Gloria's Poverty Problem

The faded proclamation pasted to a concrete wall is the only trace of her visit. Last February, shortly after she replaced Joseph Estrada as president of the Philippines, Gloria Macapagal-Arroyo ventured into Project Four, a sprawling slum of 20,000 on the outskirts of Manila. It's a place filled with rotting garbage, rusty chicken cages and naked children. Arroyo stayed for a few minutes. Like her predecessors, she promised to help the squatters buy the land they occupy. But three months later, nothing has changed. And now someone has scrawled large question marks all over the proclamation. "The date is wrong," says Gil Modesto, a 37-year-old community organizer, pointing to the document. Shirtless men and small children gather around the wall. The date given on the proclamation is one year earlier, obviously a clerical error. But to the slum dwellers, it seems to verify the indifference of the government and its elite leaders. "This promise was made in a very rushed way for political purposes," says Modesto. "Some here feel it's bogus."

Ten miles away, Arroyo glided into her oak-paneled dining room in the presidential palace last week. Around 5 feet tall, in a glowing lime green dress, she is elegant and graceful. And she's not bashful about listing her own accomplishments. In an interview with NEWSWEEK's Lally Weymouth, the new president emphasized her own steadfastness in quelling a recent riot by 20,000 poor people outside her palace gates. Arroyo knows that she faces a gantlet of problems. Economic growth is paltry (a projected 1.6 percent this year). She inherited a $3 billion budget deficit. There is stiff political opposition to her government. But she says her country's No. 1 problem is poverty. And, she adds, it is getting worse. Of the 76 million people in the Philippines, more than 38 percent live below poverty level, defined as income under $220 per year. How to deal with this massive social issue? "You can't just sign proclamations to help the poor," says Arroyo. "You have to go down to the people and say, 'You're now going to have a chance to own your own land'."

In some ways, Arroyo is the mirror image of her predecessor. Joseph Estrada was disliked by the business elite. Foreign investment shrank while he was in office. A former movie actor, he was known for his boozing and womanizing, and he is now charged with stealing government money. But he was beloved by the poor, who believed he could find them jobs and homes.

From all indications, Arroyo has a better chance of making good on that promise. She's an economist and hails from the political elite. She's got the support of the business community. A phalanx of competent technocrats will work to attract foreign investment and boost the economy. But the poor are suspicious of her--and that is shaping up as a major problem. The Senate campaign last week, which she hoped would add legitimacy to her government, was marred by violence. Almost 100 people, many of them poor supporters of Estrada, died in clashes with the police and armed bands. More street battles are expected in the months ahead, and they promise to make the new president's political life difficult. "I hate to be Marxist," says one Western diplomat in Manila. "But what we're seeing here is a class war."

Arroyo, the upper-class daughter of a former president, is trying to make sure that doesn't happen. In recent weeks, she has made well-publicized visits to poor areas of the country. Last week she ate in public with soldiers using her bare hands, an earthy practice Estrada was well known for. After the riot outside her palace on May 1, she issued arrest warrants for two prominent opposition leaders who are charged with instigating the protest. Two of them, who are running for the Senate, were still in hiding at the end of last week. Estrada, who was arrested and jailed on April 25, was moved to a hospital but still kept isolated. "His handlers have already made him appear as a martyr," says Ferdie Ramos, a spokesman for the former president. Estrada's wife, Loi, a psychiatrist, appears poised to win a Senate seat--on a sympathy vote. "Every time people know I'm coming, the boys and men hug me," Loi told NEWSWEEK's Weymouth. "They tear off my earrings. They show me the love they have for my husband."

Some voters seemed ready to die for the disgraced Estrada. Outside polling stations in the impoverished southern province of Mindanao--Estrada country--helmeted police with shields and batons fought crowds of protesters last week. To the elite, that kind of violence seems abnormal. And they worry that it signals the beginning of a dangerous trend. "This rage among the poor is a new phenomenon," says one member of Arroyo's administration. Attitudes on both sides--the upper class and the aggrieved masses--are hardening quickly. "The only way you can solve poverty in this country," says one retired general with a vast business empire, shrugging, "is if you kill off this entire generation and then start afresh."

Evangelina Margalinen has faith that there are other ways. The 57-year-old Roman Catholic social worker has worked in Project Four for decades. Inside her shadowy offices, her co-workers fold old election fliers into origami birds. Margalinen, wearing a faded dress, mumbles and fingers a large crucifix. She and other community organizers have been holding meetings to discuss the land grants they expect from the new government. "There have been so many politicians promising land for 50 years," she says. "But now our dream is going to come true."

Few share her optimism. Modesto opens the door to a tiny concrete courthouse in Project Four. Born and raised in the slum, he left to work for nine years on a construction site to put himself through school. Educated as a civil engineer, he returned to the slum several years ago and was chosen as its "captain." In the tiny courthouse surrounded by chickens and garbage, he passes judgment on brawling teenagers and drug addicts. Within the confines of the walls of Project Four, his word is law. As he walks through the mud and trash in Project Four's alleys, the slum dwellers look up and nod respectfully. But for all his power, Modesto was unable to prevent several Jeep loads of slum dwellers from joining the recent protest against the palace. "Some people can easily be recruited for that kind of thing," he says. "They don't understand the whole political situation in the Philippines."

Last week Arroyo confirmed to NEWSWEEK that she and her family had been the target of an assassination plot. That threat, and the general turmoil on the streets, have left her feeling somewhat besieged--and increasingly forced to rely on the military for safety and support. Army Chief of Staff Angelo Reyes switched his allegiance from Estrada to Arroyo last January. Now he's scornful of his former boss. "You cannot prop up a regime with [dirty] money and weapons," he told NEWSWEEK's Weymouth, sweeping his arm in disgust.

But glib promises aren't a solution to the entrenched power in the Philippines either. For Arroyo to succeed, she's got to prop up the underclass with real reform. That means igniting the economy, creating jobs in impoverished outlying provinces, reaching out to the disaffected. If she can't, she'll never win their loyalty--or their votes. The people of Project Four will be watching.