The National Security Council, the Secretary of the Treasury, Mr.
Walter Williams for the Secretary of
Commerce, and the Director, Bureau of the Budget, at the 368th
Council meeting on June 3, 1958, adopted the draft statement of
policy on the subject contained in NSC 5813, subject to the amendments set forth in NSC Action No. 1922–b.
The President has this date approved the statement of policy in
NSC 5813, as amended and adopted
by the Council and enclosed herewith as NSC 5813/1; directs its implementation by all
appropriate Executive departments and agencies of the U.S.
Government; and designates the Operations Coordinating Board as the
coordinating agency.
The Financial Appendix, an Economic Aid Annex (Annex A), and a
Military Annex (Annex B) are also enclosed for the information of
the Council.2
The enclosed statement of policy, as adopted and approved, supersedes
NSC 5413/1.
Attachment
STATEMENT OF U.S. POLICY TOWARD THE PHILIPPINES
General Considerations
Importance of the
Philippines
1. The Republic of the Philippines is important to the United
States and the Free World.
- a.
- Politically, the special relationship and close alliance
between the United States and the Philippines serve to
illustrate to other Asians that a young Asian state can
benefit directly from association with the United States and
at the same time adhere to its ideals of
self-determination.
- b.
- Strategically, the Philippines forms a principal link in
the Far East defense perimeter, of special value at this
time because of its geographic relationship to Communist
China, Japan, Formosa, Indonesia, and the countries of the
Southeast Asian mainland.
- c.
- Economically, the Philippines is one of the most important
areas of U.S. commercial activity in Asia, both as a market
and as a field for investment.
Internal Political
Situation
2.
Garcia’s Administration. The
preponderance of political power in the Philippines rests with
the Nacionalista Party, which, in the national elections of
November 1957, retained control of the Congress and the
Presidency. President Carlos P.
Garcia is a shrewd old-guard Nacionalista
politician whose opportunistic approach to the problems of
government, and tendency to surround himself with weak men
dependent upon him politically, have, in the short period of his
administration, already resulted in a serious decline in
effective leadership and a sharp rise in government corruption.
Judged on his record as President since March, 1957, most of
Garcia’s energy and
attention are apparently focussed on consolidating his political
power by patronage, political payoffs, and playing off one
faction against another. Moreover, Garcia has no wide political base from which he
can derive support for an effective program conflicting with the
interests of major Philippine groups.
[Page 860]
3. The Opposition. Potentially, the most
important political opposition group is made up of the
Magsaysay-oriented younger politicians. However, this group is
now divided between the Progressive Party (composed of many of
Magsaysay’s closest associates) and elements of the Liberal
Party (including Vice President Diosdado Macapagal). The political future of
these younger leaders will depend in a large measure upon
whether they can unite to form a single effective political
organization which can demonstrate to the people that it will
carry out a program in the spirit of Magsaysay’s honest and
energetic administration. In the 1959 senatorial and 1961
presidential elections, such a unified party could have
widespread popular appeal if the corruption and ineffectiveness
of the Garcia
administration continue. Moreover, the creation of a strong
opposition from these groups might exert a constructive
influence on Garcia.
4.
Garcia and the United States. From the
standpoint of U.S. policy, the Garcia regime already represents a sharp
retrogression from the Magsaysay period, and its prospects for
improved performance in the future are not reassuring. The
problem of U.S.-Philippine relations during the Garcia administration is
complicated by:
- a.
-
Garcia’s
apparent belief that the United States must come to his
rescue financially.4
- b.
- The possibility that Garcia, in an effort to obtain U.S.
assistance in the amounts desired by him, might adopt
more nationalistic attitudes or reopen the matter of
U.S. base rights.
- c.
- The fact that Maysaysay’s program made a lasting
impact on the hopes and aspirations of the people for a
better life, with the result that they may quickly
become restive unless their lot is improved.
It is not possible at this time to forecast with certainty
Garcia’s reactions to
the pressures on his administration.
