PROFILE

OFFICIAL NAME:
Republic of the Philippines

Geography
Area: 300,000 sq. km. (117,187 sq. mi.).
Cities: (1997) Capital--Manila (pop. 10.4 million in metropolitan area); Davao (1.3 million), Cebu (3.1 million).
Terrain: Islands, 65% mountainous, with narrow coastal lowlands.
Climate: Tropical, astride typhoon belt.

People
Nationality: Noun--Filipino(s). Adjective--Philippine.
Population (1999): 75 million.
Annual growth rate: 2.3%.
Ethnic groups: Malay, Chinese.
Religions: Catholic 83%, Protestant 9%, Muslim 5%, Buddhist and other 3%.
Languages: Pilipino (based on Tagalog), national language; English, language of government and instruction in higher education.
Education: Years compulsory--6. Attendance--above 97% in elementary grades, 55% in secondary grades. Literacy--94.6%.
Health: Infant mortality rate (1997)--35.2/1,000. Life expectancy (1997)--66.5 yrs.
Work force (1997): 30 million. Agriculture--38%; government and services--37%; industry and commerce--16%.

Government
Type: Republic.
Independence: 1946.
Constitution: February 11, 1987.
Branches: Executive--president and vice president. Legislative--bicameral legislature. Judicia1--independent.
Administrative subdivisions: 13 regions and Manila, 78 provinces, 61 chartered cities.
Political parties: Laban Ng Masang Pilipino (LAMP), Lakas Ng Bayan (Lakas/NUCD), and other small parties.
Suffrage: Universal, but not compulsory, at age 18.

Economy
GDP (1999): $76.5 billion.
Annual growth rate (1999): 3.2%.
GDP per capita (1999): $1,017.
Natural resources: Timber, copper, nickel, iron, cobalt, silver, gold.
Agriculture: Products--sugar, coconut products, rice, corn, pineapples, bananas, aquaculture, mangoes, pork, eggs.
Industry: Types--textiles and garments, pharmaceuticals, chemicals, wood products, food processing, electronics assembly, petroleum refining, fishing.
Trade (1999): Exports--$35.0 billion. Imports--$30.7 billion.

PEOPLE
The majority of Philippine people are of Malay stock, descendants of Indonesians and Malays who migrated to the islands long before the Christian era. The most significant ethnic minority group is the Chinese, who have played an important role in commerce since the ninth century, when they first came to the islands to trade. As a result of intermarriage, many Filipinos have some Chinese and Spanish ancestry. Americans and Spaniards constitute the next largest alien minorities in the country.

About 90% of the people are Christian; most were converted and Westernized to varying degrees during nearly 400 years of Spanish and American rule. The major non-Hispanicized groups are the Muslim population, concentrated in the Sulu Archipelago and in central and western Mindanao, and the mountain groups of northern Luzon. Small forest tribes live in the more remote areas of Mindanao.

About 87 native languages and dialects are spoken, all belonging to the Malay-Polynesian linguistic family. Of these, eight are the first languages of more than 85% of the population. The three principal indigenous languages are Cebuano, spoken in the Visayas; Tagalog, predominant in the area around Manila; and Ilocano, spoken in northern Luzon. Since 1939, in an effort to develop national unity, the government has promoted the use of the national language, Pilipino, which is based on Tagalog. Pilipino is taught in all schools and is gaining acceptance, particularly as a second language.

English, the most important nonnative language, is used as a second language by many, including nearly all professionals, academics, and government workers. Only a few Filipino families retain Spanish usage.

Despite this multiplicity of languages, the Philippines has one of the highest literacy rates in the East Asian and Pacific area. About 90% of the population 10 years of age and older are literate.

HISTORY
The history of the Philippines may be divided into four distinct phases: the pre-Spanish period (before 1521); the Spanish period (1521-1898); the American period (1898-1946); and the years since independence (1946-present).

