Our (Potentially) Three Wars

“War is the continuation of politics by other means.” – Carl Von Clausewitz

Last week the Colombian Government and the Revolutionary Armed Forces of Colombia (FARC) signed a peace agreement which ended the last armed conflict in the Americas. The 52-year war killed 220,000, displaced 5 million people and scarred generations for life.

The Philippines is in two wars with the (theoretical) potential for a third. The first is with the Communist Party (CPP), the second with Muslim dissidents in Mindanao and the third with China.

The conflict with the CPP and its military arm, the New People’s Army, is ironic: It is the most ambitious in scope –the overthrow of our Government- yet the easiest to resolve and the most inconsequential if it is not. Time is on our side waiting for Joma, 77, to move on. Communism is a historical anachronism that has been discredited even by its two staunchest supporters, Russia and China. The Oslo negotiations are much ado about nothing. That Duterte is even in talks is because it is politically low-lying fruit, it would be a nice feather in his cap, Joma was his former law professor and because he believes Sison & Co. are nationalists at heart and the President has a thing for patriots.

Our conflict with the CPP has many parallels with Colombia. They are both ideological often masking plain banditry, they have lasted for over half a century, and have almost the same number of armed supporters, 4,000 for the NPA and 7,000 for FARC. The resolution will most likely replicate the Colombian peace principles –reconciliation rather than retribution- and its deliverables namely surrender of firearms in exchange for amnesty, rehabilitation, financial assistance and a formal seat in the political process.

Our dispute with the Muslim dissidents is more complex. It is religious, historical, cultural, economic and political. It is about restitution and justice. It is about separation and probably eventual independence. The operative word in the negotiations is “autonomy” which in our Constitutional framework is an oxymoron. Our Government defines autonomy as a separate room in one house, its Muslim counterparts as the house itself. The Government defines it as a state in small caps, the other side as a state in big caps. There are many moving parts: Can there be democracy in a land ruled by strongmen and family fiefdoms? Does the MILF with whom we are negotiating represent the will of the people? Can they deliver on their commitments when there is the MNLF and now increasingly ISIS? As in the Middle East will Bangsamoro devolve into tribal warfare –witness the Ampatuans versus the Mangudadatus in Maguindanao -with Philippine soldiers and their families doing the heavy lifting? Is any agreement sustainable over the long run? Is separation a precursor to secession?

Our dispute with China, by contrast, has no moving parts. It is monolithic. It is simply a land-grab by a militarily and economically superior nation interested in the territories’ oil potential and strategic geography. The International Tribunal has declared the disputed island are ours and China says so what. Possession is 99% of the law. China has similar disputes with Japan and other Asian nations so we are a test case for China’s resolve. On paper the divide is insurmountable. On one hand China has declared the islands’ sovereignty is non-negotiable, on the other President Duterte cannot surrender our claims without violating his constitutional oath to protect the Motherland. He could be impeached for treason. So on what basis can negotiations proceed?

The Constitution and our sovereignty apart, the Philippines’ interest in the disputed islands is in protecting our fishermen and in the potential for oil in the area. The negotiations led by Ex-President Ramos could well center around these commercial points in exchange for our dribbling the ball on the sovereignty issue. The plan could include any or all of the following: One, Filipino fishermen will be allowed unfettered access to the area either on an exclusive basis or in some agreed formula with Chinese fishermen. Two, both countries will agree to the joint exploration and development of oil fields with concessionary terms for Philippine companies. Three, China will provide the Philippines a significant economic aid package (tied to Chinese investment in Philippine enterprises especially infrastructure) with a specific component for Filipino fishermen; and favored trade access for Philippine companies. Four, China will crack down on the export of drugs to the Philippines. Five, both countries will agree not to populate or otherwise display any form of territorial presence in the disputed islands. For optics, there may even be a mutual non-aggression treaty. Six, both countries will establish a panel that will pursue talks on the sovereignty issue and oversee the foregoing items. The panel will negotiate until hell freezes over.

Effectively the Philippines will be economically compensated for perpetually agreeing to disagree with China. It will be a face-saving and constitutionally defensible position for the Philippines. It will give China the strategic posture it desires and offer a possible template for its disputes with other Asian nations. It will allow China to stay within the bounds if not the margin of international law.

