(Editor’s Note: Following is the eleventh in a series of backgrounders on Philippine-United States relations that the Presidential News Desk is issuing on the run-up to the state visit here of US President George W. Bush tomorrow, October 18)

Defying time and circumstance as well as shifting geo-strategic calculations, this 52-year-old alliance endures because it is anchored on the values that the Philippines and the US share—the values of adherence to democracy, human freedom and free enterprise. And whenever these cherished values are threatened or under attack, both Filipinos and Americans are willing to fight and lay down their lives.

The alliance has overcome a hiatus brought about by the withdrawal of American troops in 1991. In a twist of irony, the end of American military presence in the country ushered the maturing of relation, in all dimensions, between the two countries.

The treacherous September 11, 2001 terrorist attacks in the US by the Al-Qaeda terrorist network fortified the resolve of the US and the Philippines to fight terrorism. It drove home this strong message: unless freedom-loving nations unite against terrorism, this scourge will strike with impunity and extremism will triumph over democracy.

When the US rallied countries behind an international coalition against terror, President Gloria Macapagal-Arroyo was the first Asian leader to stand up and be counted. She committed Philippine support for the US and British military strikes against the Taliban-ruled Afghanistan under the aegis of "Operation Enduring Freedom."

Subsequently, the Philippines backed the "coalition of the willing" that launched "Operation Iraqi Freedom" culminating in the ouster of a tyrannical dictator and the liberation of the Iraqi people

During her working visit to the US in November 2001, President Macapagal-Arroyo and President George Bush discussed measures by which the Philippines and the US could work together to counter terrorism. They likewise shared the view that the war against terrorism must be waged in parallel with the war against poverty, which is a fertile breeding ground for this menace.

A key result was the launching of a six-month joint RP-US training exercise called "Balikatan 02-1." Balikatan, which means "shoulder-to-shoulder," was designed to ensure the interoperability of Philippine and US military forces. Its other objective is to enhance Philippine capabilities on counter terrorism in terms of mobility, communications, intelligence and training. Conforming with the provisions of the Philippine Constitution and laws, this exercise to neutralize the Abu Sayyaf terrorist group in Basilan was AFP-led and US-assisted.

The civic component of "Balikatan 02-1" was dubbed "Operation Gentle Wind." US Army engineers built or rehabilitated roads, bridges, air and seaports and schools, along with the provision of medical and health care for the residents of Basilan. With the mission’s success, Basilan is now an island province where peace and order prevails and where development efforts can proceed.

Building upon the success of "Balikatan 02-1," the terms of reference for "Balikatan 03-1" are under discussion. The holding of another joint Philippine-US military activity under which the US will provide support to ongoing AFP operations against the Abu Sayyaf was an outcome of the President’s state visit to Washington, D.C. in May this year.

Establishment of RP-US Defense Policy Board

Enhancing Philippine-US security and defense cooperation is the establishment of RP-US Defense Policy Board. It is the product of a previous agreement between President Macapagal-Arroyo and President Bush to create "a new bilateral defense consultative mechanism" as contained in their Joint Statement issued after the working of the Philippine Chief Executive to Washington, D.C. on Nov. 20, 2001.

The new bilateral policy body complements existing defense consultative mechanisms, namely the Council of Foreign Ministers and the Mutual Defense Board, both of which are under the framework of the 1951 MDT. It fills the need for a mechanism that allows a broader review of our defense and security relations, within the context of the new and emerging security challenges.

Representing another pillar in our strategic relationship with the United States is the Mutual Logistics Support Agreement (MLSA). Signed in November 2002, its purpose is to lower the cost of security cooperation by minimizing administrative costs and wastage. The MLSA can only come into play in conjunction with an approved activity under the Mutual Defense Treaty or the Visiting Forces Agreement (VFA). The US has similar agreements with 56 other countries.

In terms of military assistance, the United States is spending a total of $114.46 million for the Philippines in the next three fiscal years, the fourth highest in the world.

