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 You are in: Under Secretary for Public Diplomacy and Public Affairs > Bureau of Public Affairs > Bureau of Public Affairs: Office of the Historian > Foreign Relations of the United States > Johnson Administration > Volume XXVI
Foreign Relations 1964-1968, Volume XXVI, Indonesia; Malaysia-Singapore; Philippines  
Released by the Office of the Historian


Documents 341-358

 

341. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, September 12, 1966, 1:40 p.m.

/1/Source: Johnson Library, National Security File, Country File, Philippines, Vol. III, Memos, 7/66-7/67 [2 of 2]. Secret.

SUBJECT
New Ideas for U.S.-Philippine Cooperation

You asked Bill Jorden to come up with some new ideas that might be raised with President Marcos. You asked him to staff out further the six ideas he submitted. He has done so.

The attached memo and attachments cover the ground--including background and recommendations.

In sum, four of the ideas have possibilities; two are non-starters. You will want to consider these in light of the total package of assistance and cooperation that State, AID and Defense are now working up.

I am sending copies of the attached memo to State, AID and Defense so these matters can be considered at the meeting tomorrow on the Marcos visit./2/

/2/No record of this meeting has been found.

Walt

 

Attachment

Memorandum From William J. Jorden of the National Security Council Staff to the President's Special Assistant (Rostow)

Washington, September 12, 1966.

SUBJECT
New Ideas for U.S.-Philippine Cooperation

In response to a request from the President,/3/ I submitted some ideas for new forms of U.S.-Philippine cooperation--ideas the President might want to take up with Marcos during the latter's visit.

/3/Jorden and Bromley Smith submitted six ideas to the President on August 23 in a memorandum. The President remarked that they were "Good" and asked that staff studies be prepared in a "Hurry." (Johnson Library, National Security File, Country File, Philippines, Vol. III, Memos, 7/66-7/67 [2 of 2])

The President expressed interest and asked me to staff out further. Don Ropa and I have done so--consulting with State, AID, NASA, and other interested agencies.

I am attaching separate papers/4/--including recommendations--on the six ideas.

/4/Attached but not printed.

To sum up my conclusions:

(1) Filipino Astronaut:

NASA has been trying to find ways to bring foreign nationals into our astronaut program. They see more disadvantages than advantages right now. Among the former are: resentment of other nations; trouble in finding a qualified candidate; let-down if man chosen flunked out, etc.

As an alternative, they propose Philippine participation in satellite, sounding rocket, and ground-based research and applications programs. This would start with a visit of Filipino scientists to NASA.

Recommendation:

The President tell Marcos of our desire to encourage Filipino participation in space-associated programs.

If Marcos shows interest, the President could offer NASA cooperation in developing a program.

He could invite Marcos to send a team of Filipino scientists and engineers to come to the U.S. to visit our space facilities. NASA would act as host and would help develop a program, including arrangements for training of young scientists under NASA-sponsored fellow- ships.

Note the Philippines have plans for a ground monitoring station for weather satellites. The President might encourage them to press forward and possibly ask if Marcos needs additional technical assistance.

(2) Typhoon Damage Control:

A small joint program is feasible, provided it meshes with regional plans being developed by ECAFE and the World Meteorological Organization (WMO).

Recommendation:

The President would advise Marcos of our interest in supporting regional planning in this field under ECAFE/WMO. He could also express interest in a joint U.S.-Philippine typhoon damage control center program.

Specifically, he might propose: (a) a small meteorological training program in the U.S. for selected Filipinos; (b) establishment of a U.S.-Philippine commission to study specific projects; (c) offer to conduct a typhoon modification experiment in the Philippines area in the next year; (d) send a U.S. meteorological team to Manila to make more detailed recommendations.

(3) Regional Military Defense College:

There is an obvious need for a center in Southeast Asia to conduct research and to develop new techniques in the field of countering subversion and promoting democratic political and social development. Ultimately, this could become multinational. At the outset, we should consider plans for a Filipino center--with them in front and us helping.

Recommendation:

The President could remind Marcos of the Philippine initiative for a SEATO regional military staff college in 1956. Recall that we opened joint talks with them in 1958, but nothing came of it. Indicate our interest in reopening discussions keyed to the present nature of the Communist threat.

If Marcos was receptive, the President could state his interest in seeing such a Center evolve through Filipino and Asian leadership, with our support.

He could propose a joint panel of Filipinos and Americans to study this proposal and recommend a course of action. Suggest that it be a Filipino-directed enterprise at the outset, with the question of a tie-in with SEATO to be deferred until it was a going concern.

(4) Regional Development Institute:

ECAFE has plans underway for this kind of institute, aiming for a link-up with the Asian Development Bank. The critical need in the Philippines is for a rational approach to their own development process. A national development institute, on the model of Thailand's National Institute of Development Administration, might be proposed.

Recommendation:

The President might express our conviction that development planning can succeed only if it is systematized. He could offer our help in developing such a systematic institutional approach.

If Marcos were interested, the President might suggest the possibility of our support in developing a new institute or in combining existing programs at the University of the Philippines and in Marcos' executive office, where he has set up a small development group.

If Marcos welcomes help, offer to send a U.S. technical advisory team composed of governmental and foundation experts.

(5) Manila-Tarlac Highway:

This is a non-starter. We gave the Philippines a highway loan in 1959--and got 17 miles of road built. We need better Filipino performance--and a well worked out road development plan--before trying to move on this.

(6) Bridge over the Pasig:

Too low a priority item to draw on scarce Filipino resources at this time. The main traffic problem, as I understand it, concerns rights-of-way, bridge approaches and squatters at key crossings.

Conclusion:

The President might want to raise one or more of the first four items./5/

/5/On September 14 Rostow recommended that Johnson raise the first four ideas in this memorandum with Marcos. (Johnson Library, National Security File, Country File, Philippines, Marcos Visit Papers, 9/14-16/66)

In a sense, these would be dessert which should be looked at in light of what State, AID, Defense and others produce in the form of a main course. If the latter is substantial, we may want to hold off on the above.

State (Bundy) and AID (Poats) are aware of the general content of the above.

Bill Jorden

 

342. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, September 14, 1966.

/1/Source: Johnson Library, National Security File, Country File, Marcos Visit Papers, Memos, 9/14-16/66. Secret.

SUBJECT
Marcos Visit

This is a revised briefing memorandum which replaces the one I sent to you on September 12./2/

/2/Not printed. (Ibid., Memos to the President, Walt Rostow, Vol. 12, 9/1/66-9/14/66)

You will have seen State's Briefing Book,/3/ especially the Scope Paper (Tab I B) and Secretary Rusk's Memo (Tab I C)./4/

/3/Undated. (National Archives and Records Administration, RG 59, Visit Files: Lot 67 D 587, V. 10)

/4/Dated September 10. (Ibid., Central Files 1964-66, POL 7 PHIL)

Background:

Marcos is strongly pro-American. But he is also fiercely pro-Philippines. He has backed our position in Viet-Nam at considerable political risk. His foremost goal here is going to be to secure tangible evidence of U.S. support for his leadership and domestic goals. He has been under the gun from domestic critics. He wants to take home:

(1) Concrete achievements in the matter of veterans' benefits and claims;
(2) pledges of increased U.S. economic and military assistance.

He wants help; but he does not want to appear to be asking for our favors or as having been bought off by the U.S.

Main Items of Business

(1) Viet-Nam

Marcos is ready to give public support to the U.S. position. He will want a fairly full and frank review of the situation as seen from our vantage point.

He may ask: if we are likely to want increased operations from Philippine bases; whether we can increase military procurement in his country.

You could:

give him a completely frank appraisal of the situation;

in connection with peace efforts, express appreciation for his efforts through ASA to promote an Asian peace conference (he is sensitive about the publicity Thanat has had on this);

tell him we will do nothing about increased operations from the Philippines without consulting him;

note the recent opening of a Procurement Information Office in Manila which should be a help to Filipino businessmen.

(2) Regional Cooperation in Asia

Marcos is active in ASA, Asian and Pacific Council, Asian Development Bank (headquarters will be in Manila).

He may ask: status of your offer of $1 billion for Southeast Asia development.

You could tell him: Gene Black will be going out in October and will want to discuss details or regional development with Marcos.

(3) Military Assistance

Marcos wants equipment for 10 engineer battalions for use in civic action projects. Your compromise solution has been presented to him (by Ambassador Blair) and he welcomed it. That is: we are funding equipment for 3 now; we will fund two more immediately; we will consider funding additional 5 in Fiscal 1968.

On other MAP problems, Marcos thinks the Philippines are not getting their share and that much equipment has been out-of-date. Fact is, the Philippines have not made effective use of much they have received.

Talks on the Bases Agreement are moving forward smoothly.

He may ask: if we can renegotiate the Military Assistance Agreement of 1953; he may ask about increased MAP.

You could:

note the engineer battalion agreement, noting we will consider more next year;

recall we have met his request for 6 Swiftcraft for anti-smuggling and for M-14 rifles and other equipment. We gave him a squadron of F-5's;

We will consider renegotiating the Assistance Agreement.

(4) Economic Assistance

Philippine economy is in bad shape--4% growth of GNP in past five years, 3.2% population growth.

Huk guerrillas are getting more active--taking advantage of local discontent.

Marcos has been moving--on anti-smuggling, tax collections, administrative improvements in Government. Remaining tasks are enormous.

The past Philippine record has been bad. They have not used much of the help offered--by World Bank, Ex-Im, AID, etc.

Marcos will probably ask for U.S. support for his rural development program, particularly in 10 major rice-producing areas.

For political reasons, he will want to be able to mention dollar amounts for loans we may be ready to consider.

You could:

recognize the problems he faces; admire the efforts he has made;

applaud his emphasis on rural development and tell him we are ready to support sound projects in the 10-Province Program;

we are ready to open talks immediately on PL-480 (Title IV) sale of cotton, feed grains and tobacco (will generate pesos for use in his programs);

note we are now working out details with his specialists on PL-480 as follows:

Title IV--$20.0 million
Title II--4.5 million
Title III--10.0 million

we are expanding technical assistance;
we are ready to extend a feasibility study credit;
total AID package is going to be worth more than $50 million.

In short, we are backing his development plan. We want him to succeed. If the above projects and others go well, we will consider more.

If he wants, and will take initiative, we will support arrangements with World Bank and others for closer multilateral consultation and assistance to the Philippines.

(5) Veterans Benefits and Claims

You know the background on this. Legislation on benefits (orphans assistance and hospitalization) has passed the House; may pass the Senate in time for the visit./5/ Estimated cost: $17 million for first year; may total up to $425 over next 30 years or so.

/5/On September 30 President Johnson signed H.R. 16330 and H.R. 17367, the two bills dealing with Philippines' veterans benefits. On October 11 he signed H.R. 16557, a bill relating to refunds of insurance benefits collected in error during World War II, which restored the value of the benefits to the full amount as intended in 1946. For Johnson's statements upon signing these bills, see Department of State Bulletin, October 31, 1996, pp. 684-685.

