By: Jay Solomon
(Source: THE WALL STREET JOURNAL ONLINE, March 21, 2002)
DATU PAGLAS, Philippines — Fifteen years ago, this secluded town exemplified the chaos that engulfs the Muslim areas of the southern Philippines. The rice and corn fields sat fallow as many of the area’s farmers headed into the hills to join a separatist army, the Moro Islamic Liberation Front. Members of the Paglas family, which has run large swaths of Mindanao island for hundreds of years and gives the town its name, were being gunned down in blood feuds with rival political clans. Kidnapping syndicates sprang up as some locals decided to trade in humans rather than crops. The island’s economic prospects dimmed.
“It was like no-man’s land,” says Ibrahim “Toto” Paglas, who was mayor at the time. “No one would pass through this area.”
Today, everyone from the Philippine government to the World Bank is holding up Datu Paglas as one of the Muslim South’s rare economic success stories. Hundreds of MILF fighters have laid down their arms and returned to the banana plantations and rice paddies. Crime is down. A mini-mall and development bank has opened in Datu Paglas (population 30,000). And foreign and Philippine entrepreneurs are trekking into Mindanao’s jungles to build factories, such as a Korean-financed plastics plant now under construction.
Mr. Paglas, who is 41 years old and no longer mayor, has done more than help his town make money. All the center of this area’s turnaround is highly unusual business venture that brings together Saudi traders, Italian shippers, Israeli farming experts, Chiquita Brands International Inc. and top MILF commanders. The result, La Frutera Inc., is the largest foreign-investment project in the Philippines’ Muslim autonomous region, which consists of five provinces.
Mr. Paglas’s ability to unite Christians, Jews and Muslims in a Southeast Asian region gripped by sectarian and ethnic conflict has opened the eyes of leaders from cities as far away as Tehran and Jerusalem. Mr. Paglas calls the company, which rents its land from him, the “United Nation of bananas.” Flags from Iran, Malaysia, Hongkong and the Philippines wave outside his company’s offices, a corrugated-metal compound across from the local mosque. One of his next projects” developing a separate plantation solely to serve Iranian market.
La Frutera has succeeded, in part, because he has cracked down violence and crime, clearing the way for construction of good roads and an irrigation system. Mindanao bananas grow large and are in demand in major Asian and Middle Eastern markets.
Mr. Paglas success is taking on even greater importance as the U.S brings its global war on terrorism to the southern Philippines. Nearly 700 U.S soldiers are currently deployed on Mindanao and other islands to help the Philippine military hunt down another militant Islamist group, the Abu Sayyaf, which the Bush administration alleges is linked to Osama bin Laden’s Al Qaeda network. The Pentagon is talking of increasing its military presence in Southeast Asia, which has seen a rising tide of Islamic militancy since economic and political crisis gripped the region in 1997.
But longer term, development experts say that only economic growth and education can bring stability to Mindanao and other Muslim areas in Southeast Asia, which is home to a quarter of the more than one billion Muslims world-wide. Both U.S and Philippine officials say they are seeking to replicate the Datu Paglas business model in other places where former combatants need to be assimilated into civil society.
“We can never improve things here through the barrel of gun,” says Mr. Paglas as he sits in a bungalow overlooking his vast acreage of bananas.
During 400 years of colonial rule, the Spanish tried military force to pacify Muslim populations on Mindanao and its surrounding islands – and failed. Many of the tribes in the area had more in common with Islamic sultanates in what are now Indonesia and Malaysia. The Spanish called Muslims “Moros”, for their perceived resemblance to the Moors of North Africa.
American colonialists fared little better during the 50-year rule of the Philippines, which ended in 1946. Fierce clashes between American servicemen and Moro fighters inspired what was then known as the U.S War Department to develop the Colt .45 sidearm. Smaller-caliber rounds were thought ineffectual against suicidal Moro fighters, who whipped themselves into a trance-like state and charged into battle adorned with rattan shields.