The cost of international military exercise and training program in the country alone is the highest in Asia and second highest in the world, according to a report of the Joint United States Military Group (JUSMAG).

JUSMAG Philippines conducts security assistance operations to enhance interoperability between the Armed Forces of the Philippines and the Armed Forces of the United States. It also supports the AFP in their fight to deny and defeat terrorist activities.

Security assistance operations for the first fiscal year amount to $38.03 million broken down into Foreign Military Financing (FMF), $1.99 million; International Military Education and Training (IMET), $1.44 million; Excess Defense Articles transfers (EDA) composed of medium class cutter/patrol vessel, $20 million; and 30,000 M-16 rifles with 120,000 M-16 magazines worth $14.60 million.

For the second fiscal year, FMF Mobility Maintenance Plan (MMP) for Technical Assistance Field Team (TAFT) and Support of critical systems amount to $20 million of the total $94.50 million.

FMF Counter-Terrorism (CT) Modules Supplemental amount to $25 million; and Presidential Drawdown Authority (Stocks/Services from existing US military inventories, $10 million; IMET accounts for $2 million while EDA Transfers total $3.20 million.

Visiting USAID projects in Mindanao, an official of the United States Agency for International Development (USAID) has made fresh pledge of US support for partnerships that accelerate economic growth, reduce poverty, and help bring about peace in the Southern Philippines.

Robert Barnes, Economic Growth Advisor, Office of Economic Development and Governance/USAID, visited recently the Islamic City of Marawi, capital of Lanao del Sur, to inaugurate post-harvest facilities for former combatants of the Moro National Liberation Front (MNLF) in Barangays Rorogagus and Cormatan.

Barnes presided over the turnover ceremonies for a grains warehouse and solar dryer that will benefit the 110-member Rorogagus Farmers Cooperative. The facilities were constructed with funds provided by the Community Infrastructure, a Program component of USAID’s Growth with Equity in Mindanao-2 (GEM-2) Program. The facility will be used for drying and storing corn harvested from the 150-hectare farm cultivated by the coop members.

In Barangay Cormatan, Barnes also turned over a grains warehouse and solar dryer to members of the Cormatan Matampay Farmers’ Association (CMFA). The project will benefit the 75 coop members and their families who are growing corn. This facility is one of the Transitional Assistance Grants (TAG) of the Livelihood Enhancement and Peace (LEAP) program.

"We are very thankful to USAID because this will truly enhance our agricultural productivity and support economic activities in the community," CMFA president Mapandi Aldem said.

Barnes explained that the post-harvest facilities are part of the more than 700 small-scale infrastructure projects that USAID is committed to build in Mindanao over the next five years through the GEM and LEAP programs. These include repairs and/or upgrades of roads, bridges, water systems, boat landings and community centers.

"These facilities, as well as a number of larger infrastructure projects that we are undertaking, complement the production inputs and skills training we provide to former MNLF combatants," Barnes said.

He added that the projects demonstrate the benefit of partnerships among the local residents, local governments, and donor agencies aimed at pushing countryside development in Mindanao.

Charles Feibel, Chief of Party of the GEM Program, and Noel Ruiz, Program Manager of the LEAP Program, were also present at the ceremonies.

PUTRAJAYA, Malaysia - - Indonesia pledged Thursday that her government fully supports the Philippine bid for an observer status in the Organization of Islamic Conference (OIC).

Indonesian President Sukarnoputri Megawati made the pledge to Philippine President Gloria Macapagal-Arroyo during their bilateral talk here Thursday afternoon after attending the opening of the 10th Session of the Islamic Summit Conference at the Putrajaya Convention Center.

President Macapagal-Arroyo requested the Indonesian President to endorse the Philippine bid to clinch the observer status in the OIC, which is now held by the Moro National Liberation Front (MNLF).

Speaking on behalf of President Megawati, Indonesian Foreign Minister N. Hassan Wirajuda said that as a matter of procedure, Libya, which is a member of the Committee of Eight monitoring the implementation of the Philippine-MNLF peace agreement of 1996, will formally make the endorsement.

