If the Marcos economy was so bad, why is his economic tsar Virata so respected?

IN its vitriolic anti-Marcos manifesto, the Ateneo de Manila pontificated: “The Marcos regime’s economics of debt-driven growth was disastrous for the Philippines.” An earlier column–but reposted in some Facebook pages recently–by UP economist Noel de Dios, an Oscar M. Lopez professor at the School of Economics, makes the same point, that the economy had a “dismal performance under martial law.”

What is astonishing in the condemnation of the Marcos years by the Ateneo and the UP professor is that both pretend—considering they are supposed to be academics—that they are unaware that it was one Cesar Virata who was almost totally in charge of the martial law regime’s economic management.

Of course, the buck stopped with Marcos, and he had command responsibility. But to blame Marcos solely for martial law is to misunderstand our history, that we will be condemned to repeat it, as we indeed have been.

Just as Marcos gave full authority to Defense Secretary Juan Ponce Enrile and Philippine Constabulary Chief Fidel Ramos to deal with the insurgency and with those pesky leftist student activists, he gave Cesar E. A Virata, whom he plucked in 1967 from the UP School of Business and groomed to be his top technocrat, as much authority over economic management.

Virata was indisputably Marcos’ economic tsar, occupying the crucial post of finance secretary from 1972 to the day the strongman fell on Feb. 25, 1986.  Never before and after has there been such a powerful finance secretary as Virata, since Marcos, after Alejandro Melchor left in 1974, had weak executive secretaries. Virata reported to no one else but Marcos.

Cesar E. A. Virata during Marcos years and today
Cesar E. A. Virata during Marcos years and today

Virata didn’t work alone, he was the big boss of the powerful bloc of Marcos technocrats who ran the economy. This included NEDA Director-General Gerardo Sicat, Trade Secretary Roberto Ongpin, central bank governor Jaime Laya, Budget Secretary Manuel Alba, PNB chairman Placido Mapa, finance undersecretaries Ernest Leung and (treasurer) Victor Macalincag, Agriculture Secretary Arturo Tanco, and Energy Secretary Geronimo Velasco.

Virata was to economic management during martial law what Ramos was to the regime’s police apparatus, and Enrile to the armed forces and his legal infrastructure. Marcos ruled as strongman through a troika: Enrile, Ramos and Virata. Without this troika, Marcos’ strongman regime would not have lasted a year.

Marcos even made Virata his Prime Minister in 1981, with “Prime” the title we reporters covering him at the time were told to address him by, and which his former subordinates call him to this day. Marcos chose him to be Prime Minister as his message to the country and the world that his economic manager was his political heir.

Another reason was that without Virata, the International Monetary Fund and the World Bank would have stopped its loans to the government. It was the “Seal of Good Housekeeping” for the regime’s economic management, without which foreign banks would have also stopped their lendings to the country.

Ninoy Aquino
And if the banks had done so, the economy would have collapsed in 1980 and not 1983, and Marcos most likely would have been ousted by Enrile and his RAM earlier. It was in March 1980 that Ninoy Aquino had a heart attack, with Marcos agreeing to send him to the US for his bypass surgery. In this alternative universe therefore, Ninoy would not have been assassinated, as he was in 1983.

Just as the Ateneo condemned “Marcos economics” as “debt-driven growth,” UP economist De Dios claimed that the “economy suffered its worst post-war recession under the Marcos regime because of the huge debt hole it had dug… collapsing completely in 1984-1985 when the country could no longer pay its obligations..”

But was it Marcos who was poring over the central bank’s balance of payments reports, and its external-debt reports? No.

It was Virata who had that responsibility, as finance secretary, chairman of the Monetary Board of the central bank and the head as well of the National Economic Development Authority, during martial law.

As finance secretary it was Virata who asked, negotiated, and even signed for most of our government’s foreign debt. The Monetary Board he chaired was the policy-making body of the central bank that had the sole authority to approve even a dollar of foreign debt.

In 1983 when we defaulted on our loans, the country’s total debt stood at $24.8 billion. Some $16.7 billion, or two-thirds of this, were incurred by, or guaranteed by the national government, mostly from the World Bank, the IMF, and the governments of the US and Japan, or more than half of our total debt.

Was there a single foreign loan Virata didn’t want government to incur, yet was forced to get, on orders from Marcos? None. Or if there were, he owes it to the country to disclose what loan this was.