The Philippines is facing three fronts of conflict. The one with the CPP is the least consequential and easiest to resolve. Our dispute with China gives us the fewest options: We will have to eat humble pie but will be financially rewarded for it. The conflict with our Muslim brothers is the most sensitive and complex. Any resolution is possibly unsustainable over time. It is the one that will test the political skills, vision and resolve of our leaders.

The War On Drugs

The Senate hearings on the War on Drugs told us less about the war than about the attendees namely the Senators, the Police and The Victims.

Never ones to miss public exposure, the Senators were out in full force (20 of 24) at the televised proceedings, ready to play to the crowd. With a few exceptions, the self-preening  outmatched the enquiries which themselves bore dubious relation to aiding legislation. One smartly attired junior Senator whose time was clearly less valuable than his nice watch; spent the better part of his monologue to remind us every testimony has two sides. Thank you, Sir, for that.

The Police was represented by General “Bato” De La Rosa on one side and by two junior officers accused of extra-judicial murder on the other. For the record, Bato is awesome. He is Kojak, Dirty Harry, a teddy bear and your favorite uncle rolled into one. He is fearless, direct, compassionate, funny, seemingly honest, reactive and tough. Think pet mastiff. Bato will be a Senator or VP in 2022.

Bato is helping to restore trust in the PNP but he has a long way to go. The hearings did not help. The police officers, PO1 Alipio Bato and Michael Tomas, have been accused by the PNP of murdering two small-time drug pushers/users; but you would not think so by the looks of it. The PNP higher-ups visibly fawned over them on national TV offering them at one point legal advise. The brotherhood was closing ranks which must have sent a chill to the relatives of the victims. I repeat these are the men the PNP charged with murder.

Then there were the Victims, a group of hooded, sobbing, masked, brave but frightened young women whose relatives were reportedly salvaged by the police. Looking at the treatment accorded the accused policemen by their superiors, these young ladies should be concerned. Gen. Bato offered to house them in his spare room.

Three things emerged from the hearings: One, the extrajudicial assassinations are principally witness-cleansing on both sides of the fence posing as vigilante killings.

Two, the PNP is not in control of its own. Not only are there rogue cops but there are over-zealous police officials who in their effort to impress have gone beyond the call of duty. In what is reminiscent of Stalin’s Great Purge, Nazi Germany and Mao’s Cultural Revolution, the Paranaque Chief of Police recently advised residents of BF Homes to expect visits for drug searches. Gen. De La Rosa admitted that was out of line.

Three, drug menace is now endemic and cannot be solved by simply slaying the offenders. It requires a comprehensive approach that combines an unrelenting pursuit of druglords and narco-officials with a compassionate rehabilitation of the users. The second part of the equation is missing.

There are over 600,000 drug dependents who have ”surrendered” to the authorities with another 1.2 million to go. Yet there is no formal program to deal with the problem. There are only 44 rehab centers in the country. The Dept. of Health and the local barangays are overwhelmed by the flood of emerging druggies. It is reportedly chaos. There is nobody in charge. The President should urgently create an inter-agency committee to oversee and co-ordinate the various efforts on the ground.

The War on Drugs requires a universal solution that includes health, education, livelihood, law enforcement, judicial adjudication and funding. The DFA should urge China to stop the export of drugs to our country. The War needs a humanitarian face that will show local and international critics the battle is not about killing every drug offender but about curing a disease, securing the nation, preserving families and restoring thousands of young lives.

Duterte has chosen to go lone wolf on the war on drugs. That is his nature, that is what he is accustomed to in Davao. Should he reach out to his other colleagues in Government to expand the scope of the war? For example, should he create a War On Drugs Commission made up of the President, Chief Justice Sereno, Senate President Pimentel, House Speaker Alvarez and the appropriate executive and police agencies to map out a total program that will address the many moving parts in the drug war? The commission would have an Enforcement arm to be led by Gen. De La Rosa, a Rehabilitation one to be headed say by the VP, a Judicial component to expedite the issuances of search warrants and special drug courts; and a Legislative arm to craft the necessary laws.

The Commission will show the world the entire Government is on the same side of the war. It will encourage the various branches to talk to each other rather than point fingers. The Judiciary in particular is a huge part of the problem and needs to be brought onside. It will be a display of unity at a time when the country is divided by misinformation, intrigues and constitutional disputes.

