocrats who shared his idea of national development.

● The AFP detained Marcos’s political enemies—an estimated thirty thousand were imprisoned
by early 1975—and took over regional and local political networks on his behalf. Freed from
legislative constraints and media scrutiny, it began a brutal engagement in the southern
Philippines with the Moro National Liberation Front and launched major attacks against the
CPP-NPA.
● Marcos expanded the AFP’s power by integrating municipal police forces and the Philippine
Constabulary into the AFP hierarchy, and he gave it a bigger role in governance by assigning
officers to run hitherto civilian agencies. As a defender of the New Society and partner in
national development, the AFP received the largest single allocation of the national budget.
From 1972 to 1976, the military budget rose from 880 million to 4 billion pesos.
● The number of agencies directly under the Office of the President and within the larger
Executive Department doubled in five years; by 1981, it stood at forty. The budget process was
also linked closely to economic planning through two new “superagencies,” the Planning,
Programming, Budgeting System and the Development Budget Coordinating Committee.
● Presidential Decree no. 27 announced the start of “Operation Land Transfer” on
tenant-occupied holdings of more than seven hectares (17.5 acres) on rice and corn lands.
● Under the rice self-sufficiency program “Masagana ’99” (Prosperity 1999), within two years,
“634,000 [farmers] borrowed $87 million from 420 rural banks, 102 branches of the Philippine
National Bank and 25 offices of the Agricultural Credit Administration” to purchase
three-hectare (7.5-acre) plots and agricultural inputs. CHAPTER 9 |
MARCOS

● Nevertheless, to imbue his dictatorship with constitutionalism, Marcos required the semblance
of electoral politics. He replaced the empty shell of a two-party system with a single
pro-government party: the Kilusang Bagong Lipunan (KBL, New Society Movement). The KBL
brought together his national and local allies with former members of the opposition who
chose to join him rather than retire.
● With parliament and the Supreme Court under control, Marcos held a series of referenda and
plebiscites—mainly for international consumption—to demonstrate popular support for his
New Society. In 1978, he even held “demonstration elections” at the local and legislative levels,
allowing small opposition parties outside Manila to win certain city and provincial positions and
a tiny number of seats in the National Assembly.
● In terms of lasting economic benefits, the results were disappointing. Tenants who participated
received a fifteen-year leasehold—essentially a mortgage, not a land deed—and the terms of
leasehold were not necessarily better than those of tenancy.
● Public spending in the Marcos years was funded by public debt. Philippine borrowing of vast
sums despite only modest economic growth—a pattern begun in Marcos’s first term—was
underwritten by multilateral agencies like the World Bank and the International Monetary
Fund.
CHAPTER 9 |
MARCOS

DECLINE
● The factors that enabled Marcos to consolidate his dictatorship were also factors in its decline.
The export boom and external borrowings boosted GNP in the early years of martial law, but the
benefits of economic growth were distributed disproportionately to the Marcos family, its
immediate relatives, and close friends.
● This consolidation of wealth and power within a segment of the country’s elite eventually
acquired the name “crony capitalism.” It was capitalism based not on competition but on
monopoly, special access, and brute force. Cronies had access to millions of dollars squeezed
out of small producers and billions in loans and credits from government finance
institutions—ultimately from foreign lenders.
● Economic deterioration pushed the government deeper into deficit spending, but Marcos had
no appetite for scaling down development programs, reforming the regressive tax system, or
ending subsidies for favored corporations.
● All signs—including the Marcos couple’s conspicuous profligacy—pointed to a breakdown. By
1980, the real wages of skilled and unskilled workers in Manila had fallen to less than half their
1962 level; Marcos responded by discontinuing the Central Bank series that tracked wages
CHAPTER 9 |
MARCOS

RESISTANCE
● In 1972, the students and politicians allied to form the Moro National Liberation Front (MNLF), a
vanguard movement to create a Bangsa Moro Republik (Moro National Republic) consisting of
Mindanao, the Sulu archipelago, and Palawan Island.
● Within months, the entire region had become a battleground. The MNLF war (1973–1977)
caused the death of more than thirteen thousand people and forced more than a million to ﬂee
their homes. At the war’s height, the dictatorship spent about $1 million a day containing the
rebellion.
● The MNLF, however, was unable to exploit Marcos’s weakness due to its own internal problems.
Its military leaders lacked combat experience and suffered major battleﬁeld losses, while its
political leaders split along ethnic lines (Tausug versus Maguindanao) over tactical issues.
● The CPP, in contrast, increased in strength as Marcos declined. (The PKP surrendered in 1974.)
● By the end of 1976, CPP organizing teams were patiently building underground networks and
forming NPA units on most major islands of the country.
CHAPTER 9 |
MARCOS

