PHILIPPINE DEVELOPMENT:Will the Federal Solution Fit the Puzzle?

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An Overview

April 2008 marked the completion of Sen. Aquilino Pimentel’s draft resolution (Senate Resolution No. 10) calling on Congress to amend the 1987 Constitution to pave the way for the adoption of a federal system of government in lieu of the highly-centralized unitary system of government. Sen. Pimentel’s federalization proposal purportedly aims to realize two goals. First is the immediate development of the entire country by tapping the competitiveness of the component federal states, and second is to quell once and for all the causes of rebellion in the country, specifically in Mindanao.

The draft resolution recommends the establishment of eleven federal states: Northern Luzon, Central Luzon, Bicol and Southern Tagalog in Luzon; the federal states of Minparom (Mindoro-Palawan-Romblon-Marinduque), Eastern Visayas, Central Visayas and Western Visayas in

the Visayas and the federal states Northern Mindanao, Southern Mindanao and Bangsamoro in Mindanao.

In the proposed federalization, component states comprised from the bigger political territories are expected to provide the environment for competitive-ness and sustainability. This is preferred over the creation of states and provinces that in most cases are deemed too small to subsist as a state. The seats of power in the three major branches of government will also be dispersed. In the event of diffusion of power, the executive branch will hold offices in the Federal Administrative Region of Metro Manila, the legislative department in the Federal State of Central Visayas and the judicial department designated in the Federal State of Northern Mindanao.

With regards to the allocation of the resources of the Republic, a formula is provided in the resolution. 30 percent will go to the Federal Government and 70

percent to the component states. Of the 70 percent amassing to the states, 30 percent will go to state governments and 70 percent to the provinces, cities, municipalities, and barangays.

The resolution filed by Sen. Pimentel will necessitate the revision of 14 of the 18 Articles of the 1987 Constitution and an addition of two Articles. Another essential feature of Pimentel’s proposed shift to federal system is the establishment of a Federal Equalization Fund. P100 billion Federal Equalization Fund will be created under the proposed federal system to assist the poor or less developed component states and hence enable them to cope with the economically advanced states. This fund will be administered by a Federal Equalization Council, with each of the 11 federal states represented by one member and the federal government represented by four. The fund will be derived from half of the proceeds of duties and imports,

PHILIPPINE DEVELOPMENT:Will the Federal Solution Fit the Puzzle?

3federal revenues, from taxation on the sale and distribution of soda beverages, tobacco, cigarettes and other tobacco products, beer, wine, alcoholic beverages, intoxicating liquor and one-tenth of the Philippine Charity Sweepstakes Office’s (PCSO) earnings.

Cloud of Doubts

Pimentel’s effort to overhaul the political structure of government of the country has opened a Pandora’s box of questions and allegations, particularly against Pimentel’s motive for filing the proposal. Accusations have been hurled that underlying his proposal is his political ambition to become Senate President and desire to see his son proclaimed as the 12th senator over Miguel Zubiri. Pimentel sharply debunked such claims, saying that the shift to a decentralized federal system of government is now debated upon by lawmakers to prepare the people for an alternative system of government that is more responsive to their needs.

Many also fear that adopting a federal system of government will lead to the disintegration of the Philippines into smaller states. Pimentel, however, consistently maintains that the proposed federal system would instead foster a nationally cohesive and united republic as the 11 component states would be endowed with favorable economic and administrative autonomy. Pimentel further cites the vulnerability of ‘overcentralized’ government powers under a unitary system, such as the Philippines, to fragmentation as in the case of the yet unresolved Mindanao conflict.

Pimentel clarifies that the proposed federal system is not just a political maneuver. What federalization hopes to endeavor is a dramatic change in the apportioning of the nation’s wealth from the central government down to the local government units.

Sen. Pimentel has received support from a handful of his

colleagues in the Senate and even from Speaker Prospero Nograles. Nograles supports Pimentel’s proposal in light of his desire to amend antiquated policies and strategies to fuel the country’s economy. One of the areas being eyed for revision is the land ownership for foreign investors and the mandated 60-40 equity requirement for foreign businesses in the country.