Pre-Spanish Period
The first people in the Philippines, the Negritos, are believed to have come to the islands 30,000 years ago from Borneo and Sumatra, making their way across then-existing land bridges. Subsequently, people of Malay stock came from the south in successive waves, the earliest by land bridges and later in boats called barangays. The Malays settled in scattered communities, also called barangays, which were ruled by chieftains known as datus. Chinese merchants and traders arrived and settled in the ninth century A.D. In the 14th century, Arabs arrived, introducing Islam in the south and extending some influence even into Luzon. The Malays, however, remained the dominant group until the Spanish arrived in the 16th century.

Spanish Period
Ferdinand Magellan claimed the Philippines for Spain in 1521, and for the next 377 years, the islands were under Spanish rule. This period was the era of conversion to Roman Catholicism. A Spanish colonial social system was developed, complete with a strong centralized government and considerable clerical influence. The Filipinos were restive under the Spanish, and this long period was marked by numerous uprisings. The most important of these began in 1896 under the leadership of Emilio Aguinaldo and continued until the Americans defeated the Spanish fleet in Manila Bay on May 1, 1898, during the Spanish-American War. Aguinaldo declared independence from Spain on June 12, 1898.

American Period
Following Admiral Dewey's defeat of the Spanish fleet in Manila Bay, the United States occupied the Philippines. Spain ceded the islands to the United States under the terms of the Treaty of Paris (December 10, 1898) that ended the war.

A war of resistance against U.S. rule, led by Revolutionary President Aguinaldo, broke out in 1899. Although Americans have historically used the term "the Philippine Insurrection," Filipinos and an increasing number of American historians refer to these hostilities as the Philippine-American War (1899-1902), and in 1999 the U.S. Library of Congress reclassified its references to use this term. In 1901, Aguinaldo was captured and swore allegiance to the United States, and resistance gradually died out.

U.S. administration of the Philippines was always declared to be temporary and aimed to develop institutions that would permit and encourage the eventual establishment of a free and democratic government. Therefore, U.S. officials concentrated on the creation of such practical supports for democratic government as public education and a sound legal system.

The first legislative assembly was elected in 1907. A bicameral legislature, largely under Philippine control, was established. A civil service was formed and was gradually taken over by the Filipinos, who had effectively gained control by the end of World War I. The Catholic Church was disestablished, and a considerable amount of church land was purchased and redistributed.

In 1935, under the terms of the Tydings-McDuffie Act, the Philippines became a self-governing commonwealth. Manuel Quezon was elected president of the new government, which was designed to prepare the country for independence after a 10-year transition period. World War II intervened, however, and in May 1942, Corregidor, the last American/Filipino stronghold, fell. U.S. forces in the Philippines surrendered to the Japanese, placing the islands under Japanese control.

The war to regain the Philippines began when Gen. Douglas MacArthur landed on Leyte on October 20, 1944. Filipinos and Americans fought together until the Japanese surrender in September 1945. Much of Manila was destroyed during the final months of the fighting, and an estimated 1 million Filipinos lost their lives in the war.

As a result of the Japanese occupation, the guerrilla warfare that followed, and the battles leading to liberation, the country suffered great damage and a complete organizational breakdown. Despite the shaken state of the country, the United States and the Philippines decided to move forward with plans for independence. On July 4, 1946, the Philippine Islands became the independent Republic of the Philippines, in accordance with the terms of the Tydings-McDuffie Act. In 1962, the official Independence Day was changed from July 4 to June 12, commemorating the date independence from Spain was declared by General Aguinaldo in 1898.

Post-Independence Period
The early years of independence were dominated by U.S.-assisted postwar reconstruction. A communist-inspired Huk Rebellion (1945-53) complicated recovery efforts before its successful suppression under the leadership of President Ramon Magsaysay. The succeeding administrations of Presidents Carlos P. Garcia (1957-61) and Diosdado Macapagal (1961-65) sought to expand Philippine ties to its Asian neighbors, implement domestic reform programs, and develop and diversify the economy.

