Area: 300,076 sq km (115,860 sq mi)
Population (1997 est.): 71,539,000
Capital: Quezon City (designated national government centre and the location of the lower house of the legislature and some ministries); many government offices are in Manila or suburbs
Head of state and government: President Fidel V. Ramos
Economic problems hurt the Philippines in 1997. Its economic growth rate slipped from 7.5% in the first half of 1996 to 5.9% in the first half of 1997 and declined further in the second half of the year. One reason for the decline was the drought that affected half of the country’s rice-growing areas. Another was the financial turmoil in Southeast Asia that triggered a fall in the international value of the Philippines’s currency, the peso, by 36% from July through December. Consequently, more pesos were needed to repay foreign loans, most of which were in U.S. dollars. Although exports increased, the stock market fell, interest rates soared, and some banks were stuck with domestic loans that could not be repaid.
The problems interrupted the steady economic growth enjoyed by the Philippines since Fidel Ramos became president in 1992. Ramos was credited with having pulled the Philippines out of earlier economic problems but blamed for hesitancy in dealing with the recent trouble at a time when his attention seemed fixed on politics. Ramos repeatedly denied that he wanted the constitution changed so that he could seek another six-year presidential term in elections scheduled for May 1998. Despite this, opposition politicians and the media accused him of scheming to run again. His supporters collected signatures for a referendum on amending the constitution, but on March 18 the Supreme Court ruled that the referendum law did not apply to this situation. Supporters in Congress, a third of whose members would also be barred from new terms, began efforts to abolish term limits.
Talk of another term, or extending Ramos’s original term, was opposed by former president Corazon Aquino and Jaime Cardinal Sin, archbishop of Manila and an influential voice in the predominately Roman Catholic country. Sin said Ramos’s administration had lost the people’s trust and respect and his continuation as president would mean a return to "political dynasties, warlordism, corruption, sham democracy, and debilitating poverty."
Support for keeping Ramos in office came from many businessmen. They appreciated his economic improvements and feared that he might be succeeded by Joseph Estrada. Estrada, a former star of B movies, had been elected vice president on a separate ticket from Ramos’s in 1992. Lacking administrative or economic experience, he campaigned for the 1998 elections on the basis of simple populist slogans. He accused Ramos on August 21 of mishandling economic problems. Estrada’s main rival in presidential opinion polls was Gloria Macapagal-Arroyo, who supported economic reform. On December 8 Ramos endorsed José de Venecia, speaker of the lower house of Congress, for president.
The government’s 1996 treaty with the Moro National Liberation Front failed to bring peace to the southern islands. The Moro Islamic Liberation Front (MILF), a hard-line faction that rejected the treaty, continued the struggle. It claimed 120,000 fighters, but the government estimated only 8,000. Its chairman, Hashim Salamat, called his headquarters at Camp Abubakre on Mindanao the capital of an "Islamic republic." Rejecting government efforts to negotiate, the MILF carried out guerrilla attacks and terrorist bombings. The government accused it of operating kidnapping syndicates to raise money.
Tension continued between the Philippines and China over reefs in the South China Sea that were part of the Spratly Islands and claimed by both nations. After China occupied Mischief Reef in 1995, the Philippines began patrolling the area. A Chinese structure was discovered on another reef in April 1997, but after Filipino complaints China abandoned the reef on May 1 and four armed Chinese vessels withdrew from the area.