The Republic of the Philippines: Background and U.S. Relations

Prepared for Members and Committees of Congress

The United States and the Republic of the Philippines (RP) maintain close ties based upon
historical relations, common interests, shared values, and the large Filipino-American population.
Although the United States closed its military bases in the Philippines in 1992, bilateral military
cooperation resumed following territorial disputes between the Philippines and China in 1994 and
the launching of the Global War on Terrorism in 2002. Major U.S. policy objectives in the
Philippines include: bolstering the Philippines as a strong U.S. ally in Southeast Asia; assisting
the Armed Forces of the Philippines (AFP) in counterterrorism efforts; supporting the peace
process in Mindanao; helping the AFP to modernize its equipment and adhere to democratic
principles; and providing assistance for political and economic development. Since 2001, the
Philippines has received the most dramatic increases in U.S. foreign aid in Southeast Asia, largely
for counterterrorism purposes, including not only military assistance but also health, education,
and economic assistance in Mindanao.
The Philippines faces terrorist threats from several groups, including Jemaah Islamiyah (JI), the
main Southeast Asian Islamic terrorist organization with reported ties to Al Qaeda, and Abu
Sayyaf, a small, violent Muslim separatist group which operates in the southern Philippines. The
Moro Islamic Liberation Front (MILF), a Muslim separatist group with an estimated armed
strength of over 10,000, seeks a homeland with a high degree of autonomy in Muslim-majority
areas of Mindanao. Since 2002, the United States has provided non-combat assistance in joint
military exercises which have helped to significantly reduce the size of Abu Sayyaf. Nonetheless,
Abu Sayyaf continues to operate through its growing cooperation with JI and some factions of the
MILF. In August 2008, the Philippine government and the MILF signed a Memorandum of
Agreement setting up a framework for expanded autonomy in Mindanao. However, Christian
politicians from Mindanao filed a suit with the Philippine Supreme Court, which ruled the accord
unconstitutional, unleashing a period of fighting between MILF and government forces.
While the United States remains the dominant foreign military, political, economic, and cultural
influence in the Philippines, China has become a major—perhaps the largest—source of
financing for infrastructure, energy, and agricultural development and arguably has engaged in
more active diplomacy. Some U.S. and RP policy makers have expressed concern regarding
China’s growing “soft power” and the perceived lack of U.S. comprehensive attention to
Philippine and regional issues.
The United States has an interest in promoting stable and effective democratic governance in the
Philippines. President Gloria Arroyo has faced at least three coup attempts and four impeachment
bids. Pervasive official corruption and a wave of politically-motivated killings of mass media
personnel and extrajudicial killings of leftists and social activists have created an impression of
lawlessness. Two independent investigations into the extrajudicial killings conducted in 2006-

2007 implicated the Philippine Armed Forces. This report will be updated periodically.

Overvi ew ....................................................................................................................... .................. 1
Policy Issues for Congress........................................................................................................1
Political Developments....................................................................................................................2
2007 Congressional Elections...................................................................................................4
Politically-Motivated Violence and Extrajudicial Killings.......................................................4
Economic Conditions......................................................................................................................5
Promoting U.S. Trade and Investment......................................................................................7
U.S. Foreign Assistance...................................................................................................................7
Terrorist, Separatist, and Communist Movements..........................................................................9
The Abu Sayyaf Group..............................................................................................................9
U.S. Policy Toward Abu Sayyaf..............................................................................................10
MNLF and MILF.....................................................................................................................11
Peace Agreement and Its Collapse.....................................................................................11
Relations Between the MILF, JI, and Abu Sayyaf............................................................12
Clan Violence....................................................................................................................13
U.S. Policy Toward the MILF.................................................................................................13
Philippine Communist Party (CPP).........................................................................................15
Foreign Relations..........................................................................................................................15
RP-U.S. Security Ties and Military Relations.........................................................................15
RP-U.S. Operations on Baslian and Jolo Islands..............................................................16
Philippines-China Relations....................................................................................................18
Filipino Veterans............................................................................................................................20
Time Line: Major Historical Events..............................................................................................21
Figure 1. Map of The Philippines..................................................................................................22
Table 1. Philippines Bilateral Trade with the United States, China, and Japan, 2007.....................7
Table 2. U.S. Assistance to Philippines, 2005-2009........................................................................8
Author Contact Information..........................................................................................................23

The United States and the Republic of the Philippines (RP) maintain close ties stemming from the
U.S. colonial period (1898-1946). Although the United States closed its military bases in the
Philippines in 1992 (Subic Naval Base and Clark Air Base), cooperation in counterterrorism
efforts has brought the two treaty allies closer together. During President Gloria Macapagal-
Arroyo’s state visit to Washington in May 2003, the Bush Administration pledged increased 1
military assistance and designated the Republic of the Philippines as a Major Non-NATO Ally.
The main pillars of the bilateral relationship are the U.S.-RP security alliance, counterterrorism
cooperation, trade and investment ties, democratic values, and extensive people-to-people
contacts. Filipino-Americans number approximately three million, making them the second-
largest Asian-American group in the United States, and comprise the largest number of 2
immigrants in the U.S. armed forces. An estimated 250,000 Americans live in the Philippines.
Despite general agreement on the importance of U.S.-RP relations and the war on terrorism,
bilateral frictions occasionally have arisen as Philippine foreign policy has become more
independent and assertive regarding RP sovereignty and self-interests or driven by domestic
political pressures. Furthermore, areas of cooperation have narrowed somewhat since 2001.
According to some analysts, Manila has begun to define its security needs in a more multilateral
rather than bilateral context, while the United States government has been accused of viewing the 3
Philippines and the Southeast Asia region largely through a prism of terrorism.
Broad U.S. policy objectives include: maintaining the U.S.-RP alliance; assisting the Armed
Forces of the Philippines (AFP) in counterterrorism efforts; supporting the peace process in
Mindanao; supporting AFP modernization and administrative reform; promoting broad-based
economic growth; and helping the Philippines to develop stable and responsive democratic
institutions. The United States may have reached a crossroads where it faces fundamental policy
questions regarding its policies toward the Philippines. These include: whether to continue
current levels of military and development assistance despite unabated political violence and
instability; whether to press for a more aggressive role for U.S. military forces in counterterrorism
operations, despite the potential for aggravating tensions in Mindanao and other regions in the
south or provoking anti-U.S. sentiment among some groups; and whether to assume a role in the
MILF-RP government peace process, despite the lack of a clear outcome.
Some policy makers have questioned the effectiveness of seven years of significantly increased
U.S. assistance to the Philippines, which they argue have not fundamentally altered the dynamics
of the insurgency in Mindanao and widespread economic disparities and political instability.
Other analysts argue that raising funding levels for Foreign Military Financing (FMF), anti-

1 Catharin Dalpino, “Separatism and Terrorism in the Philippines: Distinctions and Options for U.S. Policy, Testimony
before the Subcommittee on East Asia and the Pacific, House International Relations Committee, June 10, 2003.
2 Asian Nation; Migration Policy Institute (September 2008); Department of State,Background Note: Philippines, October 2008.
3 Herman Joseph S. Kraft, “The Philippine-U.S. Alliance: A Strategic Partnership in Tactical Mode,” Center for
Strategic and International Studies, Southeast Asia Bulletin (October 2008).

terrorism assistance (NADR), and military training (IMET) to the Philippines would help the AFP
to fight terrorist and separatist groups as well as promote democratic principles in the military.
Some observers contend that the United States should pay more attention to the underlying causes
of terrorism and separatist insurgency in the Philippines, such as the poverty and official
corruption. They advocate increasing funding for U.S. development and other aid programs,
especially in Muslim areas of Mindanao, that help provide for economic development, education,
government accountability, and conflict mitigation programs. They also support U.S. military
involvement in local infrastructure projects (civic action programs).
The United States has an interest in promoting stable and effective democratic governance in the
Philippines. While Filipinos enjoy a high degree of civil liberty, political leaders are freely
scrutinized, and elections are largely free, corruption, political violence, and the lack of civilian
control over the military continue to present major and in some cases growing challenges to
Philippine democracy. Politically-motivated acts of violence against journalists and other mass
media personalities and extrajudicial killings of individuals linked to leftist groups have risen
since Gloria Macapagal-Arroyo assumed the presidency in 2001. The United States government
has attempted to help address the problems of corruption and extra-judicial killings largely
through its foreign assistance activities. U.S. programs related to political killings include
providing additional funding to the Philippine Commission on Human Rights, training Philippine
investigators and prosecutors, educating military and law enforcement personnel in the areas of
human rights and civil liberties, supporting judicial system improvements, and aiding civil society
groups. The Consolidated Appropriations Act for FY2008 placed conditions on a portion of
military assistance in order to help compel the RP government to address this issue.
Some Philippine leaders and U.S. policy analysts have called for broader U.S. engagement
(beyond counterterrorism cooperation), in part to counter China’s growing influence in the RP.
The United States is the largest bilateral source of foreign direct investment and the second
largest bilateral provider of official development assistance in the RP after Japan. The United
States remains the RP’s largest trading partner, although bilateral trade contracted slightly in

2007, while RP-China trade continued to expand rapidly. When Hong Kong is included, however, 4

RP-China/Hong Kong trade now exceeds RP-U.S. trade. In the past few years, China has
become a major sponsor of infrastructure, energy, agriculture, and mining development in the
Philippines. The RP reportedly is the largest recipient of PRC loans in Southeast Asia. Some
observers argue that although most RP leaders do not want Chinese economic assistance to come
at the expense of U.S. friendship, Philippine reliance on China may potentially conflict with U.S.
priorities in the RP.