In 1972, President Ferdinand E. Marcos (1965-86) declared martial law, citing growing lawlessness and open rebellion by the communist rebels as his justification. Marcos governed from 1973 until mid-1981 in accordance with the transitory provisions of a new constitution that replaced the commonwealth constitution of 1935. He suppressed democratic institutions and restricted civil liberties during the martial law period, ruling largely by decree and popular referenda. The government began a process of political normalization during 1978-81, culminating in the reelection of President Marcos to a 6-year term that would have ended in 1987. The Marcos government's respect for human rights remained low despite the end of martial law on January 17, 1981. His government retained its wide arrest and detention powers. Corruption and favoritism contributed to a serious decline in economic growth and development under Marcos.

The assassination of opposition leader Benigno (Ninoy) Aquino upon his return to the Philippines in 1983, after a long period of exile, coalesced popular dissatisfaction with Marcos and set in motion a succession of events that culminated in a snap presidential election in February 1986. The opposition united under Aquino's widow, Corazon Aquino, and Salvador Laurel, head of the United Nationalist Democratic Organization (UNIDO). The election was marred by widespread electoral fraud on the part of Marcos and his supporters. International observers, including a U.S. delegation led by Sen. Richard Lugar (R-Indiana), denounced the official results. Marcos was forced to flee the Philippines in the face of a peaceful civilian-military uprising that ousted him and installed Corazon Aquino as president on February 25, 1986.

Under Aquino's presidency progress was made in revitalizing democratic institutions and respect for civil liberties. However, the administration was also viewed by many as weak and fractious, and a return to full political stability and economic development was hampered by several attempted coups staged by disaffected members of the Philippine military.

Fidel Ramos was elected president in 1992. Early in his administration, Ramos declared "national reconciliation" his highest priority. He legalized the communist party and created the National Unification Commission (NUC) to lay the groundwork for talks with communist insurgents, Muslim separatists, and military rebels. In June 1994, President Ramos signed into law a general conditional amnesty covering all rebel groups, as well as Philippine military and police personnel accused of crimes committed while fighting the insurgents. In October 1995, the government signed an agreement bringing the military insurgency to an end. A peace agreement with one major Muslim insurgent group was signed in 1996.

Joseph Ejercito Estrada's election as President in May 1998, marked the Philippines' third democratic succession since the ouster of Marcos. Estrada was elected with overwhelming mass support on a platform promising poverty alleviation and an anti-crime crackdown.

GOVERNMENT AND POLITICAL CONDITIONS  
The Philippines has a representative democracy modeled on the U.S. system. The 1987 constitution, adopted during the Aquino administration, re-established a presidential system of government with a bicameral legislature and an independent judiciary. The president is limited to one 6-year term. Provision also was made in the constitution for autonomous regions in Muslim areas of Mindanao and in the Cordillera region of northern Luzon.

The Philippine Senate is elected at large. There are currently 22 senators rather than the usual 24, since Senator Gloria Macapagal-Arroyo became Vice President in the May 1998 elections and another died--replacements cannot be chosen without a national election. The next election is scheduled for May 2001. Two hundred six of a possible 250 members of the House of Representatives are elected from the single-member districts. The remainder of the House seats are designated for sectoral representatives elected at large through a complex "party list" system.

Joseph Estrada took office June 30, 1998, succeeding Fidel Ramos, under whom he had served as Vice President. Despite coalitions and party identification, members of the Philippine congress tend to be independent, changing party affiliation with ease.

Following his election, President Estrada formed the LAMP party out of a tri-partite alliance that had helped him get elected. Some members of former President Ramos's Lakas Party defected to LAMP. President Estrada's priorities include battling poverty, crime, and corruption. The government remains confronted with both Muslim and communist insurgencies, and in May-June 2000 stepped up its military campaign against the Muslim-separatist Moro Islamic Liberation Front (MNLF). In late April 2000, the Philippines also became embroiled in an international hostage crisis, after the extremist Filipino Muslim rebel group, Abu Sayaaf, snatched a group of mostly foreign hostages from a resort in Malaysian waters and transported them to the southern Philippine Island of Jolo. The Communist New Peoples Army continues to operate in remote areas throughout the country but is badly splintered and therefore less effective than it was formerly. The anti-insurgency campaign is a drain on Philippine Government resources and hampers development efforts. However, these rebel groups do not fundamentally threaten government stability.

