A questionable decision

The PT and the FMLN

The Brazilian Party of the Workers (PT, in Spanish) has an enviable position. Its leader, who is also the eternal candidate who runs a fourth time for president, occupies the first position. The results of the first electoral round (celebrated on October 6th) were made public and revealed this information. It is not only important to consider the fact that Luiz Inacio Da Silva, Lula, got approximately 47% of the voters’ attention –while his main opponent, Jose Sierra, did not go beyond 23%-, but also that most of the Brazilian voters have given their support to the left-wing. This support is a disadvantage for the right-wing politicians, who have administrated the country until these days. The last electoral results seem to show that the PT has gained 35% of the voters’ support in the entire country, while the central right-wing has lost a 10% of the voters’ support.

With this perspective, it is very probable that in the second electoral round, planned for October 27th , Lula’s PT might win the Brazilian presidency. If this happens, this will be the most significant electoral result of a left-wing party in Latin America since the region’s third wave of transitions was inaugurated. Brazil is the most important country of Latin America, from a demographic point of view as well as from the magnitude of its economy. Consequentially, there is no doubt that whatever happens in Brazil will be relevant for the rest of the region.

From this moment on, Lula’s possible triumph for the Brazilian elections of October 27th
–or probably his eventual defeat- cannot be ignored by the rest of the left-wing politicians in Latin America. Ever since the doctrine of the communist containment, “made in Washington” ended, this is the first time that a left-wing option –if the Haitian case of November 1990, rapidly sabotaged, is not included- accumulates such a considerable amount of probable votes and is about to become the next political administration. The “doctrine of the communist containment” supported the systematic repression organized by both the military officials and the economic elite of the region. That is why the region’s left-wing parties should ask themselves what has made such results possible.

The analysts of Lula’s political journey observe that the present candidate of the PT is not the same person that ran for president during the last three Brazilian elections. No one can say that the PT has kept the same discourses and the same ideals. For better or for worse, Luiz Inacio Da Silva has openly declared himself in favor of the market, willing to honor the compromises of Brazil with the banks and the international markets, and not willing to nationalize the private business companies. His electoral strategy included the declaration of many Brazilian business people, who confirmed their adhesion to the governmental plan. His political partner, Jose Alencar, the candidate for the vice-presidency, is a businessman from the textile sector. That is why some people talk about “Lula Light”, who is now more of a conciliatory man, and far away from his former left-wing ideals.

It is evident that there are plenty of elements missing to have an accurate idea about the possible government of the PT. No one knows if Lula, in case he wins on October 27th , will use again his declarations against Neoliberalism, as many Brazilians still fear since they are not convinced yet with Lula’s campaign. No one knows if he will become even lighter, as it happened with Fernando Henrique Cardoso. However, despite so much uncertainty, the truth is that Lula has obtained plenty of support from the Brazilians because he has been able to articulate a discourse that includes the problems of Brazil’s poor majority without ignoring the financial interests of the economy’s magnates.



That is why he has been able to talk about a pact between the businessmen and the workers with the intention to increase the national production, create more jobs, and, at the same time, improve the income and the life standards of the workers. The governmental program of the PT candidate does not only seem attractive for the workers, but it also (a very important aspect that the region’s left-wing usually forgets) wins the trust of the national businessmen. It is not a coincidence that the Brazilian economic sectors that are included in Lula’s proposal are the industrial ones and not the banking sector. The businessmen reproach the present government for being closer to the interests of the financial sector, which is mostly dedicated to the speculation than to the actual economic production.

The experience of the Brazilian PT should inspire the rest of the left-wing political movements of Latin America. Beyond the a priori critics that wonder about the convenience to complain about the class struggle, the political pragmatism imposes itself in this new global political context. Lula’s example should particularly inspire the FMLN politicians, who have not been able to find an adequate strategy for the new times. The discernment should lead them to ask themselves about what could be more important for the majority in this country. And to eventually choose between an ideological rhetoric and a political pragmatism able to turn the social dialogue between the businessmen and the society’s organized sectors into a new objective.

Instead of dreaming about a socialist society, the left-wing could improve the conditions of the country by having a wider and a more realistic perspective. The most reactionary ones are not willing to listen to words such as “inclusion”, “social justice”, and “wealth distribution”. The present times show that the right-wing is not interested to work with these policies. In addition, if the left-wing does not realize the importance of this situation to adjust its discourse and its ambitions to the possible dimensions of a certain historical moment, it does not defend, as it says it does, the interests of the majorities. On the contrary, it is not promoting the necessary changes for the social, the economic, and the political game.

There is no doubt that the moderation and that the subsequent electoral results of the Brazilian PT can help the region’s left-wing, especially the Salvadoran one, to understand this need. It is not about selling the soul to the devil or about forgetting the ideals of a fair society, as some of the sectors of the left-wing usually say, when it comes to examine the proper strategies for the present times. It is all about realizing what the actual problems are, and thinking about the best options to deal with poverty.

Independently from the results of the Brazilian second electoral round, these events will become an important precedent in the region. If the PT wins, it will have the enormous responsibility to encourage the Brazilian voters and many Latin Americans who, without a doubt, will be paying close attention to the results of the new administration. However it might be, their contribution is to help Latin America to wake up and see the horizon of the left-wing.

About the 2003 General Budget

As if it were an enormous achievement, the government has announced the reduction of the 2003 budget’s total, leading us to believe that he thinks that this is the solution to the growing fiscal deficit problem. However, the easiest thing to do in the present circumstances is precisely to reduce the regular expense at all costs, even if the fundamental objectives to support the economic development and the enlargement of the basic services’ coverage range become a frustration. This indicates that the problem of the public finances in El Salvador is not the expense, but the income.

