US embassy cable - 05MANILA1594

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001594 
 
SIPDIS 
 
DEPT FOR EAP/PMBS 
NSC FOR GREEN 
DOD/ASD/ISA/AP FOR BG ALLEN 
 
E.O. 12958: DECL: 04/06/2015 
TAGS: MOPS, MARR, PTER, PINS, PREL, RP 
SUBJECT: ADMIRAL FALLON'S VISIT TO THE PHILIPPINES 
 
Classified By: (U) Political Officer Paul O'Friel 
for reasons 1.4(b) and (d). 
 
1.  (C) SUMMARY.  President Arroyo told Admiral Fallon during 
his March 28-30 visit she intends to move Southern Command 
(SOUTHCOM) headquarters to Pagadian in order to take the 
fight closer to Abu Sayyaf Group (ASG) and Jemaah Islamiyah 
(JI) terrorists.  National Defense Secretary Cruz's focus on 
Philippine Defense Reform (PDR) includes fixed tenures for 
the Armed Forces of the Philippines (AFP) Chief of Staff and 
Superintendent of the Philippine Military Academy.  Cruz 
predicted it will take 3-4 years for major changes to take 
root, and has in place a new leadership team to see the 
process through.  He claimed that anti-terrorism legislation 
would be at the top of the GRP's agenda once both houses of 
Congress had passed a value-added tax bill.  END SUMMARY. 
 
2.  (C) Incoming US Pacific Command Commander Admiral William 
Fallon's March 28-30 orientation visit to the Philippines 
included meetings on March 29 with Secretary of National 
Defense Cruz and AFP Chief of Staff General Efren Abu. 
Admiral Fallon joined Ambassador and President Gloria 
Macapagal-Arroyo on a March 30 trip to Mindanao to inspect 
USAID-funded infrastructure and other development projects in 
the vicinity of Camp Abubakar, Maguindanao, the former 
stronghold of the Moro Islamic Liberation Front (MILF) 
captured by the AFP in 2000. 
 
SOUTHCOM TO MOVE 
---------------- 
 
3.  (C) On the margins of a lunch with local officials at 
Camp Abubakar, President Arroyo noted that she had directed 
Lieutenant General Alberto Braganza, the commander of 
SOUTHCOM, to move his headquarters forward from its present 
location in Zamboanga to Pagadian (currently the headquarters 
of the 1st Infantry Division) to fight better ASG and JI 
terrorists.  LTG Braganza subsequently stated that he planned 
to complete the move, which would also involve the transition 
of the 1st Infantry Division to Zamboanga, "before the end of 
the year."  (Note:  The SOUTHCOM Chief of Staff separately 
indicated that this timeline might even be accelerated to 
mid-summer 2005.  End note.) 
 
CRUZ'S PRIORITIES 
----------------- 
 
4.  (C) In his meeting with Admiral Fallon, Secretary Cruz 
laid out five major priorities: 
o Philippine Defense Reform (PDR); 
o the Capability Upgrade Program (CUP); 
o supporting the peace process with the MILF; 
o improving the RP's anti-terrorism capabilities; and, 
o upgrading the quality of life (e.g., housing) for Filipino 
soldiers. 
 
DEFENSE REFORM 
-------------- 
 
5.  (C) Elaborating on PDR, Cruz said he is focused on 
implementing the 10 major recommendations of the 2003 Joint 
Defense Assessment, noting that the arrival of US subject 
matter experts should speed up improvements in key areas, 
such as defense acquisition and personnel management.  Among 
his targets is a fixed three-year tenure for the AFP Chief of 
Staff and the Superintendent of the Philippine Military 
Academy (PMA).  "Change the tenure, and you change the 
landscape (of the AFP)," Cruz said.  As an example of the 
need to reform, he ruefully pointed to the PMA's 
entrant-to-graduate ratio, which now stands at 36-percent. 
"My goal is 65-percent," Cruz stated. 
 
6.  (C) Cruz added he hoped to reduce personnel costs, which 
now account for 75-80-percent of the AFP's budget.  "We need 
to change the tooth-to-tail ratio," he said, noting AFP 
troops were performing a lot of "non-core" jobs, such as 
guarding ballot boxes and participating in anti-smuggling and 
anti-kidnapping task forces.  Despite "a lot of screaming," 
Cruz said he was slowly making headway on this objective. 
Other envisaged personnel reforms would include transitioning 
from a fixed ratio of general officers to a position-based 
system and ending use of the lineal list for promotions. 
Cruz expressed sharp frustration with the lineal list, 
likening it to an "escalator process" where officers had to 
"wait for someone to die" to get promoted.  "We need a system 
of deep promotion," he said. 
 
