MINDANAO UPDATE (No. 2, November 2007)

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Introduction MINDANAO UPDATE (No. 2, November 2007) 1. This Mindanao Update covers the period from April to November The previous one was issued last April. This issue will focus on the following concerns: May 11, 2007 Philippines elections results and their implications National issues that impact on the stability of Philippine political economy (i.e., the Estrada verdict and the ZTE-NBN controversy) Performance of the Philippine economy during the first half of the year Peace and order situation in Mindanao and the prospects of the resumption of the GRP-MILF peace talks Progress of selected donors assistance in Mindanao Developments in the peace process with the CPP-NPA, including violation of human right issue (attachment) A. The May 11, 2007 Election Results and Their implications 2. The administration s senatorial ticket suffered electoral defeat in the last May 11 election. The official tally was as follows: 6 opposition, 3 independent, and 3 administration candidates 2 formed part of the magic 12 winning bets. Opposition candidates occupied the top six slots while an administration candidate barely made it to the 12 th position. 3 Moreover, the two administration candidates (i.e., Angara and Arroyo) were formerly affiliated with the opposition but decided at the last minute to join the administration ticket. None of the candidates closely affiliated with the President made it to the top 12. Moreover, none of the candidates who came from the entertainment industry won, a far cry from previous election results. What do we make of these disconcerting results? 3. One is to state the obvious and that is, there is indeed widespread dissatisfaction among the public on the performance of the national government and it found its articulation from the results of the recent senatorial election. The more worrisome development is that having realized the formula for launching an effective political campaign, it is most likely that potential presidential candidates in 2010 will be in a rush to join the anti-administration bandwagon to ensure their proper projection to the voting public. Expectedly as we near 2010, the administration will find it harder to institute necessary reforms or programs meant to strengthen Philippine development efforts because of the early posturings of these potential candidates. 4. On the other hand, while the current situation presents difficulties and inconveniences for the government, it can also provide a window of opportunity for Mindanao. That window is that a fairly intellectually sophisticated crop of candidates are vying for the 2010 presidential election. The last time this happened was in 1992 when there was a good stable of potential presidential candidates able to 1 The Mindanao Update is now for public reading and is posted on emindanao.org.ph, a portal run by the Mindanao Trust Fund. This is the second update; the first was posted in April Previously the updates were produced as Watching Briefs and circulated internally within the Bank; a total of 12 watching briefs were produced. This update was prepared by the Mindanao Trust Fund Secretariat with the help of Fermin Adriano. 2 The winners, according to their order of ranking, and their affiliation are as follows: (1) Loren Legarda (O), (2) Francis Joseph Escudero (O), (3) Panfilo Lacson (O), (4) Manuel Villar (I), (5) Francis Pangilinan (I), (6) Benigno Simeon Aquino (O), (7) Edgardo Angara (A), (8) Joker Arroyo (A), (9) Alan Peter Cayetano (O), (10) Gregorio Honasan (I), (11) Antonio Trillanes (O), and (12) Juan Miguel Zubiri (A). O -opposition; I independent, and A administration. 3 This win is under protest by the losing opposition candidate Aquilino Pimentel. 1

2 answer questions on complicated issues facing the country then. Mindanao should start thinking and planning on inviting these presidentiables in various forums in the island meant to lay down their respective program of governance for Mindanao. B. Estrada Verdict and the ZTE-NBA Controversy 5. a) The Estrada verdict. Former President Joseph Estrada was charged with plunder at the Sandiganbayan court after his removal from office as a result of People Power II staged in January During the duration of his trial which lasted for more than six years, he was mostly held under house arrest in his Tanay rest house nestled on a mountain slope. On September 12, 2007, the Sandiganbayan rendered a guilty verdict against Estrada sentencing him to 40 years in prison. 