Principal Government Officials
President--Joseph E. Estrada
Vice President--Gloria Macapagal-Arroyo
Foreign Secretary--Domingo Siazon, Jr.
Ambassador to the United States-Ernesto M. Maceda
Permanent Representative to the UN--Felipe Mabilangan

The Republic of the Philippines maintains an embassy in the United States at 1600 Massachusetts Avenue NW, Washington, DC 20036 (tel. 202-467-9300). Consulates general are in New York, Chicago, San Francisco, Los Angeles, Honolulu, and Agana (Guam).

ECONOMY
Since the end of the Second World War, the Philippine economy has had a mixed history of growth and development. Over the years, the Philippines has gone from being one of the richest countries in Asia (following Japan) to being one of the poorest. Growth immediately after the war was rapid, but slowed over time. A severe recession in 1984-85 saw the economy shrink by more than 10%, and perceptions of political instability during the Aquino administration further dampened economic activity. During his administration, President Ramos introduced a broad range of economic reforms and initiatives designed to spur business growth and foreign investment. As a result, the Philippines saw a period of rapid sustained growth, but the spreading Asian financial crisis has slowed economic development in the Philippines once again. President Estrada has tried to resist protectionist measures; efforts to continue the reforms begun by the Ramos administration have made significant progress.

Important sectors of the Philippine economy include agriculture and industry (particularly food processing, textiles and garments, and electronics and automobile parts). Most industries are concentrated in the urban areas around metropolitan Manila. Mining also is important in the Philippines, which possesses significant reserves of chromite, nickel, and copper. Recent natural gas finds off the islands of Palawan add to the country's substantial geothermal, hydro, and coal energy reserves.

Today's Economy
The Philippines was less severely affected by the Asian financial crisis than its neighbors, due in considerable part to remittances of approximately $5 billion annually from overseas workers. Nonetheless, the country continues to be a weak economic performer. The government has recently reiterated its target of 4.5%-5.5% real GNP growth (4%-5% for GDP), but private forecasts are somewhat lower. In 1999, the Philippines GDP increased by 3.2%.

Agriculture accounts for one-fifth of the Philippine economy. Output fell in 1997 and early 1998 due to an El-Nino-related drought but increased by 6.6% in 1999 (over 1998s low base).

The Philippines continues to record monthly export figures up significantly on year-earlier levels, but examination of the month-by-month export figures had suggested that the export boom is running out of steam. Monthly exports continue to grow but at increasingly slower rates. Electronic and auto parts exports account for most of this growth. The Philippines' traditional exports are stagnant or declining.

The commercial banking sector suffered from high interest rates and higher nonperforming loan levels during the Asian financial crisis, but the banking system remains sound. Interest rates have been brought under control, but loan growth remains slow as banks continue to exercise caution and clean up their balance sheets.

The Philippine peso has lost more than 40% of its value vis-a-vis the U.S. dollar since mid-1997 and currently trades at about 44/$. Inflation, perennially a problem in the Philippines, is under control and will likely average 6%-7% in 2000.

Despite slower than hoped for growth, the Philippines' longer term prospects remain bright. The Aquino and Ramos administrations opened up the relatively closed Philippine economy and provided a firmer base for sustainable economic growth. After a slow start, President Estrada and his cabinet have continued with, and expanded, liberalization and market-based policies and reforms. Efforts to reform the constitution to encourage foreign investment, particularly foreign ownership of land, were abandoned amidst nationalist opposition. Initial optimism about prospects for economic reform also had dimmed amid concerns of governmental corruption. Recent scandals involving the Philippine Stock Exchange, and the President's close ties to certain businessmen, have shaken confidence of investors and other members of the business community. However, the pace of economic reform, particularly the passage of key legislation in areas such as retail trade, electronic commerce, banking reform, and securities regulation, suggests that the investment and business climate can be expected to continue to improve.

