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Baa, Baa Bad Year
Conventional wisdom would have it that the Year of the Sheep
(or Water Goat) would be a mild-mannered, gentle one in keeping
with the personality of sheep. Tranquility, amiability, and
peace are normally the hallmarks of such a year. Thus, one
should expect a slow, but sure-footed year, reflective of
the agility of goats.
 Well,
think again. Tranquility, amiability, and peace have been
in short supply. For one, a United States-led coalition is
pushing for war on Iraq. In spite of a determined effort by
Secretary of State Colin Powell to convince the United Nations,
the Security Council remains uncon-vinced and will likely
vote to wait and instead attempt to disarm Iraq through weapons
inspections efforts. In the meantime, peace rallies around
the world suggest serious rifts in the coalition and within
traditionally strong supporters like Britain.
Ironically, in the last cycle of the Year of
the Sheep (1991), war – again against Iraq — was
very much in the picture. Following an invasion into Kuwait,
a U.S.-led multinational force waged war on Iraq, pushing
its forces out of Kuwait and back into Iraq in the 100-hour
long Operation Desert Storm.
This time around, a Middle East war affects
the Philippines in a number of ways. First, there are roughly
1.5 million Filipinos working in the area – although
fewer than 500 work in Iraq itself. Filipino workers are likely
to stick to their jobs – and continue remitting funds
– in the event of war unless it escalates to a point
where evacuation is absolutely necessary. Repatriation to
the Philippines couldn’t come at worse time. With unemployment
at almost 12 percent, there is little likelihood that returning
workers will be hired.
Oil prices will also be another problem (see
related story). In the last Persian Gulf War, oil prices almost
tripled in the run-up to war but dropped immediately by half
once the actual shooting started. Price behavior will be determined
by the perception of the duration and extent of war.
Finally, if an extended war were to have a dampening
effect on say, the U.S. economy, there will be some spillover
effect on the Philippines. The U.S. is a main destination
for exports as well as a major source of foreign direct investments.
And – many don’t realize this – almost 60 percent
of overseas remittances into the country come from U.S.-based
Filipinos.
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