As we head into 2004, the Philippines faces its usual array of challenges. According to most regional economic forecasts, the country is doing moderately well on standard business and fiscal indicators. I will try to provide an updated analysis on the Philippine economy and a few prognostications about the long-term prospects in an upcoming Pearl.

In the meantime, wanting to get Pearl back on track in '04, why not a quick commentary on the political shenanigans that currently dominate the local news? I don't follow local events as closely as I used to, and my inside connections are limited (and reserved for when I need 'em), so nothing earth shattering is to be expected. Just an off-the-cuff commentary providing some context on Philippine elections and unfiltered comments on early developments in the '04 electoral campaign. I'll throw in a political/election year glossary for good measure.

I once referred to observing Philippine politics as being "more fun than a barrel of monkeys" (see Cronies and Booty Capitalism). I still agree with the "barrel of monkeys" descriptor, but no long consider it fun given my own growing stake in this country. In that early (1999) column, I argued that:

"The Americans imposed the good old red, white, and blue political system, replete with bicameral legislature, regular elections, and colorful campaign speeches - the picture perfect system for politically ambitious mestizo families. Their provincial kingdoms were located far away from Manila, protected from national integration by the lack of a national language. The elites already spoke Spanish, and quickly learned English, but politics back home were still carried out in the local language - Tagalog, Ilocano, Cebuano, Visayan, whatever. This allowed the most powerful families to develop regional power bases, many of which exist to this day (e.g., the Montanos of Cavite, the Duranos of Danao, the Osmeñas of Cebu, the Pardo de Taveras of Manila)"

A sterling example is provided by the Senate, which has always been an old boys' club with minimal accountability. Over the last three years, however, the situation has deteriorated as Senators have polarized into Arroyo supporters and opposition members (largely allied with ex-President Estrada) who still question the legitimacy of GMA given that she was never elected. Events of the last few months have revolved around that split, with elements of the opposition being overtly or covertly behind many of the weird events of the last few months (like the abortive Oakwood mutiny, (see Strange Sunday in Makati). At least the latter event brought to the surface the simmering resentments of many younger officers, who are rightly pissed off about perceived corruption in the higher ranks and their own undeniably too-low pay.

While the Philippine Congress (the lower house) has its weaknesses and corruption, at least it generates reasonable bills that need to be passed into law. The problem is that there are now piles of such legislation bottlenecked at the Senate door, as the Senators themselves are too busy mudslinging and engaging in intrigues to sully themselves with something as mundane as passing laws.

Underlying this legislative paralysis is a system of national elections in which Senators are not held accountable to any particular constituency. Instead, the 24 Senators run for election on an alternating three-year cycle (12 slots are open each three-year election, with Senators serving six year terms). The 12 top vote-getters nation-wide become Senators. Competition for the 12 slots is fierce, and it takes a well-oiled machine and plenty of dough to join the club.

Philippine Senators generally represent the second or third generation of elite families, men who have lived lives of privilege and who are accustomed to having things their way. The decision just before Christmas by Secretary of Trade Industry Mar Roxas to step down from his cabinet post to run for a Senate seat is symptomatic. Roxas, the grandson of a President, recognizes that gaining a Senate seat is the ticket to national prominence and immediately qualifies one as a "presidentiable." Indeed, that's one of the main problems, in that all 24 Senators see themselves as viable national candidates. They have already won a Senate seat in national-level elections, so why not Malacañang?

The historical origins of the institutions superimposed by the Americans can be traced to the French Revolution (which overthrew a thousand years of rule by Kings) and the American Revolutionary War. The legal and philosophical principles embodied in the American Constitution and Bill of Rights emerged from a specific set of historical and social parameters, parameters that the Philippines does not, for the most part, share.

There were distortions in implementation from the beginning. During early elections in the first decade of the 1900s, only landowners, taxpayers, and the literate (some 3% of the population) were eligible to vote. The oligarchic elites who were elected set a pattern that remains intact. Although everyone can vote now, that has the perverse effect that national elections depend upon large blocs of votes from the masa, the largely uneducated poor people of the Filipinos, the same masa who elected Erap and now form the bulwark of FPJ's (Fernando J. Poe, Jr., aka Da King) support. The Philippines version of democracy remains elite-driven and, some would argue, feudal in practice.