If Pimentel’s proposed federal system pushes through, the country would then be renamed as the Federal Republic of the Philippines. At this juncture, the proposal is dividing the country instead of uniting it. The recent initialing of the Memorandum of Agreement (MOA) on Ancestral Domain between the Government of the Republic of the Philippines (GRP) and the Moro Islamic Liberation Front (MILF) creating the BangsaMoro Juridical Entity (BJE) has foment yet another political and military unrest with matching acoustic warfare, pillage of Christian communities by alleged lost commands of the MILF, and verbal skirmishes from both GRP and MILF.

The GRP panel, apparently with malice aforethought, gave in to the MILF demands. It initialed the MOA last July 27, without telling Congress, the general public or the residents of the affected areas, that it was ceding 712 barangays to the BJE, which would now become about 30 to 35 percent larger than the existing ARMM.

A Ruse?

Another major criticism on Sen. Pimentel’s move towards federal system of government through a charter change is the possibility of a destructive masquerade that will enable GMA to stay in power beyond 2010 via the scheme to shift to the parliamentary system.

It did not come as a surprise when President Arroyo came out openly last August 11 (and back out a few days later) that the

Senator Pimentel consistently maintains that the proposed federal system would instead foster a nationally cohesive and united republic as the 11 component states would be endowed with favorable economic and administrative autonomy.

4country needs charter change in order to switch to the federal form of government to solve the peace and order problem in Mindanao. As Standard Today columnist Antonio C Abaya puts it: “The GRP is being blackmailed, and willingly so, since the end result (federalism through charter change) coincides with the strategic goal of keeping President Arroyo in power beyond 2010. Senator Pimentel protests that his Senate Resolution no. 10 deals only with a switch to federal and does not concern itself with extending anyone’s term or switching to parliamentary. But Pimentel is only the chief carpenter for the Trojan Horse. He has no say whatsoever on who will hide inside it. That is strictly for Gloria, Big Mike and Ronnie to decide.” 1

Federalism and Charter Change Not the Key to Economic Development

The true basis of the country’s failure to accelerate economic growth is not linked with the Philippines’ being a unitary state, but rather the matter of it being rooted in flawed economic policies and strategies.

Empirical evidence also reveals that there is no direct relationship between economic success and being under a federal system. The most economically successful countries in East and Southeast Asia were able to achieve economic prosperity as unitary states with Malaysia being the lone federal union. This illustrates that unitary states are indeed capable of attaining economic success given that correct economic disposition, particularly sound, equitable, transparent, and sustainable policies and strategies are put into good practice; the same way as federal states may be doomed to fail or stagnate when wrong policies and strategies are utilized.

The espousal of a centralized system of government also has pragmatic foundations. One of which is our archipelagic make-up that is inherently exposed to external factors and may be vulnerable to secession and disunity.

There are other considerable disadvantages also from shifting to a federal system from a unitary state. We can-not afford these sizeable costs, in terms of budget in the literal sense and in terms of political considerations in the contextual sense. With regards to financing the maintenance of the union, wouldn’t the legislators rather spend the projected billions worth of expenditures in more productive national plans such as endeavoring food security or ensuring the country’s self-sufficiency?

The existence and proliferation of trapos, corrupt

bureaucrats and political dynasties in almost all parts of the country would only serve to entrench their stranglehold on economic and political power, maintain their little kingdoms, and perpetuate social injustice and underdevelopment of the masses.

Another reason cited to justify the shift to a federal system is the resolution of the causes of rebellion or national armed conflicts. Again, this is further from the truth. The root cause boils down to inequitable distribution of wealth fostered by centuries-old fiefdoms, corruption and warlordism, and the attendant poverty it brings to the larger population. Asset reforms have been wanting ever since. Federalism will not guarantee the deliverance of asset reforms, like education for all and distribution of land to the landless tenants.

Another reason cited to justify the shift to a federal system is the resolution of the causes of rebellion or national armed conflicts. The root cause boils down to inequitable distribution of wealth fostered by centuries-old fiefdoms, corruption and warlordism, and the attendant poverty it brings to the larger population.

5Freeing the Captive Land

The underdevelopment of the country remains to be a mystery and a center of scrutiny to many. Since development is also an issue political economy concerns itself with, an analysis from the political economy point of view must be reckoned with.

