Abstract
The three months to the end of December bought several defence sector themes
to the fore in the
Philippines. The most important one was an escalation
of the conflict between the Moro Islamic
Liberation Front (MILF)
insurgency and the government. In September, the government ended its
direct
negotiations with MILF and demanded the surrender of three rogue
MILF commanders: Kato, Bravo and
Pangalian. Then, in mid-October 2008, the
Supreme Court of the Philippines declared the negotiations
with MILF over
a Moro ancestral home in Mindanao to be unconstitutional. The scale of
fighting between
the Philippine army and the rogue MILF forces increased,
with several hundred people reported to have
been killed.
Another key
theme was that specific (allegedly) Islamist movements have begun to undertake
piracy in
order to finance their activities. The Abu Sayyaf Group (ASG) in
the Philippines is arguably one of the
worst offenders in this regard.
The country’s political system is moderately stable. Although President
Gloria Macapagal Arroyo has
been under intense international and domestic
pressure, her position appears secure. Crucially, Arroyo
retains the
support of the military and her allies dominate the House of Representatives.
Thus a full
military coup against her would be unlikely to succeed.
Economically, defence expenditure has risen notably in response to growing
security concerns. However,
the government remains heavily reliant on
foreign financial assistance, mainly from the US. The
Philippines’
defence industry remains small compared with other regional defence
industries, especially
Australia and Singapore. For the time being, we
expect the government to increase defence spending by
8% annually, in real
terms, over the coming years, with the clear proviso that the absolute
increases will
depend in part on how the country’s economy fares
(and that of its donors) in the face of the global
financial crisis.
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