US embassy cable - 05MANILA2277

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 002277 
 
SIPDIS 
 
E.O. 12958: DECL: 05/18/2015 
TAGS: PREL, PTER, MARR, ECON, OVIP, RP, CH, BM, IZ, SU, ID 
SUBJECT: THE DEPUTY SECRETARY'S MAY 5 MEETING WITH 
PRESIDENT ARROYO 
 
 
Classified By: Acting Political Counselor Joseph L. Novak 
for reasons 1.4 (b) and (d). 
 
1.  (U) May 5, 2005; 10:00 a.m.; Manila, the Philippines. 
 
2.  (C) Summary:  President Arroyo underscored to the Deputy 
Secretary on May 5 that she considered the U.S. to be the 
 
SIPDIS 
Philippines' closest partner in dealing with security, 
economic and other issues.  She confirmed that her government 
strongly supported efforts to combat terrorism and was moving 
forward with anti-terrorism legislation.  She stated her 
support for negotiations with the Moro Islamic Liberation 
Front (MILF) but remarked that the MILF's division into 
different factions made negotiations difficult.  The Deputy 
Secretary noted the importance of defense reform in the fight 
 
SIPDIS 
against terrorism.  Arroyo agreed and asked that the U.S. 
provide similar support for the Philippine National Police 
(PNP).  The Deputy Secretary said we would look into this. 
Arroyo said she was pleased with her government's economic 
reforms, but admitted that they were painful for much of the 
populace. 
 
3.  (C) Summary (Continued):  Turning to regional and 
international issues, Arroyo said Chinese President Hu 
Jintao's recent visit had gone very well.  It was her view 
that China wanted stability in the region and knew that it 
had responsibilities that came with its fast-growing economy. 
 The GRP remained concerned about Burma taking over ASEAN's 
rotating chairmanship and believed that Burma would defer due 
to opposition from other ASEAN countries.  Arroyo said the 
GRP maintained good relations with Indonesia and she was 
impressed with President Yudhoyono.  The Deputy Secretary 
asked for Philippine support in the UN Security Council 
regarding Sudan and Darfur.  Arroyo replied that the U.S. 
could count on continued strong support.  The Deputy 
Secretary also briefed President Arroyo about progress in 
 
SIPDIS 
Iraq.  End Summary. 
 
4.  (C) President Arroyo underscored to the Deputy Secretary 
that she considered the U.S. to be the Philippines' closest 
partner in dealing with security, economic and other issues. 
She remarked that the millions of Filipino-Americans were a 
living example of our enduringly close ties.  Relations had 
improved since she and President Bush had taken office in 
2001, and September 11 in particular had drawn the two 
countries together.  The Deputy Secretary expressed 
appreciation to the GRP, noting that the U.S. wanted to 
continue to work closely with the Philippines.  He was going 
to visit Corregidor later in the day to underline the 
lasting, historical nature of the U.S. partnership with the 
Philippines. 
 
5.  (C) The Deputy Secretary noted that the GRP had made 
counter-terrorism a high priority and he asked about progress 
in that area.  Arroyo said one of her government's highest 
priorities is to enact comprehensive anti-terrorism 
legislation, and the GRP now believed it had enough support 
in the House and Senate to move it forward.  She emphasized 
that there would be no compromise on the issue of terrorism, 
but she added that terrorists had been embedded in Mindanao 
long before she had become president.  The GRP was doing its 
best to root them all out and destroy their enclaves. 
Departing from the standard Philippine view that the New 
People's Army (NPA) posed the most serious threat to the 
country, Arroyo pointedly declared that destroying the JI 
(Jemaah Islamiyah) was its highest priority.  She warned, 
however, that the war against terrorism would be a protracted 
struggle.  For example, many terrorists were freely using sea 
routes in the region to transit from country to country. 
This ease of access had to be addressed. 
 
6.  (C) The Deputy Secretary asked about the MILF and the 
situation in Mindanao.  Arroyo responded that the MILF was 
not a cohesive group, which made negotiations difficult. 
Murad Ebrahim, the MILF leader, had support from many in the 
group, but not from everyone.  Some elements of the MILF were 
cooperating with the JI.  Nonetheless, negotiations with the 
MILF would draw the more moderate members of the MILF towards 
a more peaceful solution, and the recent talks in Kuala 
Lumpur on such issues as ancestral domain had gone well.  NSC 
Advisor Gonzales remarked that he was both optimistic and not 
optimistic about the talks.  He noted that he was worried 
that the MILF might take an intransigent position regarding 
ancestral domain, which would be difficult to reconcile. 
Arroyo said the GRP would continue war with those MILF 
elements who coddled the JI, and the GRP had communicated 
that to Murad.  The President thought that most people in 
Mindanao wanted peace.  There were elements, however, in some 
areas where there has been conflict who were hawkish, verging 
on "anti-Muslim."  These elements really did not support 
negotiations with the MILF, fearing that the government might 
give in on too many issues.  As the elected president with 
five years left in her term, however, Arroyo said she was no 
longer too worried about her political situation and wanted 
to do the right thing.  Overall, the GRP would continue to 
deploy a comprehensive political, military, and development 
strategy to defeat terrorism.  Focusing excessively on any 
single aspect of this strategy would not succeed.  The Deputy 
Secretary agreed that such a comprehensive strategy was 
 
SIPDIS 
needed -- the U.S. knew that well in regards to its own 
engagement in Iraq and elsewhere. 
 
