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Does the US have to worry about a new red in its bed?

May 18, 2016: How the Philippines and China could find a common cause

Left turn. Is that like a hard left, a 90-degree pivot, right now? Or a gradual, gently sweeping arc in that direction?

Key questions, when you're looking at what shape or form Rodrigo Duterte's new government is going to take in the Philippines, are, What exactly does the "revolutionary government" he's promised actually mean? How "red" is it going to be?

Duterte's acknowledged he's going to be his country's first leftist president. But he says he's not a communist, describing himself as left-leaning, rather than card-carrying. Let's say socialist then.

What about his government though, when you consider he's promised to bring Jose Maria Sison back from a 30-year exile and install him in the new cabinet? Duterte's planning to go to The Hague for talks with Sison soon. They've already conferenced over Skype.

Sison, known colloquially as "Joma," is the founder of the Communist Party of the Philippines (CPP), and Duterte's intellectual inspiration. Sison taught a young Duterte at the Lyceum in Manila in the '70's. Marcos jailed Sison for nearly a decade for subversion.

After the dictator fell, Sison was released. Shortly after, while travelling in the Netherlands, the Philippines revoked his passport. He's been stateless since, and continues to live in the Netherlands. He's been seeking asylum there as a political refugee since 1987.

The United States has classified him as a terrorist since 2002. Similarly, the EU. But the Philippines dropped subversion charges, so he's not wanted by Manila.

The CPP distances itself from Sison, claiming he's just an advisor and consultant now. But the Philippine military continues to view him, as well as the CPP's military wing, the New People's Army (NPA), as a threat.

Sison was charged with bombing a building in Manila, and suspected of being the mastermind behind several Philippine political assassinations. As well, some 40,000 lives have already been lost on both sides since the Communist insurgency erupted in the 1970s, including more than 10,000 civilians. And those numbers are conservative.

What isn't well reported is the fact that Duterte has managed to strike a deal with the Communists to keep them from creating havoc in Davao, which sits smack bang in the middle of Communist territory in the island's south. They operate there, but non-violently. Outside Davao though, the group still operates with impunity.

In other words, Duterte's managed to create an island of stability within an ocean of volatility because he's managed to push Communist extremism to the periphery of Davao.

This wouldn't be possible on a national scale, simply because the question arises, where would Duterte push the Communists out to? An answer could lie in his suggestion of a ceasefire with them. Bringing Sison back could be part of that plan: cessation of violence in return for political inclusion. Not, if you can't beat them, join them. More, get them to join you, so everybody stops fighting.

We know Duterte's earmarked four cabinet portfolios for the CPP: land reform, the environment and natural resources, labor and employment, and social welfare.

"Will a political stake be enough, when the CPP's stated aim is to overthrow the Philippine government?"

Any ceasefire would also likely mean the release of hundreds of CPP prisoners. This is unlikely to sit well with the military, who've spilled blood capturing these same people, and more blood fighting thousands of others.

But this could be the right time, if there is such a thing as a right time to co-opt Communist revolutionaries. The NPA's ranks have shrunk over the years to less than 4,000 now. That's only about half a small army division. Perhaps the NPA is a spent force.

This month is also, coincidentally,the 50th anniversary of China's Cultural Revolution - that violent, decade long social spasm that turned China upside down.

There are reasons to worry we could be seeing a revival of that ugly '70's show, in China as well as the Philippines. I'm bothered by uncomfortable parallels between Duterte and Chinese leader Xi Jinping.

It's not so much the cult of personality that's been allowed to center on both men. On both their parts it's a preference for ideology over institutions and formal systems.

In Xi's on-going onslaught against corruption, for example, he's used party spies and goons, as opposed to state prosecutors as his dogs of war. For Duterte, it's the death squads, vigilantes and extra-judicial killings of druglords. Whether they were actually in his employ or on his payroll is beside the point. It's the fact they were literally mercenaries, outside the system. But they were working with him, and used by him.

My point is, sometimes you can tell a man by the company he keeps, who his friends are. Duterte hasn't just dealt, done business and negotiated with the Communists. He's supped with them.

Sure, the CPP partially funds itself by collecting "revolutionary taxes" from businesses both big and small for the privilege and security of operating in areas it controls. In imperfect democracies, that arrangement is called the monthly neighborhood shake-down. An extortion or protection racket by any other name.

But the CPP's primary backer is still, no surprise, China. So watch how Duterte plays the CPP, and China. It could be the difference between finding common cause, and identifying with the Communist cause.


Election tarpaulins featuring Rodrigo Duterte, erected on a street in Davao City. His landslide presidential victory was built on foul-mouthed populist tirades that exposed deep voter anger at the establishment.
Noel Celis | AFP | Getty Images
Election tarpaulins featuring Rodrigo Duterte, erected on a street in Davao City. His landslide presidential victory was built on foul-mouthed populist tirades that exposed deep voter anger at the establishment.

May 16, 2016: Watch out for the '100-day stare'

Ladies and gentleman! In this corner, we have a a Viagra-enhanced 71-year-old, with an 11-0 election record and 30 years' fighting a devil's assortment of reds, greens, and the new black in the god-forsaken furthest point south in the Philippines, the undisputed people's champion,

The Punisher, Rooooooooo-dee, Duerte Harry, Rodrigo Duterte!

But wait a minute. Who's the challenger? Who's on the back foot, after Duterte's crushing victory in the presidential elections?

It's pretty obvious who Duterte would describe under his breath as "those bums I beat." That would be "the establishment," which is why that's one of the most important things to watch - whether he reaches out, not just across the aisle, but across a huge political gulf. And who he reaches out to, what deals he cuts.

"Duterte needs to make up serious legislative ground to get the support he needs to form a coalition and rule effectively - his party is simply too small to stand alone."

This will take all the charm, persuasion, guile and possibly "pork," he can muster. Winning the establishment over, or at least getting them to compromise, isn't going to be easy. It's not just antipathy he's up against, in some cases it's vile dislike. As I've written before, Philippine politics is intensely personal.

Whether or not Duterte's got the numbers in the Philippine House and Senate matter a lot for legislation to do with everything from signing off big infrastructure projects left on the table by Aquino to a regional autonomy bill in the hope of quelling southern unrest once and for all. Peace (and law and order) and profits are linked. The more you have of the former, the more likely you are to have of the latter - investments, development aid, etc, which could be a bargaining chip for the incoming president to win over his detractors.

Legislative numbers also matter if Duterte wants to push through changes in the constitution, abolish Congress, and turn wholesale towards a parliamentary form of government, which the Philippines experimented with very briefly during the Marcos years.

So, potentially big changes ahead. We know winning an election isn't the same as governing.