On claims, we are ready to pay two. Estimated cost: up to $42 million. We want Marcos to drop the other five claims. He will find this hard.

We have the money in hand (special fund in Defense). We have made offset arrangements to minimize balance of payments problem. This will be worked out with the Philippines.

Note: Marcos has been informed of the above and is delighted; he told Ambassador Blair it was "more than he expected." So this should go smoothly. Roughest point for him will be dropping future claims.

Marcos may: note political difficulty in committing any future Philippine Government to drop all claims.

You could:

express appreciation for his willingness to drop; leave the rest to the future;

explain to him that our panel found the other five claims do not merit further study;

tell him we don't know exactly how much the claims will come to, but our present estimate is more than $30 million and as much as $40 million.

(6) Bases and Defense Relations

We have been working with the Phils on revision of the 1947 bases agreement; things are moving ahead.

Rusk and Ramos will exchange notes formalizing the 1959 Understanding which will: (a) cut our base tenure to 25 years (from 99); commit us to consult the Phils on any non-Philippine or non-SEATO use of our bases, and on setting up long-range missiles there./6/

/6/For text of the notes exchanged, see ibid., October 10, 1966, pp. 547-548. The summary minutes of the meetings of June 9, July 13, and August 29, leading up to this exchange of notes are in airgram A-180 from Manila, September 9. (National Archives and Records Administration, RG 59, Central Files 1964-66, DEF 15-4 PHIL-US)

We will reaffirm our mutual security policy.

Marcos may: ask if we are interested in any new bases; say he would want to call them "SEATO Bases."

You could:

tell him we will talk with him if we need any new installations;

hope that our bases talks will proceed smoothly and will eliminate any irritants caused by the presence of bases;
note the Rusk-Ramos agreement with approval.

(7) Trade and Investment Problems

Economic nationalism is rising in the Philippines. Main problem is the Retail Trade Nationalization Law. But it is not now being enforced against American companies.

There is much agitation to abrogate the "parity clause" in Laurel-Langley Trade Agreement (gives U.S. investors equal rights with Filipinos in natural resources and public utilities until 1974). We do not seek renewal of this clause after 1974.

We favor negotiation of a new Treaty of Friendship, Commerce and Navigation to go into effect in 1974.

Marcos may ask:

would we agree to joint committee beginning work now to develop a new trade treaty?

would we accept abrogation of "parity?"

You could:

tell him we want to work together to maintain and expand trade;

an increased flow of legitimate and worthwhile investment would help his development program;

we are ready to start informal talks aimed at later formal negotiations of a new trade treaty;

we expect Laurel-Langley to run to 1974; on "parity," our concern is proper safeguards for the rights of Americans who invested in the Philippines in good faith in the past.

(8) Special Fund for Education

This is a $28 million war damage fund. We reached agreement with the Marcos Government in April on disbursement procedures. We are limited by the terms of the original legislation. So far, the Philippines have advanced no official project proposals. We want to use the fund in the next three years.

Marcos may ask:

can we use the fund to support the new National Cultural Center (a pet project of Mrs. Marcos)? They need $3 million for this (of $9 million total cost).

can we release the fund--or a large part of it--for a permanent trust fund with the interest used for educational projects?

You could state:

we will be happy to support use of the fund for the Cultural Center;

we would like to disburse the fund in two or three years, but we will give his proposal further study.

(9) Civil Air

They are unwilling to accept a Bermuda-type agreement. We have refused a Manila-Tokyo-San Francisco route for PAL.

If Marcos asks about civil air, you might tell him if they will accept a Bermuda agreement (unlimited frequencies for U.S. carriers), we will give on the route problem. Informal talks could begin immediately, if he is interested.

The items above are the main problems we see coming up during the visit.

There will be a good deal of hard bargaining, back and forth.

But in my judgement, there are two key factors which provide the backdrop for the Marcos visit.

One, it is clear from reports from Manila that Marcos has really put his political neck on the block in backing our Viet-Nam position and in sending military forces there. But he did it.

The least we can do is recognize this fact and take actions that will make his position at home as strong as possible.

Second, Marcos is a sensitive, patriotic and sentimental man. He is also strongly pro-American. A private and personal expression of interest and support from the President of the United States will outweigh many other things. If he feels your personal concern with his problems, those problems are going to be easier to face.

In short, he should leave Washington knowing he has a true friend, a loyal friend in the White House.

I am sure he will.

Walt

 

343. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, September 14, 1966, 8:45 p.m.

/1/Source: Johnson Library, National Security File, Memos to the President, Walt Rostow, Vol. 12, 9/1/66-9/14/66. Secret.

Mr. President:

SUBJECT
Your second meeting with President Marcos, 5 p.m. Thursday

It is clear that you got through a tremendous amount of essential business with President Marcos at your first meeting today, Wednesday./2/ I do not know, of course, how much time you had for general discussion of your perspective and his on Asia and the world.

/2/September 14. Johnson met Marcos alone in the "Little Lounge" off the Oval Office from 5:26 to 7:46 p.m. (Ibid., President's Daily Diary) No written record of this conversation has been found, but see Document 345 for a discussion between Rusk and Johnson concerning what Rusk should inform the press about the meeting.

I suspect that the most important single thing you can do on this visit is to ask his advice about Asia and to request him to present to you candidly his vision of the future of Asia. I say this not merely because of what we know of the man from reports, but from the rather remarkable statement he made in response to your welcome and his toast at the State Department lunch./3/ On the latter occasion he spoke wonderfully well of his desire, while maintaining his ties to the U.S. of reaching back into the Asian foundations of Philippine life and developing on this basis a role in a new Asia.

/3/The exchange of greetings by Johnson and Marcos, September 14, is printed in Department of State Bulletin, October 10, 1966, pp. 526-528. No record has been found of the exchange of toasts at the Department of State lunch on September 14.

Therefore I suggest that you tell him:

1. of the excitement and encouragement you have derived from the spirit of the new Asia which has developed remarkably in the past year;

2. the U.S. does not intend to leave Asia but, as you said at Lancaster, Ohio,/4/ you look for the regions of the world to take a larger hand in their own destiny in the future, as they can develop together and solve their own problems in their own way. You assume President Marcos shares this vision.

/4/For Johnson's remarks on foreign policy at Fairfield County Fairground, Lancaster, Ohio, September 5, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1966, Book II, pp. 973-975.

3. Above all, you have looked forward to his visit to hear directly from him his own vision of the future of Asia; the role of the Philippines in Asia; and his advice to you about what we should do and not do with respect to Asia.

W. W. Rostow/5/

/5/Printed from a copy that bears this typed signature.

 

344. Memorandum for the Record/1/

Washington, September 15, 1966, 5 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL PHIL-US. Secret; Exdis. Drafted by Bundy. According to the President's Daily Diary, the meeting lasted from 5:08 to 6:03 p.m. (Johnson Library) Prior to this meeting, Marcos met with McNamara at the Pentagon from 4 to 4:30 p.m. A memorandum of their conversation by McNaughton, September 15, I-1307066, is in the Washington National Records Center, RG 330, OASD/ISA Files: FRC 70 A 6648, Philippines 00.1--333.

SUBJECT
Final Conversation Between President Johnson and President Marcos

(This memorandum was prepared by Mr. Bundy and cleared by Mr. Rostow. Since it has not been personally seen by the President, and in view of the sensitivity of the discussion at some points, it should be used solely for working reference, and its distribution is being limited to the following on an Eyes Only basis: Secretary Rusk, Secretary Fowler, Secretary McNamara, Mr. Ball, Mr. Rostow, and Mr. Bundy. A copy will also be given to Ambassador Blair for his personal use on his return.)

Present were:

President Johnson, Mr. Ball, Mr. Rostow, Ambassador Blair, and Mr. Bundy.

President Marcos, Secretary Ramos, Secretary Romualdez, Secretary Umali, Mr. Aspiras, Dr. Mapa, and General Menzi.

1. Stabilization credit. The President explained the reasons why the Secretary of State and the Secretary of the Treasury could not agree either to a general undertaking to support the peso or to a specific stabilization credit. He pointed out that we had never given an undertaking of support for any foreign currency, and that we had extended stabilization credits only in a multilateral framework involving the IMF. To depart from these principles would be a serious problem in our relations with other countries./2/ The President and Mr. Bundy also argued that the peso was now in sound shape, and that any reference to the subject might cause doubt in many international circles.

/2/President Johnson received a memorandum from Under Secretary of the Treasury Joseph Barr, September 15, strongly recommending against including in the Joint Communiqué issued at the conclusion of the Marcos visit a U.S. pledge to support the Philippines' peso. With the Department of State's concurrence, Treasury stated that the United States had never done this except on an ad hoc basis and it would "open up a Pandora's box of requests throughout the world." Both Treasury and State opposed standby credit for the Philippines from the Exchange Stabilization Fund. Such assistance should only be used in conjunction with financial support from the International Monetary Fund and World Bank. (Johnson Library, National Security File, Country File, Philippines, Marcos Visit Papers, Memos, 9/14-16/66)

President Marcos and Secretary Romualdez argued that, while the peso was in sound shape, there were many speculators who were contending that the expenditures under the Marcos program would lead to inflation.

In light of President Johnson's position, there was some discussion whether the paragraph should be retained with general language as proposed on the American side. President Johnson finally asked whether the paragraph was necessary, and made clear that it was not important from a US standpoint. President Marcos, in consultation with Secretary Romualdez, finally suggested that the paragraph be dropped altogether, and this was accepted./3/

/3/he text of the communiqué as released is printed in Department of State Bulletin, October 10, 1966, pp. 531-534 and American Foreign Policy: Current Documents, 1966, pp. 726-730.

2. Offshore procurement./4/ President Johnson explained that the creation of a special committee would appear to give favored status to the Philippines, and that this would cause us embarrassment in other countries. He urged acceptance of our draft language.

/4/William Bundy sent Johnson a memorandum, September 15, recommending the positions on offshore procurement and the rest of the issues discussed at this meeting. (Johnson Library, National Security File, Memos to the President, Walt Rostow, Vol. 13, 9/15-30/66)

President Marcos did not press for the special committee, but did ask for a reference to a "procurement office." Mr. Bundy explained that the DOD simply had to keep the executive responsibility for Far East procurement in Tokyo, and that a separate action office in Manila would be inefficient. Mr. Bundy noted that the present Procurement Information Office should provide full information, and was closely wired to the Tokyo action office. Thus, with the assurance of participation on a "full and equitable basis," we believed we were going as far as we could.

President Marcos said that the problem was that a lot of Philippine sales under the program were now going through middlemen in Hong Kong and elsewhere, who had better information and connections to the US procurement authorities than the Philippine businesses did for themselves. Mr. Bundy said that this was a problem that should be remedied as the new Procurement Information Office took hold, and that we would take all necessary steps that this was the case.

