Au Auexely toe Piulipges CAleek Ve en \iefonce (et Behe Tours, oO axe A ‘n- Rava maT d He ond Teun | WW eA. 5 Zaloy - Preface: The Philippine Oligarchy at the Turn of the Twenty-First Century Alfred W. McCoy Philippine paradox. How and why has cis island nation, 2 veritable “lost Een” rch Jn nareralresoures, bcome'a very poor country with a vecy wealthy oligarchy?" As revolutions, empires, and regimes have come and gone over the past evo centuries, the Filipino oligarchy has survived from generation to generation, amassing ever ‘greater vealth and power with every twist inthis tangled national history. With each passing decade, the country’s juxtaposition of private wealth and public squalor seems somehow more pronounced, lending added significance to this entrenched elce 28 the key element ina rlentles social stasis, Since the state has proven “ineffecie" in ics economic regulation, one analyst argues that “the actual path of growth emerged fiom the economic and political behaviout ofthe most powerful families, which had been accumulating capital fr several generations. ”* Bur before we sweep through the decades with anecdote and theory to explore the character ofthese elite families called “oligarchs,” let me offer 2 cautionary note about the study ofthe Philippines, particularly when probing a ropic as intimate as faily. The archipelago wears is Wester face like a brightly painted Besta mask that conceals much more chan it reveals. Although the act of analysis Forces us (0 summarize and characzrze, we do so with the caveat that even thebestof Western social science paradigms often capture but a fragment of this complex, elusive Southeast Asian sciry Our task has been complicated by the general reluctnce of Filipino historians, until recently, co accept the nation’ oligarchy at & social extegory ‘worthy of serious analysis. Throughout much of the twentieth century, Filipino historians have dismissed the countrys elites 2s politéally ueasonous of sociallyxii Prerace insignificant? In the absence of detailed hiseosical scholarship, we must borrow the ‘ost appropriate eheory and analysis to show how the oligarchy has grown, over the pte cence opel hartvoodh each epoch edging ope ang ‘0 the composition and complexity ofthis Filipino elie. Although its economic bate «nd socal composition are in constant flux, the country oligarchy has persed for over a century asa cluster of families, knited together bytes of blood and mariage, ‘shat combines politcal power and economic assets to dizec the nation’s destiny.* From the extant literature on the Philippine state, ono key elements seem t0 hhave coneribuced most directly tothe formation of these powerful poliial families: the rise of “rents” a significant share ofthe nation’s economy and the emergence of the independent Republic as a problematic postcolonial. stare* Simply put, tents—resritve state licenses that allowsholders to gain a monopoly or oligopoly ‘over a particular matket—have served to strengshen a few forunatefamlies at che ‘expense of both economic growch and government revenues. As John Sidel put eso succinedy, “Stae formation inthe Philippines ... permitted the survival of private, personal contol over che instruments of coercion and taxation.” Reviewing the past halfcentury of Philippine history from this perspective, ue ofthe term Fentseking-— ‘he active pursuit of political inuence to gain market advantage—seems appropriate for an analysis of elite polities under the Republic (1946-72), erony capital for the regime of President Ferdinand Marcos (1965-86), and the succession of grand ‘anudals during the lat ewo decades of a restored democracy.® Summarizing the historical processes that produced the Philippine state, i appeacs that Spain and America tried, and failed, o forge a strong bureauerstic apparatus above and apart from powerful Filipino elites. After chree centusies of| decentralized rule, inthe late nineteenth cenrury Spain strugeled to impose a rigid bureaucracy on the archipelago, producing a confrontation with rising provincial lites tha erupted in revolution a the century close. By contrast, the United States ‘tied to moderate the imagined excesses of Iberian centralization by introducing clections in the Anglo-American tradition of loca autonomy. In effec, the localized patronage that dominated U.S. politic during the Gilded Age coincided neaty with the aspirations of che Filipino landed elite. Thus, electoral democracy created 4 new class of provincial politicians and a national legislacue that opened state resources for privatization by established and emerging Families, which knitted themselves, ducing the middle decades of the rwentieth censury, into a national oligarchy. ‘The “persistence of & weak Philippine sate” argues Tematio Rivera, “has made it diffcul ... to formulate and implement policies independendy of the powesful Yesed inert groups,” specially the “dominant Fie, clan, and kinship Surveying the nations of Southeast Asia for a poine of comparison, the Philippines combines four aspects in ways thar ochers do not—tivl lite-finlie, ‘weak echeral states a'biybrid ‘capitliim, and &prowacted experienceof elecrions, Alchough the Philippines has had powerful elites for over two centuries, it hat never enjoyed the aristocratic lineage or bureaucratic support found elsewhere Peerace xl Jn Southeast Asit—introducing an clement of confict, even volatility into this ‘continuity, In contrast co Thailand’s strong monarchy or Indonesis bureaucratic lites she Philippine:sare lias remained weal and incapable of-contrllingithe ‘powerful families that plunder is assets rule is provscesand contend for control ‘finatonal polis. Through 2 confluence of historical fores, moreove,duting the past vo centuries the Philippines has developed adhybrid capitalism, moving from Srent-capitalism'st0*reat seeking,” that has encouraged accelerated accumiation by the countrys lites. To these there we need to add another, pechaps determining. {acco a protracted experiencéof formal election’ chat has provided some political legitimacy for elites at the cost of heightening lite rivals, reducing the cyle for development planning, and breaching any insulation chat might allow government to impose some marke discipline upon elite corporations. In eikng consrast othe ‘ordety, inaized politics of Singapore or Malaysia, the Philippines has, forthe beter parcofa centr conducted fe-forall