But Duterte's proven he can run a place even as Hobbesian as Davao, that he can deal muscularly with druglords and militants. But can he translate that management effectiveness on a national scale?

We should watch to see if it's going to be a long six years for Duterte. Can Duterte, in sporting parlance, even "go the full twelve"? Watch what kind of shape he's in after the first three months or so, the period journalists conveniently term his "first 100 days."

I'd watch for what I call the 100-day stare. The political equivalent of what military men call the "1,000-yard stare" - the blank, vacant look of a soldier paralysed by the horrors he's seen in battle. At his last campaign rally Duterte implored people, "Give me time," to solve his country's manifold problems.

For the pugnacious political fighter from Davao, the clock's running. He's unlikely to be saved by the bell. If Duterte goes down for the count, possibly because he can't get his opponents onside, in politics as team sport, well, there's always the freshly minted Senator Manny Pacquiao, who could use his new, elevated position, to make a run for the presidency in 2022.

We'll be keeping score.

Customers sing karaoke at a nighclub in Davao City in Mindanao on May 10 - the city where president-elect Rodrigo Duterte honed his crime-fighting skills. He most recently announced plans to impose a nationwide- curfew for children and may ban the serving of alcohol after midnight.
Noel Celis | AFP | Getty Images
Customers sing karaoke at a nighclub in Davao City in Mindanao on May 10 - the city where president-elect Rodrigo Duterte honed his crime-fighting skills. He most recently announced plans to impose a nationwide- curfew for children and may ban the serving of alcohol after midnight.

May 13, 2016: Time to pull out the old Cold War playbook

It's not so much that I've got a bad feeling about the new, incoming Duterte government in the Philippines. But the situation does make me worry.

A lot's been written about nostalgia politics, the yearning in the Philippines (as in America) for a strong, no-nonsense leader. Rodrigo Duterte fits that description to a tee.

But, as always, self-styled champions of law and order, and the poor - people's presidents - usually come with compromises, which the U.S. has learned time and again from working with dictators of various stripes during the Cold War.

The compromises are usually accommodated amid the greater aim of protecting or furthering U.S. interests. In the case of the Philippines, it's as simple as ABC - allies, bases and crude (oil). And they're all connected, as these factors always tend to be in geopolitics.

First, allies. Yes, the Philippines has been a strong and dependable ally of the United States for several decades. It's a nation made in our image, as American journlist and historian Stanley Karnow described it.

Sure, they kicked the U.S. out of bases in Subic and Clark in the early '90's. That was then. Now, we've just recently signed a basing deal that gives the U.S. access to five major military installations across the Philippines - some for access to the South China Sea, some to support counter-terror operations in the south of the country.


What did the State Department mean by its congratulatory message to Duterte, in which it said America looked forward to working with his new government on "issues of mutual interest" and "common challenges"? It meant China, and Islamic State.

So, tick A and B. What about C, crude oil? Well, that's connected to the first two because it's centered on both the South China Sea and the southern Philippine state of Mindanao.

The sea lanes through the South China Sea aren't just about shipping access. They're also about strategic access; for the Seventh Fleet to continue acting as the region's naval regulator, and to check China's push to project its power outside its traditional sphere. Then there's also the issue of access to resources - oil and gas, and fisheries. Similarly for Mindanao.

In fact, Mindanao could be a jackpot for resource companies, as well as for resource-hungry nations (read China).

U.S. diplomatic cables thrown into the public domain by WikiLeaks show that Washington has been aware for some time of an estimated $1 trillion worth of oil, gas and minerals on and underneath Mindanao and in the waters surrounding it. Whoever manages to tame Mindanao gets access to all that wholesome resource goodness.


"If Duterte can settle the south politically, the key will then be balancing the competing interests of U.S. and China."

It's easy to see Duterte as a local politician potentially in over his head on the national stage already, with the potential to be pushed and pulled by two geopolitical giants.

But I suspect he's the one who has leverage over both.

Firstly, the U.S. will likely continue dealing with Duterte, even if his administration took the gloves off at home. Let's say, if, just if, he manages to change the constitution, abolish Congress, and set himself up as a leftist dictator ... Well, it wouldn't be the first time such a thing's happened in an impoverished country.

And the U.S. has a history of working with these types. It's not so much a reversion to form, a continuation. Imagine "The Donald" doing business with "Duterte Harry"? Both know how to get things done. One's a businessman. The other, well, we shall find out. We all should be paying close attention. If it's Hillary who has to deal with Duterte, well, probably not much difference. There's politics, and there're U.S. national interests.

As for China, even if you believe it's a hegemon, it's also a country that understands pragmatism. It'll share, even with the U.S., if there's enough to go around. In the Philippines, with the South China Sea and resources, there's a lot at stake. But plenty for everyone. I believe China understands it doesn't have to be a zero-sum game with the U.S.

So for all those now-creaky Cold Warriors, its time to push yourselves out of those La-Z-Boys, put on your reading glasses, pop an Advil or three, and dust-off your playbook.

People crowd outside a polling station in Quezon City in Manila on May 9, when more than 80 percent of eligible voters - a record proportion - turned out to cast their votes.
Ted Aljibe | AFP | Getty Images
People crowd outside a polling station in Quezon City in Manila on May 9, when more than 80 percent of eligible voters - a record proportion - turned out to cast their votes.

May 11, 2016: Expectations are so high, they're where the air gets thin

Official results of the Philippine elections aren't out yet, but it's clear Rodrigo Duterte is the new president.

It's not about the absolute numbers anymore, it's the gulf between Duterte, with most but not all votes counted, and his nearest rival, Mar Roxas. Duterte leads by such a margin that, if it was due to vote-buying or fraud, would be one of the biggest thefts in political history.

Similarly, with most but not all votes counted, it's already clear turnout hit record levels, comfortably above 81 percent. This makes Duterte's victory not just a landslide, but a political earthquake as well.

He's just broken the monopoly on political power that a small handful of powerful and inter-married families have enjoyed pretty much since independence.

So he's a trailblazer. But he's also set himself up, almost certainly, to fail. Having made promises he will clean up corruption within six months of taking office, expectations are so high, they're where the air starts getting thin.

Duterte needs to remember this election was a huge gamble for voters. They're trying something new out of desperation, because the recent history of Philippine presidencies has been one of almost serial failure in terms of the daily lives of the majority of Filipinos.

Perhaps this is a good sign.

"Doing the same thing over and over again but expecting a different outcome, Einstein said, is insanity."

And to be fair to the out-going office-bearer, President Benigno Aquino probably made more headway on improving the lot of the average Philippine person than any leader in recent memory. But the strong economic story hasn't trickled down nearly far enough. Not when 1-in-4 poverty, exemplified by Manila's horrific slums, still exists.

