President Gloria Macapagal Arroyo agreed to an extensive interview with The Advertiser Saturday at The Kahala. Arroyo, and members of her cabinet, met with Advertiser President and Publisher Mike Fisch, Vice President/Editor Mark Platte and Editorial and Opinion Editor Jeanne Mariani-Belding. Arroyo began the interview by reacting to an Advertiser editorial appearing Friday that called on her to answer questions about her government’s possible role in the deaths of political opponents and journalists. The following is expanded transcript of that interview.

President Arroyo: Yesterday, I read your editorial and I think this is a beautiful opportunity to be able to address the issue of human rights head on. It’s not just the concern for the international community, it’s also a deep concern for me and our government. So I’d like to address that right on if I may.

I condemn these killings in the harshest possible terms. There’s a very deep and regrettable stain in our Philippine history, that for many years has fueled the political vendetta killings and we aim to stop it once and for all. That’s why we have an administration bill that compensates human rights victims of martial law and it has been passed on third reading in both houses of Congress. I think you also know that I appointed the independent Melo Commission with full powers to investigate and then cause the prosecution and I told them to follow all leads wherever they may go. During my trip here, I’ve been reading that the first inquiries have been the military and the police and I think that’s the right step and we will let the chips fall where they may.

In my recent visit to Europe before I came here, I also took the opportunity to reach out to our European colleagues and I’m very glad that Finland and Spain have accepted our invitation to recommend and send NGOs (Non-governmental organizations) to the Philippines that can assist us in this effort. And I’m told by Amnesty International that I’m the only head of State to ever reach out to them and I’ve also asked them about their assistance because I’m dead serious about breaking the cycle of the violence and political retribution once and for all.

Q: Terrorism is a problem throughout the world. What steps are you taking to combat Abu Sayyaf and other extremists in your country and is there anything you have learned from the U.S.?

A: First and foremost, the antidote to terrorism is peace. And we are forcefully pushing peace with our Muslim brothers in the Southern Philippines. We have been able to isolate the terrorists from the rebels and I think that’s the one very important step in fighting terrorism. It makes me optimistic to having a peace agreement. But the other upside of this is that the MILF (Moro Islamic Liberation Front) itself has been a partner in helping us isolate and pursue the terrorists. I’m really grateful that the U.S., Japan, OIC (Organization of Islamic conferences), our neighboring countries like Malaysia, Indonesia and Brunei have been very instrumental in supporting the peace process and I’m very grateful to all of them for that. In fact, later today, I will be meeting with PACOM (U.S. Pacific Command) and we will have a briefing on our military and non-military response to terrorism in the Philippines. Our bilateral relationship with the United States is at its strongest since the military bases have left both in terms of military coordination and intelligence sharing and economic support and aid.

Q: On human rights, what is your plan in restoring civility in your country?

A: Well, the Philippines is stable. The people are sick and tired of politics and the only ones who have been pursuing these efforts are my most ardent detractors and they’re egged on by the legal plans of the rebels. They are the only ones who keep pursuing this and wanting to lead our country to turmoil. As for the rest of us, we’re very focused on what is important. And what is important is creating jobs, creating good paying jobs and improving the lives of the people

Q: There has been an outmigration of your workers out of the country to ours, especially to Hawaii. Do you worry about your country losing skilled workers and the effect that the continued export of labor will have on your economy?

A: My dream is that jobs abroad will be a career choice and not a necessity for a hardworking Filipino. That’s the reason why I’m working very hard to create economic opportunity at home. And at the same time, while there are Filipinos in other countries, we also make it part of our job to protect their interests, their rights abroad and make sure that they’re respected abroad. So we are working to create, for instance, the kinds of jobs, good paying jobs, like we’re having now. A lot of young people who would otherwise have left are staying behind because of the rapid increase in the jobs in business process outsourcing. When I first became president in 2001, there were only 2,000 workers in that industry. Today, just five years later, there are 200,000 workers earning very well. Some of them told me when I met with them, “Thank you for developing this industry. Now we don’t have to go abroad.”

Q: You have said in past interviews, poverty feeds terrorism and terrorism feeds poverty, sometimes referring to them as the evil twins, what have you done to relieve poverty, particularly in Mindanao?

