The bet of ARENA

The Law of the National Defense

The Law of the National Defense is the new issue that the country’s social and political actors are discussing. During last week, due to the approval of the Legislative Assembly, many voices were raised to denounce the authoritarian aspects of the law, which seem to threaten the freedom of information. On the other hand, many compare the contents of the law with a maneuver to return certain privileges to the Armed Forces, which ended with the Peace Agreements. In the end, whether if the key factor is to defend the freedom of information or to keep the Armed Forces apart from the activities aimed to protect the citizenry, a choir of disagreements about the law can be heard.

In this context, on August 27th, President Flores returned the law to the Legislative Assembly with a multiplicity of considerations that he had made. Referring to article 25, connected with the obligation of a natural individual to provide the authorities with the necessary information, the President thinks that “it is an open regulation that could, at a certain moment, generate confusion about what really has to be informed, what are the limits, whether if the information can or cannot be made public”.

In order to clarify the confusion, he explains that it would be necessary to re-write article 25 in the following terms: “the officials, the public or the municipal authorities will have to give away the information they know about according to their positions, as long as it is required by a competent authority, and as long as it is relevant for the objectives of the National Defense”. This is how Francisco Flores analyses the spirit of some critics, especially those that come from the media and the reporters. For them, the law (approved by the right-wing legislators) constitutes a clear obstacle and a step backwards for the country’s freedom of information.

It is necessary to notice how fast many social actors became organized to denounce the law. The organizations of the civil society, the journalists’ guilds, and the owners of the news media added themselves to those who criticized the already famous article 25. It is necessary to see how important this is because this initiative has gathered, at least for once, the interests many different sectors that usually do not have much in common. This situation indicates the possibility of a future understanding among very different sectors, in order to present their specific demands to the political system. Is the prompt reaction of the President the result of the society’s pressure? It is difficult to answer this question. In any case, the congressmen should pay attention to these considerations if they want to eliminate the suspicions regarding their compromise with the freedom of information.

However, in the other hand, it would be convenient to notice other subjects as well, the kind of issues that do not create much attention but that are also relevant because they are connected with the Law of Defense. This idea refers to the multiple privileges given to the Armed Forces in terms of the National Security matters. It seems odd that the most important news media did not pay any attention to this issue. Ultimately, if the point is to eradicate the authoritarianism and “consecrate” the freedom of the Salvadorans, we would also have to analyze the negative consequences (it is a possibility) of assigning those tasks reserved for other institutions to the Army. In addition, it is not a secret that the Salvadoran Armed Forces are the least recommendable institution when it comes to protect the citizenry.

That is why President Flores’ observations are also intended to “correct” the mistakes. In the first place, his advice is to eliminate the third ordinal of article 2, which was intended to “guarantee the survival of the Salvadoran state (...) because of the external and the internal threats that might negatively affect the national security”. He also thinks that it is a mistake of large proportions that the congressmen establish as the goals of the National Defense “to face the disasters or the fires caused by a natural phenomenon”. In summary, what can be inferred from the President’s observations is that the legislators who voted in favor of the law confused the concept of National Defense with the concept of National Security.

However, what has not been mentioned is that a number of congressmen are excessively jealous when it comes to discuss the role of the army en the society. That is why they intend to assign the army to those tasks that are not compatible with their new constitutional mission, which was redefined with the Peace Agreements. It is an old authoritarian reflection from those who were used to feel protected by the “all-mighty” wings of the army. That is why it is difficult for them to understand that the army is not ultimately responsible for the security of the citizenry. That is why the society’s organizations have to be alert to neutralize any disguised intent to militarize (again) the country and the society.

The inveterate faith that the right-wing congressmen have in the armed forces, as an institution that can guarantee the civilian security, is so strong that they do not listen to the FMLN’s warnings about the incongruity of the Law of Defense. It seems odd that the observations that President Flores made include –in a great deal, although with a different argument- many of the critics that the left-wing party made about the “National Defense” concept used in the formerly mentioned law. In summary, Flores has proved the FMLN right when it comes to, for example, suppressing the articles that refer to the defense of the national interests before the international threats, or about the involvement of the armed forces in the police tasks.

Finally, thanks to the observations made by President Flores, the congressmen have the opportunity to re-write the controversial law of defense. The expectations are that they consider the specific observations made by both the society and the President. But it will be necessary to specify a little more the meaning of the concepts connected with the international defense. It would be positive for them to get acquainted with some of the international documents about the “defense” subject, such as the Letter of the United Nations subscribed on June 1945. This letter is basically about the Peace and the international security, and its specific purpose is to reach a pacific solution for the controversies.

The impression after reading the Law of the National Defense is that this law is destined to prepare the next war for El Salvador. However, it is a fact that the national defense cannot be reduced to this. In addition, this law does not refer to the Central American nations, although it will be necessary to count with them in order to articulate any intelligent defense policy. A national defense strategy in the present times, especially in the case of El Salvador, has to look for the political cooperation between the nations, with the purpose of achieving higher security levels at a low cost.