President Marcos asked specifically about offshore procurement of drugs. Mr. Bundy explained that the US had engaged in such procurement only in very special cases where there was a marked quality and price advantage, as in one Italian situation. Mr. Bundy said that this had to be our policy, since our general attitude was one of limiting offshore procurement in every possible way for balance of payments reasons. If Philippine suppliers could qualify on the basis of such special advantages, they could participate, but only if this were the case. Mr. Bundy also referred to current US policy, under which steel products were not being purchased under offshore procurement, and explained that this was due in part to strong Congressional pressures.

President Marcos finally agreed to the basic American language, but suggested the deletion of the last two sentences referring to the Procurement Information Office. This was accepted by President Johnson.

3. Military construction. President Marcos asked acceptance of the Philippine language. President Johnson explained that this would carry the implication of an enlarged US undertaking, and that we simply could not do this, particularly at a time when we were cutting back military construction within the US. President Johnson said that we would simply have to leave it that we would go forward with any plans that were fully justified, but could make no undertaking in the communiqué.

President Marcos accepted President Johnson's position.

4. Over-all settlement of veterans matters. President Johnson referred to the proposed Philippine sentence that would have called for an over-all, Congressionally-approved settlement of all veterans matters. President Johnson explained that any further Congressional action in this area was out of the question. President Marcos accepted President Johnson's position, and the language was removed.

5. Special Fund for Education. President Marcos asked that the Philippine language be accepted, releasing the Fund to the Philippines and handing over its administration to a joint commission, with specified categories of use. President Johnson said that he was prepared to release the funds as rapidly as projects were approved, and specifically indicated that if President Marcos wished to go ahead with the allocation of $3 million for the cultural center he would be prepared to approve this and to start the machinery. (President Marcos did not himself refer to the cultural center, or pick up this specific offer.) However, President Johnson said that the existing joint panels had been established to develop project proposals, and that the thing to do was to have them get on with it. Finally, President Johnson said that we could not release the Fund to the Philippines for balance of payments reasons.

After some brief discussion, President Marcos accepted the deletion of the Philippine language, and it was agreed that the American language would be revised to constitute a direction to the joint panels to accelerate their work, with the two Presidents concurring that there should be rapid payout as projects were approved.

6. Paragraph order. President Johnson began by saying that he might have made a mistake in suggesting that the science paragraphs come first, and that of course he would be prepared to accept another order if President Marcos desired. Nonetheless, he wanted to make clear that his reason for putting the science paragraphs first was to get the "dollar sign" out of the communiqué, and to make clear that the two Presidents had talked of broader and more fundamental things. He enlarged on this point at some length, referring to the problem of a large country appearing to give largesse to a smaller country. Basically, President Johnson stressed his belief that the proposed paragraph order was in the interests of President Marcos himself.

President Marcos seemed to take to this argument, and there was some lighter exchange. Finally, President Marcos turned to his delegation and asked who had suggested the transposition, implying that it had never been his idea in the first place. Secretary Romualdez said that he had suggested the changes. President Marcos finally said that of course he would accept President Johnson's paragraph order and thought it was fine. This ended the substantive discussions on a light and friendly note.

 

345. Editorial Note

President Johnson and Secretary Rusk talked on the telephone on September 16, 1966, at 10:18 a.m. The first 2 minutes and 8 seconds of the conversation were not available because of donor deed restrictions, so it begins with Rusk responding to the President, who was clearly annoyed and displeased, apparently at press reports of his discussion with Marcos:

Rusk: I will try to turn this around a bit at my press conference this afternoon.

Johnson: I just sure would. I would take every item and show it's a regular and moderate item that has been presented. And the President [Marcos] did not come and did not spend any of his hour and ten minutes discussing loans or aid. He said that he didn't want to discuss that and President Johnson agreed. They talked about the space thing and bringing some fellowship people in here. And they talked about studying the waters out there, oceanography. And they talked about an insurgency school and they talked about the Asian Development Bank. And I'm going out there some time, some way, I don't know how. But if you want to drop that you can say that they talked about that because he did urge me to come. I think that'll give you something a little dramatic that will get them off the money, them going out there. (Johnson Library, Recordings and Transcripts, Telephone Conversation between President Johnson and Secretary Rusk, September 16, 1966, 10:19 a.m., Tape F66.24, Side A, PNO 1)

At his press conference on September 16, Rusk answered a question on Marcos' proposed Asian political forum as a potential means of resolving the Vietnam war and his encouragement of contacts between North and South Vietnam. For text of the question and Rusk's reply, see Department of State Bulletin, October 3, 1966, page 480.

 

346. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, September 16, 1966.

/1/Source: Johnson Library, National Security File, Memos to the President, Walt Rostow, Vol. 13, 9/15/66-9/30/66. Confidential.

SUBJECT
U.S. Aid to the Philippines

Whenever the United States agrees to help a country in need, it is easy--and all too common--to ascribe a cynical motive to that action. It is easy, too, too put a price tag on the action and to believe that thereby you have described a policy. It is all too simple--and generally superficial--to take an action by Government A and an action by Government B and make one the "pay off" for the other.

This has been the approach in some of the reporting of your decision to lend new assistance to the Government of President Marcos.

Much of the reporting ignores several fundamental points involved in this decision. Among these fundamental points, I would note the following:

1. The assistance program just announced in outline is a determined effort to help a friendly country that is in trouble.

The Philippine economy has become almost a model of unstructured, unbalanced, and stunted growth. The late 1950's were boom years. Gross National Product was growing at more than 5% a year. Industrialization was proceeding at a fast pace. But the rapid growth was unstable. The peso was over-valued. Import prices were artificially low. There were virtually guaranteed markets for the main exports.

In 1962, exchange controls were eliminated. The peso suffered almost 100% devaluation. Many marginal industries were in trouble. World prices for Philippine exports fell. Growth rates declined. The economy began to stagnate. The agricultural sector (employing between 70 and 80 per cent of the population) failed to expand. The Philippines, a rich farming country, finds itself importing 90% of its milk and dairy products and 10% of its total food needs. The population continues to rise dramatically (about 3.3% a year) as GNP stagnates at about 4%.

Our Filipino friends frankly admit that their operations are plagued by bureaucratic ineptness and nonperformance. Tax collections are inefficient and graft-ridden. Smuggling robs the federal treasury of $100 million or more a year.

In the last half of 1965, credit restraints were largely ignored with the result that there was a 5% increase in the money supply since June 1955. A 10% rise in living costs occurred in the same period.

In part as a reflection of deepening economic trouble, Communist insurgents have increased their activity; propaganda efforts, recruitment and terrorism are all on the rise.

So here is a country in deep trouble, and we are trying to help.

The cynical can assert that we are merely "repaying" Filipinos for their decision to send troops to Viet-Nam. The fact is that we would have helped them in any case--indeed, most of the programs now going forward were being considered long before the Philippines' courageous decision to help their Vietnamese neighbors.

Needless to say, we are not providing economic aid to our Australian and New Zealand friends--who also have sent troops to Viet-Nam.

2. In working with President Marcos, we are cooperating with a new and active administration, one that has clearly recognized its country's fundamental problems and a chief executive who is fiercely determined to move his country forward.

President Marcos is not a man to ask for handouts or gifts without strings. He is a proud man. He is a man who wants progress for his people. He believes--and we share the belief--that the development and prosperity of his country is good, not only for the Philippines, but for Asia and for us.

He has taken steps to improve the efficient operation of his government. He has searched for men of capability and devotion and put them in positions of responsibility. He continues that search. He has moved actively against smuggling. He is trying to improve his country's tax collection system. He has worked out a Four-Year Development Program which underlines his goals, and we are working with his specialists to refine that program and to outline workable and feasible projects.

And his principal goal is to improve the agriculture of his country. He wants to expand productivity. He wants to build new roads that will bring the countryside into contact with the towns--and therefore with the markets. He wants to provide electric power for his people in the countryside, and to give them the water they need for irrigation.

An important element in President Marcos' plan is his concentration on 10 of his country's provinces. These are areas where the need for improvement is greatest.

Beyond meeting the present urgent problems in his economy, President Marcos wants his country to move proudly forward over the frontiers of science and technology. He wants to share in the exploration of space and of the ocean depths, to improve the technical and scientific training of his young people, and to provide for both training and research in the area of economic development.

We are cooperating with him in these ambitious enterprises--not to help a man but to help a man who wants to help his people.

3. A careful look at the proposed forms of our assistance shows that each one is designed to help President Marcos and the Philippines to meet some of the specific problems they face--particularly in the agricultural sector.

To be specific:

(1) A $4.5 million loan

This is for irrigation. It will make possible the reconstruction and extension of existing irrigation works, providing much-needed water for the farmers.

(2) Feasibility study loan--$2 million

This will permit the Filipinos to conduct engineering and economic studies, with our help, which will tell them whether proposed new projects, including additional irrigation works, make sense. These studies will follow up surveys already conducted in the Water Resources survey.

(3) PL-480 (Title II)

A grant of food grains and other agricultural products.

This will provide:

(a) Partial payment (in the amount of $3.5 million) to some 30,000 workers who will be digging and renovating irrigation ditches and building or repairing local roads.

(b) $.5 million in grains, returns from which will help to capitalize livestock cooperatives. \

(4) PL-480 (Title IV)

Sale of between $20 and $25 million worth of needed cotton, feed grains and tobacco.

(Note: This is repayable in dollars at 3.5% interest.)

The peso proceeds from sale of these products will provide increased capital for the Agriculture Credit Administration.

They will also be used:

--for local costs of irrigation rehabilitation projects;
--for feeder road construction;
--possibly for some capital for the Land Bank.

There may also be some small grants to government agencies for such things as: agricultural research, technical training in agriculture; pest and crop disease control; land classification studies in connection with land reform.

(5) Engineering equipment ($1.8 million)

This is equipment from surplus military stocks. It will be renovated by use of AID funds. Value of the repaired equipment is estimated at $10 million and it will be given to provincial governments (in 8 of the 10 critical provinces). The equipment is to be used in the road-building program and for irrigation and other agricultural development projects.

We will also be supplying some spare parts and technical training on operations and maintenance.

(6) Other technical assistance (about $1 million)

To be used for such things as providing for a team from the U.S. Farmers Union to advise on agricultural credit, and for a team from the Rural Electric Cooperative Association to help work up projects for establishing new rural electrification cooperatives.

(7) PL-480 (Title III)

This is a continuing program. It provides food products to U.S. voluntary agencies, such as the Catholic Relief Service, for their programs of aid to needy Filipinos.

(8) In view of the need for better performance in the tax collection field, we have sent several specialists from the Internal Revenue Service to the Philippines. This is a small project which represents about 2 1/2 man-years of labor on our part annually.

Even our assistance in the military field is related closely to President Marcos desire to help his farmers. The five engineer battalions we have agreed to support this year with equipment will be used by him in civic action projects--primarily road-building in rural areas.

This, we see when we look beneath the titles and the amounts, that the assistance program that we are working out with the Philippines is designed to meet specific needs, and primarily those needs in the field of agriculture which the Philippine Government and we recognize as most urgent.

