PROCESO — WEEKLY NEWS BULLETINEL SALVADOR, C.A.

Center for Information, Documentation and Research Support (CIDAI)
E-mail: cidai@cidai.uca.edu.sv

Central American University (UCA)
Apdo. Postal 01-168, Boulevard Los Próceres
San Salvador, El Salvador, Centro América
Tel: +(503) 210-6600 ext. 407
Fax: +(503) 210-6655
 

     Proceso is published weekly in Spanish by the Center for Information, Documentation and Research Support (CIDAI) of the Central American University (UCA) of El Salvador. Portions are sent in English to the *reg.elsalvador* conference of PeaceNet in the USA and may be forwarded or copied to other networks and electronic mailing lists. Please make sure to mention Proceso when quoting from this publication.

     Subscriptions to Proceso in Spanish can be obtained by sending a check for US$50.00 (Americas) or $75.00 (Europe) made out to 'Universidad Centroamericana' and sent to the above address. Or read it partially on the UCA’s Web Page: http://www.uca.edu.sv
     For the ones who are interested in sending donations, these would be welcome at Proceso. Apdo. Postal 01-168, San Salvador, El Salvador.



Proceso 1079
December 24, 2003
ISSN 0259-9864
 
 

INDEX




Editorial: 2003: The supremacy of politics

Politics: An evaluation of politics

Economy: The economic balance

Society: The society

 
 
Editorial


2003: The supremacy of politics

 

The year 2003 began in the middle of an intense political debate. March would bring an important electoral event through which the municipal and the legislative authorities would be chosen. The year was closed with an intense public debate; only that this time the debate was connected with the presidential elections of March (2004). Therefore, 2003 was an important year for politics, which have occupied the center of the public attention. And with this, several issues that were the main concern of the population in 2001 and 2002 (the deterioration of the life standards, the privatization of the public health system, etc.) became less important. This supremacy of politics raises a series of considerations to establish what were the positive aspects and the negative features of this situation.

The most relevant consideration has to do with the continuity that has existed between the electoral process of 2003 and the one that will take place in March 2004. Propaganda has been the most continuous aspect of this line. Once ARENA felt defeated because of the municipal elections, it prepared itself right away to face the presidential elections of 2004. The sudden success of its rival, the FMLN, which occupied a good place in the preferences of the citizenry, made the strategy team of the right-wing party –in complicity with the most important news media- launch an intense anti-Communist campaign. This campaign made the FMLN seem as a threat, not only for the freedom of the private business companies, but also for the Salvadorans who have not legalized their situation in the United States. This was an unfounded campaign, and it was a very aggressive one. It was a campaign that reminded the people about the darkest years in the eighties, when the communist groups, the real and the alleged ones, were used as an excuse for murder and torture.

Nevertheless, the anti-Communist offensive was not enough to improve the image of a party that was perceived by a considerable number of Salvadorans as the political institution responsible for the deterioration of the national life standards. By the end of the first semester of the year, the FMLN was still enjoying the results of March. It is necessary to notice that the left-wing party did not know how to –it could not or it did not want to- take advantage of the confusion that tormented the leaders of ARENA. During that time, the FMLN did very little to consolidate itself as an alternative capable to take away the Executive power from ARENA. Typically, the disputes flourished when it came to define the name of the candidates. New names appeared on the list –that was the case of Mauricio Funes-; however, the old structures and the ancient leaderships finally imposed themselves. Despite the image disadvantages that this would imply, Schafick Handal presented himself as the candidate of the FMLN, creating an environment of jealousy and resentment in the ranks of his party. In the meantime, the strategy advisors of ARENA had plenty of time to meditate about the best way to face the declination of the citizenry’s sympathy, and to understand the differences that had emerged inside the party.