lection, featuring massive expendivures and a death toll sometimes reaching hundreds, thac can provide stunning turns in the nations destiny. With all due caution and qualifeacion, there four factors can help ‘laminate the ree of «distinctive national elite—to strong, to persistent, and so pervasive thatthe term olgercly seems meted. In comparison with South Korea, 2 posteolonial narion that once suffered a plight. the key element in chair diferent developmental pathe seems co be she relative degree of insulation ofthe bureaucracy from particular interes, allowing Filipino entrepreneurs to break rules in ways that Scoul of Tokyo would never pert For two hundred yeats, moreover, the Philippine state, colonial and nacional, has artempted a succession of filed development schemes—the Spanish Real Sociedad and’Tobacco Monopoly, the U.S. regime's Philippine Nasional Bank (PNB) and “Marita Railroad, the Commonwealts National Development Corporation and the Derelopment Bank of the Philippines (DBP), Marcoes National Sugar Trading Association (Nasutra), and President Fidel Ramod’ Philippines 2000, There aze, ‘of coutse, notable exceptions to this dismal uccension that serve eo highlight che significance ofthe toad not taken. During much ofthe 1950s, fr example, Miguel Ceaderno managed the Central Bank through diseiplined policies tha, by fending off clce interests, sparked a decade of double-digie growth in manufacturing ® Is ‘general, however elites have been able o use these programs in uningended ways to offer society minimal ccanomic growth vile deepening their own contol. Surveying the broad sweep of recent Philippine history, che sate has, through the sum ofits successes and flues, shaped the charac of the society and is oligarchy. Historical Origins Although Spanish colonials restricted Flpino participation in govenance, thee colonial regime presided over a period of marked growth inthe mid-nineteenth century chat by deful if nothing els, enriched Flipin landheders and urban smerchanr, Aste export economy expanded fir 1820, the Spnith colony freedxiv Pasrace fits economic leadetship to British and American merchants who worked with Filipino provincial elites, many of them Chinese mesies, in exporting suger and hhemp. During the ninescenth cencury, the emerging Filipino elite, in ies formative landholding phase, practiced a nongenerative, even partitic fotm of capitalism that, ss lan Bobelcargucs, featured 2 refinement of encaction rather than a rationalization ‘of production, Instead of producing profits by means of innovation, these landlord “rent capitalise” increased the ate of exrection from theie tenants, raising rents to 70 percent of the harvest and interes ates for crop loans vo 100 percent? Daring four decades of direct colonial rule, che United States crested a comprehensive electoral system, fostering new clas of professional politicians and ‘opening the state torent seeking by both Manila oligarchs and provincial politicians. Moving from local elections in {901 to legislative in 1907 and presidential in 1935, the U.S, regime built electoral politics from the municipaiy upward, theseby ‘entrenching elite families ar both the regional and national levels To restrain the abuses and autonomy ofthese provincial elites, American officials crested an efficent ecvice and used the Philippine Constabulary asa political police to check abuses ofthe peasantry by these so-called caciguer—a term thete colonials applied to Filipino local elites with an intentional Latin American connotation." Similarly, che colonial executive ried to we the insular audivor to restrain rent secking by the national elite. Although ic was penetrated and manipulated by an oligarchy fiom the outset, the U.S, colonial bureaucracy maintained its influence through the Commonwealeh period of the late 1980s, providing some restraint on rent secking, Withthe founding of the PNB and other goverment-corporitions ‘after 1916; the dominant Nacionaliste Pary-used state cape to-rewarditall ‘with low-cost loans. By 1922, the emergingoligarchs had plundered che PNBrand allied corporations bringing the country o the brink of fiscal eollapse—a remarkable display of both financial acumen and early, predatory cent seeking! ‘Afverindependence in 1946, the new Republic inherited the tak of rest both rene secking by Manila oligarchs and the auronomy of provincial lites. Un the US. colonial governors, who were appointed rather than elected, Philippine presidents had ro win office with the electoral support ofthese same elites, Elected {through the support of rent-seeking politcal brokers, successive presidents were forced to cultivate these powerful politicians with local and national benefices, regulating the esh flow to reward and punish loyal. Brom the 1930sonvacd, argues Pauicio Abinales, Philippine presidecs tad to. compromise “with loca. poltca clans... , watlords, and bosses” by making “sate largeve available in exchanged fidelity co national authori” ‘Of course, the Philippines was by no means alone in allowing rents to play a significant role in its national economy. Since the end of colonial rule, rent secking has played a major role among the capitalist nations of Southeast Asia including Indonesia under Suharto, Malaysia under the ruling UMNO party, and Thailand tunder both the generals and civilian prime ministers such as Thaksin Shinawatra, Farther afield in East Asia, ents have been evident in South Korea and in both BYUMET et a Prerace xv prewar and postwar Japan. The puzzle, of course, is why some societies, such asthe ian tiger economies, have succeeded in experiencing more substantial economic growth chan the Philippines despite equally pervasive rent seeking. The ‘were able to extract concessions from the executive that breached the insulation of the regulatory bureaucracy, removing any restraint on pure rent secking. In the South Korean case, the sate also heavily subsidized ies chaebol indus conglomerates through low-interest loans that were ill-disguised rens, bur simulzanéously forced them to compete in the world masket, Similarly, che Japanese corporations char ‘elied on government-guaranceed loans all competed by exporting industrial goods ico the world market. With sugar exports tothe procected U.S, marke dominating Philippine economy for most of the ewensicth century, 1909 to 1975, key Filipino clites lacked any analogue to such marker