The President has started a ripple that has grown into a wave. He is right. In the early phases of the War on Drugs he needs to move quickly and decisively. He must be able to act unilaterally unfettered by the niceties, compromises, bureaucracy and endless talk inherent in consensual action. But as the groundswell builds there will be a need to broaden his sweep both within the Executive branch and with his co-equals in the other branches of Government to have them buy into the initiative and deal with the unintended consequences and collateral damage. Otherwise he risks having the wave he has created break into an uncontrollable tsunami of fear and disarray.

Why Not Outsource The Cell Sites?

The internet is one of society’s greatest equalizers. It makes every Filipino more competitive by allowing him access to information be it for a better education, healthcare, job, technology, suppliers or markets. Universal broadband is a Duterte priority.

In the Philippines mobile and fixed internet is provided by two telcos, PLDT and Globe. Internationally Philippine internet is reportedly among the slowest (just ahead of last place Afghanistan) and costs 3.5 times the global average. This is due allegedly to the absence of frequencies and to bureaucratic delays in rolling out fiber optic cables for fixed and cell sites for mobile transmission.

We have enough unused frequencies. The problem is they have been hoarded by companies hoping to cash in on their worth. Globe and Smart recently “acquired” valuable frequencies from San Miguel-controlled companies for P70 billion. The Philippine Competition Commission is reviewing the transaction over the objections of the telcos. The deal raises questions of anti-trust (did the telcos act in unison, does it deter a new entrant?) and whether SMC was entitled to sell unused frequencies which belong to the nation and should have been returned to Government for auction to the highest bidders.

The second obstacle to improved telecom services is in rolling out the infrastructure. There are 21,000 cellsites in the Philippines, 15,000 of which are in towers and 6,000 in buildings. The U.S. has 300,000 and Indonesia 76,000 towers. To achieve the tower density of the U.S., according to Globe the Philippines would need 64,000 sites. Building towers is expensive (over $100,000 per tower) and plagued by obstacles: Local Government permits (25), site location, negotiation with land owners, opposition by home residents concerned with the health effects. Globe alone has a backlog of 3,000 towers yet can only roll out 480 a year. At this rate it would take them 6.6 years or the term of the President to fill its backlog.

Smart and Globe are very profitable and proud of it. This is needed, they say, to bankroll their large capital investments. The two companies have a return on equity of over 25% which is very attractive in an era of near-zero interest rates. This suggests there is room to drive down prices to the consumer.

Critics claim Globe and Smart compete in service but not in price. A new entrant would promote competition. Telstra, the Australian telco, considered entering the market with San Miguel Corp. but backed out for unknown reasons. These may include valuation, the robustness of the spectrum (PLDT and Globe threatened to challenge SMC’s frequencies), the entrenchment of Globe and Smart, and the costs of rolling out the infrastructure. It was estimated the venture would require at least $2 billion largely for the cell sites.

Here is a suggestion: Why not all cell sites be outsourced to a tower company owned by the Government or in partnership with the private sector including the telcos? The Tower Co. would buy the current cell infrastructure of Globe and Smart and lease them back to them. It would also build out the new ones. In Australia cell towers are Government owned, in the U.S. and Indonesia they are privately owned by third parties.

The proposal has some advantages. With Government muscle, the Tower Co. can fast track the infrastructure. The Government might use Emergency Powers to overcome legal, consumer and bureaucratic obstacles.

At say a depreciated value P3 million per site, the cost to buy the telcos’ existing 15,000 cellsites is P45 billion. Double that to build new ones. Tower Co. could finance the total of P90 billion through the auction of frequencies, loans and by going public. If the Government and not SMC were to have sold the frequencies bought by the telcos, it would have covered over half the funding requirement. The Government could borrow the rest by “securitizing” the loan with the telco rental agreements and liquidating it from lease payments. There would be no need for a Government guarantee. Tower Co. could be floated as a Real Estate Investment Trust (REIT) –the legislation is already in place- to allow public participation and to reduce Government’s up front cash.

The proposal would reduce the capital requirements for new entrants and allow the existing players to deleverage their balance sheets. This would promote price and service competition.

It would slash the cost of duplicating cell sites. Globe and Smart each have their own towers. By “co-locating” (sharing cell space), the Tower Co. could halve the site requirements and soft costs –insurance, rentals for land use, security and maintenance; allowing sites to be deployed more quickly and cheaply.

The Tower Co. and the telcos would have to agree on the purchase price of the sites and the lease-back rentals which are in fact related. The Government could sweeten the package by bundling the proposal with frequency allocations and tax incentives e.g. waive the VAT on the sale of the cell sites and allow any auction premium to be tax amortized.

