"This report discusses key issues in U.S.-Philippine relations and developments in Philippine politics, economics, society, and foreign relations. Global terrorism concerns have brought the United States and the Republic of the Philippines (RP) closer together, but they also have produced some bilateral tensions and highlighted weaknesses in Philippine economic, political, and military institutions. The RP faces terrorist threats through alleged cooperation among three groups - Jeemah Islamiah (JI), the main Southeast Asian Islamic terrorist organization with ties to Al Qaeda; Abu Sayyaf, a small, violent Muslim separatist group which operates in Mindanao and the Sulu Archipelago in the southern Philippines; and the Moro Islamic Liberation Front (MILF), an armed separatist group with alleged ties to both JI and Abu Sayyaf. President Gloria Macapagal-Arroyo has strongly supported the U.S.-led war on terrorism. Since 2001, the Philippines has received the most dramatic increase in U.S. foreign assistance in the East Asia-Pacific region, particularly foreign military financing (FMF). In May 2003, the United States designated the Philippines as a Major Non-NATO Ally. Since 2002, joint U.S.-RP military exercises (Balikatan) have focused on counter-terrorism efforts. The Balikatan exercises of 2002, in which U.S. troops provided non-combat assistance, significantly reduced the strength of Abu Sayyaf. However, there is also evidence that Mindanao appears to be transforming into a significant base of regional operations for JI. Furthermore, the rise of the Rajah Solaiman Movement (RSM), composed of Muslim converts from the northern Philippines, has the potential to expand the reach of Islamic terrorism to Manila and the main island of Luzon."
CRS Report for Congress, RL33233
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