US embassy cable - 05MANILA5637

C O N F I D E N T I A L SECTION 01 OF 04 MANILA 005637 
 
SIPDIS 
 
DEPARTMENT FOR EAP, EAP/MTS, EAP/MLS, INR/EAP, INR/TNC 
S/CT 
NSC FOR H.MORROW 
USIP FOR SOLOMON 
 
E.O. 12958: DECL: 11/30/2015 
TAGS: PREL, PINS, PTER, RP 
SUBJECT: MILF REPRESENTATIVES UNVEIL ISLAMIC ECONOMIC 
DEVELOPMENT MODEL TO PHILIPPINE BUSINESS LEADERS FORUM 
 
Classified By: Acting Political Counselor Paul O'Friel for 
reasons 1.4 (b) and (d) 
 
 1.  (C) Summary:  Three executives from the Moro Islamic 
Liberation Front's (MILF's) development arm -- the Bangsamoro 
Development Agency (BDA) -- represented MILF Vice-Chairman 
for Political Affairs Ghazali Jafaar during a November 23 
special closed door session of the Philippine Business 
Leaders Forum and Mindanao Business Council (MBC).  On behalf 
of Jafaar, BDA chairman Dr. Abas A. Candao delivered the 
message that a final GRP-MILF peace agreement must be rooted 
in Islamic values, and that an Islamic Economic Development 
Model will be implemented in whatever juridical entity is 
created in Mindanao.  Educating businessmen, government 
officials, and the general public -- particularly within 
non-Muslim sectors of Mindanao and the international 
community -- on the principles, legal aspects, and merits of 
an Islamic model will be a daunting challenge for the MILF, 
BDA, and MBC during the months -- if not years -- ahead.  End 
Summary. 
 
--------------------------------------------- --- 
Islamic Economic Development Model for Mindanao? 
--------------------------------------------- --- 
 
2.  (SBU) Some fifty businessmen, bankers, academics, and 
diplomats gathered at the Filinvest Corporate Center in 
Alabang, Metro Manila on November 23 for a panel discussion 
on "Building Peace and Security in Mindanao."  MILF 
Vice-Chairman for Political Affairs Ghazali Jafaar was billed 
as the keynote speaker, but failed to appear for this special 
closed door event hosted by the Philippines Business Leaders 
Forum (PBLF) and Mindanao Business Council (MBC).  (Note: 
MILF Vice-Chairman Jafaar was also expected to attend the 
November 27 opening ceremony for the Southeast Asian Games in 
Manila with MILF Central Committee Chairman Al Haj Murad 
Ebrahim and GRP-MILF Peace Panel Chairman Mohaqer Iqbal, but 
all three leaders did not appear due to "previous 
commitments."  Attending the SEA Games opening ceremony on 
their behalf were MILF Coordinating Committee on Cessation of 
Hostilities (CCCH) Chief Von Al Haq, MILF Spokesman Eid 
Kabalu, MILF member Jannati Mimbantas, and attorney Abdul 
Dataya.  End Note.) 
 
3.  (SBU) Delivering the keynote speech in place of MILF 
Vice-Chairman Jafaar at the PBLF's November 23 special forum 
was Dr. Abas A. Candao, Chairman and CEO of the Bangsamoro 
Development Agency (BDA).  Dr. Candao began his speech -- 
which contained quotes from the Koran -- by conveying 
Jafaar's gratitude to the PBLF and MBC for inviting him to be 
the keynote speaker for a forum that would set the stage for 
an international investment conference on Mindanao.  Since 
Jafaar was unable to attend because of "a previous 
commitment," Dr. Candao represented him along with BDA 
Executive Director Dr. Danda N. Juanday and BDA 
Vice-Chairman/former MILF Technical Adviser Dr. Saifrullah M. 
Dipatuan.  (Note: The BDA is a non-governmental organization 
based in Cotabato City, Mindanao that was established by the 
MILF in accordance with provisions of the 2001 Tripoli Peace 
Agreement.  Since being activated in 2002, the BDA has been 
the MILF's development arm responsible for implementing 
rehabilitation and development projects within impoverished 
and conflict-affected areas of Mindanao.  Its executives -- 
Candao, Juanday, and Dipatuan -- are all medical doctors by 
profession.  End Note.) 
 
4.  (SBU) After thanking the Malaysian-led International 
Monitoring Team (IMT), U.S. Institute of Peace (USIP), World 
Bank, and international donor community for their 
contributions to the GRP-MILF peace process, Dr. Candao gave 
the audience a glimpse of the MILF's vision for Mindanao's 
future development.  His key points were as follows: 
 
--- Spiritual and material development are inseparable and 
must be in accordance with the Koran. 
 
--- Feasibility studies will be conducted to determine the 
kind of investments that are needed in each area. 
 
--- An Islamic Economic Development Model will be implemented 
in whatever juridical entity that is created by a final 
GRP-MILF peace agreement. 
 