Virata was chairman or board member of 22 government firms (Imelda had 23), many of which incurred foreign debts, or which on-lent the foreign loans they got to private firms. One case was a $200 million loan from the World Bank purportedly to modernize the country’s textile industry. It was the Development Bank of the Philippines that incurred the loan and the Board of Investments that determined to what firm it would be on-lent to. Virata was chairman of the DBP and a member of the Board of Investments. The program was a disaster, with evidence unearthed years later that the textile firms channeled their funds to other sectors, even real estate and hotels.

A favorite example of “Marcos’ mismanagement” was the $1.2 billion loan incurred by the Bataan Nuclear Power Plant, never commissioned. But Virata was a member of the board of the National Power Corp. that had the plant as its project, and chairman of the Monetary Board of the central bank that approved the loan. Did he ever, then and now, object to the nuclear plant project? No.

Virata School of Business
Yet despite this crucial role in Marcos’ strongman rule, Virata has been very much respected, and has enjoyed a lucrative post-Marcos career as a consultant here and abroad, and as a member of the boards of several huge corporations.

I found it weird that on the same screen of my computer monitor which had Facebook posts demanding that Ferdinand Marcos, Jr., who was in his teens during martial law, apologize for his father’s alleged sins, there was a post about Virata, the dictator’s economic tsar, being honored by the Emperor of Japan with the Order of the Rising Sun, with his former subordinates in government in proud attendance, beaming in a group photo.

HE MUST BE GOOD? Virata in group picture at honoring ceremony by the Japanese embassy Nov. 25, 2016. With officials from different administrations: clockwise from extreme left: Emmanuel Esguerra, NEDA head under Benigno Aquino III; Jaime Laya, Marcos’ central bank governor; Ernest Leung and Victor Macalincag, Marcos’ finance undersecretaries; Romeo Bernardo, President Ramos’ finance undersecretary and Globe Telecoms board member. To Virata’s left is Amina Rasul-Bernardo, Ramos’ Presidential Adviser on Youth Affairs and an avid supporter of Aquino III’s peace pact with the MILF.
HE MUST BE GOOD? Virata in group picture at honoring ceremony by the Japanese embassy Nov. 25, 2016. With officials from different administrations: clockwise from extreme left: Emmanuel Esguerra, NEDA head under Benigno Aquino III; Jaime Laya, Marcos’ central bank governor; Ernest Leung and Victor Macalincag, Marcos’ finance undersecretaries; Romeo Bernardo, President Ramos’ finance undersecretary and Globe Telecoms board member. To Virata’s left is Amina Rasul-Bernardo, Ramos’ Presidential Adviser on Youth Affairs and an avid supporter of Aquino III’s peace pact with the MILF.

The UP, a bastion of anti-Marcos sentiment, even renamed its College of Business Administration as the “Cesar E.A. Virata School of Business,” the only building or institution in the country’s premier educational institution ever to be named after a living person. The UP Press even published (i.e., paid for) a 900-page hagiography by Virata’s protégé Gerardo P. Sicat entitled Cesar Virata, Life and Times: Through Four Decades of Philippine Economic History. (To Sicat’s credit though, the book is a well-researched account of the economy during martial law, that’s far from the Yellow narrative.)

Why has the Yellow and Red Cults blamed Marcos solely for martial law, that they even seem afraid to mention the role of Ramos, Enrile and Virata in this crucial period of our history?

The reason is that the Yellow and Red Cults’ demonization of Marcos is intended–wittingly for the Cory Aquino followers and unwittingly for the intellectually bankrupt Communist Party forces–to hide from the nation one very important thing: the hegemony of the ruling class before, during, and after martial law.

Authoritarian rule wasn’t just a project of a diabolical Marcos, wanting to be dictator. Martial law was supported by the ruling class after it concluded that Marcos was targeting solely one of its power-hungry factions, the Eugenio Lopez faction and its allies.

As the ruling classes in most countries in the region did at the time, the Filipino elite had concluded that democracy under conditions in which oligarchs controlled its tools—parliament and the press mainly—would result in chaos which risked not only their wealth and capital, but even their very existence, if in the turmoil the Communist Party would capture power.

When the economy succumbed to the world debt crisis in 1983, the elite was more than willing to junk Marcos, and replace him with a more authentic representative of the ruling class, Cory Aquino of the centuries-old Filipino landlord class.

For Filipinos to realize the crucial roles of Enrile and Ramos, and Virata during martial law would shatter drastically the Yellow fairy tale of an Evil Dictator defeated by the avenging Widow.

Virata is an excellent representative, as corporate executives are, of the capitalist ruling class. UP may just have been naively honest to name its business school as the Virata Business School, since this is the only institution in the entire university devoted to training the corporate servants of the ruling class.

To hide Virata’s role during martial law is to hide the crucial role of the ruling class and its oligarchs in the country’s 13-year authoritarian rule.

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