7.  (C) To implement his reform agenda, Cruz said he had 
established a calendar of regular meetings with AFP Chief of 
Staff Abu and the major service commanders to discuss issues. 
 Asked how long he would stay on as Defense Secretary, Cruz 
projected it would take 3-4 years to put in place major 
changes, and was confident that his new all-civilian senior 
leadership team would help see the process through.  Cruz, 
who expressed disappointment that the present 400-person DND 
civilian staff was not performing at a "professional level," 
said his target was to create a pool of 30-40 professionals 
who could serve as a catalyst for change. 
 
CAPABILITY UPGRADES 
------------------- 
 
8.  (C) The CUP consists of an 18-year program separated into 
three six-year tranches aimed at addressing the AFP's most 
compelling equipment needs to win the counterinsurgency 
fight, according to Cruz. With a rough total budget of P110 
billion (approximately $2 billion), the priority is on 
mobility: trucks, patrol craft, and -- most importantly -- 
helicopters, of which Cruz hopes to obtain 100 more for the 
AFP inventory. 
 
MILF PEACE PROCESS 
------------------ 
 
9.  (C) Cruz spoke optimistically of the GRP's peace process 
with the MILF, claiming there is "consensus to push ahead." 
He indicated the GRP is prepared to engage constructively on 
the "ancestral domain" issue and was confident the 
Malaysian-brokered peace talks set to resume on April 16 
would succeed. 
 
ANTI-TERRORISM 
-------------- 
 
10.  (C) Looking beyond the AFP, Cruz said he wanted to 
improve the GRP's broad-based anti-terrorism capabilities, 
including improving inter-agency coordination within the 
Anti-terrorism Task Force.  Cruz claimed anti-terrorism 
legislation would be at the top of the GRP's legislative 
agenda, once both houses of Congress had passed a value-added 
tax bill. 
 
CHIEF OF STAFF FOCUSED ON NCO DEVELOPMENT 
----------------------------------------- 
 
11.  (C) Separately, AFP Chief of Staff Abu told Admiral 
Fallon that, after 35 years of dealing with insurgencies, the 
Philippine people were "fed up."  The AFP had to make itself 
more capable to respond to and deal with these threats.  Abu 
described his goal as tailoring the AFP for counterinsurgency 
operations.  "We need to shoot, move, and communicate," he 
stated, noting he had reduced the number of "J" staff 
positions from 11 to 7.  Abu added he was spending a "lot of 
effort" on PDR, and was specifically focused on developing 
non-commissioned officer (NCO)training.  Undersecretary for 
Defense Reform Ernesto Carolina in his meeting with Admiral 
Fallon underscored the importance of NCO training.  Fifteen 
AFP instructors who had just completed training at US schools 
in Hawaii would form the core staff for the centralized NCO 
Academy located at the 2nd Infantry Division, and would focus 
on instituting change. 
 
COMMENT 
------- 
 
12.  (C) While strongly applauding the concept of bringing 
the fight closer to the terrorists, we are not sanguine that 
SOUTHCOM's transition from Zamboanga to Pagadian will occur 
seamlessly.  Unlike Zamboanga, Pagadian has no direct flights 
to Manila, and its infrastructure is inadequate to support a 
headquarters.  A better choice might have been Cotobato City, 
which does have direct flights, and whose 6th Infantry 
Division is bearing the brunt of current combat operations 
against ASG/JI terrorists hiding in the Liguasan Marsh and 
the Kraan Valley. 
 
13.  (C) Cruz has put together a talented team of civilian 
undersecretaries, three of whom come directly from 
high-paying jobs in the private sector, and we are encouraged 
by his professed commitment to put together a core cadre of 
professionals who will serve as a catalyst for change.  The 
Philippine Defense Secretary has the right instincts to focus 
on a fixed tenure for the Chief of Staff, "J" staff, service 
chiefs, and PMA superintendent as the only means of seeing 
through reform.  However, to beat the insurgents he also 
needs to end the revolving door at SOUTHCOM, and identify and 
keep in place a tough commander who can find, fix, and finish 
the terrorists.  End comment. 
 
14.  (U)  Admiral Fallon did not have an opportunity to clear 
this message. 
Visit Embassy Manila's Classified website: 
http://www.state.sgov.gov/p/eap/manila/index. cfm 
Mussomeli