U.S. Assistance to the Philippines after Marcos
by Al La Porta
A retired Foreign Service Officer recalls the remarkably effective U.S. economic support for the Philippines’ transition to democracy following the “people power” revolution overthrowing Ferdinand Marcos in 1989. It was coordinated by former U.S. Attorney General Elliot Richardson, with a two-person staff, and succeeded largely because of his leadership, stature, and access to decision-makers. — Ed.
In 1989, the Bush Administration wanted a high level response to the transition to democracy represented by Cory Aquino and the “people power” revolution. There was broad support within the Administration for a primarily economic response designed to assist the Philippines move from Marcos’ “crony capitalism” to a more open and more modern economic system.
This effort had two components. One was the Philippine Assistance Program (PAP) that was largely developed in USAID as the bilateral U.S. initiative, which included advisory assistance to the finance ministry and central bank, trade development and investment assistance, restructuring of customs and the tax authority, energy advisory assistance, and regional economic assistance. There was also political assistance outside the PAP, including development of civil society organizations, public opinion polling, local FM radio outlets, and an increase in educational exchanges. Not much was done in education except to target a couple of management programs in AIM (the Asian Institute for Management in Manila) and the precursor of Bernie Villegas’ University of Asia and the Pacific.
The other half of the program was the Multilateral Assistance Initiative (MAI), essentially consisting of donor coordination through the World Bank, which at that time took a strong hand in marshalling international assistance, harmonizing economic programs, and monitoring Philippine government actions and macro-economic performance.
Elliot Richardson was asked to head the U.S. coordinating effort for Philippine assistance. He had been Secretary of Health, Education, and Welfare, Secretary of Defense, and Attorney General in the Nixon Administration as well as special envoy for the Law of the Sea negotiations. His mandate was very general, so Elliot used his “bully pulpit” to convoke various elements of the U.S. government around the above themes and to deal with the U.S. private sector. Investment promotion was considered important to give the new democratic government a good lift-off in employment and economic terms.
Elliot’s office was in the East Asia bureau of the State Department, and he reported through the assistant secretary, first Dick Solomon and later Winston Lord after the change to the Clinton administration. His office consisted only of a secretary and an executive assistant, first John Forbes until mid-1991, then me from 1991 until 1994 (when the function lapsed after the inauguration of the Ramos Administration), and a secretary. Our relations with the State Philippine desk were off-and-on; to some extent they viewed us as a competitor in policy formulation and implementation on the economic side. Little initiative, I recall, came from their side, although Forbes and I took pains to coordinate with them. We had excellent relations with the Embassy, however, and Elliot got strong support from Ambassadors Nick Platt and Frank Wisner, who saw him as a high level ally, which he was.
Elliot saw his own role as a catalyst to bring parties together, whether in the U.S. government or internationally, around the objective of promoting Philippine economic reform. He did not hesitate to work upward in State and other agencies to bring significant issues to the top level, although Secretary of State Warren Christopher was far less interested than his predecessor James Baker. Because Elliot knew virtually everyone on the top level in Washington, both in the administration and in the economic elite, he had extraordinary mobility and used his personal influence, although he was careful not to overdo it.
The MAI was very multilateral and, in my experience, it was the best example of donor coordination I had seen. The Asian Development Bank and International Monetary Fund were constructive, and Elliot had good relations there. World Bank leadership (for a change) was effective, although we had less contact with the Bank’s mission in Manila than we might have. The donors’ group, by recollection, consisted of 26 or so countries, and the quarterly review meetings hosted by the Bank were always well-attended by embassies in Washington or delegations from capitals. We had excellent relations with the vice president of the World Bank for Asia, Calisto Madavo, and worked pretty well with his office, although it seemed that personnel there were always changing.
There was “soft” conditionality. Senior Filipino officials knew that MAI issues or performance shortfalls would not be hidden and would be taken up at the highest level with President Aquino or her successor, Fidel Ramos — Elliot effectively saw to that. What was important on the Philippine side is that government officials in any agency or department knew that they had to be transparent and were subject to being called to account publicly, as well as being criticized in the MAI donors’ group. I do not recall any instances — whether multilateral or bilateral — of assistance having been cut off for non-performance.
