TIME: Have you accomplished what you set out to do? Arroyo: I inherited a complex nation with complex problems, both domestically and internationally. And I came in realizing that there is no silver bullet. It's not a sprint: it's a marathon. Nonetheless, a lot of things have been done. We are strengthening our revenue institutions. We are working on macro-economic fundamentals. Our interest rates are at their lowest in a generation. Our peso is stable. And we have been doing very important reform legislation that's been waiting for decades. For instance, the power sector reform law, the money laundering law, the special purpose vehicle law; these are reforms that have been waiting for many, many years and have finally come into being.TIME: Is there much more you want to achieve in the time you've allowed yourself? You don't seem to have enough time to do it. Arroyo: Any man or woman who thinks that he should be a superman or superwoman who should do everything himself will end up like a dictator who wants to be there for 20 years. It's very important to realize, as my father said, That every President is not expected to build the whole edifice, but to add a fine stone to that edifice....Rather than say, am I satisfied? Am I not satisfied? What I would say is yes, we should be satisfied at the progress but not at the pace. For instance, another great reform that has been waiting for a long time is the modernization of our electoral processes. It's a shame that Filipinos are being sought everywhere because of our IT expertise, our call-center expertise, our business processing operations and backroom expertise—and yet we still do our elections by manual counting. So somebody had to exercise the political will to finally make the money available... and now we will finally have modern computerized elections in 2004 so that everybody's vote will be counted, and votes will not be counted that are not really there.TIME: Will you run again in 2004? Arroyo: I made my declaration [not to run] in December because I don't want to be distracted by politics. I have not talked politics since then. I don't intend to start talking politics in this interview or any other interview. I believe that my being freed from the burden of politics has enabled me to do these reforms in the BIR and Customs, to do the reforms on computerized elections, to finally have closure on major cases pending in the courts on good governance. All of these could not have been done if I kept thinking about, will I run in 2004 or not?...I have been able to do unpopular things. Making peace with the MILF is not totally popular. But we have been doggedly pushing the peace process forward, to make sure that we show that the better alternative for the rebels is the peace process rather than a military solution. And I am feeling very gratified that peace is now within our grasp. These are the things that occupy my time: instituting economic reforms, booting out corruption and actively promoting the Philippine economy and [its] workers. You know, I am not only the president of 80 million Filipinos. I am also like the CEO of a global corporation of the 8 million Filipinos who live and work in 140 countries all over the world. They make our country proud, and they are a good basis for us to engage the world as partners rather than under the old feudal relationship of colonizer and colonized.TIME: In light of the escape of terrorist Fathur Rohman al-Ghozi, it looks more and more like the Philippines is one of the weakest links in the war on terror. Considering the MILF's history and the fact that they have probably trained international terrorists in their camps, is it contradictory to prosecute the war on terror at the same as to try to make peace? Arroyo: No. It's not contradictory, because part of what we've always been telling them is that if they want to go to the peace talks, they have to prove their sincerity, renounce terrorism and help us interdict the terrorists. They have renounced terrorism and they are helping us find al-Ghozi. In fact, the imminence of the peace talks blunts the complication of his escape. Because now he has nowhere to run and hide. He is not going to be coddled and protected. He's going to be spurned or even turned in.TIME: At this point, are you confident that there are no more camps where Jemaah Islamiah terrorists can be trained in Mindanao? Arroyo: If there are camps, the peace talks do not in any way prevent us from hitting those camps. If there are camps, they are JI camps. And there is nothing in the terms of the proposed peace talks or the cease-fire that says that we will not go against terrorism, that we will not enforce the law. And our talks via backchannels with the MILF have confirmed this—that they renounce terrorism too and that they will help us. They are looking for peace as we are looking for peace.TIME: The MILF leadership may be fully committed to peace, but there may be elements in the MILF that will remain cooperative with international terrorism. How do you crack down on certain elements without complicating the peace process? Arroyo: That is part of what the talks are all about. It is very clear that terrorism is not within what will be allowed. We will continue to enforce the law. These are part of the new conditions that I worked on to make the peace process more successful this time—that we can differentiate between terrorism and political aspirations.TIME: Do you think that the escape of al-Ghozi has damaged the reputation of your government, either at home or around the region? Arroyo: Well, certainly the escape of a prisoner adds volatility to the peace process. We have to recognize that indeed, many forces are at work to make the peace process fail. but I am very hopeful that we can overcome these challenges. The time has really come for peace.TIME: Has the Philippines' role as a training base