Agriculture and Forestry
Arable farmland comprises an estimated 26% of the total land area. Although the Philippines is rich in agricultural potential, inadequate infrastructure, lack of financing, and past government policies have limited productivity gains. Philippine farms produce food crops for domestic consumption and cash crops for export. The agricultural sector employs about 38% of the work force but only provides about one-fifth of GDP.

Decades of uncontrolled logging and slash-and-burn agriculture in marginal upland areas have stripped forests, with critical implications for the ecological balance. The government has instituted conservation programs, but deforestation remains a severe problem.

With its 7,107 islands, the Philippines has a very diverse range of fishing areas. Notwithstanding good prospects for the aquaculture subsector, the fishing industry continues to face a bleak future due to destructive fishing methods, a lack of funds, and an absence of government support.

Industry
Industrial production is centered on processing and assembly operations of the following: food, beverages, tobacco, rubber products, textiles, clothing and footwear, pharmaceuticals, paints, plywood and veneer, paper and paper products, small appliances, and electronics. Heavier industries are dominated by the production of cement, glass, industrial chemicals, fertilizers, iron and steel, and refined petroleum products.

The industrial sector is concentrated in the urban areas, especially in the metropolitan Manila region and has only weak linkages to the rural economy. Inadequate infrastructure, transportation, communication, and electrical power shortages have so far inhibited faster industrial growth.

Mining
The country is well-endowed with mineral and thermal energy resources. A recent discovery of natural gas reserves off Palawan Island will soon be brought on-line to generate electricity. Philippine copper and chromite deposits are among the largest in the world. Other important minerals include gold, nickel, silver, coal, gypsum, and sulfur. Significant deposits of clay, limestone, marble, silica, and phosphate exist. About 60% of total mining production is accounted for by nonmetallic minearls, which contributed substantially to the industry's steady output growth between 1993 and 1998, with the value of production growing 58%. In 1999, however, mineral production declines 16% to $793 million. Mineral exports have slowed steadily since 1996. Led by copper cathodes, Philippine mineral exports amounted to $645 million in 1999, down 16% from 1998 levels. Low metal prices, high production costs, and lack of investment in infrastructure have contributed to the mining industry's overall decline.

FOREIGN RELATIONS
In its foreign policy, the Philippines cultivates constructive relations with its Asian neighbors, with whom it is linked through membership in ASEAN, the ASEAN Regional Forum (ARF), and the Asia-Pacific Economic Cooperation (APEC) forum. The Philippines is a member of the UN and some of its specialized agencies, the Non-Aligned Movement (NAM, since 1992), and has close links with the Organization of Islamic Conference (OIC). The Philippines has played a key role in ASEAN in recent years and also values its relations with the countries of the Middle East, in no small part because hundreds of thousands of Filipinos are employed in that region. The fundamental Philippine attachment to democracy and human rights is reflected in its foreign policy. Philippine soldiers and police have participated in a number of multilateral civilian police and peacekeeping operations, and a Philippine Army general served as the first commander of the UN Peacekeeping Operation in East Timor. The Philippine Government also has been active in efforts to reduce tensions among rival claimants to the territories and waters of the resource-rich South China Sea.

U.S.-PHILIPPINE RELATIONS
U.S.-Philippine relations are based on shared history and commitment to democratic principles, as well as on economic ties. The historical and cultural links between the Philippines and the U.S. remain strong. The Philippines modeled its governmental institutions on those of the U.S., and continues to share a commitment to democracy and human rights. At the most fundamental level of bilateral relations, human links continue to form a strong bridge between the two countries. There are an estimated 2 million Americans of Philippine ancestry in the United States and more than 100,000 American citizens in the Philippines.