It's not so much a widening rich-poor gap (although this is true too); That's in larger part due to the rich getting richer, while the poor seem to be trapped at the same level of poverty the country hasn't been to grow its way out of.

It's more about the quality of growth and, consequently, the quality of life. Some peoples' financial circumstances may have improved but even the rich face the same struggles - traffic, sclerotic infrastructure, a corrupt civil service, and crime. Money just insulates them a little better.

Can Duterte deliver? It's not just the poor who voted for him who're watching whether the back-to-the-future style of government he seems to be pointing to will work. The establishment, whose monopoly on power he broke, are more than ready to gloat if he fails.

If he does, it will be the country's loss. And for more than 100 million Filipinos, who're among the most optimistic people on earth, it'll be just the latest disappointment for a people who deserve better.

Rodrigo Duterte gestures to members of the media at a polling station in Davao, Mindanao, on May 9.
Veejay Villafranca | Bloomberg | Getty Images
Rodrigo Duterte gestures to members of the media at a polling station in Davao, Mindanao, on May 9.

May 11, 2016: Now's the time to start looking for political ROI

With the almost-shock victory of Roddy Duterte as the new president of the Philippines pretty much in the bag, it's probably a good time to look back.

What? Not forward? What about trying to figure out what his policy priorities are, how he's going to govern? We'll get to that. Bear with me, first.

Duterte seems to me to be the kind of man who won't forget where he's come from. And won't forget who his friends are either. Which makes me curious who's actually behind him. A politician who reportedly makes $2,000 a month after a 30-year career in local politics probably won't be a man of significant means, right?

Yet when confronted with the evidence, Duterte admitted he had $5.7 million in the bank. In one account. From rich friends, he joked. Maybe from savvy investing. But I doubt it.

So who is bank-rolling Duterte? Philippine campaign finance laws, such as there are, aren't going to be much help. There're no caps on contributions to politicians and their parties or campaigns. Politicians can pull in as much as individual hearts prefer and corporate balance sheets can bear.

Politicians also aren't obliged to go public about who these people and companies are, until one month after the elections. That's right, after. By which time the money's either been spent or skimmed. And the political horse those people and companies backed is already in power. Or not.

Sounds like a job for campaign finance reform. But which politician would support it, when the rules have allowed them to be, shall we say, so light on financial disclosure?

Why's this important? Because political financing, like organ transplants, is the gift that keeps on giving. Or at least that's the expectation - that people, and particularly companies, that back politicians with money are going to want a return. Let's not confuse politics, especially in Southeast Asia, with charity. It's the usual cycle of patronage politics - the more you give, the more you expect back.

Want an example? The non-profit Philippine Center for Investigative Journalism found a total of just 301 entities - people or companies - who financed the 2010 presidential election. That's more like the number of investors in a hedge fund, or some other type of limited partnership investment vehicle, and it concentrates influence over newly-elected president by putting it in very few hands.

We like to say there's no such thing as a free lunch. In the case of politics, it gives a very different meaning to the term "free election," or lack of one.

The good news is, the formidable minds at the Financial Times expect that there was a ramp-up in election spending this year (a third more) by politicians as well as the government - enough to bump up Philippiine GDP to between 6.5 percent and 7 percent this year from 5.8 percent in 2015. Talk about fiscal stimulus.

But this isn't investment in infrastructure, jobs, healthcare or education. This is money that puts people in power. Leaders come and go. Sometimes people are glad to see the back of them.


People are already focusing on the fact that Duterte's party is small. And how, so far, he doesn't have the kind of personal connections needed to form a legislative coalition. Politics in the Philippines has traditionally been more about personalities and loyalties than parties. Party-jumping is so common it's a veritable workout.

Personal chemistry and trust must play a part. But you'd expect that, as concentrated as financing and contributions are on such a small handful of people and companies, money must play a bigger role in policy decisions and governance.

The question is what does that money want in return? Call it political return on investment (ROI). Sometimes the return is in the currency of position and power. Sometimes it's in the form of advantageous positioning for investments and contracts.

I'd say watch the companies that start doing well, or better, as the Duterte administration gets underway. Newer conglomerates, which tend to be owned by Filipino-Chinese rather than old-line Spanish/mestizo families, could have an advantage.

And I wouldn't be surprised to learn that the original currency of their campaign contributions was renminbi.

Women queue to vote at a polling station in manila on May 9, 2016.
Lam Yik Fei | Getty Images
Women queue to vote at a polling station in manila on May 9, 2016.

May 9, 2016: If you're planning a coup, consult me first

We're more than six hours into voting here in the Philippines. With opinion polls giving a healthy lead to Rodrigo Duterte, here's some of the factors that could sway the outcome.

Turnout:

Voter turnout expected to be high, about 70 to 75 percent of the Philippines' 54.4 million registered voters. A past peak was 80 percent. It needs to be high for Duterte to win. Getting out to vote is harder in rural and outlying areas, for obvious reasons. But that's Duterte's base, the masses.

The recent ''Come-leak'' hacking of data of millions of voters could potentially affect turnout, as well as preferences.

Weather:

Sunshine, with a few clouds, average temperature of 37 degrees. In urban areas this might affect middle-class voting - a long queue in the heat lacks appeal for many.

Swing voters:

Unusually, in this election the middle-class is the swing vote - had been leaning towards establishment candidates, as expected, but now split. The inflection point was Grace Poe's endorsement by disgraced former president Joseph Estrada, which turned off middle-class voters.


Youth vote:

About 40 percent of eligible voters are 18-35 years old. Many will be firs- time voters. Few, if any, have memories of the Marcos years. Political analysts say that's left them particularly impressionable to very savvy nostalgia campaigning, including on social media, by ''strongman'' candidates Duterte, and "Bong Bong" Marcos.

Negative campaigns:

Campaigning in the Philippines is tame in comparison to the current bare-knuckle bouts happening in the U.S. Whatever the media, there are little to no direct personal attacks.

Conversely, both Duterte and Bong Bong Marcos' social media strategy has focused on positioning the candidates in the same league as iconic strongman leaders, and suggesting the need for and benefits of more authoritarian rule. Locals call digital and social media spin operations ''Black Ops."

Marcos apparently has a dedicated operations center entirely devoted to it.


Coup:

Rumors are flying around that a Duterte win could trigger a coup by establishment parties, or at least recounting of votes and other administrative and procedural, as well as possibly legal, means to stall a power transition.

The flip-side risk is Duterte mobilizing supporters in response, for civic action at least. There's also talk paramilitaries could be involved. Some voters are still nervous about Duterte's links with Communist groups. He's denied he's a Communist, says he's left-leaning rather than card-carrying.