4 Many political analysts have pointed out that the Estrada case serves as a precedent for the Arroyo administration. They warned that Estrada s fate might eventually become that of the President s fate and that of her relatives and supporters once they are no longer in power in Immediately after his guilty verdict, negotiations were held between government representatives and the Estrada camp for the latter to be given a Presidential pardon. The talks successfully ended with the President bestowing unconditional pardon to Estrada. Civil society groups and anti-corruption corruption crusaders protested noting that the pardon made futile the government s effort to catch the so-called big fish. 6. b) NBB-ZTE controversy. It is at the backdrop of the guilty verdict against Estrada that the scandal over the National Broadband Network (NBN) project contracted to a Chinese firm called ZTE exploded. The NBN-ZTE project is US$329 million worth of contract to be financed by a soft loan from the Chinese government. Originally, the project was supposed to be undertaken under a BOT (build operate transfer) scheme as proposed by Jose de Venecia III, the businessman-son of the House Speaker Jose de Venecia. When the former lost the bid for the project, he revealed that officials close to the administration worked to have the bid awarded to ZTE for a considerable sum of money. A Senate inquiry was held over the incident and together with the former head of NEDA (National Economic and Development Authority), they identified Comelec (Commission on Election) Chairman Benjamin Abalos as the chief architect of the deal with ZTE. De Venecia further accused the President s husband of pressuring him to back-off from the project, which Malacanang vehemently denied. 7. Besides the alleged massive kickbacks attending the ZTE-NBN deal, economists argue that the deal is flawed from the very start. 5 First, it goes against the grain of the privatization thrust of the government. They claim that there already two existing (broadband) backbones in the Philippines and all that is needed is to provide the link between these existing highways (backbones) to that of the provincial or secondary network so that the connectivity problem will be addressed. This will not require a huge amount. Second, they noted that the proposed backbone will be maintained and operated by the government. Given the poor track record of the government in running a business, they question whether it will become economically viable in the long-run. And third, they are also against the BOT scheme proposed by de Venecia because it carries the stipulation that the government will be a captive market for the facilities that will be established. For them, a third backbone is unnecessary since there are existing private enterprises engaged in the business and that if telecommunications is just opened to other investors, there will surely be private foreign investors who will be willing to enter the sector, compete with the existing ones to provide better and cheaper services to the Filipino consumers. The problem, as the former NEDA chief declared, is the regulatory capture of some key sectors of the Philippine economy by vested interest groups. 4 Practically a life imprisonment since Estrada is in his 70s. Former Malaysian opposition leader Anwar Ibrahim who was on a visit to Manila to attend a democracy forum, opined that the sentence was harsh and expressed hope that Estrada would be freed soon. 5 Refer to the paper by Drs. Raul Fabella and Noel de Dios on the subject matter. 2

3 C. Performance of the Philippine and Mindanao Economy 8. a) The Philippine economy. The Philippine economy, despite the adverse political developments, has proven its resilience and has in fact, performed beyond expectation. For the second quarter of 2007, the GDP (gross domestic product) registered an impressive growth rate of 7.5% compared to 5.5% for the same period last year. This was due to the strong performance of trade, construction, communication and storage, and the manufacturing sectors. In fact, the growth of construction in the second quarter of 2007 was the highest since the first quarter of 1997, before the Asian regional financial crisis broke out. Services remained to be the driver of growth contributing 8.4%, industry 8% and agriculture, fishery and forestry 3.9%. In terms of contribution to GDP growth rate, again services ranked first contributing 4.1%, industry 2.7%, and agriculture, fishery and forestry only 0.7%. 9. Continued high inflows of remittances from overseas Filipino workers resulted in a 16.6% expansion in the net factor income from abroad (NFIA) and pushed the gross national product (GNP) growth rate to a remarkable 8.3% in the second quarter of 2007, upped from 6.4% for the same quarter last year. Per capita GDP grew from 5.4% in the second quarter compared to 3.4% for the same period last year. Similarly, government expenditures rose from 13.5% in the second quarter compared to only 3.3% for the same period last year. However, inflation decelerated from 6.4% in July last year to only 2.6% in July The peso continues to appreciate vis-à-vis the US dollar. Similarly, the stock markets are in the bullish run despite the surging costs of oil in the world market and the credit crunch in the US. The government has taken advantage of the strong peso by retiring a number of its external debts. 