Our country needs to accelerate the roll out of broadband to be globally competitive. One way is to outsource the cell-site network. This will reduce the costs and expedite the deployment of new infrastructure and promote competition to the benefit of consumers. It may require legislation, some Government heavy-handedness and private sector co-operation but with the thrust and political capital of the President that should not be a problem.

The Perfect Job For Leni

Mr. President, Mr. President, I have the perfect job for Ms. Robredo!

Finding a suitable Cabinet spot for the Vice-President has not been easy. Duterte initially balked at giving her any at all since he was unsure of her loyalty and continuing ties to the LP family. But after a first meeting he volunteered to share his coco-water with her, escorted her to her car and offered her the post of HUDCC head. The unit co-ordinates the various agencies involved in the national shelter program.

The relationship between Rody and Leni is developing but not without some heartbreaks and awkwardness. The President has been taken by her genuine passion for the Filipino and her real desire to help. In a Cabinet meeting he singled her out as “attractive” which is true but not necessarily a high bar in a group of male septuagenarians.

However there has been tension with Leni’s public pronouncements questioning the President’s doctrine on human rights and extra judicial killings. As one elected by over 14 million Filipinos, the VP believes she must voice her conscience even if this runs counter to her membership in Team Duterte. She is being true to herself which I imagine is part of what the President saw in her but presents a problem nonetheless.

The post of HUDCC head also does not play to Leni’s strengths. It is a legacy of the past when Binay held the position, almost an after thought (ok, what else do we have here?) and is better filled by a professional manager adept at the rudiments of construction and finance. Leni’s experience and advocacy is as a public defendant and in community development, not in building 1.4 million homes and overseeing billions in mortgages.

How can the VP’s core competence and beliefs be used to further the President’s principal agenda, his war against drugs? I suggest Rody appoint her as his Drug Rehab Czar.

There are reportedly 3 million drug users. Multiply this by 4 to include their families and you have 12 million Filipinos who would directly and indirectly benefit from returning the dependents to the fold. The Drug Rehab Program is huge and important. A 50% success ratio would still be 1.5 million youths saved.

For the war on drugs to be effective it must address the demand and the supply side of the equation. It cannot just be about eradicating the drug sources by blitzing its lords-the evil genius will always find a way- it must also stop the dependence of its users. The latter means molding health, education, counseling, legal support, social services, livelihood, law enforcement, funding, local government, NGOs, Church, and high level co-ordination with Cabinet heads; into a platform and spreading the template over 42,028 barangays.

It requires learning about best practices the world over. It means engagement with families and immersion in the communities. It talks to all that the VP has advocated, all that she has worked for in her times in Naga; now bolstered by the weight of the Vice-President’s office and the credibility of her persona. Leni would be the ambassador and overseer of the program.

For Leni, the job would let her appreciate the damage drugs are doing to the nation and how one has to break eggs to cook an omelet. It would allow her to travel the country and get to know the real situation on the ground not only with respect to drugs but also to the other aspects of the Filipino condition. She can feed this information back to the President and the Cabinet on how their programs are actually benefitting -or not- the country.

The President has launched a shock-and-awe attack on druglords and their protectors. It has been widely criticized for being brutal and quasi-illegal. The Drug Rehab Program will provide the soft side to the hard tactics of the President. It will be the humanitarian face of the war, the ying to the yang, the glove to the fist. It will show that the President’s crusade is not simply about extra-judicial assassinations but about the cure to a disease, about relief to parents, about the security of communities and about the restoration of dignity and livelihood to those who have succumbed not by choice but by circumstance. It will silence the critics that oppose his cold-hearted approach.

In the drug menace we have the unique opportunity to turn a national crisis into an opportunity. We have the chance to showcase to the world how to solve a problem that has become pandemic around the globe. The model is a two pronged, holistic initiative that combines a scorched-earth cleansing of drug sources with a compassionate approach to rehabilitation. Would not that be something if we could do that?

Duterte is in charge of the first part, Leni, I suggest, be in charge of the second. Superman and Supergirl. Mr. President, offer Leni the job and see what she can do with it.

45 Days

Forty-five days into his Administration and Duterte continues to rock.