COLLAPSE
● Aquino’s assassination catalyzed the sequence of events leading to Marcos’s downfall. The
urban middle class and economic elites, deeply worried by the economic crisis, were shocked
into political involvement and opposition ranks swelled.
● Many business elites were particularly angered by the brazen nature of the assassination and
frightened by the economic effect of the turmoil. The once-fractious elite opposition and the
splintered social democrats reunited to exploit Marcos’s fondness for constitutional cover.
● The CPP, on the other hand, suddenly found its rural based “protracted people’s war” outpaced
by urban mass mobilizations, obliging its leadership to allow more
“experimentation”—mini-uprisings in rural and urban areas, “tactical coalitions” with
anti-Marcos elites and social democrats, and “tactical offensives” by the New People’s Army.
● Finally, the Catholic Church hierarchy was pushed toward confronting the dictatorship as more
priests, nuns, and lay leaders expressed their opposition in rallies and from the pulpit.
● At the same time, Marcos was losing support from his institutional allies. The ﬁrst to waver were
the technocrats. Their dream of creating a managerial state and developing the Philippines into
a full market economy withered as “the political logic of cronyism placed major obstacles in the
path of serious reform.
CHAPTER 9 |
MARCOS

● The tension between technocrats and cronies worsened with Marcos’s rescue of the failing
businesses and his refusal to control Madame Marcos’s lavish spending. . It was clear that the
professional managers had lost their clout when an embattled Marcos narrowed his inner circle
to his immediate family and most loyal military officers.
● The most serious internal threat to Marcos came from within the military establishment.
Middle-level officers were frustrated with corruption in the AFP and pervasive favoritism in its
officer corps.
● They organized a group called RAM (Reform the AFP Movement), purportedly to push for
military reforms but quietly to sound out other officers and military units about plans for a coup
against the government.
● For more than two years, political stalemate ensued between the weakened state and surging
social forces. Marcos was embattled but still had enough allies to stay in power—particularly the
United States under President Ronald Reagan, who was unequivocal in his support.
● Then Marcos, for reasons that are still unclear, decided to change the tempo, calling a “snap
election” for February 1986 to determine whether he should continue as president or step
down. His challenger was Corazon (Cory) Aquino, widow of Benigno, who was convinced to run
by moderate and elite oppositionists and the Catholic Church. Huge segments of the leftist
movement, along with hundreds of thousands of ordinary citizens politicized by her husband’s
assassination, joined the Aquino campaign.

● RAM broke the tension by launching its coup in the early morning hours of February 22.
● The rebels’ wide recruitment efforts within the military had also brought advance warning
(though incomplete knowledge) to the Marcos loyalists. RAM’s attempt to grab power failed.
Together with their patrons, Defense Secretary Juan Ponce Enrile and AFP Vice Chief of Staff
Fidel V. Ramos, the rebels retreated to await counterattack in Manila’s two large military camps
facing each other across the broad Epifanio de los Santos Avenue (Edsa).
● To their rescue, however, came the Aquino coalition and the Catholic Church, which called on
its supporters to surround the camps along Edsa and protect the rebels.
● On February 24, the defection of air force officers and the entire Manila police force turned the
tide—the rebels could now meet a counterattack should Marcos fire on “the people.” U.S.
president Ronald Reagan was finally convinced by his senior advisers to withdraw American
support, and Marcos had no options left.
● Early in the morning of February 25, the dictator, his family, and his closest cronies left the
presidential palace aboard two American helicopters. They were taken to Clark Air Base,
transferred to a military jet, and flown to Hawaii. The same day, Corazon Aquino and her
supporters proclaimed the victory of a bloodless “people power” revolution and agreed to an
alliance with RAM and its supporters to form a provisional revolutionary government.
CHAPTER 9 |
MARCOS