5. Nationalism. There is a genuine and
growing nationalist sentiment in the Philippines which is thus
far not identified with anti-Americanism. However, a small but
important group has attempted to exploit resentment of
Philippine political and economic dependence upon the United
States by emotional and chauvinist appeals. The political focal
point of ultra-nationalist sentiment is currently the
Nationalist-Citizens Party, founded by the
chauvinist-nationalist Senator Recto and the devoutly Catholic
but anti-clerical Senator Tanada.5 This Party is supported by
an influential and vocal segment of the Filipino elite, speaking
through the Daily Manila Chronicle. Although [Page 861] the Recto group has now officially
left the ruling Nacionalista Party, its influence upon the
Party’s old guard and within the Garcia Administration remains strong. Unless
successful settlement of outstanding issues between the two
countries is effected, Philippine nationalism will take on an
increasing anti-American coloration. In any event, within the
framework of the over-all alliance with the United States, and a
generally pro-American attitude, there will be increased
pressure for a more independent foreign policy.
6. Minorities.
- a.
-
Muslims. The largest and
politically most significant minority group in the
Philippines is formed by the more than a million Muslims
(Moros) concentrated in Mindanao and the Sulu archipelago.
Since independence, Filipino Muslim contacts with other
Muslim peoples, particularly in Indonesia and Egypt, have
been more actively pursued and have prompted Philippine
concern that the Philippine Muslims may be transformed into
a subversive element within the Philippine nation. This
concern has been compounded by the growth of Communist
influence in Indonesia.
- b.
-
The Chinese Community. The Chinese
community, estimated at between 300,000 and 400,000, is by
far the largest alien minority in the Philippines. The
Chinese have held strongly to their culture and traditions,
and have acquired economic power greatly disproportionate to
their numbers. As a result, the Chinese have traditionally
been a prime target of nationalist hostility. Discriminatory
measures have been imposed against them, and they have
commonly been the source of substantial campaign
contributions to the Filipino candidates and heavy bribes to
Filipino legislators and officials. Although frequently
forced from the Chinese under pressure, such funds have at
the same time been an important source of Chinese political
influence. A strongly anti-communist Philippine Government
with full diplomatic relations with the Government of the
Republic of China has kept communist influence among the
Chinese minority to a minimum. However, as long as Chinese
Communist pressures remain strong and the Chinese minority
is largely unassimilated, the Chinese in the Philippines
will constitute an important potential instrument of
communist subversion.
7. Americans in the Philippines. U.S.
citizens constitute the second largest alien minority in the
Philippines, and are estimated at approximately 45,000,
including a substantial number of Filipino ethnic origin, about
11,000 United States Government employees and military
personnel, plus dependents of the latter two categories. The
American business community occupies a position of considerable
importance in the economy and enjoys commensurate esteem and
prestige. Direct private American investment is estimated at
approximately $300 million, almost half of total foreign
investment in the Philippines. Under [Page 862] the terms of the Revised Trade Agreement
between the United States and the Philippines,6 U.S. citizens are
accorded equal rights with Filipinos until 1974 in the
“disposition, exploitation, development, and utilization” of
natural resources and the operation of public utilities, and are
also accorded national treatment with respect to engaging in
other activities. In an increasingly nationalistic economic
environment, increasing criticism of this equal rights
arrangement can be expected. While most of the provisions of the
Revised Trade Agreement are being carried out satisfactorily,
the Philippines has never offered to implement the important
provision for consultation with the United States prior to
taking restrictive action affecting U.S. trade, and has ignored
our requests for consultation in specific cases.
8. Church and State. Roman Catholicism has
been the dominant religion in the Philippines since the
Christianization of the archipelago by the Spanish. Under Spain,
the Roman Catholic Church enjoyed the active support of the
Spanish administration. Under American rule, strict separation
of Church and State was enforced. As a protest against Church
refusal to appoint Filipinos to leading Church offices, the
nationalist element of the Filipino Catholic hierarchy broke
away in 1898 to establish what became the Aglipayan Church. This
and various other Protestant churches attracted those who had
opposed the Catholic Church’s role during the Spanish period.
During the American period and the first years of independence,
the Roman Catholic Church was preoccupied with problems of
reorganization and reconstruction as well as with adjustment to
the new status of the nation. In recent years, the Church has
reasserted its claim to an official position as the dominant
religious force in the Philippines, and issues and problems of
relations between Church and State have again captured public
attention. The struggle between Catholic Action and the
anti-clerical group, which comprises both Catholics and
non-Catholics, has for the most part taken place in politics and
education where the Church is resuming an active political role
and seeking to control the public school curriculum. In their
attacks on the Catholic Church’s open involvement in politics,
its opponents point to the long history of Church opposition to
reforms and to greater autonomy for Filipinos.
