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."