discipline. The Philippine Republic thus developed as a polity with both substantial economic resources and limited bburezucraic capacity—a paradoxical paring of wealth and wesknes that opened che seat to aggresive ret seeking by powerfel elites. Crony Capitalism ‘To understindahe rise of theligerchsand the decline of the democrstic intiutions ‘hat roiled this infane Republic, we need to examine gree social forees that shaped _thinproces—persstent-tenesecking, the-weakening of poliial- patronage, and the centraliry-ofintracite conflicts. Under the Philippine Republic and the Mareat dictatorship, the dominant sectors of the Filipino elite engaged in an aggresive rent seeking. Successive Philippine presidents sed the-sat licensing powers ax bargaining chips with national and provincial elites, chereby creating tenes that favored thee dominant fale. By the mid-19S0e, this sytem wa collapsing athe nation’ economic strategy of impore-substitution indurttss (LSI) could no longer provide employment fora large generation of secondary and university graduates. Simultaneously, the syter of political patronage, clued roa thin gre! by soaring population, filed to deliver essential services to most voters: On the eve of martial Jawvin August 1972, overall unemployment in Mila wat 11 percent, with 800,000 recent graduates pusing youth unemployment to 20 peccent." Exemplifyng this selling lecroate, the numberof vores in Cavite Province rose fom just 7,000 in 1912 co 400,000 in 1992." As political confit intensified in 1971-72, miliary ineligence supposedly warned President Marcos that "reacrionaries and radicals sightists and leis" had joined in an assassnasion plot asthe frst rep toward revolucion, “I agnin went through che humilistng exercise of seeking to proptite some of the oligarchs,” Marcos wrote, tying to stall chese powerful reacionaces by “visting thei in theic Jnr, breaking bread with them and temporisng on their demands for epecal favorswi Prevace from the Government, hoping to delay thee fatal decision to... place their resources at che dispaal ofthe rebellion.” In Seprember 1972, Marcos declared martial law and assumed extraordinary powers sufficient for a sustained azackon whac he called che “reactionary nature ofthe oligarchy.” In his martal-rule manifesos, che president condemned these oligarchs asthe "root cause of social carcuption? who blocked all progres by bribing the bureaucracy, buying politicans, and controlling che masses through media. ‘Although Marcos posed as a social reformer fighting the old oligatchy in pursue of equality, his euthorcaian regime rested on a new coalition of avaricious, fentsecking anil. In the fis yeas of his dicarorhip, Marcos baile new national oligarchy of close kin and courtiers, ereaing a fuiiy-based fasion of national and provincial powes, By year four of martial rule, the pattern was so obvious chat the president fle compelled to deny that “we have liquidated an oligarchy coset up anew oligarchy,” claiming that his new rich were worshy industrialists, not the “oligarchs ‘of old, who conuolled media and even the politicians so they could protect their ineres."” In face, Marcos had used his exceptional powers to-punish enemies ‘among the old families, stripping them of asec and-denying them loans or licenses + rebuild, Simultaneously, he invested his entourage with extrsordinary financial ‘opportunities, creating unprecedented private wealth, Enriched by monopoly control over key national industie, powerful courtiers assumed political responsibility for their home regions. In Negros Occidental, Robero-S. Benedicra. became president of:tkeationalsugar-rading monopolyicNasutraandaregionsl.aice presidentcof thesalingrpartythe-Kilusarg Bagong Lipanan (KBL,.or-New Socieqp Movement). Similarly, in Central Luzon, Eduardos*DandinglsCajtigee xegionalviceprsidens ‘of he ruling KBL:party:took control ofthe countryonce-diffurecnconnit industry ‘through’ complex nerwork-of proditcion:tares:and:exporticences,asingsthe ‘venues co acquie'the-blut-ehip San>Miguel Corporation." In 1980, a World Bank team found that eight years of martial rule had led to “the political decline of regional, rural-based leaders” and ereated a “new ruling coalition consisting of the Marcos family and personal associates, high-level eechnoerass, key bureaucrats, end miliary officers and some wealthy businestmen,”? Instead of using his extroedinary powers to promote economic development, Marcos thus expanded the role of rents within the economy. But in the foancial cues of 1981 and 1983 many crony corporations collapsed, leaving only Danding ‘Cojuangco and Juan Ponce Encile viable political leaders by the time of the ctcal 1986 elections —a failing thae doomed Marcos to defeat by an opposition candidate, Corazon. *Cory” Aquino, who enjoyed the support of a resurgent oligarchy. More broadly, by destroying or damaging esablished elite families, many of them proven ‘enuepreneurs, and replacing them with untested cronies, Marcos’ attempt to generate Schumpeterian “waves of creative destruction” became simple destruction — producing negative economic growth, crippling Filipino capitalists, and creating by efuult « new economic elit, the Filipino Chinese. During the ewenty year of Marcot's miscule, the Philippine gross national produer per capes grew imperceptibly ~Auudatay) di Prerace — xvit fom $495 to $540, vine sagnaton, $2,345." 1 polities under the pre-Marcos Republic relied on the “three Ge of guns, ‘scons, and gold, then we ean descrbetetiew forts that dmergbdimhiewatdecades lle AM I98G. as che "four Cx"—eostinuiey,titnais, Chintse) and -elebi The sum of these forces as fostered a merger of the formal and informal sectors, transforming che countrys elites and forming new, unstable political and economic underpinnings for the country’s electoral polited and economic development. a Continuity The element of elite continuity was soon evident in the administration of Marcos rival and successor, Cory Aquino. Amid the high poltia! drama of Marcos’ fight into exile, President Aquino took power in February 1986 with contradictory polities! agendas—a mandate for change and a personal plan for restoring the satus {quo ante Marcos. Mindful ofthe abuses ofthe Marcos era, Aquino’ Constitutional (Commission adopted articles designed ro brea, for al time, the influence of *poiieal nasties” through both universal erm mits and a specific prohibition