Thursday, June 24, 2004

MANILA — After six weeks of squabbling, the Philippine presidential election drama has ended with Gloria Macapagal Arroyo declared the winner with a comfortable margin of 1.2 million votes.

The 57-year-old economist will have little time to savor victory, however. Once Asia’s second-leading economy after Japan, the Philippines has slipped to near the back of the pack in most yardsticks of development. Despite Mrs. Arroyo’s impressive resume — dean’s list at Georgetown University, Ph.D. from the prestigious University of the Philippines — expectations about her ability to make a significant dent in the island nation’s staggering array of problems are low.

“The Philippines isn’t failing,” said John Forbes, of the U.S. Chamber of Commerce here. “It’s flailing.”

Overpopulation is partly to blame. With one of the highest birthrates in the world, at 2.4 percent, this country of 80 million will double in population in 30 years. “At that speed of growth, having an economy that can cope is almost impossible,” said Manila-based business consultant Peter Wallace.

About one in every two Filipinos is poor. About 7 million work abroad, some as accountants or nurses but more as maids or sailors.

The unusual willingness of Filipinos to support poor relatives back home accounts for the lavish shopping malls amid deep poverty, patronized not by a stable middle class — which doesn’t exist — but by lower-income consumers funded by visits to the Western Union counter. One popular shopping center even features artificial falling snow — in the tropics.

Former Finance Minister Roberto de Ocampo estimates that at current population growth rates, gross domestic product would have to grow at 10 percent a year for a full decade just to reach the per capita income level of Thailand today.

“While we are benefiting from the current phenomenon of Filipinos being in demand abroad,” he said, “this cannot be our eternal lifeline.”

Despite the presence of the politically powerful and socially conservative Roman Catholic Church, birth control is widely available — but only to those who can afford it. Mrs. Arroyo, a devout Catholic, is not expected to break new ground in family-planning programs.

A second reason why the Philippines remains a chronic underachiever — despite its long history of democracy and educated, English-fluent work force — is corruption. Systematic graft, particularly in tax collection and public procurement, has siphoned funds from the severely strained treasury and is responsible for the country’s inadequate and shoddy infrastructure.

The World Bank reckons the Philippines has wasted as much on graft in the past two decades as it has received in foreign aid.

The Arroyo government argues that it has made inroads on corruption by introducing online procurement and investigating bureaucrats with suspiciously opulent lifestyles. Critics discount these measures.

“Mrs. Arroyo is not known to be a risk-taker,” said Sheila Coronel, executive director of the Philippine Center for Investigative Journalism. “She is very much a product of this establishment. She’ll be very reluctant to step on toes.”

Security is another key issue for the administration. A badly compromised judicial system, underfunded and ill-equipped military and widespread poverty are fertile ground for kidnappings, coups and insurgents, some with links to al Qaeda.

In terms of garden-variety criminality, however, the streets of New York or Washington are more dangerous than Ayala Avenue or Paseo de Roxas. Filipinos complain that a casual CNN viewer might equate the sprawling Philippine archipelago — with its state-of-the-art outsourcing centers, electronics factories, food processing plants and glittering Makati financial district — with a few remote terrorist bases 500 miles south of the capital on Mindanao.

Yet until the government puts an end to the violence in the country’s heavily Muslim southern islands, most tourists and foreign investors will stay away from the Philippines.

Mrs. Arroyo could defy her critics and, exploiting her one-time only, six-year mandate to push for a bold and enlightened agenda.

The constitution bans the incumbent from seeking a second term, but this will be Mrs. Arroyo’s first term as elected president. Mrs. Arroyo was vice president under President Joseph Estrada, who was driven from office in 2001, and completed his term.

Boosters such as Bernardo Villegas, senior vice president of the University of Asia and Pacific, say that in that case, Philippine growth could surge to the tune of 8 percent per year, comparable to the economic growth rates of China, Vietnam or India.

But most predict Gloria II will be much like Gloria I, leaving growth at around 5 percent.

“Radical reform tends to come out of crisis,” said Steven Rood of the Asia Foundation. “I think we will avoid a crisis — which will reduce the incentive for radical reform.”

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