Until November 1992, pursuant to the 1947 Military Bases Agreement, the United States maintained and operated major facilities at Clark Air Base, Subic Bay Naval Complex, and several small subsidiary installations in the Philippines. In 1983 and 1988, the United States and the Philippines completed successful reviews and extensions of the Military Bases Agreement, as amended. In August 1991, negotiators from the two countries reached agreement on a draft treaty providing for use of Subic Bay Naval Base by U.S. forces for 10 years. The draft treaty did not include use of Clark Air Base, which had been so heavily damaged by the 1991 eruption of Mt. Pinatubo that the U.S. decided to abandon it.

On September 16, 1991, the Philippine Senate rejected the bases treaty, and despite further efforts to salvage the situation, the two sides could not reach agreement. As a result, the Philippine Government informed the U.S. on December 6, 1991, that it would have 1 year to complete withdrawal. That withdrawal went smoothly and was completed ahead of schedule, with the last U.S. forces departing on November 24, 1992. On departure, the U.S. Government turned over assets worth more than $1.3 billion to the Philippines, including an airport and ship-repair facility. Agencies formed by the Philippine Government have converted the former military bases for civilian commercial use, with Subic Bay serving as a flagship for that effort.

The post-U.S. bases era has seen U.S.-Philippine relations improved and broadened, focusing more prominently on economic and commercial ties while maintaining the importance of the security dimension. Philippine domestic political stability has resulted in increased U.S. investment in the country, while a strong security relationship rests on the U.S.-Philippines Mutual Defense Treaty (MDT). In February 1998, U.S. and Philippine negotiators concluded the Visiting Forces Agreement (VFA), paving the way for increased military cooperation under the MDT. The agreement was approved by the Philippine Senate in May 1999 and entered into force on June 1, 1999. Under the VFA, the U.S. is conducting an active program of ship visits to Philippine ports and has resumed large combined military exercises with Philippine forces. Although U.S. aid to the Philippines has taken on a far less prominent role than in the past, assistance programs continue, highlighted by the July 1996 opening of a major airport and harbor project in General Santos City with U.S. Agency for International Development funding. Then-President Ramos underscored the strength of the bilateral relationship by declaring July 4, 1996 to be Philippine-American Friendship Day in commemoration of the 50th anniversary of Philippine independence. Ramos visited the United States in April 1998.

Trade and Investment
Two-way U.S. trade with the Philippines amounted to nearly $17 billion in 1999. The strong trade ties between the U.S. and the Philippines is reflected in the fact that some 20% of the Philippines' imports in 1999 came from the U.S., and about one-third of its exports were bound for America. Key exports to the U.S. are semiconductor devices and computer peripherals, automobile parts, electric machinery, textiles and garments, and coconut oil. In addition to other goods, the Philippines imports raw and semiprocessed materials for the manufacture of semiconductors, electronics and electrical machinery, transport equipment, and cereals and cereal preparations.

U.S. investment in the Philippines is estimated at some $2.8 billion, slightly more than 25% of all foreign investment in the Philippines. Since the late 1980s, the Philippines has committed itself to reforms that encourage foreign investment as a basis for economic development, subject to certain guidelines and restrictions in specified areas. Under President Ramos, the Philippines expanded reforms, opening the power generation and telecommunications sectors to foreign investment, as well as securing ratification of the Uruguay Round agreement and membership in the World Trade Organization. As noted earlier, President Estrada's administration is continuing such reforms, a position which generally enjoys domestic political support.

During the last few years, the relatively closed Philippine economy has been opened significantly by foreign exchange deregulation, foreign investment and banking liberalization, and tariff and market barrier reduction. President Estrada continues to support further economic reform, and congressional action is now furthering these efforts. Trade opportunities for exporters exist in a broad range of industries.

Principal U.S. Embassy Officials
Charge d'Affairs ad interim--Michael E. Malinowski
Consul General--John P. Caulfield

The U.S. embassy is located at 1201 Roxas Boulevard, Manila; tel. (63)(2)521-7116; fax 522-4361; telex 722-27366 AME PH. Website: http://www.usembassy.state.gov/manila