Chapter 9
DEMOCRATIZATION
(1986ー1998)
This chapter mainly revolves on the post-Marcos period and the transition of the
country’s political system into a more democratic regime. The chapter sheds light on
the Philippines’ economic condition, the creation of the 1987 Constitution, and other
actions taken in the attempts of rebuilding the state from the Aquino to the Ramos
administration. The problems, challenges and other signiﬁcant social and political
events that emerged at the end of the 20th
century are also presented in this chapter.
PREPARED BY MICHELLE JOY MAGANGAN

CHAPTER 9 | DEMOCRATIZATION
SECTIONS AND SUBSECTIONS OF
THIS CHAPTER
Aquino’s
Legacy
Reformists
And
Trapos
Between
Recovery and Crisis
A Declaration
of
State Strength
STATE AND SOCIETY
AFTER THE FALL
ECONOMIC
RECOVERY AND
STATE REBUILDING
DEMOCRATIZATION
OF THE
CHINESE-FILIPINO
COMMUNITY
UNRAVELING OF
PHILIPPINES 2000

1986 1988 1990 1992 1994 1996 1998
1987 1989 1991 1993 1995 1997
EDSA
People
Power
Revolution
New
Philippine
Constitution
was created
Death of
Marcos and
coup attempts
of RAM
The
government
signs a peace
pact with the
MNLF
US military
presence
discontinued after
the Senate
rejected a newly
proposed military
treaty
The beginning
of the Ramos
administration
The country’s
economy
improved after
ties with ASEAN
were
strengthened by
Ramos
Diplomatic row
with the
Singaporean
government due
to the execution
of OFW Flor
Contemplacion
Joseph Estrada
becomes the
13th President
of the
Philippines
Asian
ﬁnancial
crisis
TIMELINE OF SIGNIFICANT EVENTS IN
PHILIPPINE HISTORY (1986-1998)
A 7.7
magnitude
earthquake
struck the
island of Luzon
Comprehensive
Agrarian
Reform
Program was
signed by
Aquino
The Supreme
Court declares
the
controversial
VAT Law legal

STATE AND SOCIETY AFTER THE FALL
● Our Lady of EDSA Shrine (Mary, Queen of Peace) was
consecrated in 1989 as a symbol of the 1986 EDSA
Revolution that brought down a dictator; EDSA then
became a natural place to rally against other threats to
democracy.
● The uprising gave the Philippines a special place in the
wave of “democratization” as the revolution came to
look like a trendsetter in other democratic movements
worldwide.
● Within the Philippines, the EDSA Revolution was a
symbol of the sisterhood and brotherhood of the
nation; it represented a spiritual unity to rival the 1896
Revolution.
● The memories of people power are true to the symbolic
life of the nation, but we should also remember what
people power was not, in the political
sense.

We should also remember that People Power…
● WAS NOT an act of unmediated love of nation or a dissolving of social divisions
Filipinos came to EDSA as members of social forces opposing the dictatorship in varying
degrees for varying lengths of time 一as student activists, Catholics, business executives, or
urban-poor leaders.
● WAS NOT the result of consensus among those social forces
The revolution was sparked by mistakes made by Marcos (calling the election) and the
action of one opposition force (RAM’s coup).
● DID NOT include all the social forces opposing Marcos
It had little relevance to the Muslims and represented a defeat of sorts for the Communist
Party of the Philippines.
● WAS NOT a sustainable political action, even as a form of revolutionary change

STATE AND SOCIETY AFTER THE FALL
● The limits of people power then became evident when
the constituent elements and forces of the EDSA
Revolution returned to politics during the presidency of
Corazon Aquino (1986–1992), and were determined to
ﬁnd expression in her government’s policies.
● Cory Aquino’s dilemma was how to deal with Marcos’
devastation of the nation’s economy while restoring full
constitutional rule via this coalition of often antagonistic
interest.
● Her political and policy choices would be dictated by
contingency, habit, and ideological outlook.

Aquino’s Legacy
● President Cory Aquino inherited an excessively
centralized, thoroughly discredited state with an
economy in crisis and a nation with a growing
proportion of poor citizens.
● Although Marcos was now gone, the forces he
had nurtured were not and presented two
immediate challenges:
■ Separate attempts to overthrow the
government were made by Marcos
loyalists in the AFP and RAM.
■ Aquino faced the international debt
inherited from the previous
government, estimated at $27.2 billion
in 1986.