Former President Fidel Ramos is quoted saying, ''If you're planning a coup, consult me first''. He was only half-joking, which suggests no one's run the idea by him.

The political eminence grise still carries weight and influence with many sides. Ramos encouraged Duterte to run, but is confident he'll respect the law. Ramos was key to ousting Marcos, and had a significant hand in both People Power revolutions. As President Cory Aquino's defense minister he also thwarted nine coup attempts. He's 88, but still a game-changer.

May 8, 2016: The Philippines is suffering growing pains

When you think of animals as people, and start attributing human qualities to them, sociologists call it anthropomorphizing. I like to think of countries and economies in human terms. But I'm still thinking of a new term to coin to describe it.

Basically, I see development in people terms. I ask how a country makes its way in the world, like how someone makes a living. What kind of work they do. I also like to think about what countries want to be, and can be, when they grow up. Similar to wondering whether a kid who's good with animals, say, is necessarily going to end up a vet.

When I look at the Philippines, it's a country that looks like it's grown up too fast. The economy is 70 percent consumption. Development economists will tell you that usually happens when a country is mature, and rich. Think the U.S., or Japan, where what people spend and invest accounts for up to two-thirds of the economy. But the Philippines is still a lower middle-income economy.

That kind of reliance on consumption in the Philippines isn't bad, or wrong. But it looks like a country trying to run before it's barely learned to walk.

Functionally, economies start looking after themselves by farming. Then they go from growing things, to making things: manufacturing. Finally, when they're all grown up, they transact things, provide services.

The Philippines, though, is still taking stumbling steps and tying to get its balance with agriculture. But the land is fertile, and its people are originally agrarian. By the 1960s that had helped make the Philippines a significant rice economy, for example. It's one reason why the International Rice Research Institute is based here.

But over the last few decades countries like Vietnam have overtaken the Philippines in rice - both growing it and exporting it.

The problem lies in land reform, or the lack of it. The Philippines has the dubious distinction of being probably the most prolific in initiating land reform in Asia, but as prolific in its failures to follow through. It's a history of many false starts.

Filipino farmers now mostly make a living growing things for big companies, rather than for themselves, because they rent rather than own land.

It's a squandered opportunity. There's simply not enough incentive to learn and invest to grow more, faster or better.

There's also not much manufacturing or industry in the Philippines. Some lower-value-added electronics get made here. There's also ship-building and repair, but those are mainly Japanese and Korean offshore operations. Part of the problem is not enough of a skills base due to underdeveloped vocational education.

The recent boom in BPO (business process outsourcing) has been phenomenal. But how many call centers can a country have? To grow BPO, companies will have to move higher and faster up the value ladder of services. Start offering specialized functions like finance and HR, or even full back-office operations - like Indian IT companies have - while making sure Filipino wages stay comparatively competitive.

I wrote earlier about how Chinese investment, in everything from highways and power plants to casinos and real estate, could be the Philippines' next big growth driver.

The infrastructure would help the economy, structurally. That's good. It stays once it's built, and makes the country more competitive. The other money, though, is cyclical. It could leave as quickly as it came.

Which leaves resources, in the ground as well as in the sea (oil and natural gas). But that brings with it worries about the potential historical curse of many resource economies, if not managed carefully.

Growing up isn't easy. But it helps if it happens as nature intended. Or in the case of countries, as development economics intended. There're no natural laws, and no plan that works for all. The Philippines, like all economies, will have to find its own way in life.

Workers pack bananas at the Tagum Agricultural Development Co. plant in Davao del Norte on Mindanao in April 2008.
Romeo Gacad | AFP | Getty Images
Workers pack bananas at the Tagum Agricultural Development Co. plant in Davao del Norte on Mindanao in April 2008.

May 8, 2016 : Why heading south could be the way up

I spend much more time listening and observing than I do reporting and writing. In between, I do a whole lot of thinking. Trying to connect dots. Trying to see stories that emerge from them. Here's what I saw today, after listening intently to a trio of people, and what I figured out after my brain cooled down from the processing.

First, the listening. It kicked off with the young but very clued-in and connected Philippine expert Richard Javad Heydarian. Then, former President Fidel Ramos, 88 years old but still very much a political heavy, a true eminence grise.

Finally, well into last night, Roddy Duterte, the maverick Davao mayor and front-runner who's looks likely to become the next president of the Philippines, when the country votes on Monday.

The standout theme in what all of them said today, was Mindanao, the second-largest and southern-most island in the Philippines.

Heydarian thinks about how the resource rich and highly cultivatable island province could be the next driver of the Philippine economy. How that can't happen unless and until there's a lasting peace and political accommodation with militant Islamists and Communists in control there. And how China could be the catalyst to make these things happen.

Duterte, meanwhile, spent at least half of a three-hour off-the-cuff address at his last rally before campaigning ended midnight Saturday talking about re-starting peace talks with Mindanao militants.

Practically, we assume that means leveraging his extensive experience dealing with all the groups in a 30-year political career there in order to revive legislation that stalled at the tail-end of the Aquino administration, which would give Mindanao devolved authority, and disarm at least the Moro militants.

Ramos, who admits to having a big hand in in Duterte's decision to run for president, said a political solution to the problem of the south would be key to the Philippine economy's future growth and development. In other words, peace would lead to more prosperity.

He also welcomed engagement with China, and Chinese investment in the Philippines.

Earlier, I wrote about a strong hunch that China could be a new growth driver for the Philippines.

The logic went: Cut a deal to compromise on the South China Sea, draw-in Chinese investment in Philippine infrastructure, roll out the red carpet for Chinese high-rollers at Manila's casinos, and let many of the same fellows buy up high-end Manila real estate.

Presto - new pillar for the economy, building on BPO and remittances.

But after all my recent listening, though, and the thinking that followed, I'm adding Mindanao to the equation.

To get engaged and involved in the Philippines, China would likely require a show of good faith from Manila.

It could mean the Philippines keeping quiet (or at least not rubbing it in Beijing's face), if United Nations rules in favor of Manila's claim that China doesn't own all of the South China Sea, as is likely to happen when the Hague delivers its decision on Manila's claim in the next month or so.

It could also mean revoking a recently inked agreement with the United States to set up new bases in the Philippines - a deal meant to counter China's assertiveness in the South China Sea, as well as support counter-terrorism and counter-insurgency efforts against militants in the south.

Villagers watch a horse fight in November 2015 in the southern Philippine town of Lake Sebu in South Cotabato. Horse fights have been banned since 1998 but are still held by many Mindanao communities.
Jeoffrey Maitem | Getty Images
Villagers watch a horse fight in November 2015 in the southern Philippine town of Lake Sebu in South Cotabato. Horse fights have been banned since 1998 but are still held by many Mindanao communities.

