PROCESO — WEEKLY NEWS BULLETINEL SALVADOR, C.A.

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Proceso 1075
November 26, 2003
ISSN 0259-9864
 
 

INDEX




Editorial: What kind of democratic governance are we talking about?

Politics: ENADE 2003: disguised fears

Economy: The economic model in question: like diagnosis, like recipe

 
 
Editorial


What kind of democratic governance are we talking about?

 

The Fourth National Encounter of the Private Business Companies (ENADE 2003, in Spanish), called “Governance in Democracy: everyone’s commitment”, has been recently celebrated. This time, all of the Salvadoran businessmen decided not only to absorb the problem of the democratic governance, but also to discuss the subject and make a proposal to the social, the economic, and the political actors of the country. This proposal is part of a document that explains the business perspective about the democratic governance concept, its most important features, and the existing threats that surround the idea.

About the definition of governance, the ENADE 2003 does not add anything new to what we already know. In fact, just like the document says, governance is a set of complex mechanisms and institutional procedures through which the citizens express and resolve their demands without going against the law, and without attacking other people’s rights. The lack of governance can be defined as a situation in which the citizens overwhelm the State’s institutions with demands, while these institutions do not seem able to –because of lack of resources, lack of authority, or lack of legitimacy- respond. In this sense, in order to stabilize a society it is necessary to make it governable. In other words, the institutions have to work, and the citizens have to trust them, so that both the legal and the institutional procedures become more important than any other alternative to proceed, which could be illegal.

Therefore, governance is a reasonable aspiration. However, what is even more reasonable and desirable is a democratic administration of the government. The document of the ENADE 2003 seems to indicate that the businessmen who were present at the forum are not just interested in the concept of governance, but in a democratic governance concept as well. This word is the starting point of the problem, because democracy has a series of elements that go beyond politics, and are therefore connected with the social and the economic context. It is true, there is no governance without strong institutions, and El Salvador is not in that stage yet. Democratic governance demands, in addition to a firm institutional circle, an economic model able to promote higher life standards and a social coexistence for the people to actively and consciously participate in the defense of their rights.

Businessmen intend to establish a connection between democratic governance and economic development, but they do not seem to consider all of the consequences of such challenge. The weakness of their perspective involves three aspects:
- They assume that the reactivation of the economy –to expand and modernize the productive infrastructure, to build a solid foundation for exportation, to strengthen the internal market, to create competitive companies able to participate in the global markets, to efficiently administrate the public finances, to control the indebtedness of the public sector- will automatically generate a democratic governance. In other words, businessmen assume this obsolete thesis because for them it is still valid: the progress of the market will bring along democracy.

They should be reminded that democracy is not an automatic result of the market, as many different authoritarian regimes have shown when trying to encourage a strong modernization process and the expansion of the market by violating the most elemental civilian rights. Democracy follows a different logic that has almost nothing to do with the market: the market somehow excludes those who have very little or nothing to offer as sellers or buyers; while the principle of democracy is based on equality of opportunity for all citizens.

- Businessmen seem to have a poor idea about political democracy. They insist on a series of institutional requirements, as if this was enough to make a democracy develop. They do not seem to understand that political democracy, in addition to the institutions, means that a country has critical, educated, healthy, and well fed individuals who participate in the decision making process. These are the unavoidable implications of democracy, which prevent us from considering it an automatic result of the market. And this is because the market is mainly directed by a logic that does not generate jobs, or education, or health for all of the citizens.

- The ENADE 2003 shares the optimistically biased vision of the government about the country’s social, economic, and political activities. This prevents them from being critical enough, not only about the performance of ARENA, but about their own role in the grave situation that the country has gone through along the last 15 years. The businessmen seem to speak with pride about the economic reform implemented by the first administration of ARENA, and they accept that the poverty level has to be reduced. However, they do not seem able to see the connection between the neoliberal reform, the deterioration of the life standards of a significant segment of the population, and the weakening of the State.

It is admirable that the businessmen are concerned about the idea of a democratic administration of the government. Their problem is that they believe that in order to create it the laws, the institutions, the political parties, and the citizens should be at the service of the market’s economic model. From this perspective, democracy remains a servant of the market, and does not work as a regulator of its abuses.