4. Finally, it should be clear that the kind of program outlined in this memo and which we hope to carry out with the Philippines Government is a reflection of your consistent--and often repeated--concern with the problem of food production in a world where the population is rising steadily.

For example, on March 19, 1964, in your foreign aid message, you noted:

"Funds for educational and technical cooperation--to help start schools, health centers, agricultural experimental stations, credit services, and dozens of other institutions . . . But they will be used by selected projects to raise the ability of less fortunate peoples to meet their own needs."

A year later, on January 14, 1965, you said:

"In the years ahead, if the developing countries are to continue to grow, they must rapidly enlarge their capacity to provide food for their people. Up to a point, they can and should improve their ability to buy some of their food from abroad. For the most part, however, they must expand and diversify their own production of food."

On February 10, 1966--in your Food for Freedom--you said:

"We will launch a major, new attack on worldwide hunger. We will present this year a new food aid program designed around the principle of intense cooperation with those in all hungry countries who are ready to help themselves. We will direct our assistance program toward a cooperative effort to increase agricultural production."

And again this year--on June 30, 1966 in your Food for Peace Report-- you said:

"In simplest terms the task of bringing food and population into balance--while maintaining progress in health, education and economic growth--is the most critical challenge many countries are facing today. It will probably remain their most urgent challenge in the immediate years ahead. The world's capacity to respond will dramatically affect the course which individuals and nations choose in confronting their problems and neighbors in coming generations."

W. W. Rostow/2/

/2/Printed from a copy that bears this typed signature.

 

347. Memorandum From Secretary of State Rusk to President Johnson/1/

Washington, October 14, 1966.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 PHIL. Secret. President Johnson visited East Asia for 17 days beginning on October 17. The President was in Manila from October 23 to 27 excluding the 1-day surprise trip he made to Cam Ranh Bay, South Vietnam on October 26.

SUBJECT
Matters of Substance for Your Country Visits

You will be supplied daily with material covering the successive country stops. This will give detail on leading personalities with whom you will be talking, topics that may come up, and suggested positions. This memorandum is a shorter summary, for your personal use, of those key items that may require your personal attention and some review of the detail with me prior to our talks. I have also highlighted sensitive issues that may not be raised in high-level conversations, but of which you should be aware.

This memorandum does not cover the question of your speeches and statements. Drafts of these will reach you through your own staff, on the basis of materials prepared by the Department and your staff.

In looking at each visit, we have all tried to find special topics on which you could make new proposals or offers of assistance that would be consistent with our interests apart from the trip. Items of this sort will appear in the speech material, but by far the most basic issues concern military assistance for Thailand and the question of our rubber stockpile disposal policy for Malaysia. Both of these would be critical in any event at this time, and the handling of them could have a great effect on the atmosphere of your visit to each of these two countries. They are covered in more detail in separate papers sent to you.

I have arranged the material in separate pages for each country.

Dean Rusk/2/

/2/Printed from a copy that indicates Rusk signed the original.

[Here follows material on New Zealand and Australia.]

III--PHILIPPINES

The Marcos visit covered all aspects so thoroughly that you should find Marcos quite content with the result and with little on his mind on our bilateral relations. He may raise such topics as delivery time for the engineer construction equipment for the five battalions, and you could simply indicate that this is being pushed forward as hard as possible.

The various loan and PL-480 projects covered in the communiqué with Marcos/3/ have all gone along reasonably well.

/3/See footnote 3, Document 344.

As to dollar figures, you should be aware that Marcos and his people have put out such figures as "a half billion" as the amount that will be coming to the Philippines as a result of the Marcos visit. This is of course way in excess of the total of approximately $100 million which would be reached by adding every single item on the list--economic aid, military aid, and the first year cost of veterans benefits and the two claims. The Filipinos have latched onto the ultimate actuarial payout on veterans benefits ($425 million by our calculations), and are also inclined to throw in World Bank loans ($40 million) and all their private lending commitments now outstanding. This kind of "numbers game" is regrettably an old Philippine institution. I would recommend that if this subject comes up at any point, you avoid numbers completely and simply say that the undertakings in the communiqué speak for themselves.

[Here follows material on Thailand, Malaysia, and Korea.]

 

348. Intelligence Memorandum Prepared in the Central Intelligence Agency/1/

No. 0631/67

Washington, April 19, 1967.

/1/Source: Johnson Library, National Security File, Country File, Philippines, Vol. III, Cables, 7/66-7/67 [2 of 2]. Secret. This memorandum was prepared by the Office of Current Intelligence and coordinated with the Office of National Estimates. Rostow sent this memorandum to the President under cover of a note of April 19 which stated: "I had this CIA evaluation of the Huk resurgence in the Philippines especially prepared. It shows a modest increase in Huk capabilities; grave political weakness in Central Luzon political life; promising political and security counter-measures, inadequately followed through." There is an indication on the note that the President saw Rostow's note and presumably the attached memorandum.

THE HUK RESURGENCE IN THE PHILIPPINES

1. The resurgence of the Hukbong Magpapalaya Sa Bayan--commonly known as the Huks--could cause President Marcos serious political difficulties, although so far the resurgence poses no major threat to his government. He has made eradication of the Huk movement, mainly based in Central Luzon, a major goal of his administration./2/

/2/In a Special Report Weekly Review, SC No. 00758/67A, February 24, the CIA concluded that during his 14 months in office, "Marcos has broadened the Philippines involvement in Far Eastern international problems, while showing little more than good intentions on the domestic front." Such a concentration "has tended to leave relatively untouched the deep-seated social, economic, and political problems." The report noted that there was "widespread discontent with pervasive rural poverty and rising urban unemployment has contributed to a rise in crime and violence as well as a resurgence of leftist activities" including the revival of a modest threat from the Huks. (Ibid.) The President apparently did not see this report.

2. During the past 20 months, both the strength and the activities of the Huks have shown a marked increase. The number of armed cadre has grown from an estimated 37 to possibly 300-400, and the US Embassy in Manila estimates that the mass base support has increased by five to eight percent to about 28-29,000 persons, roughly one percent of the population in the affected provinces. The number of assassinations and kidnappings jumped abruptly from a total of 17 in 1965 to 71 in the first eight months of 1966. Although later figures are not available, the higher level of activity appears to be continuing. The most flagrant act of terror was the murder in July 1966 of Mayor Anastasio Gallardo of Candaba, chairman of the anti-Huk Mayors' League of Pampanga, while he was on his way to a meeting with President Marcos. The league has since become dormant, its members fearing Huk reprisals.

3. Originally the paramilitary arm of the illegal Philippine Communist Party (PKP), the Huks over the years have taken on the appearance of marauding bandits and extortionists, rather than of revolutionaries motivated by Communist ideology. Although there have been recent indications that recruits are again receiving Marxist indoctrination, among the peasantry the Huks maintain a "Robin Hood" image of assisting the poor. In fact, the Huks' separate system of justice in the area they influence, chiefly in the rice-producing provinces of Central Luzon, appears to be more efficient than the government's slow-moving and often corrupt judicial system. The Huks' decisions, which do not always favor the peasant, seem to be accepted by many landlords as well.

4. The Huks' present ties with the PKP are vague and contradictory. The terrorism that sustains Huk power is not in keeping with the party's purported abandonment of terror for the "parliamentary struggle." Links between the leadership of the two groups appear tenuous. Pedro Taruc, until recently the Huk chieftain, is one of a three-man committee that reportedly has taken over the functions of imprisoned PKP secretary general Jesus Lava. According to a recent report, however, Taruc has relinquished Huk leadership to Faustino del Mundo, whose Communist leanings are believed none too firm. Other reports suggest that the imprisoned former party leaders may retain control through intermediaries of both the party and the Huks.

5. Marcos moved quickly to meet the revived Huk threat. Last June he launched Operation Central Luzon, later renamed the Central Luzon Development Program. The immediate mission of this plan was to implement the land reform code in critical areas of eastern Pampanga Province, Central Luzon, and eventually to construct roads, schools, and irrigation projects, and to improve agricultural methods. So far, results have been modest. To improve security conditions, Marcos has requested funds in the FY-1968 budget to expand and improve the Philippine constabulary.

6. A major stumbling block to reducing Huk influence is the continuing collaboration of local politicians seeking the votes the Huks can deliver. With the approach of off-year elections this November, there appears to have been an increase in this collaboration. In Pampanga, the Huks seem to enjoy the support of the governor. More critical, however, is the evident acquiescence of much of the peasantry. This attitude can be expected to continue as long as local landlords block reform efforts, as corruption by officials diverts funds from development projects, and as legal redress remains slow and one-sided.

7. A manifest failure by Marcos to reduce Huk influence could contribute to his future defeat at the polls. Over the long run, if not effectively dealt with, the Huk movement could again develop into a major insurgent threat.

 

349. Telegram From the Embassy in the Philippines to the Department of State/1/

Manila, April 20, 1967, 1011Z.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, AID (US) 1 PHIL. Confidential; Priority.

10813. Subject: USAID multi-year strategy paper. Ref: Aidto Circ XA 2031./2/ Country Team message.

/2/Aidto Circular XA-2031, February 2, provided guidance for implementation of AID's Planning-Programming-Budgeting system. (Ibid., POL 1 US)

1. We have carefully reviewed the proposed USAID multi-year strategy paper (MYSP) full text of which being pouched/3/ and strongly endorse it. This paper directly addresses the problems facing the US in the Philippines and the fundamental issues associated with Philippine economic development; and proposes a plan of action through FY1975, along with priorities, that we believe is both realistic and necessary. Highlights follow:

3/In airgram Aidto A-840, April 25. (Ibid., AID (US) 1 PHIL)

2. Major emphasis. The MYSP has four main points of emphasis as follows. It emphasizes (1) the development and support of local governments and private institutions as viable alternatives for total dependence on central government agencies, and as vehicles through which economic development programs and projects can be executed: (2) that as the Philippine agricultural program gains momentum there should be a decrease in social unrest in rural areas with unabated social unrest in urban areas, requiring a balanced socio-economic program to offset both; (3) the postponement, to the extent possible of major US capital and large-scale conventional technical assistance projects until later in the planning period and after appropriate institutions have been developed and are functioning; and (4) a recognition of the advisory role of USAID technicians who perform catalytic and promotional functions in the private sector and at both the central and local levels of government, particularly the latter (which already extensively done by number of USAID staff).

3. Consequences of this approach. In order to make the plan effective we see a need to increase the USAID staff from its present level; a need for local currency, in part to be derived from PL480 sources; and probably a need for closer cooperation among all US agencies at the working level. Staffing and peso requirements have as yet not been worked out, in terms of magnitude and timing over the eight year planning period. Likewise organizational requirements for the US Mission have not been thought out. Before we proceed with these details we need general agreement on the proposed overall approach which, we repeat again, is in our judgment realistic and necessary.

