Philippines ripe for another meltdown, a coup or a dose of balut
WITH APOLOGIES TO Spanish director Pedro Almodovar, it has to be said that the Philippines is one of those few countries eternally on the verge of a nervous breakdown. It is not exactly a banana republic, but its political institutions are notorious for chronic peeling, while its social and economic woes come in bunches.
And now, on the closing day of the week, the Philippines seems ripe for another economic meltdown or a civilian-backed military coup, triggered by charges of corruption and electoral fraud against President Gloria Macapagal-Arroyo or people around her.
Just as the country's stock market benchmark seemed to be heading back to levels not seen since mid-1999, the president's son and brother-in-law were accused of receiving protection money from operators of jueteng, an illegal numbers game.
The two have denied the charges and are threatening to sue, but, as expected, the Philippine Composite Index swooned, recording its biggest three-day losing streak in more than three years.
The peso followed suit, posting its biggest fall since August 2003 and becoming the worst-performing among 15 Asia-Pacific currencies monitored by Bloomberg. And yields on the country's bonds, which have been falling about 26 basis points in previous weeks as the government's fiscal position seemed to be improving, surged 20 basis points to 9.35 per cent.
To Mrs Arroyo, the sudden rise in yields was probably excessively grating, as Fitch Ratings had just raised its rating outlook on the nation's debt from negative to stable - the first such upgrade in more than three years.
The recent political turmoil spoiled the party for many, as analysts had expected a real credit-rating upgrade imminently in the wake of reports that the government might balance its budget by 2008 - two years earlier than the government's original target of 2010, when Mrs Arroyo's term ends.
In fact, budget officials said the Philippines should post a budget surplus in 2008 - its first in 11 years - thanks to revenue from new tax measures pushed through by the Arroyo administration.
But the charges against the president and her family were better copy, and Manila's media - prone to the same single-issue tendencies as their emerging-market counterparts - went on a feeding frenzy, spurred by speculation and conspiracy theories.
After all, allegations of graft brought down Mrs Arroyo's predecessor, Joseph Estrada, in January 2001. Corruption was one of the major diseases that led to the downfall of Ferdinand Marcos in 1986.
These 'bloodless revolts' were largely backed by the military, some of whose members still think they are the arbiters of power in the country - a mentality that has spawned at least a dozen attempted coups since 1986.
Deluded or delusional, the anti-government agitations of these (mostly retired) military messiahs rock the markets, scare investors away and often times lead to pathetic mini-revolts by soldiers who invariably do not even know what they are getting into.
Some Filipino intellectuals believe the country needs another strongman to keep the military and pesky politicians in check and guide and shape the economy by fiat. Some say a philosopher-king a la Machiavelli's prince would suit the Filipinos' ethnic tendencies. Marcos thought of himself that way, and look where that took him and the country.
Still, others are convinced that a horse-trading technocrat is needed, someone with the economic vision and moral stamina to manage the nation's bewildering and often contradictory political and social interests.
In this sense, Mrs Arroyo is a quintessential technocrat - a product of Georgetown University in Washington (where she attended the same classes as former US president Bill Clinton) with a doctorate in economics.
Unfortunately, as seen in the muddled and contentious passage of her tax laws, Mrs Arroyo lacks the requisite political power-broking skills.
Perhaps, the Philippines can ride on multilateralism. As its economy is increasingly and ineluctably absorbed into the global system, it can gain from international regulations and treaties that compel it to open its markets to the inflow and outflow of capital, goods, services and labour. Such international obligations can help bypass the political paralysis that afflicts its institutions.
For instance, the country has benefited a lot in joining the Paris-based Financial Action Task Force (FATF), the anti-money laundering watchdog of the Organisation for Economic Co-operation and Development.
Thanks to the implacable reluctance of the FATF to open its doors to the Philippines unless it cleaned up its act, the country now has a banking system that can detect and expose money laundering, once the favourite sport of Filipino politicians and kingmakers.
As most foreign investors know, the Philippines is not for the faint-hearted. Amid all the scandals, allegations of corruption and coup attempts, Philippine businessmen and entrepreneurs will simply plod on.
In the Philippines, political and economic turbulence is a semi-permanent state. It is like balut, that germinating duck's egg believed by all Filipino men to be an aphrodisiac. Anybody who can swallow balut can have the golden egg.