True to his word, the President hit the ground sprinting. He has declared war on drugs  and oligarchs. We have hit the 1000 mark on the number of so-called extra-judicial killings (Is the adjective not superfluous, is there such a thing as “judicial killings”?). There is lament the list does not include smugglers, corrupt politicians and oligarchs. The latter have not been fully named but already some are offering billions for the President’s drug rehab program.

No big time drug lords have been brought down mostly because they are openly living in luxury in Bilibid Prison. But they are anxious. Recently some two-dozen inmates suspiciously died in an explosion while questioning a change in their cells and the warden was brushing his teeth. Perhaps they should have left well enough alone.

The drugs reportedly come from China. This country has annexed our islands by force, is it now also exporting drugs of mass destruction as an instrument of foreign policy?

The extent of our drug problem has taken the country by surprise, prompting a recall for the Death Penalty (Except for Hong Kong, Cambodia, Nepal, Bhuttan and the Philippines, all Asian countries carry the Death Penalty). Some believe the move is unwarranted. They argue the Death Penalty has not proven to be a deterrent, what we need is stricter enforcement of our laws. Sen. De Lima is an advocate of the latter even as she fails to explain what she did about it in her six years as DOJ Secretary. In the meantime Filipinos are paying to feed, house and protect in prison the very criminals who are poisoning the nation.

There are other things going on. The President delivered his State of the Nation Address which technically was not his but his predecessor’s. The speech was a compendium of the usual technocratic programs and the President was best when not following it. He had something for everybody:

To the bleeding hearts: “Human rights must work to uphold human dignity. It cannot be used as an excuse to destroy our country.”

To the faint of heart: “Courage knows no limits, cowardice does. I am undeterred by the fear of failing.”

To the religious at heart: “I am a stickler for the separation of Church and State but not between God and State.”

To the corrupt at heart: “Not a single one of you supported me, only maybe two Governors. But now…”

To the oligarchs at heart: “Do not do things that are wrong. Then we will not fight. This is not personal. “

To the technocrats at heart: “Let us adopt the human approach to governance respecting culture and the environment.”

To the bureaucrats at heart: “If I hear any complaints I will directly visit your office.”

To the Filipinos at heart: “In my quest against drugs, I will put at stake my honor, my life and the Presidency itself.”

What can we make of the man so far? Duterte is as advertised, he is the real deal (either that or he is totally awesome at faking it). He is decisive, simple, unrestrained, instinctive, fearless, God and woman loving, mischievous, incredibly hateful of corruption and drugs; and passionate in his love for the Filipino. He does not take himself seriously but expects everybody else to.

The President does not countenance fakeness. He has been around the block and, except for a few executive selections, is a good judge of character. He is loyal to his chosen ones so do not undermine them without basis. The President is above all true to himself and seeks that in others.

The President likes to intimidate his detractors but respects those who legitimately challenge him. Chief Justice Sereno stood upto him and he apologized. Nonetheless he still bristles at anything that restrains his ability to get the job done.

Duterte is not without flaws: He is irreverent and sensitive to criticism. He has an uncontrollable penchant to go unfiltered from brain to mouth. He blurted something about martial law. He has derided the U.S. Ambassador. Duterte reportedly took affront to the diplomat’s criticism of his human rights record at the height of the Presidential race. He thought he was speaking off the record but as President he must understand he is always on record. Duterte simply cannot help himself.

Actually, his image –whether contrived or not- of a man occasionally out of control is what makes him so effective. With their expensive lawyers and money, crooks, oligarchs and their type have thumbed their nose at authority and the prospect of incarceration. This time it is different. Rody is threatening not to jail them but to kill them, destroy their business and burn their homes and whoever is in it; or something close. He is politically incorrect, he travels off road, he is unconstrained by the niceties of the law. That to the criminal mind is scary.

There is little unsolicited advise to give the President at this time. His biggest danger is of constitutional, diplomatic and personal over-reach, of believing that in a global world he needs nothing but the support of the Filipino. He has a 91% trust rating which gives him a war chest of political capital. How, where and how quickly he chooses to spend it will define his Administration in the near term. Right now he is balancing the weight of public expectations with reality and the limitations of his office.

So far, so good. We just have to get past the tipping point, get to the new normal where we ask ourselves in wonderment :”Why could it not always have been like this?”

 

Who Is Next?

The President has declared war on the country’s oligarchs. He singled out Bobby Ongpin whose company, Philweb, has had its gaming license revoked and saw its shares collapse in the aftermath. The company, or what is left of it, is reportedly for sale.

