S/P–NSC files, lot 61 D 167, NSC 84 Series
No. 335
Memorandum by the Under Secretary of
State (Smith) to the Executive
Secretary of the National Security Council (Lay)
Third Progress Report on NSC 84/2, “The Position of the United States with Respect to the Philippines”
summary
The Philippines is currently in the throes of a Presidential election campaign. The contenders are (1) Elpidio Quirino of the Liberal Party, the present incumbent, who, under the Constitution, can remain in office only until April 1956, if re-elected, (2) Ramon Magsaysay, former Secretary of Defense under Quirino and now candidate of the Nacionalista Party, and (3) Carlos Romulo, former Foreign Minister under Quirino, who with his supporters broke from the Liberal Party at the Convention that renominated Quirino and established a third party called the Democratic Party. Rumors of a recurrence of the violence and dishonesty characteristic of the Presidential election four years ago have given the forthcoming elections the character of a test of representative government in the Philippines. The United States is using its influence in support of free and honest elections, scrupulously avoiding attempting to influence their outcome. Attempts to involve the U.S. Embassy and other agencies in the Philippines in local politics have, however, been a feature of the election. The Liberal Party in particular has accused the U.S. representatives of seeking to bring about the election of Magsaysay.
Despite the visit of two Japanese Missions to Manila in the past year, the issue of Japanese reparations to the Philippines remains unsettled and the Nacionalistas have blocked ratification of the Japanese Peace Treaty.
The campaign against the Communist-led Huks has improved steadily in the past two years, thanks largely to Magsaysay and the joint U. S. Military Advisory Group.
Of $77 million in economic aid planned for Fiscal Years 1951–53, expenditures as of March 31, 1953 totaled $30.2 million. It is planned to reduce the FY 1953 program to $20 million and the FY 1954 program to $17 million. Of $115 million MDAP assistance planned for Fiscal Years 1950–53, over $46 million worth of equipment had been delivered as of February 1953.
[Page 540]Owing to new tax measures, financial reforms, U.S. assistance, the effect of the Korean war, and increased production of Philippine staple crops, the Philippine Republic has recovered from its near bankruptcy in 1950 and currently both its budget and foreign trade are in near balance.
The policy objectives and courses of action set forth in NSC 84/2 continue to be valid.
NSC 84/2 was approved by the President on November 10, 1950. It is requested that this Progress Report, as of May 26, 1953 be circulated to members of the Council for their information.
This report reviews events since January 1952 and the actions taken by the United States designed to attain its objectives in the Philippines, listed in NSC 84/2 as the establishment and maintenance of:
- “a. An effective government which will preserve and strengthen the pro-United States orientation of the people.
- “b. A Philippine military capability of restoring and maintaining internal security.
- “c. A stable and self-supporting economy.”
i. policy implementation
Elections, November 1953.
The positions to be filled are the presidency, the vice presidency, eight of the twenty-four seats in the Senate, and all the 102 seats in the House. President Quirino, according to the Constitution, can remain in office, even if he should be re-elected in November, only eight consecutive years, e.g. until April 15, 1956. Until the end of 1952 it was commonly believed that Secretary of Defense Ramon Magsaysay would be Quirino’s running mate on the Liberal ticket, but increasingly strained relations culminated in Magsaysay’s resignation from his cabinet post on February 28, 1953, and his issuance of a press statement that he could no longer continue in an administration which wanted him only to kill Huks and continued to tolerate conditions which offered a fertile soil for communism. Nine days later Magsaysay announced his formal adherence to the Nacionalista Party and early in April, with the support of Senators Laurel and Recto, received the Nacionalista presidential nomination.
