Can She Hold On?

The Philippine President delivers a State of the Nation speech every summer. Last week Gloria Macapagal Arroyo jumped the gun on the speech scheduled for July 25 because, as she told her countrymen in a hurried radio address, the nation's state was so parlous it needed fixes that couldn't wait. "Let's confront the biggest, most painful political truth ... our political system has degenerated," the President said. Arroyo ordered her Cabinet to step down and announced a crusade to reform the government, reducing red tape and cleaning up the election process. Arroyo also said she couldn't resign in the wake of allegations that she fixed last year's presidential election because it would show the Philippines to be "hopelessly unstable."

Arroyo's address was the most eloquent of her career, and her points about the Philippines' hurly-burly political system might have hit home—if her own widely criticized presidency weren't hanging by the thinnest of threads. She insisted that her speech was not "a political ploy or gimmick," but that's how it came across. The following day, seven members of her Cabinet, including Arroyo's respected economic team, quit, saying they had been on the verge of resigning anyway, and that Arroyo had simply been trying to pre-empt their moves and show that she's still in charge. "The President can be part of the solution to this crisis by making the supreme sacrifice for God and country to voluntarily relinquish her office," said Finance Secretary Cesar Purisima. "The longer the President stays in office under a cloud of doubt and mistrust ... the greater the damage [to] the economy and the more vulnerable the fragile political situation becomes." (Three additional Cabinet members resigned later that day.)

Purisima's remarks followed a week of calls for Arroyo's resignation from such high-profile organizations as the Catholic De La Salle University, the University of the Philippines College of Law, and the leaders of the country's 13 million Protestants. On Friday, the blue-chip Makati Business Club joined the chorus, as well as former President Corazon Aquino, the heroine of the 1986 People Power revolution, who said the present crisis was "crippling the government and endangering the nation."

Until recently, the business community was squarely behind Arroyo. Its defection is a major worry for her, given that Ferdinand Marcos and Joseph Estrada fell from power in 1986 and 2001 respectively after Big Business wrote them off. In June, Arroyo's administration pushed through Congress a fiscal restructuring package to help avoid an Argentine-style financial crisis. But the cornerstone of that package—an expanded value-added tax—has been suspended by the Supreme Court. Increasingly, Arroyo is no longer seen as an asset but a liability. "We were on the verge of a major boom," says Joey Salceda, a Congressman who helped devise the economic plan. "That's gone now."

The government is still hoping for growth of around 5% this year—if the Arroyo crisis doesn't drag on. But it may prove hard to hang on with so little support from businessmen and her former Cabinet members. The Philippines may avoid a nonconstitutional overthrow like a military coup or another People Power revolt if Arroyo chooses to surrender power to her Vice President, former news broadcaster Noli de Castro. But De Castro, who served as a Senator before becoming Vice President last year, is best known to the public for his television career, not for accomplishments in office. "If De Castro takes over," says Asiri Abubakar, a political-science professor at the University of the Philippines' Asian Center, "at best he'll be merely a transition President. He doesn't have a track record."

Meanwhile, Arroyo is hanging tough. "This must stop," she said Friday. "With due respect to former President Aquino and others, their actions cause deep and grievous harm to the nation because they undermine our democratic principles and the very foundation of our constitution." Another former President, Fidel Ramos, told the press that Arroyo should "stay the course" but also advised she start work on changing the constitution to a parliamentary system and calling a presidential election by June 2006—in effect, cutting short Arroyo's term by four years. "People ask, 'Can I govern?'" Arroyo admitted in her radio address. "Yes, I can govern, and I am governing." The problem is that fewer and fewer Filipinos either believe her or believe in her.