Since 2005, President Arroyo has faced popular protests calling for her resignation, at least three
coup attempts by elements of the Philippine military, and four impeachment bids (three have
failed and a fourth is not expected to prevail). She won the presidential election of 2004 (a non-
renewable six-year term), after having already served for three and one-half years, but 5
subsequently was accused of attempting to rig the election. In October 2008, the President’s

4 Global Trade Atlas.
5 The basis of the accusation was a recorded telephone conversation of Arroyo with a member of the Commission of

approval rating stood at 27%, with 54% dissatisfied with her performance.6 The government’s
successful fiscal reforms, lack of popular leadership alternatives, support from the top ranks of
the military, and relative quiet of the Catholic church of the Philippines, have helped to prevent
opposition movements from gathering momentum. Likely top contenders to succeed Arroyo in
2010 include: Vice President Noli de Catro; former Senate President Manuel B. Villar
(Nacionalista Party); Senator Loren Legarda (Genuine Opposition coalition), and Senator Manuel 7
“Mar” Roxas II (Liberal Party).
On the one hand, RP citizens enjoy a high level of political freedom, including a robust civil
society, while the legislative and judicial branches exert checks upon the presidency. On the other
hand, Philippine politics are plagued by corruption and cronyism, and power is concentrated in
the hands of entrenched socio-economic elites. One analyst describes the Philippines as a “weak 8
state ... captured by strong interests.” Another rising concern among some opposition and civil
society groups is the growing influence of the Philippine security forces in the Arroyo
Administration, exemplified by the number of armed forces and police officials appointed to high
level positions in government. They argue that Arroyo has thereby attempted to bolster her
strength both within the military itself and vis-a-vis opposition groups; in return for the military’s
support, the President has protected the security forces from charges of corruption and human 9
rights abuses. Freedom House characterizes the Philippines as “partly free”—its rating of
political rights falling from 3 to 4 (on a scale of 1 to 7) in 2008 due to allegations of corruption 10th
and political killings. The Economist Intelligence Unit (EIU) ranks the RP 77 out of 167
countries in terms of democracy, owing largely to ongoing corruption and attempted military
coups. However, the EIU scores the Philippines high on the electoral process, pluralism, and civil 11
The Philippine legislature acts as a “watchdog” toward the executive branch, but historically has
had difficulty articulating and carrying out broad policy options and programs. Political parties
and groupings tend to be fragmented and shifting, driven more by individual personality or
geographic and sectoral interests than by unifying ideologies, platforms, and policy goals. The
public often elects and places its trust in charismatic leaders, who distribute the spoils of victory 12
to their cronies.

Elections prior to the voting. According to reports, in the call, she told the commissioner that she wanted to secure a
one million vote margin,” and he expressed support for her wish. In June 2005, President Macapagal-Arroyo publicly
apologized for alapse in judgment” but vowed to remain in office. Paul Alexander,Support for Philippine President
Crumbles,” Washington Post, July 8, 2005.
6Philippine President Arroyo Looking Better in Poll,”, October 14, 2008.
7 Alexis Douglas B. Romero, “DeCastro Still Top Pick but Villar Narrows Gap (2010 Elections),” BusinessWorld,
November 7, 2008.
8 Mely Caballero-Anthony, “U.S.-Philippine Relations after the Iraq Crisis,” PacNet No. 35, August 19, 2004.
9 Joel D. Adriano,Arroyo’s Risky Politics of Patronage, Asia Times Online, December 9, 2008.
10 Freedom in the World Survey
11 Economist Intelligence Unit, Country Profile 2008 (Philippines).
12 Alex Magno, “The Perils of Pedestals, Time Asia, July 11, 2005.

The May 2007 mid-term elections reportedly were marred by violence, intimidation, fraud,
disenfranchisement, and other voting irregularities in some areas, particularly in the south. An 13
estimated 116 people were killed and 121 were wounded in election-related violence. However,
according to some observers, the 2007 elections were carried out honestly overall and represented
an improvement over the 2004 elections. President Arroyo, whose term ends in 2010, gained
support in the lower House following the elections, thus helping her avert another impeachment
bid. However, pro-Arroyo parties lost their narrow majority in the Senate. This has made it more 14
difficult for the President to carry out her policy agenda.
Politically-motivated acts of violence against journalists and other mass media personalities and
extrajudicial killings of individuals linked to leftist groups have risen since Gloria Macapagal-
Arroyo assumed the presidency in 2001, reportedly reaching a peak in 2006. According to one 15
estimate, 58 journalists reportedly have been killed since 2001. Many experts attribute these
killings to local power struggles rather than to a systematic crackdown on media freedom directed
by Manila. In many cases, powerful, local political families reportedly have targeted journalists or
mass media personalities who had either exposed the business practices of these families or
threatened their interests by allying with rival families or criticizing local government corruption.
The police, often beholden to local elites, have been accused of failing to perform proper
investigations, while higher levels of government have been blamed for not aggressively pursuing 16
or prosecuting those responsible for the violence.
The communist insurgency has spawned another type of killing. Since the late 1960s, the
Communist Party of the Philippines (CPP) allegedly has developed an extensive array of front
groups in rural areas. These groups often have operated in close proximity to non-communist but
left-leaning social groups and non-governmental organizations (NGOs) trying to assist poorer 17
Filipinos. Members of both communist groups and civil society have been the targets of
assassination. Between 2001 and 2007, hundreds of mostly leftist political, trade union, farmer,
church, and human rights activists reportedly were killed (over 800 according to Philippine
human rights groups). However, a Philippine National Police task force declared that about three-18
fourths of these killings were non-political in nature.
Some reports have attributed most of these deaths to the Armed Forces of the Philippines. Experts
argue that the AFP has been so dedicated to eradicating the CPP and its armed wing, the New

13 Carlos H. Conde,Deaths and Fraud Reports Mar Philippine Vote,” New York Times, May 15, 2007.
14 Bruce Gale,Arroyo in for Reform Headache,The Straits Times, July 4, 2007.
15Filipino Reporter Shot; Official Condemns Attack,” International Herald Tribune, August 5, 2008.
16 Alan Sipress, “A ‘Culture of ImpunityProtects Journalists’ Killers in Philippines,” Washington Post, September 12,
2004. “Gunmen Kill Radio Commentator in South Philippines,” Reuters News, July 18, 2006.
Simon Montlake, “In Capitalist Asia, Philippines Still Grapples with Communists,” Christian Science Monitor,
December 7, 2005.
18Philippine Police Reject 635 Cases on Rights Group’s Extrajudicial Killings List,” BBC Monitoring Asia Pacific,
February 4, 2008.