Being discrete on the Hague ruling would be fairly easy for the new president. Aquino filed the case.

The new president also has executive authority to renegotiate the U.S. base agreement. Will he? If he can get China on-side, possibly.

Once China's satisfied diplomatically, on the South China Seas, and U.S. access to Philippine bases, we get to the roll-up-your-sleeves work. That is, settling the south politically, then developing it, through heavy Chinese investment.

And what would China want from all this? For one thing, access to resources in Mindanao, which U.S. and Australian companies have struggled to exploit. China and its companies, on the other hand, aren't as hung up on law and contracts.

For another, possibly favorable positioning and access to jointly developing resources in the South China Sea.

Is it too far fetched to imagine that China's already kick-started this whole chain of events?

Maybe my brain's been in over-drive a bit too long. But something clicked when I started hearing talk - unsubstantiated - that Duterte could be receiving financial support from China, possibly through Filipino-Chinese tycoons.

May 7, 2016: People do what people do everywhere: laundry, loving, fighting

In the first world, we talk about an embarrassment of riches. Which is usually a disingenuous, back-handed conceit. In the Third World, people don't have that luxury.

The Philippines belongs to the much more grey Second World. It hasn't arrived. But it's managed to pull itself out of the anonymity of countries too poor to be gifted with any sort of easily recognizable international identity, other than notoriety.

But poverty in the Philippines is still a good story. Is it an accurate one though? Most of us know about Smokey Mountain, where the poor live, parasitically, off the rotting refuse of those richer. We've also heard about Filipinos so poor they're forced to live in cemeteries.


A few afternoons ago, we found ourselves in San Andreas Bukid. Like most slums in Manila, it's a self-contained world of hardship, pocketed in by high-rise office buildings, malls and condos. The juxtaposition is always jarring.

The streets and alleys we walked through weren't quite post-apocalyptic. But there was a common disorder and displacement; many things, and people, where they shouldn't usually be. Cars and trucks, abandoned in the middle of the street. Kids running around naked, when they should be in school. Flea-infested mongrels foraging through garbage. A dead four-year old girl, in a baby casket.

"Yep, to say there's poverty in the Philippines is still accurate."

What we saw has to be a key question for whoever becomes the next president - should one in four people be living in poverty, in one of Asia's fastest growing economies ?

Yet, beyond the obvious economic modelling that says poverty holds back growth and development, that it encourages crime and corruption, that it keeps people from achieving their full potential, we saw something else.


We saw life, and death, and such a normalcy to living we could almost imagine the poverty wasn't there. Here, people do what people do everywhere: their laundry, their loving, their fighting. They were just going about their lives. And not just in quiet desperation.

It may be too easy to say that poverty doesn't feel so bad when it's all you've ever known. But the residents we saw appeared to be living lives that could be almost "everyday." Just across the street from you and me, with a richness just thanks to being alive.

A Filipino boy runs near puddles along the railroad tracks in Pasay City in Manila in July 2005. The area is now being gentrified but slums remain.
Paula Bronstein | Getty Images
A Filipino boy runs near puddles along the railroad tracks in Pasay City in Manila in July 2005. The area is now being gentrified but slums remain.

May 7, 2016: The 'one-night millionaires' have all grown up

Those of you who've been in the service, or who have family who are, will probably be familiar with Filipinos in the U.S. Navy. It's been a time-honored tradition for thousands of them to sign on, and eventually become U.S. citizens.

What a lot of people probably aren't aware of, is how extensively Filipinos are involved in the civilian maritime trade; About 500,000 of them work on commercial vessels around the world. They dominate the industry.

That's according to the Philippine Shipowners Association, which coordinates training for seamen, and helps them find work once they're qualified to be at sea.

You could argue that Filipinos are culturally predisposed to a life at sea, because theirs is an archipelagic nation, spread out over more than 7,000 islands.

But in reality, the big attraction for so many Filipinos of being a seaman (though roughly 5 percent of the Filipinos working at sea are female, usually in higher grades) is simply the money. The lowest rating makes about $12,000 a year, which is comfortably more than average starting pay on land at home. The highest, say a captain on an oil tanker, can make up to $180,000 a year, depending on experience. And it's all tax free.

Like OFWs, though, there's the hardship and loneliness of being away from home and family. Stints at sea average about nine months at a time.

The profile of Filipino seamen has changed over the years. The association jokes there was a time not so long ago when Filipino seamen were called ''one-night millionaires''. Because after getting paid a lump sum at the end of a contract, seafaring legend has it seamen would blow it all on a night on the town and go home to their families penniless.

Fortunately, today's Filipino seaman, the association says, is younger, and more responsible with their hard-earned money.

May 6: Why China will be a game-changer for the Philippines

One of things that gets me up and out of bed every morning is the challenge of figuring out the ''how'', and ''why'' of things I'm reporting on, events I'm covering.

There's what makes headlines. There's news. And there's the backstory, and the story itself. All distinctly different. I prefer to try and nail down the story first. Which helps me make sense of the news and headlines.

Talking to smart people, to help me understand the ''how'' and ''why'', is my stock in trade. So this morning I had a sit-down with CLSA's Alfred Dy, who made a lightbulb go off inside my otherwise pretty dim head usually.

Here's the nut of the Philippine story. A lower-middle -ncome country that got to where it is today on the back of the sweat and labor of Filipinos working overseas. Remittances. More recently, on the less sweaty labor of Filipinos in air-conditioned call centers. The explosion of BPO (business process outsourcing) in the Philippines.

Both together account for a fifth of the economy. So far, pretty darn impressive.

"The big question hanging over the economy, and the next president, is 'now what?'"

The answer seems apocryphal, at first, especially for a country as proud as the Philippines. And as colonized. First by the Spanish. Then, in effect, if not fact, by the United States. China, meanwhile, could help the Philippines write the next chapter in its growth and development.

Counter-intuitive, right, when the Philippines has been openly challenging China's claim to the South China Sea? But imagine a Duterte presidency making good on its promise of engaging China unilaterally. Some sort of compromise that trades China manufacturing new sovereign territory out of sand in the middle of the ocean, in return for China building much needed infrastructure on Philippine soil.

Take that a step further (though this could happen pretty much concurrently), and imagine a nascent Philippine gaming sector supercharged by a flood of Chinese high-rollers who bring extra suitcases bulging with cash to buy Philippine real estate.

Sound familiar? The same story's played out in Macau/Hong Kong, as well as Singapore. If you build it, they will come; the casinos, and the Chinese, with their money.

Will they? No reason they won't, other than added flight time. But Manila's probably just another hour away. And certainly more exotic than urban, built-up Macau/Hong Kong or skyscrapered Singapore.

