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The Philippines is a democratic political system disguising an oligarchic society. In the mid-nineteenth century, a Filipino landowning elite developed on the basis of the export of agricultural products. This planter group was cultivated as part of the United States military and political pacification program. The democratic process imposed on the Philippines during the American colonial period remained under the control of this elite. The landowning class was able to use its privileged position directly to further its economic interests as well as to secure a flow of resources to garner political support and ensure its position as the political elite. This political dynamic remained basically unchanged at the outset of the 21st Century.

In 1960, the Philippines was slightly richer than South Korea. The Philippines had a slightly larger per capita gross national product (GNP) and a far larger base of natural resources. By the 1990s, however, Korea's per capita GNP was three times greater than that of the Philippines. In addition, South Korea's social indicators have shown greater improvement. Many different factors explain the divergence in development between South Korea and the Philippines. Some are unique to the individual countries. But what seemed to matter most was that the political and economic policies of South Korea over these 30 years were much more favorable to long-term growth and development than those of the Philippines. Foreign aid helped South Korea's development somewhat, but it arguably hindered the Philippines' development by reinforcing the government's political and economic policies.

The election of Ferdinand Marcos as the Philippine president in 1966 led the country down a path that was ultimately counterproductive to long-term development. Marcos pursued more inward-oriented economic policies than those pursued by South Korea. Marcos's policies produced aggregate economic growth initially, but in the 1980s the Philippine economy experienced a severe crisis, leading to substantial declines in per capita GNP. Moreover, the average rural or urban worker was far worse off at the end of the Marcos era than at its start. Corruption and self-aggrandizement on the part of Marcos and his family and friends contributed to the economy's problems. Reforms under Marcos's successors -- Corazon Aquino and Fidel Ramos -- made some progress in reversing the damage done by the Marcos era, but the Philippines' future, though promising, remained uncertain.

Renato De Castro has written that "The 400 families, who dominate Philippine politics and government since the country became independent in 1946, constitute the political elite. They have financed politicians (many of whom are members of their clans), and political parties, and purchased the loyalty of government bureaucrats and military officers. The elite act as rent-seeking political powerbrokers who support successive Philippine presidents and members of the Congress. In return, they require these national officials to provide them with local and national largesse, thereby compromising the state’s integrity and autonomy, and diminishing its resources.... The elite’s role as powerbrokers and their control of the legislature enable them to make the Philippine state a private instrument or a prebendal state. Such state is characterised by a formal political unit created by external recognition, territoriality, and legitimate monopoly of violence but nevertheless an empty shell that is controlled by those possessing force mejeure — the 400 families."

Bereft of any conventional military capabilities, the Philippines has no choice but to adopt a policy of conflict avoidance when it comes to the country’s external security needs. The AFP is poorly funded and is armed with antiquated equipment. In addition, only slightly more than half of the Philippines' naval ships are operational, and only a few air force planes are combat ready. Compounding the problem of inadequate equipment, the AFP's leadership has been accused of corruption and complicity with insurgent groups, although its primary mission involves counterinsurgency. In July 2003, junior officers staged an unsuccessful coup.

The Armed Forces of the Philippines (AFP) consists of a 66,000-member army; a 24,000-member navy, including 7,500 marines; and a 16,000-member air force. Active forces are supplemented by 131,000 reserves. A joint service command covers five military areas. The 6,000-member National Capital Region Command, established in November 2003, is responsible for protecting the government against coup attempts. The president of the republic is commander in chief of the armed forces.

On 22 December 2006 President Gloria Macapagal-Arroyo pushed for a revised military modernization law to speed the upgrading of the Philippines' poorly-equipped Armed Forces. Arroyo said she was working with the military chief of staff to revise the guidelines of the law so that the modernization would be swiftly implemented in a transparent and graft-free manner. Once this is completed, "we will jump-start the process, being careful to be transparent and overtly discouraging the involvement of brokers and middle-men," she told military officers at the 71st anniversary of the armed forces. This is apparently intended to allay widespread perceptions of corruption within the 130,000-strong force. Arroyo also said that a finance undersecretary would be involved in the process because "we have many procurement (contracts) which are to be done, government-to-government". She did not specify which foreign governments she was referring to.