All in all, call it political theater of the absurd. Although there's a certain entertainment value involved in trying to sort out the various permutations, there's also a nagging feeling that surely something is wrong with this picture. The vested interests/families continue to play internecine power games and give lip service to the need for reform while most Filipinos live on less than $2,000 a year, one in five Filipinos is unemployed, and the population is exploding with projected doubling to 160 million people by 2030. As long as the power structure remains tied to an ossified class system frozen in near-feudal surreality, the real interests of the country will continue to be ignored while legitimate economic and social concerns emanating from lower classes will continue to be squashed (see The Social Volcano). No wonder the various insurgent groups are enjoying gangbuster recruitment these days.

At any rate, the craziness is sure to accelerate over first half 2004, with the campaign looking to be one of the most corrupt and contentious in Philippine history (which is saying something). Prognostications are probably a waste of time, suffice to say that the outcomes are unpredictable and the possibility of alternative (non-electoral) outcomes is always there. Who knows what might happen given patterns of recent Philippines' history (think periodic people power uprisings and frequent coup attempts) and the personalities involved?

No wonder investors are staying away in droves and all the political risk consultancies are posting red flags all over the Philippines in their confidential reports to multinationals.

Following are a few terms that neophyte observers of the Philippine scene might want to get familiar with.

Balimbing. In American or British politics, politicians are often linked in the public mind to particular issues, with such identifications often being high profile and career-defining. As such, it is hard for a politician to change his/her position (i.e., pull a 180) and get away with it. Not so in the Philippines, where major league issue switching and party jumping are common. The balimbing is a multi-sided fruit and provides a perfect metaphor for ideological chameleons. Marcos was the master, often switching positions on issues in the midst of political campaigns. During the 1969 presidential campaign, finding himself under pressure from the Americans, who were concerned about the gradually increasing nationalist bent of his first term, Marcos suddenly decided that he was less concerned about giving preference to Filipino capital, not so hot on the idea of trading with the Eastern Bloc, and supportive of the American bases after all. Marcos also switched parties with alacrity throughout his career.

Celebrity politics. The Philippines has a long tradition of electing movie stars and TV celebrities to high office, and celebrities have often been heavily involved in political campaigns. Many of the older current celebrities actively supported Marcos. Of those elected, the most famous of course is Estrada. Others include Tito Sotto (a Senator, and also a 1970s-era singer in one of my wife's favorite OPM bands (OPM = Original People's Music, referring to Filipino pop music of a certain age and time), Bong Revilla (former Senator, now head of the Videogram Regulatory Board, where he fights video piracy and poses as gangbuster on billboards overlooking the Pasig River), Loren Legarda and Noli de Castro (newscasters), and Robert Jaworski (a Philippine Basketball Association legend, see Pinoy Hoop Dreams). Indeed, Ninoy Aquino used his credentials as a journalist to catapult into visibility, as did Edgardo Angara (the current erstwhile kingmaker). The list goes on. The budding candidacy of FPJ represents a continuation of this phenomenon, as do the choices of Noli de Castro and Loren Legarda as Vice Presidential candidates by GMA and (reportedly as of this writing) FPJ.

Envelopmental journalism. Journalism becomes "envelopmental" when it involves envelopes of crisp cash to sway the take on particular stories. A related term is AC-DC, which stands for attack-collect, defend-collect, as when as reporter lambastes a person in order to collect money (from the attacker), then turns around with a defense of that same person to collect money (from the attackee).

Guns, goons, and gold. Philippine elections have always been acrimonious, with widespread cheating related to the fact that poorly paid officials tally tens of millions of votes by hand. Results from far-flung areas in this archipelago of 7,100 islands usually take weeks to come in. These dynamics have been described for the last half century as "guns, goons and gold." Efforts of COMELEC (the Commission on Elections) to computerize the 2004 tally have fallen short, and apparently the new vote-counting machines will only be used in selected geographic areas and only a fraction of an estimated 41 million eligible Filipinos have been registered. Of some concern are the moves by COMELEC to stop the National Movement for Free Elections (Namfrel), a private watchdog group, from holding its traditional election quick-count - if this pushes through, 2004 would be the first election in two decades without such an independent count (a small check and balance).