Economic Situation
9. Basic Economic Situation. With
considerable aid and assistance from the United States, the
Philippines has succeeded in a large measure in recovering from
the extensive damage of World War II, and has [Page 863] gone on to attain production
levels substantially above those of the pre-war period. The
population of 23 million is increasing at an estimated rate of
from 2 to 3 per cent per year, but the rate of increase of the
Philippine economy has been roughly twice as fast, although the
rate of increase slackened somewhat in 1957. However, the
distribution of income continues to be seriously unequal, and
there continue to be problems of unemployment and
underemployment. Despite the availability of ample arable land,
the Philippines has not achieved self-sufficiency in food
production. The Philippine economy remains predominantly
agricultural, but a gradual diversification is taking place. The
preponderant role of the United States in Philippine foreign
trade has been declining in recent years, and Philippine
commerce with Japan and Northwestern Europe has increased
proportionately. Despite this decline, the continued importance
of the United States to the Philippine economy is indicated by
the fact that in 1956 the United States purchased more than 50
per cent of total Philippine exports, and U.S. Government
expenditures (exclusive of assistance) provided 18 per cent of
total Philippine foreign exchange receipts.
10. Current Economic Situation.7
The fiscal policies of the
present administration have jeopardized financial stability and
promoted inflationary pressures. Election politics and
widespread evasion of exchange regulations led to a serious
weakening of the exchange control system in 1957, and
international reserves during that year diminished by one-half.
At the same time, cumulative budget deficits and lenient credit
policies began to undermine the internal price structure. Faced
with the double threat of dangerously low international reserves
and growing inflationary pressures, the Garcia administration in
December 1957 announced an “austerity” program to restore the
financial position of the nation. However, the program soon lost
most of its momentum and there appears to be little
determination left to enforce its restrictive measures. The
early relaxation of the “austerity” controls and prospects of a
large budget deficit in FY 1959 indicate that the Filipinos
intend to rely primarily on external assistance to restore
financial stability.
The U.S. Role
11. It is in the U.S. interest that the program initiated by
Magsaysay to improve the status of the Philippine peasant and
raise the level of political morality in the government be
continued successfully.
12. The United States has provided economic assistance to the
Philippines under the Mutual Security Program since FY 1951,
although since Magsaysay’s death it has been difficult to
maintain the [Page 864]
effectiveness of the program. In the period from FY 1951 through
FY 1957 the United States spent $12 million in technical
assistance directed toward improving the effectiveness of
government services and increasing agricultural and industrial
production. In the same period, economic aid expenditures for
public works, industrial and agricultural development, public
health, rural improvement, and education and military
construction totaled $120 million. During the same period, the
Philippines drew $26 million from Export-Import Bank lines of
credit totaling $93 million. All Philippine loan applications
thus far submitted to the Development Loan Fund have either been
referred to the Export-Import Bank or rejected.
13. U.S. information programs in the Philippines provide current
material supporting U.S. policy objectives to newspapers, radio,
movies, television and other public information media. This task
is greatly facilitated by the fact that almost all important
daily newspapers, all serious magazines, most radio programs and
most government publications are in English. Widespread
knowledge and understanding of English results from its use
since the earliest days of the U.S. administration as the means
of instruction in all grades of the public school system.
However, since the Japanese occupation the level of English
teaching in the schools has steadily deteriorated. There are
nine distinct languages in the Philippines, and English serves
as a means of communication among various sections of the
country. Unless standards are restored, particularly among
primary school teachers, the Filipinos are in danger of seeing a
decline in their ability to communicate easily among themselves
and with the rest of the world through English.
Foreign Relations
14. Philippine foreign policy continues to be one of active and
close alignment with the democratic world, particularly the
United States. In recent years closer relations with some other
Southeast Asian states such as Vietnam, Thailand and Pakistan,
as well as Philippine participation in SEATO, the Colombo Plan, ECAFE, and meetings of the Bandung group, have
sharpened its awareness of regional problems. In 1956 the
Philippines finally reached a reparations agreement with
Japan8
and ratified the Japanese Peace Treaty. Diplomatic relations
have since been established, but the residue of hostility toward
the Japanese as a result of the war, together with the constant
Philippine fear of Japanese economic domination, have kept
relations between the two countries cool. The Philippines has no
diplomatic relations with the Sino-Soviet bloc; no cultural
exchanges with the bloc have been permitted; and trade is
negligible.