on relatives “within the fourth evil degree of the President” holding any public ofice”* Despite these aspiracions, in her first year as president Aquino restored both provincial dynasties to politial office and Manila’ oligarchs ro control of lexding corporations. During her presidency, the media, ignoring hee elite background, -made much of her rise ftom housewife to chief executive. Born in 1933 into che powerful Cojuangco family, Corazon Cojuangeo led a secluded life at religious schools until 1954 when she martied Benigno “Ninoy” Aquino, Jz, scion of che rival political family in her home prevince of Tatlac. Showing the significance of this union, President Ramon Magsaysay was principal sponsor at their wedding ‘mass and Salvador “Do” Laurel, she grooms closet friend and the bride’ fucure vice president, was veil sponsor. From her father, Cory inherited both substantia wealth and provincial power. From her husband she acquired the aura of sociation with the nations riost charismatic leader. Through these imily ties, she ‘was slated to nine other oligarchic Families, including the Antonio Cojuangeos, who ‘owned the nation’s telephone monopoly; the Yabuts, who dominazed Makati Citys ‘the Tanjuatcos, who combined an industrial conglomerate with political office; and the Oreas, who fused real esate dealing and local politics in subusban Malabon.”? ‘That a housewife nanied Cory should move into Malseafang Palace was remarkable. That 2 Cojuangeo married to an Aquino should become president was fot. Indeed, in the May 1987 congressional elections tat followed her inauguration ‘many of the president’ relatives won seats with the support ofthe raling politcal party headed by her brother, Jose Cojuangeo, Je From exile, moreover, the president’ chief rival wes her own cousin and blood enemy, Eduardo "Danding” Cojuangeo, Jt, who Financed both coups and opposition political paries in 2 ‘South Kores’ soared from $330 toPecsace ‘Marriage ceremony, October 1954, Pascy Ci, Metopolion Manilo, with President Ramon Magsaysay [sponsor, second fem le, Berigno “Ninoy" Aauino, k: lroam, ‘hitd rom lll, ond Corazon *Cory” Cojuongcoforid, secon om right). determined, desperate bid to oust her from ponen® During the 1987 elections in theis home province of alae, Cons brother defeated Danding’s ster for Congres, and Cory’ sisterinlaw beat Dandling’s brother in the race for provincial governor ™ More broadly, by the end of Aquino’ cerm in 1992 the restored Congress was virtual congeries of elite families, with 32 percent of the representatives children of «tablished politicians and 15 percent “thed- of fourth-genertion politicians.” Paralleling this restoration of clte families, President -Aquinoseensmned “expropriated corporations to. Mantle old oligatchy—many. of themtcattes, classmates, compadns. and close ftiends. To cite the best-known example, the Lopes family, which had suffered exile, expropriation, and imprisonment wader ‘martial lav, Bew back to Manila after Marea’ fll to reclaim its eosporations~—the Manila Electrical. Company. (Meralco), the Manila. Chronicle, and ‘EV. Chanaeh2, In the struggle between a dictator and a single family, the family had survived and the dictator had not, an indication of how deeply this oligachy is embedded in Philippine sociery3* ‘These patterns persisted under her anointed successor. In his July 1992 inaugural address, Pesidene Fidel Ramos promised to end che countrys entrenched rent secking, which privileged che few and meant povery foc the many In October, the World Bank cited poor telecommunications asa key barter to the counts srowth, and « month late Lee Koran Yew quipped dsmisively ducing ¢ visit to ———— aBNE musta Preeace xe Manila, “Ninety-nine percent of Flipnos ate waiting for azléphone and the cher one percent for s dialtone.” These ertcsma were, as ereryone knew, dizeced atthe Philippine Loag Distance Telephone Company (PLDT), prompting the president to make this mismanaged monopoly che prime tngetof his signature deregulation effort. But whet Ramos-broke PLDT’: grip on telecommutications his"new regulations were tigged in such a way thet the cocporetion all emerged withthe lions share ofthe business thanks to ex president Cory Cojuangco Aquino’ personal intercession with Ramos on behalf of hee nephew; Antonio "Tony Boy” Cojuangeo, thepresident of PLDT.” Mare broaly, Ramosé diversification undesiRepublicest FO2GledeAbilppinesTleconnmenicaionscis2095) transformed the Cojuangeo monopoly ino an oligopoly of elite family Gems, including the Gokongweis of Digitl che Cojuangeos of PLDT, the Lopeces of International Communications, the Delgades of sl Communicitions, Lucio Taa of Powerpage, andthe Santiago of Philippine Telegraph & Telephone (P&I). In retrospect, the capacity of Danding Cojuangco to survive President Aquino’ sadminisraion and Tony Boy Cojuangeo's ability to emerge from President Ramos’ deregulation unscathed serve to highlight how this Filipino mix of family and oligarchy often seems moze powerful thaa the state Crime In the post-Mareos era, syndicate crime emerged from society margins to become, for the fs time, a visible force in the countrys polices. In the chace that fllowed Marco fall, vice syndicates foutished, and seni police protected these eriminale in ‘exchange fora share of the take, making Manila a metropolis akin to Shanghai in the 1980s or Havana in the 1950s, where criminal hoses exercised enormous influence. Jn Luzon large gambling syndicaes cha operate the ileal jutenglorery and were protected by the Constabulary grew to unprecedented size and power. In metropolitan Manila, powerful robbery gangs began to hie banks with military precision, geting vay with millions of pero. Beeveen 1989 and 1998, professional kidnap gangs, sever linked to senior Constabulary officers, lnunched a wave of kidnapping against wealthy Chinese families, Inthis same troubled decade illegal methamphetsmines, called shabu, spread in pandemic proportions throughout Philippine slums. In each of cheseillce feds, the most prominent criminal syndicate or gang was somehow connected tothe fragmented military, either a former civilian defence force militia such asthe Kuratong Balleng or wayward “intligence project.” Filipinos may not pay heavy taxes, bu they eupportjuctng gambling in ways that allow ths illegal lotery extraordinary political inlence. Dusing the countrys only electoral campaigns, jucteng