People’s Army (NPA), both of which are on the U.S. list of terrorist organizations, that it has cast
an excessively wide net over leftist activists and networks. The RP government’s February 2006
proclamation of an “all out war” against communist insurgents and other “enemies of the state”
gave further license to the AFP’s unrestricted campaign against perceived leftist security threats.
Many analysts contend that Arroyo has been reluctant to discipline the military, since its top ranks 19
have provided her with much needed political support.
AFP officials have largely rejected the claims that extrajudicial killings have occurred or that the
military should be blamed, as well as the notion that the victims were innocent. Some military
officials have responded to allegations with counterclaims that the deaths were a fabrication of
the CPP, that political and social organizations of whom many alleged victims were members,
such as the National Democratic Front, Bayan Muna, and Karapatan, were fronts for the CPP, or 20
that activists were killed as part of a CPP intra-organizational purge.
In 2006, partially in response to outcries from Philippine and international human rights groups,
the Catholic Church of the Philippines, and European countries, President Arroyo created a
special task force to investigate the extra-judicial killings and invited the United Nations Special
Rapporteur on Extrajudicial, Summary or Arbitrary Executions, Philip Alston, to conduct a fact-
finding mission. The task force (Melo Commission) and the Special Rapporteur released their 21
findings in January 2007 and February 2007, respectively. Both studies implicated the
Philippine armed forces but not the government. They largely rejected the assertions that many
leftist activists were linked to the Communist Party, killed by the CPP as part of an internal
organizational purge, or died in military combat between the AFP and the New People’s Army. In
response to recommendations of the Melo Commission and Special Rapporteur, the Arroyo
government reportedly has taken major steps to bolster the investigation and prosecution of cases
involving unlawful killings and establish procedures to ensure greater accountability in the 22
military and police forces. Although the number of such deaths has declined, some human rights 23
advocates contend that most of the perpetrators of such crimes have remained unpunished.

During the post-World War II period, the Philippines, with its American-influenced political
institutions and culture, well-educated and talented workforce, and widespread use of English,
was considered by some observers to be the second most-developed country in East Asia, after
Japan. However, the country has fallen behind other developing nations in the region. For
example, the Philippines has slipped below China both in gross domestic product (GDP) per 24
capita ($3,200 in the Philippines compared to $5,400 in China) and “human development.” The

19 “The Dirty War that Deepens Philippine Divisions,International Herald Tribune, August 22, 2006; Donald Kirk,
Filipinos Protest Steady Rise of Political Killings,” Christian Science Monitor, May 31, 2006.
20Rights Activists Uncowed as Blood Letting in Philippines Continues,” Agence France-Presse, November 12, 2006.
21Another Journalist Shot Dead,” Philippine Daily Inquirer, February 20, 2007; Press Statement: Professor Philip
Alston, Special Rapporteur of the United Nations Human Rights Council on Extrajudicial, Summary or Arbitrary
Executions, Manila, February 21, 2007.
22 U.S. Department of State, Country Reports on Human Rights Practices2007, March 11, 2008 (Philippines).
23 Katherine Adraneda, “RP Report Card on HR: Abysmal,” The Philippine Star, January 3, 2009.
24 Measured inpurchasing power parity (PPP) terms, which factors in cost of living.

United Nations Development Program’s Human Development Index (HDI) ranked the thst25
Philippines 90 and China 81 for 2007-2008.
Despite these declines, many analysts credit President Arroyo for putting the economy back on a
strong footing after several years of stagnation. Arroyo’s fiscal reforms, which included reducing
public debt through more aggressive collection of taxes, streamlining government operations, and
privatizing public sector enterprises, contributed to economic growth. The government budget
deficit declined, agriculture, export industries (electronics), and business process outsourcing
(BPO) performed well, and remittances from abroad surged. In addition, foreign investment
rebounded and the poverty rate declined. The Philippines is the world’s second largest center for
business process outsourcing, after India, employing 340,000 persons and accounting for 3% of 26
GDP. Real growth in gross domestic product averaged 5% during 2004-2006 and reached 7% in
2007. However, economic growth is expected to slow to 4.3% in 2008 and 1.3% in 2009, due in
large part to the slowdown in the global economy. Falling remittances and foreign investment, as
well as price inflation, particularly that pertaining to rice and fuel, are likely to act as drags on the 27
Philippine prosperity is highly dependent upon remittances from abroad. In 2007, roughly 8
million overseas Filipino workers (OFWs) remitted $17 billion, compared to $15.25 billion in

2006, making the RP the fourth largest recipient of remittances worldwide. Remittances constitute 28

over 10% of GDP or more than half the government budget. While this source of income is a
boon to the economy, some observers argue that it promotes consumption over long-term
investment. Furthermore, the flight of educated professionals represents a brain drain as well as
the depletion of the middle class, which has long been considered the bulwark of democracy in
the Philippines.
The RP’s largest trading partners and foreign investors are the People’s Republic of China (PRC),
the United States, and Japan. According to RP official data, bilateral trade with China (including
Hong Kong) is slightly higher than that with the United States and growing at a faster rate. (See
Table 1.) The Philippines also benefits from annual trade surpluses with China. The RP exports
primarily electrical machinery and natural resources to China and electrical machinery and 29
textiles to the United States.

25 Central Intelligence Agency, World Factbook; United Nations Development Programme. The HDI ranks countries
according to human development indicators of life expectancy, education, literacy, and gross domestic product.
26 Sarah Efron, “Calling out Bangalore; Rivalling India, the Philippines See Prosperity in Offshore Outsourcing,”
National Post, September 6, 2008.
27 Economist Intelligence Unit, Country Report—Philippines, January 2009.
28 “RP is 4th in Worldwide Remittances,” The Manila Times, March 25, 2008.
29 Global Trade Atlas.

Table 1. Philippines Bilateral Trade with the United States, China, and Japan, 2007
Philippines Data Trade Partner Data
% %
Change Change
Total from Total from
Imports Exports Trade 2006 Imports Exports Trade 2006
U.S. 7.9 8.5 16.4 -2 7.7 9.4 17.1 -1
China 4.0 5.7 9.7 16 7.5 23.1 30.6 31.3
Hong Kong 2.2 5.8 8.0 40 2.8 6.3 9.1 13.7
Japan 6.6 7.3 13.9 -5 9.5 8.7 18.2 7.6
Source: Global Trade Atlas.
Note: Philippine and PRC trade data vary significantly.
Some foreign policy makers advocate trade-liberalization policies that would encourage greater
U.S. trade with and investment in the Philippines, which they argue would help promote
economic development and social and political stability as well as to counteract growing Chinese
influence. The United States has concluded Trade and Investment Framework Agreements
(TIFAs) with five major economies in Southeast Asia, including the Philippines. TIFAs provide
forums for the discussion and resolution of bilateral trade issues as well as foundations for
potential FTA negotiations. In 2006, the United States Trade Representative (USTR) upgraded the
RP from “Priority Watch List” to “Watch List” for improvements in its efforts to reduce
Intellectual Property Rights (IPR) violations. In June 2008, the two countries signed an
Agreement of Cooperation on Agriculture and Related Fields that would allow for the sale of 30
fresh fruits from the Philippines to the United States. Some analysts expect little progress on a
U.S.-RP FTA in the foreseeable future, however, due to likely opposition or higher standards th31
imposed upon them in the 111 Congress and under the Obama Administration.

Since 2001, the Philippines has received the most dramatic increases in U.S. foreign assistance in
Southeast Asia. The main goals of U.S. assistance in the Philippines include: fighting terrorism
through both military and non-military means; supporting the peace process in Muslim
Mindanao; promoting health and education programs, especially in conflict-ridden areas of
Mindanao; increasing private sector competitiveness; and promoting good governance. “Peace
and Security” efforts, which receive the greatest funding, include assistance for counterterrorism
operations, social and economic programs in Mindanao, and the Philippine Defense Reform
(PDR) program, the aim of which is to create institutional mechanisms for preventing extra-32
judicial killings. In 2006, the Millennium Challenge Corporation (MCC) designated the

30 Maila Ager, “RP, US Sign Agriculture Cooperation Pact,, June 25, 2008.
31 PCCI Upbeat on Prospects for RP-US Trade Agreement,BusinessWorld, July 30, 2008.
32 For further information, see U.S. Department of State, Congressional Budget Justification for Foreign Operations,

Philippines as a “threshold” country or close to meeting criteria for receiving additional
assistance through the Millennium Challenge Account (MCA). The Philippines recently initiated
a two-year, $21 million MCA threshold program that focuses on fighting corruption and
improving government revenue collection. (See Table 2.)
Table 2. U.S. Assistance to Philippines, 2005-2009
(thousands of dollars)
FY2008 FY2009
Account FY2005 FY2006 FY2007 estimate request
CSH 27,050 24,651 24,362 24,967 20,043
DA 27,576 24,212 15,448 27,321 56,703
ESF 30,720 24,750 29,750 27,773
FMF 29,760 29,700 39,700 29,757 15,000
IMET 2,915 2,926 2,746 1,475 1,700
INCLE 3,968 1,980 1,900 794 1,150
NADR 2,257 4,968 4,198 4,531 4,625
Peace Corps 2,820 2,767 2,820 2,753
Totals 127,066 115,954 120,924 119,371 99,221
Food Aid
P.L. 480 Title I USDA Loan 20,000 0 0 0 0
FFP 1,720 6,335 3,655
Section 416(b) 5,644 0 0
Sources: U.S. Department of State; USAID; U.S. Department of Agriculture.
The Consolidated Appropriations Act for FY2008, Section 699E provided up to $30 million for
Foreign Military Financing for the Philippines, of which $2 million would be made available if
the U.S. Secretary of State reported that the Philippine government and military were adequately
addressing the problem of extra-judicial killings: investigating and prosecuting military personnel
and others who had been credibly alleged to have committed extrajudicial executions or other
violations of human rights; implementing policies promoting human rights safeguards in the
military; and not engaging in acts of intimidation or violence against members of legal
organizations who advocate for human rights.
In September 2008, the House and Senate of the U.S. Congress passed a continuing resolution
(CR), H.R. 2638 (Consolidated Security, Disaster Assistance, and Continuing Appropriations Act,
2009). The bill was signed into law as P.L. 110-329. The CR for FY2009 continues most foreign
operations funding through March 6, 2009, at FY2008 levels.