10. b) The Mindanao economy. As for Mindanao, a record high investment growth was experienced by the island for the second half of Investments grew by 133.8% compared to last year s first half performance. It was the power sector that buoyed up Mindanao investments with around P2.6 billion contributed by this sector out of total investments of P4.3 billion. Geographically, Southern Mindanao received the largest share of investments of around P2.8 billion followed by PhiViDEC Industrial Estate in Northern Mindanao with around P1.1 billion. Most of the investments came from local investors as foreign direct investments (FDI) declined by as much as 80% in the first half of this year compared to last year. P115 million new foreign direct investments were mostly made by the Chinese in the mining sector. 11. c) Caveats. Although the national 7.5% GDP growth rate for the second quarter of this year is impressive, critics believe that it is not sustainable. First is that they note that it is largely driven by government spending as a result of the May 11 election. Second is that it is not generating enough employment because a good part of the growth can be attributed to consumption due to large remittances of overseas Filipino workers and the election spending. Third is that the growth is mostly in the business outsourcing and the ICT sector wherein the many poor and educated Filipinos cannot possibly participate because of lack of skills and education for this kind of jobs. Not surprisingly, the 2 nd quarter Social Weather Station (SWS) survey of hunger and poverty revealed that 3.8 million Filipinos expressed that they experienced involuntary hunger in the past three months. The figure rose to 21.5% of total respondents, which is 10 points above the 11.8% average incidence registered in all 38 quarterly SWS surveys which begun in mid Moreover, although economic activities are picking up, perception of widespread corruption in the Philippines persists. In the SWS survey of top and middle level managers on their perception of corruption in the country 6, they noted that bribery and extortion remain a major impediment on their investments and that their level of confidence on most government agencies (except for the Ombudsman) 6 The results of the survey were presented by the SWS staff to the Cabinet last August 21. 3

4 that they deal with to pursue a reported corruption case against offending officials is negative. This view was somewhat confirmed by the 2008 Doing Business Survey of the World Bank and the International Finance Corporation (WB-IFC), and by Transparency International (TI). Of the 178 economies surveyed in terms of having a business friendly environment, the Philippines ranked 133, down from 126 a year ago. On the other hand, TI ranked the Philippines lower from 121 in 2006 down to 131 in 2007 (out of 180 countries surveyed) because of its failure to institute significant reforms that will lower the incidence of graft and corruption. At 131, the Philippines is grouped with Burundi, Honduras, Iran, Libya, Nepal and Yemen in terms of having the most dishonest government officials. The same TI revealed that from a ranking of 1 to 10 where 10 is the highest, the Philippines scored only 2.5. The lowest score was 1.4 obtained by countries such as Burma and Somalia, while the highest was received by Denmark, Finland and New Zealand scoring On Mindanao s economic performance, there can be no denying that despite the high investment figure for the first half of the 2007, the total amount (i.e., more than P4 billion) is still an insignificant sum compared to the growth potential of Mindanao. Moreover, the investments are concentrated in the power sector and in Southern and Northern Mindanao which are the usual destination of investments in Mindanao because of the relatively stable peace and order situation in these places. Considering that Mindanao s comparative advantage lies in agriculture, the virtual absence of huge investments to the agricultural sector means that its potential contribution to sustained growth and development for the island is hardly tapped D. The Mindanao Peace Situation and the Prospect for the Resumption of the GRP-MILF Peace Talks 14. a) Mindanao peace and order situation. While there has be no major and sustained outbreak of hostilities between government troops and the Moro Islamic Liberation Front (MILF) rebels, the overall peace and order situation in Mindanao for the first eight months of 2007 was far from encouraging. The first quarter of the year saw fighting occurring in communities