". . . So let the speculators beware," she concluded.
When a President opens her mouth like that, stock markets tumble, the peso spins wildly, bankers dive into their bomb-shelters, foreign exchange or valuta flees. Obviously, President GMA had not checked with her economic and financial managers: Finance Secretary Jose Isidro "Lito" Camacho and Economic Planning Secretary Dante Canlas had to rush around reassuring everybody that currency controls were unlikely to happen. Governor Rafael Buenaventura of the Bangko Sentral ng Pilipinas (BSP) was peppered with the same query everywhere he went and he almost developed lockjaw intoning the nervous mantra: "No exchange controls! No exchange controls!" (He’ll be flying soon to a global economic and banking conference in Aspen, Colorado, and has his work cut out for him, having to soothe the American and other foreign participants and pour oil on troubled waters.)
What Buenaventura did, which was effective, was impose fines on nine banks, but he still softened the blow on them by meting out the fines on the basis of documentary and prudential regulations, not specifically for speculating on the peso. (How polite can you get?) In any event, the BSP is authorized to impose only measly fines, not even constituting a painful slap on the wrist. What’s a few thousand pesos in fines when banks which speculate on the peso can earn millions in the wink of an eye? In any event, the peso rebounded, the banks "penalized" made an effort to sound properly contrite. The stock market rallied, for the moment at least. The President, for her part, stopped talking.
I think, in her enthusiasm for Malaysia’s Prime Minister Mahathir as a "model" for her own presidency, she forgot a number of basic points. First, Mahathir is empowered (under an Internal Security Ordinance inherited from the colonial British) to rule with an iron hand and arrest anybody, from journalists and top officials to justices of the High Court. Secondly, Malaysia has a population of only 23 million thinly dispersed over a wide area. Malaysia has large sweeps of agricultural land, aside from revenues from oil and petroleum gas, mainly from Sabah (our North Borneo). When Mahathir shut the gates in 1998 and pegged the ringgit at R3.8 to one dollar, he knew he could last for a while on the stockpiled resources of Fortress Malaysia. He also knew the bankers and business community would not balk, because he had all of them by the short and curlies (remember ISO?).
Furthermore, Mahathir’s main target was Singapore. He felt that he somehow had to regain control of the ringgit which was being spun out of whack by the dictatorship of Singapore’s powerful banks which had accumulated through black market speculation (it’s said) even more ringgits than the Bank Negara, Malaysia’s central bank. Suddenly, the cheeky Singapore banks found themselves saddled with tons of devalued and "controlled" ringgits which they couldn’t repatriate to Kuala Lumpur except at great loss. Of course, Malaysia suffered, but Mahathir had made his point.
La Gloria, for her part, has missed the point.
The Asia Wall Street Journal, in its Saturday-Sunday lead editorial – captioned "A DANGEROUS TEMPTATION: President Arroyo waffles on capital controls" – called the very idea "shocking."
". . . After all," the Journal’s editors pointed out, President Arroyo "holds a doctorate in economics and has taken an interest in economic policy matters over the years." It declared that "putting up a wall around the Philippine economy to prevent the free flow of capital" would be wrong.
"Actually," the AWSJ grumbled, "imposing capital controls is bad enough. But dropping hints you might do so is completely pointless, since it only creates a stampede for the exits."
The Journal, which in normal times has been kind to GMA while mercilessly bashing former President Estrada, concluded on a dour note: "Perhaps Ms. Arroyo should clarify if she is interested in attracting foreign investment to the Philippines or not. She has been in office seven months now, but still there has been precious little movement on economic reforms. While the Philippine economy is in bad shape, it still could get much worse. Scaring away foreign investment and hamstringing Filipinos with capital controls is one sure way to make that happen."
Incidentally, GMA might do well to take a stroll down Memory Lane. Admittedly, it can be irritating to have people say too often that Papa did this and Papa wouldn’t have done that. Therefore, I hope the President will forgive me when I recall that it was her father, President Diosdado Macapagal, who had discarded exchange controls on January 21, 1962, when he signed Central Bank Circular No. 133.