[Page 865]
Threats to Philippine
Security
15. Internal Threats. The threat of the
Philippine Communist Party to Philippine internal security has
decreased steadily since 1950. The Communist Party and its
military front, the Huks
(Hukbong Mapagpalaya ng Bayan), were formally outlawed by
statute in 1957; and the Huks
were reduced by the Magsaysay counteroffensive from 10,000
well-organized armed men in 1950 to about 500 scattered and
harried individuals today. However, the Communist Party has
adopted political action in place of armed rebellion as its
primary tactic and is currently concentrating its energies in an
attempt to subvert the influential urban intelligentsia. The
susceptibility of this element of the population to manipulation
of slogans about “nationalism” and “colonialism” makes it a
useful potential instrument in the Communist plan to destroy the
alliance between the United States and the Philippines.
16. External Threats. Externally, the
proximity of Communist regimes on the Chinese and Vietnamese
mainlands heightens Philippine concern over the rise of
Communist strength in Indonesia. Under the terms of a Mutual
Defense Treaty (1952), the United States and the Philippines
recognized that an armed attack in the Pacific area on either
country would be dangerous to the peace and safety of the other,
and each agreed to act to meet the common danger in accordance
with its own constitutional processes. Similar guaranties are
provided through Philippine membership in the collective
security system established by the Southeast Asia Collective
Defense Treaty. The 1947 Agreement on Military Bases in the
Philippines and the 1947 Agreement on Military Assistance to the
Philippines strengthen further the close mutual security
relationship between the Philippines and the United States.
Military Problems
17. Military Assistance. During the period
FY 1950–FY 1957, U.S. military assistance programmed for the
Philippines totaled $167 million, with deliveries totaling $143
million. Additionally, excess stocks valued at $25.5 million
were programmed during the FY 1950–57 period, of which $15.7
million was delivered through FY 1957.
18. The Philippine Armed Forces. U.S. military assistance has
made possible a considerable build-up and reorganization of the
Philippine armed forces, first to combat the Huk menace and subsequently to
concentrate on the preparation for resistance to external
aggression. At present, these forces consist of: an Army of
about 27,300 men, currently being reorganized into one active
and three standby infantry divisions; a Navy of about 3,660 men,
32 combat vessels and 23 auxiliary and service vessels; an Air
Force of 4,840 men and 154 [Page 866] aircraft; and a Constabulary of 10,000
men. These armed forces are capable of providing for internal
security, contributing to defense of the Philippines, and making
a limited contribution to the collective defense of the Western
Pacific area.
19. U.S. Forces in the Philippines. U.S.
military forces (9,730 men as of July 1, 1957) are stationed in
the Philippines to assist in meeting the requirements of U.S.
forward strategy in the Western Pacific, including defense of
U.S. bases in the Philippines. Such U.S. bases provide fleet
support for U.S. naval forces in the area, operating and staging
facilities for the U.S. Air Force, and emergency training
facilities for the U.S. Army.
20. Base Negotiations. In the summer of
1956 the United States undertook to open negotiations with the
Philippine Government looking toward a land adjustment under the
1947 Military Bases Agreement. The United States had
requirements for additional military sites, including
approximately 16,000 acres of land needed for improvement or
expansion of present facilities. In return the United States was
willing to relinquish rights to 128,108 of the 542,270 acres
under its control and to return a cargo unloading facility in
the Port of Manila. When the negotiations were opened, the
Philippines raised a number of issues, including the revision of
the jurisdiction provisions of the Military Bases Agreement and
the correlation of the Bases Agreement, the Military Assistance
Agreement, and the Mutual Defense Treaty, as conditions
precedent to the land adjustment. These points were discussed
with Philippine officials by the Bendetsen Mission, but an
impasse was reached on the question of criminal jurisdiction,
and the negotiations were recessed in December 1956. While
negotiations have not been formally resumed, a number of matters
have been resolved through diplomatic channels. The United
States has agreed to turn over to the Philippines the Manila Air
Station in July 1958; agreements have been concluded for the
establishment of a Mutual Defense Board; and it has been agreed
that Philippine liaison officers will be placed at major U.S.
bases in the Philippines. Several major issues, including
criminal jurisdiction, are still outstanding.
Objectives
21. A stable, effective, democratic Philippine government capable
of carrying out economic development and social reform, and a
stable, expanding Philippine economy, which will reflect credit
on the democratic system.