near the municipality of Midsayap, South Cotabato over a land dispute by competing clans which eventually resulted in the involvement of the military and the MILF into the conflict. The timely intercession of the GRP-MILF Joint Coordinating Committee on the Cessation of Hostilities (JCCCH) and the International Monitoring Team (IMT) prevented the armed hostilities from further escalating into a full-scale war. 15. It was also during this period that a government contingent led by Maj. Gen., Benjamin Dolorfino and Undersecretary Ramon Santos to supervise rehabilitation and reconstruction in Sulu was held hostage by Ustadz Habier Malik, a loyal supporter of former MNLF chairman Nur Misuari. Though the hostage-taking incident was settled peacefully, Malik s defiance against the government continued. In April, he and his troops attacked the marine outpost in Parang and Panamao, Sulu. Shortly thereafter, beheadings of kidnapped provincial government public works employees were carried out allegedly by Abu Sayyaf elements. The government launched a counter-offensive against Malik and the Abu Sayyaf which resulted in the displacements of thousands of civilians in the affected municipalities. 16. The advent of the election campaign witnessed an upswing in reported election-related violence. 7 Several bombings occurred in Midsayap and Pikit, North Cotabato before the end of April. There were killings of a number of supporters of rival politicians, including those who reported that massive electoral fraud was committed in some Mindanao provinces particularly the ARMM provinces of Sulu, Basilan and Maguindanao. 8 Curiously, Maguindanao was the only province in the country that registered a 12-0 win 7 In a speech delivered by former President Corazon C. Aquino last June 4, she estimated that there were 59 candidates and 55 supporters killed all over the country due to election-related violence. 8 A prime example was Musa Dimasidsing, the Maguindanao teacher who exposed systematic and widespread election fraud in Maguindanao, who was shot after praying at a local mosque. Moreover, media personnel were 4

5 for the administration party. The unexpected result led opposition senatorial candidates and the media to question the competence and integrity of the provincial election supervisor, Atty. Lintang Bedol, who coincidentally was also named part of the Garci scandal team Mindanao did not experience a reprieve from violence during the post-election period. On June 10, Fr. Giancarlo Bossi, Italian priest assigned in the parish of Payao, Zamboanga Sibugay, was kidnapped by alleged members of the Abu Sayyaf Group (ASG). Immediately, rescue efforts were launched by the military and it was reported that the MILF was initially assisting the military in the search. However, on July 10, it was reported that 14 marines were killed in an encounter against a joint MILF-ASG rebels operating in Tipo-Tipo, Basilan. More than the killings, the beheading and mutilation of the dead bodies of 10 marines after the armed hostilities evoked nationwide anger and revulsion. The military demanded from the MILF the surrender of the perpetrators of the heinous crime but the latter insisted that though their members were involved in the armed encounter, they were not part of the group that beheaded the dead soldiers and declared that they would not surrender their members because the military ventured into their territory without proper coordination with them. In response, the military ordered a massive assault on the place to arrest those involved in the heinous acts. 18. The Joint Coordinating Committee for the Cessation of Hostilities (JCCCH), International Monitoring Team (IMT), members of various civil society organizations (CSOs), and donors interceded by appealing to both parties to allow the JCCCH and IMT to investigate first what really happened before drastic actions were taken. 10 When the report was released, it claimed that the MILF members did not commit the dastardly act of mutilating the bodies of the dead soldiers and accused former armed supporters of a local politician of perpetrating the crime. But by then the military assault was already ongoing in various municipalities of Basilan where suspected MILF and ASG members were operating. 19. Fr. Bossi was finally released on July 19 (after 40 days of captivity) by rogue MILF Commander Khidi in Karamutan town in Basilan. However, the month of August saw the killing of 20 soldiers in Sulu in an ambush allegedly staged by ASG. Just as in the island of Basilan, the military launched a massive counter-offensive against the ASG. The military hierarchy promised to crush the ASG and other breakaway rebel groups in the islands of Basilan and Sulu, but like in the past, the rebel groups are far from being defeated. 