With that signature, Cong Dadong junked the exchange controls which had spawned favoritism and rampant blackmarket speculation, freeing the peso to seek its true level of value.
She remarked she was planning to set up a consulate or even an embassy in Sabah (remember, we already have these in Kuala Lumpur). Doesn’t she realize the implication of such a move? Sure, there are half a million Filipinos (mostly Moros from the south) living and working in Sabah, quite a number of them – I might add – holding down important jobs. True enough, a Philippine "consulate" in Kota Kinabalu would be helpful and convenient for them. But if GMA puts one there it would be tantamount to officially recognizing that Sabah or North Borneo belongs to Malaysia. It would send the message that Sabah was no longer being claimed by the Philippines as belonging to the Sultanate of Sulu.
Ironically, it was President Arroyo’s father, President Macapagal, who announced the Philippines’ claim to Sabah on June 22, 1962, through the Department of Foreign Affairs. He dispatched a communication to the United Kingdom asserting Philippine sovereignty over Sabah (an island, by the way, bigger than Mindanao) and protesting its "planned" inclusion in the fledgling Federation of Malaysia.
Our then Vice President and Foreign Affairs Secretary Emmanuel "Manny" Pelaez was barely halfway across the Atlantic, enroute to London to present the documents backing up our claim and protesting Sabah’s incorporation in the Malaysian federation, when Washington, DC undercut us by rushing to "recognize" the new Federation, Sabah and all. When we were deserted by even our American "friends" (we forgot it’s usually their "cousins", the British, who are first in US policy), Macapagal’s brave crusade lost steam.
However, it was never abandoned even during the chummy-chummy period of kiss-kiss between former President Fidel V. Ramos and Mahathir and the EAGA sunshine era.
The late Dictator Ferdinand Marcos had also stoutly pursued that claim but his government bungled disastrously with the Jabidah "special forces" massacre of Muslim trainees on Corregidor, which sent a wave of revulsion throughout the Islamic world.
As for Dr. Mahathir, whatever his totalitarian ways, I’ve always been in awe of his adroitness as a politician. He has, over the years, cynically but effectively "used" the large number of Filipinos who’ve migrated to Sabah, most of them "illegally." For instance, a powerful Islamic opposition party used to dominate the government of Sabah in Kota Kinabalu, resisting all the efforts of Mahathir and his coalition to oust it. One day, Mahathir had the bright idea of issuing "blue cards" to the hundreds of thousands of Filipinos there on condition that they "voted" for his party. The opposition in Sabah was severely routed in that election. Mahathir has effectively controlled things in Sabah ever since.
Madam President: Resist his charms! Dr. M. has the capability to charm the whiskers off anybody (except Anwar and Erap, and, let’s not forget, George Soros). I say this in admiration, but with some trepidation.
Somehow, the searing attacks by the ISAFP Chief, Col. Victor Corpus (Intelligence Service Armed Forces of the Philippines), General Wycoco, Justice Secretary Hernando Perez et al. call to mind the "It Appears" speech of then Justice Secretary Salvador Mariño linking several prominent political figures to the controversial American businessman Harry S. Stonehill, who was by then in jail – and later deported. Mariño’s speech, provoked a furious response from Vice President Pelaez (who was one of those mentioned in "It Appears"). Pelaez quit the Macapagal Administration, crying out angrily that Mariño had "borrowed my honor" and besmirched it.
Mariño never proved the allegations which had tarred so many reputations, but his strange speech was perceived by most observers of the day as a "diversionary" tactic to take the heat off Macapagal himself since the President was widely rumored (known?) to have received substantial contributions and help from Stonehill for his presidential campaign, and in getting his late brother-in-law, the very popular Senator later Ambassador Rogelio "Roger" de la Rosa, to withdraw from the presidential race.
Mariño is by now forgotten, and so are his "It Appears" charges and accusations.
I trust the GMA administration will have more success in "getting" Lacson. But radio-TV statements, press releases, and a media barrage won’t accomplish that. The nitty-gritty is to document and prove all of Lacson’s sins.