Democratic institutions were introduced to the Philippines by the United States at the beginning of the twentieth century. The apparent success of these imported practices gave the Philippines its reputation as "the showcase of democracy in Asia." Before 1972 the constitutional separation of powers was generally maintained. Political power was centralized in Manila, but it was shared by two equally influential institutions, the presidency and Congress. The checks and balances between them, coupled with the openness of bipartisan competition between the Nacionalista and Liberal parties, precluded the emergence of one-person or one-party rule. Power was transferred peacefully from one party to another through elections. The mass media, sensational at times, fiercely criticized public officials and checked government excess.
Marcos inflicted immeasurable damage on democratic values. He offered the Filipino people economic progress and national dignity, but the results were dictatorship, poverty, militarized politics and a politicized military, and greatly increased dependence on foreign governments and banks. His New Society was supposed to eliminate corruption, but when Marcos fled the country in 1986, his suitcases contained, according to a United States customs agent, jewels, luxury items, and twenty-four gold bricks. Estimates of Marcos's wealth ran from a low of US$3 billion to a high of US$30 billion, and even after his death in 1989, no one knew the true value of his estate, perhaps not even his widow.
If Marcos had been merely corrupt, his legacy would have been bad enough, but he broke the spell of democracy. The long evolution of democratic institutions, unsatisfactory though it may have been in some ways, was interrupted. The political culture of democracy was violated. Ordinary Filipinos knew fear in the night. An entire generation came of age never once witnessing a genuine election or reading a free newspaper. Classes that graduated from the Philippine Military Academy were contemptuous of civilians and anticipated opportunities for influence and perhaps even wealth. Marcos's worst nightmare came true when Corazon Aquino used the power of popular opinion to bring him down.
Aquino inherited a very distorted economy. The Philippines owed about US$28 billion to foreign creditors. Borrowed money had not promoted development, and most of it had been wasted on showcase projects along Manila Bay, or had disappeared into the pockets and offshore accounts of the Marcos and Romualdez families and their friends and partners. Many Filipinos believed that they would be morally justified in renouncing the foreign debt on grounds that the banks should have known what the Marcoses were doing with the money. Even Cardinal Jaime Sin declared it "morally wrong" to pay foreign creditors when Filipino children were hungry. Aquino, however, resolutely pledged to pay the debt. Otherwise, the nation would be cut off from the credit it needed. Although the Philippines could pay the interest on the debt every year, it could not pay the principal. This never-ending debt naturally inflamed Filipino nationalism. A Freedom From Debt Coalition advocated using the money to help the unemployed instead of sending the hard currency abroad.
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