22. Continued availability in the Philippines of necessary U.S.
bases.
23. A Philippine military establishment capable of maintaining
internal security and contributing to the defense of the
Philippines and to the collective defense of the Western Pacific
area.
[Page 867]
24. Philippine policies based upon close relationship with the
United States.
Major Policy Guidance
Political
25. Encourage President Garcia and his administration to (a) strengthen
the efficiency and effectiveness of its operations, (b) reduce
graft and corruption, and (c) restore the popular confidence in
government which existed under Magsaysay.
26. Encourage the Magsaysay-oriented younger political leaders to
become an effective united political force for economic and
social reform.
27. Conduct U.S. relations and activities in the Philippines with
full respect for Philippine sovereignty and independence, in
order to foster an increased sense of mutuality in all aspects
of U.S.-Philippine relations, including questions of defense and
military bases.
28. Encourage the Philippines to (a) improve the quality of
Philippine diplomatic representation in non-Communist Asia and
(b) establish resident missions in Malaya, Laos, Burma and
Cambodia.
29. Encourage and support training programs for other Free Asian
nationals at qualified institutions in the Philippines,
including the Pacific Defense College when established.9
30. Continue to improve the programs for educational exchange
between the Philippines and the United States.
31. Encourage an effective public school system in the
Philippines along the lines established during the period of
U.S. administration. Encourage and give support to the continued
use of the English language as (a) a practical educational tool
and (b) a means of contact with English-speaking countries and
with other nations of the world and among the Filipinos
themselves.
32. Continue present information programs, and seek increased
emphasis upon areas outside Manila.
33. Encourage the Philippine Government and the leaders of the
Chinese Community to initiate policies designed to obtain the
maximum non-disruptive rate of assimilation of the Chinese
minority into Philippine life.
[Page 868]
Economic
34. Encourage the Philippine Government to follow policies
conducive to the sound development and diversification of the
Philippine economy.
35. a. Continue to provide (1) economic and technical assistance
to facilitate the development and diversification of the
Philippine economy, and (2) technical assistance to help in
expanding entrepreneurial, managerial, and other technical
skills.
b. Seek to persuade the Philippine Government to undertake the
necessary budgetary, monetary, and balance of payments measures
for economic and financial stability; making clear that the
Philippine Government is responsible for achieving and
maintaining the internal financial stability essential to sound
economic growth.
c. Consideration of any substantial expansion in the total amount
of economic assistance to the Philippines should be dependent
among other things on absorptive capacity in the Philippines and
Philippine performance in utilizing available internal and
external resources for well-conceived development purposes based
on sound financial policies and administration.10
36. Encourage realistic Philippine programs to reduce existing
social and economic inequities and to improve the standard of
living of the average Filipino over the long term.
37. Continue to encourage, and support with technical advice,
effective government administration, including measures to
increase government revenues.
38. Be prepared to negotiate a double taxation convention with
the Philippines as a means of encouraging private American
investment.
39. Encourage the Philippines to create a more favorable climate
for private investment, both domestic and foreign.
40. Seek full compliance with the terms of the Revised
U.S.-Philippine Trade Agreement of 1955.
41. Encourage and maintain close and friendly commercial
relations between the United States and the Philippines,
especially during the period of transition outlined in the
Revised U.S.-Philippine Trade Agreement.
42. Encourage the Philippine Government to develop its economy
without relying on the assistance of unreasonable protective
trade barriers.
[Page 869]
Military
43. Continue to provide military assistance for the purpose of
assisting the Philippine armed forces to maintain internal
security, to improve their capability to defend against external
attack, and to make a limited contribution to collective
security in the Western Pacific area.
44. Continue to improve Philippine public understanding of the
mutual value of the U.S. bases to the security of both
countries; through improved contacts with local public leaders
and, where practicable, through increased participation by
Philippine forces in the defense, protection, and operation of
the base system.
45. Upon Philippine request, review those aspects of the bases
arrangements with which the Philippines have expressed
dissatisfaction, with a view to reaching mutually acceptable
solutions.
46. Seek mutually satisfactory arrangements for unrestricted
access to U.S. military bases in the Philippines by the forces
of U.S. allies.
47. In the event of overt attack on the Philippines, take
military and other appropriate actions in fulfillment of U.S.
obligations under the Mutual Defense Treaty with the Philippines
and the Manila Pact (SEATO).