for terrorism been overstated, or has it been fairly cast? Arroyo: Terrorism has become a trans-national phenomenon. Certainly, terrorism has networks in Southeast Asia. And that's the reason why we have to have a trans-national and regional approach to terrorism. That's the reason why after 9/11, I initiated a trilateral agreement with my neighbors Malaysia and Indonesia so that we could work on terrorism together. We have been joined by Thailand, Vietnam, Cambodia in this. I believe we will soon be joined by Brunei as well. We are working together with the United States and with Australia, which is also part of the area of interest. The important thing is what do we do to address these threats.TIME: Have you been satisfied with the work your security forces have done, in general, against terrorism? Arroyo: They do what they can, given the fact that we have limited modern resources. But that's the reason why I have engaged our neighbors and allies in this fight. And that's why I am using hard-collected money to buy more assets. I'm buying 20 helicopters, which has not happened in a long time. We're putting money in modernization, where in the past we were always relying just on assistance, because we are determined to strengthen our capability to fight terrorism.You talk about the escape [of al-Ghozi]. But catching him in the first place was a great contribution that we have made. And other terrorists have also been caught. We have been very aggressive in the fight against terrorism, because we know what terrorism is. Because even before 9/11 we already had terrorism in the southwestern Philippines. Now that this is a world struggle, we have partners, and we enthusiastically accept their help to fight terrorism and to win the peace in the Philippines. And we also lend our support to fighting terrorism in the world and in the region. Fighting terrorism means winning a war, but also winning a peace. And the fact that peace is within grasp with the MILF is in itself going to be a major blow to terrorism. Because the terrorists will have one ally less.TIME: When you wake up in the morning, what is the first issue that pops into your mind? Arroyo: When I first became president, it was the economy—and it remains my focus. After 9/11, it became very clear that the focus must be both peace and security. So every day that I wake up and all the hours that I am working, everything that I do is always, How does this contribute to the economy? How does this contribute to the security of our country? That's always my concern.TIME: So specifically the first thing you worry about is the economy? Arroyo: The economy and stability. Because in this post-9/11 world, they are twin challenges, not only for the Philippines but for all countries.TIME: In another year, can you achieve everything you've set out to achieve on the economy? Arroyo: It's not so much that we achieve it all, but that we set irreversible directions.TIME: How does a country like the Philippines compete internationally, what with the concerns about security and competition from China? Arroyo: Way back in 2001, when I saw that the NASDAQ bubble was going to burst, our exports were very dependent on electronic exports. I discussed with my economic managers what we were going to do. Were we going to try to look for other markets, change our products, or work on the domestic economy? Of course, we'll look for other markets. We'll try to diversify our products. But the most important thing is to strengthen our domestic economy. So that no matter what happens in the outside world, we are resilient. And we did. We strengthened our small and medium enterprises because they are the most efficient users of capital. We have been directing bank funds to SMEs rather than to unproductive projects or industries with excess capacity. We developed housing because it has the biggest multiplier effect. And the housing executives say that the housing policies have never been as good as they are now. We worked on agricultural modernization, putting money in the countryside. We spent an unprecedented P20 billion in agriculture and we have been doing so every year so that there will be money in the hands of the farmers. I paid my predecessors' debts to the local government so that they would have purchasing power in their hands.The proof of the pudding is that for all these years, our growth rates have been better than many of our neighbors and our trading partners. And at the same time, our peso has been relatively stable, our inflation is down, our interest rates are down. So I think that the resiliency of the economy, the purchasing power of our domestic market—modest as it is, but reliable—are the things that make us competitive. Not to mention the great Filipino worker, 8 million of whom fuel 140 economies around the world. They send us back remittances of about $7 billion a year.TIME: Your December 30 statement was about freeing you from politics to pursue what you feel is a more important agenda. Can a President ever really be free from politics? Arroyo: Certainly I'm trying to be free of politics. That's why I just simply don't want to talk about elections. I think that I've been able to do a lot that would have been very difficult politically. I've been able to be very focused. I've been able to make tough decisions without making apologies if I step on any toes. My decisions are made in the best interests of the people. And that's the kind of leadership that this country needs at this time in order to stay on the path of progress. If there's anybody who can do it, I'm trying to be the one who can do it.TIME: Do you think you would have a different legislative agenda had you not made that declaration? Arroyo: The anti-money laundering law, for instance, was something that could not pass for a very long time because the political pressures against it were tremendous. I