Wirajuda said Indonesia, chairman of the Committee of Eight, will second the motion of the endorsement by Libya.

President Macapagal-Arroyo was extremely happy to hear Indonesia’s pledge of support for the Philippine bid for observer status in the influential OIC, which is composed 57 Muslim countries.

For the first time in its 34-year history, a Philippine President had been invited to attend the OIC summit.

This favorable action came to fruition through the efforts of Malaysian Prime Minister Mahathir Mohamad who invited President Arroyo to grace the summit, the largest gathering of the OIC held every three years.

Indonesia played a key role in forging a peace agreement between the Philippine government and the MILF on Sept. 2, 1996, briefly ending the biggest Musllim insurgeny in Mindanao.

The Mindanao conflict has remained a thorn in the neck of the Philippine government because the Moro Islamic Liberation Front (MILF), the second largest Muslim guerilla front, continued the fight in southern Philippines.

But the Philippines and the MILF have started exploratory talks and even signed a cessation of hostilities last year to give peace another chance in Mindanao.

Defense Secretary Eduardo R. Ermita, who accompanied the President at the OIC summit here, said that the resumption of the RP-MILF exploratory talks would be held here on Oct. 22.

Ermita was also confident that the Philippines would ultimately be given an observer status in the OIC.

Foreign Affairs Secretary Blas F. Ople said the bid of the Philippines for observer status remains strong. Ople was also here with the President.

He clarified a news report about the alleged OIC's rejection of the Philippines' application for OIC observer status.

"The OIC's Committee of the Eight has taken no such action. It has not rejected our bid," Ople said.

"In fact, the recent action by the Committee of the Eight, through its Chairman, had strengthened our bid," he added.

Indonesia, chair of the Committee of the Eight, has declared that the Philippines has complied with the political and security mandates of the 1996 GRP-MNLF peace accord.

"This is a historic report. For it settles conclusively the issue of peace between the Philippines and the MNLF. This formal report of Indonesia,delivered to the gathered Foreign Ministers of the OIC on Monday, was roundly applauded. I fully expect that this report will be adopted by the OIC Summit," Ople said.

"We have the full support of many members of the OIC for our Observer status. While we are hopeful that we soon be admitted as an observer, I understand that certain procedures have to be followed. I understand that there are other countries which had filed for observer status years ahead of the Philippines, for example," he said.

Ople continued: "I would like to emphasize that there has been no rejection of our application, whether at the level of the Committee of the Eight or at any other level in the OIC. The favorable Report of the Committee of the Eight, the invtation for the President to attend the OIC Summit, and the strong support we are getting from our close friends and allies in the OIC, all belie any notion of rejction."

President Gloria Macapagal-Arroyo arrived today at 3:30 A.M. from her historic attendance in the 10^TH Session of the Organization of Islamic Conference in Putrajaya, Malaysia.

The President, garbed in a fuschia-colored Malaysian dress and black pants, flew in aboard a chartered Philippine Airlines plane at the Villamor Air Base in Pasay City.

Mrs. Macapagal-Arroyo was the first Philippine president invited to the summit of the OIC, which is composed of 57 Muslim countries.

Accompanying the President on the flight home were Defense Secretary Eduardo Ermita, Presidential Assistant on the Peace Process Teresita Quintos-Deles, Presidential Spokesman Ignacio Bunye, and Presidential Management Staff (PMA) chief Secretary Silvestre Afable.

Armed Forces chief of staff Gen. Narciso Abaya escorted the President during the rendition of foyer honors.