A: Well, in Mindanao, especially in the former conflict areas, there is a visible change in the lives of the people. The poorest province used to be Sulu. It was the lair of Abu Sayyaf and that’s where the last Abu Sayyaf are holding out now as the military pursues them. But together with our ODA (official development assistance) partners, and our own budget, now that we have tax reforms, Sulu has graduated from being the poorest province to not even in the bottom ten. We’ve been working with the local stakeholders, the governor of Sulu has a program called “arms-to-farms.” And he is literally sending not tanks but tractors to former conflicts areas. Sulu’s poverty used to be 60% of the population, now it’s less than 45% and it’s alleviating the problem. Two other former conflict areas have also graduated from the bottom ten. These provinces also have recipient of assistance from the ODA government and our partners. That’s why I’m very grateful to the U.S. where they spend a lot of money and of course, there are the original areas where we work on fighting terrorists and fighting poverty as in Basilan. The area is so peaceful and bustling now that the No. 1 hamburger chain in the Philippines has seen fit, and were able, to put an operation there because the peace is good and the market is good.

Q: Why do you favor a charter change for your government that would move to parliamentary style? How do you answer critics that say it will solidify and extend your political power?

A: Why do we prefer charter change? Because in our context in ASEAN (the Association of Southeast Asian Nations) in Asia, Southeast Asia, the presidential system has really been leading to a lot of gridlock in legislation and implementation. This gridlock is not conducive to the rapid response to conditions that we need for the 21st century. We’re the only country in our part of the world that is presidential and the others who have adopted the parliamentary system have been moving quite fast to go to the parliamentary system so we can have a union of executive and legislators rather than the separation which brings about gridlock. The present system has led to political vendetta rather than other democratic means of resolving conflict. The other thing also is we have had two EDSA “People Power” events and it’s not democratic taking out presidents by mass. One of the advantages of parliamentary form of government is that you can have the votes of our country men. It’s not going to prolong my term whether or not it’s approved. My term ends in 2010. My political fortunes are not tied to charter change. It is the future of our country.

Q: In the remaining four years of your term, what are your plans on the economic front?

A: We have to face our economic plans by phase. The first phase we have to undertake is to raise the revenue that we need to finance development. In the past all our development expenditures were financed by borrowing and that is a vicious cycle because then we have to spend more money on debt service. That was the situation last year before tax reforms were made and that was the situation in the years before. We had a 900-million peso budget. We had 700 million pesos of revenue. About 300 million went to debt service, 250 million to salaries, 150 million to the local governments’ share. That's why we have a 200-million-peso deficit. So of course, in a few years, the debts become bigger and that’s the vicious cycle that we have to break once and for all. That’s why we have a difficult tax reform that has cost me a lot in terms of political price I have to pay. But we were able to do the previous tax reform for the first time in a generation. We increased our taxes by about 100 million pesos. We informed the government corporation and that would save another 100 billion pesos but because of the international community, strengthen our peso rate and narrow down our expenses so now we are able to finance infrastructure and social services through our own tax efforts and not through borrowing. My economic managers are optimistic that we can balance the budget by 2008. Now we have to extract infrastructure and social services, create jobs and improve the lives of the people directly. For my infrastructure program. I’ve divided the country into five super regions because politically we have 16 regions but economically, we have five regions. We can only sustain natural advantages so I’ve divided the country into those five super regions so we can allocate our newfound money rationally.

Q: What are the five super regions?

A: No. 1 region where most of the Filipinos from here come is North Luzon. We’ve been putting in a lot of massive investments there. The second region is the area around northern Manila. It is called the resort urban beltway where you have industry, services, expressways and ports, investments like that. Then we have central Philippines where 55 percent foreign tourists go so we’ll put tourist investments there. Then we have Mindanao which is business like the North. Then the fifth super region is a corridor that runs down the left of these four regions from Baguio city in the north through Cebu city in central Philippines through Davao Mindanao that is the cyber corridor where the development and we put infrastructure and human resources investments in.

Q: Can you talk more about what kinds of industries that you’re focusing on?

A: The most direct impact would be the cyber service, the call centers, the animation, the medical transcription, the editing, the software development, the backroom accounting, but then we need the research on agriculture and biotechnology so the science and technology community are giving me a proposed master plan for the Philippines and we will be amending and revising it from 2004 and we will be expanding in this cybertory. Why did I choose the cybertory? Because this is where you have the English-speaking work force and the connectivity. Of course the whole Philippines is English speaking but this is where you have very good speaking graduates. I started with Baguio because in our mountain province, the English is very good. The young people and the people of my generation when they were young were educated by a lot of missionaries, American missionaries, so their English is very good. When we started out we had no good connectivities and we put the connectivity in. And then when the central Philippines grew, we had a good telecommunication infrastructure, it has also a lot of very good universities and a very good investment climate. In the south, there’s good universities and a very welcoming business climate. So the corridor goes through here and it’s a combination of connectivity and human resources development.

Q: What do you see as your greatest challenge over the next four years that is going to possibly hinder you from moving forward: is it inflation, terrorism, poverty or is it political gridlock?

