Philippines Defence and Security Report Q1 2009

The three months to the end of December bought several defence sector themes to the fore in thePhilippines. The most important one was an escalation of the conflict between the Moro IslamicLiberation Front (MILF) insurgency and the government. In September, the government ended its directnegotiations with MILF and demanded the surrender of three rogue MILF commanders: Kato, Bravo andPangalian. Then, in mid-October 2008, the Supreme Court of the Philippines declared the negotiationswith MILF over a Moro ancestral home in Mindanao to be unconstitutional. The scale of fighting betweenthe Philippine army and the rogue MILF forces increased, with several hundred people reported to havebeen killed.

Another key theme was that specific (allegedly) Islamist movements have begun to undertake piracy inorder to finance their activities. The Abu Sayyaf Group (ASG) in the Philippines is arguably one of theworst offenders in this regard.

The country’s political system is moderately stable. Although President Gloria Macapagal Arroyo hasbeen under intense international and domestic pressure, her position appears secure. Crucially, Arroyoretains the support of the military and her allies dominate the House of Representatives. Thus a fullmilitary coup against her would be unlikely to succeed.

Economically, defence expenditure has risen notably in response to growing security concerns. However,the government remains heavily reliant on foreign financial assistance, mainly from the US. ThePhilippines’ defence industry remains small compared with other regional defence industries, especiallyAustralia and Singapore. For the time being, we expect the government to increase defence spending by8% annually, in real terms, over the coming years, with the clear proviso that the absolute increases willdepend in part on how the country’s economy fares (and that of its donors) in the face of the globalfinancial crisis.