FY2009; CRS Report RL31362, U.S. Foreign Aid to East and South Asia: Selected Recipients, by Thomas Lum.

Key to Foreign Assistance Acronyms
CSH Child Survival and Health IMET International Military Education and Training
DA Development Assistance INCLE International Narcotics Control and Law Enforcement
ESF Economic Support Funds NADR Non-Proliferation, Anti-Terrorism and De-Mining
FMF Foreign Military Financing FFP Food for Progress

The Muslim terrorist and insurgency situation in the southern Philippines has become
increasingly complex since 2002, when Philippine and U.S. forces conducted a relatively
successful operation against the Abu Sayyaf terrorist group on Basilan island off the southwestern 33
tip of the big southern island of Mindanao. Over a span of about four years, the operation 34
reduced Abu Sayyaf’s strength from an estimated 1,000 active fighters to an estimated 200-400.
(See Figure 1, Map of the Philippines.) However, there are other developments of a decidedly
negative nature that could worsen the overall situation in the southern Philippines and even the
Philippines as a whole.
One worrisome trend is the growing cooperation among Abu Sayyaf, several major Moro Islamic
Liberation Front (MILF) commands, and elements of Jemaah Islamiyah (JI) on Mindanao. JI, the
Southeast Asian Muslim terrorist organization with ties to Al Qaeda, appears to have made
Mindanao a primary base for building up its cadre of terrorists. Moreover, this cooperation among
the three groups appears to be transforming Mindanao into a significant base of operations rather
than just a site for training; and these operations appear to increasingly target the Philippines for
terrorist attacks. A related development is the emergence of a group of Filipino Muslim converts
in the northern Philippines, the Rajah Solaiman Movement, which is working with Abu Sayyaf
and JI. The result has been an increase in terrorist bombings since 2002, both in number and
destructiveness, and an increase in the level of bombing targets in the northern Philippines,
including Manila. Other obstacles to resolving the conflict in the south include distrust between
the MNLF and MILF and the factionalism that exists among the two fronts. Some analysts
suggest that if the MILF agrees to a settlement with the government, and ceases to represent a
more fundamentalist alternative, then some of the more radical members and leaders may be 35
compelled to join JI or Abu Sayyaf.
Abu Sayyaf is a small, violent, faction-ridden Muslim group that operates in western Mindanao
and on the Sulu islands extending from Mindanao. It has a record of killings and hostage-taking 36
for ransom and has had past, sporadic links with Al Qaeda. In May 2001, Abu Sayyaf kidnapped

33 See CRS Report RL31672, Terrorism in Southeast Asia, by Bruce Vaughn et al..
34Philippine Forces Capture Abu Sayyaf Militant Suspected of Beheading Marines,”International Herald Tribune,
January 21, 2008.
35 Abuza, Zachary. Balik-Terrorism: The Return of the Abu Sayyaf Group. Carlisle, U.S. Army War College, 2005.
36 The ASG reportedly provided support to Ramzi Yousef, an Al Qaeda agent convicted of planning the 1993 bombing

and took hostage 20 people from a resort on the island of Palawan, including three American
citizens. Some of the Filipino hostages were later freed, while one of the Americans, Guillermo
Sobero, was beheaded. One year later, in June 2002, Filipino army rangers attempted a rescue in
which one of the remaining Americans, Martin Burnham, was killed along with a Filipina
hostage. Burnham’s wife, Gracia, was freed.
Philippine military operations since 2001, supported by the United States, have weakened Abu
Sayyaf on Basilan island and in the Sulu islands. However, under the leadership of Khadafi
Janjalani, Abu Sayyaf reoriented its strategy and appears to have gained greater effectiveness as a
terrorist organization. Janjalani de-emphasized kidnaping for ransom and instead emphasized
developing capabilities for urban bombing. He improved ties with key military factions of the
MILF and established cooperation with JI. He also re-emphasized the Islamic nature of Abu
Sayyaf. Thus, even though Abu Sayyaf’s armed strength fell from an estimated 1,000 in 2002 to 37
200-400 in 2005, the capabilities of the organization may be growing. Khadafi Janjalani moved
some of Abu Sayyaf’s operations and leadership to the mainland of western Mindanao. There it
reportedly established links with elements of JI, using several MILF base camps where the two
groups reportedly engage in joint training with an emphasis on bomb-making carrying urban 38
attacks. Two key JI leaders from Indonesia also relocated to Jolo island in the Sulu island chain
southwest of Basilan. In March and April 2003, Abu Sayyaf, JI, and MILF cadre carried out
bombings in Davao on Mindanao, which killed 48.
By mid-2005, Jemaah Islamiyah personnel reportedly had trained about 60 Abu Sayyaf members 39
in bomb assembly and detonation. Since March 2004, the Philippine government reportedly has
uncovered several Abu Sayyaf plots to carry out attacks in Manila, including the discovery of
explosives. One reported target was the United States Embassy. In February 2005, Abu Sayyaf
carried out simultaneous bombings in three cities, which indicated a higher level of technical and
operational capability. In April 2004, police officials reportedly determined that a February 2004
bombing of a Manila-based ferry, in which 194 people died, was the work of Abu Sayyaf and the
Rajah Solaiman Movement, a group of Filipino Muslim converts from the Manila area.
According to Philippine national security officials, Abu Sayyaf is training Rajah Solaiman 40
members to carry out terrorist bombings in Manila and several other cities.
Within a few months after the September 11, 2001 terrorist attack on the United States, the Bush
Administration moved to extend direct military support to the Philippines in combating Abu
Sayyaf. The U.S. military role appears to be based on three objectives: (1) assist the Philippine
military to weaken Abu Sayyaf in its redoubt of Jolo and the other Sulu islands; (2) neutralize

of the World Trade Center. In 1994, Yousef rented an apartment in Manila where he made plans and explosives in an
attempt to blow up 11 U.S. passenger jets simultaneously over the Pacific Ocean.
37 Abuza, Balik-Terrorism, op. cit., p. 27. Mogato, Manny.Fighting in the Philippine South Rages, Soldier Killed.
Reuters News, November 24, 2005.
38 Ibid., pp. 14-19, 22-24.
39 Mogato, Manny. “Philippine Rebels Linking up with Foreign Jihadists.” Reuters, August 21, 2005. Del Puerto, Luige
A.PNP [Philippine National Police]: Alliance of JI, RP Terrorists Strong.” Philippine Daily Inquirer (internet
version), November 20, 2005.
40 Abuza, Balik-Terrorism, op. cit., p. 36.