A: The political system. It’s like we have two Philippines. We have the one Philippines where the stock market is up, the peso market is up and investment market is up and investments are coming in. Then you have the other Philippines where the politics is so divisive and destructive that it cuts down the economic development. The biggest challenge is how to reform this type of political system. It’s a poisonous political system. And that’s the reason why I am working on the last reform which is political reform which includes charter change. It also includes incidentally electoral reform so we can automate our elections. We are such an IT country that we need to automate.

Q: Can we talk about a little about your visit here and why you are here and to those who have come here from your country?

A: I’d like to celebrate with them 100 years of Filipino immigration to Hawaii. Which paved the way for 3.5 million Filipinos who are living in the United States today. They also paved the way for the 8 million Filipinos who are working and living all over the world. They call it the great Filipino diaspora and therefore because of that they call the first migration to Hawaii one of the great stories for the global economy. We honor the forefathers, the original immigrants here because they showed courage, optimism and they allowed their descendents to have a better life here in the United States and other places. We are very proud of the Filipinos who have come here from those first fifteen sakadas. You talk about Ben Cayetano, we have a lot of Filipino celebrities right here in Hawaii: Brian Viloria, who speaks Ilocano at home; we have Tia Carrere who is our most famous Filipina in show business, but we are not only proud of these celebrities, we are also proud of the average Filipino in United States and in Hawaii. Because the average Filipino has a higher standard of living, a higher income, a higher education attainment above the U.S. average. We’re very proud of them. And they provide the human link that seals the relationship between the Philippines and the United States.

Q: As an island state, Hawaii faces the same issues regarding fuel and there may some collaborations between our two areas.

A: That’s a very good idea. We’re doing that among ourselves in our region. For instance, in the nation, the Philippines is working together with the regions on an energy-security project which will provide energy security in Mindanao and also in northeastern Indonesia which are our continuous areas. Because we can convert into ethanol and Thailand and the Philippines have a lot of sugar which we can turn into ethanol. Ford Philippines is producing engines that will compatible with ethanol so that’s our collaboration. When I meet with Gov. Lingle later, I will mention that it will be good to have a collaboration with our neighbors in Southeast Asia. For example, if you produce ethanol here, Ford Philippines can provide the cars because Hawaii is very near. In a sense, we can ship out the cars from the Philippines to Hawaii, that would be an acceptable collaboration.

Q: Your relationship going forward has lot of support especially in economic reform. What are you looking forward to with the United States?

A: The relationship that we have now ideally has matured. It’s growing. In fact our relationship is stronger since the U.S. bases left. And it’s both security and economic and it’s also based on our strong common values that we share: democracy, human rights. We’re the strongest ally in the world against terror. And we’re allies in strengthening the Philippine economy to liberate the poor. It’s a good relationship that we have and we hope it continues to be as strong and as mature as it is today.

Q: About your trip, you’ve been traveling for a while. You can just came from Europe and Cuba. Can you give us insight on what’s happening there?

A: We were in Cuba because we attended the Non-Aligned Movement summit. It’s an opportunity for us to promote peace and human rights to the 118 members of the Non-Aligned Movement. Before Cuba, I was in the United Kingdom and aside from seeing Amnesty International, I also sought out the business community because I addressed a seminar on business outsourcing which is a big source of good paying jobs for us. Prior to that, my trips to Belgium and Helsinki were to promote relationships with other European countries. We talked about energy independence, one of the subjects in the Asia-European meetings that I keynoted. That is because we are aware of the danger that the energy situation could present to prevent us from growth and progress. In the Philippines, we are watching the prices very closely to prevent price gouging which will hurt the poor most. We are also using this as an opportunity to declare our own independence from imported oil. We want to be like Brazil, we want to be self-sufficient in biofuels. This is the future of commerce, the future of the world and the future of the Philippines. It’s also the future of our self-sufficiency in windpower, in geothermal power and solar power. We are spending a lot of resources in looking for alternative sources of energy. At the same time I’ve also been able to secure a steady supply of fuel for our people through our diplomatic relationships with our friendly oil-producing countries.

Q: I also know that there a number of non-governmental organizations, charitable groups and others who have close ties to the Philippines, like Rotary and various churches. What kinds of things can those organizations do to help you deal with poverty and other concerns?

Well we need help with health insurance. Right now, not all of the poor can afford health insurance. The law says the local government should pay for their health insurance if they cannot afford it but the local governments. Where the poor are, the local governments are also poor and cannot afford it. Only the big cities and the prosperous provinces can afford it. So the national government has been subsidizing and advancing premiums for the poorest of the poor. That’s another area where we need help in the premiums of health insurance.

The other one is half-price medicines. By half-price, I mean half of the prices in 2010 of the medicines most commonly bought by the poor because I inherited a period of high medicine prices. But they seem to be going down now. But we need a billion pesos worth of investments to have an impact on helping the poor.

