We have been through a number of political storms and this nation has weathered crisis after crisis through a strong leadership and the support of the people.

The political pot will definitely continue to heat up but this will not pose a threat to the country’s political stability, which is firmly founded on a vibrant democracy and a strong market economy.

The train of reforms has already started its journey and can no longer be stopped, not by any political and media grandstanding that the people have already discounted and learned to ignore.

I wish to appeal for understanding from the people that this action will not affect the substantive issues at bar, nor impede justice and the rule of law.

The government had to take this action in order to forestall the further deterioration in our strategic relationship with the United States, which was being rapidly eroded by our non-compliance with the Visiting Forces Agreement.

The Executive Branch is prepared to face legal challenges to this decision and we are confident that its legitimacy and wisdom will be upheld.

This difficult decision was made and taken with only the best of the Philippines in mind.

President Gloria Macapagal-Arroyo said today convicted rapist Lance Cpl. Daniel Smith was transferred to the custody of the US embassy to avert the further erosion of the country’s strategic relations with the US over the non-compliance by the Philippine government of its treaty obligation under the Visiting Forces Agreement (VFA).

Appealing for the Filipino people’s understanding of the action taken by the government on the matter, the President said Smith’s transfer to the custody of US authorities "will not affect the substantive issues at bar, nor impede justice and the rule of law."

Convicted by the Makati City Regional Trial Court (RTC) for raping a 22-year-old Filipino woman and sentenced to life imprisonment, Smith has appealed his conviction.

The Chief Executive also said the Executive Branch is prepared to meet all legal challenges to the government action on the Smith case, and "we are confident that its legitimacy and wisdom will be upheld."

"This difficult decision was made and taken with only the best interest of the Philippines in mind. I therefore ask all Filipinos to stand by it and to stand behind our alliance with the United States to fight terror and poverty," the President added.

Earlier, Solicitor General Antonio Nachura explained that Smith’s transfer to US custody was not a "constitutional violation," but rather a "constitutional compliance."

He said the custody issue is clearly defined in the VFA, which, in turn, is embedded in the 1987 Constitution. Article ll, Section 2 of the 1987 Constitution states that the government "adopts the generally accepted principle of international law as part of the law of the land and adherence to the policy of peace, equality, justice, freedom, cooperation and amity with all nations."

Nachura pointed out that the government cannot just ignore its treaty obligations such as the VFA which are guaranteed by the Constitution.

In a statement, Press Secretary and Presidential Spokesman Ignacio R. Bunye said today that the reforms the government had initiated can no longer be stopped -- not by any political and media grandstanding "that the people have already discounted and learned to ignore."

"This administration is focused on the task of completing our economic and political platforms and translating them into benefits that would be fully enjoyed by the people in terms of more jobs, services and law and order," he said.

Bunye was reacting to opposition claims that 2007 would be more politically turbulent than 2006 because of the administration’s mishandling of the custody case involving Smith.

He said the government has been through a number of political storms while the nation has weathered crisis after crisis because of the strong leadership of the President and the support of the Filipino people.

"The political pot will definitely continue to heat up but this will not pose a threat to the country’s political stability, which is firmly founded on a vibrant democracy and a strong market economy," he asserted.

The President stated in Baguio over the weekend that she sees 2007 as the year when the ordinary Filipino families will enjoy their share of the social payback of her tough policy reforms.

"The best is yet to come," she stressed. "In other words, may it be the year when it will all come together."

Even the business community foresees business conditions to improve especially in the first quarter of 2007.

"All indicators point to bright prospects for 2007," said Philippine Chamber of Commerce and Industry (PCCI) chairman Miguel Varela, who is also the chairman of the Employers Confederation of the Philippines (ECOP).

Varela pointed out that the growth of investments appears to have surpassed targets and the budget deficit is lower than expected.

He also noted that government revenues continue to grow, while the country’s international reserves level "is unprecedented."

"The outlook for our stock market is bullish for next year," he pointed out. "Furthermore, I think the peso will continue to climb up to P48.51 by the New Year due to the increased surge of foreign remittances."

SCIENCE CITY OF MUNOZ, Nueva Ecija —In her first working day of the year, President Gloria Macapagal-Arroyo inaugurated today Phase I of the Casecnan Multipurpose Irrigation and Power Project (CMIPP) that will irrigate almost 27,000 hectares of farmlands here and in Victoria town in neighboring Tarlac province, and benefit 15,000 farmers.

Phase l includes irrigation canals and other structures of the Lateral-A headgate in Barangay Magtanggol here that will irrigate an initial 10,000 hectares of farmlands in this city stretching to Guimba town.

The President arrived here at 10:45 a.m. with First Gentleman Atty. Jose Miguel Arroyo and Presidential Assistant Renato Diaz from Nueva Vizcaya where she also inaugurated the Baguio-Aritao road improvement project.

The Baguio-Aritao road project will greatly reduce the travel time between Baguio City and the famous Banaue Rice Terraces.

Among those who welcomed the President were a big group of local residents and officials led by Nueva Ecija Governor Tomas Joson III, 2nd District Representative Eleuterio Violago, Vice Governor Mariano Cristino Joson and Munoz Mayor Nestor Alvarez.

Also present were Agriculture Secretary Arthur Yap and National Irrigation Administrator Arturo Lomibao.

Speaking atop a hand tractor, the President said the irrigation project would spur economic activities and development in the North Luzon Agribusiness Quadrangle composed of Regions 1, 2, the Cordillera Administrative Region (CAR), and the northern part of Region 3.

"Ito ay isang malaking super region project natin, itong irrigation component ng Casecnan Dam," she said.

The President said the next phase of the project is the construction of an irrigation canal that would open an additional 16,000 hectares of farmlands from Guimba all the way to Victoria, Tarlac.