4. USAID goals. In view of the US objectives in the Philippines and in Southeast Asia, the problems the US faces in realizing these objectives, and the approach set forth in the USAID MYSP to enable progress to be made, the following six goals are proposed as ones which will govern USAID activities over the planning period, subject of course to modification if and when basic conditions in the Philippine setting change, e.g., stepped up Communist activity in the Philippines emanating from outside the Philippines, failure of agricultural program, etc.

(1) Demonstrating to the Filipino elite, nationalist and other, the advantages of pursuing a vigorous economic development policy that is outside partisan politics, and ultimately identifying nationalism with growth and prosperity;

(2) Denying potential Communist or other subversive exploitation of those Philippine socio-economic problems most susceptible to exploitation, and thus preventing diversion of Philippine energies from the task of economic development;

(3) Creating for the Filipino elite and GOP policy makers an expanded reservoir of patriotic Filipinos who are capable of viewing objectively the socio-economic problems of their country;

(4) Improving, on a modest scale, Philippine health, education and public administration, in preparation for the time when economic development becomes a national policy;

(5) Developing private Philippine institutions and local governments, where possible, to become viable alternatives for central government bureaucracy, and through which programs and projects can be executed;

(6) Encouraging non-US assistance in financing and executing foreign aid projects in order to gradually focus Filipino attention away from the United States, and particularly within the Southeast Asia region itself.

The specific program components associated with the achieve- ment of each goal, along with priorities over time, are identified in the MYSP.

5. The foregoing outline of the new approach proposed in the MYSP was reviewed by the Ambassador and USAID director prior to their departure for Washington and approved in principle. It reflects a growing view within this Mission that more vigorous steps and new departures are essential in the general thrust of our aid programs in the Philippines if we are to assist the present administration in halting the downward internal spiral which has characterized the past several years and in effecting a reasonable turn-around.

6. In its early phases it will represent a concentration of effort in those areas which in our judgment appear to offer the greatest present hope of success; i.e. a selective concentration on those provincial or local activities which bear continued promise of producing immediate though initially small-scale results at the grass roots level, in the expectation that these may spread more generally to other areas of the country and take hold. It represents, moreover, a deliberate effort to identify ourselves progressively and to the extent possible with the common man, whose restiveness is increasing.

7. It would bypass in many places the central national bureaucracy and to this extent would admittedly constitute a greater US involvement in the internal affairs and political habits of the country. It cannot, on the other hand, be accomplished without the wholehearted support of the Marcos administration and must accordingly be sold to the President and his immediate advisors in such a way as to enlist their full support. Given Marcos' continued determination to effect major internal improvements, however, and his enthusiasm for earlier efforts along these lines, we are optimistic that he can be persuaded.

8. This does not imply that the projected policy would entirely neglect efforts at the national level. Some elements of the program would continue to be directed specifically in that direction, and toward the end of the project it would be our hope that progressively more of our joint effort could be channeled in that direction as the overall situation improved. But the major thrust of our assistance and advisory efforts during the early stages would clearly involve a new emphasis on local administration, building hopefully on our experience and success in the immediate past with the US supported rural development program.

Wilson

 

350. Memorandum From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, June 8, 1967.

/1/Source: Johnson Library, National Security File, Country File, Philippines, [Filed by Johnson Library]. Secret.

SUBJECT
Equipment for Five Additional Engineer Battalions (Philippines)

You will recall that we are supplying equipment for five engineer construction battalions for the Philippines. This was in response to President Marcos' request made during his visit last Fall. The equipment is all to be delivered by the end of this month.

At the same time, you agreed to consider supplying equipment for a second five battalions in Fiscal 1968. As you know, nothing ranks higher on President Marcos' list of priorities than equipping these 10 battalions for vital civic action work--road building, irrigation, etc. Reports from Manila indicate the Filipinos are beginning to use effectively the equipment thus far provided.

There is no doubt that failure on our part to carry through on the second five would be read by Marcos--and by his political enemies--in this election year as clear evidence of unwillingness to back him on an important program to which he is publicly committed. On the other hand, the political and psychological advantages of our moving forward--even before he pushes us on the matter--would be great.

State and Defense recommend that we promise the additional equipment (see attached memo from Secretary Rusk)./2/ I heartily concur. The Bureau of the Budget supports the recommendation.

/2/Dated June 5, not printed. Another copy is in the National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 19-8 US-PHIL.

Defense has made available an additional $4.4 million from overall FY 1967 MAP. This will take care of more than 2-1/2 battalions. The additional $4 million required can be acquired by cutting some lower priority items from FY 1968 Philippine MAP.

While promising to supply the equipment, we would not give a firm pledge on timing of deliveries. However, I am assured that every effort will be made to complete delivery in CY 1968 and possibly in FY 1968. This will depend, in part, on the timing of Congressional action on FY 1968 MAP appropriations.

All concerned believe that this action will have a favorable effect in easing some of the tensions that have developed in U.S.-Philippine relations. It is recommended that President Marcos be informed of your decision in a personal letter from you.

This letter also should cover the main elements in our current relations and should open a new and constructive dialogue between you and President Marcos. A proposed text is attached./3/ We would telegraph the text and pouch the signed original.

/3/Not printed. For the letter as sent, see Document 351.

Secretary Rusk asks that you authorize him and Secretary McNamara to inform Congressional leaders on both sides and the chairmen of key committees that you propose to make this commitment. They do not anticipate any objections. You may, however, wish them to carry out this consultation on the Hill before the letter to Marcos is sent.

Walt

Supply of equipment approved/4/
Disapproved
Letter to Marcos approved
Disapproved
Have Rusk and McNamara consult Congressional leaders
Send letter immediately
Hold letter pending consultations on Hill
See me

/4/The President checked the options to approve supplying the equipment, the letter to Marcos, Rusk's consulting with Congressional leaders, and holding the letter to Marcos pending consultations with Congress.

 

351. Telegram From the Department of State to the Embassy in the Philippines/1/

Washington, June 24, 1967, 5:09 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL PHIL-US. Secret; Niact; Limdis. Drafted by Service, then revised in the White House; cleared by Walt Rostow, William Bundy, Steadman of DOD/ISA, and Ives of AID.

215920. For Ambassador.

1. Request you deliver in person the following letter dated June 24, from President Johnson to President Marcos. (Signed original being pouched.)/2/

/2/The signed original is in the Johnson Library, National Security File, Special Head of State Correspondence, Philippines, Part II [2 of 2].

Begin Text

"Dear Mr. President:

I still think often and warmly of your and Mrs. Marcos' visit to Washington last year, and of our later meetings in your capital during the Manila conference. And I read with close attention reports from your country, especially those which describe your courageous struggle to meet the urgent problems that confront you.

Some of these reports have caused me to give a good deal of thought in recent weeks to the relations between our two countries. From a remark you made some weeks ago to an American reporter--that our relations 'are in a vexing and irritating period of readjustment'--I know that this question is very much on your mind, too.

I think it would be useful, therefore, if you and I could exchange views on this important subject. I believe we should explore together what can be done to strengthen and deepen our relations, and to remove, or at least reduce, such irritants as exist.

At the outset, I must say that I have no doubt whatsoever that our relations rest on a solid foundation. Our shared history and common values are important parts of this foundation. In the long run, of course, durable and harmonious relations between nations depend on their national interests, but here, too, I find no cause for anxiety.

Your national interests and ours are on parallel courses. Our two countries are cooperating toward the goal of peace in the Pacific. Our military presence in the Philippines contributes to your security and enables you to concentrate your resources more fully on social and economic development.

At the same time, our presence permits us to fulfill our heavy responsibilities in the area as a whole.

You and your administration are making strenuous efforts to build a strong and expanding economy, one that will give your people more jobs, improved housing, a higher standard of living, broader education, and better health. I know that you are pushing ahead to expand internal savings, both public and private, to finance these efforts. We ardently hope that you will succeed.

I know very well the difficult problems you face in these efforts to produce effective programs and convert them into actions. I assure you that we are anxious and ready to help.

At the same time, we both realize that irritations exist. During your visit to Washington and since, you and I have cleared up many of these matters which had been pending too long.

Our governments signed a new agreement on bases tenure. We have supplied high-speed boats to help in your anti-smuggling campaign. We have taken action on veterans' benefits and are making progress on claims. We reached agreement on the first two projects under the Special Fund for Education. Our A.I.D. program is going forward in promising new directions, particularly in rural development. We are ready to begin discussion of the concept of our trade relations after the expiration of the Laurel-Langley Agreement.

Your program to raise rice production is among the most hopeful in Asia today.

We agreed last September to equip five engineer battalions which, in addition to their military mission, are carrying out vital civic action programs. I am assured this equipment will be delivered by the end of this fiscal year. I have read encouraging reports on the potential of those battalions and the key role they are beginning to play in your economic and social development effort.

I have considered providing equipment for the second five battalions, as I promised to do. I am happy to tell you that we will be able to provide equipment for these additional battalions, subject, of course, to the availability of appropriated funds. The equipment for these battalions will be financed in part from this year's funds, and the balance from new appropriations. Some of these funds represent additional assistance, but some may have to come from within planned military assistance levels with engineer equipment replacing items of a lesser priority. I hope that you will treat this undertaking as wholly private between us. I believe we should consult closely as to the appropriate timing and form of an announcement, and I would appreciate your views on this at your early convenience.

When you were here, you and Mrs. Marcos told us of your deep interest in providing support for the Philippine National Cultural Center. I have looked into this and am delighted to tell you that I have now authorized Secretary Rusk to work out formal arrangements with your officials along the lines of the proposal your Government advanced earlier this year. This calls for a $3,500,000 contribution into a trust fund, the interest on which will be used to finance the programs and operations of the Cultural Center.

Sometimes we cannot meet requests from your Government. The turnover of Sangley is an example. That base serves important security and defense purposes--ours, yours, and those of our allies. When we studied the matter, we saw no feasible way of shifting the operations elsewhere.

I assure you that I will do everything in my power to help you in every way I can. I am deeply desirous of doing all possible to reduce irritations. I know the presence of American military personnel in the Philippines is bound to produce some strains. But I am sure you will agree that mutual understanding and mutual sensitivity can keep those strains within bounds.

Our common problems cannot be solved only by the actions of one or the other of us. And I must confess candidly that I am troubled by the chorus of extreme criticism from some Filipinos directed against us, our policies and our actions.

I am troubled, also, by signs of increased hostility toward foreign investment, a matter that is being discussed extensively now in American business circles.

As you know, foreign capital played an enormous role in the economic development of the United States. It could do the same in the Philippines. But it is not likely to be attracted if it is regarded with suspicion and distrust.

I realize you are doing what you can to keep these matters in true perspective for your countrymen. I hope the report by the special committee on Philippine-American relations of your Congress will provide a better and deeper understanding of what is involved in our relations and what needs to be done to further improve them.

It was my hope that Vice President Humphrey would be able to visit your country and to discuss these matters in detail. Unfortunately, his journey to the Philippines and other countries of the area had to be postponed because of the Middle East crisis and other urgent business here. He will be heading our delegation to the inauguration of President Park in Seoul, but will return immediately to Washington.

