MANILA, 15 December 2004 — Squatting under a lamppost where she sells cigarettes and candy to office workers, Marissa Degamo feels economic change more acutely than many of her customers. Her complaints — prices up, profits down, friends going out of business — help explain why Philippine President Gloria Macapagal Arroyo’s honeymoon is well and truly over just half a year after she won a second term in May elections.
Two opinion polls released last month showed a steep slide in her support, one of them giving her the worst rating of any Philippine president in the 18 years since huge protests ended the rule of dictator Ferdinand Marcos. Arroyo’s office took the news in stride, saying it was the price to pay for painful reforms aimed at cutting the country’s dependency on debt and warding off a full-blown financial crisis.
But some analysts say Arroyo’s prospects look bleak.
The death on yesterday of Fernando Poe Jr, the film idol who came within 3 percent of unseating her in May’s election, was a reminder of her lingering legitimacy problems nearly four years after she rode huge protests into the presidency. Millions of people who voted for Poe still believe she cheated her way to victory in May and her failure to make much progress on reform since then has further shaken trust in her, said Felipe Miranda, head of polling firm Pulse Asia.
“I think she has exhausted quite a lot of the political capital that normally Filipinos would extend to anyone who is a new president,” he said. “It is not so easy for the public to get over their feelings of anger, frustration and distrust in the administration.” Miranda said a new Pulse survey had found that trust in Arroyo’s government had for the first time fallen below that in the disgraced administration of predecessor Joseph Estrada.
Arroyo’s problem is that her popularity has slumped even before Filipinos feel any pain from proposed tax-raising bills, which remain stuck in Congress, or from rises in power rates and cuts in spending expected next year. Sharp rises in imported oil prices have fed through to transport fares and food, squeezing millions of Filipinos like Degamo who live on the breadline. Degamo, 37, said she used to sell cooked rice, but gave up that business after the price of cooking gas shot up. The price she pays for the bite-sized sweets on her stall has also gone up sharply, squeezing her profits as she is afraid to pass on the extra cost to customers. “Life is very hard,” said the mother of four. “I’m scared that I will go out of business.”
In what could be a sign of things to come if oil prices stay high, transport groups brought much of the country to a halt last month with a nationwide strike over the cost of fuel. The government blinked, persuading oil companies to give buses and public taxis a special discount.
Some saw that as the latest sign of a lack of political courage. The government has rowed back on several proposed tax bills, including a tax on telecoms firms’ revenues, after they ran into opposition among the public and industry groups. Arroyo declared a fiscal crisis in August, only to declare it over three months later even though none of her proposed revenue-raising bills had been passed by Congress.
“The Philippines is trapped in its own schizophrenic dilemma — on the one hand it’s trying to initiate fiscal austerity and revenue enhancement but at the same time it’s trying to keep subsidies in place,” said Scott Harrison, head of the Manila-based Pacific Strategies and Assessments consultancy. “It can’t have it both ways and that’s what it’s trying to do.”
With the economy set to slow next year as demand for exports cools and interest rates at home and abroad likely rise, Arroyo will face an even more difficult environment for reform. The worrying parallel is Argentina, where violent unrest accompanied a slide into economic crisis in 2002, although Filipinos have so far shown more patience.
“How a regime that is still trying to legitimize its rule will allocate this pain is going to be a political nightmare,” wrote political analyst Randy David in the Philippine Daily Inquirer.
But the opposition, which was split by Poe’s candidacy, has yet to reunite and mount a coherent challenge to Arroyo. That, and the realization among many Filipinos that reform is necessary, should give her a last chance to push ahead with reforms in the next six months without risking her job, said political analyst Ramon Casiple. “She has to be a leader, she has to be out there in front,” he said.
“If she doesn’t do that then her popularity slide would increase and she would have a very difficult year ahead of her,” he predicted.