--- Dependence on foreign loans is a "disease" that has 
shattered lives.  Islamic principles require the Bangsamoro 
people to avoid incurring foreign debt "even if it hurts." 
 
--- Capitalism still suffers from unequal distribution of 
wealth, poverty, greed, exploitation of consumers, and 
distortions of the market that result in monopolies.  The 
rich use money for their own benefit and interest payments 
are always added to the cost of production.  These are 
problems created by capitalism, and, unless solved, may give 
birth to another reaction worse than communism. 
 
--- While capitalists have celebrated the fall of communism 
on both a political and ideological plane, the fact remains 
that communism was a reaction by the common man toward 
unequal distribution of wealth. 
 
--- Communism failed because of its inherent defects.  The 
communist model assailed private ownership and market forces, 
denied individual liberties, curtailed production, and left 
people at the hands of a ruling class. 
 
--- The principles contained in the Koran are capable of 
solving economic problems in the world today.  Islamic 
principles allow for private ownership, market forces, and an 
economic system that prevents monopolies as well as 
activities such as gambling that are detrimental to society. 
 
--- Under the Islamic Economic Development Model, common 
people share in the fruits of development, income is 
distributed to the needy through Zakat, and there is a just 
and equitable relationship between lenders and borrowers. 
 
-------------------------- 
The MILF's Development Arm 
-------------------------- 
 
5.  (SBU) Following Dr. Candao's keynote speech, BDA 
Executive Director Dr. Juanday gave an overview of the BDA's 
activities.  A total of 3,128 persons (2,287 females and 841 
males) have been trained on transparency and accountability 
to support six BDA Regional Management Offices in Central 
Mindanao, Lanao area, Socsksargen (South Cotabato, Sultan 
Kudurat, Sarangani, and General Santos City), Zamboanga 
Peninsula, and "Zambusulla." 
 
6.  (SBU) Dr. Juanday noted that Islamic development requires 
"value transformation" and "agents for community change."  He 
highlighted existing linkages between the BDA and such 
institutions as the World Bank, Islamic Development Bank, 
Asian Institute of Management, World Vision, UNICEF, U.S. 
AID, Japanese Government, and GRP Office of the Presidential 
Adviser for the Peace Process.  He especially thanked the 
World Bank for assisting the BDA in capacity building and 
developing plans for communications and marketing, finance, 
administration, and personnel management. 
 
7.  (SBU) In his closing remarks on the future of the BDA, 
Dr. Juanday emphasized the importance of the Islamic Economic 
Development Model, the establishment of a partnership between 
the BDA and Global Islamic System, and key role that the BDA 
would play in peace and development for Mindanao. 
 
-------------------------------- 
GRP-MILF Peace Process Continues 
-------------------------------- 
 
8.  (SBU) BDA Director Dr. Dipatuan - who formerly served on 
the MILF Peace Panel -- made the following key points 
regarding the GRP-MILF peace process: 
 
--- The GRP and MILF peace negotiators have yet to determine 
the kind of juridical entity to be created in Mindanao. 
While a federal state is a possibility, the MILF is open to 
other options and has been looking at examples from other 
countries such as Peru.  Whatever juridical entity is 
ultimately created must be acceptable to the Bangsamoro 
people. 
 
--- The MILF is not going to rush into any final peace 
agreement. 
 
--- A key issue in the peace process is ancestral domain 
which has four strands - concept, territory, natural 
resources, and governance. 
 
--- Until the recent press leak, details of the GRP-MILF 
peace negotiations were held secret for good reason.  Future 
negotiations will continue to be held secret, with details 
released to the public at an appropriate time. 
 
------------------------------ 
View from the Sulu Archipelago 
------------------------------ 
 
9.  (SBU) In her opening remarks, the lead convenor for the 
Council on Islam and Democracy (CID) Amina Rasul -- whose 
family is originally from Sulu -- stated that Islam and 
democracy were compatible based on the Koran.  Rasul then 
intimated that MILF Vice-Chairman Jafaar's failure to appear 
for the November 23 forum was related to his meetings with 
the World Bank.  According to Rasul, a six member team from 
the World Bank -- including a former rebel from Latin America 
-- unofficially met with Jafaar and eight other MILF leaders 
for the first time in Mindanao.   Their meeting, which lasted 
for a half day, went so well that a second meeting was 
arranged. 
 
10.  (SBU) Rasul highlighted the importance of overcoming the 
common stereotype that Muslims are incapable of economic 
development by their own efforts.  She pointed out that Sulu 
once had a vibrant economy with trade routes throughout the 
region.  The imposition of martial law by the Marcos Regime 
during 1972 and the armed conflict that followed had a 
devastating impact on Sulu's economy. 
 
11. (SBU) To date, there has been little foreign investment 
in the Sulu Archipelago due to the lack of peace and 
security.  Local businessmen in these areas are thus pooling 
their financial resources together to buy equipment for their 
own development projects.  According to Rasul, opportunities 
exist in the Sulu Archipelago for any outside investors 
willing to take a risk. (Rasul's CID has been examining 
Islamic finance for the past year and plans to organize a 
major conference on this important topic during 2006 for 
potential investors.) 
 