Who are the next “oligarchs” to be named? This is the question on the lips of Big Business, investors and banks in the wake of the Philweb debacle. Businessmen are worried not only whether they are on the presidential list but who else are: You do not want to be dealing with someone about to go down.

Stock market investors are wondering which is the next Philweb. Bankers are concerned about loan exposure to possible “oligarchs”.

The Merriam-Webster dictionary defines a business oligarch as “a person who belongs to a small group of people who govern or control a business” through political influence and money. In the Marcos era they were called cronies.

Oligarchs became prominent in countries that emerged from Communism like Russia, China and Eastern Europe. The term referred to persons who, using political connections, acquired large businesses from the State on the cheap when these were privatized.

Who are the oligarchs in the Philippines? Here is a clue: If he walks and talks like a duck, he is probably a duck. An oligarch is:

A. Someone who trades on special privileges and not on management or business skills. He cannot legitimately compete in the market place so he uses his special advantages to give him a leg up and deter competition. The special privileges could be a franchise, hoarding of scarce national assets like telecom frequencies, politically protected smuggling and tax dodges; or sweetheart supplier contracts. Oligarchs typically operate in regulated industries  e.g. energy, public utilities, natural resources, gambling, toll roads and ports; where competition is limited and where Government and political influence can disproportionately affect the business outcome. As Duterte said, an oligarch collects money for doing nothing.

B. Someone whose businesses are highly indebted. An oligarch works with OPM (Other People’s Money). He rarely puts his own finances at risk except to jump-start his misdeeds. He borrows heavily from Government financial institutions, overprices his projects, skims the business and leaves his creditors to pick up the pieces. The modern oligarch uses the capital markets –the stock and bond market- to further his purposes: One, he gets greedy investment bankers to peddle his stock and his debt to an unsuspecting public. Two, oligarchs scam the stock market through insider trading. Three, oligarchs use the market to artificially inflate the value of their companies and their personal worth. In one case, a company with net assets of P1 billion has had its stock market valuation ramped to P60 billion which allowed its oligarch owner to land in Forbes’ list of dollar billionaires.

C. An oligarch likes to wheel and deal rather than organically build his businesses. During GMA’s term, a la Russian model, a number of well-connected individuals were able to acquire valuable companies owned by the State and State-controlled pension funds; at below their true worth using coercion and Government bank financing.

D. An oligarch carefully manages his image. To dupe investors and creditors he must be perceived to be extraordinarily influential, skillfull and wealthy. Landing on the Forbes list is a mark of success. So are selfies with the political powers at be. Oligarchs use expensive PR practitioners and lawyers to groom their profile and intimidate their detractors.

How do oligarchs fall or be made to fall from power? Oligarchs trade on smoke and mirrors, they thrive on public misconception of their political and business reach. They are essentially big-time con artists. But just as their businesses are built on a pile of cards, so can they be taken down like a house of cards. This can happen in a number of ways but here is one scenario. The President declares that the oligarch will have his special privileges “reviewed” and his operations investigated. This leads to a collapse in his company’s share price as investors dump his stock. In Ongpin’s case, Philweb’s share price plummeted by 80% or an estimated P20 billion in a matter of days. The fall diminishes the collateral value of the shares which may have been used to secure bank loans. This triggers a “margin call” from the banks for more collateral and, if none available, a notice for the loans to be repaid. Other creditors are spooked and do likewise. This ignites cross default provisions across financial institutions causing a “run” on the oligarch’s highly indebted operations. Personal loans and guarantees are called in. Suppliers stop delivering on credit to the oligarch’s businesses. Clients are afraid commitments cannot be honored. The “credit run” becomes a “business run”. The oligarch is asked to step down from friendly boards for fear of contamination. People stop returning his calls. There is a fire sale of assets and flight of funds. It is a race to the bottom.

So who is the next business mogul to be taken down? The next “oligarch” is whoever Duterte says he is but if you want clues, look for businesspersons with some or all of the following: They are in regulated industries, have listed companies which are opaque, are highly indebted, are protected by franchises or other regulatory fire-walls, are highly dependent on the principal owner; and have a history of duping the country. A few may be “too big to fail” i.e. their collapse could affect the banking system. I could cite a number but it is best we wait for the Presidential pronouncement.

The Leni Connundrum

Leni needs to rethink her situation.

