The House of Representatives has adopted a proposal to convert Congress into an assembly that can change the constitution, a move that may derail the holding of next year's presidential elections. The plan, pushed through by allies of President Gloria Macapagal Arroyo late on Tuesday night, may result in removal of constitutional term limits of elected officials, Arroyo included. Arroyo is trailing in opinion polls, and analysts fear popular unrest, an increase in political risk, and further pressure on financial markets if the charter plan is pursued. Arroyo and her aides have staunchly maintained that the move is aimed at starting the process to amend the constitution to allow economic reforms, a process which will take years. Tuesday's vote is expected to be challenged in the Supreme Court which would give a definitive ruling on how to proceed. Elections next year will not be affected, Arroyo's aides say. But the president's critics have questioned the timing of the move, and the haste through which it has been pushed through the legislature. They insist the only aim is to enable Arroyo to remain in power beyond the end of her current term, which she is not entitled to under current law. Many analysts agree that parts of the 1987 constitution do need to be changed to allow economic reform, including removing limits on foreign investment in some sectors and allowing foreign ownership of property. But critics say Arroyo and her supporters are using that as a fig leaf and will ram through amendments that circumvent constitutionally-set term limits, enabling them to remain in office beyond May 2010, when elections are due. The motion adopted by the 268-member House of Representatives seeks to form a constituent assembly along with the Senate to decide on amendments. But the 23-member, opposition-dominated Senate is opposed, saying both houses must vote separately. The constitution itself does not explain how to amend the charter. If the Supreme Court rules in favor of holding a constituent assembly, this body would decide what articles should be amended, with the changes put to a national referendum later. Nominations for the 2010 elections are due in November. It will be difficult to have the court decision, the constituent assembly meeting and a referendum completed before then. But decisions can be fast-tracked, and with enough political will, can be rushed through. Street protests would be almost inevitable if there are any actual moves to tinker with the elections. Opinion polls say Arroyo is the most unpopular president in the Philippines since the late dictator Ferdinand Marcos – ousted in a “people power” revolt in 1986 after two decades in power. The military supports Arroyo and the powerful church is non-committal, but analysts say all bets will be off if massive street protests emerge. Both foreign and local investors would be watching closely how the charter change move progresses and may take a cautious stance on the Philippines in the next 6-12 months, analysts said. “It provides additional uncertainty and that may have some implications for the exchange rate,” said Joey Cuyegkeng, economist at ING Bank in Manila. “We'll probably see whether this political uncertainty deepens and that maybe the time when people start taking on more insurance.” He said local investors may shift to more dollar holdings as a safe haven if the political situation boils over. On Wednesday, the Philippine peso opened firmer at 47.24 per dollar and was quoted at 47.26 at 0322 GMT, against its close on Tuesday at 47.35. Yields on the most active 5-year and 7-year local debt papers went up 5 to 10 basis points on Wednesday, as political concerns compounded worries over Manila's fiscal health. The government had said it may raise its budget deficit target this year with weak revenues so far.