7.  (C) The Deputy Secretary, noting that the issue had been 
discussed in an earlier meeting (septel), cited the success 
of defense reform in the Philippines.  Arroyo agreed and 
asked that the U.S. provide similar support for reform and 
modernization of the Philippine National Police (PNP).  She 
said she believed that the same template -- including a 
baseline assessment -- that had been used for defense reform 
would also work for the PNP.  The Deputy Secretary replied 
that he would look into how we could assist in this area.  He 
commented that it was also important that the GRP give PNP 
reform a real push. 
 
8.  (C) The Deputy Secretary asked about the government's 
economic reforms.  Arroyo said her administration was moving 
forward with a comprehensive package and having success in 
doing so.  She believed, for example, that her 
administration's proposed two percent rise in the Value Added 
Tax (from 10 percent to 12 percent) would win legislative 
approval soon.  However, the reforms were difficult and had 
proved painful for many people.  Her popularity, in fact, had 
suffered and she had to walk a tightrope at times.  Asked 
about tax revenues, Secretary Purisima admitted that 
enforcement was a problem.  Another problem was that many 
export and other enterprises were duty free and not subject 
to tax. 
 
9.  (C) The Deputy Secretary asked about Chinese President Hu 
Jintao's April 26-28 visit.  President Arroyo offered her 
view that China wanted stability in the region.  Hu Jintao 
indicated that China supported the Six-Party Talks and 
constructive engagement with Taiwan.  Queried about whether 
China had given any hints regarding its fixed currency 
exchange rate, she replied that she had little information on 
where the Chinese stood on that, but Hu Jintao knew that 
China had responsibilities that came with its fast-growing 
economy.  Asked about China-Japan tensions, the President 
said she believed that the two countries wanted to reconcile. 
 Prime Minister Koizumi's recent comments had been eloquent 
and hopefully would calm down the situation.  China appeared 
to have been worried that anti-Japan protests might get out 
of hand. 
 
10.  (C) The Deputy Secretary commented that the U.S. wanted 
to see ASEAN strengthened further, and that it would be a 
serious setback for our ability to engage if Burma assumed 
the rotating chairmanship of the organization in 2006. 
Arroyo said the GRP shared this view and had always been on 
the front lines supporting democratic change in Burma.  The 
Deputy Secretary said he had understood from the Thais that 
Burma seemed inclined to defer taking the chairmanship. 
 
11.  (C) Asked about Indonesia, Arroyo said she was very 
impressed with President Yudhoyono, although she did not know 
him well.  Based on her experience during the recent 
Asian-African Summit, Indonesia appeared to be going through 
a very difficult time in the aftermath of the tsunami.  The 
Deputy Secretary remarked that he would be visiting Aceh 
Province to check on the relief efforts there.  Arroyo 
indicated satisfaction with the exchange of information 
between the GRP and the Indonesian government in the area of 
counter-terrorism. 
 
12.  (C) The Deputy Secretary noted that the U.S. considered 
the Philippines' role on the UN Security Council (UNSC) to be 
important.  The U.S. hoped to be able to call on continued 
Philippine support on Darfur.  There appeared to be signs 
that perhaps the political dynamics in Sudan were turning 
positive and that that could help the situation in Darfur. 
Arroyo replied that the GRP would continue to support the 
U.S. at the UNSC. 
 
13.  (C) The Deputy Secretary shared some impressions from 
his mid-April visit to Baghdad and Fallujah.  In the 
aftermath of the January elections, a real political process 
was taking hold.  Further political, military and economic 
engagement by the U.S. and other international partners was 
crucial.  A comprehensive approach that included political, 
economic and security elements will be necessary to defeat 
the insurgency in Iraq and put the country on a long-term 
path.  The U.S.and Europe would host a conference on June 22 
to show support for the new, democratically-elected 
government of Iraq.  There had been many inefficiencies built 
into the Iraqi economy over the years by Saddam Hussein's 
regime and much work was needed to improve the economic 
situation. 
14.  (U) Participants: 
 
U.S.: 
The Deputy Secretary 
Ambassador Francis J. Ricciardone 
EAP Deputy Assistant Secretary Marie Huhtala 
D Executive Assistant Ross Wilson 
D Special Assistant for Outreach and Public Affairs 
Christine Davies 
D Personal Assistant Lisa Martilotta 
Public Affairs Officer Adam Ereli 
D Special Assistant Christian Castro 
Deputy Chief of Mission Joseph A. Mussomeli 
Political Counselor Scott D. Bellard 
Deputy Political Counselor Joseph L. Novak (Notetaker) 
 
Philippines: 
President Gloria Macapagal-Arroyo 
Executive Secretary Eduardo Ermita 
Defense Secretary Avelino Cruz 
Finance Secretary Cesar Purisima 
Trade and Industry Secretary Juan Santos 
NSC Advisor Norberto Gonzales 
Press Secretary and Presidential Spokesperson Ignacio Bunye 
Acting Secretary of Foreign Affairs Edsel Custodio 
Assistant Secretary for American Affairs Ariel Abadilla 
 
15.  (U) D Staff has reviewed has reviewed this telegram. 
 
Visit Embassy Manila's Classified SIPRNET website: 
http://www.state.sgov.gov/p/eap/manila/index. cfm 
 
You can also access this site through the State 
Department's Classified SIPRNET website: 
http://www.state.sgov.gov/ 
MUSSOMELI