Aquino’s Legacy
● Aquino vetoed radical changes in economic policy and decided to honor the
country’s debt obligations “fully and unconditionally instead of declaring a
selective moratorium to address the resource transfer issue.”
● She enrolled the Philippines in the recovery programs of the IMF and World
Bank, which required meeting a series of reform targets to liberalize the
economy—ending agricultural monopolies and favoritism in industrial projects,
reducing tariffs, and lifting import controls.
● She mended ties with the United States, assuring its leaders that the Philippines
would honor the military bases and other security commitments.
● To restore democratic government, she appointed a constitutional commission
broadly representing her coalition, and in February 1987, a new constitution was
submitted to popular referendum.

Aquino’s Legacy
The 1987 Constitution…
● Reﬂected the diverse makeup of its drafters in how they honored various
elements of society—the family, women, labor, and the private and other
“sectors” (such as the peasantry and cultural minorities).
● Enshrined the goal of “a more equitable distribution of opportunities,
income, and wealth”.
● Promoted social justice and created economic opportunities based on
freedom of initiative and self-reliance.
● Restored, most importantly, the pre–martial law constitutional system
consisting of a president and vice president elected by popular vote in
national at-large elections., bicameral legislature, and independent
Supreme Court.

Aquino’s Legacy
● The 1987 local and legislative elections featured 90 percent voter turnout, but the
restoration saw the return to power of many “dynastic” families that had
controlled politics in the pre–martial law period.
● The most bitterly fought battle was for comprehensive agrarian reform to end
decades of rural exploitation and impoverishment.
● The Communist Party of the Philippines (CPP) brieﬂy participated in peace talks
before they withdrew in February 1987.
● When the CPP renewed its war against the state, Aquino ordered
counterinsurgency operations to resume and combat the CPP insurgencies.
● Aquino became known for her “middle ground” political legacy describing it as “a
peaceful political transition . . . protected every step of the way by the military.”
● However, her legacy would also be a curse on her successors, for it dictated a
delicate balance between strengthening state capacities and the need to assure
a rightly skeptical public of the state’s commitment to democracy.

Reformists and Trapos
● An important element of support for the new regime
came from reformist nongovernmental organizations
(NGOs) and people’s organizations (POs).
● G. Sidney Silliman and Lela Garner Noble deﬁned NGOs
as “any voluntary organization that is independent of
both the government and the private business sectors.”
● According to James Putzel, POs are
“membership-based organizations, like farmer
organizations, trade unions, women’s organizations,
community organizations, and cooperatives, which are
set up primarily to promote the interest of their
members.”
● Basically, the educated professionals and other staff of
NGOs mediate with business and the state, raise funds,
run social welfare programs, or otherwise advance the
interests of the sectors, while POs directly represent
them.

● Republic Act 7160, Local Government Code 1991, was passed to reinvigorate local
governance and was part of the efforts to restore the state’s democratic identity.
It devolved some of the powers of the national government to local and provincial
governments, increase their share of revenue allotments, and give them the right to
impose property taxes on state-owned or -controlled corporations in their localities; NGOs
and POs would also ﬁnd space for participation in governance in this arena.
● No single organization with a nationwide network capable of dominating the
political arena was left after Marcos ended the two-party system (Nacionalistas and
Liberals) that was followed by the splintering his Kilusang Bagong Lipunan (KBL) in
1986.
● After some time, new organizations approximating a national party emerged一
Laban ng Demokratikong Pilipino (LDP, Struggle of the Democratic Filipino) and
the Lakas ng Bansa (Strength of the Nation, or Lakas).
● Even so, they were less the uniﬁed patronage parties of old than coalitions of
factions and smaller parties kept tenuously together by patronage and pork barrel
politics.

● “Trapos” (traditional politicians) sensed opportunity in the new political context and
many forged alliances with NGOs and POs.
● NGOs and POs agreed to the “tactical alliances” to expand their knowledge of
“parliamentary struggle” and piggyback onto the trapo networks to build their own.
● Agencies run by NGOs/POs and business and middle-class Aquino allies pursued
governance agendas with professionalism and efficiency.
● Examples of “islands of state strength” that flourished under reformist supervision
were:
■ the Finance Department and the Central Bank, which sought to shed their
Marcos-era cronyism;
■ the Department of Health, which pushed for a generic prescription drug
program; and
■ the Housing and Urban Development Coordinating Council, which
successfully brokered with Congress and urban poor NGOs and POs to
craft an urban land reform law beneficial to city slum dwellers.