11 Until now, the military campaign continues without a near end in sight. News reports also noted the presence of US Special Forces troops in various Muslim-inhabited provinces of Mindanao and the installation of various US military facilities there. 12 The government responded to these reports claiming that the presence of US troops and minor military facilities were in preparation for joint military exercises between the Philippines and US soldiers in those areas. banned from entering the provincial capitol of Maguindanao where the canvassing of votes for the senatorial candidates was being done. Reporters from ABS-CBN TV-radio station even received death threats if they persisted on entering the premises. 9 Named after former Comelec official Virgilio Garcillano, who was the official in-charge of the Mindanao canvassing during the 2004 presidential election wherein it was alleged that he masterminded the rigging of the election results in the island to favor the incumbent President. Atty. Lintang was eventually penalized by the Comelec with a six month jail sentence and fined a minute sum of P1,000 (US$23) for indirect contempt. He however posted a bail of P15,000 for his freedom. 10 It was reported in the papers that the Japan, Canada and World Bank expressed concern over possible outbreak of fighting between the government and MILF as this could scuttle the peace talks (refer to Philppine Star, July 27 issue). Nonetheless, it should be noted that the active intercession of CSOs and donors prevented what could have been a punitive action of the military on the wrong parties. This is indeed one of the unique experiences in the peace-building effort. 11 Refer for instance to the Philippine Star issue of August 24 which reported that the AFP chief vows to finish off Abu Sayyaf in two months. 12 Refer to the Philippine Daily Inquirer issue of August 16, and the Manila Times issue of August 28. 5

6 20. b) Prospects of the GRP-MILF peace talks. Almost a year had elapsed since the last exploratory talks were conducted between the GRP and MILF panels. 13 The talks reached a deadlock when the issue of ancestral domain was placed on the table. Although the government recognized the MILF s demand to create a Bangsamoro Juridical Entity (BJE), the two panels could not reach an agreement when the questions on the actual territorial coverage of the BJE and the manner by which additional areas shall be included in the proposed BJE were raised. To break the impasse, the government proffered the notion of the right to self determination for the Bangsamoro but this will require the MILF uniting different Moro factions so that it can speak on their behalf and that the position it is negotiating with the government is acceptable to all Moro factions. While the concept of self-determination appealed to the MILF, realities on the ground however prevented the formulation of a unified position among the various Moro factions to respond to the government s offer. The BJE, based on the precept of the ancestral domain claim of the Bangsamoro, remained as the negotiating position of the MILF. 21. After more than six months, there was no major movement in the negotiating positions of both parties. On June 21, an announcement was made that the Chair of the GRP negotiating panel, Secretary Silvestre Afable, resigned and would be replaced by Fr. Eliseo Mercado, OMI, a veteran of the GRP- MNLF talks which ended with the signing of a peace agreement between the two parties in September The MILF was surprised by this sudden change in leadership and objected to the appointment of Fr. Mercado to head the GRP panel. Their main argument was that they wanted a high-ranking government official to head the government panel and that a priest was not suited for such a highly political process. The government accommodated the MILF s sentiment and appointed former Army General and head of the GRP panel in the JCCCH, Rodolfo Garcia. The MILF welcomed the government s move and upon his appointment, Gen. Garcia issued a statement that he was optimistic that the exploratory talks would soon resume. 22. Unfortunately, the killings of the marines and the eventual mutilation of their bodies in Basilan in mid-july created an unfavorable environment for talks to proceed. The government announced that any scheduled talks would be postponed for a later date. Despite these adverse developments at the ground level, the overall peace effort seems to be holding considering that armed hostilities between the government and the MILF were largely confined to Basilan and Sulu. 14 Moreover, the MILF leadership has repeatedly expressed its desire to resume the talks while the head of the GRP panel articulated the same sentiment. 