Businessmen are not exactly fond of a weak government, because it can affect the market. It is normal if they worry about it. However, it is not very clever to bet for a democratic government that seems to be custom-made for the businessmen’s interests. This kind of governance overlooks equality and justice, a couple of focal points that belong to the democratic ideals. To ignore these characteristics, to overlook these aspects of democracy, and to discredit them by calling them “populist beliefs” is to encourage social conflicts, disorder, and chaos. While these requirements are not met, a weak government will be a permanent threat for a sacrosanct Neoliberalism, Salvadoran style.

G

 

Politics


ENADE 2003: disguised fears

 

“The business sector is happy to announce the Fourth National Encounter of the Private Business Companies, ENADE 2003, and its motto, ‘Democratic Governance: everyone’s commitment’, in an effort to analyze and contribute with the foundations of the country’s future in order to reach a new stage”. The document of the National Association of Private Business Companies (ANEP, in Spanish) ended its introduction with these words, as it was presented to the Salvadoran business sector in a meeting that took place in a hotel. This year’s ENADE had an important feature: the businessmen invited the presidential candidates to listen to their proposals.

The business elite decided to share with the rest of the Salvadorans their vision about the national reality and about the possible solutions to alleviate the country’s problems. In this context, this was a very important event because the different political actors were invited to present their perspectives. Hopefully, this is not a facade, but an action that proves that the businessmen are willing to welcome the analysis of their proposals. That is why it is necessary to reflect upon several approaches contained in the document made by the ANEP, and evaluate how the politicians reacted to it.

A biased approach to reality
The first reflection about the contents of the diagnosis about the country’s situation, a document prepared by the businessmen, is how much they seem to agree with the vision that ARENA has about the national reality. The businessmen do not only compliment the ARENA administrations, but they also follow the thesis of President Flores. “The political, the social, and the economic development of El Salvador along the last fifteen years has been outstanding. The international community has acknowledged this effort, they have seen in El Salvador an example, because it has taken a whole generation to other countries to reach this kind of accomplishments”.

Without the intention to deny how the country has improved itself since the end of the civil war, it is still important to recall how this phrase coincides with a thesis that President Flores has constantly defended in every international forum he has attended to. Even if the aforementioned document accepts the existence of several social problems, in the end it seems to tell the reader that ARENA has nothing to do with them. The earthquakes and the hurricanes are the scapegoats. They seem to be the cause of the country’s crisis. The congressmen who transfer funds to other institutions of the State are also responsible. That is why this document seems to be connected with the fashionable discourses of the governmental sector. When we remember that Elias Saca, prior to his designation as the presidential candidate, had led the ANEP, we cannot help to suspect about his performance in the future if he is elected president. And that is why we can refer to a biased interpretation of reality in the ENADE 2003.

The document of the ENADE exudes a certain will to defend the performance of the three ARENA administrations. On the other hand, when the businessmen are finally willing to accept some of the problems of the political system, they blame the parties and the congressmen, those who are constantly receiving negative evaluations. They criticized the distribution of the seats in the Congress, and they concluded that it is not representative enough. The financing of the parties is also questioned. “It seems as if –says the document- the interests of the parties are the priority of the Congress. It seems as if the power of the parties is more important than the technical, the legal, the administrative, and the ethical improvement of a group of institutions that have the responsibility to play a key role in the country’s governance and in the consolidation of democracy”.

The target was wisely chosen. It is common to criticize the congressmen, and the control of the Legislative Assembly is not at stake in the next elections. Only if these facts are taken into consideration it is possible to understand the hollow rhetoric of the critics against the legislative performance. Once again, this is not about denying the serious problems that this organ of the State is facing. This is about remembering that the interests that, according to the businessmen, the parties and the congressmen defend are perfectly combined with those of several social groups that hold the country’s economic power. That is why the idea to sell the image of certain parties and congressmen as independent individuals that form a class with their own priorities in mind is nothing but a farce. In addition, by criticizing these aspects, they avoid to discuss whose interests are the parties actually representing. It is enough to look at some examples to understand the aforementioned idea. The businessmen should remember that the transformation in the distribution system of the legislative seats, the sudden approval of dollarization, or the lack of support to the agricultural sector are the results of a decision that has been definitively examined by ARENA. And that this has been motivated by the defense of several specific interests connected with the party’s most influential sector.

To tie the hands of the dissidents
After making the former considerations, it is only logical to think that this ENADE 2003 did not have the objectives that were officially announced. Their approach looks more like a warning to the opposition than the defense of a democratic government. The advice of the businessmen about the virtues of a democratic government, is only a reaction against the uncertainties about the electoral results of next March.

