The Philippines Needs An Action Hero, But Estrada May Not Be It

Rumors of coups d'etat never surfaced in Manila when General Fidel V. Ramos was president of the Philippines. But in late August, just two months after Ramos stepped down to make way for successor Joseph Estrada, disaffected army officers were reported to be plotting one. Estrada summoned his top generals to demand their loyalty, and the rumors died down. But the episode underscores the shaky start of a president already viewed as a weak and ineffective leader.

Estrada, a former movie star, took office on June 30, with a landslide election victory and a clear mandate to help the poor. Although the elite distrusted him, voters thought Estrada was another Ronald Reagan, the great communicator who knew how to rally support while delegating the rigors of economic policy to subordinates. But Estrada has stumbled. He has fought publicly with opponents over issues such as moving the burial place of dictator Ferdinand Marcos, made careless statements about the economy, and allowed cronies from the Marcos era to reassume key business posts. Manila is reeling from "the lack of serious leadership," says a regional investment banker. If Estrada cannot assert strong leadership fast, political and economic problems could wipe away the gains of the Ramos era--and another Asian country could succumb to the ravages of regional crisis.

"MATTER OF EMPHASIS." These moves are drawing an avalanche of criticism and wasting the administration's energies just as the Asian crisis is catching up with the Philippines. Far from growing this year, as was expected, the economy contracted at an annual rate of 1.2% in the second quarter. Meanwhile, unemployment has risen to more than 13%, and inflation is nearing double digits. Analysts fear nonperforming loans could reach 20% of bank portfolios.

The situation cries out for leadership. But Estrada's initial moves have spooked investors. In a speech on July 31, he bluntly announced that the government was bankrupt. It's not. But the stock market plunged, now down 36% for the year. Cabinet officials have scrambled to attempt damage control. Finance Secretary Edgardo Espiritu says Estrada's statement was "a matter of emphasis" rather than fact. He adds: "We have not lost our direction. Our feeling is we can restore confidence, and we have solutions to the problems."

They include spending an additional $545 million--bankruptcy speech or no--on rural infrastructure and housing by the end of the year as a way to spur growth. "As you develop more farm-to-market roads and irrigation, you provide job opportunities," Espiritu says. But first the government must find the money. It already has a $1.6 billion budget deficit and depends heavily on foreign handouts. To find new money in the budget, Estrada has proposed cutting the funds that powerful members of Congress use for social "pork barrel" projects back home. While that would save about $1 billion, most analysts deem the plan politically untenable. Estrada also wants to freeze military spending--an unpopular idea with an already disgruntled army.

Estrada would have a better chance of pushing through programs if he could coordinate policy better. But the power vacuum has resulted in squabbling cabinet secretaries jockeying for dominance. There are also concerns that Estrada is out of touch: When the U.S. Navy conducted joint military exercises with the Philippines in early August, Estrada telephoned his defense secretary to ask what the devil was going on. The commander-in-chief, clearly, had not been informed. In his movie days, Estrada usually played a take-charge guy. He needs to also play that role in office.