necworks provide critical support for poltieal ‘machines in the form of cath donations, political intelligence, and vocermcbilization, A 1999 survey fousid that 28 percent ofall adult Filipinos bet regularly on jueeng. ‘The legislate hae estimated the annual gros fom Luzon juseng syndicates at neatly «billion U.S. dolar with protection payoffs running to US. $180 milion.xx Paerace 2 TF we add this billion dollar in.illegal-gembling revenue to-ihe five billion. earned ‘hrough ilici drug sales, then by 2000 the Philippine?” vice economy had'emerged a a yast underground industry with evens equal tohalf che govecnmene budget and a corresponding capacity to corrupt both police and politicians. Duting its ft year in power the Aquino administration forged a carefully ‘concealed alliance with th jucteng bosses, swapping political protection for kickbacks in a covrupe bargain that raised che incidence of illegal gambling to unprecedented levels Shaken by a succession of nine coup attempes, the administration used the vie economy a5 a counterweight to the state scenricy apparatus, which was now ‘compromised through coup ploters in its ranks. Through the president's brother, Peping Cojuangco, the palace operated a clandettne fund-nising machine that tapped illegal gaming revenue to nance a civilian countercoup force the anystsious “Yellow Army." During congressional ‘hearings in 1995, Presidenc Aquina’s antigambling enforcer, Potenciano “Chto” Roque, came forward to confess tha he ants pote bagmen made er colectos ors azo’ top rene ue, “With this covert presidential patronage and police protection encouraging idation, regional juceng syndicates replaced more local operators across the main island of Luzon, A 1999 survey by the Philippine National Police (PNP) found ‘high level of syndication with sixty jueteng operators dividing a daily warnover of P84 milion. While each province usally hada single syndicate, afew financiers had a regional reach, notably Luis “Chav” Singvon in Tlocos and, above all, Rodolfo “Bong” Pineda in Central Luzon. “To protect their operations, jueteng syndicates paid an estimated 30 peccent of thee revenue to police and politicians, making the egional botses powerful figures with direc access tothe palace under presidents Joseph Estrada and Glotia Artoyo, respectively, In this impoverished sociey, jueseng had replaced pre-matialaw patty machines by funding a costly electoral patronage system that was otherwise unsustainable.®* A senior police analyse estimated, from data collected in 1999, that syndicate payments co politicians and police had reached an exsbrdinary P9 billion (U.S, $225 milli) annually” By the ime he let office in 2001, President Eserada, using national police ro expropriate profits from the juctng industry, had accumulated «fortune sufficient to elevare him co che ranks of the nation’s oligarchy, a social ascent postponed fora generation by several yess of imprisonment on graft charges. usteating the familil dynamic found even within this criminal milieu, Gloria Macapagal Azroye's politi ise was asisted significantly by her il-conceaed alliance with the country’s leading jueteng operator, Bong Pineds, which sprang from shared roots in the same small town, Lubao, Pampanga. From the rime Aroyo launched her political career with 2 race for the Senate in 1995 through her election to the presidency in 2004, Pineda, according to opposition politicians, used his vast cath resources to bankroll her successful campsigns. So close was this alliance that Arroyo beftended the gambling bosss wife former Lubso mayor Lilia Pineda, and stood Radda) Me dN Prerace ed 25 godmother tothe Pineda’ son. After her inauguration in 2001, President Arroyo sdmiced to this ritual kinship with the country’s tp syndicate boss in an incerview ‘with Aviwcek, but she insisted that it was traditional not politial—in effet trying to mark a corrupt relpolck relationship with an endearing familial shetric.” To this solid nancial support, Aroyo could add name recognition as en ex preident's daughter and oligarchic connections chrough her marsage to Jose Tuason Arroyo. a descendait of the arstocratieTuasons of Mala and the lnided Arroyos ofthe Westin Viayas. Chinese Long apolitical, Menilas Chinese emerged in che post-Marcos era as powerful entreprencurs who had a pressing need to become involved, forthe first time, in Phil Filipino sociery has been the capacity 10 assimilate overseas Chinese, admitcing them filly into the Catholic Church, communities, and corporations. From 1898 to 1975, however, Filipino economic nazionalism blocked the assimilaion of Chinese migrants who had atrived after 1898, denying them citizenship under an exclusionary doctrine of jus sanguinis. This blanker denial was reinforced by sgong-anti-Chinese das, including the-prewar Manila Public Sualls-Ordinance; ‘Cormonvrealth legislation requiring that-Chinese ledgers be kept'in English the 1954 Retil-TraderNatibnalization Acts and cegulations:adopted by the-National ‘Economic Council in 1957-58 giving procty to Filipino firms. In 1975, howeves, President Marcos ordered more liberal nacuralization policy, simultaneously increasing his illicit income nd allowing thousands among the Chinese community then about I percent of the counery’s population, to Knally win formal citizenship and fuller participation inthe sociey®? While the Filipino oligarchs exhauseed themselves in che selfdestrutive infighting of martial law intrigues, the Chinese taipans had quietly focused on business to emerge fiom the Marcos dieraorship as the councey’s most dynamic cenurepeeneuts, Ar the end of Mercors regime in 1986, Chiness-Flipinos alesdy ‘owned 45 percent of the top 120 manufaceuring firms. Many of these Chinese familics were ‘poorly educated immigrant... more predisposed toa family-based ‘ype of busines chan cheit Filipino counterparts” who often mitigated the fanlial influence with foreign equity oF public Listings. In the firesale privatization of ‘government corporttions mismanaged under Marcos, tozling some P43 billion, Chinese conglomerates sequized, among other businesses, Philippine Shipyard and Engineering (Philsco): Oriental Petroleum, the nations largest oil exploration ‘company; and Philippine Aline, the national fag catties. By 1954, Chinese banks held 38 percent of total commercial banking assess, and six top Chinere cntreprencurs, the so-called taipans, controlled