12. (SBU) Speaking in reference to the ongoing armed clashes 
in Sulu between the Armed Forces of the Philippines (AFP), 
Abu Sayyaf Group (ASG), and Misuari Breakaway Group (MBG), 
Rasul stated that most members of the Moro National 
Liberation Front (MNLF) still recognize Nur Misuari as their 
leader.  Though the MNLF signed a 1996 Final Peace Agreement 
with the GRP, this agreement has not been fully implemented. 
According to Rasul, any peace agreement negotiated between 
the GRP and MILF must not supersede this GRP-MNLF Final Peace 
Agreement. 
 
 
13. (SBU) Rasul ended her presentation with remarks about 
charter change.  Consultations during November in Mindanao 
with local government, religious, and civil society leaders 
revealed concerns about the motive, timing, and necessity of 
charter change and its potential impact on the implementation 
of a final GRP-MILF peace agreement.  In Rasul's view, a 
constitutional convention must be held, and, if federalism is 
adopted, the Bangsamoro state should include the 13 provinces 
of Mindanao. 
 
------------------------- 
An Outsider's Perspective 
------------------------- 
 
14. (SBU) Panelist Edward McBride - the Bangkok based 
Southeast Asia Correspondent for The Economist -- made the 
following points: 
 
--- Mindanao needs more rather than less capitalism. 
Increased investments and loans can only improve the 
situation there. 
 
--- Countries with the most open economies and least 
interference by government in the Southeast Asian region, 
such as Singapore and Malaysia, are the most prosperous. 
Making Mindanao more like these countries would improve the 
lives of the Bangsamoro people. 
 
--- Neither the Philippine political system nor some of the 
people claiming to speak on behalf of the Bangsamoro people 
have really addressed their aspirations and concerns. 
 
----------------------- 
Views from the Audience 
----------------------- 
 
15.  (SBU) The following key points were made by several 
businessmen, a retired banker, an academic, and former GRP 
official during the open forum: 
 
--- Mindanao is currently divided into two areas -- a growth 
area that includes Davao and Bukidnon and a conflict-affected 
area that includes Sulu.  Without strong GRP intervention in 
the conflict-affected area, there will be a negative 
spillover into the growth area and rest of the Philippines. 
 
--- Four major factors inhibit investment in Mindanao -- 
lack of law and order, conflicting GRP land policies and 
competing land claims, poor infrastructure, and local 
poverty. 
 
--- The excessive focus on religion in the dialogue on 
Mindanao is a source of concern to bankers and businessmen. 
 
-------------------------------------------- 
MBC Chairman Santos Accentuates the Positive 
-------------------------------------------- 
 
16.  (SBU) In delivering the closing remarks for the forum, 
MBC Chairman Antonio R. Santos Sr. highlighted the positive 
aspects of Mindanao for potential investors: 
 
--- Mindanao, which is located in the heart of the 
Asia-Pacific Region, offers investment opportunities in 
agri-business, industry and tourism. 
 
--- Approval has been given for the establishment of an ARMM 
Regional Economic Zone. 
 
--- The peaceful election within the Autonomous Region of 
Muslim Mindanao (ARMM) last August reflects that governance 
is improving. 
 
--- The Polloc Port in Maguindanao has the potential to 
become a major international port. 
 
--- Power projects are now being implemented in the region. 
 
--- Agricultural products such as bananas, mangos, and 
pineapple are being exported into foreign markets. 
 
--- Seaweed products are shipped from the Sulu Archipelago to 
Cebu via Zamboanga City. 
 
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Comment 
------- 
 
17.  (C) With the unveiling of an Islamic Economic 
Development Model at this Philippines Business Leaders Forum 
-- which happened to coincide with a November 21-24 
international conference in Jakarta, Indonesia on "Islamic 
Economics and Banking in the 21st Century" -- MILF 
religious/intellectual leaders have put the business 
community on notice of their opposition to free wheeling 
capitalism in post-conflict Mindanao.  Implementing an 
Islamic Model may prove to be easier said than done, however. 
 Christian leaders such as Zamboanga City Mayor Celso 
Lobregat, along with such groups as the Concerned 
Citizens-Activists for Development (CCAD), are firmly opposed 
to the creation of any juridical entity that includes areas 
outside of the ARMM (Maguindanao, Lanao Del Sur, Basilan, 
Sulu, and Tawi-Tawi.)  It also remains to be seen whether 
there is a consensus regarding an Islamic Economic 
Development Model between the MILF, factionalized MNLF, new 
ARMM Administration under Zaldy Ampatuan, and leading Muslim 
clans within the region.  Nonetheless, businessmen, 
government officials and the general public would do well to 
bone up on Islamic economics, finance, and banking because 
the debate over this alternative paradigm to capitalism and 
communism is likely to intensify in the months ahead. 
 
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/ 
 
 
Jones