Military

DATE=08/29/03

TYPE=CORRESPONDENT REPORT

TITLE=PHILIPPINES/DEFENSE (L-ONLY)

NUMBER=2-306973

BYLINE=HEDA BAYRON

DATELINE=HONG KONG

CONTENT=

VOICED AT:

INTRO: The political turmoil in the Philippines following a failed military rebellion last month deepens. As V-O-A's Heda Bayron reports from Hong Kong, the country's defense chief has resigned amid allegations of corruption.

TEXT: Defense Secretary Angelo Reyes became the second political casualty of a failed military mutiny last month -- when hundreds of young soldiers charged senior military officials of corruption.

The soldiers had demanded his resignation, along with that of the intelligence chief and President Gloria Arroyo. The intelligence chief stepped down shortly after the mutiny was quelled.

Friday, an emotional Mr. Reyes left his position.

/// REYES ACT ///

I wish to announce that not withstanding the baselessness of the charges hurled against me, I have decided to resign my position as secretary of national defense.

/// END ACT ///

Flanked by the military chief and other generals, Mr. Reyes says he is stepping down to allow President Arroyo a "free hand" to deal with the allegations against him and the military.

But he warned of a conspiracy to undermine the country's democracy and its institutions.

/// 2nd REYES ACT ///

At this critical moment in our national life, our democracy is under serious threat from political opportunists as well as insurgents waiting in the wings. Unless a drastic remedy is quickly found, these elements, I am convinced, are going to be the nation's undoing.

/// END ACT ///

Mr. Reyes is seen as a key player in the Arroyo government. As military chief in 2001, he withdrew support from then President Joseph Estrada during mass protests against Mr. Estrada's alleged corrupt activities. That allowed Ms. Arroyo, then vice president, to take power.

/// OPT ///

Presidential spokesman Ignacio Bunye said Ms. Arroyo accepted the resignation with "deep regrets." He added that Mr. Reyes is likely to be assigned to a different government post. In the meantime, Ms. Arroyo herself will take over the defense portfolio.

/// END OPT ///

President Arroyo has been trying to consolidate support for her government following the military mutiny. She has called for an end to political partisanship, which she says undermines the country's stability.

The political turmoil has wreaked havoc on the Philippine currency, which dropped to a 31-month low against the U-S dollar earlier this week. (Signed)

NEB/HK/HB/KPD/FC