Virata and technocrats ran the martial law economy

Virata and technocrats ran the martial law economy

A statement issued by the Ateneo de Manila staff pontificated: “The Marcos regime’s economics of debt-driven growth was disastrous for the Philippines. The regime was not interested in inclusive development, long-term state-building, nor genuine social transformation of the country.” And they demanded that Ferdinand Marcos 2nd apologize for this.

It is such a sad commentary on the quality of an academe to be so misinformed of a crucial era of our country, and to sink to the level of sloganeering. The dishonesty of whoever plotted this statement is obvious in that the statement has been portrayed as issued by “412 professors.” The fact is only half of them were faculty, including teachers and assistant teachers at the grade and high school levels. On the other hand, the Ateneo has always been an academic bastion not only of the elite but whoever or whatever regime is in power. The blue eagles of our generation have become the yellow parrots today, parroting mindlessly the fraying yellow storybook.

Was Marcos directly running the country’s apparatus for economic management? No, and that might have been a big mistake on his part. The politician-lawyer left economic management to the following, known as the martial law “technocrats”:


Cesar Virata, Marcos’ finance secretary from 1970 to 1986. He was Marcos’ “chief technocrat, or for the entire period of Martial Law, and stayed with the strongman to the very end. He was one of Marcos’ earliest recruits, joining him in 1967 as deputy director of the Presidential Economic Staff. That he was Marcos’ official in charge of the economy is also reflected in the fact that he was chairman or board member of 22 government firms and financial institutions, for which I estimated he made P1 million a month, a fortune in those days.

Marcos trusted him so much he ordered his 200-member Interim Batasang Pambansa and then the “regular’ Batasang Pambansa, which was set up in 1984, to elect him Prime Minister. Virata took the prime minister’s title seriously that he refused to vacate his office in the few days before EDSA I, saying he was elected to the position, and resigning would have meant “a dereliction of duty”. * When I was covering the finance beat for the business newspaper Business Day in the early 1980s, all of us in media addressed him as “Prime.”

Gerardo P. Sicat, Marcos’ economic guru and chief economic planning minister, who organized the NEDA in 1973 and headed it until 1984. Sicat was and to this day is a true believer of Marcos’ Martial Law “vision,” as he reveals in his recent book “Cesar Virata: Life and Times,” published by the UP (University of the Philippines) Press:

“On September 21, 1972, Marcos declared Martial Law, explaining that he would build a New Society. The immediate effect of this declaration was a major shift in the political and economic climate. Martial Law gave Marcos the power to undertake a clean execution of institutional change. Economic reforms suddenly became possible under Martial Law. The powerful opponents of Martial Law reform were silenced. Now it was possible to have the needed changes undertaken through presidential decree... Marcos was a lawyer and he made sure that the moves he made were covered effectively by current provisions of law or by new legal provisions.”

Take it from the horses’ mouth. “The technocrats who occupied high positions under the Marcos administration found themselves in charge of major economic policy... Now they were power wielders within the government,” Sicat wrote.

If Virata, Sicat and the other technocrats weren’t really running the economy, why did these strong-willed people, known for their integrity, stick through the entire Marcos regime? I don’t think any of them was the type who would act willingly as Marcos puppets.

Both Virata and Sicat were known to share the economic philosophy of the International Monetary Fund (IMF) and the World Bank (WB), who trusted them as if they were their representatives in the Philippines.

Other than Virata and Sicat, Marcos’ technocrats included:

Roberto V. Ongpin – Marcos’ minister of trade and industry throughout his regime, especially credited, or cursed, for handling the country’s foreign exchange market by controlling the so-called underground “Binondo Central Bank” during the crisis years of 1984-1985. Ongpin was, however, at odds with Virata and Sicat because of his espousal of a Japan- and Korea-type of state-directed industrial development.

Jaime Laya – Marcos’ budget secretary from 1975 to 1981, and central bank governor from 1981 to 1984. The IMF and the World Bank asked for his head in 1984 for being responsible as central bank governor for the deliberate padding of the country’s international reserves. Marcos then appointed him as education secretary, a post he held until the Marcos regime’s very end. (Manuel Alba replaced Laya in 1981 as budget minister, a post he held until the end of the Marcos regime.)

Marcos’ Trade and Industry Secretary Ongpin, budget Secretary Alba and PNB Chairman Mapa.

Placido Mapa – a ranking Opus Dei figure, who headed the NEDA from 1981-1983 and at various years during the dictatorship, the Philippine National Bank and the Development Bank of the Philippines.

Arturo Tanco – agriculture secretary from 1974 to 1984, the architect of the Green Revolution who steered the country to rice self-sufficiency. He was succeeded by his trusted deputy, a veterinarian, Salvador Escudero 3rd, father of vice presidential candidate Francis Escudero. (Should he be also asked to be accountable for Martial Law abuses, going by the logic of the Ateneo manifesto?)

Most of these technocrats shared the same worldview, the same philosophy on how the economy should be managed, formed by their years in Ivy-League schools – Virata studied at Wharton; Sicat, at the Massachusetts Institute of Technology; Laya, at Stanford Graduate School of Business; and Mapa, at Harvard.

They believed so much in laissez-faire ideology (now called neoliberalism) – that state intervention should be minimal – that partly explains why our economy became so bad throughout Martial Law. Contrast what they did, or did not do, to what their counterparts in Japan, South Korea and Taiwan did, which was to support (and force in some cases) companies in becoming world-class players.

In contrast to Marcos, who was demonized after EDSA I, most of his technocrats, of course, have become highly respected members of Philippine society, their role in running the economy under Martial Law – for good or bad – forgotten.