The considerations about the “necessary democratic governance” –beyond the inexactitude of some assertions that, for instance, speak about the separation of powers as something exclusive of the presidential regimes, or the wrong dissertation about an almost idyllic democratic governance, where there would be no social conflicts- are a wink to an opposition that threatens to replace ARENA.

However, in order to prevent any kind of sudden turns, the businessmen take the time to remind the dissidents about the rules of “the healthy economic, political, and social administration” of the public assets. According to the businessmen, “it is necessary to accept that, as we speak, the public sector faces several restrictions that are the result of engagements such as: the service of the debt, the transactions that according to the law have to be made in connection to the public sector (with the Judicial Organ and the municipalities, for example, and the payment of the pensions of the former system). Because of those reasons, the social conditions have to be administrated in a prudent manner and with vision. To use the social problems as a political flag is the worst that could happen to the country, because the populist perspectives do not resolve the essential problems, instead, they complicate the situation even more”.

The main concern of the businessmen resides in this text. They fear that the “irresponsible politicians” use the social problems as a political flag. This is an absurd argument that reveals the nervous state of the business elite. To denounce the critical situation of most Salvadorans, to denounce the lack of economic options of the three administrations of ARENA is to use the social problems as a political flag. The only thing that they did not say was that it is not convenient to discuss the economic or the social problems, and that it is necessary to avoid any arguments about the political orientation of the right wing, because that would be an obstacle for the democratic governance.

The politicians danced to the rhythm of the ANEP
The presence of the presidential candidates in the encounter organized by the ANEP is a sample of how much power this group has inside the national political circles. The participants were polite enough not to hurt the feelings of the businessmen. Elias Saca swore that he would support the anti-populist program. He said that the investments made on the social issues will not affect the interests of the public finances. According to Saca, his team will act “with creativity, efficiency, and will power”. He offered to the businessmen “more opportunities to expand their markets, joining them as the true partners of progress”. At the same time, he asked them to support him in order to finish with the country’s reconstruction process. The candidate from ARENA did not only use the main thesis of the businessmen, but he also reaffirmed the need to neutralize any change that might affect their interests.

The candidate of the CDU-PDC, Hector Silva, spoke about the need to discuss a fiscal reform. He said that it was necessary to “agree about our needs, and once we are sure about it we will discuss how to fulfill them in order to have a successful fiscal reform”. However, the candidate of the coalition did not say how long he will take to reach this sort of agreement with the businessmen, and who will set the limits. Something similar happened with the candidate of the PCN, who dedicated himself to rave about the public administration and the agricultural sector. Rafael Machuca said that he will not enlarge the dimensions of the State, but that he will make it more efficient.

In his presentation before the ANEP, the candidate of the FMLN gave a moralist speech to the businessmen. “My advice to the most prominent businessmen is that it is important to make certain sacrifices. These sacrifices will not make you poor, they will allow you to honor this country, they will bring to you many satisfactions, and will give prestige to your families and descendants”. Even if the businessmen did not take the message very well (specially the one about paying their share of taxes in the right proportion), Handal said that it would be something simple and accessible for them.

The general line of the candidates’ discourses in the meeting organized by the ANEP revealed a crucial issue for the democratic governance that the businessmen claim to defend: their relation with the politicians. It seems as if the candidates attended to that meeting in order to get the approval of the business elite. Obviously, this is not about going back to an authoritarian era and overlooking the importance of the business sector for the country’s economy. This is only about remembering a golden rule of the democratic governance: the citizens have to respect the decisions that the chosen authorities make, according to the already established regulations. In this sense, even if we have to consider the interests of the whole country, it is also necessary to remember that in the society there is a confrontation of interests, because different sectors are competing for the same (and scarce) resources.

The business elite has managed to be the main beneficiary of the few national resources. A democratic governance process seems to be the way to negotiate with them what are they willing to tolerate. Instead of doing this, we should reconsider the idea of an independent State that imposes its authority (not in the authoritarian sense of the word) in order to demand that the citizens fulfill their obligations. The candidates that begged the business elite for their comprehension in order to face the country’s social problems (even the FMLN, which had the most aggressive approach), have to understand that the agreements and the dialogues are not equivalent to an evasion of the responsibilities that the political authorities have.