To this day, the Philippines continues to be one of the major development puzzles in the world. The country’s known conditions in the past were very favorable for development and that there was little evidence that something would go wrong. Over time, results of endeavors toward development were dismal. It even reached a point of stagnation while its Asian neighbors are slowly but noticeably marking a disparity between their economies and the Philippines’.

One of the factors often left in oblivion is the reality that the nature of the underdevelop-ment of the country is significantly agrarian. Considering that majority of the Filipino population, about 60-70 percent, is still tied up to the agricultural sector, weakness in targeting appropriate programs still persists. There is indeed no surprise that while the proposal of change in the system of government has been yet again revived, dire need for reforms and solutions to issues, e.g. of farmers, that are central to real politics in the Philippines, is again brushed aside. The extension of the Comprehensive Agrarian Reform Program (CARP), for example, was

left hanging after the first regular session of the 14th Congress adjourned last June.

The implication shown through one of the main goals of the proposed federal system is that economic growth under a unitary state is not possible. Sen. Pimentel, being the main proponent of the shift to federal system, may have overlooked the ability of the state to create the basis for meaningful democracy and development through reengineering of property relations especially in the country’s rural areas. This is contrary to the alleged motivation of the proposed federal system that is to spur economic success; the system of government in fact may be out of the question in this case.

Breaking the Permanent Crisis

Tracing the political history of the Philippines, it is inevitable to question how and why every attempt at economic and social change has failed. An attempt to arrive at an explanation explores several factors including the failure to address the problems of the country with proper agrarian reforms, regressive taxation to build the fiscal capability to service even the onerous foreign debts, and blind obedience to some flawed economic and fiscal structural adjustment programs of policy-makers. What our lawmakers should be endeavoring is a strong state; one that is capable of promot-ing equitable and sustained development and disciplining the elite and the private sector. One of the factors often left in oblivion is the reality that the nature of the underdevelopment of the country is

significantly agrarian.

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shift we are truly in dire need of is a paradigm shift. Many of our problems are social concerns that necessitate a collective response for good governance, one that will be a realized effort to address our problems whose breadth and depth have grown to the extent that cannot be resolved by mere individuals or individual states thinking and acting separately.

Rather than rushing to shift to a federal system of governance, our explorations for possible solutions should be directed to available channels to lobby for national government action. Putting into motion an effective local governance as a meaningful option remains to be untapped in mainstream Philippine politics. The true challenge is to unleash the competitiveness of local communities, vis-à-vis increased venues for local government and community activities, hence empowering local governance.

As stated by a group of business leaders, federalism will, by its very nature, add a new level to our huge government, increase the already bloated bureaucracy, increase the currently heavy cost of doing business, increase in taxation (federal, state and city), and enlarge the areas for graft and corruption, not to mention foment conflict in judicial systems. It will divide us further, and worse of all, institutionalize our division, perhaps making impossible our dreams of a nation truly unitedin the words of Daniel Webster “One country, one constitution, one destiny.”

In contrast to Sen. Pimentel’s proposed federal system’s goal to unleash the forces of competitiveness among the component states, the Philippines nevertheless has its own potential source of power and autonomy.

In the Philippine saga towards development, the kind of

Meaningful participation of local communities will increase not only competitiveness but also engender effective accountability and responsiveness. Strengthened accountability ought to be a joint endeavor of both people and government. With the demand comes the responsibility of the government to create the means to strengthen the values of accountability and transparency from public servants in government offices. The shift to a federal form of government will simply be futile if the character and disposition itself of those who hold public trust remain to be inherently tainted and perverted. Bureaucratic personalities and attitudes that perpetuate underdevelopment will continue to proliferate rendering the pursuit of federalization useless.

Again, this is one of the failures of Pimentel’s proposed federal system. Bestowing economic and administrative autonomy to component states can be simply too overwhelming. In the greater pursuit of nation and prosperity building, we ought to recognize accordingly that the solutions may just be closer to our homes. This package includes a number of reforms such overhauling the electoral system in order to elect into office quality leaders; strengthening the rule of law and the predictability of policies, and institutionalizing a bureaucracy that is accountable and transparent.

If there is no national moral transformation and a full recovery of the Filipino’s dignity and integrity, a change in the form of government will not amount to anything.

Endnotes:

1 Antonio C. Abaya, “Thank you, Nene”, Standard Today, August 14, 2008