Abu Sayyaf-Jemaah Islamiyah training; and (3) kill or capture Abu Sayyaf leaders. The United
States committed 1,300 U.S. military personnel in 2002 to support Philippine military operations
against Abu Sayyaf on Basilan island. This force completed its mission by the end of 2002. In
2005, the Philippines and the United States developed and implemented a combined operation in
western Mindanao against Abu Sayyaf, and U.S. military personnel also participated in non-
combat operations on Jolo island in the Sulu island chain.
The U.S. focus on Abu Sayyaf is complicated by the broader Muslim problem in the southern
Philippines, including the existence of two separatist movements, the Moro National Liberation
Front (MNLF) and the Moro Islamic Liberation Front (MILF). These organizations represent
Moro ethnic and religious groups which form a majority of the population in several provinces on
Mindanao Island. The MILF was established in 1980 as a splinter group of the more secular
MNLF. With an estimated armed strength of 10,000-12,000, the MILF has outgrown its parent
organization. Both groups have been in insurrection against the Philippine government for much
of the last 30 years. The MNLF signed a peace treaty with Manila in 1996, granting limited
autonomy to four Mindanao provinces under an Autonomous Region of Muslim Mindanao
(ARMM), while the MILF continued to insist upon the creation of an independent Islamic state.
In August 2008, the Philippine government and the MILF signed a Memorandum of Agreement
laying out a framework for a settlement regarding ending MILF insurgency and recognizing their
ancestral domain. The Memorandum of Agreement provided for the establishment of a
“Bangsamoro Juridical Entity” (BJE), comprised of the ARMM and as many as 737 Muslim
majority villages (barangays) outside the ARMM to be determined through plebiscites within 12
months of the signing of the Memorandum. It also laid out the possible future inclusion of 1,459
other “conflict-affected areas.” The BJE would have an “associative relationship” with the
Philippine government, including “shared authority and responsibility.” The Entity would be able
to create its own government, election system, banking system, schools, judicial system, and
police and internal security forces. The economic resources of the region would be allocated
among the Philippine government and the BJE on a 75-25 percent basis favoring the BJE. The
Entity could enter into trade and economic relations with foreign countries and would control the 41
resources of waters extending 15 kilometers from its coast.
Immediately after the conclusion of the Memorandum of Agreement, however, Christian
politicians on Mindanao filed a suit with the Philippine Supreme Court, calling for the Court to
block the Memorandum. The politicians claimed that they had not been consulted about the
agreement even though they were the elected officials of areas envisioned for incorporation into
the BJE. The Court issued a temporary restraining order on implementation of the Memorandum.
Resistance to the Memorandum reportedly came from not only local Christian leaders and
residents, but also entrenched political and economic interests in Mindanao and opposition

41 International Crisis Group, “The Philippines: The Collapse of Peace in Mindanao.” October 23, 2008, p. 3-6. Fe
Zamora, “Bangsomoro to Get Own State: Government, MILF to Sign Ancestral Domain Pact Tuesday,Philippine
Daily Inquirer (internet), August 3, 2008.

politicians in Manila. Some critics charged that President Arroyo had schemed to use the
Memorandum, which would require changing the government from a unitary form to a federal
one, to amend the Philippine constitution, which also would open the way for her to remove the 42
ban on seeking a second term of office. The Supreme Court ruled on October 14, 2008, that the
Memorandum was unconstitutional. In an 8-7 decision, the Court held that the “associative
relationship” envisaged in the Memorandum was illegal in that it implied eventual independence 43
for the BJE. Some analysts suggest that the Arroyo Administration’s lack of legitimacy and 44
preparation on related constitutional issues and had doomed the Agreement from the start.
Renewed fighting between the AFP and MILF broke out following the collapse of the accord, 45
reportedly resulting in the displacement of over 130,000 villagers and dozens of deaths. Several
MILF units attacked Christian villages. The Philippine military launched operations against these
“rogue” groups but not the MILF as a whole. In other areas, a cease-fire, first negotiated in 2003,
remained in force. However, the truce grew more tenuous when Malaysia withdrew its troops
from an International Monitoring Team (IMT) that had been operating in conjunction with the
cease-fire. Malaysian personnel had formed the core of the IMT, which was created in 2004 by
the Organization of the Islamic Conference (OIC) to help advance the peace process.
Following the Supreme Court ruling of October 14, 2008, the government insisted on new terms
for negotiations, including greater consultation with local representatives and organizations.
President Arroyo appointed a new chief negotiator in December 2008. The MILF has questioned
the government’s sincerity in pursuing a settlement and sought a commitment from Manila to 46
adhere to the principles of the Memorandum of Agreement.
MILF leaders have denied links with JI and Abu Sayyaf, and reportedly have cooperated with
U.S. efforts to hunt Abu Sayyaf leaders. However, there also are many reports linking some local
MILF commands with the terrorist organizations. Evidence, including the testimonies of captured
Jemaah Islamiyah leaders, has pointed to strong links between certain MILF commanders and JI, 47
including the continued training of JI terrorists in some MILF camps. This training appears to
be important to Jemaah Islamiyah’s ability to replenish its ranks following arrests of nearly 500
cadre in Indonesia, Malaysia, and Singapore. Furthermore, a stronger collaborative relationship
has developed between these MILF commands and Abu Sayyaf since 2002. Zachary Abuza, an
expert on Islamic terrorism in Southeast Asia, has identified four of eight MILF base camps as
sites of active MILF cooperation with JI and Abu Sayyaf. He also has identified the MILF’s 48
Special Operations Group as facilitating joint training and joint operations with Abu Sayyaf.

42 Brett M. Decker, “Gloria’s Terror Gambit,Wall Street Journal Asia, August 7, 2008, p. 12.
43 International Crisis Group,” The Philippines: the Collapse of Peace in Mindanao.” October 23, 2008, p. 11-12.
44 Carl Baker, “Looking Forward in Mindanao, PacNet #45, September 4, 2008.
45 Jim Gomez,Philippine Troops Press Assault on Muslim Rebels,” Washington Post, August 11, 2008.
46 Simon Roughneen,Philippine Unease,Washington Times, October 30, 2008, p. B1. Alexis B. Romero and Darwin
T. Wee, “New Peace Panel Head a Sign to Restart Stalled Negotiations, Business World Online, December 2, 2008.
ETM, “Longer Christmas Truce Recommended,Business World Online, December 16, 2008.
47 Isagani P. Palma,Military Links MILF to Jemaah Islamiyah,” Manila Times Online, November 30, 2008.
48 Interview with Zachary Abuza, January 3, 2006.

There are divisions between civilian and military authorities over strategy toward the MILF. The
Arroyo Administration has emphasized negotiation. The AFP has favored a more aggressive
strategy and is suspicious of a negotiated settlement. The collaboration between elements of the
MILF, JI, and Abu Sayyaf also suggests that key MILF commanders may not support any
agreement between the MILF leadership and the Philippine government that does not include
outright independence for the Muslim areas of the southern Philippines. In that scenario, the
MILF could fracture with hardline elements embracing even more closely JI and Abu Sayyaf,
which could give rise to a greater terrorist threat despite a settlement. Furthermore, there is
another view that the MILF leadership has a relationship with hard-line MILF commands similar
to that between the political organization, Sinn Fein, and the armed wing of the Irish Republican
Army. According to this view, the MILF leadership is acting as a front for the hard-line 49
commands, shielding them from the AFP.
According to some experts, a chief factor contributing to the cycle of violence, corruption, and
poverty in Mindanao is clan conflict or vendettas, also known as rido. Local police, RP military,
and factions of regional separatist organizations have become involved in or exploited such
conflicts. In some cases, parties to clan disputes have enlisted state or insurgent military
resources; in others, government and rebel forces have recruited local familial groups. Rido 50
reportedly also has been a frequent cause of extra-judicial killings in the region.
The Bush Administration considered placing the MILF on the U.S. list of terrorist organizations
in 2002, and expressed growing concerns over MILF links with JI and JI’s use of the Mindanao-51
Sulawesi (Indonesia) corridor to transport terrorists and weapons. U.S. Administration officials
also voiced doubts about the RP government’s ability to end Muslim terrorist activity on 52
Mindanao. However, the Arroyo government has opposed characterizing the MILF as terrorist, 53
fearing that such a stance would jeopardize the peace negotiations. Furthermore, some analysts
have argued that casting the MILF as terrorist would drive it further into the arms of JI and Abu 54
Sayyaf. The Bush Administration later adopted a policy of supporting the Philippine 55
government-MILF peace negotiations as the best means of de-linking the MILF from JI. This

49 Commentary on ABC Radio News, December 28, 2005.
50 Wilfredo Magno Torres III, ed. Rido: Clan Feuding and Conflict Management in Mindanao, The Asia Foundation,
2007; “Extrajudicial Killings in the Philippines: Strategies to End the Violence, Statement by G. Eugene Martin, U.S.
Institute of Peace, Hearing before the Senate Foreign Relations Subcommittee on East Asian and Pacific Affairs, March
14, 2007; “Rido Worsens Conflict in South, Says Study,”, October 29, 2007.
51 Abuza, Balik-Terrorism, op. cit., p. 42.
52 In April 2005, U.S. Embassy Charge dAffairs in Manila, Joseph Mussomeli, caused an uproar among RP officials
when he stated that parts of Muslim Mindanao, with its poverty, lawlessness, porous borders, and links to regional
terrorist groups, could develop into anAfghanistan-style” situation. In May 2005, U.S. Ambassador to the Philippines,
Francis Ricciardone, referred to Cotabato province in southern Mindanao as adoormat” for Muslim terrorists. Jacinto,
Al, “War on Corruption, Poverty in South Must be Won First, Manila Times (Internet Edition), September 11, 2007.
53 Glorias powers of persuasion. Far Eastern Economic Review, December 12, 2002. p. 10.
54 “Mindanao Impasse: Prospects for Peace and What it Means for America,” Heritage Foundation, October 24, 2008.
55 Asia Security Monitor No. 147, November 30, 2005. “U.S. Says Peace Deal in Manila May Pressure JI. Reuters
News, October 22, 2005.