Mr. Paglas is a product of a feudal culture in which a handful of dominant families historically have owned most of the land. His bloodlines trace back hundreds of years to a series of Islamic monarchs who ruled the islands. His grandfather, father and brothers all have served as mayors and senators in Mindanao.
While his family has tasted the fruits of wealth and power, it has also been scarred by the violence that permeates Mindanao’s history. Assassins and bandits gunned down Mr. Paglas’s father and three brothers in power struggles in recent decades. Today, Mr. Paglas and his friends talk of the 1991 murder of one of those brothers as the galvanizing force behind the current wave of economic development in Datu Paglas (“Datu” is a Malay honorific for a Muslim chieftain.)
Friends of Mr. Paglas say they expected he would launch a retaliatory war against the clans thought to be responsible for the 1991 slaying of his brother. Instead, he welcomed a visiting delegation from a neighboring town and agreed there had to be peace. “It was as if Allah was trying to tell me something: that the cycle of violence would never end,” Mr. Paglas recalls over a beer at one of his favorite haunts, the Champagne Bar in the nearby city of Davao. “This changed me.”
The creation of La Frutera was similarly improbable. “No one wanted to put money into the Muslim areas of Mindanao because of the many risks,” says Edgar Bullecer, who represents the foreign investors in the venture: Chiquita, the De Nadai family of Italy and the large Saudi trading company Abdullah Abbar & Ahmed Zainy Co. The investor group had formed in 1991 to develop banana plantations in the fertile regions of Mindanao. Through the mid-1990s, the group focused on land near predominantly Catholic Davao. To increase production, the investors were now looking at Muslim areas, too. But businessmen in Manila warned that Muslim communities didn’t have enough trained workers to support big business. Another hurdle was that potential Filipino staff members from Manila and elsewhere were leery about living in Datu Paglas.
But Mr. Paglas pushed for a deal. Gathered in his small office in late 1997, the team of would-be foreign investors made an offer some local landowners might have found insulting: the equivalent of $70 per hectare (2.47 acres) a year. Other plantation owners on Mindanao were getting at least $160 for a year’s lease. But Mr. Paglas recalls thinking that “no one else would put in any money, so I said OK.” The meeting lasted only 15 minutes, and he leased out of a total of 1,500 hectares. Ultimately, the foreigners invested $27 million in La Frutera.
Perhaps the most unlikely figure at La Frutera is Yaal Pecker, an Israeli who grew up on a kibbutz, or communal farm, near the Sea of Galilee. During his service in the Israeli military in the 1980s, Mr. Pecker fought Muslim militants in Lebanon. He went on to become an agricultural specialist with the Israeli company Plastro International, which took him to Thailand, Australia, and South America. La Frutera’s foreign investors sought out Plastro for its strong reputation in irrigation technology. Any potential tension between the Israelis and the Saudi traders was overweighed by the desire for Israeli expertise, participants say.
Mr. Pecker and six of his colleagues worked hand in hand with the former MILF guerrillas who tend the fields, oversee fumigation and provide security at Datu Paglas. Both sides saw themselves as members of agricultural cultures, rather than as combatants in a global religious war, the Israeli says. “They’re farmers just like me”, the gruff Mr. Pecker says. “What’s the big deal?”. He and Mr. Paglas call each other “brother” and kiss each other on the cheeks as a greeting.
Approval for the Israeli participation had to be granted at the highet levels of the MILF command. In late 1997, Mr. Bullecer and Mr. Paglas trooped through the jungle to meet Hashim Salamat, the MILF Chairman. The rebel leader also happens to be Mr. Paglas’s uncle. As they made their way through the dense undergrowth, Mr. Bullecer expected the rebel chief to upbraid Mr. Paglas for bringing Israeli Jews into Muslim Mindanao. When they met in an MILF safe house, Mr. Salamat’s reaction was opposite.