On May 24, 1953, the Liberal Party, in a convention characterized by dubious parliamentary tactics, nominated President Quirino as its candidate for the presidency. Supporters of the candidacy of Carlos P. Romulo, until recently Ambassador to the United States, walked out of the convention after they were unable to obtain secret balloting. Romulo has now announced the formation of a third party and has secured the support of several prominent [Page 541] figures such as Vice President Lopez and former Governor Lacson of Negros Occidental. In determining whether to continue with the third party or to throw his support behind Magsaysay, Romulo will be paying close attention to Quirino’s health. If the combination of gout and heart trouble should prove fatal, a new Liberal Party Convention would have to be held to choose a new candidate.
Recent actions by Liberal Party leaders indicate that President Quirino may be preparing to use the same methods he employed in 1949 when he defeated Jose Laurel, the Nacionalista candidate, in an election notorious for fraud and coercion. Quirino has already attacked opposition leaders for failure to pay income taxes and for alleged Communist sympathies. The Liberal Party has been charged with collecting campaign funds by extortion from Chinese, often as the price for release from detention for alleged Communist activities, and also from businessmen by making the issuance of import licenses contingent upon contributions to the Party. The constabulary, which was used in 1949 to help elect Quirino and which in 1951 was placed under army control at the suggestion of the Joint U.S. Military Advisory Group (JUSMAG), has in some areas recently been removed from direct control of provincial army commanders.
The United States is convinced of the necessity of free and honest elections in the Philippines and is using its influence to that end rather than to advance the fortune of any candidate, recognizing that any attempt to influence the elections would be bound to become public knowledge and would be prejudicial to our own best interests. Through statements to the press, conversations with individuals, and material distributed through USIE; by support or such non-partisan organizations as the League of Women Voters and the National Movement for Free Elections (NAMFREL); and by not discouraging speculation as to whether the United States would discontinue military and economic aid in the event of dishonest elections. Ambassador Spruance and his staff are emphasizing the importance of the continuation of the democratic tradition in the Philippines. They have determined that the close relationship established with Magsaysay in his capacity of Secretary of Defense shall give way to a formal, neutral, correct attitude toward Magsaysay the candidate.
The Embassy and other United States Government agencies in the Philippines cannot, however, expect to remain immune from attempts to involve them in local politics. In fact, such attempts—chiefly exemplified by accusations of the Liberal Party that United States representatives are working for the success of the Nacionalistas—have been a feature of the Philippine political scene since the autumn of 1952.
[Page 542]The differences between the parties on basic issues are slight. Despite their platform promises of reform and progress, Nacionalista leaders, like those of the Liberal Party, have no specific program designed to cope with the country’s major problems. Their interest lies almost wholly in ousting Quirino. Although Magsaysay believes that social reform, particularly with respect to land tenure, is essential for the maintenance of peace and order, it is doubtful that if elected president he could institute any very drastic measures since these would by their very nature run counter to what most members of the Congress consider their personal interests. Regardless of the outcome of the 1953 elections, few major changes can be expected in domestic policies.
Japanese Peace Treaty
During the past year two Japanese missions have visited Manila for the purpose of discussing reparations. Although Liberal Party leaders have made sincere efforts to obtain Senate ratification of the treaty, the Nacionalistas have successfully blocked ratification and have made it difficult for the administration to retreat from its previous demands for large cash reparations.
Korea
The Philippines has maintained in Korea a battalion combat team of approximately 1200 officers and men. A proposal to withdraw these troops made by several pro-Quirino Liberal Congressmen in March 1953 ostensibly in the interests of economy was vigorously attacked in the press and apparently has been dropped.
Indochina
The Philippine Department of Foreign Affairs still holds that the Associated States of Indochina do not have sufficient attributes of sovereignty to merit recognition.
Internal Military Action
A steady improvement in the campaign against the Communist-led Huks has been evident in the past two years. The more aggressive spirit of the Philippine armed forces and improved discipline and training, attributable in large part to Magsaysay and JUSMAG, have prevented the Huks from carrying on their activities on a scale comparable to that of 1949 and 1950. So far the resignation of Magsaysay has not appreciably diminished the effectiveness of the armed forces, as had been feared.
