MANILA, January 17, 2004 (MANILA TIMES) POLITICAL ECONOMY By Calixto V. Chikiamco - From the way he has been handling his campaign, Fernando Poe Jr. seems to have learned the lessons from the downfall of his friend, former President Estrada.

Unlike Erap, for example, FPJ doesn’t have a lot of “hangers-on,” particularly of the shady kind. He has a lean campaign staff and doesn’t travel with a large retinue of bodyguards and compadres.

His campaign theme is political unity, in marked contrast to Erap with his divisive “Erap para sa mahirap” theme.

FPJ’s wanting to be an un-Erap, despite their friendship and common show-business industry roots, is a good omen because it shows that he doesn’t want to repeat the fate of the befallen President.

Should FPJ win the presidency, here are more lessons from the Erap era for him:

1. Court (but not be subservient to) the country’s financial capitalist class.

To my mind, the gravest error of former President Estrada was his “plundering” of the financial markets, acts that struck at the heart of the country’s financial district and angered the country’s powerful financial capitalist class.

If one traces how Edsa 2 was financed, it wouldn’t be hard to find the trail leading to the country’s moneyed banking families.

The “plundering” was manifested in two major scandals, the takeover of Equitable Bank of PCIBank with the help of SSS and GSIS, and the BW stock manipulation scandal. There were probably many more financial deals, some of them engineered by that “genius,” former congressman Mark Jimenez, but the BW stock manipulation and the PCIBank takeover were probably the most scandalous.

Both plunderous acts showed that the Erap government wasn’t going to be an impartial and prudent regulator of financial markets. On the contrary, these showed that the Erap government was ready to plunder the financial markets, play favorites and sacrifice the health of financial institutions, not to say the giving of power and prominence to a gambling character like Stan-ley Ho.

Should FPJ win, it would be good politics to win over the country’s financial capitalist class. He should get them, wary of his friendship with Estrada, to his side, not with acts of favoritism, but with bold strokes of leadership and statesmanship.

For example, FPJ could show that he’s determined to solve the government fiscal crisis, perhaps with a fuel levy or increase in excise taxes. With this stroke, the risk premium on government and private debt could fall dramatically, benefiting government, the financial capitalist class and major corporate borrowers.

As Robert Rubin, former US President Bill Clinton’s highly regarded Treasury Secretary wrote in his memoirs, psychology plays an important role in financial markets. When he got the Democratic Party President to move toward solving the government fiscal deficit, the markets rewarded the Clinton administration with a huge boost in confidence. That increased level of confidence led to the longest peacetime expansion in US history.

2. Use foreign policy to strengthen, not weaken, the presidency.

Former President Estrada treated foreign policy as if he was still mayor of San Juan, and that helped undermine his presidency.

For example, he expressed full support for former Malaysian prime minister Anwar Ibrahim only because the latter was his friend. (Anwar was a frequent visitor to Manila and had many friends among Filipino politicians). Estrada’s support for Anwar angered the Malaysian government, which had filed charges of sodomy and moral turpitude against the former ally of Prime Minister Mahathir. Estrada wasn’t thinking that a pissed-off Malaysian government could sow trouble here, starting with the Muslim war in Mindanao.

In contrast, President Arroyo has used foreign policy effectively, at least to survive threats to her presidency. Without a domestic constituency, she saw the strategic value on holding on to the United States superpower to fend off political and military threats to her rule.

However, probably because she lacked a domestic political mandate and, negotiating from a position of weakness, she hasn’t been able to exploit the new relationship with the US to the fullest. For example, the Philippines has been receiving a pittance in aid from the US compared with its other ally against terrorism, Pakistan.

Foreign policy has a huge potential to strengthen the presidency and generate benefits to the nation. Properly used, it can be a lever to force economic and political reforms.

The US war against terrorism, China-Taiwan tensions, the rise of India, the breaking out of Japan from its pacifist cocoon, the fall of Iraq, the movement toward bilateral free-trade agreements, the globalization of labor markets, etc.—all are full of threats but are also full of possible opportunities.

Afflicted with hubris, Estrada had a personalistic and narrow view of foreign policy. FPJ should learn from the negative example of Estrada and instead use foreign policy as a strategic instrument for strengthening the presidency.

The measure of a man is not the number of degrees that he can append to his name but his humility and willingness to learn. From the mistakes of Estrada, FPJ can learn a lot.

Reported by: Sol Jose Vanzi

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