“He asked Toto if the Israelis were helping his people,” Mr. Bullecer recalls. Mr. Paglas said yes and that was it. The MILF commander declared the Israelis were welcome. Some lower-ranking local Muslim leaders remain wary of the Israelis, but overall, relations have been smooth.
MILF consent is seen here as a big reason for the success of La Frutera and the town of Datu Paglas. Of La Frutera’s 2,000-man work force, company officials estimate that 90% had been members of the MILF or sympathizers. Mr. Salamat’s army signed a cease-fire agreement with Manila last year, but tensions have resurfaced recently. Philippine security forces accuse the MILF of having ties to Al Qaeda and improperly grabbing back land the MILF lost in fighting in 2000. Rebel leaders deny the accusations, saying they are manufactured to lure them into wider war with U.S. troops in Mindanao.
Former MILF fighters working at La Frutera say they have no desire to return to fighting. On a recent Friday afternoon, about a dozen men lined up outside the Datu Paglas Rural Bank to receive their bimonthly paychecks. Many wore tattered basketball jerseys and Islamic skullcaps as they sat near a photo of a beaming Mr. Paglas and former Philippine President Joseph Estrada.
“My life is much better since I left the MILF”, says Rocky Daud, 24. As an MILF field commander patrolling the dangerous jungles of Mindanao, he received no pay and rarely saw his fiancée. Today, he makes what is considered here to be a decent paycheck – the equivalent of $100 a month – and can afford an appliance or two from Datu Paglas’s newly opened mini-mall. “I don’t want to go back to the hills”, he says.
Abbic Puas, who fought under the moniker Commander Spider while in the MILF, now oversees 45 men in La Frutera fields. For most of his 40 years, he roamed the area’s green hills, occasionally ambushing Philippine army patrols and bandits. “I can now send my children to school”, he says.
La Frutera says last year it generated net income of $3.6 million in revenue of $12.6 million. In the absence of violence, Mindanao is one of the world’s best places to grow bananas. It has rich soil and is just outside of Southeast Asia’s notorious “typhoon belt”. The fruit is in heavy demand in Japan, China and the Middle East.
Now, La Frutera business is filtering though the rest of Mindanao’s small economy. Mr. Paglas has set up trucking, security and gas-station companies to serve the plantation. These ancillary businesses of Paglas Corp. helped it generate a total of $10 million in sales last year, company executives say. They provide jobs to local residents, while the town’s new bank offers loans to other aspiring entrepreneurs.
Can Datu Paglas be duplicated in other war zones? Another project in the southern Philippines suggests that throwing money at Muslim militancy doesn’t necessarily curb it. The U.S. Agency for International Development has spent at least $12 million since 1996 to help another separatist army, the Moro National Liberation front, set up a postwar economy. The money is intended to support a six-year-old peace agreement between Manila and the MNLF. AID says it has provided more than 13,000 former MNLF combatants with training in skills like seaweed– and corn-farming, as well as helping to facilitate small-business loans. But money and jobs haven’t damped local hostility. Fighting between the rebels and the Philippine government has kicked up again since the peace accord, as the two sides struggle over control of the area.
The situation in Datu Paglas is aided by Mr. Paglas’s unquestioned authority as a Muslim chieftain. He has the last word in enforcing security arrangements and settling disputes. Even the national government acknowledges that. Last year, when three employees from a Chinese oil company were kidnapped by a local gang, Manila turned to Mr. Paglas. He helped secure their release. “I tell people that if they have guns near my plantations, I’ll kill them”, Mr. Paglas says.
He hasn’t eliminated all crime in Mindanao. A visiting Korean businessman was kidnapped in the area recently for ransom and has yet to be released.
But foreign investors and former rebels agree that Mr. Paglas’s authority is critical to La Frutera success. “Paglas definitely needed to use muscle at first to squelch violence and crime”, says Jesus Dureza, a top adviser on Mindanao to Philippine President Gloria Macapagal Arroyo. “It allowed investment to sink in”.