● The NGOs and POs also brought different popular sectors into the state and one
sector that experienced unprecedented prominence in the political arenaーwomen.
● Apathetic middle-class and elite women supported Aquino, after Marcos belittled
her as a presidential rival, and they formed a boisterous and inﬂuential group that
cemented support for her presidency in the “golden ghettos”; many of the
professional women among them later served in her administration.
● The structural and political remnants from the authoritarian past abutted
democratic practices exploited by reformists and trapos alike.

ECONOMIC RECOVERY AND
STATE REBUILDING
● Aquino’s decision to honor the country’s ﬁnancial
obligations, dismantle import controls and monopolies
that protected crony enterprises, and initiate trade
reform halted the downward spiral of the economy
handed down by the Marcos era.
● Foreign investment began to return, rising from $564
million in 1987 to $2.5 billion in 1992.
● The value of exports doubled in the same period,
reaching $8.8 billion.
● Government spending on public works, education, and
infrastructure grew, while “countryside development
programs” were restored with the assistance of grants to
NGOs and POs.
Between Recovery and Crisis

● However, honoring the Marcos-era debt also brought disadvantages:
■ Eighty percent of the country’s foreign debt was held by the public sector.
■ The government paid $3.5 billion per year—about 10 percent of the
GDP—to service this debt.
■ The “foreign debt hemorrhage caused a huge drain on the budget and
severely limited the government’s options.”
■ Domestic debt soared to $12.3 billion in 1990, and each year from 1987 to
1991, payments on foreign and domestic debt consumed between 40 and
50 percent of the national budget.
● Toward the end of her term, the deﬁcit severely constrained Aquino’s ability to
address social welfare problems, infrastructure needs, and rehabilitation.

● The major earthquake in 1990 followed by the volcanic eruption of Mount Pinatubo
the next year and devastating ﬂoods in the central Philippines also added to the
country’s travails.
● Remittances from overseas Filipino workers reduced during the 1991 Persian Gulf
War.
● The Senate declined to renew the military bases agreement with the United States,
costing the treasury $480 million annually in rent.
● More fundamental problems of poverty surfaced and income disparity remained
evident.
● In the late Marcos period, 49.3 percent of Filipinos lived in poverty; this ﬁgure
declined to 46.5 percent during Aquino’s term.

● Despite the seriousness of this economic situation, government intervention was
not dictated for this was precluded by two factors:
■ Aquino’s ﬁrm commitment to her particular interpretation of “democracy”
and the public’s lingering mistrust of state power made intervention
undesirable.
■ The state was essentially bankrupt due not only to the burden of debt
repayment but also to lost revenue (many wealthy Filipinos were not so
eager to do their civic duty and were committing tax evasion).
● NGOs and POs tried initiate social welfare projects through the tremendous ﬂow of
external funding granted by different countries from 1986 to the nearly 1990s
however, these actions could not replace comprehensive state efforts to alleviate
poverty and correct income inequality.
● The return of democracy was a welcome development, but the new regime’s ability
to foster economic prosperity was found wanting.

A Declaration of State Strength
● Nearing the end of Aquino’s term, she endorsed Fidel
Ramos as her successor who was popular among
Filipino and Chinese-Filipino businessmen because of
his “professionalism”.
● He won the presidential election in 1992 only a slim
majority and began his term with a vision of
institutional and economic reform.
● In contrast to the state under Marcos, Ramos pledged a
“strong state” anchored in “people empowerment” and
committed to “a policy environment” in which
reformists could pursue their “economic, political, social,
cultural, and spiritual aspirations.”
● Ramos having detailed economic strategy declared his
goal to turn the Philippines into an “economic cub” by
2000; he used the term “strong state” to signal the
intention to face down family conglomerates’ control of
key industries.

● Ramos meant to focus on rebuilding and reshaping the economy; the institutional
reforms he pursued in the ﬁrst four years of his term should therefore be seen as
serving his economic goals.
● Ramos, and his strong vision of national economic development embraced
liberalization more fully and started the country on an economic path that it
followed until late 2003.
● Trade liberalization…
■ involved lowering tariffs and lifting quantitative import restrictions on
hundreds of goods (notably, not rice);
■ removing capital controls to allow capital to ﬂow unimpeded in and out of
the country; and
■ opening previously restricted sectors and industries to foreign ownership
● These policies yielded some impressive results such as increased in foreign
investment, growth of export zones, and moderate improvement in employment
also increased domestic demand.

