MANILA, Philippines?The government-backed attempt to take control of the Manila Electric Co. (Meralco) has its roots in a clan war among the Lopez family on one side and the Macapagals and Arroyos on the other that has been raging for most of the last century, according to investigative reporter Greg Rushford.

More importantly, the dominance of such powerful clans?and their occasional fights for control over sections of the economy?has been holding back the country from achieving its potential, according to the veteran journalist in an article entitled ?Clan Warfare Hobbles the Philippines? published in the July/August edition of the Far Eastern Economic Review.

?The bad feelings between the Macapagals and Lopezes started more than four decades ago,? Rushford said, quoting a 1994 study by University of Wisconsin historian Alfred McCoy. ?When Diosdado Macapagal, President Arroyo?s father, was elected president of the Philippines in 1961, he ?had good reason to dislike the Lopez? family.

?Not only had [family patriarch Eugenio Lopez and his younger brother Fernando] financed his rival?s campaign but they were maneuvering for control of Congress to position Fernando for a presidential run in 1965.?

Because of this, President Macapagal then ?employed the full powers of the state to bring the Lopez empire down.?

According to the article, criminal complaints were drawn up by Macapagal?s justice department charging the Lopez brothers with corruption in a land deal, while the Bureau of Internal Revenue went after Lopez-owned sugar mills. The Macapagal administration also tried to remove Eugenio Lopez from the board of Meralco, which was then already the largest electricity distributor in the country.

?Ultimately, the moves failed, and Macapagal was defeated in his 1965 reelection bid by a rising young politician named Ferdinand Marcos, who enjoyed the Lopez family?s support,? Rushford said.

Meanwhile, Rushford pointed out, the bad blood between the family of First Gentleman Jose Miguel Arroyo and the Lopezes went even farther back?as far as the 1920s when the province of Iloilo was run by Gov. Mariano Arroyo, the grandfather of the First Gentleman.

In 1929, Eugenio Lopez Sr. owned the local newspaper, El Tiempo, and used it to launch himself as a power broker in Iloilo City, according to McCoy?s.

?Governor Arroyo?s problem was that he was taking bribes from an illegal gambling racket?although he would deny the fact that gambling was going on when the Lopez-owned El Tiempo exposed it in a series of well-documented investigative reports,? Rushford said.

The ensuing battle between the Lopezes and Arroyos ended with US colonial authorities sacking Governor Arroyo, having concluded that he had indeed taken bribes from a gambling syndicate.

?This defeat, indeed destruction, of the province?s leading politician was a stunning political victory for Eugenio Lopez who, at 29, was still a neophyte publisher,? according to McCoy?s book.

Rushford pointed out that the Arroyo family never regained its political clout until the future First Gentleman married Gloria Macapagal.

?Although the President and her husband have denied any ill feelings toward the Lopezes, the recent headlines in Manila suggest otherwise,? Rushford said.

Rushford used the story as an example of the main issue he believes is preventing the country from matching the economic and political growth of its regional peers.

?Sadly, despite her boasts, Ms Arroyo?s speech conveyed a negative message about her country?s development, because it showed she is in denial about the key stumbling block to growth,? he said, referring to the President?s recent speech in Japan where she proclaimed that the Philippines was headed in the right direction, thanks to her leadership.