divensfied conglomerates led by “flagship firms active in finance and real estate. Far from he “low-profile” rice and commodiy traders of decades past, Manila leading Chinese now controlled some ine politics. Over the past two centuries, one of the defining attributes ofxxii Prerace ‘ety visible corporarions—banks, insurance companies, shopping malls, diailerie, ‘he national airline, telephone neeworks, and the capital’ premier newspaper” Driven by this rapid gronth, six of che leading taipan conglomerates began merging with the established Filipino business lies while simultaneously guarding family control over core operations. As the Gokonguel group expanded beyond is ociginal food-matketng operations into real estate and finance, the patiarch, John Gokongwei, developed what he called a “close relationship” with Eugenio Lapen, Js, leader of one ofthe “old rich” Filipino families, to buy a controlling share in che Philippine Commercial International Bank (PCIB) and form the First Philippine Power Corporation, which built a 215-megawatt generating plane. Yer even == the Gokongwei holdings grew into « diversified conglomerate of thiryesix major corporations by 1994, the family reraied tight control through 2 holding company, JG Summit Holdings, Inc. Although Summic had two Filipino directors and three Filipino senior managers, real control remained with the executire committee of seven close relativee—ranging from John, age sixty-eight, co Lance, age owenty- cight—thereby atvuring that any “noncfumnily member is definitely excluded from, decision making at the Group's headquarter, indeed.” In their centralization of ‘management under family contol, ait shared with othe Philippine ethnic groups such asthe Spanish Filipinos atthe Ayala and Aboitiz corporations, che caipans were ‘ensuring the "transfer of power along ther heredcay lines to solidify their eoncemne family busines in the true seine ute word."® These new Chinese taipans ranged from politically neutral enteepreneuts such as Henry Sy of the Shoemart cert chain to che hypetpolitical Lucio Tan. Alchough Tan was bora in China and is nominally Chinese his business operations seem strikingly reminiscent of the old Filipino oligarchs, His Forcane Tabacco and Tanduay, for ecample, both operate through rent secking and tax avoidance, and he has backed presidental candidates with lavish donations, recsiving lucrative rents in rewurn, In 1966, Tan established his fist major firm, Fortune ‘Tobscco, with the backing of Presidene Marcos and soon won “tax breaks and neat ‘monopoly licenses” ro captare some 70 percent of the country’ cigarete musket, ‘At the height of martial Iw in 1980, the president also awarded Tan a license to open Asia Brewery as a rival to San Miguel bee, allowing this upseare compeny to win 20 percent ofthe market. Hustrating the transfer of asee from declining Spanish families to rising Chinese eipans, Tan purchased the Tenduzy from Manuel “Mand Fortune Tobacco. Indeed, the government filed a msive, billion-dollar tax evasion ‘ase against Tan's tobaceo company, but in 1996 the Supreme Court ruled in his favor, a decision so controversial thas the justices fle compelled to issue a formal Asolal chat they had been bribed. By using hs vat profits from alcohol and eobacco sales, allegedly amplified by systematic tax erasion, in 1992 Tan invested PS billion in Philippine Aidines and six years acer bankrolled Joseph Estrada succesful 1998 presidential campaign, prompring. the new president to cancel compzting flights by rival carcets and press a sti woTan® ‘Tapping into che couneryé il-concealed raclim and rerntment, kidnap tangs preyed on the Philippine Chinese during the 1990s wich a ruthlessness that extracted huge ransoms and then executed some’of che victims, According to the PNB reporced kidnappings nationwide rose from 25 in 1991 to a peak of 179 in 1996 before dipping bacco 129 in 1998. At the height of cis erime wave, Lloyds ‘of London ranked the Philippines asthe world’s fourdh most dangerous kidsap sie, Fortune magazine called ic"the kidnap eapical of Asia." As kidnapping and armed robbery surged, Manila Chinese community was forced to mabilize politically against conrupt police and their criminal allies, marching in mass demonstrations, holding rallies and supporting candidates, With chic visible wealth, presing need for security and newfound political involvement, the Chinese consmtnity emerged 2s major nancies inthe 2004 presdencial elections, backing the candidacy of the former national police chief Panflo “Ping” Lacson, known for his suecess against idoappers. Paradoxically, these foimal baits to assimilation, which remained in place until che late 1970s, had allowed taipans to remain aloof from polities, facilitating their capital formation and economic rise. With legal restraints now removed these violent kidnappings and visible Chinese protests seemed to be manifestations of a slow, painful asimilaion, Inthe nexe generation, we will Hikely witness eaipan incermartiages with Filipino oligarch Funiles and more active Chinese community Involvement ia Philippine plies. ing union to sete on etme favorable Celebrity ‘With the weakening of patronage newodts, nation! sections have become more ein expressions of the popula: will allowing pop clcure icons vo palsy thet Cele neo sucefl campaigns far both the Sens and ce peesideney Jat land, lineage, and erudition wers once credentials for joining the national ec, 0 now a od jump shor ora tegenic personality seams tobe an equ vali ‘tlifcation Sparking this change, new media have made these eclebies @ more onscane public presence In deads pas fm sts and sports penalise feng Sigazes enon 2 the oe erena or cinema: Under Marrs New Soin. howetes the aval of the videocaseve recorder (VCR) and domestic suite tlevsion brought profsonal basketball and Filipino fms into most households ‘mowing, non, an nigh Once « forum for statesman distinguished in lew and politics, the Senate, dled. national, has become 2 clletion of basketball players, television personalities, movie stats, and failed coup ploctets, During the 1990s, two former ‘basketball sears, Freddie Webb and Robert Jaworski, were elected to the Senate solely on pain recogrton inthis honp-raed nation. By 2008, ix among te een. Four senators had won ofce though eebishre a forme fl and elvsionTh Prerace stars (Loren Legacda, Lito Lapid, and Ramon Revills, J) and three