15 Similarly, President Arroyo in her meeting with Malaysian Prime Minister Abdullah Ahmad Badawi at the sideline of the Asia-Pacific Conference in Sydney, Australia reiterated her government s commitment to finding a peaceful resolution of the conflict with the MILF. She also requested the Malaysian government s continued assistance in the peace effort through their leadership of the IMT. By the end of September, there were movements in the exploratory talks when the GRP and MILF panels agreed to conduct a preparatory meeting in Malaysia. The meeting was meant to determine the agendas for discussion in the next exploratory talks should there be an agreement reached that the talks will resume. 23. The meeting of October between the GRP and MILF in Kuala Lumpur resulted in a breakthrough on the ancestral domain issue. It was reported that the government accepted the inclusion of additional areas to the BJE and the MILF accepted the holding of a plebiscite to decide whether additional areas will be included in the BJE. Should these areas rejected inclusion to the BJE, they will still be treated as Special Areas of Intervention, meaning that they will still be recipient of assistance 13 The last talk was held in September 2006 in Malaysia. 14 Though there were sporadic encounters between MILF and government troops in Maguindanao and adjoining provinces, these were quickly settled through the intermediation of the JCCCH and the IMT. 15 In Luwaran, the official website of the MILF, Mr. Jun Mantawil, head of the MILF peace panel Secretariat, complained that the Philippine government should not dribble the talks and become more serious in resolving its already 10-year old peace talks with the MILF. 6

7 coming from the peace dividends. Both parties were optimistic that they will be able to forge an agreement on the ancestral domain issue by next year, which hopefully will trigger the signing of the formal peace agreement. E. Progress of Selected Donors Work in Mindanao 24. a) Mindanao Trust Fund for Reconstruction and Development Program (MTR-RDP). The MTF-RDP is a multi-donor trust fund jointly funded by Australia, Canada, European Union, World Bank, Sweden, New Zealand, and lately, the US, with the World Bank acting as Trustee and Fund Administrator in partnership with Office of the Presidential Adviser on the Peace Process (OPAPP) and the Bangsamoro Development Agency (BDA). Initially, it was conceived to provide reconstruction and development assistance to conflict-affected communities in Mindanao once a peace agreement is signed between the GRP and MILF. However, after discussions with OPAPP, BDA and other stakeholders, the program was launched with the objective of building the institutional capacity of BDA (Phase I), in collaboration with recipient LGUs, in extending assistance to conflict-affected communities. It was envisaged that should there be an eventual signing of the peace accord, BDA as the development arm of the MILF will be in a better position to help conflict-affected communities under Phase 2 of MTF-RDP where assistance would be upscaled. Phase 1 is focusing on capacity building for BDA, LGUs and communities through a process of learning-by-doing reconstruction and development work in the barangays. A communitydriven development (CDD) approach is utilized in the implementation of the sub-projects in the conflictaffected barangays b) ARMM Social Fund Project (AFSP). The ASFP is a loan-funded program (about US$33.6 M World Bank and US$20 M JBIC) by the National Government for the Autonomous Region in Muslim Mindanao. AFSP continues to demonstrate satisfactory performance as significant progress has been made in achieving project objectives. Over 1,000 community-based infrastructure sub-projects have been completed or on-going in 600 barangays in ARMM. A total of 164 learning and livelihood sub-projects have also been undertaken in various ARMM barangays. As for strategic regional infrastructure, 12 subprojects have been completed. Institutional strengthening and governance for ARMM is on-going. 27. c) Mindanao Rural Development Project 2 (MRDP 2). Taking off from the successful MRDP 1, MRDP 2 is a US$83.8 million World Bank loan to the Philippine government aimed at improving incomes and food security in targeted rural communities in all provinces of Mindanao. Its four components will basically continue those pursued under MRDP1 with special emphasis on further improving LGU capacity for delivery of agricultural services, and the Department of Agriculture s capacity (particularly at the regional level) to support LGU activities in rural development. The four components are: (i) investments for governance reforms and program administration, (ii) rural infrastructure, (iii) community fund for agriculture development, and (iv) natural resources management. MRDP 2 will pilot test performance-based grant scheme wherein additional grants will be provided to LGUs based on achievement of agreed targets. It will cover 225 municipalities in all 27 provinces (compared to only 5 under MRDP1) of Mindanao. 