Another one our transforming our primary hospitals all over the provinces to secondary hospitals, meaning hospitals where you can perform surgery and deliver anesthesia. We have many hospitals all over the country that don’t have this yet. They are only primary hospitals. If you can transform them, then it’ll give health services directly to the poor. At the same time, these hospitals will also be qualified to receive nursing trainees. Our nurses are in great demand all over the world. We can’t stop them because it is a free enterprise system. We keep turning out more nurses. We have enough investors in new nursing schools, but precisely why our nurses are in great demand is because they have low hours of practical before they graduate. So, these new nursing schools have to have hospitals to train the nursing students in. If we graduate massively our primary hospitals to secondary hospitals, they can accept nursing trainees which can also increases their personnel. So we need to support these hospitals by giving them the capacity to perform major surgeries with anesthesia and delivery would be another practical way to help alleviate poverty here directly.

We have education not only in the grade-schools, we have also mismatch, we have a very educated labor force and that’s the reason why we’re very strong in PTO. We have only some mismatch industrially. We have management graduates among those who are coming from families who don’t own a business and no company will hire a management graduate to be a manager. The great Filipino dream is a college diploma. So we encourage them to go to vocational and technical schools first because that will land them a job and then from there, from their earnings, when they have a job because they did six months of vocational school, then they can go to the college course if that’s their dream. So we are encouraging them by giving out scholarships for vocational training and that will help stop the mismatch between supply and demand.

We have a great deal of urban poor. And Habitat for Humanity has been helping us. We have been having a massive relocations of former settlers in Manila, some 20,000-30,000, the most massive relocation we have ever seen in the history of the Philippines. The more we have NGOs helping build the locals’ houses, the sooner we can encourage them to move out in the nearby provinces where life is much better in terms of health, environment and so on. And this ties in with our infrastructure program because we have all of these beautiful places in the near north as beautiful and as in the near south. So we can relocate these squatters to these areas. NGOs have been helping us build the houses.

Q: America is moving a lot more of their military assets from the Pacific Region over the next decade as part of the focus on what’s happening in that region. Will you see a change in the relationship with Pacific Command? Do you foresee basing again in the Philippines?

A: The constitution today does not allow basing. However, the Supreme Court ruled in our favor, in my administration’s favor and we are allowed to have joint exercises with the favor of this constitution, even if the participation of the U.S. is very big and very long. On top of that, in my 2001 or 2002 trip to Hawaii, we also signed with PACOM, the logistical support agreement whereby you can keep equipment in the Philippines. So it’s short of a basing arrangement but it’s convenient. The combination of the Supreme Court ruling on joint exercises and logistics support agreement, I think will enhance our partnership against terrorism and other threats in the Pacific.
terrorism and other threats in the Pacific.

Q: Let’s talk about post-tsunami relief effort of the USS Mercy. Has that made a difference?

A: I’m very grateful for USS Mercy. They were so welcome, and they made have such a big difference in the lives of the people.

Q: Do you think that effort and support should be expanded in any way?

A: Yes, definitely because the population in those areas welcome the U.S. soldiers and doctors and the more difficult it becomes for terrorist to regroup because they have a very good experience with the U.S. who is working together with the Philippine government and they can see that we care because the services are very direct.

Q: People in this country are divided over the war in Iraq. Do you think the U.S. is doing the right thing in Iraq?

A: Let’s put it this way: we stand shoulder-to-shoulder with the U.S. in the war against terrorism. Like many friends and allies of the U.S., we are agonizing about the situation in Iraq. We support all the moves that will eventually lead to the stabilization of Iraq so that the Iraqi people will experience the full benefits of freedom in a democratic society. Now it’s not only the invasion of Iraq , we also have common goals and joint efforts to have peace and stability in other places like Korean peninsula and Burma. We also came up a declaration on Myanmar, on Burma, just as we would engage in Burma, we will accelerate the process of democratic Asia including the release of political prisoners.

Q: Are you expecting another attempt at impeachment? It’s been a year since the last attempt. Is that something you are preparing for?

A: All I can say, the people are sick and tired of politics and no impeachment will succeed because it is fueled by my most ardent adversaries and the political fronts of the rebels. People want to move on and focus on their lives and that’s what we’re also focused on.

Q: Your term ends in 2010? What would you like your legacy to be?

A: I would like to be remembered for the fact that I did the most fundamental economic reforms. I want my country to be self-sufficient in development. That I would have done the fundamental economic reforms within the charter. I would have done the security reforms that would have broken the back of the rebellion and I would have done what was needed for such a long time to create jobs and improve lives and that is develop the super region that I was talking about. That’s what I’m concentrating on.