● However, export-oriented industrialization did not continue to perform as expected
for instead of expanding its share of GDP and employment, the industrial
sector—led by manufacturing—actually declined from 1990 to 2002, from 34.5
percent of GDP to 31.6 percent.
● Economists Romeo Bautista and Gwendolyn Tecson maintain that a few years of
trade policy reform alone cannot produce sustained growth especially only years
after the Marcos regime.
● Prominent globalization critic Walden Bello argues, to the contrary, that Philippine
technocrats indiscriminately lowered tariffs hoping to replicate the 8–10 percent
growth of other ASEAN countries, but fundamentally misread those nations’
“selective liberalization.”

● Privatization was the second pillar of Ramos’ economic strategy.
● After the fall of Marcos, the government took control of nearly eight hundred
companies that were either non-performing due to plunder and mismanagement
or were proven to have been illicitly acquired.
● The maintenance of these assets was a significant drain on the national accounts
driving Ramos to speed up the sale of these two categories of firms where many of
the latter were reacquired by their former owners (such as the Lopezes) or by
former Marcos cronies (such as Lucio Tan, who purchased Philippine Airlines).
● From 1987 to 1998, privatization earned the government almost 300 billion pesos, or
$12 billion and this revenue helped balance the budget and restore “both fiscal and
monetary control.
● Ramos’ was determined to make the Philippines competitive for international
investment and so he targeted the telecommunications industry which was
through 1992, monopolized by the Cojuangco-owned Philippine Long Distance
Telephone (PLDT).

● In early 1993, despite opposition from some of the country’s top business leaders,
Ramos ordered the creation of a “universally accessible and integrated national
network”, thus allowing new investors to enter the market and compete in
providing telecommunication services.
● In terms of direct poverty alleviation measures and addressing the increasingly
woeful state of agricultural sector, Ramos did less.
● In revenue collection, Ramos projected a cigar-chomping, hands-on image, but
even here the “strong state” had some very weak spots.
● Tax reform did raise revenue, but pervasive corruption in the BIR and widespread
evasion by business limited its effectiveness; failure of government to prosecute
notorious tax evaders such as former Marcos crony Tan underscored state weakness
and encouraged more evasion.

● In the realm of governance, the country’s local government units (LGUs)
enthusiastically welcomed the implementation of the Local Government Code,
which devolved the powers of several national agencies to the provincial, city, and
town government.
● The most often cited success story of devolution combined with liberalization was
the unprecedented growth in the mid-1990s of Cebu (although the “Ceboom” also
had negative social and ecological consequences).
● But administrative decentralization did not reduce overall government expenditure
for the the increased share of tax revenues and power to levy local taxes led to
uneven management and heavier revenue obligations.
● LGU deﬁcit spending rose from 543 million pesos in 1992 to 2.09 billion pesos in
1998, while annual LGU unliquidated cash advances (public money spent for which
no receipt has been produced) rose from 358 million to 2.3 billion pesos in the same
period.

● In 1996, Ramos signed a peace treaty with the Moro National Liberation Front and
its leader, Nur Misuari, and was elected governor of the constitutionally mandated
Autonomous Region in Muslim Mindanao (ARMM).
● In 1998 and 1999, the ARMM provinces of Tawi-Tawi, Basilan, and Sulu led the
country in unliquidated cash advances.
● Sixty-six percent of the ARMM budget went to personnel services, “leaving only 14%
and 20% for maintenance [and] operating expenses and capital outlay, respectively
● However, Ramos cannot control ARMM’s expenditures without jeopardizing the
MNLF agreement that kept the peace in the southern Philippines.