got it passed. That's one very good example. The Marcos case is a very difficult case to pursue if you have political interests and if you have bow to powerful political interests. But here it is.TIME: But it's certainly a populist case. Arroyo: Not necessarily, because so many didn't want to touch it for long time. If it were so populist, it would have been addressed a long time ago. It was very difficult for many of those who tried to pursue it. In fact, it was already almost a lost cause... [Take reforms such as] running after these corrupt people in the Bureau of Internal Revenue: sure it's populist once you've done it, but what about the process of doing it? It was not a question of flying high; it was a question of plodding. And plodding is not good politics. Flying high is good politics; it's populist, but you won't always be able to achieve lasting results. And that's the important thing.If I had played to the crowd all the times regarding, for instance, the Marcos wealth, we would not have reached this stage. If I had been populist about the money laundering law, we would not be where we are now. And what we're going to work on now is how to implement it properly. And I'm engaging the world in this implementation. I'm asking the U.S. and the U.K. to help us technically, to do the tracing on terrorist money and drug money.That's the other thing too: the drug war. I couldn't have done the drug war. I mean, you can be populist and say that you're fighting drugs. But all these busts and all these arrests that we're making now are the results of political will, which is not always popular because there are strong political forces [at work].TIME: If there are currently training camps in Mindanao, in effect you are saying that after the Kuala Lumpur peace talks there won't be anymore? Arroyo: The MILF has renounced, they have explicitly renounced terrorist ties.TIME: So there are no more military camps training foreign terrorists in the Philippines? Arroyo: What I'm saying is, if there are, that is not part of the peace talks. The fight against terrorism continues; the enforcement of law continues. We are expecting the MILF to help us find these camps and overrun them and interdict the terrorists.TIME: Do you think the MILF is being forthcoming? Arroyo: We have our monitoring teams. The monitoring teams, especially the Malaysian-led monitoring team, are there for a very important reason—to address these comments.TIME: The economy is running nicely, but can the Philippines really see the boom that other countries in the region have seen without solving these terrorist issues? Arroyo: They go together, of course. But notwithstanding these challenges, we've had a faster growth rate than many of our neighbors. Our stock market is doing very well, our peso is stable. Our domestic market is keeping us resilient—and that's not by accident. We worked on policies to strengthen our domestic market.TIME: I've read that you're somewhat of a fan of Thaksin's economic policies? Arroyo: Yes, exactly. I've not been shy about saying that I like many of the instruments that he used for promoting small and medium enterprises and housing, and now in the war on drugs. We have a very good relationship with each other. Thailand's Air Force is more advanced than the Philippines', and he's assisting our Air Force with actual planes. He's going to deliver 4 planes in September. And I asked him to come and give a lecture on what I have called Thaksinomics so that the bureaucrats can learn from him directly the things he's done to make his program work. You know, when Thaksin first talked about one town, one product; one village, one product; one million baht, everybody made fun of him. But one year later, other countries were also replicating it including the Philippines. The economists call it managed asset reflation.TIME: What's going to be the main thing on your agenda in your last year of office? Arroyo: My focus is still on the economy and security. And as I said, we continue to strengthen the Republic, for instance by strengthening the Bureau of Internal Revenue by fighting corruption there. I think another area of great reform is the Philippine National Police. I am forming a commission called the PNP Reform Commission, which I will ask to report back to me with a recommendation for a complete overhaul of the Philippine National Police. That's another strengthening of the Republic. We are strengthening the BIR and Customs by running after the crooks, but we also want to strengthen the institutions themselves. So we have a bill to create a National Revenue Authority. We also want to strengthen the judiciary by improving compensation for judges, so that more upright and competent judges will join the force. And also by strengthening mediation as a means of settling disputes in order to de-clog the judicial system.I also want to reform the school system. I want to close our school-building gap once and for all. In a developing country like ours, if you have more than 50 but less than 100 students in a school, you can have two shifts [of classes]. But if you have more than a hundred students, then the two-shift idea won't work. We have to close that school-building gap once and for all. And I'm very grateful to divine Providence for making this Marcos money available, because that can close the gap. And this is on top of the reforms that have been made already in strengthening math and science education and English education. So now, we work on the school-building gap and on distance learning for the faraway students. That's what I mean by strengthening our Republic—strengthening the institutions. So that they will execute good policy.TIME: What do you mean by the overhaul of the police? Arroyo: We will await the result of the commission. Maybe the structure has too many layers: the head, then the deputy for this, and the director