At least there is visibility
The idea that any visibility is good visibility will be put to the test tomorrow as Philippine President Gloria Macapagal-Arroyo comes calling on US President Barack Obama, the first Southeast Asia head-of-state invited to do so. While the visit is likely to draw attention to the Philippines’ relative resilience to the global financial crisis and its free-wheeling democracy, its inability to match its neighbors’ rate of growth and development, endemic corruption and poverty, and chronic rebellion in the context of increasing political turmoil will more likely be the media’s focus.
In fact, as early as Sunday the conservative The Washington Times criticized Mr. Obama for extending the invitation, suggesting that it would provide a level of credibility undeserved by Mrs. Arroyo’s administration. “The choice of Mrs. Arroyo for this honor was a mistake because Mr. Obama is being used to give political cover for the Philippines president’s troubles back home,” the paper argued.
The Times editorial enumerated the weaknesses that have kept the Philippine economy from breaking out like those of its neighbors. Foremost among them is corruption, as described in a Freedom House report : “Corruption is extensive throughout the Philippine state apparatus, from the lowest to the highest levels. Bribes and extortion seem to be a regular element of the complex connections among bureaucrats, politicians, businessmen, the press and the public.”
Buttressing that report, the editorial raised the Philippines’ poor ranking in Transparency International’s Corruption Perceptions Index, noting that “the level of Philippine corruption is tied with Iran and Yemen and worse than in dodgy places such as Libya and Nigeria.” Pervasive corruption has also affected relationships with Philippine allies. The Times cited the example of the Philippines’ 2004 seizure of the Terminal 3 complex of the Ninoy Aquino International Airport-Mrs. Arroyo called the seizure “historic ”-which was being constructed by a company partly owned by the German state government of Hesse (31.52%) and the city of Frankfurt (20.13%). According to The Times editorial, German Chancellor Angela Merkel is demanding that the Philippines repay Fraport A.G. $60 million.
The editorial also cites human rights issues, including violence against journalists, and recent alleged attempts by the administration to extend the tenure of Mrs. Arroyo as the end of her term approaches next year. With Mrs. Arroyo and Mr. Obama scheduled to meet tomorrow in Washington D.C., The Times editorial is likely to be just the first of a number of close examinations of the Arroyo administration, its record, and the reasons behind Mr. Obama’s invitation.
Mrs. Arroyo appears to view Monday’s State of the Nation Address and the meeting with Mr. Obama as an opportunity to showcase her accomplishments, and in the latter case, to do so on the world stage. To be fair, the Arroyo administration is not without notable accomplishments. But the harsh reality is that those accomplishments have been frequently overstated, and even when they weren’t, they have been deeply overshadowed by a debilitating series of alleged corruption scandals.
Corruption is nothing new to Asia. A look at the recent examples of Japan, South Korea, and Thailand shows that the fall of former and current heads-of-state on corruption charges is fairly common. However, the Philippines stands out from these examples in several ways. Consider just two of the ways that the Philippines is different from other scandal-racked Asian governments.
First, typically the head-of-state is thrown out of office, constitutionally or otherwise. Thailand’s former Prime Minister Thaksin Shinawatra was overthrown by the military almost three years ago. Japan has had three prime ministers in less than three years. Former South Korea Prime Minister Roo Moo-Hyun was so hounded by allegations of corruption that he took his own life after leaving office. While Mrs. Arroyo came to office in a popular uprising in 2001, disenchantment with her presidency seems to have convinced political and business elites, the church, and middle-class professionals that the extra-constitutional overthrow of a government doesn’t yield desirable results.
Second, all of these countries-including Thailand-are economically better off than the Philippines, and rake in billions of dollars more in foreign direct investment annually. So while corruption scandals clearly have a negative impact on them, they are far less devastating on a per capita basis than in the Philippines. As we know, the Philippines receives dramatically less job-creating foreign investment than virtually all its neighboring economies, including fast-developing Vietnam.
Perhaps this week’s visibility will pay off nevertheless. But it is more likely that investors will instead become even more nervous about risking job creation in the Philippines.