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234. Memorandum From Secretary of State Rogers to the Administrator of the Agency for International Development (Hannah)1

SUBJECT

  • Rural Electrification for the Philippines

Recent proposals from the GOP and USAID/Manila have outlined a rural electrification program for the Philippines to be funded in part by AID development loans. I understand that the initial reaction at working levels in the Department and in AID is basically favorable, while adding the ingredients of a greater emphasis on a multilateral forum, in conjunction with the IBRD and ADB, and greater emphasis on sector-wide planning. Assuming this to be the case, I should like to express to you certain political considerations which I believe support a decision to implement this program as soon as possible.

It has been characteristic of the Philippines that the pace of infrastructure development and modernization has been too slow to meet the expectations of a rapidly growing Philippine population.

In order to overcome a critical balance of payments crisis, Marcos has conscientiously enforced the fiscal and foreign exchange disciplines imposed a year ago by the IMF. This has led, however, to a slow-down in the rate of economic growth and a 22 percent rise in consumer prices in 1970. Discontent and an anti-administration mood prevails among the populace. Revolutionary extremists, operating provocatively through emergent student activists and with the unwitting cooperation of Marcos’ conventional political opponents, are creating serious political instability and fanning the danger of explosive violence.

While this situation is partly of Marcos’ own making—his overkill tactics in the last Presidential elections, the popular belief that he is amassing a large personal fortune from his Presidential office—the fact is that explosive popular discontent stems to an important extent from economic problems. For example, recent riots in which five were killed stemmed from a strike of jeepney drivers supported by activist students. Discontent could be reduced and popular confidence in the Philippines’ democratic structure of government strengthened by indications that the country is moving forward with national economic [Page 501]development. It is in our interest, as well as in that of the Philippines, that this be achieved; and it is important that indications of forward progress come now, before the internal political situation of the Philippines further deteriorates.

Initiation of the long planned and impatiently awaited national electrification program at this critical juncture could have a significant favorable economic and political impact. Thus, I would urge that serious consideration be given to the allotment of sufficient development loan funds from FY 71 to initiate this program with the remainder to be programmed in FY 72.

William P. Rogers
  1. Source: National Archives, RG 59, Central Files 1970–73, AID (US) PHIL. Secret. Drafted by Usher (EA/PHL) and Shepard C. Lowman, Country Officer (EA/PHL), and cleared by Wilson and Barger (EA). This memorandum responds to a January 21 memorandum from Green to Rogers. (Ibid.)