The country’s income from taxes barely reached a 10.3% during the present year, when the minimum amount (considered by the international standards) is 12%. Paradoxically, this is a fact despite the radical tax reform implemented during the nineties by the first two ARENA governments. With this reform, the taxes charged to the business companies were excessively and unnecessarily reduced. However, for the Minister of Hacienda (the Salvadoran Internal Revenue Service) a tax increase is out of the question because such measure is “counterproductive”.

The present government seems to insist on adding a reform to the public expense policy, which is already characterized by a drastic budget cut, which has been imposed to the state’s dependencies. The policy is explicit, a public announcement was made by the end of 2001, when the Minister of Hacienda requested to the institutions of the central government a 25% reduction of their regular expense. These measures were followed, during the first trimester of 2002, by the dismissal of more than 7,000 workers of the public sector, an amount equivalent to a 7% of the sector’s employees. Many of those job positions were connected with key activities, such as the construction and the maintenance of the infrastructure, the technical assistance to the agricultural sector, and the promotion of a sustainable use of the natural resources. All of these aspects evidently were of a vital importance for a highly vulnerable rural sector.

The 2003 budget was prepared with the intention to reduce the regular expense by 5%. Such action has had an influence on the reduction of the total budget, in relation to the 2002 budget, which –although it has not been a considerable reduction- reflects a qualitative change in the expenses of the state: a tendency to decrease. When the budget is meticulously examined, it reveals that the reform of the expense policy follows an indiscriminate procedure. An evidence of this situation is the meager increases to the education and the health sector, the reduction of the expenditures applied to the to the housing branch (in a context of an enormous housing deficit), and the drastic budget reduction to the agricultural and the cattle-raising sectors.

In general terms, the social area (education, health, housing, and employment) will have a participation of 29% in the total budget for 2003. This is an improvement for this year (the current participation rate is 28%). This is the result of the increase of both the education and the health budget, which were increased by 3.34% and 2.82% (respectively). The employment and the housing branches’ participation rate decreased from 0.24% to 0.22% , and from 0.16% to 0.07%, respectively.

Although the increase in the education and the health sectors are significant, they show a reduction in the growth rhythm of the budget, a critical aspect in a context of evident deficits in the services of the health and the public education system. Such deficits were intensified by the disasters of the earthquakes suffered in 2001. In fact, there are dozens of public schools and several hospitals, which by now are working either at completely inadequate “provisional” facilities or under completely inadequate structural conditions.

The budget reduction for the employment and the housing branches, on the other hand, is equally critical. This is because, in the first place, the employment branch has to strengthen its role in a context of a considerable presence and proliferation of the textile maquila, where it is required to examine the completion of the Labor Code. To assign a smaller number of resources to this branch means to weaken it. In the second place, the housing branch needs to make an enormous effort –even if it is only a normative one- to face the housing deficit. This problem has grown larger with the impact of the earthquakes suffered in 2001. The housing deficit rate could easily reach 700,000 housing units. To this we have to add that there is a higher level of vulnerability due to the proliferation of the temporary homes made out of sheet metal and wood, which were generated as an immediate answer to the disasters.

The budget reduction in the Ministry of Agriculture and Cattle-Raising, on the other hand, reflects another contradiction. While they reveal the plans for the agricultural development, the rescue of the coffee-growing market, for the generation of temporary employment in the coffee-growing fields, and for the actions to prevent the impact of the draughts, they continue to dismantle the state’s capacity to encourage the sustainable development of the rural population. New personnel reductions will be performed in different areas and in the dependencies of the agricultural field.

In the other hand, some branches do not seem to be affected by the austerity policy. The Legislative Organ will not reduce its budget between 2002 and 2003, while the Judicial Organ will increase it by 11.42%, and the Presidency by 3.19%. This is a very curious piece of information because the increase took place in the “administrative conduction” area, which comes to show that the Executive does not practice what it preaches. This situation becomes more evident if we consider that the administrative conduction of the already mentioned field went from $11,242,210 million in 2002 to $12,455,915 million in 2003, an increase of $1,213,905 (10.8%).

However, the most significant increase was in the “Varied Transactions” document, where an increase of 20.46% was reported, and it increased its participation share from 13.01% to 15.7% between 2002 and 2003. In addition, there has been a new item in the budget, called “Essential Contribution Expenses”, which involves $72 million. However, the most critical aspect is that if we add the public debt, the general obligations of the state, the varied transactions, and the special contribution expenses, we would see that 39.9% of the budget is dedicated to that. The social area only counts with a 29%. The amortization of the debt that the state has with the pension scheme (a vice of its privatization) as well as the transference of 6% of the budget to the municipal governments are having an influence on this problem.


The reduction of the general budget of the nation for 2003 is neither good news nor a good policy. The fundamental problem that must be attacked is the low taxes. The fiscal deficit can be reduced through that procedure. At the same time, the amount and the quality of the public expense could be improved, especially in the social and in the economic development area, where the intervention of the state becomes an urgent task.

In addition, even with the budget cut, the reduction of the fiscal deficit is not assured, because the country’s income from taxes was calculated with a GNP growth rate between 2.5% and 3%, a difficult goal to achieve in the present context. The stabilization of the public finances also depends on the recuperation of the high economic growth rates, and on the increase of the amount of taxes that the government collects every year, an overlooked aspect of the problem.

THE GENERAL BUDGET OF THE NATION

Source: The Ministry of Hacienda (www.mh.gob.sv)