for this. Under the head you have at least four executive layers. And then you have the regional heads. And the regions are a mirror of all the layers at the top. And of course we have to flush out the corrupt officials and policemen in the Philippine National Police.TIME: What is it about you that you feel has been your most useful attribute as chief executive? Arroyo: That I'm very focused.TIME: And you've always been? Arroyo: Yes. I don't allow marginal things to occupy my time and my energy.TIME: Do you think that's the pre-eminent requisite for a chief executive? Arroyo: At this point in time, yes. If you're going to try to attend to everything yourself, then you'll wear yourself out and you will achieve very little. But I focused on the economy, I focused on security. And here we are; our growth rates are good, our interest rate, inflation rate and deficit are good and we have peace within grasp after decades of fighting.TIME: Do you find this job difficult? Arroyo: Of course. The Presidency is a very difficult job. There are many challenges. But God having put me here, I'm undeterred in moving our nation forward.TIME: Is there anything you'd rather be doing than what you are doing right now? Arroyo: I'm a very religious person and I always believe if I surrender myself to the will of God, where I am is where He wants me to be. And I also would not want to waste any emotion on wishful thinking.TIME: It's not wishful thinking. I mean, we all sometimes see someone on TV, or we're reading about something, and we think, that would be interesting. Arroyo: I've always felt that what I will do is what God wants me to do. And at this point in time, Edsa 2 [the popular protest which ousted ex-President Joseph Estrada] was a miracle and here I am because of it. So this is what God wants me to do, and therefore this is what I want to do in spite all the challenges. It is my job to face those challenges and to steer our country through those challenges, to stay on course.TIME: Do you pray every day? Arroyo: Every day, yes. All the time.TIME: In the morning and in the evening? Arroyo: All the time. All day long I'm talking to God. I'm asking God, What are You trying to tell me with this situation? What do You want me to do at this point in time? What do You want me to do with this problem? Or, Here's a blessing; what do You want me to do with this blessing?TIME: And how has God let you know what to do? Arroyo: It's an idea that comes while I'm praying. And many times the idea is confirmed by confidence.TIME: It's a feeling sometimes. Arroyo: Yes. Others would call it intuition; it's really prayerful analysis.TIME: Is this something you've always done, or do you find you do it more as President? Arroyo: I've done it since I was a young married woman.TIME: Are you ever frightened? Arroyo: I do get frightened, but I don't entertain my fear. I immediately say, Why am I frightened, what is the challenge? What must I do to face the challenge?TIME: Can you always be that analytical? Arroyo: I'd say it's second nature to me.TIME: What about the challenge of the Philippines' high birth rate? Arroyo: You know, I look at other countries that worked very hard to reduce their birth rate a generation ago. Now, they are suffering from old-age health care crises. And they're turning to countries like the Philippines, where the bulk of the population is of productive age.Having said that, I do believe in family planning. In our country, only 30% of the people practice family planning because the rest have always thought that there is a conflict between their faith and the idea of planning a family. But I'm saying that there is no conflict, because there is such a thing as natural family planning.TIME: You're talking about non-intrusive, or non-prophylactic family planning? Arroyo: That's right. And that requires education. That's what we're working on now.TIME: It has never been successfully implemented in any society. Arroyo: Well, there are the 30% who are already using birth control. The other 70% have to know that there is a way to keep their faith as they understand it and still be responsible parents. The theme of our population program is responsible parenthood, which is what's in the constitution. In any case, concentrating only on the artificial methods has not been successful either.TIME: What's the worst part of your job besides the distractions? Arroyo: The worst part of the job, because of the way that politics has evolved in our country today, is that black propaganda and destabilization have become political tools. And that's not healthy; that weakens a nation. That's why I keep talking about strengthening the nation.TIME: Do you ever wake up and wish you were doing something else? Arroyo: Well, I have this philosophy, that God created me, and therefore I must do the things I should do. and never mind about wishing, because we're not Almighty. We don't have genies, we have to deal with what we have, rather than what we would like to have, but can't help.TIME: What has been a disappointment for you in terms of something you wanted to do? Arroyo: Well the pace of reforms. As I said earlier, the progress, the direction is there; the pace is something that I'm impatient with. But that's because our nation is not yet so strong. If we want our country to achieve reforms at the pace that we want to achieve them, we must strengthen our institutions. That's the way to speed up the pace. But strengthening the institutions will be, again, a marathon, not a sprint.TIME: So, a year from now, when you move out the palace again, what are you going to miss most? Arroyo: I'm not into this thing about missing this and missing that. What God wants me to do at a given moment in time is what I joyfully accept.TIME: And you always have this feeling about the right thing to do?Arroyo: That's my philosophy. It guides my everyday life.