28. d) UN Act for Peace Programme. Funding support for this program comes from the governments of Australia, New Zealand and Spain, and it is being implemented over a five-year period, starting from June 2005 up to May There are 16 provinces and 14 cities of the former Special 16 The CDD involves community members in analyzing their problems, identifying and prioritizing their needs, deciding on what sub-projects to undertake, implementing or assisting in the implementation of the sub-project, and managing the funds for the sub-project. The role of the BDA, in collaboration with the LGUs, is to facilitate the process (through their community organizers), provide technical assistance, and monitor and evaluate financial and procurement processes, sub-project implementation and sub-project quality. 17 Total funding support amounts to around US$15 million. 7

8 Zone for Peace and Development (SZOPAD) in Southern Philippines, and four provinces and cities in CARAGA covered by the program. The Mindanao Economic Development Council (MEDCo) serves as the overall implementing agency with the ARMM Regional Government (ARG) as the lead implementing agency. 29. For the first half of this year, the program focused on attaining its two-pronged strategies, namely: (i) empowerment and transformation of its peace and development communities (PDCs); and (ii) creating and strengthening the enabling environment for sustained peace-building and conflict transformation based on pre-determined targets. A number of physical accomplishments were achieved, among which were: completion of 21 Barangay Health Stations, 34 Botika ng Barangay projects, and 9 water system projects; completion of 43 approved community economic development projects; capacity building training programs of peace and development advocates league; provision of scholarships to 30 qualified students from PDCs; conduct of peace education seminars; networking with CSOs involved in peace-building work; etc. 30. e) Japan-Bangsamoro Initiatives for Reconstruction and Development Project (J-BIRD). Activities for this project started in earnest at the beginning of this year with the holding of the first Steering Committee last April. 18 The project consists of: (i) formulation of Socio-Economic Reconstruction and Development of Conflict Affected Areas in Mindanao (SERD-CAAM) plan; (ii) survey to build a database of conflict affected areas including selected In-Depth Barangay Needs Survey (IBNS); (iii) implementation of Quick Impact Projects (QIP) on selected sites; and iv) Grants Assistance for Grassroots Human Security Projects (GGPs). Besides closely working with OPAPP and the BDA, the project team also coordinates their effort with the IMT through its Japanese representative. It is envisioned that both the SERD-CAAM and the database will be completed by the end of the year, though QIP activities have already started. 31. f) Growth with Equity in Mindanao 3 (GEM 3). Last September witnessed the signing of the USAID Mindanao Peace and Development project (originally called as GEM 3). It is the single biggest grant on peace and development work in Mindanao with a total amount of US$190 million over a fiveyear implementation period. The project will commence before the end of the year and will pursue basically the same components comprising the previous GEM 2 program which are: (a) Infrastructure development (comprising of medium-scale infrastructure, and community (small) infrastructure) which constitutes the biggest line item in the budget); (b) Enterprise Development (support to business organizations and targeted commodity expansion); (c) Governance (education including computer education, congressional internship program, health, etc.); and (d) Livelihood and Enhancement for Peace (a combatant reintegration program). Ancillary activities are the (a) communication and information dissemination, (b) facilitation service, and (c) the special activities fund, which can fund other activities not falling within the major components but are deemed important by the project proponent. The project and sub-project implementation is mostly undertaken by a contractor. 32. g) Canadian International Development Agency (CIDA). CIDA has now four grants solely devoted to Mindanao namely: (i) the Local Governance Support Program in the Autonomous Region in Muslim Mindanao (LGSPA); (ii) the Peace Links Program; (iii) the Peace Fund; and (iv) contribution to the MTF-RDP. The first is CA$18 million grant which seeks to strengthen the institutional capacity of the ARG and other institutions in the ARMM (including CSOs) and will be implemented for the period Peace Links Program (with a budget of CA$2.85 million) is a support fund to link four mutually supportive components to the peace and development efforts in Mindanao, namely: the Peace Fund; MTF; IMT (to Canada s representative in the team); and electoral assistance to ARMM and adjoining areas during the May 2007 elections. *************************** 18 The initial amount released for this project is US$3 million to cover its various components. 8

