Slow aid utilization prompts US to cut economic, military aid to RP in 2006

WASHINGTON, D.C. — The United States has cut economic and military aid to the Philippines for 2006 because of Manila’s slow aid utilization.

The Bush administration has asked the US Congress for $96 million in military and economic aid for the Philippines for fiscal year 2006, down from $129 million for this year.

Officials said the drop is due to a "slow drawdown of FY (fiscal year) 2005 aid ending Sept. 30."

The Philippine government’s tight fiscal situation has left it unable to put up counterpart funding — the money a government or beneficiary agency must contribute to be entitled to or to avail itself of donor funds given through aid.

Funds earmarked for the Philippines come from the US government’s international affairs budget request of $33.6 billion for next year.

Testifying before a House subcommittee appropriations hearing last Wednesday, Secretary of State Condoleezza Rice said the budget request proposes enhanced funding for diplomatic and assistance activities in countries with significant Muslim populations, particularly for Muslim outreach through educational and cultural exchanges.

Washington has set economic and support funds (ESF) for the Philippines at $20 million for 2006, a significant drop from $34.7 million this year. The ESF are supposed to help the Arroyo administration spur economic growth and implement peace initiatives in Mindanao.

Sixty percent of the reduced ESF, or $12 million, will go to programs in Mindanao that maximize the economic benefits of a 1996 Peace Agreement with the Moro National Liberation Front (MNLF) and support efforts to reach out to other Muslim separatist groups.

Should the Moro Islamic Liberation Front reach a peace agreement with the Philippine government, the ESF could also be used to provide livelihood and reintegration programs for the MILF returnees, according to a report entitled "FY 2006 Congressional Budget Justification for Foreign Operations."

Under the proposed budget, foreign military financing (FMF) for the Philippines was slashed by 30 percent from $30 million this year to $20 million in 2006. This fund is for Manila to continue modernizing and reforming its armed forces and enhance counter-terrorism activities. This reduced sum represents the bulk of $27.75 million in FMF earmarked for the East Asia and Pacific region.

A portion of the FMF for 2005 and 2006 will be allocated to help the Philippine government undertake systemic reform, retraining and restructuring of its military through the Philippine Defense Reform program.

The report said the Philippine government would bankroll most of the expenses for this program, set to run for at least seven years.

It also said the Philippines would continue to be eligible to receive excess defense articles next year.

The US also slashed other appropriations for the Philippines.

Washington allocated only $21.5 million in 2006 for development assistance programs to support education and microfinance projects in Mindanao, a $6-million drop from $27.5 million in 2005.

The US also slashed child survival and health funds to $24.6 million from $26.8 million in 2005.

Funding for international military education and training, which is supposed to encourage civilian control over the military, was reduced to $2.9 million for 2006 from $3 million this year.

The US, however, increased its international narcotics control and law enforcement funding, which supports the Philippine government’s police reform program, to $523,000 for next year from $326,000 in 2005.   

In Manila, US Embassy counselor for public affairs Ronald Post said the reported reduction in aid for the Philippines under the proposed 2006 budget submitted to the US Congress was based on "very preliminary" figures.

Post said budget deliberations in the US Congress, like those in the Philippines, are a continuing process. "These are just very preliminary figures," he said. "In Washington, they change the budget and those are the changes."

Post stressed this after earlier denying reported cuts in the annual aid package for the Philippines.

The STAR reached him yesterday by telephone while he was in Zamboanga attending the 60th anniversary of the US landing in Mindanao during World War II.

Post insisted they expected no cuts in the existing aid package for the Philippines. He added that if there would be cuts, a "supplemental" budget could restore the aid package to previous levels.

"Roughly, it’s the same (aid) for the Philippines but not as high as the previous years," he said, adding that "it’s a complicated process because we deal with the reality in our budget that we have."

Earlier reports said the European Union might lower its annual official development assistance (ODA) of 20 million euros to the Philippines because of the country’s security problems and lackluster economic performance.