Doubts surround President Estrada at midterm

Doubts surround President Estrada at midterm

By Ruben Alabastro

MANILA (Reuters): Joseph Estrada, the Philippines' actor
turned president, begins his third year in office on Friday with
questions over his capabilities and skepticism he can steer past
the pitfalls of economic malaise and Muslim insurgency.

These doubts, analysts say, have to be resolved if the
Philippines is to avoid falling economically further behind its
neighbors and prevent political paralysis as it heads into
crucial congressional elections next year.

"The people will have to be convinced that there is leadership
around," University of the Philippines political science
professor Alex Magno told Reuters.

"It's a nebulous question but it's unfortunately very crucial.
It's a sense of whether the nation is being led or not."

Estrada's immediate job as he reaches the halfway stage of his
six-year term is to energize a listless economy, revive popular
confidence in his government and tame a resurgent Islamic
rebellion in the south of his mainly Roman Catholic country.

The former action movie hero, who swept into office on a tidal
wave of votes, promised firm, no-nonsense leadership when he took
office on June 30, 1998, warning criminals, corrupt officials and
influence peddlers: "Don't dare me."

But the promise has dimmed, his popularity has waned and an
economy once billed as one of Asia's most promising has lost its
glitter.

When scandals and charges of cronyism rocked his government,
Estrada launched a cabinet revamp early this year, but continuing
political concerns pushed the peso and the stock market to 18-
month lows.

The unemployment rate surged to 13.9 percent in April -- the
highest in nine years -- and economists said the number of poor
families had risen despite Estrada's campaign pledge to bring
development to rural areas.

Corruption has remained unchecked, costing the government two
billion pesos (US$46 million) a year, a World Bank study says.

"There are already too many whispered deals involving
(presidential) palace habitues and pals, not to mention
relatives ... the slippery road back to credibility is becoming
steeper by the day," political analyst and newspaper publisher
Max Soliven said.

A surge of Islamic militancy in the south, where Abu Sayyaf
fundamentalists have held 20 mostly foreign hostages for over two
months and the military launched a major offensive against the
bigger Moro Islamic Liberation Front (MILF), has deepened
business gloom.

The army assault has driven the MILF out of most of its bases
and roused national fervor, boosting Estrada's sagging
popularity. But the war in a region which accounts for a third of
the country's farm output has inflicted heavy economic costs.

Analysts doubt the country will be able to achieve its
targeted four to five percent gross domestic product growth for
the year.

"The widespread perception that this is a presidency that's
not going anywhere...is a problem," Bruce Gale, regional manager
of Hong Kong-based Political and Economic Risk Consultancy, told
Reuters.

"I think we all hope now that (after) two years, the president
has got sufficient experience in the job and settled in well
enough to be able to move ahead," he said. "Foreigners have got
to be convinced this is a go-ahead country. They're not."

Estrada will face his biggest political test in congressional
elections in May, when a third of the Senate seats and all 200
seats of the House of Representatives -- which his ruling
coalition controls -- will be at stake.

An opposition victory at the polls could dislodge Estrada's
economic reform agenda, reduce him to a lame duck midway in his
term and usher in a period of political paralysis where the
country ultimately is the loser, analysts said.

"We've lost time and we've lost opportunities," Magno said,
adding what the country now needed was a "new Estrada."

"A new Estrada committed to pro-market policies, to fair
application of the rules, (who) makes the correct noises about
cronyism and exceptions to the rules," Magno said.

"He (should) listen to business and bring down the costs of
business which means... creating an environment of predictable
policy, reassuring everybody that what is written as the policy
stays and is not changed after midnight."