Mutual Defense Treaty
The Mutual Defense Treaty was signed at Washington on August 30, 1951. The Philippine Senate gave its unanimous concurrence on [Page 543] May 12, 1952, and ratifications were exchanged at Manila on August 27, 1952.
Mutual Defense Assistance Program
Under MDAP $115,200,000 was programmed for FY 1950–1953 inclusive. Shipments under the combined FY 1950–53 programs as of February 28, 1953, amounted to $46,700,000 which represents 41% of the total based on value.
Military Bases Negotiation
The United States Government has under consideration the sending of a special mission to the Philippines, as recommended by the Ambassador, to acquire land for military base expansion and to focus Philippine attention on the necessity of resolving in an expeditious manner certain property questions and related matters arising from the Military Bases Agreement.
Economic Aid
Originally planned economic aid programs for fiscal year 1951 through 1953 amounted to $77 million. Of this amount, expenditures as of March 31, 1953, totaled $30.2 million. The inability of the Philippines to utilize funds available has been due in part to detailed planning necessitated by the nature of a project program requiring review and approval by relatively inexperienced Philippine officials. It has become apparent that a five-year program of $250 million as envisaged by the Bell Mission is beyond the capacity of the Philippines to absorb and that a program based on smaller yearly expenditures over a longer period of time is more realistic. Consequently, it is planned to reduce the FY 1953 program to the level of $20 million and the FY 1954 program to $17 million.
The program is making some impact on the Philippine economy by improving and extending the technical and administrative operations of the Philippine Government through advisers in the fields of finance, public health, low-cost housing, agricultural extension services, plant disease control, labor, and education; the opening up for settlement of new lands in Mindanao by the building of a system of roads; and the expanding of food production through distribution of fertilizer, assistance to agricultural colleges, and the installation of irrigation systems.
Philippine Economic Position
As a result of the new tax measures passed by the Philippine Congress pursuant to the terms of the Quirino–Foster Agreement, and more efficient collection of taxes, revenue in FY 1952 was more than double that of FY 1950. In contrast to a considerable deficit in FY 1950 the government was able to show a budgetary surplus in FY 1951 and 1952. It appears, however, that there will [Page 544] be a small deficit in FY 1953, with total government expenditures estimated at $354 million.
Exports, $254 million in calendar year 1949, reached a peak of $499 million in 1951, reflecting post-Korea price increases for Philippine agricultural products, and declined to $352 million in 1952. Imports have been reduced from a post-war peak of $657 million in 1949 to about $425 million in 1952. The unfavorable balance of trade of $72 million in 1952 is more than offset by United States Government expenditures (including benefits to veterans) of $134 million. The international reserve (Central Bank and private banks) of over $300 million is considered adequate.
The production of Philippine staple crops continues to improve. Sugar production in 1952 amounted to over one million short tons as against less than 800,000 in 1951. The 1952–53 rice crop, expected to be the largest in Philippine history, is such that imports may be unnecessary.
ii. policy evaluation
The policy objectives and actions recommended for achieving them as set forth in NSC 84/2 continue to be valid.
In no small measure because of United States influence the 1951 congressional and gubernatorial elections were reasonably honest. The United States is following the same tactics in regard to the even more important 1953 elections.
Financial reforms undertaken by the Philippine Government saved it from near bankruptcy in 1950 and resulted in a budget surplus in FY 1952.
In compliance with the terms of the Quirino–Foster Agreement, the Philippine Congress passed in 1951 a minimum wage law and in May 1953 a law greatly strengthening the rights of unions but at the same time defining their obligations.
Although the Philippine Government has passed measures to provide better rural credit facilities and to improve its agricultural extension services and is considering means of accelerating issuance of land titles, which will greatly expedite the orderly settlement of virgin lands in Mindanao, it has shown no inclination to come to grips with the fundamental problems of land tenancy. Once the elections are over the United States should continue to exert efforts to focus Philippine attention on finding workable solutions.1
- In NSC Action No. 876, taken at the National Security Council meeting held on Aug. 6, the Council took note of this report.↩