US embassy cable - 05MANILA3846

C O N F I D E N T I A L SECTION 01 OF 02 MANILA 003846 
 
SIPDIS 
 
SECDEF/OSD/ISA/EA FOR ALLEN 
 
E.O. 12958: DECL: 08/18/2015 
TAGS: MOPS, MARR, MCAP, PREL, PTER, PINS, RP 
SUBJECT: DEFENSE SECRETARY CRUZ DETAILS PLANS TO IMPROVE 
THE AFP 
 
Classified By: (U) Political Officer Paul O'Friel 
for reasons 1.4(b) and (d). 
 
1.  (C) Summary.  Defense Secretary Cruz's multi-faceted 
reform agenda includes establishing new budget and 
procurement procedures, buying counterinsurgency equipment, 
revamping training, and restructuring Armed Forces of the 
Philippines (AFP) intelligence services.   The GRP hopes an 
eventual peace deal with the Moro Islamic Liberation Front 
will enable it to use its improved combat capabilities to 
crush the Communist Party of the Philippines/New People's 
Army (CPP/NPA) and defeat the Abu Sayyaf Group (ASG) and 
Jemaah Islamiyah (JI) terrorists.  Cruz is grateful for US 
anti-terrorism assistance, and welcomes additional US help in 
professionalizing the AFP's intelligence cadres.  With some 
notable budget reforms and acquisition successes already 
under his belt, Cruz appears poised to bring about a 
significant transformation of the AFP.  However, the GRP's 
financial constraints may impact Cruz's ability to get the 
AFP the equipment it needs.  End Summary. 
 
ESTABLISHING A BUDGET 
--------------------- 
 
2.  (SBU) During an August 17 courtesy call by Charge 
d'Affaires Johnson, Secretary of National Defense Avelino 
Cruz reviewed his plans to restructure the Armed Forces of 
the Philippines (AFP).  Cruz said he had broken the 46 
billion peso (approximately $822 million) AFP annual budget 
into seven clearly defined mission areas.  In order better to 
justify the budget to Congress (and to the Secretary of 
Budget and Management), the budget makes clear specific 
needs, including 400 million pesos ($7.15 million) to cover 
increased fuel costs, 3.3 billion pesos ($59 million) for 
counterinsurgency equipment, and 3 billion pesos ($53.6 
million) for basic infrastructure upgrades for villages in 
rebel-controlled areas. 
 
IMPROVING ACQUISITION 
-------------------- 
 
3.  (SBU) Cruz explained how improvements to the acquisition 
system are now taking effect.  To improve transparency, 
representatives from the Catholic Bishops' Conference of the 
Philippines (CBCP) and the Makati Business Club now have an 
oversight role in the procurement process.  Suppliers are 
only permitted to talk to the bids and awards committee in an 
open forum to avoid any appearance of favoritism or conflict 
of interest. 
 
4.  (SBU) Cruz said he planned to create a corps of defense 
acquisition specialists composed of 55 civilians and 55 
military officers.  "I told my service chiefs that I want 
quality officers assigned to acquisition and that the quality 
of the equipment they would get would be directly 
proportional to the quality of acquisition officers they 
supplied," Cruz stated.  Charge commended Cruz for his budget 
initiatives, noting that the United States strongly supported 
the Philippine Defense Reform effort. 
 
BUYING NEW EQUIPMENT 
-------------------- 
 
5.  (C) Cruz said the Cabinet had just accepted in principle 
his 18-year, 210 billion peso ($3.75 billion) plan to procure 
new equipment for the AFP.  The first phase would concentrate 
exclusively on acquiring counterinsurgency equipment, 
including radios, flak vests, squad automatic weapons, patrol 
boats, and, helicopters. "This is basic equipment, not 
modernization," Cruz commented, noting that LTG Romeo 
Dominguez, the commander of North Luzon Command (an area of 
intense Communist insurgent activity) had reported that his 
troops needed to replace 30-percent of their rifle barrels. 
"We're almost building from scratch," Cruz noted. 
 