The Philippines would also be significantly better value for assets like high-end real estate.

At the state level, any push by China commercially into the Philippines (or better yet at a G-to-G development level), would be sweet for Beijing. Especially with the U.S. reinserting itself into the Philippines with a new base agreement, which allows access for U.S. men and material to several military bases in the country. That move, of course, is to make sure a worryingly assertive China thinks twice.

Even with its history as a key U.S. ally in Asia, it wouldn't be much of a surprise if the Philippines hedges, plays both sides as it were.

It wouldn't be about selling out or welcoming new colonizers with open arms. It would simply be smart geopolitics. And good business.

Could a Duterte presidency make that happen? Going by his track record running Davao, and turning it over more than 20 years from a crime-ridden, drug-addled haven for criminals, to one of the safest cities in the Philippines, Duterte is a man who can get things done. One of the ways he's rehabilitated Davao, was attracting business and investment.

May 7, 2016: For political bang for the buck, the Philippines are hard to beat

The vast majority of Filipinos are Catholic; in this photo, survivors of super-typhoon Haiyan march during a religious procession in Tolosa on the eastern island of Leyte in November 2013.
Philippe Lopez | AFP | Getty Images
The vast majority of Filipinos are Catholic; in this photo, survivors of super-typhoon Haiyan march during a religious procession in Tolosa on the eastern island of Leyte in November 2013.

In religion, the still staunchly Catholic Philippines is very much pro-life. But politics is another matter. Votes and, more worryingly lives, are still cheap.

The stereotype is of Filipinos as a warm, social, fun-loving, live-for-today people, which is largely true.

But there's also a culture of violence here that can be easy to underestimate. It goes beyond the old-school macho posturing of what's still a mostly conservative Catholic society.

Political violence, with every election cycle, is alive and well. And very real. Maybe it should be no surprise, when you consider handguns are easily available. Owning one is quite common, and very few of them are registered.

As expected, in the run-up to this election there's been an upsurge in politically related violence. Let's just say it straight out - shootings and assassination attempts.

"Don't think anything as twisted and Machiavellian as 'The Manchurian Candidate.' But still the stuff you only think happens in movies, as a skim through recent local press reports shows."

In April, a candidate running for mayor in a town in Maguindanao (a province in the southern and predominantly Muslim Mindanao autonomous region), barely survived a bomb attack. He'd just been out campaigning. Also in April, a man running for governor got ambushed by gunmen walking out of his hotel. On a Saturday morning.

And these guys are the ones who're still alive. According to government statistics, during the last national elections three years ago, 145 people were killed by politically-related violence.

In execution, the attacks are brazen, very public, and also galling in an apparently Westernized and English-speaking democracy. Even more so, in one of Asia's fastest-growing economies.

This isn't about growing income disparity, and aggrieved people being left behind. This is about power, and what people are willing, and able, to do to achieve it. Mao famously said power grows from the barrel of a gun. It is an operating principle in Philippine politics, especially at the local level.

Forget about PAC's and Super PAC's raising money in the millions. For political bang for the buck, it's hard to beat the Philippines. I've been told the going rate for a motorcycle drive-by shooting (here, as in Thailand, the most common and preferred method) is $450. Two guys, one drives, the shooter sits behind him with the gun. It's all over in seconds, both disappearing in a cloud of two-stroke smoke into the country's notoriously snarled urban traffic.

So if Rodrigo Duterte's Dirty Harry-style campaign rhetoric offends your political sensibilities, get real. As far as it's come, the Philippines is still, not so much heavily militarized, as heavily-armed. And not afraid to flex that muscle. At least politically, Manila is still a cowboy town.

A placard in front of the Minor Basilica of the Black Nazarene in Quiapo during a Catholic Church-backed anti-abortion rally in August 2011 in Manila.
Dondi Tawatao | Getty Images
A placard in front of the Minor Basilica of the Black Nazarene in Quiapo during a Catholic Church-backed anti-abortion rally in August 2011 in Manila.

May 7, 2016 Life imitating art imitating life

Politics in the Philippines is less about policy, more about personalities and compelling backstories. It's also about life imitating art, or rather, the movies.

On Thursday night, we drove out to Tondo (more on that later) in north Manila, and crashed a rally for Joseph Estrada, the disgraced former president who's more than landed on his feet after being booted from office on corruption charges in 2001.

He's been the mayor of Manila the last three years, and he's running again. But he was just the opening act, at his own rally. The star was Grace Poe, who's running for president.


How's that work?

Well, Poe's adoptive father is the late Fernando Poe Jr., one of the Philippines' most beloved movie stars. Famous for his hardman, action-hero roles in a slew of movies through the 70's and 80's. And his best buddy on the silver screen, as well as in real life? Joseph Estrada. Ah ...

To follow politics in the Philippines, sometimes it's more important to keep up with the entertainment and gossip rags than political journals.

But, wait, why's Tondo so important? It's a legendarily tough neighborhood, the home of hard men. It's also home to Smokey Mountain, an entire village built on top of a rubbish dump. And the setting for one of Fernando Poe Jr.'s most famous movies, 1986's "Iyo ang Tondo kanya ang Cavite." Double ah ...

To know politics in the Philippines, you gotta know your movies.


May 6, 2016: Go tell the world journos know how to die

Straight off the plane in Manila, we headed right to the International Press Center to get officially accredited to cover the Philippine elections.

While waiting for our paperwork to be processed, I noticed a marble memorial just as you drive into the IPC. It commemorates the lives of 32 local journos, doing exactly what I do. Except they were killed, brutally, in one of the worst cases of mass murder in modern Philippine history.

The memorial, erected by the National Press Club of the Philippines, reads: "Go tell the world journalists know how to die ..." They died in the Maguindanao Massacre and it occurred not that long ago, in November 2009.

The journalists were among 58 people killed in an attack orchestrated by the then-provincial governor, to head off an election rival.

A Filipino police officer working on the investigation into the 2009 massacre in Ampatuan, Maguindanao Province, holds a list of the victims' names.
Jeoffrey Maitem | Getty Images
A Filipino police officer working on the investigation into the 2009 massacre in Ampatuan, Maguindanao Province, holds a list of the victims' names.

The governor's son, Sajid Ampatuan, was among 28 people charged. He spent more than five years in a Manila jail, awaiting trial. Last year, he was released on bail on insufficient evidence.

This year, he's running for mayor of one of the towns in Maguindanao.

Sajid isn't the only politician accused or convicted of major crimes who's standing for office in Philippine elections this year. Local press point to two ex-presidents - one convicted of plunder (Joseph Estrada) and one on trial for vote fraud and graft (Gloria Macapagal Arroyo). In previous elections, a convicted pedophile ran for Congress from behind bars. He won.