The different publications about the redistribution of the wealth produced inside the country indicate that El Salvador is one of the nations with a higher level of inequality in the whole hemisphere. It is a fact that the wealth produced by the society is concentrated in only a few hands. None of the candidates, especially not Saca, reminded the ANEP that the social investment has to be financed, mostly, by the businessmen. In other words, this is about putting more pressure on the wealthiest ones because they are those who contribute less. The society is not more governable just because the authorities ask for the approval of the most powerful circles before making their decisions. Although it is still important to explain the reason of their decisions, their objectives, and operate with a transparent procedure.

The sudden preoccupation of the businessmen for the “democratic governance” seemed more like a desperate measure to neutralize the possible dissidents. No one spoke about this issue before because with the presence of ARENA in the Executive power they were sure that their interests were going to be defended. However, there is no doubt that the ANEP has quite a peculiar concept about democratic governance. It not only reduces the chosen representatives to simple marionettes in the hands of the most influential groups, but with an idyllic idea of social harmony, it prepares the way to protest against any project that might not beneficiate its most powerful and influential members. A society that can be governed through a permanent consensus does not necessarily include the interests of the workers or those of the majority, a majority that the official newspapers usually refer to as –whenever they demand respect for their rights- “professional agitators” and “ungrateful terrorists” who do not appreciate the advantages of Neoliberalism.

G

 

Economy


The economic model in question: like diagnosis, like recipe

 

According to the ideas contained in the document of the Fourth National Encounter of the private Business Companies (ENADE 2003), the economic as well as the political grounds are the faces of the same coin. If someone aspires to live in a democratic government, it would be necessary to count with a favorable environment for the economic development.

However, the analysis about the nature of the necessary economic policies to generate that economic development is a delicate matter. The recommendations about the fiscal, the monetary, the technological, and the competitiveness policies will depend on the diagnosis of the economic situation. At the same time, the diagnosis depends on the interests of the sectors that elaborate it. That is why the governmental policies will not affect all of the sectors with the same intensity.

The fundamental problem of the effort made by the ENADE 2003, as far as the economic aspect is concerned, has to do with a couple of key factors:
- The diagnosis of the problems of the precarious Salvadoran economy is not focused on its structural roots.
- The economic interests of the portion of the private business sector that supports the government’s decisions reduce their capacity to evaluate both their performance and the economic model of ARENA.

In their document, they implicitly suggest that they have followed a well defined economic model where the actions of the economic policies have been focused on deregulation; external openness; the re-privatization of both the commercial banking system and the external commerce; the privatization of the pensions’ system, the telecommunications system, and the distribution of the electric energy, among other measures. The government followed the Consensus of Washington and this tendency is the result. The Consensus of Washington holds all of these measures as theoretical approaches and as explicit recommendations about the economic policy, dogmatically adopted by the government along the last 14 years.

In other words, the economic model that has been followed is not the result of an internal diagnosis about the actual economic needs of the population, or how to provide them with medical assistance, education, housing, employment... What they have done is to copy the Consensus of Washington through the Structural Adjustment Programs, and the credit conditions that have been imposed by the international financial organisms.

This external economic line that has been followed is technically a defined internal model, more of an aggressive and an anarchic state of Capitalism: the Neoliberal economic model. However, in the ENADE 2003 no one accepts that what they have built is a rabid Neoliberalism.

For the businessmen, that group of economic policies belongs to “the social economy of the market”. However, this is only a fallacy because a genuine social market economy keeps in the public policies the structural concern to place a social perspective inside an economy that works with markets. This means that the market’s deficiencies will be regulated and rectified, avoiding the construction of oligopolies and monopolies, and that the productive sectors will be encouraged in an articulated fashion, dedicating an considerable part of the GNP to the social expenses: health, education, infrastructure, etc. In this sense, the State has to play an active role to reduce the structural poverty.

In the own words of the ENADE 2003, in a social market economy the basic rule is that the consumer is the most important aspect of it, since the State acts as a regulator that has more power than the market to make the “State of right” prevail in the economic context. However, exactly the opposite is happening in El Salvador. The consumer is not the most important feature of the market, and the State is not strong. On the contrary, the alleged modernization of the State has only reduced its range of action at the same time that the government has systematically refused to promote decentralization by vetoing the increase of the municipal budget.