President Flores was in debt with his political partners because a great portion of the responsibility for the party’s defeat in March was due to his performance. His steep fall inside the ranks of ARENA was not only notorious when, immediately after the elections two of the former presidents, Cristiani and Calderon Sol, reminded Flores about his mistakes in the social and in the political field. His lack of popularity was also evident when the party started with the selection process of the presidential candidate. Flores would not be the one to decide the name of his successor –as the PRI used to do in Mexico-, this time there were others who would become part of the games of power played by ARENA. Without a doubt, the pressures of the ANEP were present in this game, and this situation created a safe platform for Elias Antonio Saca, the person who would become the candidate of the right-wing party. Saca left behind the intentions of those that would risk it all and lose, as in the case of Mauricio Sandoval for instance. At the time, Flores had no choice but to frown before the critics of his former mentors. He would soon have the opportunity to show to the whole party –especially to those that were against him- that his contribution was crucial to improve the public image of ARENA.

The “Iron Fist Plan” was that contribution. With an enormous advertising campaign, Flores sold to the Salvadoran population the idea that the main source of violence in the country was the gangs. And that to fight them was the best sample of the commitment he had with his administration and with the safety of the citizenry. The success of that initiative revealed itself almost immediately, when 88% of those interviewed through an opinion poll conducted by the IUDOP (the Public Opinion Institute of the Central American University) said that they agreed with the implementation of the “Iron Fist Plan”. The sympathy in favor of ARENA began to increase in a constant manner –with just a slight fluctuation- from October to December of 2003. Flores was, in a great deal, the artifice of this master plan that knew how to take advantage of the authoritarian yearning of a considerable part of the population.

In the meantime, as ARENA began to occupy a better position because of the sympathy of the citizenry, the FMLN began to feel a slow but an almost inexorable decline. They started to work on the improvement of Handal’s image by highlighting his professional experience, his honesty, and his performance. They also tried to promote and discuss a relatively well- elaborated governmental plan. However, that was not enough to overshadow the supremacy of both ARENA and its candidate. No one knows how much more advantage Flores will be able to take from the “Iron Fist Plan”. What seems unquestionable is the fact that the image that Saca has adopted, a man whose personal effort has taken him from rags to riches, has been welcomed by a population that aspires to do the same. This is the Salvadoran version of the American way of life: a dream that most people share, but that only a few can achieve.

The candidate from ARENA, the party itself, and the government have managed to make an enormous advertising campaign through which they have manipulated reality. The FMLN does not have as many resources, and it probably does not have enough capacity either to respond to the campaign launched by ARENA. The FMLN has understood that this is a marketing strategy; however, this party has not made much of an effort to have an impact on the opinion of the society. The citizens have been the losers of this uneven publicity campaign. Their consciences have been manipulated, and they have been the mute witnesses of a poor political debate that did not reflect the social and the economic problems.

Triviality is the most comfortable way to do politics. That strategy takes away the responsibility from the future president. The person who does not seem willing to undertake substantial responsibilities is Antonio Saca. His governmental plan is formulated in only a few pages. It seems that Saca has left in the hands of both the ANEP and FUSADES the formulation of the fundamental aspects of his governmental plan. The business elite –especially those who have received the benefits of three economic sectors, and those who plan to receive the benefits of the Free Trade Agreement- can be happy with this decision. It is absurd to think that most of the population will approve of these circumstances. After 15 years of administration, ARENA has not been able to deliver to the citizenry the benefits of the economic growth. Ignorance and manipulation, however, can do wonders for a party that has not done much to improve the life standards of the voters.

The FMLN has played a less trivial game, and from time to time it has been overshadowed by the effects of bad publicity. The FMLN has not been able to do politics with a content. It does not react fast enough, its advisors insists on playing with market strategies without knowing how to do it right, its promises are not realistic... All of these factors have affected the party’s ability to bring new perspectives to the Salvadoran politics.

The year 2003 has reflected a poor way to deal with politics. Far from enhancing the political maturity of the citizenry, 2003 has submerged the people in a shallow sea of politics. This is what happens when the government, two of the most important political parties, and the news media promote a set of political values based on a game of images and appearances. Thanks to this game, ARENA is preparing itself to control the Executive power for the fourth time.