I had hoped the Vice President could deliver this letter during his visit. I have, instead, asked Ambassador Blair to present it to you promptly.

I have written to you as I can only to a friend, knowing that you have given these matters a great deal of thought. I would deeply value your views on what we each can do to serve better our common interests and our shared purposes. You know how much I value your friendship and advice, and how much I believe in the close and continuing cooperation of our two countries and peoples.

Sincerely, Lyndon B. Johnson"

2. In addition, you should make clear following point orally to President Marcos: We want to make clear that while we will provide the funds in FY1968 we are not undertaking to deliver all of the equipment in FY68. We will, of course, do our best to deliver the equipment as rapidly as possible./3/ FYI: It is particularly important that Marcos understand this because the language of article 15 of the September 15, 1966 Communiqué bound us to provide (i.e. deliver) equipment for five ECBs in FY67 and to consider furnishing (i.e. delivering) equipment for five more ECBs in FY68. End FYI.

/3/Blair reported in telegram 12912 from Manila, June 25, that he delivered the letter to Marcos who read it then and was pleased. Marcos told Blair that hostility toward American investment was politically motivated pressure from vested Philippine business interests. Marcos promised a showdown on the pending Investment Incentive Bill. He dismissed the extreme criticism of the United States by noting it came from a small minority of politicians who collaborated with the Japanese in World War II, whose outlook was "professional anti-American." Marcos accepted the injunction that not all the equipment would arrive in fiscal year 1968. (National Archives and Records Administration, RG 59, Central Files 1967-69, POL PHIL-US)

Katzenbach

 

352. Information Memorandum From the Assistant Secretary of State for Far Eastern Affairs (Bundy) to Secretary of State Rusk/1/

Washington, June 29, 1967.

/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL PHIL-US. Secret; Exdis. Drafted by Dawson S. Wilson and Ralph C. Porter (both of EA/PHIL) and cleared by Richard M. Service (EA/PHIL), John R. Burke (EA), and Bundy. A note on the memorandum indicates that Rusk saw it.

SUBJECT
Current Developments in US-Philippine Relations

1. Philippine Veterans Claims Agreement--On June 29, 1967 an Executive Agreement was signed in Manila under which the United States will pay (early in July) the Government of the Philippines $31,120,000 in settlement of two World War II Philippine veterans claims./2/

/2/For text, see 18 UST 1392.

2. Bilateral Textile Agreement--Agreement was reached here on June 28, 1967, on a new bilateral textile agreement./3/

/3/The agreement was signed at Washington on September 21, 1967. (18 UST 2379)

3. Engineering Construction Battalions (ECBs)--The bulk of the equipment for ECBs 1-5 was turned over to the GOP in Manila on June 24. In a speech at the turnover ceremony, Marcos deflated criticism of the US by his political opposition when he declared we had completely complied with our commitment to equip five battalions. FYI. The decision to equip the second five ECBs was conveyed to Marcos in the President's letter of June 24.4 The letter and this decision have not been made public. We expect Marcos' response to the letter shortly. End FYI. (Vice President Lopez may or may not be privy to the FYI portion above. This is provided for the Secretary's information and in case the Vice President should raise it.)

/4/See Document 351.

4. Philippine Aid to Viet-Nam--Marcos and his administration have consistently supported the Free World position in Viet-Nam. The 2,000-man Philippine Civic Action Group (PHILCAG) arrived in Viet-Nam in October 1966 and is stationed in Tay Ninh province. The GOP has been paying the salaries of the troops. The U.S. pays overseas allowances and furnishes equipment and logistic support for the PHILCAG.

5. Future Economic Relations--President Marcos and President Johnson have recently named respective teams to discuss the type of instrument to replace the Laurel-Langley trade agreement after its expiration in 1974./5/ The date and site for the first meeting have not yet been determined.

/5/Information on the creation of the U.S. team and the issues that it faced are in a June 20 memorandum from Richard Moose of the NSC Staff to George Christian, White House Press Secretary. (Johnson Library, National Security File, Country File, Philippines, Vol. III, 7/66-7/67)

6. Bases Negotiations--Over the past two years, we have taken major steps to update the 1947 Bases Agreement, which covers Clark Air Base, Subic Naval Base and Sangley Point Naval Station, as well as some smaller bases. In 1965, we concluded a new criminal jurisdiction article on the NATO-Netherlands pattern/6/ and relinquished some 50,000 acres of base lands. During the September 1966 Marcos visit, the Rusk-Ramos agreement was signed, reducing the duration of base use to 25 years./7/ The GOP has now asked for, and we have authorized the Embassy to participate in, a preliminary review of other provisions, including customs and immigration, taxation and conditions of employment. These discussions are not yet underway.

/6/August 10, 1965. (16 UST 1090) The agreed minutes of the 12 meetings between Ambassador Blair and Foreign Secretary Mendez, January 5-May 21, 1965, resulting in this agreement are in the following airgrams from Manila: A-571, February 5, A-603, February 17, A-629, February 25, A-705, March 19, A-787, April 7, A-840, April 23, A-879, May 4, A-916, May 14 and A-995, June 4, 1965. (National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 15 US-PHIL, DEF 15-4 PHIL-US, DEF 15-3 PHIL-US)

/7/See footnote 6, Document 342.

7. Special Fund for Education--Agreements have been concluded on two Special Fund for Education projects: a Classroom Construction Project on May 17, 1967 and a Textbook production project on June 26, 1967. President Johnson recently approved a third project, a $3.5 million Cultural Center Trust fund project./8/

/8/For texts, see 19 UST 5082, 19 UST 5129, and 19 UST 5151, respectively.

8. Philippine Interest in US Rice--The Government of the Philippines is interested in purchasing 50,000 tons of US rice. We have approved CCC credit for 25,000 tons. Internal maneuvering by the Filipinos has delayed the purchase.

9. Talks on Abaca Disposals--We are discussing with the Filipinos the problem of low abaca prices which they attribute to GSA stockpile disposals. We attribute the decline to inroads by synthetic fibers.

 

353. Memorandum From Marshall Wright of the National Security Council Staff to the President's Special Assistant (Rostow)/1/

Washington, August 2, 1967.

/1/Source: Johnson Library, National Security File, Country File, Philippines, Vol. IV, Memos, 8/67-11/68. Secret. A copy was sent to William Jorden.

SUBJECT
What an Ambassador in Manila will have to deal with

We discussed the desire of John Macy's office (Lou Schwartz and Bob Cox) for information on U.S./Philippine relations relevant to the selection of a new Ambassador. They insisted on a quick oral briefing. What follows is a reconstruction of the conversation. I will be delighted to make any additional points or changes of emphasis that you deem advisable.

(1) It would be nearly impossible to overestimate the gravity of the problems with which our next Ambassador to Manila must deal. It has become common-place for people knowledgeable on the Philippines to predict a vast social upheaval in the near future. There is widespread talk that the current president will be the last popularly elected Philippine chief executive. Many high-level American officials consider the Philippines to be the most serious and the most bleak threat that we face in Asia. It is absolutely essential that we have a Chief of Mission in Manila who can come to grips with the problem.

(2) The Philippine Republic is stagnant. There is practically no increase in the per capita GNP. The government has failed lamentably to come to grips with the problems in economic and social development. Both the government and the society are shot through with a pervasive and paralyzing corruption. There is a revived subversive Huk movement which is serious, though not yet critical. The Huks actually control much of Central Luzon, including the Clark Field area, and it is a fact that the Huk movement is being financed, in large part, by expenditures connected with the Clark Field complex. No Filipino President has ever been reelected, which is a measure of dissatisfaction and frustration of the Filipino masses with government performance. The birth rate approaches 4% a year.

(3) Philippine/U.S. relations are still in a state of transition from colonial days. Although there is a strong residue of affection for the U.S. among the masses, ultranationalism is rampant in the elite. The U.S. and the American Embassy are the natural focus for ultranationalist suspicions and hostilities. The press, in particular, is dominated by the ultranationalists and has a very strong anti-American flavor. Regardless of who our Ambassador is and however properly he comports himself, he and his family will, beyond doubt, be subjected to vicious and personal press attacks. The position of the U.S. Ambassador in Manila is unique. He is part governor-general and part shipping boy. On the one hand the Philippines want to retain a special relationship with the United States. On the other hand, they bitterly resent their dependence upon us and any assertion by us of a special position. Our Ambassador in Manila is in the middle of this psychological cross- fire and gets hit from both sides.

The Problem

First and foremost, the Ambassador will need to be able to identify the levers of power in the Philippine system and to manipulate them effectively to help bring about economic and social movement. He must be a man who understands the development process. It will be essential that he work effectively in helping President Marcos straighten out the Philippine public sector. Tax collections, smuggling control, and some minimum level of efficiency and honesty in the Philippine bureaucracy are exigent problems in the Philippines.

The United States has three major bases (Clark Air Force Base, Subic Bay Naval Base, and Sangley Point Naval Base), and a number of smaller or leased installations. Although our Base Rights run for 24 more years (under a 1966 agreement) it is by no means inconceivable that the Filipino nationalists will put pressure on our use of the bases. The bases are central to our operations in Viet Nam and our longer range military effectiveness in Southeast Asia. The style with which our Base Rights are exercised now may determine our long-run access to these installations.

The future of U.S./Philippine trade relations, the status of the American business community in the Philippines, and the future for American investments in the Philippines will all be determined in negotiation which will begin this fall. The negotiation looks to the replacement of the Laurel-Langley Agreement, which has, since independence, regulated U.S./Philippine economic relations.

In the immediate future, the U.S. will undoubtedly be pressing for a larger Philippine contribution to the Viet Nam war, an issue of the greatest political sensitivity in the Philippines because of the activities of the ultranationalists.

Politically, the Philippines is a cesspool, and the Ambassador must be capable not only of surviving in a poisonous atmosphere but of working in it effectively, for his major weapon will be his influence on Philippine President Marcos, and Marcos is a completely political being.

In the Philippines, power is concentrated in the presidency to a remarkable extent. Our Ambassador carries on most of the important business directly with the President. The ability to develop a close official and personal relationship with the President is essential. Marcos is the Philippines' most decorated war hero. He is an accomplished golfer (a 7 handicap). Mrs. Marcos is very powerful in the Administration. She has a strongly extroverted personality and makes no bones about enjoying gay and festive occasions, including dancing parties that go on until dawn. There is, in addition, a general Philippine fondness for banter and horseplay and our Ambassador will be expected to join in this atmosphere with evident enjoyment. Extensive travel throughout the Philippines is an important part of our Ambassador's duties, and is physically demanding, among other reasons, because Philippine hospitality on these occasions has, as an invariable concomitant, subsequent stomach disorders.

The American community in the Philippines is large. American private investment runs at $550 million, and there is a big American business community in Manila. There are about 40,000 American military personnel in the Philippines and probably as many dependents. [less than 1 line of source text not declassified] a Peace Corps of 700 volunteers and substantial USIS and AID missions. The Ambassador will, therefore, need to be a man with considerable executive talent.