"All of which highlights what Philippine watchers call a culture of impunity."

It's not so much that the rich and powerful (most politicians in the Philippines are both) are above the law. It's more that they're able to make the law work for them.

Legally, someone has to be "convicted with finality," and have no avenue left to appeal, to be disqualified from running for office. But money buys high-priced lawyers who're able to stall legal proceedings, which buys politicians time to get elected. Once in power, they use their office and position to influence judges.


None of this is especially new, or peculiar to the Philippines. What is worrying, is why Filipinos still elect the politicians they do.

Filipinos are a generous and accommodating people. You might even go as far as saying they're chronically forgiving. But do they have a more flexible moral and ethical construct, as can be the case in many developing countries?

Or is the answer as simple as vote-buying?

Well, that still happens in the Philippines. And will, in this election too. In fact, it's become systematic and institutionalized, so much so that politicians no longer have to even do it themselves directly. They simply stump up the money, pass it to ''coordinators'' in barangays (the smallest administrative district or ward), who're supposed to share out the splits with families.

The irony is that the people whose votes are bought don't get all of the money. The coordinators often end up skimming a cut, often a big one.

So goes money politics. Not so much one man, one vote - more, one family's vote. I've been told the going rate's about $100. If a quarter of the population wasn't in poverty, the political math would be very different.

Filipino protesters at the Chinese embassy in Makati City in July 2007 to coincide with the first day of a hearing at the Permanent Court of Arbitration in The Hague into the two countries' competing territorial claims.
J Gerard Seguia | Pacific Press | LightRocket | Getty Images
Filipino protesters at the Chinese embassy in Makati City in July 2007 to coincide with the first day of a hearing at the Permanent Court of Arbitration in The Hague into the two countries' competing territorial claims.

May 6, 2016: Jet ski diplomacy on the South China Sea

I suppose there's no reason why - weather and waves permitting - a 71-year old man can't hop on a jet ski and zip 125 nautical miles all by himself out to a small pile of rubble in the middle of the South China Sea.

That would be to what's known as the Scarborough Shoals, the closest thing to the Philippines that's sticking out of the water in the South China Sea. The question is, why would he ?

Supporters of the man who's promising to do just that - macho, trash-talking Roddy Duterte, front-runner in the Philippine presidential elections - are happy to cheer him on.

What a photo opp, if he does. Duterte, like McArthur 70-odd years ago, wading ashore and planting a Philippine flag, staking his country's claim. (Cue Ray-Bans. The only thing missing would be Doug's corncob pipe.) Probably even more assertive, physically, than Aquino taking China to court in The Hague, over the South China Sea.

Duterte, if elected President, is also promising to go one-on-one with China. Head to head over who owns what in that stretch of water. Which sounds diplomatically virile, but which will cause jaws to drop geopolitically.

Why? Because it threatens to scuttle the entire approach woven together so far by the Philippines, the rest of Southeast Asia, and the US to deal collectively with China when it throws its geopolitical weight around in the region.

What Duterte wants to do, is go cowboy. Alone.

The worry, and the risk, is he's more likely to cut a deal with China than hold the line. He's already offered to bring China in to help build Philippine infrastructure. And God knows, the Chinese are pretty damn good at heavy engineering.

The backdrop to these worries, of course, is Aquino's case pending in the Hague. A ruling's due out sometime in the next month or so, on whether or not China's claim to pretty much all of the South China Sea flouts UN conventions.

The Philippines, and four other Asian nations, are adamant their own claims to a similar chunk of the 3.5 million square kilometers (many of the claims overlap), are as legitimate as Beijing's.

But only Manila, a minnow in regional (much less international) diplomacy, had the temerity to challenge China directly, when it filed its case against Beijing three years ago.


Just to remind ourselves what all the geopolitical marking of nautical territory is all about, the South China Sea is rich in reserves of undersea oil and gas, plus a whole lotta fish.

But it's not just about resources. It's about logistics. More specifically, freedom of navigation. For half the world's commercial shipping fleet, the South China Sea shipping lanes are a superhighway, as well economic lifelines for many of the countries using them.

Roddy might cut a pretty good deal with China … for the Philippines. But that could leave the rest of the region, and the US, adrift.

A military checkpoint at Samal Island in the Philippines' south, where John Ridsdel was kidnapped. The Canadian retiree was later beheaded by Abu Sayyaf militants.
Herman Lumanog | Pacific Press | Getty Images
A military checkpoint at Samal Island in the Philippines' south, where John Ridsdel was kidnapped. The Canadian retiree was later beheaded by Abu Sayyaf militants.

May 6, 2016: Is Filipino terror turning non-profit?

One thing I'll be trying to get a better sense of this trip here is, whether or not Islamic State (IS) has really managed to plant its black flag in the Philippines.

The secessionist issue in Mindanao looks like it's just gotten a whole lot more complicated, and could be an even bigger challenge for whoever takes over from Noynoy - as President Benigno Aquino's affectionately known - at Malacanang.

This has implications for peace and stability, of course. But also for development, the social fabric, and country risk for investors.

So far, no Filipino jihadists are reported to have been exported to Syria or Iraq, unlike Indonesia and Australia, the top two terrorist producers in this region. But the brutal beheading mid-April of retired Canadian mining executive John Ridsdel strongly suggests an IS connection. Whether it is real, or apparent (and intended to be) is the question.

The Abu Sayyaf militants who carried out the killing placed what looked like black flags with IS symbols behind them in videos.

The events took place in southern Mindanao, which is predominantly Muslim, and an autonomous region which the central government in far-away Manila has struggled for decades to control. So far, nothing new.

But the big difference this time is, money wasn't the motivation, as it's usually been for kidnappings in the south. Yes, they demanded a record ransom for Ridsdel, at least at first. But rather than drag out negotiations after the deadline had passed, they killed him.

Is it now about ideology, rather than money? Politics over terror-as-business?

The politics of IS are about Islamization. Not just of a population, but of a region. That's what their idea of a caliphate is all about, which so far they appear to be picturing as in and around Syria. But a more distant caliphate in Southeast Asia isn't a new idea. Proto-IS terrorist groups like Jamaah Islamiyah (JI) have been focused on achieving this since the late 1960's.

JI was purportedly behind the Bali bombings in 2002 and is linked to Al-Qaeda as well as the Moro Islamic Liberation Front in the Philippines. Though Indonesia-based, JI's known to have cells in Thailand and Malaysia.

Amidst this potentially heightened threat of a multinational terror group moving in, proposed legislation that would have brought peace in the south - including disbanding Moro and creating an autonomous region with devolved power and administration - has flopped.

