US embassy cable - 05MANILA3163

C O N F I D E N T I A L SECTION 01 OF 02 MANILA 003163 
 
SIPDIS 
 
STATE FOR EAP/EP, EAP/PMBS, EB/IFD, EB/TPP/BTA/ANA 
STATE PASS USTR FOR BWEISEL AND DKATZ 
STATE PASS USAID AND OPIC 
TREASURY FOR OASIA FOR AJEWELL 
USDOJ FOR MCRAWFORD 
USDOC FOR 4430/ITA/MAC/DBISBEE 
 
E.O. 12958: DECL: 07/08/2015 
TAGS: PINS, PGOV, ECON, RP 
SUBJECT: BUSINESS GROUPS JOIN CALLS FOR ARROYO'S RESIGNATION 
 
REF: MANILA 3061 
 
Classified By: Classified by Shawn Waddoups, Acting Economic 
Counselor.  Reason: 1.4(b) and (d). 
 
1. (SBU) Summary: Business leaders in Manila continue to 
call for a Constitutionally consistent resolution to the 
current political situation, but now have added their 
voices to the chorus calling for Arroyo to leave office. 
On July 8, three key business groups, including the 
highly influential Makati Business Club (MBC), issued 
a statement urging President Macapagal Arroyo (PGMA) 
to step down.  This reflected an abrupt change in 
posture for the business community which, until then, 
had been relatively steadfast in its support for her. 
In press statements calling for her now to relinquish 
power, major business groups stressed the importance 
of strictly following the constitution.  End Summary. 
 
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Landing could be hard or soft 
----------------------------- 
 
2.  (C) Charge met with former Foreign Secretary Roberto 
"Bobby" Romulo, an influential business leader and 
advisor to PGMA, on the afternoon of July 7.  Romulo 
said that he and other business leaders "must admit 
their disenchantment" with PGMA and said that this 
weekend is the crucial moment for her presidency.  He 
predicted either a "hard landing" in which Arroyo would 
be forced out of office or a "soft landing" where she 
would be allowed "gracefully" to leave office.  He 
expressed optimism that either resolution would be both 
constitutional and acceptable to business leaders.  He 
and his associates had hoped they would not have to 
face either scenario, but said that it is now clear she 
will have to leave eventually.  Thus, they favor a 
transition that will allow her to exit with minimum 
disruption to on-going reforms.  He was concerned, 
however, that something "untoward" will happen before 
either scenario had time to unfold, and expressed worry 
about leftist forces trying to capitalize on the current 
instability.  He emphasized that the country must 
avoid another "People Power" at all costs. 
 
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Makati Business Club, Finex call for PGMA's resignation 
--------------------------------------------- ---------- 
 
3. (U) The Makati Business Club (MBC), comprised of the 
most powerful and influential business people in the 
country, and the Financial Executives Institute of the 
Philippines (Finex) on July 8 jointly called on PGMA to 
relinquish her post for the sake of national unity and to 
enable the country to move forward.  They said the 
resignation earlier in the day of "key Cabinet members 
representing the core of the President's social and 
economic team" was "a grave loss to the government." 
Concluding that "the President's ability to effectively 
manage the affairs of state has been seriously 
impaired," and that "national interest" did not appear 
to lie above Arroyo's "personal, political interest," 
they asked PGMA to "relinquish her position as 
President," stressing that "all moves for change must 
take place firmly within the context of the 
Constitution."  The MBC's members formed one of the key 
constituencies propelling PGMA to power in 2001. 
 
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MAP joins the fray 
------------------ 
 
4.  (U) The Management Association of the Philippines 
(MAP), composed of over 700 small, medium and large 
companies, also called for PGMA to step down on July 8. 
Noting that the country faced "a potential fiscal 
crisis that has been exacerbated by the Supreme 
Court's recent issuance of a Temporary Restraining Order" 
(TRO) on the VAT law as well as corruption, MAP said "the 
events of the past weeks ... seriously impaired" PGMA's 
ability to address the problems of the country.   Like 
the MBC/Finex statement, the MAP statement also referred 
to the "resignations today of the most respected members 
of her cabinet."  Arguing that "the longer the President 
stays in office under a cloud of doubt and mistrust, the 
greater the damage to the economy... (a)nd the greater 
the vulnerability to forces seeking extra-constitutional 
means to grab power," MAP said "she must now ... 
relinquish the Presidency to her Constitutionally- 
mandated successor." 
 
5. (C) MAP President Simon Paterno told econoff on 
July 8, just after the release of the MAP statement, that 
the morning press conference in which DOF Secretary 
Purisima and nine other key cabinet members resigned en 
masse and called for PGMA to step down caused the 
business groups to do an about-face and fall in line 
with the increasing number of individuals and groups 
calling for her resignation.  Paterno explained that the 
growing tensions have created too many opportunities for 
extra-constitutional political adventurism, noting that 
the last thing the country needs is a coup d'etat.  He 
said that although the business community is concerned 
about constitutional successor Vice President De 
Castro's lack of political experience and economic 
expertise, they consider a De Castro presidency 
preferable to any extra-constitutional change of power. 
 
6.  (C) Paterno made it clear that the business 
community had a great deal of respect for the skills 
and integrity of Purisima, as well as Bureau of Internal 
Revenue Commissioner Guillermo Payrano, and that these key 
economic advisors' loss of confidence in PGMA had a major 
impact on turning the sentiments of the general business 
community more sharply negative towards her.  He added 
that the Supreme Court's TRO against implementation of 
the E-VAT law (reftel) "had (PGMA's) fingerprints all 
over it."  This, he said, showed that she valued her 
political survival over the interests of the nation.  As 
news of the business community's call for PGMA to resign 
flashed across the television screen beneath former 
President Cory Aquino as Aquino began her televised 
statement at 3 p.m., Paterno noted that "Cory is the 
queen of this country."  When Aquino called for 
PGMA to step down, Paterno said "it's all over for her 
(PGMA)." 
 
7. (SBU) Comment: The elite, rich and powerful members of 
the MBC and MAP were a core constituency supporting 
PGMA's ascendancy to the Presidency during EDSA II in 
2001 and again in the 2004 election.  Their unequivocal 
call for her to step down, sandwiched between the 
morning's en masse resignations by her most widely 
respected economic advisors and this afternoon's 
televised plea by former President Cory Aquino for PGMA 
to resign, is a powerful blow to her chances for 
survival.  Most of her closest supporters were relying on 
this "sensible middle class" to continue to lend her 
legitimacy.  With this gone, it will be increasingly 
difficult for her to hold on. 
MUSSOMELI