The Ambassador will need to know Asia. The main thrust of Philippine nationalism is to carve out a place for the Philippines in Asia. Filipino membership in SEATO, its role in Viet Nam, its participation in Asian regionalism, and its relations with its Asian neighbors are essential elements in Manila's policy. One who doesn't understand Asia can easily be trapped by history and superficialities into thinking of the Philippines as somehow less than completely Asian. But there can be no health in the U.S./Philippine relationship unless it is based on a mutual acceptance of the Philippines as an Asian state rather than an American protege. One who understands Asia will know this in his bones. One who does not understand Asia could easily destroy his utility in Manila before he learns it.

In short, the U.S. needs a paragon in Manila. He must be an adept politician. He must thoroughly understand the development process and be able to advise President Marcos in his efforts to revivify the Philippine public sector. He will have to work with a substantial U.S. military community in harmony. He will need to understand the problems of business and to deal with an influential American business community. He will preside over an impressive official U.S. community and will need to be a person of executive talent. He will need a substantial amount of personal charm to operate effectively in the Filipino atmosphere. He will need to be impervious to unfair and sometimes vicious press attacks, both of a personal and political nature. Most of all, he will need to be extremely tough-minded in grappling with a whole series of problems, which no one has been able to deal with effectively yet, but on which progress must now be made without delay as a matter of high national policy. He will need the sensitivity of a chihuahua, the stamina of a Great Dane, and the skin of a rhinoceros.

Marshall

 

354. Memorandum From Marshall Wright of the National Security Council Staff to William J. Jorden of the National Security Council Staff/1/

Washington, August 22, 1967.

/1/Source: Johnson Library, National Security File, Country File, Philippines, Vol. IV, Memos, 8/67-11/68. Secret. Jorden passed this memorandum to President Johnson on August 24, 7:30 p.m. In his covering memorandum to the President, August 24, Jorden described Wright as "the very able officer who has replaced Don Ropa on our Staff." Jorden told the President, "I heartily agree that something is souring our dealings with Marcos--and that we should find out what it is. I will be working on this." There is an indication on Jorden's memorandum that the President saw it. (Ibid.)

SUBJECT
Something's Wrong in Manila

A weather change seems to have set in in our relations with the Philippines, or, more precisely, our relations with President Marcos.

The tone of Marcos' reply to President Johnson's letter of August 17 is stiff and unforthcoming./2/ That is, however, only the latest of several places of evidence of strain in our relations with Marcos:

/2/The August 21 Marcos letter and the August 17 Johnson letter are ibid., Special Head of State Correspondence, Marcos Correspondence.

--Marcos is considering the appointment of J.V. Cruz as his Press Secretary and Blas Ople as his Secretary of Labor. Both are so notoriously anti-American that their consideration by Marcos is difficult to understand.

--Recently, Marcos indicated a reluctance to announce our agreement to provide equipment for 5 more engineering construction battalions. This is a complete turnabout on his part and his explanation of it is unconvincing.

--Marcos was adamantly uncooperative on the Clifford-Taylor visit, which simply would not have caused him as much political difficulty as he pretends.

It seems to me evident that something is going on in Manila or in Marcos' own mind which we do not understand. Whatever it is, it is already creating substantial problems for us. I have talked to the people in State about this and they are hoping that Bill Blair's imminent return to Manila will precipitate an Embassy assessment of the difficulty. Blair, however, is somewhat crippled by a lameduck status.

I hope that there will not be too much delay in naming and getting to Manila a new ambassador. I think we need one even more than we had realized earlier.

Marshall

 

355. Memorandum From Marshall Wright of the National Security Council Staff to the President's Special Assistant (Rostow)/1/

Washington, September 5, 1967.

/1/Source: Johnson Library, National Security File, Country File, Philippines, Vol. IV, Memos, 8/67-11/68. Secret.

SUBJECT
The Philippines

You will remember our recent memo to the President, "Something's Wrong in the Philippines."/2/ We asked Embassy, Manila for their interpretation of Marcos' current behavior and the attached airgram/3/ is their answer.

/2/Document 354.

/3/Airgram A-127 from Manila, August 27; not printed.

I do not find it very helpful. Basically, they are saying that Marcos is worrying about his political image and is therefore being stand-offish with us. But he is more concerned with the Presidential election two years hence than he is with the imminent congressional elections. If he is coming to believe that his good relationship with us is a political liability, that is a very worrisome thing, indeed, and has implications that run far beyond November.

The airgram says that Marcos thinks he can use the left-wingers and ultra-nationalists by keeping them close to him. Perhaps. But he certainly knows that he cannot keep them close to him unless there are changes in his relations with us. If, therefore, he is considering a move to the left in domestic politics, he is considering a new tone, and perhaps a new substance in his relations with the U.S.

This airgram simply serves to strengthen my belief that there is some urgency in getting a new ambassador to Manila.

Marshall

 

356. Editorial Note

President Johnson, Vice President Humphrey and four advisers (Lawrence O'Brien, Harold "Barefoot" Sanders, Joseph Califano, and Michael Mantoes) met with the Democratic Congressional leadership for a breakfast meeting lasting from 8:36 to 9:35 a.m. on September 19, 1967. The discussion related primarily to domestic legislation and politics. At the beginning of the meeting, Senator Mike Mansfield reported on his recent Asian trip and stated that "the Philippines are on the upgrade. They are doing a good job. They expect to get control of the Senate and Marcos is doing a good job." Speaker of the House Carl Albert asked Mansfield about "Huk activity in the Philippines." Mansfield responded, "there is not much." Vice President Humphrey then asked if Marcos talked to Mansfield about civic action groups and engineer battalions. Mansfield replied, "yes, but most of the time was spent talking about rice, production, graft, corruption, and cleaning up the local situation." The President remarked that he was "glad to hear that Marcos was friendly, because he had heard bad reports." (Memorandum from Jones to Johnson, September 19; Johnson Library, Meeting Notes File, Sept. 19, 1967 Congressional Leadership Meeting)

 

357. Note From the President's Special Assistant (Rostow) to President Johnson/1/

Washington, October 24, 1967, 3:55 p.m.

/1/Source: Johnson Library, National Security File, Country File, Vietnam, 5 (D) (1), Allies Troops Commitments, 3/67-1/69. Secret.

Mr. President:

Herewith:

1. Marcos complains to Locke,/2/ claiming we equipped only two rather than five engineer battalions.

/2/Marcos invited Deputy Ambassador to Vietnam Eugene Locke to visit the Philippines and discuss with him Philippine aid to Vietnam. (Telegram 8420 from Saigon, October 13; National Archives and Records Administration, RG 59, Central Files 1967-69, POL PHIL-US) The Department suggested that Locke use his visit to encourage Marcos to think about what more the Philippines could do in Vietnam, most usefully another Philippine Civic Action Group (PHILCAG). Locke should encourage Marcos to support "really practical and useful" projects rather than ineffective "grandiose schemes." (Telegram 54265 to Saigon, October 14; ibid.)

2. Bill Jorden puts the matter in perspective and advises that no hasty action required.

I am having the matter looked into carefully.

Since your conversation with him is involved, I thought you'd wish to know about it right away.

Walt

 

Attachment A

FOR THE PRESIDENT

TEXT OF CABLE FROM AMBASSADOR LOCKE (Manila 464)/3/

/3/Telegram 464 from Manila, October 24 (Secret; Priority), [text not declassified]. The telegram as received in the White House before it was retyped for the President is in the Johnson Library, National Security File, Country File, Vietnam, 5 (D) (1), Allies Troop Commitments, 3/67-1/69.

In a private conversation with Philippine President Marcos, he said to me:

A. When he was promised in the U.S. equipment for five engineering battalions then, and probably five later, this was intended to mean new battalions and was not to include the three battalions which had previously been equipped by the U.S. This was made clear in private conversation between him and you.

B. Later the U.S. Government took the position that the first five battalions to be equipped included the three previously equipped so that new equipment for only two, not five, was secured.

C. He has been embarrassed by this but has "covered up" publicly, indicating the U.S. has furnished the equipment. When Speaker Laurel assailed the U.S. in Assembly, claiming Philippines "short-changed," Marcos told him to stop his criticism, that perhaps equipment was not then available.

D. He feels you are not aware of the situation and that misunderstanding developed at other levels. He has considered writing you a personal letter, but preferred for me to get word to you. He wants to know what happened.

I told President Marcos I had no information about the matter, but would try to find out.

I discussed the history of the first five battalions with U.S. Charge d'Affaires in Manila, Jim Wilson. He said:

A. At the time of the agreement there were three U.S. equipped engineering battalions in the Philippines. These were not "engineering construction" battalions, which take far more heavy equipment than plain "engineering" battalions.

B. Our Joint U.S. Military Assistance Group Chief and Philippine Chief of Staff had gone over equipment lists prior to your meeting with Marcos and had agreed on what was necessary for five "engineering construction" battalions. This was furnished in full, but the equipment furnished consisted of a) full equipment for two new battalions; b) construction equipment necessary to convert the three plain engineering battalions into three engineering construction battalions.

C. So far as Wilson knows, the agreement with respect to the first 5 battalions as then understood by Philippine military chiefs, was an agreement to furnish 2 completely new construction engineering battalions and to upgrade the 3 existing plain engineering battalions to construction engineering battalions. Ambassador Blair had explained all this some months ago to Ambassador Romualdez, President Marcos' brother-in-law, but the Embassy cannot be sure whether or not Romualdez in fact explained it in full to President Marcos, although, subsequently, Marcos had stated publicly he was satisfied that the commitment had been met.

It may be that President Marcos mistakenly believes that the original 3 battalions remained the same and that he only received equipment for 2 new battalions. Or it may be he recognizes the facts, but believes the agreement was to leave the 3 original battalions as plain engineering battalions and to fully equip 5 new and additional construction engineering battalions. He did not mention any difference between plain engineering battalions and construction engineering battalions and I doubt that he recognizes that these distinctions figured in the arrangement. I believe he feels simply that he started with 3 equipped battalions, that he was to get 5 more, which makes 8, and that he ended with 5 and was therefore "short-changed".

I believe President Marcos resents what he believes was a failure of the U.S. to live up to an agreement he thinks he made personally with you. I believe we should correct the mistake if one has been made, or explain the fact to President Marcos personally if his understanding is wrong. I am sure President Marcos expects me to take this up personally and directly with you and it is possible that no one in his own government knows he spoke to me about this, as he did so privately, even though numerous of his Cabinet Ministers and U.S. Charge Wilson were waiting in an adjoining room presumably to discuss other matters with him and me.