 
REVAMPING TRAINING 
------------------ 
 
6.  (C) Cruz said he also intended to improve training.  The 
incoming Philippine Army commander, MG Hermogenes Esperon, 
had orders strictly to enforce Cruz's directive to train 
twelve battalions annually.  (Note: According to DAO, due to 
their heavy operational tempo, some Philippine Army 
battalions have not undergone training in over 13 years.  End 
note.)  To win the counterinsurgency fight, Cruz said he 
wanted to realign the AFP's force structure to add 2,700 
junior officers.  "We need small unit leaders who can think," 
Cruz said.  Officer Candidate School offered the quickest way 
to reduce the officer to troop ratio from 12:1 to 8:1; Cruz 
plans an additional 550 million pesos ($9.8 million) in 
upgrades to the Camp O'Donnell officer training facility in 
Tarlac. 
 
RESTRUCTURING INTELLIGENCE 
-------------------------- 
 
7.  (C) According to Cruz, the continued heightened terrorist 
threat mandated a restructuring of AFP's intelligence 
services.  "We're afraid foreign elements are coming in to 
try to indoctrinate Filipinos to commit suicide bombings," 
Cruz said, adding, "we have enough people but not in the 
right place."  Incoming AFP Chief of Staff LTG Generoso 
Senga, because of his intelligence background, would take a 
personal hand in developing a professional cadre of mid-level 
intelligence officers focused on combating terrorism and 
insurgency, Cruz explained. 
 
MAKE PEACE WITH THE MILF; CRUSH THE NPA, ASG, AND JI 
--------------------------------------------- ------- 
 
8.  (C) Cruz said the GRP hoped an eventual peace agreement 
with the separatist Moro Islamic Liberation Front (MILF) 
would remove 10,000 MILF combatants from the fight, allowing 
the AFP to concentrate its expanding combat power against the 
CPP/NPA.  Cruz indicated that the GRP's autonomy offer to the 
MILF might include the right to exploit natural -- including 
subsoil -- resources in a yet-to-be-defined "ancestral 
domain" area, a long-standing MILF demand.  Faced with the 
AFP's improved capabilities, the CPP/NPA would collapse, 
allowing the GRP finally to eradicate the Abu Sayyaf Group 
and Jemaah Islamiyah threats, Cruz predicted. 
 
9.  (C) Increased USG engagement with Indonesia had improved 
the situation with JI, Cruz said, adding that the Philippines 
was closely cooperating with Indonesia and Malaysia on 
patrolling their porous common borders.  Cruz noted 
Singaporean efforts to promote greater maritime cooperation 
in the Malacca Straits, commenting that if an effective 
mechanism developed there, it could serve as a template for 
the adjoining seas.  Cruz expressed worry about the growing 
Muslim insurgency in southern Thailand, whose "viciousness" 
and intensity were so alien to the Thai character.  Charge 
noted separatist feelings in Southern Thailand were based on 
long-standing historical grievances, acerbated by Islamist 
extremists. 
 
PRAISE FOR US ASSISTANCE 
------------------------ 
 
10.  (C) Cruz praised US counterterrorism assistance.  US 
intelligence fusion had provided active leads in the hunt for 
JI and ASG terrorists.  Security assistance training of the 
Light Reaction Companies (LRCs) by Joint United States 
Military Assistance Group Philippines (JUSMAG) had upgraded 
the AFP's ability to react quickly to terrorist threats. 
Cruz said he would also welcome US help in professionalizing 
the AFP's intelligence services. 
 
COMMENT 
------- 
 
11.  (C) Cruz, as usual, was well prepared with facts and 
figures and a clear vision of where he wants to take the AFP. 
 He has already achieved some success in reforming the budget 
and acquisition systems.  His commitment to reform appears 
firm despite the political distractions he faces, as a key 
adviser of President Arroyo, from the incessant partisan 
bickering and turbulence.  Fiscal constraints, a 
cash-strapped GRP budget, and rising fuel costs may 
nonetheless impact Cruz's ability to achieve all of his goals. 
 
 
Visit Embassy Manila's Classified website: 
http://www.state.sgov.gov/p/eap/manila/index. cfm 
JOHNSON