Barak Obama

A Quarter of the Way

image courtesy of 123rf.com

That is how much of P-Noy’s term of office would have expired by the end of next month. It usually marks the end of the window of opportunity for introducing major reforms. In the case of the US presidency, the current occupant of the White House President Obama was able to introduce his stimulus program, banking reform and of course, the once in a lifetime reform of the healthcare system within his first eighteen months in office.

At the end of that period, the tea party movement rebelled against the direction he was taking the nation and voted the Democrats out of their majority in the lower house of congress. The new Republican-led house’s intransigence over the deficit has blocked any further reforms (witness the failure of the super committee over the weekend), and it will probably take another election to allow the grid-lock to be broken.

As we approach the quarter mark of P-Noy’s presidency, it is worth reflecting on his accomplishments or lack thereof and the conditions under which he has had to govern that may or may not have enabled him to achieve what he promised during his campaign. More than anything, I believe that these first eighteen months have highlighted the inconsistencies in his promises and the inevitable tensions that come about from pursuing them.

Firstly, let me tackle his social contract and the plugging of the fiscal deficit. Due to his pledge of no new taxes, the finance and budget departments have had to rely on better tax compliance and program savings in order to bridge the government’s fiscal gap while attending to social and economic infrastructure programs. This is in a country of very wealthy elites who are averse to paying their fair share of taxes.

Despite my distaste for the government’s attempts at “fiscal consolidation” a euphemism for austerity measures I dubbed the “surplus fetish”, one benefit that I now see with the way in which they have gone about things is that it has exposed the inability of tax agencies even under the best efforts of honest officials to raise enough revenue to meet the government’s social compact obligations.

This is why Secretary Purisima, in a bid to shore up enough revenues down the track has flagged a few revenue measures to congress including the rationalization of fiscal incentives, the indexation of sin taxes, and as recently as this week the raising of a minerals tax similar in vein to the Australian resource rent scheme. These three taken alongside the stricter enforcement of the tax code on self-employed entrepreneurs and professionals could yield an estimated four hundred billion pesos, enough to close the fiscal gap and then some.

Enacting these revenue measures would lift the tax collection effort to a more sustainable nineteen percent of GDP, a position last held in the late-90s when the country eked out a surplus. The reform of the tax and incentives system would allow a more progressive and equitable fiscal expenditure program. One reason why the growth of the last decade was not felt by the broad masses of people was that the growth went largely to big business in the form of profits. Benefits through the tax system could not be shared with the less fortunate as the tax collection rate continued to decline despite the growth.

The absence of a successful asset reform program to tackle landlessness in the rural sector led to continued urban migration and growth of informal labor markets. This normally would lead to greater social insurance spending by the state, but this has only been recently addressed with the conditional cash trasnfers program. By next year, the government believes it will cover two of the four million poorest households. The funding comes from the scaling down of the grains importation program, a low lying fruit. To cover the remainder would require doubling the current thirty billion pesos spent on the program. This can only be accomodated through new taxes.

Secondly, given the new-found consensus around new revenue measures, getting them adopted will entail the exertion of executive will and the full cooperation from the congressional leadership. The legislative record of the government has been rather dismal with only 3.25 of its thirty three priority measures passed this year.

These include the reform of government-owned and controlled corporations, changes to labor regulations covering night shifts for women and the synchronization of the elections in the autonomous region of Muslim Mindanao with the rest of the country. The passage of an ammendment to the Electric Power Industry Reform Act that contained one fourth of the recommended changes of the administration accounts for a quarter-measure (hence 3.25 out of 33 measures).

At this rate, it will take a little over ten years to get all of the priority bills passed, including the reproductive health bill which has been seized on by the local Occupy movement. The actual tally of bills passed was seven, three of them not flagged as urgent including one that granted Philippine citizenship to a certain Marcus Eugene Douthit. The country spends about a hundred and ten billion pesos a year for both houses of congress. This is about sixteen billion pesos per measure, which represents very low value for money.

Contrast that with the performance of the Gillard government in Australia which passed two hundred and fifty measures this year including a highly contentious carbon tax and emissions trading scheme. This is quite impressive considering that it has had to seek an alliance with the Greens and a few independents to see these bills through both the lower and upper house.

In the Philippines, the majority in the lower chamber is always loyal to the president, which makes the Senate the only real check on executive power. But the senators unlike in the past are not particularly hostile to P-Noy, which represents a window of opportunity. Unfortunately, much of the upper chamber’s attention has been devoted to controversies involving the former regime which is perhaps why it has had little time to devote to other matters.

Thirdly, the pursuit of the rule of law and anti-corruption under the rubric of Daang Matuwid (Righteous Path) and the prosecution of the former president have come into conflict with each other. It is clear that P-Noy does not want a repeat of the ongoing saga with the Marcoses. This is perhaps the reason why he sought to bring Mrs Arroyo to justice by sending her to jail before Christmas this year.