support boosted the Arroyo Administration’s position against the AFP’s advocacy of a militarily-
aggressive strategy. U.S. Ambassador to the Philippines, Kristie Kenney, signaled Bush
Administration support for the 2008 Memorandum of Agreement when she attended the signing 56
of the accord in Kuala Lumpur, Malaysia.
The United States also increased its aid presence in areas of the MILF insurgency. In September
2007, the Bush and Arroyo administrations signed an agreement for a U.S. peace and
development program in Mindanao costing $190 million over a five year period. U.S. aid
programs in MILF areas involve support for schools, infrastructure programs, and a program to
reintegrate ex-MILF fighters into civilian society. Moreover, U.S. military forces in the
Philippines have extended civic action programs from Abu Sayyaf conflict areas into MILF 57
regions, and the U.S. military is negotiating with local leaders to expand these programs.
Deepening U.S. involvement has raised the stakes for the United States, especially if the
Philippine-MILF conflict worsens in 2009. If the collapse of the August 2008 Memorandum of
Agreement should lead to a complete breakdown of negotiations and the cease-fire, the Obama
Administration could be confronted with policy decisions regarding the U.S. role in a wider war.
The AFP could be expected to propose increased supplies of U.S. arms and military equipment,
and likely would argue for a more direct U.S. military role. The Philippine government might
change its previous policy of opposition to a U.S. military role and encourage U.S. actions against
the MILF similar to those in the joint operations against Abu Sayyaf. If significant elements of
the MILF were to move closer to JI and Abu Sayyaf, and if they were able to continue or expand
terrorist operations, the Obama Administration could face additional pressures for greater U.S.
military involvement.
Given the seemingly intractable nature of the Muslim problem in the southern Philippines, the
Obama Administration faces difficult policy choices. One policy dilemma is whether to pressure
the Philippine government and political establishment to negotiate an agreement with the MILF
along the lines of the 2008 Memorandum of Agreement granting Muslim Mindanao a unique
system of autonomy, despite likely opposition to such a settlement among some groups on both
sides of the conflict. This scenario appears increasingly plausible, given the perceived poor
performance of the Philippine government and political establishment in dealing with and
ultimately rejecting the August 2008 accord. A group of former U.S. ambassadors to the
Philippines wrote in The Wall Street Journal Asia in September 2008 that “the Philippine
Supreme Court precipitated a true crisis when it issued a temporary restraining order that aborted”
the Memorandum of Agreement and that “something very much like the recently suspended 58
agreement would have to be part of any future settlement.” Both RP government and MILF
leaders reportedly have called on the United States to get more directly involved in negotiations,
but also have expressed suspicion or anger toward some U.S. diplomatic and military activities in 59

56Mess in Mindanao,” Wall Street Journal Asia, August 22, 2008, p. 14.
57 Patricio N. Abinales, “And What of America?Manila Times, August 29, 2008. “U.S. Military Projects Up in Lanao
Del Norte,Mindanao Examiner Online, November 25, 2008.
58 Stephen Bosworth, et. al.,Fixing Mindanao,” Wall Street Journal Asia, September 30, 2008, p. 16.
59 Julmunir I. Jannaral, “MILF Says US Government Has Unfinished Obligation Toward Moro People,” Manila Times
Online, December 1, 2008. Fabio Scarpello, “U.S. Diplomat Meets Philippines Rebels amid Ongoing Controversy over
U.S. Presence,World Politics Review (internet), February 28, 2008.

Another, related quandary facing the new Administration is whether to continue current levels of
military and development assistance to the RP. Some analysts suggest that although Philippine
and joint RP-U.S. military operations have reduced Abu Sayyaf armed strength, a lasting solution
in Mindanao requires political will and consensus in Manila that may be beyond the reach of U.S.
assistance programs. Furthermore, U.S. aid efforts that aim to address the economic roots of the
problem, while they reportedly have garnered goodwill among many local residents, may fail to
affect larger trends and stem the tide of violence. Other observers argue that Washington needs to
become more engaged and provide greater support, especially non-military assistance, in conflict-
ridden areas. Without greater U.S. assistance, they contend, not only would the risk of violence 60
grow, but also U.S. leverage in the Philippines may diminish.
The CPP has directed an insurgency under its New Peoples’ Army since the late 1960s. NPA
armed strength reached over 25,000 in the early 1980s and was a factor in the downfall of
President Ferdinand Marcos in 1986. After Marcos fell and democracy was restored, the NPA
declined in strength. However, in recent years, the insurgency has made a slight recovery,
reaching an estimated armed force of 8,000 in 2004-2005 and operating in 69 of the Philippines’ 6162
79 provinces. Estimated strength in mid-2007 was 7,000. The CPP also has called for attacks
on American targets. In August 2002, the Bush Administration placed the CPP and the NPA on
the official U.S. list of terrorist organizations. It also pressured the government of the Netherlands
to revoke the visa privileges of Communist Party leader, Jose Maria Sison, and other CPP
officials who have lived in the Netherlands for a number of years and reportedly direct CPP/NPA
operations. In December 2005, the European Union placed the CPP/NPA on its list of terrorist
organizations. This could place greater pressure on the Netherlands government to restrict Sison’s
communist exile group. In June 2007, the Commander of the U.S. Pacific Command, Admiral 63
Timothy Keating, offered a more direct U.S. support role in AFP operations against the NPA.

The Republic of the Philippines is a treaty ally of the United States under the 1951 Mutual
Defense Treaty, and relies heavily upon the United States for its external security. Following the
terrorist attacks in the United States in September 2001, the RP was designated as a front-line
state in the global war on terrorism. The RP has actively supported U.S. counterterrorism efforts
in Southeast Asia and has worked with the United States to enhance its own counterterrorism 64
capabilities. The Philippines was designated a Major Non-NATO Ally on October 6, 2003, after

60Mindanao Impasse,” op. cit.
61 Hepinstall, Sonya and OCallaghan, John.InterviewCommunists Pose Biggest Threat to Philippines. Reuters
News, January 10, 2006.
62 Labog-Javellana, Juliet and Mallari, Delfin T.AFP: We Can Beat NPA Rebels Without US Help.” Makati City, June 29, 2007.
63 Ibid.
64 U.S. Department of State, FY2009 Congressional Budget Justification.

