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Philippines mutiny takes on political twist

MANILA, Monday (Reuters)

Philippine police arrested an aide of ousted president Joseph Estrada on Monday and were investigating the role of a senator as a weekend mutiny by rogue troops took on increasingly political overtones.

Despite President Gloria Macapagal Arroyo's assurances on Sunday that the mutiny "does not in any way injure our national security and political stability", share prices and the peso currency took a beating when financial markets reopened.

"The future beckons with what looks like the crosswinds of a raging storm," columnist Teodoro Benigno wrote in the Philippine Star newspaper, adding that the failed uprising was part of general disaffection with Arroyo's government. The peaceful end to the standoff is sure to get heavy billing in Arroyo's annual State of the Nation address set for 0800 GMT.

Police said they found weapons, ammunition and red armbands worn by the nearly 300 renegade soldiers in a raid on the home of Ramon Cardenas, near the mall in Manila's financial district where the mutineers barricaded themselves for 19 hours.

Cardenas was a cabinet minister in the government of Estrada, who is now on trial for economic plunder after being toppled by popular protests in January 2001.

Military officers and Roman Catholic clerics played a major role in elevating Arroyo from Estrada's vice president to the leader of the nation's 82 million people.

Officials also said they were gathering evidence about the role of Senator Gregorio Honasan, a former military officer who led coup attempts in the 1980s. He was one of the negotiators who helped end the siege on Sunday night without a shot being fired.

It will be tough for the president, in her address to the nation, to put a positive spin on rogue soldiers paralysing Manila's commercial heart under the apparent guidance of her political opponents.

"The rebellion may be finished but they didn't resolve any issues yesterday except that the rebel soldiers surrendered," said Rowena Reodico, an officer at a shipping company.

The mutineers accused the government and senior officers of corruption, collusion with Muslim rebels and planning to impose martial law to avoid presidential elections scheduled for 2004.

The Philippines is no stranger to graft or to allegations military officers profit from hand-in-glove deals with rebels.

But suggestions of direct government involvement - no matter how unfounded - put the onus on Arroyo to tackle the issues underlying the soldiers' grievances.

"Pushing accountability for something like this will send a signal that the country means business and wants to correct things and come through with reforms," Guillermo Luz, president of the influential Makati Business Club, said on television.

"Anything less than that would probably raise the political risk profile for the country."

Presidential spokesman Ignacio Bunye said Arroyo was "very determined to get at the root of the matter".

Arroyo has insisted she will not run in next May's election in order to devote her attention to the economy, but many think she will be persuaded or has already decided to reverse course.

There were fears the mutiny could be the start of a throwback to the 1986-1992 rule of President Corazon Aquino, marked by a string of coup attempts that stymied the Philippines as its Southeast Asian neighbours enjoyed rapid growth.

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