The lady he has put to the task, his justice secretary, might have skirted a few legal formalities in order to make that happen. This is the conclusion arrived at by a few dispassionate observers including legal luminary Fr Joaquin Bernas, SJ, dean emeritus of the Ateneo Law School from where a number of the president’s men have been trained.

During the campaign, it seemed that the rule of law was intertwined with bringing Mrs Arroyo to justice for misdeeds done while in office. Now, given the situation where the high court is stacked with her appointees, certain exigencies have to be dispensed with in going after her. Indeed it would be preferable from Mrs Arroyo’s point of view for these cases to be tried immediately while she still enjoys some legal cache with those on the Corona bench.

In pursuing the case against her, P-Noy runs the risk of succumbing to the “dark side” by employing extra-legal or extra-constitutional tactics as she did during her presidency. Rather than lifting the country out of the mud, what could happen is that his presidency could get dragged through it with her. The impending release of the Supreme Court’s order to distribute his family’s hacienda to its poor tenants can be seen as a form of retribution. It distorts the narrative of “light vs darkness” by laying the blame for social inequity and injustice squarely on the president.

At any rate, what economists and foreign investors mean when they refer to the rule of law has nothing to do with prosecuting former incumbents but with the securing of ownership and property rights and the efficient enforcement of contracts. And here once again, the pursuit of daang matuwid has led to the scrapping of a few contracts involving foreign donors and their suppliers for the simple reason that they were signed by the former president. This has if anything maintained the image of the Philippines as a country with a high sovereign risk attached to it.

In conclusion, it is worth reflecting on how the shadow and specter of Mrs Arroyo’s administration has haunted her successor. In the first instance, an absence of public trust in government has cemented the idea in P-Noy’s head that he could only fund his social contract by improving tax collection rather than new taxes. This has been shown to be a false economy of sorts. Secondly, investigations into anomalies committed by her have distracted congress from pursuing his legislative agenda. Thirdly, prosecuting her at all costs has compromised his pursuit of the rule of law, property rights and good governance.

At some point, P-Noy will have to pivot from correcting the errors of the past to ensuring a brighter future for all. To do that, he will have to wrestle with the internal inconsistencies of his reform agenda and exert executive will to get his measures passed as well as restraint when required to show an even hand in prosecuting Mrs Arroyo.

In the end, he would want to avoid a problem known to economists as the winner’s curse. This situation could arise if he becomes overly-invested in the hunt for personal vindication against Mrs Arroyo and her minions. In seeking to settle a few scores with her, he might eventually get side-tracked into a very personal and passionate fight. This could detract him from pursuing a much broader reform agenda for the country. In this manner, he could easily squander the remaining time he has in office and wind up with very little to show for it.

The Libyan War of 2011

By George Friedman

The Libyan war has now begun. It pits a coalition of European powers plus the United States, a handful of Arab states and rebels in Libya against the Libyan government. The long-term goal, unspoken but well understood, is regime change — displacing the government of Libyan leader Moammar Gadhafi and replacing it with a new regime built around the rebels.

The mission is clearer than the strategy, and that strategy can’t be figured out from the first moves. The strategy might be the imposition of a no-fly zone, the imposition of a no-fly zone and attacks against Libya’s command-and-control centers, or these two plus direct ground attacks on Gadhafi’s forces. These could also be combined with an invasion and occupation of Libya.

The question, therefore, is not the mission but the strategy to be pursued. How far is the coalition, or at least some of its members, prepared to go to effect regime change and manage the consequences following regime change? How many resources are they prepared to provide and how long are they prepared to fight? It should be remembered that in Iraq and Afghanistan the occupation became the heart of the war, and regime change was merely the opening act. It is possible that the coalition partners haven’t decided on the strategy yet, or may not be in agreement. Let’s therefore consider the first phases of the war, regardless of how far they are prepared to go in pursuit of the mission.

Like previous wars since 1991, this war began with a very public buildup in which the coalition partners negotiated the basic framework, sought international support and authorization from multinational organizations and mobilized forces. This was done quite publicly because the cost of secrecy (time and possible failure) was not worth what was to be gained: surprise. Surprise matters when the enemy can mobilize resistance. Gadhafi was trapped and has limited military capabilities, so secrecy was unnecessary.

While all this was going on and before final decisions were made, special operations forces were inserted in Libya on two missions. First, to make contact with insurgent forces to prepare them for coming events, create channels of communications and logistics and create a post-war political framework. The second purpose was to identify targets for attack and conduct reconnaissance of those targets that provided as up-to-date information as possible. This, combined with air and space reconnaissance, served as the foundations of the war. We know British SAS operators were in Libya and suspect other countries’ special operations forces and intelligence services were also operating there.