Pork barrel. The pork barrel plays a key role in Philippine politics in general, but especially during election years. Pork barrel funds were abolished by Marcos when he imposed martial law, but were re-established by President Aquino in 1990 as the Countrywide Development Fund. Now known as the Priority Development Assistance Fund (PDAF), the pork barrel is a readily available, handy-dandy source of cash for campaigning, patronage, and kickbacks. The pork barrel includes the so-called "PDAF soft allocation" and appropriations made by the Department of Public Works and Highways (DPWH). Senators are allocated about P200 million ($3.6 million) in pork barrel funds, and Congressmen P100 million ($1.8 million). Those amounts represent significant clout in the Philippines' impoverished economy.

Power brokers. It is useful to differentiate political power brokers from business power brokers. Traditionally, political power brokers have been dominant, as epitomized by the powerful Negros sugar bloc in the old days (see Sugar Cane, Sugar Cane). Even today, many congressmen owe their seats to powerful landholding interests and national elections are often decided by old-fashioned horse-trading. Who can deliver how many thousands of votes at what price per head? However, the power of the old political power brokers has declined relative to business power brokers.

Business power brokers have a long history of using their money to influence Philippine elections, with the usual suspects including logging interests, large agribusiness concerns, and financial institutions. Consider, for example, the case of Henry Stonehill, an American GI who returned to the Philippines in 1949 to set up a business importing American cigarettes. He made a fortune, and soon diversified into steel, cotton, glass, cement, and publishing. His political contributions were legendary, including a million pesos (when a million pesos represented real money) given to candidate Carlos Garcia in exchange for promises to approve preferential measures for American tobacco imports; he also gave P 1.5 million to the senior Macapagal campaign. For once, there was a huge political scandal (mostly because he was American), leading to Stonehill's deportation (early 1960s) at Macapagal's order.

Today, the key business power brokers often represent Filipino-Chinese businessmen (tsinoys), who are dominant in the Philippine retail sector (e.g., Shoemart = Sy, Robinsons = Gokongwei, etc.) and with a prominent presence throughout the economy. The Philippines has a long history of Chinese businessmen bankrolling candidates, and Marcos gave tsinoys preferential treatment. Interesting sidenote: Many of the leading families have a "co" prefix or suffix (e.g., Cojuangco (Cory Aquino's family), Tianco, Cuenco, Tiangco). That comes from the Hokkienese "k'o", a term of respect for older males, and symbolizes that the families descended from the mestizo families of Chinese-Filipino marriages. Remember that the Chinese were already dominant economically under the Spanish during the second half of the 1800s, and consolidated their power by stepping smoothly into political power under American colonialism (whose institutions proved malleable to many purposes other than those for which intended) (see Golden Dragon Ruminations for some background on the key role played by the Chinese in the Philippines).

Trapo. This term is translated literally as "dishrag," but in Filipino slang creates a nice double entendre for "traditional politician." FPJ is relying heavily on old-line trapos (think Enrile) for support in his bid.

Tsismis (pronounced "cheese-mis"). Tsismis (gossip) is a national sport in the Philippines, which you discover the first time you try to keep a secret in Manila. Journalists also practice this, and the "news" as reported in the press does not reflect the double-verified facts Westerners expect. Indeed, read four local papers in the morning and you're likely to come away a bit confused about what's really going down given the wildly contradictory accounts of who is backing whom, who is running for what, etc.

At this early date, the outcome of the mid-2004 election is unpredictable, and poll results in the Philippines are unreliable, contradictory, and subject to number-fudging depending on who paid for a particular survey. While GMA clearly has faults, a strong case can be made that she has never been given a real chance to implement a coherent program given the paralysis described above. She might, with luck, evolve into the leader the country needs if she wins a clean election.

However, the bottom line is that this election is bringing out a lot of the underlying warts and raising a lot of anxiety. Investors are staying away in droves. Although the growing call center and outsourcing business represents a bright spot, it is only a spot (see Globalization Revisited). What this country needs is jobs, lots of them, in agriculture, in industry, in services, in electronics. What this country needs is a responsible legislative system in which representatives of the people make policies that address people's needs instead of grandstanding and feeding at the trough. What this country needs is major reform and strong leadership that recognizes the gravity of the problems facing the Philippines.

What this country will get, however, remains an open question.