G

 

Politics


An evaluation of politics

 

The year 2003 began for El Salvador with a combination of factors that promoted a contradictory number of expectations. In the context of the elections that were celebrated in March, many Salvadorans expected the political parties to end with the main social problems of the country. On the other hand, the year began with the strike of the public health system. The hopes of those who were optimistic enough to believe in the resolution of the crucial problems of the society vanished. There were also those who felt pessimistic about the confrontation of the actors involved in these conflicts. This article will try to analyze the behavior and the actions of the leading actors of the political system, and the role of those institutions that represent the national political life.

An irritating confrontation
It is enough to examine the discourses of the different actors to have an idea about the intense confrontation between the political sectors during the year 2003. This situation was enough to end with the hopes of the most optimistic people, as the different opinion polls have revealed. The strike of the workers who opposed themselves to the privatization of the public health system was the main scenery of this situation. The right wing and the left wing confronted each other in this context. The left wing was accused of being the main instigator of the strike, and that its objective was to create a governmental for the up-coming elections. ARENA was accused of an alleged attempt to intensify the patrimonial state in favor of its most important members.
Because of the results of the elections, it can be said that the Salvadorans punished the governmental party for trying to commercialize the health system, for its poor performance in the social area and for its evident connection with the interests of the business elite. In the context that defined the defeat of ARENA, the FMLN chose to radicalize its ideas for the presidential elections. The designation of Schafick Handal as the presidential candidate is a sample of the secure attitude adopted by the maximum leaders of the left wing.

This reality made it seem as if the most important issue of the political life was the confrontation between the two leading opposing forces. ARENA saw its main adversary in the FMLN, which represented a constant threat against its position in the Executive power. In the meantime, the FMLN kept seeing this sector of the right wing as the main responsible for the national problems. In this radicalized scenery, and in the beginning of a very violent electoral campaign, the central-wing parties that see themselves as the preachers of the political moderation between the left wing and the right wing did not have much influence on the public opinion.

However, after the results of the municipal elections were revealed, the FMLN seemed more concerned about improving its image. The left wing began to think in the solution of certain social problems from the Legislative Assembly. As a sample of the former idea, the FMLN made a pact with the PCN (a party that had collaborated with ARENA in the past) to resolve the strike of the public health system and the problems of the farmers, among other objectives. With those initiatives, the FMLN tried to portray the image of a party that cared about the governmental affairs, in order to gain public credibility. This is an important change because so far the left wing seemed to have only a negative attitude towards the congress. The opposition did not seem to make specific proposals to resolve the most common problems.

However, after March, the FMLN showed a very different face. The party’s aggressive attitude helped to discuss the need to include in the national political agenda the social and the economic problems of the Salvadorans. From a totally self-pleasing discourse, some of the sectors of ARENA –even its future presidential candidate- began to talk about the social problems that the party still had to resolve. Even President Flores seemed defensive, demanding more solidarity from his party. At the same time, ARENA seemed to blame Flores for his stubbornness and for not responding often enough to the social demands of the citizenry.

On the other hand, the social offensive of the FMLN and its pact with the PCN irritated the right wing. This issue is important because the different groups of the right wing believe that they have to follow the same purposes. That is why the National Conciliation Party (PCN) was usually described as the appendix of ARENA. However, the brief alliance between the FMLN and the PCN not only made them wonder if this country was about to overcome the old myths of the opposition between the left and the right wing. They also saw this relationship as the birth of different interests among the right wing. The PCN supported the small business company owners with its proposals to reactivate the agricultural sector. And put its finger right on the weak spot of an ARENA that was more concerned about the interests of the business elite, especially those sectors dedicated to the importation and exportation business, and to the financial operations.
The discussions and the threats about an internal break-up that was caused by the results of the legislative and the municipal elections of March 2003 confirm the hypothesis of a relative identity crisis inside the right wing. Even if it is true that with the designation of Elias Antonio Saca as the presidential candidate of ARENA it seemed as if the scar between those sectors had been healed, soon reality showed a completely opposite sight of what had happened. A little while after that, the alleged artisan of the successful opinion polls and the mood of the members of ARENA had to abandon his position due to the confrontations connected with the official posture about the problems with the farmers.