President Arroyo announced Manila’s support for the U.S.-led invasion of Iraq. This U.S. move
was made in part to give the Philippines greater access to American defense equipment and
In 1991, the Philippine Senate voted 12-11 to revoke the Military Bases Agreement between the
RP and the United States, forcing the closure of the Subic Naval base and Clark Air Force base.
However, in 1995, President Fidel Ramos invited U.S. forces back on a limited basis, partially in
response to China’s erection and upgrading of structures on Mischief Reef in the disputed Spratly
Islands group. A Visiting Forces Agreement (VFA), allowing joint Philippine-U.S. military
operations, was signed by the two countries in 1998 and ratified by the RP Senate in 1999, despite
protests by the Catholic Church of the Philippines, leftists, and others. In January 2000, RP-U.S.
joint military exercises (“Balikatan” or Shoulder-to-Shoulder) were held following a five-year
hiatus, in which the United States assumed a non-combat role.
Following the September 11 attacks, Manila offered ports and airports for use by U.S. naval
vessels and military aircraft. On March 20, 2003, the Philippines sent a peacekeeping and
humanitarian contingent of nearly 100 soldiers and other personnel to Iraq. In July 2004, the
Arroyo government withdrew its troops ahead of schedule in exchange for the release of a
Filipino truck driver kidnaped by an Iraqi Islamist group. The government reportedly feared that
not doing so would provoke a public outcry and raise the risk of kidnaping for hundreds of
thousands of other Filipinos working in the region. Arroyo’s action represented an exertion of
national over bilateral (U.S.) interests. Officials in the U.S. State Department expressed
“disappointment” while some inside and outside of the Administration were angered that Manila
“had emboldened the terrorists.” President Arroyo’s state visit to Beijing in September further
added to the apparent chill in RP-U.S. relations. However, the basic ideological and institutional 65
foundations of the RP-U.S. relationship remained strong.
The 2001 terrorist attacks prompted concern over Al Qaeda’s links to Abu Sayyaf as well as
greater U.S.-Philippine military cooperation. President Arroyo and President Bush agreed on the
deployment of U.S. military personnel to the southern Philippines to train and assist the AFP
against the Abu Sayyaf group. In February 2002, the United States dispatched 1,300 U.S. troops
to provide training, advice, and other non-combat assistance to 1,200 Filipino troops against Abu
Sayyaf on the island of Basilan. In consideration of the Filipino Constitution’s ban on foreign
combat troops operating inside the country, Washington and Manila negotiated special rules of
engagement for the Balikatan exercise. U.S. military personnel took direction from Filipino
commanders and could use force only to defend themselves. In November 2002, the Arroyo
administration signed a Military Logistics and Support Agreement (MLSA), allowing the United
States to use the Philippines as a supply base for military operations throughout the region.
The Balikatan exercise reportedly resulted in a significant diminishing of Abu Sayyaf strength on
Basilan. Abu Sayyaf’s estimated manpower fell to 200-400, but it continued to operate in the Sulu
islands south of Basilan and in western Mindanao. In addition, the AFP operations improved as a
result of U.S. assistance in intelligence gathering, the supplying of modern equipment, and aid in

65 Mely Caballero-Anthony, “U.S.-Philippine Relations after the Iraq Crisis,” PacNet No. 35, August 19, 2004; Andrea
Koppel,U.S. Confused by Philippine Decision,”, July 13, 2004; Peter Brookes, “Saying ‘Yes’ to Terror,”
The Heritage Foundation, July 16, 2004.

the planning of operations. The United States and the Philippines negotiated a second phase of
U.S. training and support of the AFP, beginning in late 2002, with an objective of training light
infantry companies for use against both Muslim insurgents and the NPA.
Continued Abu Sayyaf bombings led the U.S. Defense Department to consider a more extended
U.S. assistance program in the southern Philippines, focusing on the Abu Sayyaf concentrations
in western Mindanao and on Jolo Island in the Sulu chain. In 2005, the Philippines and the United
States developed and implemented combined operations against elements of Abu Sayyaf
operating in western Mindanao and Jolo. The operation apparently had three objectives: (1)
neutralize Abu Sayyaf-Jemaah Islamiyah training; (2) kill or capture leaders of Abu Sayyaf; and
(3) root out the Abu Sayyaf forces and organization on Jolo in a similar fashion as the successful
campaign on Basilan in 2002. The U.S. role in western Mindanao reportedly involved intelligence
and communications support of the AFP, including the employment of U.S. P-3 surveillance
aircraft; deployment of Navy Seal and Special Forces personnel with AFP ground units; and rules
restricting U.S. personnel to a non-combat role (although such rules normally would allow U.S. 66
personnel to defend themselves if attacked).
U.S. troops landed on Jolo in 2005. The number of U.S. troops on the island has ranged between
180 and 250. Their mission has been to support 7,000 Filipino troops (ten battalions) on the island
against Abu Sayyaf. U.S. military personnel live within Philippine military camps and always 67
operate with AFP units. They can use their weapons only when fired upon. U.S. military support
on Jolo has the following main components:
• Training of AFP battalions in conducting operations. This has emphasized
training for night combat.
• Providing equipment to the Philippine battalions, including communications
equipment and night vision goggles.
• Providing intelligence-gathering technology to the AFP.
• Providing aerial intelligence reconnaissance to locate Abu Sayyaf units and
personnel in Jolo’s jungles.
• Conducting civic action programs with the AFP aimed at the local populace. U.S.
troops have repaired and built piers for fishermen and have constructed roads,
water purification installations, and farm markets. They have renovated schools
and provided medical care.
• Supporting USAID projects on Jolo and on neighboring Tawi Tawi island,
including a new market for Jolo town (the market was destroyed by Abu Sayyaf
bombing in 2006) and a major pier on Tawi Tawi.
Reports indicate major successes for the AFP operation on Jolo backed by the United States, but
Abu Sayyaf has not been eliminated. Some reports in late 2008 describe limited Abu Sayyaf 68
activity on Basilan. Abu Sayyaf strength on Jolo is down to an estimated 200-300. The group

66 Bonner, Raymond and Conde, Carlos H.U.S. and Philippines Join Forces to Pursue Terrorist Leader.” New York
Times, July 23, 2005.
67 Hookway, James. “Terror Fight Scores in the Philippines. The Wall Street Journal Asia, June 20, 2007. p. A.
68 Darwin T. Wee, Alexis B. Romero and Carmelito Q. Francisco, “Pursuit of Bandits Ordered Intensified,” Business
World Online, December 15, 2008.

has been pushed back to remote areas on the island. Senior leaders have been killed, including
Khadafi Janjalani and Abu Solaiman. However, JI leaders Umar Petek and Dulmatin remain at
large on the island. Security has improved in many parts of the island as the AFP has established a
permanent presence in many of the areas cleared of Abu Sayyaf. New businesses have emerged in
the main towns, and people now venture out at night. The incidence of bombings and ambushes
has declined. The attitude of the people of Jolo toward the U.S. military generally has been
positive. As on Basilan in 2002, U.S.-conducted and supported civic action projects have been 69
well received.
Another potential U.S. policy decision could come out of the December 2005 agreement among
the Philippines, Indonesia, Malaysia, and Brunei for joint maritime patrols in the waters
separating them. The agreement specifically covers Mindanao and the Mindanao-Sulawesi
corridor. Any future programs to establish maritime interdiction cooperation between the
Philippines and its neighbors likely would produce proposals for expanded U.S. military aid and
training for the Philippine Navy.
In the past decade, the Philippines has pursued stable and friendly political and economic
relations with China, while relying upon the United States and the Association of Southeast Asian
Nations (ASEAN) as security and diplomatic counterweights to the PRC. President Arroyo has
made several official visits to China since she assumed the presidency in 2001. Some analysts
argue that the People’s Republic of China has sought to forestall a greater U.S. military presence
in the region, a clash over disputed territory in the Spratlys that might provoke U.S. involvement,
and Philippine support of the United States in a possible military crisis involving Taiwan. Rather
than take a back seat following the strengthening of Philippine-U.S. ties after 2001, China has 70
offered Manila much-needed military assistance and well as economic aid and investment.
The Philippines’ relationship with the PRC has improved markedly since the Mischief Reef 71
Incident in 1995. Faced with pressure from ASEAN, China promised to abide by the United
Nations Convention on the Law of the Sea, which states that countries with overlapping claims
must resolve them by good faith negotiation. In 2002, Beijing and ASEAN signed the Declaration
on the Conduct of Parties in the South China Sea (DOC), which many in the region hope will
evolve into a formal code of conduct that promotes a peaceful resolution of territorial disputes. In
2003, China acceded to the Treaty of Amity and Cooperation in Southeast Asia, which renounces
the use of force and calls for greater economic and political cooperation.
Some analysts contend that the Arroyo government’s withdrawal of RP military personnel from
Iraq in July 2004 created a temporary chill in Manila’s relations with Washington, while
Philippine contacts with Beijing became warmer. President Arroyo paid an official visit to China
in September 2004. In November 2004, RP and PRC military officials signed a Memorandum of
Understanding on Defense Cooperation, and in May 2005, the two countries signed agreements

