Event

After negotiations involving Malaysian mediators, the Philippine government and the Moro Islamic Liberation Front (MILF) signed a historic peace agreement on 15 October which could end a 40-year deadly conflict. The framework agreement provides for the creation by 2016 of an (partially) autonomous political entity for Muslim-majority areas, called “Bangsamoro”, on the southern mineral-rich island of Mindanao. Beside an announced higher share of mineral revenues granted to Bangsmamoro, some political, judicial and economic powers will be devolved whereas the central government will keep exclusive powers such as civil, monetary and defence policy. Meanwhile, a transition Commission will have the task of drafting a basic law for Bangsamoro region that will eventually be subject to referendum in Mindanao by 2015, i.e. before Aquino’s term ends.

Impact on country risk

In the past, peace attempts with secessionist Muslim movements in Mindanao failed, the last time in 2008 notably due to Christian opposition. Thus, the recent deal is no guarantee of success and sustainable peace as many details have still to be agreed upon and several risks to be overcome. One is the resistance from MILF divergent factions and other Muslim rebel groups – particularly the Bangsamoro Islamic Freedom Fighters - which are determined to continue fighting for full independence, from the largely Catholic national population and the Christian community whose importance in Mindanao has grown over the years. Another concern is the difficult disarming of MILF fighters. So, the way to peace will remain very tortuous and challenging even though the MILF has pledged to respect the ceasefire and agreement. Traditionally, Mindanao has long represented the highest security threat in the Philippines, characterised by the separatist conflict, dreadful political violence and high poverty. Therefore, in an ideal scenario, the peace deal has the potential to boost investments in the medium-term and represents a further positive achievement for President Aquino who is capitalising on his country’s excellent economic momentum.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com