ORLANDO MERCADO, FORMER PHILLIPPINES DEFENCE SECRETARY: Yes, indeed, I think what people seem to want to express is the fact that the administration, the President herself, they have listened to the cries of the people. As the President herself has said, Angelo de la Cruz is a Filipino everyman. 1 out of 10 Filipinos is an overseas foreign worker and we depend a lot of them who are working under very difficult conditions if only to bring resources back to our people and to provide employment for families who cannot find employment here.

MARK DAVIS: The Philippines certainly has plenty of its own terrorists and hostage-takers. Is there any concern there that these people will take great heart from these developments?

ORLANDO MERCADO: Well, at first blush it may be easier to say that we're having difficulties and we're turning our back on terrorism, but that is not so. I believe that, in the final analysis, our foreign policy has to be an extension of our domestic policy. And it is very important that there is political stability in the domestic front.
I believe that the consequences of not listening to the people in this particular case could be worse. There would be political instability. The President is starting her new six-year term and she needs to unite the people. I believe that it is going to be understood later on that it was a wise decision, largely because of the fact that we now want to say that while we are not turning our back on terrorism, the fight against terrorism, it is important to consider many things, there are nuances that cannot be seen immediately if you are just watching it from afar.

MARK DAVIS: Yes, well, it's an interesting point you make. I mean, many opposition supporters are still challenging the results of the last election. Will this consolidate or bolster President Arroyo's hold on power? Is there a large domestic agenda here?

ORLANDO MERCADO: I believe that it will not only bolster her hold on power but we can move forward now. In the past, we have made decisions that resulted in strains with the United States, like our rejection of the bases in 1991, the Bases Agreement. That caused some difficulties after that, but later on we began to have a more mature relationship with the US.
I believe that if we all look at each other's record, you will find out that it's neither black or white, even the United States, for example, have, I think, in a certain way, speeded up the transfer of political power and sovereignty, largely because of the fact of the influence of domestic politics in the United States.

MARK DAVIS: Well, Australia has been quite vocal in its criticism of this decision. The Americans have as well. How has that criticism being received locally?

ORLANDO MERCADO: I think what we should do is have a little more understanding of where we are. Let us not forget that in the past we have had very good relations, the Philippines has been very supportive of Australia's efforts especially. I do remember when I was secretary of defence, the East Timor problem, we were one of the first to send troops immediately when it was necessary and our troops served well.
It is a hunt that we're going through, it is a difficulty we're going through, but I think after this the President will stay the course, and she has said it herself. The same is not going to be true of all victims of terrorists, but this particular case cannot be marginalised, because it is not marginal in the focus of the Filipino people.

MARK DAVIS: Well, the Philippines has its own problems with Islamic terrorism or Islamic insurgency. You've received a lot of American assistance in that battle in recent years. If you need help again, do you think that assistance will be as forthcoming?

ORLANDO MERCADO: I believe in the final analysis, we will have to, in spite of some difficulties, come together. And this problem, as we know, is a global problem. It cannot be solved by one country alone or one group of countries and marginalise others, especially in a country like ours where we are facing the threat of terrorism almost constantly. But I'd like to say that sometimes you have to see things from the perspective of your own national interests.
I do remember when the kidnapping of foreigners, that happened in Sipadan and they were transferred to the island of Sulu, happened, I was then in office as secretary of defence. And I do remember that a high-powered delegation from the EU came to the Philippines, and talked to then-president Estrada and was asking him not to conduct military operations. We were already conducting military operations and to allow negotiations to go through. And that was what happened. The negotiations were ensued, but as a consequence, they were released. But you have to look at each case differently, on a case-to-case basis. We cannot just generalise these particular cases.

MARK DAVIS: Orlando Mercado, thanks again for your time.

ORLANDO MERCADO: Thank you very much.