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It is easy to be disheartened about the violence that is sweeping across the Philippine province of Mindanao. It was thought to have been settled four years ago, but it has erupted once again. The government has had recent successes on the battlefield, but the rebels are not likely to be subdued.

The roots of the conflict date back 400 years, when Catholicism was introduced to the islands and set off a competition with followers of Islam who had come to the islands 100 years before. It is estimated that about 120,000 people have been killed since the early 1970s. In 1996, the Moro National Liberation Front signed a peace treaty with the government under which it gained limited autonomy for Muslims in southern Mindanao. Two dissident groups, the Moro Islamic Liberation Front and the Abu Sayyaf, spurned the deal and continued to fight.

The government has gone on the offensive in recent months, spurred by President Joseph Estrada. There have been some successes. Since a June 30 deadline for a peace agreement expired, government troops have captured more than 20 MILF camps. Two weeks ago, they seized the MILF headquarters, along with stores of arms and ammunition. Mr. Estrada’s claim that the tide had turned were countered by calls for a jihad, or holy war, by the MILF leader, Mr. Salamat Hashim.

Mr. Salamat threatened “flexible warfare” and warned that all of Mindanao could become a battleground. The government believes that the majority of Muslims want peace and will ignore the call for jihad. There are dangers, nevertheless. Intensified fighting has driven 100,000 people from their homes. The government’s distraction by the Muslim guerrillas has reportedly given communist rebels an opening to launch their own attacks.

Just as important is the damage done to the country’s reputation. The guerrillas’ threats to attack public facilities and foreign property are designed to undercut confidence in the Philippine government. For that reason, the taking of 21 hostages, including 10 Westerners, from the Sipadan resort island in Malaysia by Abu Sayyaf is the government’s chief headache right now. Since the April kidnapping, the group has seized three French journalists and a German newsman who had come to interview the hostages, as well as 13 Christian evangelists who had come to pray for them.

The kidnapping has dragged on amid charges that Manila is mishandling the crisis. It has aggravated Manila’s relations with its neighbors, especially Malaysia, as well as with European governments who want their nationals set free unharmed. Although the kidnappers are allegedly acting for political reasons, there is speculation that they want money pure and simple. The rebels are reportedly demanding $1 million for each hostage. The government says it will not pay ransom, although it has paid “room and board” for hostages seized in the past.

The spectacle of live interviews with the hostages and the kidnappers has only intensified criticism of the Philippine government. It is not clear who is heading the negotiations — nor, for that matter, who is negotiating for whom — and the growing number of hostages has turned the entire episode into something of a farce.

The government is attempting to resume negotiations on both fronts. On Friday, one Malaysian hostage was released. Earlier this week, Mr. Estrada offered immunity to leaders of the MILF if they reopened peace talks. He repeated that his government is not prepared to offer anything more than local autonomy. Not surprisingly, there is no sign that the rebels are ready to negotiate.

As long as they hold hostages, the rebels have the upper hand. The chaos and confusion surrounding the negotiations also plays to the guerrillas’ strength. The biggest concern is that Mr. Estrada may let the government’s recent military successes go to his head and try to force the situation by sending in troops. He has to resist the macho temptation. He should take his cue from the quiet confidence of his predecessor, Mr. Fidel Ramos, who delivered the 1996 peace agreement.

The only way to end the insurgency is to bring prosperity to Mindanao, one of the poorest parts of the Philippines. The key to growth is investment, but that will not be forthcoming until the government can guarantee security. That is dangerously close to a vicious circle. It certainly is vicious.

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