The welcoming party included First Gentleman Atty. Jose Miguel Arroyo, Malaysian Ambassador to the Philippines Mohammad Taufik Noor, Executive Secretary Alberto Romulo, Transportation and Communications Secretary Leandro Mendoza, Social Welfare and Development Secretary Corazon Juliano-Soliman, Philippine National Police (PNP) chief Director General Hermogenes Ebdane, Philippine Army (PA) commander Lt. Gen. Gregorio Camiling, Philippine Air Force (PAF) chief Lt. Gen. Nestor Santillan, and Philippine Navy (PN) Flag-Officer-in-Command Lt. Gen. Ernesto de Leon.

Members of the independent power producers (IPPS) today pledged to President Gloria Macapagal-Arroyo to help provide electricity to more than 1,600 barangays in the country under the government’s accelerated rural electrification program.

The IPPs made their pledge before the President during the launching of the Partnership for Rural Electrification Program (PREP) held at the Heroes’ Hall in Malacaņang.

The program is a partnership between the government and the private sector, supported by Overseas Development Assistance (ODA), aimed at enhancing total electrification of the country.

Among the IPPs participating in the PREP are the PNOC Energy Development Corporation (PNOC-EDC), California Energy, Korea Electric Power Corporation (KEPCO), Mirant Philippines, Power One Corporation, and the Luzon Hydro Power Company.

The PNOC-EDC pledged to energize 827 barangays in Cotabato, Leyte, Samar, Negros island, Albay and Sorsogon; KEPCO to 200 barangays in Panay, Cebu, Palawan, and Siquijor; California Energy to 101 barangays in Nueva Vizcaya, Aurora and Cagayan provinces; Power One Corporation to 50 barangays in Catanduanes; Luzon Hydro Power Corporation to two barangays in Benguet; while Mirant Philippines pledged to provide electricity to 500 more barangays in the country.

During the program, Energy Secretary Vincent Perez reported to the President that about four out of 10 households in the country are without electricity.

Perez said the government has already energized 95 percent of households in Luzon while 11 percent needs to be energized in the Visayas and 23 percent in Mindanao.

"This translates to about 4,600 barangays or 2.9 million households nationwide," he said.

As early as 1999, he said the Department of Energy (DOE) decided to work together with the Philippine National Oil Company (PNOC), National Power Corporation (NAPOCOR), National Electrification Administration (NEA), other government agencies, the IPPs, and 119 electric cooperatives in the country for the rural electrification program or the "O Ilaw" Project.

In 2001, he said the passage of the Power Reform Law accelerated the rural electrification of the country.

"At that time, the President, in her very first State-of-the-Nation Address (SONA), made a pledge to the nation that everyday four barangays would be energized so that we could reach an 85 percent barangay energization by the end of 12 months," Perez said.

Through the help of the private sector and various international donor partners, he said the government accelerated its barangay electrification program averaging about 1,500 barangays each year.

He said this is more than three times the average accomplishment of each of the last three administrations that averaged only 400 to 600 barangays per year.

As part of the government’s war against poverty, Perez said electricity is needed to create livelihood in the rural barangays, establish power-driven irrigation for higher yield of agricultural harvests, and provide longer time for children to study.

"So by bringing them to the mainstream we could make a difference in their lives," Perez said.

Still, Perez said the government needs P4 billion to electrify the 3,000 remaining barangays in the country hopefully by 2006.

During the program, the government of Netherlands, represented by Ambassador Robert Vornis, also pledged to provide assistance to the government’s electrification program.

The assistance shall be considered in three grant programs, namely, the Economic Cooperation Projects Program, the Development-Related Export Transaction Program, and the Program for Cooperation with Energy Markets.

Fraport chairman William Bender, as early as mid-November last year, threatened an international campaign to embarrass the Philippine government in order to pressure it to go along with the contract it signed with the past Estrada administration.

The filing of an "arbitration case" on September 17, 2003 at the International Centre for Settlement of Investment Disputes (ICSID) is obviously part of that international vilification campaign Bender threatened last year.

In an interview published November 18, 2002 in the international magazine Aviation Week and Space Technology, Bender made the following statement, a thinly veiled blackmail threat: "We are planning initiatives via international institutions to make it crystal clear that the Philippine government is on the way to endangering the country’s international reputation as an investment location." The magazine noted: "Bender promises…to use more than the courts to push Fraport’s case."

