PHILIPPINES' ARROYO HANGS ON, FACES CRUCIAL WEEK

By Stuart Grudgings MANILA, Aug 21 (Reuters) - Philippine President Gloria Macapagal Arroyo faces a crucial week as flagging opposition attempts to impeach her come to a head and a court rules on the centrepiece of her economic reform plans. Since her presidency was taken to the brink of collapse last month when ministers and other allies deserted her, Arroyo has used her formidable political machinery to shore up support and fend off a steady stream of fresh allegations against her.

But political analysts say she still looks fragile given her dire popularity ratings and as Filipinos brace for an economic chill from spiraling world oil prices that could be worsened by Arroyo's attempts to raise taxes.

In Congress, she faces the dilemma of whether to quash the impeachment attempt and risk angering a population that may be starting to tire of the scandal or allowing it to progress to a point where it could gather momentum and succeed in ousting her.

Ramon Casiple, executive director of the Institute for Political and Electoral Reforms, said it would be dangerous for Arroyo if she was seen as blocking the search for truth over the allegations, including that she tried to rig elections last year.

"The middle class will definitely react. If you look at the surveys it already shows there is a definite public opinion for impeaching her," he said. "It's a question how they can stop the impeachment and yet have the people believe it is natural. I don't think they can do it."

A lower house committee stacked with Arroyo allies is due to vote on Tuesday on which of three impeachment cases to take up. Only one of the cases is seen as strong enough to have a chance of succeeding, and some opposition figures have threatened to abandon the proceedings if it is not taken up.

By doing so, they would hope to generate the same kind of anger that ousted Joseph Estrada from the presidency in 2001 after his impeachment trial collapsed. But there have so far been no signs that Filipinos are ready to take to the streets in their hundreds of thousands as they did in 2001 and in 1986 to oust dictator Ferdinand Marcos.

WANING INTEREST

Political analyst Alex Magno said the opposition was struggling to hold public attention and had not helped its cause by making some tenuous allegations against Arroyo, who has also been accused of having links with illegal gambling.

"What the public wants to hear are compelling arguments, more profound than mere character assassination, that the Republic's interest is best served by ousting the sitting president," he wrote in his newspaper column.

The opposition has been largely unable to make its allegations stick. Last week, it accused the government of helping an election official to flee the country after Arroyo was allegedly caught on tape asking him to fix last year's polls.

As with many of the allegations, it was largely based on hearsay and rumour. But Arroyo can ill afford to relax with her popularity at record lows for any Philippine president and ahead of the Supreme Court's decision on whether to lift a freeze it imposed last month on an expanded sales tax that would ratchet up prices.

The court is expected to lift the freeze this week, boosting Arroyo's image with ratings agencies concerned about the country's huge debts but making life harder for millions of poor. Political analyst Antonio Gatmaitan said the loyalty of Arroyo's allies in Congress was far from solid and could buckle if new allegations surface and raise public anger. "I don't know what the tipping point will be, but it will come," he said.