Erap has argued that allowing non-Filipinos to own the land on which their factories are built will encourage the entry of more direct foreign investments. He has promised a growth of 4 -10% in gross domestic production and argues that full liberalization will benefit the country.

Globalization has required constitutional amendments in participating nation-states to facilitate the free movement of international finance capital in and out of the economy. But tinkering with the constitution is not without political risk. Thailand has had 17 constitutional changes, and gone through 16 coup attempts, according to Business World.

As part of the process of nationhood, the Philippines experimented with various forms of development under the leadership of the native elite principalia. The principalia class is composed of the leading elements of the towns set up by the Spanish conquistadores. The elements were drawn from the datu class that negotiated with the Spaniards for the retention and expansion of their land property rights and assurance that they would retain their leadership privileges. The principalia gave rise to the ilustrados during the Spanish era. It was this class that provided the leadership during the Philippine Revolution, and compromised with the victorious Americans when General Emilio Aguinaldo surrendered. Economic development during the Commonwealth period transformed the Ilustrado Class into a ruling self-perpetuating Oligarchy.

The Ilustrado class compromised with the invading Japanese forces during World War II under the guise of making war time conditions palatable to the Filipino people. Using various legal devices such as the post World War II Laurel-Langley Agreement, that for 25 years gave American investors property rights, the ilustrados sought to waive their responsibility for the development of the national economy for all the Filipinos and give it to foreign capital.

Most Filipinos do not begrudge the Ilustrados their wealth but by being the owners of land, the main source of capital, they have the duty to develop the productive resources of the country that they own or control. It is largely the failure of the Ilustrados as a ruling class that have kept the country poor. Their vision was limited to promoting their narrow class interest and the retention of their political privileges and economic wealth. As writer F. Sionil Jose theorized, the Ilustrados merely wanted political equality with the colonial power and not economic independence.

Perceptive Filipinos are asking why the Philippines is still poor 100 years after the 1986 Revolution. Why haven't we developed as much as our neighbors in the ASEAN? Even Indonesia was able to reduce its poverty to about 15% of the population before the 1997 currency crisis. Philippine poverty still hovers at about 40% of the population. The economy still cannot supply the people's material requirements and basic services such as electricity, water, health and education. Since Spanish times, the country is still dependent on imports.

The growing perception of continued failure on the part of the Elite (oligarchy) has made Filipinos open to radical changes in the political rules that governs society. It was the elite that set the ground rules in the 1987 Cory Constitution and required 60% Filipino ownership of utilities. This presumed that the elite would come up with the capital required matching those offered by the foreign investor. The failure of Filipino Capital justifies the constitutional amendment, according to President Estrada.

It may be pointed out that it is only the Philippines that seeks to provide the foreigner with full economic rights, such as 100% ownership of factory land and rights to establish a business. The Middle Eastern states of the Arabian Gulf, although hard-pressed to develop their economies using native skills and capital, have resisted opening up their economies and granting expatriates the right to own property or starting a business without native sponsorship.

Everything rests on property rights. The right to own property (on which a business can later be started) is exclusive only to nationals. Thus, President Estrada is encountering opposition, not just from the masses who do not own property but dream of owning their own portion of the country, but even from property owners whose economic dominance is threatened.

The Ramos Regime argued that foreign banks were needed to make more capital available for development or consumption. The prevailing high interest rates at the time even prompted Speaker Jose de Venecia to propose legislation increasing bank rates for deposits because bank loans using these deposits cost as much as 24-36% at one time. However, he was forced to stop this campaign and the cost of money remains sky high.

Capital is always a scarce resource and is created by business activity. Banks whose function is to allocate capital make loans only to projects with an assured return on investment (ROI). However, the Philippine elite owners of the banks want to make money the easy way by imposing high interest rates and use deposits to buy treasury bills with its assured yield. They deny small businesses access to capital by arguing that their business plans are not risk free. Even now, Filipino banks refuse to lend, starving the country of much needed liquidity.

It is in fact the policy of Philippine banks to lend only to sister companies but they have only so much money left over. Compliance with the law requiring banks to reserve a large part of their loanable funds for the agricultural sector is still inadequate. Regulatory authorities such as the Central Bank cannot enforce bank compliance and even suggests ways in which compliance with the law can be avoided. (Reference "Booty Capitalism" by Prof. Paul D. Hutchcroft)

Starved of capital, the Ramos Administration facilitated the easy entry and exit of speculative funds, the so-called "hot money" invested in the stock market, and short term dollar denominated loans. They did this by sanctioning the free exchange of pesos into dollars. The Ramos Administration also kept the dollar cheap, when its value was really P39 and not P26. All in all, about $500 billion in capital flowed into Asian countries.