In was only in her speech on November 30, 2002 that President Gloria Macapagal-Arroyo upheld the position of the Office of the Solicitor General that the PIATCO contract with government involved corruption and that it violated the laws of the land.

The President’s decisive November 30 position was subsequently affirmed by the two other independent branches of government, first by the Senate Blue Ribbon Committee in December and secondly, by the ultimate interpreter of our laws, the Supreme Court in May this year.

It is the President’s sworn duty to uphold the law and to fight corruption. It was, therefore, a moral issue for her administration to stop such an anomalous contract, whose main onerous features were fashioned in the past administration.

While arbitration cases by definition deal with a third-party interpretation of disputed commercial contracts, the case filed by Fraport almost entirely involves wild, baseless accusations of corruption. These were all based on the absurd argument that three individuals managed to stop a huge $600 million project merely because Fraport refused their demands. Realizing the libelous nature of the accusations, Fraport’s lawyers even cleverly did not identify who were making the corruption allegations.

The filing of the case appears to be a devious maneuver to pressure government to hand over to Fraport more money in the negotiations started a few months ago to compensate them for their legitimate investments. The talks seemed to move forward, as the squabbling factions in PIATCO – Fraport and the Cheng family – agreed to a single negotiator to represent them last September 9. As a pressure tactic, Fraport filed its case with the ICSID on September 17.

The international magazine Aviation Week and Space Technology had noted some of the provisions of the contract that would have made airport use expensive: "To get its payback, Fraport proposed raising the airport’s current departure tax to $20 from $11, which was met with protests. International carriers also will have to pay a long list of fees to PIATCO – for check-in counter rentals, office space, passenger service agents and ground handling workers employed by (a company) which Fraport stashed," (The increase in airport departure tax would have generated P9 billion for PIATCO).

Other anomalous features of the contract involved payment of nearly $2 million (P100 million) for what was disguised as "public relations" cost for government officials, violation of the constitutional ban on foreigners owning than 40% of a utility company, and the establishment of an airport monopoly.

Right now, there are eight cases – ranging from forgery to violation of the Anti-Plunder Law – filed at the Ombudsman, the Supreme Court, and other regular courts to prosecute the individuals involved in the onerous contract.

This Fraport episode has become a case of a powerful, global company bullying our nation and embarrassing it, to cover up for its involvement in a corrupt contract by trampling on the integrity not only of this administration but of the Senate and the Supreme Court – the bottom line being to recover more money out of its commercial quagmire.

President Gloria Macapagal-Arroyo today recognized the contribution of the private sector in the government’s accelerated rural electrification program.

President Gloria Macapagal-Arroyo has pledged to ask US President George W. Bush for a further commitment to US legislation (H.R. 667 and S. 68) that provides for equitable benefits to Philippine-based World War II veterans, according to the American Coalition for Filipino War Veterans (ACFV).

The bills seek to provide 21,000 Filipino WWII veterans living in the country the same benefits received by 8,000 US-based veterans.

This is one of the points President Macapagal-Arroyo and President Bush are expected to take up in their one-on-one session tomorrow at Malacaņang.

During the President’s state visit to the United States in May, President Bush promised to support US legislation increasing benefits for the Filipino war veterans.

In July, the US House of Representatives passed President Bush’s requested legislation, HR 2297 and HR 2357 for full medical care for the US-based Filipino veterans with a $19 million annual budget. The Senate Veteran Affairs Committee passed their version in September. Bush is expected to sign the bills by November 11, Veterans Day.

Two dozen leaders of the National Federation of Filipino American Associations (NaFFAA) and ACFV are in town to welcome Bush and thank President Macapagal-Arroyo for their support for equitable Filipino WWII veterans’ benefits and a stronger mutual partnership.

NaFFAA is chaired by corporate CEO Loida Nicolas-Lewis.