There was no appetite for it in an election year, either from incumbents, who didn't want to risk political capital by supporting the bill, or from voters; the Philippines is 80 percent Catholic, 5 percent Muslim, after all.

Out-going president Aquino has no authority to bind the incoming administration to the peace process. So for the new president, the Mindanao issue (including as well a separate and equally long-running Communist insurgency, also in the south) will continue to fester.

And possibly worsen – on Thursday the Philippines agreed with Indonesia and Malaysia to work together on maritime patrols to beat back Abu Sayyaf militants who've ramped up their ship hijackings in the southern Philippine islands. About $40 billion worth of cargo goes through those waters each year, Reuters reckons – the last thing the Philippines needs is a Somali-style piracy industry.

The question is, what's Abu Sayyaf up to? Have they really "gone IS"? Or are they just showing off, as it were, to try and attract the endorsement of IS, as well as its financial backing?

Meantime, the folks at Jane's, the security and defense experts, think the failure of peace legislation for the south risks Moro militants losing patience and defecting to even more violent groups, including ones that have pledged support for IS. Jane's also sees an increasing risk of terror attacks in Mindanao. The Ridsdel beheading could just be the beginning.

Supporters of presidential candidate Rodrigo Duterte protest in Manila on May 2 after a rival candidate challenged Duterte to open his bank accounts to public scrutiny.
Noel Celis | AFP | Getty Images
Supporters of presidential candidate Rodrigo Duterte protest in Manila on May 2 after a rival candidate challenged Duterte to open his bank accounts to public scrutiny.

- See more election coverage from Martin Soong on Twitter.

May 5, 2016: Holding out for a hero

This election in the Philippines could be a political watershed.

Sure, reporters always like to make proclamations like that. But think about this; The front runner, tough-guy Roddy Duterte, isn't exactly from the political establishment, isn't the latest scion from any political family. He's a total outsider to the entrenched system.

So we're possibly talking about the end of dynastic politics in the Philippines. And that's saying something for a country that's been run since independence, for better or for worse, by a handful of old-line surnames. And Duterte's not even related by marriage to any of them!

Having said that, Duterte's appeal to the masses isn't just because he's anti-establishment (and apparently extra-legal.) It also seems to be because of a worrying sense of nostalgia, part of a trend we've been seeing recently.

Sure, you can think Trump's promise of a return to a simpler America. But also remember, not much more than a year ago, Prabowo was astride a stallion, or in a Suharto-like songkok (plus Raybans), roaring into a vintage microphone. That was Indonesia, of course.


In the Philippines, there seems to be a yearning for a strongman to return, too. Odd, you might think, after the disastrous plundering of the Marcos kleptocracy. But remember, the median age of the Filipino population is just 22, meaning a significant number of Filipinos have no memory of the Marcos years.

As well, despite the strides President Aquino has made relieving the Philippines of its burdensome reputation as the "sick man of Asia," much below the surface remains the same: the corruption, the often porous administration of the law, the concentration of influence and money within a handful of families and their cronies.


Add to that, development and prosperity have come with the usual price tag: widening income inequality. For the poor (and about a quarter of the population still lives at or below the poverty line), 6 percent GDP growth means much less than it does for the head of a conglomerate or his children.

Development, including much needed infrastructure, has focused primarily on cities, not on less built-up rural areas, including the country's south. That's something that's fueled the ongoing insurgency and unrest in that region.

The point is, the Philippines is looking much better by the numbers. But the system hasn't changed, or at least, not enough to make a difference for millions of Filipinos. As a result, they seem to yearn for a leader who's not so concerned about the process, legal or political. Not so concerned about how things are done. They just want someone who can fix things, as Duterte claims he can.

Can he, though? Sometimes you need to be careful what you wish for. A singular political savior versus a system that has prevailed through changes of government and the often naive political whims of a disgruntled, disenfranchised electorate? Filipinos will decide soon.


- See more election coverage from Martin Soong on Twitter.

May 5, 2016: Filipinos do their home work

Sometimes reporters like to use random locals they meet to try and tell a story about an entire country they're covering.

There's a conceit here. As if they'll always get a direct and accurate extrapolation that way. But it's easy to do, and it instantly personalizes a story.

Sometimes, though, the numbers (which can more often than not be dull and gray), and simple economics (the so-called ''dismal science''), tell the story so much better.

So this is a story about data, and what it says is this; there's a huge rebalancing underway in the Philippines, which is largely underreported.


Filipina maids carry shopping bags out of a mall in Riyadh, Saudi Arabia. They are among the roughly 12 million workers from the Philippines employed outside the country.
Fayez Nureldine | AFP | Getty Images
Filipina maids carry shopping bags out of a mall in Riyadh, Saudi Arabia. They are among the roughly 12 million workers from the Philippines employed outside the country.

We know how important remittances are. More than 10 percent of Filipinos work overseas. That's about 12 million people. They do it because they can make the kind of money they never could at home. The amount they send home is huge -equivalent to 10 percent of GDP. The impact is direct. Most of it is spent, immediately. And consumption is 70 percent of GDP.

This has been happening year in and year out for decades. But something else has been happening more recently.

You may have heard how what's known as ''BPO'', or business process outsourcing, is booming in the Philippines. In plain English, that's call centers. You may have also heard that the Philippines has overtaken India as the preferred base for BPO. That's because Filipinos have a greater fluency in, and facility with, English. Because they're more service-oriented, more eager to please, however you want to say it. All true.

But did you know that BPO has quietly ramped up to about $20 billion a year in revenues? Nearly as much as remittances. At the current rate, BPO business will overtake remittances within the next few years as a source of income for the Philippines. So far, it's created about a million jobs for Filipinos - at home.



Why's this important? Because BPO has a multiplier effect that remittances don't. Money sent home usually gets spent as soon as it arrives -on rent, paying bills, on a new TV. Not much is saved, if any at all. It's part of the unfortunate culture of poverty, in which a quarter of the population still lives.

BPO money, in contrast, goes much further. It's what BPO workers get paid, and what they spend. It's the rent BPOs pay landlords. It's business BPOs generate for shops and restaurants nearby.

All of which means, not just more money staying home, more jobs stay at home too. And, more importantly, more people stay at home in the Philippines, rather than working in construction in the Middle East, or as a domestic helper in Hong Kong and Singapore, or as entertainers of different stripes in Japan.


This means families are more likely to stay together, because both parents are more likely to be at home. Which means a new generation of Filipinos won't be raised by surrogates like grandparents, aunts and uncles.

Demographics – its young population, with a median age of just 22 - are one of the comparative advantages the Philippines holds. This change in employment could bring much needed social stability to the Philippines at the family level. Future development and prosperity can involve fewer compromises, and come at a lower human price.

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