This isn’t at all surprising. Our elites needed their services, as they knew the ins-and-outs of the financial community, the business world they presided over during 13 years of Marcos’ rule. Maybe I’m wrong and the Philippine elite assessed that these technocrats didn’t do so bad really, with the economy simply a victim of external shocks.

Virata had been consultant to the World Bank and to scores of companies, even serving as director in a few others. The University of the Philippines, which was a center of the anti-Marcos movement in the 1970s, even – unbelievably – named its School of Business Administration, the Cesar E.A. Virata School of Business.VIRATA

I say unbelievable because while most prestigious US universities would name a school only after a humongous donation to them, the UP didn’t get a single centavo from Virata.And why would a school of business be named after somebody who never was a businessman, but an executive, all his life? If the economy during the Marcos years was bad, and if Virata managed it, why the hell did our premier university name a major college after him, the only unit there named after alivingperson?

Sicat is treated as a sage of the School of Economics, writes a regular column for the Philippine Star set up by anti-Marcos journalists in 1986, and wrote a 500-page hagiography on Virata published and financed by the UP.

Laya set up what would be one of the top accounting firms in the country, and has been chairman or board member of a dozen firms, including the Yap family’s PhilTrust Bank, Ayala Land, Manila Water and the GMA Network.

Alba has been the administrator of Quezon City since Feliciano Belmonte (now Speaker of the House) became its mayor. Mapa has been the top executive of Metrobank taipan George Ty.

The smartest of Marcos technocrats has been Ongpin. While his comrades have remained essentially highly paid employees, he has become one of the country’s richest tycoons, ranked 20th for 2015 by Forbes magazine, with a net worth of $900 million (P43 billion).

Are these the kind of people who messed up our economy?

I covered the economy, focusing on finance, as Business Day reporter from 1981 to 1987, and had so many interviews with Virata, Laya, Mapa, and Ongpin. No one ever complained that Marcos was intervening in economic policy, although Virata was very critical of Imelda Marcos’ projects that required huge government funds, such as her human settlements program and the heart, lung and kidney medical centers. That or he felt that Imelda would replace Marcos, rather than him, who after all was Prime Minister.

Why Marcos’ rule ended in economic conflagration, as in any phenomenon in this world, is a long, complicated story, beyond the simplistic good-versus-evil little minds of the writer and signatories of that Ateneo manifesto against Marcos Jr. It is a story still to be told.

Among many things that should alert us that something is wrong with that Ateneo simplification is as follows:

GDP average growth from 1972 to 1980 averaged 6 percent, reaching 9 percent in 1973 and 9 percent in 1976, a rate never reached again. However, from 1981 (after the global recession broke out as triggered by the spike in oil prices) to 1985, the average GDP growth rate became negative 1 percent because of the economy’s unprecedented 7 percent contraction for each of the years 1984 and 1985. I believe such recession was partly due to the austerity measures the IMF and the World Bank imposed on us, which were the conditions for extending loans to pay off our debts.

We weren’t the only country on a “debt-driven” growth mode, which the Ateneo manifesto condemned. After the Arab countries wrested from the industrial nations their oil wells, they were awash with “petro-dollars” looking for some outlet. The US banks rushed to push successfully these loans to Latin American countries and our country in the 1970s. The shit hit the fan when the Iran-Iraq war broke out in 1980, disrupting oil production, pushing its prices and then international interest rates through the roof. What we could easily afford before 1980 became totally beyond our means, and we declared that we couldn’t pay off our foreign debt in October 1983. Ninoy’s Aquino’s assassination in August 1983 merely hastened, but was not really the reason, for the debt default.

Debt crisis

Together with Argentina, Brazil, and Chile, we fell into our so-called debt-crisis, which essentially meant our isolation from the world economy, resulting in our near economic meltdown. It was this economic crisis that was the base for the widespread dissatisfaction with Marcos by 1985, that with or without Cory Aquino, the strongman had reached his end of days. According to an academic study, Virata believed to the very end of Marcos’ rule that the country’s economic downturn in 1983 was not due to corruption or cronyism but to three factors: negative balance of payments, accumulating debts and low returns on capital.*

It is important for us as a nation to have an objective, accurate analysis of the Marcos era, especially its economic history, if we are to develop our nation. It is worrying, though, that a century-and-a-half old academic institution like the Ateneo could be so easily mesmerized into believing the Yellow Cult’s inaccurate, simplistic narrative of the Marcos era.

The simplistic, erroneous analysis is that our economy crashed because of corruption and cronyism in that era. The reality, though, is that the technocrats who ran the economy adhered fanatically to neoliberal economic thinking, which in almost all developing countries had proven disastrous. No country that has become industrialized in the past 40 years ever implemented such kind of economics.

But while Marcos technocrats are still alive, why don’t our media and academe, especially those at the Ateneo, ask them what really happened to the economy under Martial Law?

POSTSCRIPT. It is a bit surreal for the Ateneo “community” to be coming out against the Marcos regime, when the institution was the strongman’s bastion throughout the Martial Law period, as it has been such for every regime that is in power — and as it is now a base for this Administration. The University’s president from 1972 to 1984 then was Fr. Jose A. Cruz, who was so close to and supportive of the dictator as his father confessor and spiritual adviser.

Cruz kicked out my comrades – Alex Aquino and Billy Begg, and others – for leading anti-Marcos demonstrations at our campus. Fr. Cruz was so rabidly pro-Marcos that he refused to allow for even a day the wake for my close friend and comrade and fellow Atenean Ferdie Arceo, an NPA commander killed by the military in Aklan in 1974. It was only when the tide started to turn in 1984 that the big Jesuit bosses removed him and replaced him with the Cory-friendly Joaquin Bernas.

* (From Teresa S. Encarnacion Tadem, 2012: Virata: the trials and tribulations of a “chief technocrat,” Philippine Political Science Journal, 33:1, 23-37. )

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