for notoriety in thee military service (Gregorio Honasan, Panfilo Laston, and Antonio illans 1V), Sirsilacy, i 1998 Joseph Estrada was the fst, hough probably not the last, movie star elected tothe presidency. Indeed, only three years after his ouster the action sar Fernando "Ronnie Poc, Jt, challenged Gloria Arroyo for the presidency and might wel have won without che systematic fraud that assured her reelection. Bren within the world of Philippine celebrity, family connections have also proved critical. With ltde alent and les taining, Ronnie Poe, born Ronald Allan Poe, adopeed his fathers steen name to become “Fernando Poe, Jt.” and break into films asthe son of a prewar matinee idol. Senator Ramon Revilla, Je, fllowed his father ico the Flipino film industry as an‘action sta and thea went into politics, parlaying this multigenerational name recognition into a Senate scat. Similarly, Senator Lito Lapid’s son Mark enjoyed some success in the film indusiry before ‘winning election asthe governor of Pampanga, a posion his father held before his clevation to che Senate, These ferily connections can also prove a lability. Afar yeats of adulation 25a college and professionel basketball sas, Freddie Webb was tlected to the Senate in 1992 only to have eelebricytuen to notaiety when his son “Hubert was charged ina sensational murdet-rape case, sending his poll nambers #0 rock bottom among the thirty-two Senate candidates in 2000. Ulimarely, che blending of crime and celebrizy in ways seemingly ephemeral yet somehow substantial is slowly changing the country’s political culture and the character ofits ruling elt. Just as the once august Senate has become an odd collection of criminals, media oxlebrites, spores stars, and coup plotters, so che presidential palace has lost its luster, In an earlier generation, the ambitious used ‘celebrity to gain access to the presidential palace, but now some would ue the palace coachieve elebriy: While President Cory Aquino held office with the propriey and privacy that marked the old ite her daughter made the palace a stage on which she shed her identity as Ms. Kristina Bernaderte Cojuangco Aquino and become instad "Kis Aquino’—the star of blood-soaked slasher films, che queen of gossip on daycime TV, and the object of fan-magazine fascination for her succession of steamy affaits With basketball playezs and action stat, replete with sexually transmitted disease, encounter sex, and babies legitimate o illegitimate. Even the aistocratic Lope family has been marked by this mix of crime and celebrity, Instead of a martiage compact within olgachic circles sealed by an exchange of landed aset a bie parents, bad done, in 1999 Manuel "Beavet” Lopez, Jy heir co this long lineage, maied Jacqueline Bjercto, the legitimate daugheer of President Estrada, che star of over a hundred Filipino fllms, and was given a masive mansion thatthe prsidens had purchased with gambling kickbacks and transferred via 2 faudulent tax-evasion scheme. ‘Through the sur of such change, the oligarchy is no longer comprised of austere aristocrats such as Manuel Hlzalde, Se, Oscar Ledesma, of Eugenio Lopes, St, and is instad becoming an eclectic collection of gambling bosses, media stars, smougeles, telecom rent seckers, rel estate wheelerdealers, and Chines taipans. It favuE me dh Pecsact xv is by no means clear whether this changing lite is a manifestation of dynamism akin to, s4y that of India or instability comparable to, say, that of Color Conclusion In conclusion, there can be no conclusion to the ever-changing history of such a dynamic social stratum. Looking back over the past two hundred yeas, the Filipino cle, both provincial dynasties and the national oligarchy has changed constantly in both composition and character, Looking forward twenty yer, it seems likely that this oligarchy wil adape to maintain is sole defining axerbure—the continuity of control over the Philippine economy and sociery. (Over the past half centuiy, this ogarchic system has proved exible, even fluid, ignoring the source of any ilgotren grins and ceadily integrating perveau ‘families within this social elite, Lucio‘Tarumighe be a déclassé Chinese émigré, but ‘he has become the nation leading enteprencur through uneczing politcal instinct, which have allowed him ta maintain an unbroken record of-eorporate expansion sander Aveval adminiseeations, winning key licenses under"Marcos, acquiring the ational atine under Marcos enemy Aquino, surviving 2 mass tse investigation started by:Ramos, and winsing extraordinary executive boons from Estrada. No ‘matter how determined any administration might be to destoy a paticularolinarch, all seem to survive. Danding Cojuangco came home, wealth inact, afer hs cous and blood enemy President Aquino left office: the Lopenes restored much oftheir lose nancial empire after their nemesis Marcos fll from power: sn the Marcos, too, are back fiom exile and‘back in office, many of their plundered billions still somehow under their contra. 1 Byen the mot tawdey ofthese acvistes, cx-president Joseph Estrada, may yet scorer his lost influence, nov that he,is out of prison, and transae his purloined sets into social prestige even shough much of his wealth came from blanc bribery illegal gambling kickbacks, ad stock market fraud that bought the nation's financial markers close to collapse. Asa veweran screen acto, Estrada hes shown an uncanny ability to play contradictory social oles in ways that assured his social ascen, winning the presidency with an angry ant-ligachic, pro-meeashetoic, znd then using that office to marry his daughter into the blue-blooded Lopez clan while plundecing sulicientaxsets ftom his pro-mata (pro-masses) social programs to jin che oligarchy on his own, ‘Therpenitrence-of-oligachicspowen is, moreover, made possible by both sncgacineandipositive czars; that is, not only che active pursuiof:powecby:eite families bue also-the:rlative weakness.of countervailing social forces. Insead-of insulating the state fom oligarch inAuence, the judiciary is often compromised by-coreuption or politica! pressure. Adding tothe oligarchy politcal influence, the traditional role ofthe middle cla as an insulating factor beoween the elce and the smasses has been diminished by a éomplex of socioeconomic frees ‘Confusing charicy with philanchropy, the country’ oligarchy has filed topool Prerace transfer signiicant capital to the