Manila Protesters Rally, Defying Arroyo's State of Emergency

Bloomberg

Feb. 24 (Bloomberg) -- Thousands of Filipinos marched through Manila tonight demanding President Gloria Arroyo's resignation hours after she declared a state of emergency and banned demonstrations. The peso had its biggest drop in more than three years. Stocks and bonds slumped.

In a nationally televised address today, Arroyo said a group of military officers and civilians had planned to establish an ``extra-constitutional regime'' in the country. The military said this morning it detained General Danilo Lim, commanding officer of the army's elite Scout Rangers. Lim was involved in 1989 coup attempt against then-President Corazon Aquino.

``This is my warning to those plotting against the country,'' Arroyo said in her address. ``The full weight of the law will fall on your betrayal.''

Arroyo's declaration comes on the 20th anniversary of the revolt that ousted dictator Ferdinand Marcos. It may revive opposition efforts to oust Arroyo. They've been demanding her resignation since last year over allegations she cheated in the 2004 election. Arroyo denied the allegations and in September defeated a move to impeach her in Congress.

Thousands marched even after the police said permits to rally today would be canceled. Police broke up rallies at two points on Manila's main road, Edsa. They used shields and truncheons as they tried to disperse a group headed toward Makati, Manila's financial district, according to video broadcast by ABS- CBN News. ``Many'' civilians participating in the rallies have been arrested, ABS-CBN reported.

The peso fell 1.1 percent to close at 52.20 to the U.S. dollar at 4 p.m. in Manila, its biggest drop since July 26, 2002.

``It doesn't bode too well,'' said Thio Chin Loo, a senior currency analyst at BNP Paribas in Singapore. ``The news suggests that there's some control over the situation, but it also means some soldiers are rebelling against the authority.''

Stocks Fall

The benchmark stock index dropped 1 percent to 2069.93 at the noon close, its biggest drop in two weeks. Bonds fell too. The yield on five-year peso denominated Treasury bonds rose 0.17 percentage point to 8.48 percent, according to the Money Market Association. That's the biggest increase since July 8, 2005, according to Bloomberg data. Yields move inversely to price.

Some participants in the first two rallies made it to Makati, where they planned to join another group that converged at a monument to Ninoy Aquino, who was assassinated during the Marcos regime and whose widow Corazon Aquino succeeded the dictator.

Police blocked the two groups from merging. A clash in front of the stock exchange was averted when police fell back after Makati Mayor Jojo Binay, an opposition leader, talked to police.

Less Momentum

The opposition has so far failed to match the magnitude of the rallies that helped bring down Marcos and President Joseph Estrada in 2001. The second brought Arroyo, then vice president, to power. The military was part of both revolts.

``I still think she should make the supreme sacrifice and resign,'' former President Aquino said in an interview with ABS- CBN. She first asked Arroyo to resign in July.

In May 2001, four months after Arroyo took power, Estrada partisans marched on the Malacanang presidential compound. Arroyo declared a ``state of rebellion'' to arrest persons who allegedly tried to topple her government. She lifted it four days later.

While Arroyo invoked two sections of the constitution in making her declaration today, she didn't provide more details about its implications. There's no plan to declare martial law, Defense Secretary Avelino Cruz said at a news conference broadcast on government television, without elaborating.

``It will backfire if they start dispersing rallies and arresting people,'' said Earl Parreno, an analyst at the Manila- based Institute for Political and Economic Reforms. ``It will arouse the passion of unaffected citizens.''

Marcos, Estrada

The arrested general, Danilo Lim, is a graduate of the U.S. Military Academy at West Point, New York, and was appointed head of the Scout Rangers in 2003. He had been involved in a 1989 coup attempt against Aquino, the bloodiest in the country's history, in which as many as 100 people died, most of them civilians.

While the bulk of the military has ignored the plea of some opposition members to withdraw their support from Arroyo, as the military did with Marcos and Estrada, some soldiers have challenged the commander-in-chief.

The military said on Feb. 22 it has been holding 14 junior officers since January who were planning a coup that involved about 200 soldiers.

In 2003, 300 soldiers took over a hotel in Makati, Manila's financial district, and demanded Arroyo and key civilian and military officials resign. They stood down within a day. In December and January, five officers on trial for that action escaped. One was recaptured in January and another this week.

A group saying it is made up of active and retired members of the military earlier this week claimed responsibility for an explosion on the grounds of Malacanang. Malacanang officials said the explosion, which didn't cause any injuries or damage, may have been a construction-related accident, without ruling out the possibility it was intentional.

To contact the reporter for this story:
Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net