War commences with two sets of attacks. The first attacks are decapitation attacks designed to destroy or isolate the national command structure. These may also include strikes designed to kill leaders such as Gadhafi and his sons or other senior leaders. These attacks depend on specific intelligence on facilities, including communications, planning and so on along with detailed information on the location of the leadership. Attacks on buildings are carried out from the air but not particularly with cruise missile because they are especially accurate if the targets are slow, and buildings aren’t going anywhere. At the same time, aircraft are orbiting out of range of air defenses awaiting information on more mobile targets and if such is forthcoming, they come into range and fire appropriate munitions at the target. The type of aircraft used depends on the robustness of the air defenses, the time available prior to attack and the munitions needed. They can range from conventional fighters or stealth strategic aircraft like the U.S. B-2 bomber (if the United States authorized its use). Special operations forces might be on the ground painting the target for laser-guided munitions, which are highly accurate but require illumination.

At the same time these attacks are under way, attacks on airfields, fuel storage depots and the like are being targeted to ground the Libyan air force. Air or cruise missile attacks are also being carried out on radars of large and immobile surface-to-air (SAM) missile sites. Simultaneously, “wild weasel” aircraft — aircraft configured for the suppression of enemy air defenses — will be on patrol for more mobile SAM systems to locate and destroy. This becomes a critical part of the conflict. Being mobile, detecting these weapons systems on the ground is complex. They engage when they want to, depending on visual perception of opportunities. Therefore the total elimination of anti-missile systems is in part up to the Libyans. Between mobile systems and man-portable air-defense missiles, the threat to allied aircraft can persist for quite a while even if Gadhafi’s forces might have difficulty shooting anything down.

This is the part that the United States in particular and the West in general is extremely good at. But it is the beginning of the war. Gadhafi’s primary capabilities are conventional armor and particularly artillery. Destroying his air force and isolating his forces will not by itself win the war. The war is on the ground. The question is the motivation of his troops: If they perceive that surrender is unacceptable or personally catastrophic, they may continue to fight. At that point the coalition must decide if it intends to engage and destroy Gadhafi’s ground forces from the air. This can be done, but it is never a foregone conclusion that it will work. Moreover, this is the phase at which civilian casualties begin to mount. It is a paradox of warfare instigated to end human suffering that the means of achieving this can sometimes impose substantial human suffering itself. This is not merely a theoretical statement. It is at this point at which supporters of the war who want to end suffering may turn on the political leaders for not ending suffering without cost. It should be remembered that Saddam Hussein was loathed universally but those who loathed him were frequently not willing to impose the price of overthrowing him. The Europeans in particular are sensitive to this issue.

The question then becomes the extent to which this remains an air operation, as Kosovo was, or becomes a ground operation. Kosovo is the ideal, but Gadhafi is not Slobodan Milosevic and he may not feel he has anywhere to go if he surrenders. For him the fight may be existential, whereas for Milosevic it was not. He and his followers may resist. This is the great unknown. The choice here is to maintain air operations for an extended period of time without clear results, or invade. This raises the question of whose troops would invade. Egypt appears ready but there is long animosity between the two countries, and its actions might not be viewed as liberation. The Europeans could do so. It is difficult to imagine Obama adopting a third war in Muslim world as his own. This is where the coalition is really tested.

If there is an invasion, it is likely to succeed. The question then becomes whether Gadhafi’s forces move into opposition and insurgency. This again depends on morale but also on behavior. The Americans forced an insurgency in Iraq by putting the Baathists into an untenable position. In Afghanistan the Taliban gave up formal power without having been decisively defeated. They regrouped, reformed and returned. It is not known to us what Gadhafi can do or not do. It is clear that it is the major unknown.

The problem in Iraq was not the special operations forces. It was not in the decapitation strikes or suppression of enemy air defenses. It was not in the defeat of the Iraqi army on the ground. It was in the occupation, when the enemy reformed and imposed an insurgency on the United States that it found extraordinarily difficult to deal with.

Therefore the successes of the coming day will tell us nothing. Even if Gadhafi surrenders or is killed, even if no invasion is necessary save a small occupation force to aid the insurgents, the possibility of an insurgency is there. We will not know if there will be an insurgency until after it begins. Therefore, the only thing that would be surprising about this phase of the operation is if it failed.

The decision has been made that the mission is regime change in Libya. The strategic sequence is the routine buildup to war since 1991, this time with a heavier European component. The early days will go extremely well but will not define whether or not the war is successful. The test will come if a war designed to stop human suffering begins to inflict human suffering. That is when the difficult political decisions have to be made and when we will find out whether the strategy, the mission and the political will fully match up.

The Libyan War of 2011,” is republished with permission from STRATFOR.

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Editor’s note: The New York Times published, “U.S. Missiles Strike Libyan Air-Defense targets.”