public sector in ways that would create educational ‘and caleural institutions accessible ro the middle class. While America Gilded Age industsalss, for example, cleansed their money by meaas of philanthropy, building public libraries and privae universities, the Flipino oligarchs have not developed che habit, producing relatively emall publi insticutions incapable of sustaining a large, smote lively middle cass, Many members ofthe elite publicize thei gesezosty in granting a few scholarships, Teodoro Yangeo in an eadlier ea, Lucio Tan today. But thisisan insignificant share oftheir asses, far from ral philanthropy. Ia recent years, the Chinese taipans have been buying up many of che established private institutions in Manilis downtown univers bee of some forty universities with several hundeed chousand students, Mapua Universi, a leading center of engineering and architectural tudes, is now contalle by the Yachengeos, covwnets of Malayan Insurence Company; University of the Eat (UE), the country’s langest private university with over 60,000 seadents, by Lucio Ten; National Universcy by the Sy farily of the ShoeMar retail empire; Centro Escolar Univesiy by Dr Emilio . Yap, who also owns the Manila Hotel and the Manile Bulletin. For the ime being, the caipans have appointed presidents of Mapuia and UE who were welhrespected professors fom the Univesity ofthe Philippines, the country’ premies insccution, In principle, some kind of developmental synergy between the business sector and the universces might be possible. Whether the tsipane will manage ‘these insticutions to maximize cash fow from thet swelling tudent populations or ‘ansform them into centers of educational excellence and social mobility emains ‘0 be seen. In the pursuit of philanthropy, pzoft eaking might prove had for there ssipans to resis. ‘Other mechanisms for social mobility ae also weak, All societies need to renew their elites by the regular recruitment of ratual leader from te lower class, I the Philipines, with a closed oligarchy and the University ofthe Philippines edmisson captured by the middle cls, the Philippine Miliary Academy (PMA) has been one of the few vehicles for such lower-class reeruiement. Over the past ewo years, the Univessty of the Philipines has imposed a 300 percent inreate in seadent fet that has made i much less accessible to lower-and midadlecass udents, no matcer how promising, Although its cade ae still drawn from the poor and middle clas, the PMA’ graduates, no maces how prominent, donot generally marcy ia the elie, and retired military officers have remained 2 che threshold of power, sil waiting to be invited inside. Farther weakening the middle clas,our-migetion of aklled-workers and educated professionals since the 1960s-has reduced thessocihimasseof his key seratum. Created by Spain in the nineccenth cencury and expanded under U.S. rule in the early ewentieth, members of the Filipino middle ces, largely white-collar ‘workers and civil servants, found ther social position weakened by the politicization of a bloated, illpaid public service afer independence. As real income and socal status fell this sector was confronted with a cruel choice: either slip downward on the cocal sale or emignate. By che late 1990s, some five millon Filipinos, almost 20 RdbdalT mud dh percent of the total labor force, weie working overseas, and the middle-ass presence in Manila was much diminished.” With some 800,000 new "job entrants” every year, the number of overseas workers rose co 74 milion by 2005 and the middle- class presence in Manila continved to fade, removing this catalyse element for social and economic change. ‘With 2 weak mide cai, Philippine politics has become a stagnant balance between an entrenched oligarchy and an impoverished mass whose vores are often Bought cheaply with cash.? In the moze prosperous decade of the 1950s, before the. middle caus began its precipicous decline, these middle forces seeved 38 2 socal engine dtiving successful campaigns for socal reform and good goveenance, In the absence ofa stiong middle class to suppore such reforms, relatively popular presidents—Aquino, Ramos, and Esada—have been “stymied when they pursued policies inimical to local lie inezets."™ Although the potential ofthis class as « force for change made brief reappearance: inthe fared “people power” mobilizations EDSA I and EDSA I which toppled Marcos in 1986 and Estrada in 2001, chis socal strategy has proven to bea problematic, extraconsticuional means of change and is now largely spent, leaving the country mited in policicalscum-soca stalemate ‘withour any clear means of moving forward? In che future, if his out-migration is somehow reversed and the mile clase _secover its social mass, civil society movements may serve as acheck on government cocruption and oligarchic exces. For the time being, however, che country, caught in the grip of this social salemate, will sumble chrough “its perperual sae of ‘varying levels of cis,” mired ina politics marked by deepening oligarchic contol fraudulent elections, aborsive coups, and spreading poverty2* Notes Tam indebeed co Patecio Abinaes for some excallene suggestions after 2 cose reading ofan ‘ule draft, Tam alo grate toa former colleague, Temaro River, for hsinsighel analysis ‘ofthe changing Filipino ec, which informs the conemporary sections of this analysis. Yemes K. Boyce, The Philippine The Political Beonomy of Groweh and Impoverisent ‘nthe Maras Era (London: Maclin, 1993), 1-3. Spacer Keinks, The Economy of the Philippine: Hits, Inquaiti and Economie Resracarng (Londons Rowtedge, 2002), 3. “Teodoro A. Agoncilo, Malolos The Cris of the Republic (Quezon Cry: Univesicy of the Philippines Press, 1960), 664-45; Renato Constantino, The Philippa A Per Revised (Quezon City: Tale Publishing Seevies, 1975), 232. * “Mindal of Sidelscxique of what he cls the “zzong oligacchy, weak sere” ches, hit analysis usesa more uid definion of ligercly as drawing its economic esurces fom dvece Sources noe tied w curl landholdings See John. Siel, Capital, Coercion, and Grime: Boe in he Philippines (Seanfowd: Stanford Universi Pres, 1993), 9-11. Paul D. Hutcherf, Booty Capitan: The Plt of Banking in he Piippine (aca, 1% Comell Universisy Pes, 1998), 45-64; Sidel, Ceptal, Coercion, and Crime, 4-22; Bya-Lowa E. Hedman and John T idl Philpine Pali and Seca inthe Tete Centr, (Londen: Routledge, 2000), 5-6, 16-17, 172-79.