As indicated above, the MAI donor’s group was highly effective, perhaps the best example ever (at least in Asia). The presentations by the Filipinos were usually good, or they were called to account; performance (the “metrics”) was monitored carefully; and government representatives normally came to the table well prepared in the quarterly meetings and the annual conferences, which rotated between Washington and Manila (although one was held in Tokyo and one in Hong Kong). The primary approach of the donors was, “Well, what are you going to do about XXX situation,” thereby forcing the Filipinos to think in action terms.
Apart from policies and discrete donor initiatives, one area where the coordinating group worked well was in disaster relief and initial reconstruction responses to the Pinatubo volcano eruption. This was because the MAI was already in existence, and all of the multilateral agencies were included, so there was no need to create a separate multilateral coordinating body internationally, although a local group headed by the UN Development Program operated in Manila.
The Japanese were a strong player in the MAI, second to the United States although their focus was economic (protecting their investments?), not political as it was with the United States. The Asian Development Bank also played well; in fact I was asked by the State Department East Asia and Pacific Bureau to set up donor coordinating groups on the MAI model for the three former trustee territories — Micronesia, the Marshall Islands and Palau. The ADB assumed leadership of donor coordination in these three cases but the model was the World Bank-led MAI.
U.S. funding for Philippine economic recovery and reform primarily was through USAID. I recall that there was little assistance directed at MAI/PAP goals outside AID accounts, although we did leverage some assistance from State and Commerce for investment and business promotion delegations in concert with the U.S. Chamber of Commerce. Military assistance did not play into the MAI/PAP process, although Elliot had good relations with Assistant Secretary for Asia Rich Armitage at Defense.
Elliot took some interest in transitioning Subic Naval Base (mainly) and Clark Air Force Base to private use, and we worked closely with then-Mayor (now Senator) Dick Gordon on Subic, which we thought was a more achievable objective than Clark (because it was heavily impacted by Pinatubo). DOD was cooperative, mainly because we worked on a high level and the Embassy kept us connected with the commanders and senior Navy people on the ground.
The MAI/PAP showed what could be done — with high level U.S. political will — in coordinated approaches to a significant economic problem and in terms of effective coordination with the multilateral and bilateral donors. What was most difficult to get hold of were the increasing number of contractor-operated programs by USAID and other donors; this situation has become much more complex since, as most development operations have been outsourced.
Elliot Richardson’s role was essential to the success of the MAI/PAP in the Cory Aquino and early Ramos years. His stature meant near-instant access on most levels, and we (and he) did not hesitate to use it. Moreover, Elliot was extraordinarily adept in negotiating and “schmoozing,” and he worked hard at getting pragmatic and implementable agreements on policies and projects. Very often we were able to be the broker on MAI donor group outcomes.
We had good relations with the Congress, especially with Senator Lugar, who was a strong supporter, but also Representative Doug Bereuter (now head of the Asia Foundation) and many others who had clout on the economic side. Not surprisingly because of Elliot’s stature as a Republican, we enjoyed somewhat less success with Representatives Obey and some other Democrats who had a lot of say about appropriations for Philippine aid. John Forbes and I, however, had excellent access to the congressional staffs, and we worked hard at this aspect.
Ambassador La Porta is the immediate past president of the United States-Indonesia Society (USINDO). He retired from the U.S. Foreign Service in the fall of 2003 after 38 years of service in the Department of State and an overall U.S. government career of 44 years. During his time in the Foreign Service, he served as Ambassador to Mongolia and Political Advisor to the Commander of NATO Forces in Southern Europe. He also served overseas in Indonesia (twice), Malaysia, New Zealand, and Turkey. At the State Department, in addition to his MAI/PAP assignment, he was director of the Office of Cambodian Genocide Investigations.