President Marcos also discussed several other matters with me which are covered in detail in Manila 3760./4/ The most important was the sending of additional help to Vietnam. The President will introduce the new appropriation for PHILCAG after the elections are over. He will also give additional help. He cannot politically send troops, and I told him I was sure we could not pay for an Operation Brotherhood in Vietnam, which was his choice (additional to, not in place of, PHILCAG). I believe we can get one, or perhaps even more, Army engineering battalions (which General Westmoreland prefers to another PHILCAG), for which he will seek appropriations in the Assembly, if we build for him some roads in the Clark Field area which could, in his opinion, be justified by military considerations. He believes the roads would benefit Clark Field and also increase mobility in the Huk Territory. Foreign Secretary Ramos is coming to Vietnam on the 29th, at which time I hope to have detailed discussions between him and General Westmoreland on the nuts and bolts of the battalions we want and the roads he wants./5/ Embassy Manila is informed and agreeable to this meeting. I, of course, have not committed U.S. Government in any way.

/4/See Document 358.

/5/A report of this meeting between Ramos and Westmoreland is in telegram 9951 from Saigon, October 30. (National Archives and Records Administration, RG 59, Central Files 1967-69, POL PHIL-US)

 

Attachment B

FOR WALT ROSTOW

TEXT OF CABLE FROM WILLIAM JORDEN (Manila 465)/6/

/6/Telegram 465 from Manila, October 24 (Secret; Eyes Only), [text not declassified]. The telegram as received in the White House before it was retyped for the President is in the Johnson Library, National Security File, Country File, Vietnam, 5 (D) (1), Allies Troop Commitments, 3/67-1/69.

You will be receiving promptly a message from Ambassador Locke to the President regarding "misunderstanding" about equipment for Philippine army construction battalions. Think you will wish to reassure President that this matter not as critical as might seem at first blush.

Marcos talked with me about same matter. I assured him that I would look into it on return to Washington but I thought there had been no reference to "new" battalions. President Johnson had said we would supply equipment for five battalions this year and would consider doing same for five next year. We had done both. Marcos seemed fully satisfied that we would check in good faith and did not push question. Certainly there is no "misunderstanding" on part of Americans or Filipinos who worked out details of the equipment deal. In my opinion, President Marcos is (1) looking for excuse for not doing more for us in Vietnam; (2) on edge because of rough political campaign underway here; (3) possibly feeling us out on whether equipment for another three battalions may not be in the cards. Assure you this is not of such urgency that it cannot wait until my return. President said he wanted to see me again before departure and if that works out I will do all possible to reassure him as to facts.

You will of course wish to ascertain whether our President's recollection of this agrees with Marcos concept which might have developed in private talk. But ensuing negotiations between Filipinos and U.S. strongly supports view that understanding was as described above.

Separate message from Locke through State channel describes other aspects of his talk with Marcos.

He is right: Combat troops probably not politically possible--except as element of U.S. forces and that has obvious drawbacks. On basis of "volunteers" for U.S. forces we could probably get two divisions, but that has "mercenary" flavor and other deficiencies.

If we play our cards right, another Philippine Civic Action Group or engineering battalion is possible. In my opinion, Marcos would accept some compromise that would recognize his political problems and our common needs.

He badly needs some kind of regular briefing on situation in Vietnam--including growing evidence of problems on the other side. Jim Wilson agrees this would be desirable and hope something can be worked out with Ambassador Bunker and Westmoreland. A monthly visit to Manila by Military Assistance Command, Vietnam, J-2 would be valuable, with possible occasional visit by Westmoreland.

Regarding reference discussions with Secretary Ramos on this matter (paragraph 5 of cable to State),/7/ this is not the best way to approach matter. Any serious talk about this should be done in Manila or Washington, preferably former. We will get nowhere on this unless it is with Marcos and his Defense Department.

/7See footnote 5 above.

Talk of U.S. construction contractors is a non-starter, road building is one thing Filipinos are doing very well on their own.

Take paragraph on Huks with a grain of salt. There are other reasons for not cracking down.

I have been operating on assumption that full report on my return on experiences here and Vietnam and observations thereon was preferred course. If you wish fuller report on these matters earlier, please inform. This has been damn profitable trip. Regards.

 

358. Telegram From the Ambassador to the Philippines to President Johnson/1/

Manila, October 24, 1967.

/1/Source: Johnson Library, National Security File, Country File, Vietnam, 5 D (2), Allies Troop Commitments and Other Aid, 1967-69. Secret. The source text is the text of telegram 3760 from Manila that was retyped for the President. There is an indication on the transmittal memorandum from Rostow to the President that the President saw this telegram.

FOR THE PRESIDENT FROM AMBASSADOR LOCKE

(Manila 3760)

I had an over 2-hour private talk with Philippine President Marcos on Sunday, October 22. No one else was present.

President Marcos intends to secure an appropriation for existing Philippine Civic Action Group replacement after the impending elections.

With respect to Vietnam, help from the Philippines, in addition to existing Philippine Civic Action Group:

A. President Marcos said combat troops are not politically possible.

B. President Marcos suggested an "Operation Brotherhood" similar to the Laos Operation as an addition to the existing Philippine Civic Action Group. He did not mention the De Venecia Proposals./2/

/2/Jose de Venecia, Minister of the Philippines Embassy in Vietnam, proposed the establishment of a private Philippine corporation employing Filipino technicians to carry out rural reconstruction and refugee settlement work, the establishment of a Philippine manned helicopter squadron, and Philippine and other third country pilots flying F-5 aircraft in combat in Vietnam. (Memorandum from Chadbourn to Bundy, October 18; National Archives and Records Administration, RG 59, EA/VN Files: Lot 75 D 334, Free World Assistance--Philippines)

C. I indicated this is not feasible because: (1) It does not fulfill the U.S. need for further troop participation from Asian countries; (2) It is a civilian-aid type project, which would require the cooperation, approval and greater involvement of the Government of Vietnam; and (3) It is an AID-financed project, and AID is having trouble financing our own projects in Vietnam without taking on anything new.

D. The most likely projects appeared to be: (1) Another Philippine Civic Action Group or (2) Army engineering battalions divorced from a civic action concept which could build roads, bridges, etc. Military Assistance Command in Vietnam would prefer a combat battalion to another Philippine Civic Action Group. Therefore, I pushed the idea of an engineering battalion to guard, build, maintain roads, etc., but did not use word "combat" to describe battalion. This strategy is a product of a long briefing session with Embassy Manila the previous night, it being thought the word "combat" might kill the idea before it started. I made it clear we wanted an "army" battalion.

E. Marcos would not have money to finance, and would not want us to finance directly because of possible charges of our hiring "mercenaries." He thought it might be possible if we financed indirectly by financing work in the Philippines which otherwise he would have to finance.

F. Marcos said he would study the matter. I made it plain I could not commit the U.S. and that our discussion was only an attempt to find possible solutions for our mutual problems that were at least worthy of his study and of my submission to Washington.

The following morning I had a discussion with Secretary Ramos and De Venecia. Ramos and Secretary of Defense Mata had a talk with President Marcos at length after I left. Secretary Ramos said:

A. The President is agreeable, in principle, to the army engineering battalion concept and also to sending engineering specialists as "observers."

B. The President is prepared to seek an appropriation for this purpose if we will build certain roads near Clark Field.

Ramos said these would have the military value of (1) speeding up traffic between Clark Field and Manila; (2) extending roads into Huk territory, thus helping the government deal with the Huks. Ramos mentioned a diversionary road north of Clark to relieve traffic. Marcos had mentioned the Clark to Subic Bay route.

Secretary Ramos will be in Saigon for the Thieu inauguration. He will come armed with maps and details of roads. I will have General Westmoreland come up with the nuts and bolts of the desired battalions. The plan is for General Westmoreland, or perhaps his appropriate staff man, Ramos, and me to discuss the details and costs October 29 in Saigon./3/ I discussed this with Embassy Manila which was agreeable. If the matter proceeds to the proper point, discussions will then naturally shift to Embassy Manila and to various appropriate Philippine officials after the elections. Ramos is informed I cannot make a commitment and the present stage is one of discussion only.

/3/See footnote 5, Document 357.

Other matters discussed by Marcos were:

A. A Japanese agreement to finance part of the projected new road system. The Japanese Prime Minister will send Japanese private contractors to Manila to negotiate construction contracts. Marcos did not mention an amount, but De Venecia had previously mentioned $60,000,000 and this was confirmed by the newspapers.

B. The Marcos desire that United States contractors come to Manila to negotiate construction contracts for roads. He said he would guarantee them there would be no under-the-table payoffs, the fear of which he believes has prevented U.S. contractors from being interested in the past. (This statement he also made in front of a group of his Ministers and U.S. Charge d'Affaires Wilson with whom he discussed some matters in my presence after our private talk.) I told him I would inform Washington of his desires. I was thinking the Department of Commerce might be interested. I also suggested that through the Philippine Bank or the Philippine Embassy in the U.S., he could probably get information on road contractors in the Federal Highway System and Dunn and Bradstreet reports on those interested. I surmise one of his interests in U.S. contractors is that they might make it easier to finance his road program. I understand U.S. contractors would have to take Philippine contractors as joint venturers and that the Philippine Bank guarantees might be available for highly qualified and reputable companies.

C. The Marcos desire that U.S. Armed Forces at Clark conduct a civil action program to help hamlets in the area. This is to be part of anti-Huk work and part of a program to improve the U.S. image, as "good work done" stories could be leaked to the press. He is thinking of help with farm roads, irrigation ditches, schools--small and scattered work--a completely U.S. program. (I understand from Embassy Manila such a program is now contemplated.)

D. Marcos said the Huks in the provinces are known and could be picked up but are connected with intellectuals in Manila whom he wished to identify first. The Huks are now supporting political candidates, and he is supporting the best candidates to oppose them without reference to party lines. Candidates deny a connection with the Huks or that they seek Huk support, and he has told them that if they get elected and help the Huks, he will clamp down. The Huks infiltrated guards at Clark, necessitating his using the constabulary to guard the base. Also some accommodation with lower army echelons, necessitating his change of army units in the area. Also some Huks have had M-16 weapons.

E. Discussion was held of the situation in Vietnam (I said progress is being made in all respects), of peace negotiations (I said no sign of change in attitude by Hanoi) of the importance of Vietnam to all Asia (he agreed, and said all Asian leaders agreed. He said even Sukarno had told him he was glad of the U.S. presence in Asia and that Sukarno claimed he was "using" the Communists). It is possible, if Washington thinks it useful, that he might be willing to start a movement toward negotiation for a limited purpose of prisoner exchange.

Before leaving Vietnam, I had discussed various proposals with the Military Assistance Command in Vietnam, Civil Operations for Revolutionary Development, and the Agency for International Development for Philippines help in technical and civilian fields. I did not discuss these with President Marcos because I did not want to confuse the engineering battalion issue. De Venecia thinks it important to have the civilian "mix" with the military aid. Probably this will come up when Secretary Ramos comes to Vietnam. I will send a separate message about this.

So far, there have been no press leaks. The President's lunch at the Palace was very small, and included U.S. Charge Wilson and his wife. The only sizeable party (about 50) was given by Secretary and Mrs. Ramos and Mrs. Perez (widow of former House Speaker and mother-in-law of De Venecia) at Mrs. Perez' home. Presumably, only friends of the government were invited and they were not necessarily told of the Presidential invitation.

Volume XXVI Index


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