Interview with Arroyo: Extended Transcript — page 3

TIME: How does a country like the Philippines compete internationally, what with the concerns about security and competition from China?
Arroyo: Way back in 2001, when I saw that the NASDAQ bubble was going to burst, our exports were very dependent on electronic exports. I discussed with my economic managers what we were going to do. Were we going to try to look for other markets, change our products, or work on the domestic economy? Of course, we'll look for other markets. We'll try to diversify our products. But the most important thing is to strengthen our domestic economy. So that no matter what happens in the outside world, we are resilient. And we did. We strengthened our small and medium enterprises because they are the most efficient users of capital. We have been directing bank funds to SMEs rather than to unproductive projects or industries with excess capacity. We developed housing because it has the biggest multiplier effect. And the housing executives say that the housing policies have never been as good as they are now. We worked on agricultural modernization, putting money in the countryside. We spent an unprecedented P20 billion in agriculture and we have been doing so every year so that there will be money in the hands of the farmers. I paid my predecessors' debts to the local government so that they would have purchasing power in their hands.

The proof of the pudding is that for all these years, our growth rates have been better than many of our neighbors and our trading partners. And at the same time, our peso has been relatively stable, our inflation is down, our interest rates are down. So I think that the resiliency of the economy, the purchasing power of our domestic market—modest as it is, but reliable—are the things that make us competitive. Not to mention the great Filipino worker, 8 million of whom fuel 140 economies around the world. They send us back remittances of about $7 billion a year.

TIME: Your December 30 statement was about freeing you from politics to pursue what you feel is a more important agenda. Can a President ever really be free from politics?
Arroyo: Certainly I'm trying to be free of politics. That's why I just simply don't want to talk about elections. I think that I've been able to do a lot that would have been very difficult politically. I've been able to be very focused. I've been able to make tough decisions without making apologies if I step on any toes. My decisions are made in the best interests of the people. And that's the kind of leadership that this country needs at this time in order to stay on the path of progress. If there's anybody who can do it, I'm trying to be the one who can do it.

TIME: Do you think you would have a different legislative agenda had you not made that declaration?
Arroyo: The anti-money laundering law, for instance, was something that could not pass for a very long time because the political pressures against it were tremendous. I got it passed. That's one very good example. The Marcos case is a very difficult case to pursue if you have political interests and if you have bow to powerful political interests. But here it is.

TIME: But it's certainly a populist case.
Arroyo: Not necessarily, because so many didn't want to touch it for long time. If it were so populist, it would have been addressed a long time ago. It was very difficult for many of those who tried to pursue it. In fact, it was already almost a lost cause... [Take reforms such as] running after these corrupt people in the Bureau of Internal Revenue: sure it's populist once you've done it, but what about the process of doing it? It was not a question of flying high; it was a question of plodding. And plodding is not good politics. Flying high is good politics; it's populist, but you won't always be able to achieve lasting results. And that's the important thing.

If I had played to the crowd all the times regarding, for instance, the Marcos wealth, we would not have reached this stage. If I had been populist about the money laundering law, we would not be where we are now. And what we're going to work on now is how to implement it properly. And I'm engaging the world in this implementation. I'm asking the U.S. and the U.K. to help us technically, to do the tracing on terrorist money and drug money.

That's the other thing too: the drug war. I couldn't have done the drug war. I mean, you can be populist and say that you're fighting drugs. But all these busts and all these arrests that we're making now are the results of political will, which is not always popular because there are strong political forces [at work].

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