On the other hand, under this premise it is normal that the social economy of the market is focused on the application of a strict law of free competition, the existence of a strong institutional economy, and that the State’s levels of corruption do not affect its efficiency and its performance. However, in El Salvador we experience the other side of the coin. After more than a decade, the alleged “social economy of the market”, a free competition law has not been created yet. The corruption case of the National Administration of Aqueducts and Sewage (ANDA, in Spanish) is only the tip of the iceberg that represents the corruption inside the government. According to the Salvadoran Foundation for the Economic and the Social Development (FUSADES, in Spanish), the country’s institutional performance is weak.

In spite of these events, the businessmen’s document makes the following recommendation: “the support public policies have to aim at the conformation of a coherent development strategy, with agile and timely information, where the government facilitates and promotes the private productive process with clear and predictable regulations, without interfering in the business decisions, but conscious of its responsibility to take care of the juridical security and the needs of the most vulnerable groups”. This means that the National Association of the Private Business Companies (ANEP) longs for a “let us do, let us pass” in the market, confining the State to a secondary role.

One of the most talked about issues in the ENADE 2003 was the administration of the public policy and its connection with governance. The idea is that there should be a rational administration of the public expense with the objective to promote the country’s development without altering the fiscal equilibrium in the long-term. In order to do this, according to the ANEP, the control of the State’s finances should be efficient and stay away from the “populist approaches” which manage to spend on activities that, in the end, affect the stability of the economic system.

In the ENADE 2003, they accepted that the finances of the State are at a critical stage, and it is necessary to make an effort to increase the revenue in order to obtain a larger amount of funds for the country. In such a delicate situation, according to the ANEP, the rigidity of the country’s budget plays an important role in the assignation of a 13% to the Judicial Organ and the municipalities. However it is necessary to consider that this rigidity of the public expense can be explained by the role that the judicial apparatus and the city halls play in the country’s institutional structure.

From an economic perspective, it seems that the “Law of Fiscal Responsibility” that the businessmen of the ANEP propose does not agree with a fundamental principle of every economic policy: the governmental self-determination. In other words, the priority in the fiscal matters and the administration of the State’s expense are determined by the present governmental program, and not by the criteria of a social group. This does not mean that some of the criteria to control the movement of the country’s finances are not interesting. However, they should be the result of the consideration of all of the social agents who are directly connected with the fiscal administration.

In reference to the local development policy, in the ENADE 2003 they came to the conclusion that it is necessary to reform the State through a process of decentralization. In this context, it is also important that the municipalities, besides receiving a portion of the funds of the State, are able have more responsibilities. According to the ANEP, for this process to be successful it is necessary to realize that the income of the municipalities should mainly come from the taxes and from the local rates.

The proposal of the ANEP has its obstacles. In the country there are many municipalities that are abandoned by the policies of the present government. In these municipalities there are many families who only have very few resources to survive and many social problems. This fact is pointing at a very important question: how will these municipalities obtain most of its funds through the taxes and the local rates? It is obvious that this is not possible and that most of the expenses of these municipalities must be financed with the public funds, a portion of the nation’s general budget should be assigned to them.

The municipalities should report how they administrate their funds but it is also necessary to accept that there are needs in many municipalities that cannot be independently financed with local rates and local taxes. No one can say that the Fund for the Economic and the Social Development (FODES) has perverse incentives only because the mayors spend the income that comes from the taxes that they have not collected with much effort. It has to be admitted that the criteria to assign the FODES to the municipalities are subjected to a logic that intends to make the expense of those resources more efficient. The municipalities with higher poverty levels receive a larger portion of the 20% of such fund. A 25% of the FODES is divided in equal parts between all of the country’s municipalities; a 5% is divided between the country’s territorial extension, and the result is multiplied by the extension of each municipality. There is a 50% of the funds for the municipalities that is distributed based on the number of inhabitants and the income per capita of each municipality.

In the ENADE 2003 they also discussed the need to have a Free Competition Law. Such law should prevent and sanction the disloyal transactions. This would contribute to protect the rights of the consumers.

This law initiative seems to be very accurate; however, people have to realize that the success of a law of this nature depends on the abolition of a series of privileges that many business groups have had in this country. Some of these groups, based on their economic strength in the market, have not allowed the existence or the presence of new business companies that might put their benefits in danger.

These are just a few of the aspects mentioned on the ENADE 2003 that are connected with the country’s economic activity. Some of them are definitively important; however, there are several elements that still have to be analyzed by the different social sectors.

G

 

 
 
 


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