Philippine banks used the loans to finance consumption of real estate, cars and other durables, contributing to the bubble that burst with the sudden exit of this capital in July 1997, triggering the Asian currency meltdown. Commentators have noted that foreign fund managers are now converting their peso profits into dollars, further weakening the peso. Importers are also buying more dollars to finance imports for the Christmas season, the only time during the year it is said, when retailers can make money in a recession.

Something more is needed than mere charter change. A basic change in the rules underpinning Philippine society is required. Surveys indicate that over 85% of the people want the State to provide or create jobs and provide a decent income (President Fidel Ramos, quoted in the Asiaweek Millennium special). The 1987 Cory Constitution makes it the mission of the State to guarantee full employment. Yet, we have a State that is unable to create jobs on its own, saying the private sector should put up factories, agricultural cooperatives for food production and distribution. The government cannot even make the bureaucracy more efficient because that would contribute to unemployment, and prolong the recession. The function of Graft after all is to re-distribute income to the poorly paid government employees.

Estrada proposes to transfer this duty to create jobs from the property-owning Elite to foreign investors. Government is beholden to the idea that the private sector should develop productive forces. Yet, small Filipino businessmen cannot find the capital to put up new business ventures, using native managerial and engineering resources. With Philippine private banks unwilling to risk their money in unsure business ventures, Government banks were created to provide the capital for new business ventures. They are not supposed to fund the expansion of existing big business firms. A commotion was thus raised in 1998 over the discovery that big domestic corporations cornered the bulk of the loanable funds of government financial institutions (GFIs) during the Ramos Regime.

Since they do not exist to make capital available for new business, Philippine banks now have to justify their reason for being or risk being bought out by foreign banks.

Historically, the Filipino elite offered constitutional amendments as the main tool in effecting change and ward off class violence. And yet, the last time the Philippines changed its constitution, in 1971, Martial Law became necessary in order to implement it. Thus, is Martial Law II likely?

Efforts to change the 1935 constitution to reflect present day reality were undertaken in the late 1960's. Moderate, mainly Catholic school students led the vanguard for "peaceful constitutional change" as against "revolutionary change" advocated by the left. The elite-dominated Congress granted their wish and approved legislation for a Constitutional Convention. The elections that followed brought into the fore more of the elite (wives, brothers and cousins of members of Congress were elected). But the political forces unleashed proved unsettling.

Marcos declared Martial Law in September 1972 just when the Con-Con was ready with the new constitution. He suspended implementation of the new constitution until such a time as he felt the conditions were ripe. Martial Law was lifted in due course in 1981 and Marcos called for elections to the National Assembly in order to implement the semi-parliamentary system of government envisioned by the 1973 Constitution.

In retrospect, Martial Law was really designed to implement the 1973 Constitution that Marcos structured to perpetuate himself in power. Thus, the first act of Cory Aquino when she assumed power in 1986 was to void the 1973 Marcos Constitution and issue her own "Revolutionary Constitution."

The Philippine political-economic system is designed by the Elite to give the executive (the President) all power. The Congress is subservient to the President, and a Supreme Court does not intervene unless a case is brought to it. Thus, trust in the wisdom and probity of the Chief Executive is a crucial element in any effort to amend the constitution.

The very divisive proposal to grant land-owning rights to foreign investors in exchange for capital are upsetting a lot of people and setting the stage for another experiment in authoritarian politics. Senator Enrile has already remarked that the 1987 Cory Constitution permits the Armed Forces to mount a coup d'etat under its responsibility to ensure the continued existence of the State.

A civil war is likely to be fought over the question of land ownership, as it has been fought in states in Europe such as England and in Africa in recent times.

A divided ruling class is creating conditions for civil strife. The division is best illustrated by the alliance that has developed to oppose changes to the 1987 Constitution. The commemoration of the 27th anniversary of Martial Law saw an alliance of sorts between the forces of the Left who were the main victims of ML1972, the politically active Catholic Church and the defenders of the 1987 Cory Constitution that is under revisionist attack.

It is likely that should the Estrada Concord be adopted, Martial Law or a milder version will be necessary to implement the changes, it is feared. A coup d'etat on the part of the AFP is likely to result from attempts to preserve the State. Martial Law will become necessary in order to implement an unpalatable constitutional amendment and mass protests will set the stage for civil war.