Standoff a big blow for Arroyo

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Philippine rebel soldiers take positions outside a department store in Manila's financial district

Philippine President Gloria Macapagal Arroyo called it "a triumph for democracy." Late Sunday night, 296 soldiers holed up in a central Manila mall complex decided to return to their barracks after a tense daylong standoff with government troops. Arroyo kept her tough line on the mutineers to the end. Despite their peaceful surrender, Arroyo promised that they would "not be given special treatment."

The outcome was the best possible in a situation that appeared headed for something much uglier. Early Sunday, Arroyo set a 5 p.m. deadline for the rebels to stand down; if they didn't, she warned that the government would use "reasonable force." The rebels had lined the square in front of the Glorietta mall they occupied with explosives to deter just such an option. (Just to make sure the deterrence wasn't lost on those monitoring the situation, two mutineers wandered away from the Glorietta to cover one bomb with a plastic garbage bag when rain began to fall.) As the afternoon wore on, more troops and tanks crowded around the square. But negotiations were also being furiously pursued. The mutineers' mall saw an endless train of negotiators — senators, military brass, even family members. The 5 p.m. deadline was extended, then scrapped. In the end, the rebels were driven out of central Manila on buses, having received nothing from the government but a promise to examine their many grievances.

Those complaints may dog Arroyo during her final 10 months in office. The rebels leveled fierce charges of corruption and mismanagement at the military leadership — even accusing the armed forces of supplying weapons to insurgency groups. Whether true or not, these issues appear to hold widespread appeal throughout the military ranks. If they aren't alleviated, the complaints could lead to more anti-government outbursts by the often volatile armed forces. "The message is that the government should take action — real reform," says Lieutenant Col. Rod Mejia of the Marines' intelligence unit. "If not, this coup will continue and continue and continue."

Though the mutineers backed down, it's hard to see Arroyo as a clear victor. The mutiny was a painful black eye for the economist-turned-president on the weekend before her final State of the Nation address on Monday. Government officials fear that the biggest blow could be to investor sentiment towards the economy. "This is really destructive for the image of the country," complains Trade Secretary Mar Roxas. And that's the last thing the Philippines needs.