The first figures of the budget for 2003

The first figures for the Nation’s General Budget for 2003 were revealed, and the situation does not allow us to perceive any major changes in the tendencies that the expenditure, the income, and the fiscal deficit follow. The total expenditure will increase despite the efforts of the Ministry of Hacienda (the Internal Revenue Service) to reduce the common expenses. The projection of the income is based on optimistic speculations again about the economic growth rate and the fiscal deficit is expected to be close to at least 2.7%, but it will increase with the amortization that the state will destine to face the debt with the system of pensions.

Although it is still necessary to know what will be the budget requested by the different governmental institutions, it is necessary to examine the initial formulation of the budget facing the actual level of performance that the public finances have had during the last years. This turns especially important if we consider that the government, through the Ministry of Hacienda, adopts drastic measures that do not show any positive results. In fact, the austerity policy adopted since 2001 is reducing the regular expenses, but it does not seem to have an effect over the deficit. It is only causing a reduction of the state’s capacity to regulate and support the social and the economic development.

For 2003, the Ministry of Hacienda expects to use a budget of approximately $2,742.8 million. This means an increase of 9.5% in relation to the 2002 budget, which increased to $2,504.1 million. According to the official sources of information, the 2003 budget contemplates a reduction of 3% for the regular expenses. However, in the end, the increase on the investment expenses and the transference of wealth annul this reduction and can even cause the formerly mentioned increase in relation to the budget’s total amount.

The efforts to reduce the regular expenses will not be so drastic during 2003, mostly if it is considered that for the present year the regular expenses dropped in 15%. It is necessary to clarify that this did not neutralize the tendency that the expense followed nor the increase of the fiscal deficit for that year when it went, according to the official figures, from 2.3 to 3.6% of the GNP. This was the result of the outrageous increase of the public investment (which went from $287 million for 2000, to $528 million in 2001) induced by the loans to reconstruct the infrastructure destroyed by the 2001 earthquakes. The external public debt went from $2,831.3 to $3,147.7 million during the same period, while the public debt went from $1,955 to $2,383 million. Other increases are about to be added to this one once the 2003 budget is defined.

The bottom line about the inefficiency of the expense’s reduction and the constant increase of the public debt can be found not only –as the government would like the people to believe- in the expenses or in the fiscal evasion. The problem is that the taxation structure is not efficient enough to collect the necessary income to pay for the enormous expenses of the state. In many occasions this publication has discussed how the nineties’ tax reform failed and did not heal the public finances. However, this issue is constantly discussed every year when the general budget is designed.

It would be enough to reflect about the fact that the government’s total income for 2001 reached $1,65.4 million, although the expense was approximately $2.143 million. This means that close to 25% of the total budget was not financed. If the 2001 tax revenue is considered ($1,448.9 million) it would be evident that 35% of the total expense was not financed. It would not be necessary to discuss that much about how weak this kind of policy really is. It can only lead to a growing level of indebtedness that, in the mid-term, it will be impossible to pay back.

The observations of the Minister of Hacienda, Juan José Daboub, which include “we are working with a fiscal discipline” seem questionable even when he says that a reduction of the fiscal deficit is expected for 2003 (approximately 2.7%). In any case, this amount would be above the level obtained in 1999 and 2000. The bet of the Ministry of Hacienda would be to continue with a reduction of the regular expense, until a total reduction of 25% is reached for 2004. In other words, we would have to expect a new and a substantial reduction when it comes to formulate the 2004 budget.

The implications of this kind of policies can be worse than the problem itself because –by reducing the fiscal deficit- the state is being dismantled and its capacity to promote a sustainable development is reduced. Along with it, they also reduced the number of existing jobs in the public sectors, and therefore the unemployment level increased. By the first trimester of the year, this austerity policy caused more than 7,000 layoffs and it substantially reduced the effective and the potential capacity of the state to promote the transference of the agricultural technology, among other things.

Unfortunately, even if the common expenses are reduced, the truth is that the public finances will not improve while the taxation is not increased. Presently, it reaches approximately 10.5% of the GNP. However, according to the international standards it is necessary to reach a level of at least 12% of the GNP to keep the public finances healthy. The bet of the monetary authorities is not placed so much on an increase of the taxation, but on a reduction of the expenses.

This does not mean that there are no plans to increase the tax revenue. According to the preliminary figures it is estimated that there will be an increase between 6% and 9% in the total revenue, which is evidently not enough to compensate an increase of 9,5% and $238 million in the total budget. The prediction of the increase mainly comes from the natural “growth” of the taxes, which is the result of the increase of the GNP. It is also the result of the reduction of the fiscal evasion, which –in the case of the Value Added Tax- can be estimated to reach a 40%. Therefore, if the growth rate of the GNP does not reach the expected levels, the same will happen with the increase on the tax revenue. It has happened before when they calculate that the tax revenue will reach a 3.5% growth rate (for the GNP), and in the end it grows only 2% (as it happened in 2001)

The problem of the public finances shows that the business companies have to become more responsible. If the taxation is not increased, that means that the government has considerably reduced the taxes for the business sector along the nineties, and that the private business companies improperly take possession of the collected taxes with the Value Added Taxes. By analyzing both cases, the conclusion is the same: the solution to the fiscal deficit and to the growth of the debt is to increase the taxes that the business people pay.