MANILA, Philippines (AP) – Two weeks ago, President Gloria Macapagal Arroyo was one of Washington’s best friends. Angelo dela Cruz was toiling in anonymity 5,000 miles away, starting a dangerous drive into Iraq with a truckload of fuel.

Then, with a rattle of gunfire, Iraqi insurgents hijacked both their lives, setting off a chain of events that has left Arroyo isolated and criticized by her closest allies even as dela Cruz, a poor father of eight, has emerged as an unlikely national icon.

Behind the scenes, it is a tale of negotiations that led to a policy flip-flop that could hurt the rest of the U.S.-led coalition in Iraq and is likely to haunt the Philippines long after dela Cruz fades back into obscurity.

Washington says ties with Manila won’t be affected, but the question now being asked is whether it will remain willing to continue counterterrorism training and equipment to help modernize the poor Philippine military.

The episode has also highlighted once again the concept of “people power,” a term that originated in the Philippines to define the power of public protest to overthrow governments. This time, protests were small but reinforced the wave of public opinion that pressured Arroyo, raising the question of whether the Philippines own terrorists will be emboldened, and other Filipino workers abroad be put in jeopardy.

It was well after midnight in the Philippines on July 8 when the wake-up calls began. The Arabic TV station Al-Jazeera had aired a videotape from a previously unknown group in Iraq that showed dela Cruz, snatched near restive Fallujah as his Iraqi security guard was killed.

The kidnappers’ demand was blunt: Manila had three days to withdraw its peacekeeping force of 43 soldiers and eight policemen from Iraq or dela Cruz, like other American and South Korean captives, would be beheaded.

The Philippines, with a reputation as Asia’s kidnap capital, has plenty of recent experience negotiating for hostages, despite an official policy against doing so. Two high-profile mass abductions have earned the Al-Qaida-linked Abu Sayyaf terrorist group millions in ransom.

So the government went to work, setting up contacts with the kidnappers through intermediaries while another distinctively Filipino phenomenon unfolded.

Seven million Filipinos work abroad, sending home billions of dollars, and when even one of them is in distress, it’s felt throughout the island nation. Suddenly dela Cruz’s picture was everywhere. Family and friends in Pampanga, Arroyo’s home province, tied yellow ribbons. Taxi drivers held candlelight vigils. Leftist groups redoubled their campaign to get the Philippine army out of Iraq.

The victim’s everyman stature grew as relatives described a man who only wanted a better life for his family and went on his fourth stint to Saudi Arabia in April 2003 to pay for surgery for a son with an eye injury.

On Saturday, with the deadline 12 hours away, Arroyo’s office issued a statement, clearly aimed at the kidnappers, that the peacekeepers would leave when their mandate expired Aug. 20.

The statement was ambiguous. There had been talks about extending the mandate, but no decision. The statement suggested the troops could return under U.N. auspices.

At first, it appeared to have worked.

Labor Secretary Patricia Santo Tomas, staying with dela Cruz’s family, went live on television around midnight Saturday, saying Arroyo had called with news that the hostage was free and headed to a Baghdad hotel.

Hours passed without confirmation. Suspicion grew that the kidnappers had backed out. Celebration faded to a prayer vigil.

The next day, the kidnappers announced they were giving Manila an extra day to provide concrete proof it was withdrawing by July 20. Dela Cruz would be held as a prisoner of war until the pullout was complete.

After an emergency Cabinet meeting Sunday, Foreign Secretary Delia Albert announced Manila was sticking with the Aug. 20 pullout date.

Washington had already been hit by Spain’s pullout over the Madrid train bombings. Secretary of State Colin Powell called Arroyo to make sure she wasn’t wavering.

On Monday officials said they believed the insurgents were giving them another extension, for 48 hours. Then a new video surfaced, slashing the deadline to just three hours away. It showed dela Cruz in an orange jumpsuit like those worn by other hostages before beheading, and carried a statement that he had been moved to his place of execution.

After all-night Cabinet consultations, Foreign Undersecretary Rafael Seguis, dispatched to Baghdad to help in the negotiations, went on Al-Jazeera with a statement that added more ambiguity: The peacekeepers would be withdrawn “as soon as preparations for their return to the Philippines are completed.”

But the Arabic voiceover translated the phrase to mean “as soon as possible,” which was seen as agreement to the kidnappers’ demand.

There was no clarification from the government, which then went silent until Wednesday, when Albert issued a statement saying eight peacekeepers had been withdrawn and efforts were under way to coordinate the pullout of the rest.

With the blackout continuing, questions focused on Arroyo’s strategy and motivation. Diplomats were unanimous in only one thing: Arroyo had “crossed the line” in making concessions to terrorists.

Australian Foreign Minister Alexander Downer warned that other coalition members in Iraq “would pay the price” for the Philippines’ early pullout. The U.S. State Department expressed disappointment, as did Iraq’s interim government.

On Thursday night, the kidnappers issued yet another video of dela Cruz. He no longer was in the orange jumpsuit, and told family members he would be home soon.

The kidnappers said he would be freed as soon as the Philippines completed the pullout, and Albert said Friday that 11 more peacekeepers were heading home.

AP-ES-07-17-04 1311EDT