The United States and the Philippines have a mutual defense treaty that has been in effect since 1952, but it does not extend to territorial disputes involving the Spratly Islands. In 2003 the United States designated the Philippines as a major non-North Atlantic Treaty Organization ally. The Philippines maintains strong ties to the United States. Although the United States mildly rebuked the Philippines for yielding to insurgent demands in Iraq to withdraw its small contingent, the United States continued to view the Philippines as an important ally in the war on terrorism, particularly in view of various Islamic insurgencies on the islands of Mindanao and Jolo.

The relationship with the United States was redefined in the early 1990s, when the United States complied with Philippine demands to vacate various military bases, including the naval base at Subic Bay. It was only after the Armed Forces of the Philippines (AFP) during appeared incapable of effectively responding to several provocative maneuvers by the Chinese Navy around the Spratly Island group between 1995 and 1997 that the Ramos administration was able to generate interest in renewing the US-Philippine security relationship.

A specific result was the ratification of a new Visiting Forces Agreement that laid out the legal basis for treatment of U.S. military personnel visiting the Philippines and a renewed interest in providing coastal defense ships for the AFP. In February 1998, U.S. and Philippine negotiators concluded the Visiting Forces Agreement (VFA), paving the way for increased military cooperation under the MDT. The agreement was approved by the Philippine Senate in May 1999 and entered into force on June 1, 1999. Under the VFA, the United States has conducted ship visits to Philippine ports and resumed large combined military exercises with Philippine forces.

In May 2004 the Philippines signed an agreement with the United States exempting U.S. military personnel in the Philippines from prosecution before the International Criminal Court. Total US military assistance to the Philippines rose from US$38 million in 2001 to US$114 million in 2003 and a projected US$164 million in 2005, which would make the Philippines the fourth largest recipient of U.S. foreign military assistance. Australia reportedly also a major source of military assistance.

The Philippines is working to diversify its security interests away from a singular reliance on the United States. To this end, the Philippines is developing stronger security ties with its ASEAN partners to address internal security concerns and it is establishing a bilateral relationship with China to address security concerns over the territorial dispute in the South China Sea.

In 2006 President Arroyo stressed the modernization process was part of the government's campaign to defeat the communist insurgent New People's Army (NPA) by 2010, as well as other rebel groups like the al-Qaeda-linked Abu Sayyaf Muslim extremists. Military chief General Hermogenes Esperon Jr. said separately that the ranks of the NPA had fallen from about 7,400 in 2005 to 7,100 in 2006 as the government killed and captured more of the rebels, who have been waging a 37-year-old Maoist campaign.

The ongoing insurgency and other internal security threats have a negative impact on the economy and that the resolution of these threats will significantly improve the security environment and foster a climate conducive to economic growth and national development. The security threats confronting the country come from the Communist Party of the Philippines-New People's Army-National Democratic Front (CPP-NPA-NDF) or the Communist Terrorist Movement (CTM); the Southern Philippines Secessionist Groups (SPSGs), such as the Moro Islamic Liberation Front (MILF) and break-away factions of the Moro National Liberation Front (MNLF); and terrorist organizations like the Abu Sayyaf Group (ASG) and the Jemaah Islamiyah (JI).

These various threat groups have consistently demonstrated their capability to sustain their movement from quite some time and gain influence over target sectors. They have even established linkages with international allied groups for financial and logistical support. Likewise, they persist in undertaking selective guerilla operations and terrorist activities to create an atmosphere of instability.

Government-armed civilian militias supplemented the Armed Forces of the Philippines [AFP] and the Philippine National Police [PNP]; the AFP held operational control of Citizens' Armed Force Geographical Units (CAFGU), and Civilian Volunteer Organizations (CVOs) fell under PNP command. These paramilitary units often received minimal training and were poorly monitored, tracked, and regulated. Some politicians and clan leaders, particularly in Mindanao, maintained their own private armies and at times co-opted CVO and CAFGU members into these armies. Human rights NGOs have linked state-backed militias and private armies with numerous human rights abuses, including the 2009 massacre of 58 people -- family members and supporters of a gubernatorial candidate, 31 media members, and six passersby -- in Maguindanao Province.

Military sources reported that 176 AFP members were killed in action during encounters with rebel and terrorist groups during the year 2010, 166 by the NPA and 10 by the ASG. During the same period, AFP operations killed 131 insurgents: 97 suspected NPA members, 23 ASG members, and 11 MILF members. Insurgents killed 11 PNP officers during the year, and the PNP claimed 44 NPA insurgents were killed in police operations around the country. The AFP also recorded 55 bombings during the same period.

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