69 Ibid. Montlake, Simon. “US Troops in Philippines Defy Old Stereotype.” Christian Science Monitor, March 1, 2007.
p. 7.
70 Renato Cruz De Castro, “China, the Philippines, and U.S. Influence in Asia,” Asian Outlook (AEI Online), July 6,
71 Carl Baker,China-Philippines Relations: Cautious Cooperation, Asia-Pacific Center for Security Studies, October

related to the following: annual defense and security dialogues; PRC training of AFP soldiers;
Chinese technical assistance to the AFP; and a gift of non-lethal military equipment worth $6 72
Some argue that China has exploited what many Southeast Asians perceive as a one-dimensional
U.S. view of the region, with its focus on counterterrorism, by emphasizing their development
needs. In the past few years, China has become one of the RP’s biggest trading partners, a major
investor in infrastructure, energy, agriculture, and mining, and a significant provider of foreign
aid, mostly in the form of concessional loans which rival those of Japan, the Asian Development
Bank, and the World Bank. The Philippines is now the largest recipient of PRC loans in Southeast
Asia, which reportedly total $2 billion in pledged financing, of which about half has been 73
disbursed. One of the largest PRC-funded projects in the country is the $1 billion North Rail 74
line on Luzon.
China’s beneficence has also been a source of scandals roiling Philippine politics. In 2007, the RP
government signed a $329 million contract with ZTE Corporation of China to build a national
broadband network linking government units. The Commissions of Elections chairman, Benjamin
Abalos, was later accused of bribing Philippine and Chinese officials and a rival Philippine
telecom company in exchange for their support of the ZTE deal. Abalos resigned from his
position in October 2007 while President Arroyo canceled the project. ZTE denied involvement in 75
any corrupt activities.
Some Philippine lawmakers have accused the Arroyo government of compromising the country’s
sovereignty and foreign relations in exchange for PRC loans and other forms of cooperation. The
Joint Marine Seismic Undertaking (JMSU), a three-year agreement signed in 2004 and 2005 by
the China National Offshore Oil Corp., the Philippine National Oil Corp., and PetroVietnam,
involved seismic data gathering in the Spratly Islands area in preparation for oil exploration
activities. Some Philippine lawmakers protested that the JMSU covered not only disputed
territory but also undisputed Philippine islands as well as one island claimed and occupied by 76
Taiwan. Furthermore, other critics argued that the agreement undermined ASEAN efforts to deal
with China as a bloc. The RP government did not renew the JMSU in 2008 due to opposition in
the legislature.
Although some Philippine politicians and opinion leaders have been critical of RP-China
economic arrangements, some analysts argue that the focus of their disapproval has been their

72 Ian Story,China and the Philippines: Moving Beyond the South China Sea Dispute, China Brief, The Jamestown
Foundation, October 25, 2006.
73 Katrice R. Jalbuena, “Ties with PRC, Now Most Important to RP, Also Involves Security Matters,” Manila Times,
June 29, 2008; New York University Wagner School, “Understanding Chinese Foreign Aid: A Look at Chinas
Development Assistance to Africa, Southeast Asia, and Latin America,” report prepared for the Congressional
Research Service, April 25, 2008.
74 Walter Lohman, “Off the Rails in the Philippines,” Heritage Foundation, WebMemo no. 1856, March 14, 2008;
Darwin G. Amojelar, “Chinese Loans to RP Rising, The Manila Times, December 3, 2007.
75 Allen Kicken, “The Philippines in 2007,” Asian Survey, Vol. XLVIII, No. 1 (January/February 2008).
76 The Philippines and China signed the agreement in 2004; Vietnam signed on in 2005. The Spratlys are claimed in
whole or in part by the Philippines, China, Vietnam, Malaysia, Taiwan, and Brunei. Barry Wain, “Manilas Bungle in
the South China Sea,Far Eastern Economic Review, Jan/Feb 2008; “Sold: 24,000 Sq. Km.,” Malaya News, March 8,
2008; “Philippines: Energy Chief Says Joint Exploration Pact with China, Vietnam, Lapses, BBC Monitoring Asia
Pacific, July 12, 2008.

domestic political opponents rather than the PRC. Meanwhile, many Filipinos view RP-China
relations as positive overall and China’s intentions as benign. They have expressed more concern
about political corruption and the lack of government transparency regarding these deals than
about China per se. In September 2008, President Arroyo created a special government panel to 77
oversee projects funded by PRC aid money, a move expected to be popular with the public.

Many Filipino veterans of World War II, who fought with the U.S. Armed Forces against the
Japanese military, claimed that the United States government promised them U.S. citizenship and
full veterans’ benefits. However, following the war, congressional legislation granted full veterans
benefits only to Regular (“Old”) Philippine Scouts, while limiting eligibility among three
groups—the “New” Philippine Scouts, Recognized Guerrilla Forces, and Commonwealth Army
of the Philippines. The U.S. Congress expanded benefits to these three groups over the years. In
December 2003, the Bush Administration signed a measure that extended Veterans Affairs health
benefits to all Filipino veterans living in the United States. Filipino veterans organizations
continued to push for legislation that would provide more complete benefits, including health care
to veterans living in the Philippines. In 2008, fewer than 18,000 of over 200,000 Filipino WWII
veterans reportedly were still alive, including 6,000 residing in the United States, according to 78
some estimates.
Two measures were introduced in the 110th Congress, H.R. 760 and S. 57, that would grant full
veterans benefits to the New Philippine Scouts, Recognized Guerrilla Forces, and Commonwealth
Army of the Philippines, similar to those received by U.S. veterans and “Old” Philippine 79
Scouts. The Veterans Benefits Enhancement Act of 2007 (S. 1315), as passed by the Senate,
incorporated elements of S. 57, while the House version of the bill did not contain such 80
provisions. In addition, the Filipino Veterans Equity Act of 2008 (H.R. 6897, introduced on
September 15, 2008) would establish the Filipino Veterans Equity Compensation Fund through
which one-time payments would be made ($15,000 for U.S. citizens and $9,000 for non-U.S.
citizens) to certain eligible persons who served in the New Philippine Scouts, Recognized
Guerrilla Forces, and Commonwealth Army of the Philippines. The Filipino Veterans Assistance
Act of 2008 (H.R. 6645), introduced on July 29, 2008, would authorize the President to provide
assistance to the Republic of the Philippines for the purpose of aiding these Filipino veterans.
S. 68, introduced by Senator Inouye on January 6, 2009 (111th Congress), would require the
Secretary of the Army to determine the validity of the claims of certain Filipinos that they
performed military service on behalf of the United States during World War II. Such certification
would qualify such persons or their survivors to receive any military, veterans’, or other benefits
under U.S. laws.

77 “Macapagal Sets up Oversight of China Projects,Financial Times, September 26, 2008.
78 Jennie L. Ilustre,WW2 Filvets Oppose Lump Sum US Pension Bill,” Malaya, September 25, 2008.
79 See CRS Report RL33876, Overview of Filipino Veterans Benefits, by Sidath Viranga Panangala, Carol D. Davis,
and Christine Scott.
80 S.Rept. 110-148, Title IV.

1542: Spaniards claim the islands and name them the Philippines.
1890s: Insurgency against Spanish rule
1898: Spanish-American War—Spain cedes the Philippines to the United States
1899: Insurgency against U.S. rule
1935: Plebiscite approves establishment of Commonwealth of Philippines; Country is promised full independence in
ten years
1941: Japan invades
1944: U.S. forces retake islands
1946: Philippines granted full independence
1965: Ferdinand Marcos becomes president
1969: Muslim separatists begin guerrilla war
1972: Marcos declares Marshall Law
1983: Opposition leader Benigno Aquino assassinated
1986: Corazon Aquino assumes presidency following “People Power” protests
1989: Coup attempt suppressed
1992: Aquino’s defense minister, Fidel Ramos, wins presidency. United States closes Subic Bay Naval Station
1996: Philippines government reaches truce with Moro National Liberation Front (MNLF)
1998: Film star Joseph Estrada elected President
2000: Impeachment proceedings begin against Estrada on allegations of corruption and violation of the constitution
2001(January): Amid mass street protests, Estrada’s vice-President, Gloria Macapagal-Arroyo, is sworn in as President.
Estrada is arrested for plundering state funds
2001 (March): Moro Islamic Liberation Front (MILF) declares cease fire
2002: Philippines and United States hold joint military exercises
2002: Terrorist bombs detonate in Manila and Zamboanga city, killing ten persons
2003 (July): RP government signs cease fire with MILF
2003 (July): RP soldiers (AFP) seize shopping center in mutiny
2004: Peace talks between government and NPA start but are later called off
2004 (June): Macapagal-Arroyo wins Presidential election
2004 (July): Philippines withdraws peacekeeping troops from Iraq
2005: Heavy fighting between AFP and MILF breaks cease fire
2005: President Arroyo comes under pressure to resign over allegations of vote-rigging
2006: President Arroyo declares week-long state of emergency following alleged discovery of coup plot.
2007: In mid-term congressional elections, pro-Arroyo parties gain strength in the House but lose seats in the Senate.
2008 (August): Peace agreement between the government and MILF collapses after Supreme Court issues a
temporary stay.

Figure 1. Map of The Philippines

Thomas Lum Larry A. Niksch
Specialist in Asian Affairs Specialist in Asian Affairs, 7-7616, 7-7680