There was a recent news item that questioned her “jet setting” ways. Barely into her election the Vice-President has been to Japan, Bangkok and is scheduled to visit the U.S. All these trips are for official purposes, privately funded and worthwhile but to Filipinos sitting in traffic or otherwise angry with their condition, this feels like junketeering. In politics perception is reality.

This follows pronouncements from her that the spate of drug-related killings is ushering a “culture of violence” and should be investigated. This runs counter to statements of DOJ Secretary Aguirre that such is not needed and Duterte’s insistence that the rub-outs are  fine “if they are within the law”.

It is uncertain whether Leni was speaking as Vice-President or as a member of Team Duterte. She clearly is uncomfortable with the Presidential directives on vigilante killings but has to decide whether to take it or leave it. Publicly taking a stance that is independent of Malacanang will not endear her to the President and will render her ineffective as the nation’s housing czar.

It is complicated. Leni is the only member of Duterte’s official family who is both elected (and cannot be fired) and appointed (and can be fired). She has also become the darling of the nation drawing media attention unique among her peers in the Cabinet. The President has singled her out as “attractive”. She has been seen to now sit at his right hand side when previously relegated to the outer reaches. He has offered to share his coco-water with her. This spotlight as the teacher’s pet is both good and bad: It attracts envy and is fodder for her political opponents who still have hopes of unseating her.

Leni can be VP and Cabinet Secretary some of the time but cannot be both all of the time. She must decide who she is. As the former she believes she is accountable to the nation and must act as its national conscience. As Cabinet Secretary she has a big job to do, must toe the party line however unpalatable this might sometimes be and relinquish some of her independent initiatives. This means rolling up her sleeves –or whatever is the equivalent for females in sleeveless attire- and getting down in the trenches with her colleagues in the Cabinet. She has done it before as public defender and advocate for the poor in Naga. She just needs to do it now on a national scale.

Leni’s position is especially tenuous because of the inevitable comparisons that will be made between her and her boss. Duterte has set a very high bar for public office with his simplicity and hard work. Against this standard of rolled-up sleeves at three in the morning, flying around the world at whoever’s expense hardly a month in office to give speeches to Fil-Americans and to receive international recognition albeit for a good cause; is arguably not the image she wants or needs. God forbid she gets pictured shopping in Market Street, San Francisco even for “pasalubongs”. No, Leni has to be very careful not to be viewed as lightweight.

The President initially had reservations of Leni, that she would be a mole for the Liberal Party, but after an initial meeting he is now somewhat taken by her. If there is anything Duterte likes in a person it is passion for the Filipino. This is why he is so supportive of Gina Lopez despite the opposition from the business sector and its PR lackeys. Leni has this same passion and this is why the President will allow her a degree of leeway. However, the Vice-President should not extend her welcome.

There is an option for Leni  which is to give up her HUDCC post. In a sense she is under-utilized in this position. Leni has many aptitudes but overseeing the construction of 1.4 million homes and a half a trillion mortgage portfolio is I imagine not her core competence. Professional managers could do a better job and they are plentiful. Leni has rarer qualities -credibility, good selling skills and real community experience – which would make her ideal as an ambassador without portfolio marketing the country, raising international funds and supervising grass roots projects.

Duterte offered Leni a Cabinet post as a political gesture and not for executive reasons. Giving VPs operational responsibility is in fact a post-Marcos phenomenon. In the U.S. Vice-Presidents are Cabinet members but do not have administrative functions. So if by mutual consent Leni were to step down as housing head this should not be seen as a loss of confidence by Duterte nor as Leni distancing herself from him. In her new role she could cheerlead the Duterte initiatives she believes in.

Leni could be taken out of the loop of daily governance but that is the price to pay for her freedom. What seems increasingly evident is she cannot have it both ways but that is not necessarily a bad thing for the nation, for the President and for herself.

Beware Of The Change We Seek

There is a proposal to shift to a Federal/Parliamentary form of Government.

The proposal is in fact not a single plan but two, one a shift to a Federal system and second a move to a Parliamentary form. The two are not intertwined. The U.S. has a Federal and Presidential form of Government, many European and Commonwealth countries have a Federal and Parliamentary one. Duterte is advocating a mix of Federal, Parliamentary and Presidential which just adds to the complexity. In one formula the various Philippine regions would become 12 semi-independent states, Congress and the Senate would devolve into a unicameral body who would choose their Prime Minister; and a President who would be directly elected by the people. The President would be in charge of Defense, Police, Foreign Affairs and Fiscal/Monetary policy while the PM would act as his “Chief Operating Officer (COO)”.