9 ATTACHMENT Peace Efforts with the CPP-NPA and the Proposed Amnesty Declaration a) Human right violation an unresolved concern. The extrajudicial killings of suspected sympathizers of Leftist organizations and union leaders reached a level of impunity which has alarmed human rights organizations here and abroad. In late April 2007, Jonas Joseph Burgos was abducted by suspected military personnel in broad daylight in a shopping mall in Metro-Manila. 19 The case merited extensive media coverage because Burgos is the son of the late media crusader against the dictatorial Marcos regime, Malaya newspaper publisher Jose ( Joe ) Burgos. The military claimed that the young Burgos is a member of the CPP-NPA. Later on, Senior State Prosecutor Emmanuel Velasco 20 assigned to investigate the case identified the abductors as ISAFP (Intelligence Service of the Armed Forces of the Philippines) agents and also found out that the vehicle used to kidnap Burgos was parked in said military installation. The military vehemently denied having any knowledge of the abduction. Moreover, it continues to resist repeated demands and clamors by the relatives of Burgos, media and human rights organizations to release the Provost Marshal General report on the Burgos kidnapping. On July 15, the Human Security Act (HSA) or Republic Act No became effective. Various human rights groups and Leftist organizations warned the public of its possible use in the curtailment of civil liberties. The Catholic Bishops also issued a statement expressing support to those who oppose the implementation of said Act 21. However, the fear seems unwarranted because up to the writing of this Update, there has been no major incident wherein the HSA was used as justification for arrest. Recently, National Security Adviser Norberto Gonzales opined that he agreed with the observation that the HSA is unenforceable because of the many stipulations in the law before an arrest and prosecution can be made against suspected terrorists. 22 On August 28, Jose Maria Sison, alleged founder and head of the Communist Party of the Philippines New Peoples Army (CPP-NPA), based in the Netherlands was arrested by Dutch police on charges that he ordered the murder of his two former allies in the Philippines, Arturo Tabara and Romeo Kintanar. 23 Both spouses of the murdered leaders welcomed the news and President Arrroyo claimed that it was a giant step toward peace and justice. 24 On the other hand, the spokesperson for the CPP-NPA declared that the arrest of Sison virtually doomed any resumption of the peace talks between the GRP and the CPP-NPA. Shortly thereafter, President Arroyo issued Proclamation No (September 6) granting amnesty to members of CPP-NPA-NDF and other Communist rebel groups who will surrender to the government. The CPP-NPA-NDF denounced this as a divide and rule tactic employed by the government against their ranks and further asserted that the amnesty program will only line up the pockets of officials involved in the process. It continued that the amnesty was a government ploy to justify request for his Sison s deportation to the Philippines. 25 However, Armed Forces Chief of Staff Hermogenes Esperon noted that Sison is not covered by the amnesty proclamation. 26 It is expected though that breakaway groups particularly in the Visayas and Northern Mindanao (and quite a number in Central and Southern Luzon provinces) areas will likely take advantage of the offer. Meanwhile in the Netherlands, the Hague Court temporarily allowed the release of Sison but stipulated that the trial will commence in 90 days The same month also witnessed the assassination of human rights lawyer Atty. Solema Jubilar in Kidapawan City. According to the latest count, there were 33 union leaders killed in the first half of 2007 in different parts of the country (refer to BusinessWorld, September 19 issue). 20 Velasco was later relieved by Secretary of Justice Raul Gonzales for prematurely revealing the information. The European Union Ambassador to the Philippines expressed his astonishment over the relief of Velasco (refer to the Philippine Daily Inquirer, July 13 issue. 21 Refer to Manila Bulletin, July 20 issue. 22 See BusinessMirror, August 16 issue. 23 His current official designation in the movement is Chief Consultant of the NDF negotiating panel. 24 See the Philippine Daily Inqurer, August 29 issue. 25 See Manila Bulletin, September 12 issue. 26 See Philippine Daily Inquirer, September 5 issue. 27 Refer to the Philippine Daily Inquirer, September 14 issue. 9