● After World War II, the state had refused to accept the
Chinese community as part of the national community,
as reﬂected in their economic exclusion under Garcia’s
Filipino First policy.
● In the 1970s, Ferdinand Marcos recognized the Chinese
community’s value as political allies, and the greatest
beneﬁciaries of this, of course, were those businessmen
who became Marcos cronies (e.g. Lucio Tan).
● In 1984, Chinese-Filipino businessmen and black market
operators aided Marcos as he desperately tried to
restore the country’s economic stability by setting up an
underground “central bank” to regulate the peso–dollar
exchange rate on the black market and help stabilize
the currency at a time when it was under speculative
attack.
DEMOCRATIZATION OF THE
CHINESE-FILIPINO COMMUNITY

● During the presidency of Corazon Aquino, the position of the state vis-à-vis the
Chinese-Filipino community weren’t changed with their economic presence still
highly visible; controlling interest in four large private banks and many other
industries.
● In the 1990s, the Chinese became full members of the Philippine nation.
● However, in the mid-1990s, there was a surge of bank robberies and kidnappings of
wealthy Chinese-Filipino businessmen committed by criminal networks
representing the ﬂotsam of the Marcos years (former and active soldiers, policemen
and anticommunist vigilantes, former NPA guerrillas, and armed units of the MNLF
not beneﬁting from the peace agreement)
● Between 1993 and 1997, the number of victims ranged from 179 to 286 per year and
the total yearly ransoms grew from $2.5 million to $10.4 million.

● In 1997, instead of a new economic tiger, Manila was known as “Asia’s
kidnapping capital.
● Ramos admitted that his administration had failed to contain a crime that
“lacerated Philippine civil society” and this reinforced public fear of the
state’s deteriorating effectiveness.
● Wealthy Chinese-Filipino families opted to send their children abroad and
beefed up their private security forces.

UNRAVELING OF THE PHILIPPINES 2000
● Another notable failure during the Ramos
administration was the banking industry, which staved
off all but the limited entry of foreign ﬁnancial
institutions.
● But when an Asian crisis sparked in 1997, among the
countries hit by it, the Philippines was noteworthy for its
resilient weathering of the storm and experienced
neither a general banking crisis or prolonged negative
GDP growth.
● Observers agree that reasons for these were…
■ the Philippines’ lower exposure to debt at the
time
■ strong capitalization; requirements and
regulations on the country’s banks imposed
by the Bangko Sentral ng Pilipinas; and
■ the 1997 remittances of overseas Filipino
workers

● Throughout Ramos’s term, the success of national-level reform initiatives was due
to some very old-fashioned—and costly—patronage bargaining with congressional
leaders.
● The cost of pork barrel and other “discretionary” funds reached nearly $1 billion in
1997—allocations on top of the customary annual pork barrel allocation of 62.5
million pesos ($2.4 million) per member of Congress.
● Ramos admitted that 20 percent of the government budget was “lost to corruption
every year.
● Ramos’ integrity was stained more when allies in his political party allegedly
accepted two billion pesos from a company bidding for a Manila Bay reclamation
project.

● In 1995, police authorities arrested one Abdul Hakim Murad, who confessed under
torture to plans by an Islamic group to assassinate Pope John Paul II on a Manila
visit and to plant bombs on American airlines ﬂying out of the Philippines.
● A band of kidnappers calling themselves the Abu Sayyaf Group also gained
notoriety when its kidnapping sprees reached international tourist sites in Malaysia
and the Philippines and when it set off bombs in Manila and Mindanao.
● The Moro Islamic Liberation Front (MILF), another group that signaled its intent to
carry on the separatist war abandoned by the MNLF, a glimpse of its ﬁrepower and
mass base by staging a million-strong rally in central Mindanao.
● The political tremors were indications that peace was still an elusive goal in the
country.
● Ramos tried to deal with these threats by lobbying Congress for an antiterrorism
bill, but he was rebuffed by his own allies and widely criticized by the public for
resorting to Marcos-era tactics.

● Ramos was in favor of switching to a parliamentary system of government.
● In 1996, there was an initiative to gather sufﬁcient signatures for a constitutional
convention to pursue charter change (dubbed “Cha-Cha” in the Philippine press).
● As the 1998 presidential elections neared, many were alarmed that If Estrada was
unqualiﬁed to be president and no one else was as popular, wouldn’t a late-term
conversion to a parliamentary system allow Ramos to stay on or run again to
become prime minister?
● Ramos’ attempt to evade the one-term limit triggered more outrage from social
forces already critical of his economic policies.
● He was accused of threatening democracy and endangering individual freedoms
with his antiterrorism bill and wanting to stay in power in violation of the
constitution.
● Disillusioned with Ramos, Filipinos turned to Joseph Estrada for hope.

State and Society in the Philippines (Chapters 8 and 9)

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