The drive for Federalism is ostensibly to decentralize powers from Imperial Manila, alleviate poverty, spread the wealth, decongest the NCR, expedite decision-making and accountability and empower the people. Speaker Pantaleon Alvarez said each State will have its own legislative body and justice system. He cited Hong Kong and Macao as models of federalism. Huh? It will take more than Federalism, I am afraid, to make the Philippines a Hong Kong.

Change, especially quantum change, should not be an end in itself. For it to be meaningful change must be in substance and not in form. The lessons of the Arab Spring and Brexit is that change that occurs in a vacuum can be more detrimental than the status quo. The Arab Spring in Libya, Egypt and Syria released pent up forces that devolved into chaos. The exit of Britain from Europe resulted in a 30% devaluation of the currency and the prospect of a recession. Once the genie is released from the bottle it is very hard to bring it back in.

Can the supposed benefits of Federalism – decentralization of authority and monies- be achieved without destroying the current constitutional set-up? Yes. Resources and administrative powers  can be reallocated through policy, budgeting and legislation e.g. by amending the Local Government Code.

There is no world precedent of recent vintage where a country has moved from a Single State Presidential to a Federal/Parliamentary system and there are reasons for this. Federalism has political costs. In an immature political culture it will strengthen the politics of patronage. It will promote nativism and tribal fiefdoms with their own political and economic agenda. It will institutionalize family dynasties and warlords. With new-found legislative and judicial powers it will legitimize entrenched interests and strangle the very people we want to be empowered. Defenders of Federalism say this will be counteracted by strict anti-dynasty provisions but good luck with that. An Anti-Dynasty bill has been pending in Congress for over 30 years and even if passed will be gamed by the power players.

Federalism has financial costs. In addition to the billions for referendums, etc. there will be recurring costs as the individual States establish duplicate legislative and administrative bodies.

Federalism has judicial costs. It will be a hive  for conflicting Federal and State laws which will have to be adjudicated by an already over-burdened Supreme Court.

Federalism and Parliamentarism will create disruption and paralysis as we move not into one but two new systems of Government. Do we really want to switch horses in midstream when we are on a developmental time clock?

The call for Federalism is an offshoot of the injustices inflicted on our Muslim brothers in Mindanao. But the tail need not wag the dog. Mindanao is a special situation that requires a particular solution. Let us study whether what is good for Mindanao is indeed good for the rest of the nation.

We already have Federalism in this country, it is called the Metro Manila Development Authority (MMDA). MMDA is the central body and the cities are the states. Yet many of the problems of the NCR –the traffic, the degradation of the Pasig River, the urban poor- are due to this arrangement where there are no common rules, where each mayor is his own strongman, where there is no unified vision. And if we want to see what Federalism will do for family dynasties just look at Makati, Taguig, Mandaluyong and other cities in Metro Manila. These communities have been ruled by single families for decades. Is this what we want on a nationwide scale?

As for Parliamentarism, it assumes a strong party system and legislators who truly speak the voice of their constituents. In the Philippines these are really, really big assumptions. A Parliamentary system reinforces the status quo. It does not allow for meaningful change because the Prime Minister is the product of horse-trading among traditional politicians and not the will of the people. Do we really want to be hostage to a bunch of trapos? Note that no parliamentary system in the world has produced transformative leaders like Cory, Obama or even Duterte.

In the proposed Parliamentary/Presidential system, the PM would be the COO to the President. The PM is elected by Parliament members, the President by the people. They have different constituencies: The PM serves his peers by giving them goodies, the President is looking out for the nation, those are widely differing priorities. What if their agendas do not match? And if they do match how does one control the abuses?

As we explore change, let us ask whether the transformation we seek should be in ourselves as Gandhi said and not in the outer manifestation of our ills. Are our problems a failure of the Constitution or a failure of leadership, governance and even the electorate? We want to dismantle the machine but will we know how to re-assemble it and not lose vital parts?

The metamorphosis to a new  political paradigm will involve time, energy, focus and money which might be better used to addressing the real problems of the country like the economy, the environment, corruption, criminality and our judicial system, the stuff our new President is so rightly addressing. It will divide the country at a time when we need to be united.

Let us not buy into a change that is not in our political culture, that is unnecessary, that is expensive, disruptive, has no refund policy and no warranties.