Nevertheless, those difficulties were not an obstacle for the successful campaign launched by ARENA in 2003. In addition, as it usually happens, several sectors of the private business companies and some of the news media supported the position of ARENA by adopting a recalcitrant anti-Communist position. A number of different proposals were presented with the alleged objective of promoting a national project capable to resolve the most crucial problems of the Salvadorans, and without putting at risk the status quo that favors the market

The pre-campaign
On May 1st, the elected legislature started its operations. Far from ending, the electoral confrontation increased. The political parties began a new stage of the electoral battle because of the up-coming presidential elections. Those who saw themselves as the winners began to prepare everything to attack. The social issues were the talk of the day. The President talked about the family economy, the increase of the minimum wage, and an initiative to reduce the prices of both the electric energy and the telephone services.

As for the Legislative Assembly, it can be said that this institution reconsidered the social concerns of the Salvadorans. Several projects connected were born in the parliament during 2003. The initiatives were destined to examine the structural problems: public health, education, and the reduction of the debt contracted by the agricultural sector, among other topics. This activity created displeasure and political confrontations with President Flores, who was not pleased by the fact that the opposition was “invading those fields that belonged to the Executive power”. In this context, the President decided to promote the “Iron Fist Plan”, a decision that was questioned by the opposition.

The campaign of ARENA
The different presidential candidates were chosen in this context. However, a little while later, ARENA changed the perspective of the pre-campaign issues. The communication services of the President saw in the violence issue (thousands of gang members) a possibility to win the sympathy of the electorate. It was publicly announced that this issue was going to be an electoral affair. Ever since then, all of the official sectors announced their wish to fight against the juvenile criminality.

In this context, even if it is true that the opinion polls reveal that ARENA ended the year 2003 with a high probability of wining the elections, the problems between the different sectors of the party have not come to an end yet. By the end of 2003, Elias Antonio Saca
-because of his comfortable position in the public opinion polls- managed to keep the party united. It seems that the unhappy sectors of his party still long to convince the financial sector to consider their vindication. In this sense, the internal cohesion of ARENA remained firm in the pre-electoral context thanks in part to the fear and the hate against the FMLN, and because the FMLN was not able to gain the trust of the Salvadorans.

The campaign of the FMLN
The FMLN launched its pre-electoral campaign with a solid advantage: the acceptance of the Salvadoran electorate. Happy with the positive electoral results, the leaders of the party occupied an enviable position; it seemed as if their recent internal confrontations had been left behind. Carlos Rivas Zamora was the elected Mayor of San Salvador, and this was an evident proof that the FMLN was meant to conquer the electoral field even after the departure of certain emblematic figures, as in the case of Hector Silva. At least that was the approach that the leaders of this party used to convince its militants that they should support the candidacy of Schafik Handal.

It is still too soon to know if the bet made by the leaders of the FMLN was the right one. The only thing that can be said is that, by the end of 2003, according to the different opinion polls, the left-wing party had already thrown away the trust of the citizenry, the trust that the party had gained before and after the elections of March. It seemed as if the Salvadorans had seen in the presidential candidate –known by his past as a communist leader- an evident proof the will to de perpetuate the lack of action. The results of the March 2004 presidential elections will reveal if those who evaluated the future of the left-wing party in this sense were right. In any case, it is necessary to say that several militants from the FMLN used the same argument to defy its leaders. The candidacy of Oscar Ortiz was a sign of protest.

During 2003, the left-wing party experienced a fluctuating movement in the different opinion polls. The party that occupied a comfortable position in the electoral preferences now ends the year below ARENA. The strategy of the leaders of the FMLN is to think that the deterioration of the life standards, the decline of ARENA after three administrations, and the internal contradictions of the official party will be enough to increase the votes in favor of the FMLN.

The other parties
The rest of the parties –CDU, PDC, and the PCN- made a double bet. They expected that both the defeat of ARENA (in March) and the radical attitude of the FMLN would be the factors that would make them look as the leading option for the country’s transformation. That is why during the first months of 2003 there were quite a few attempts to establish an electoral pact between these parties. However, despite their good intentions, the year 2003 ended with a coalition between the PDC-CDU, and with the PCN going solo.

According to the public opinion polls, the “third option parties” will not be considered as such. The PCN will have to fight harder to remain as a party. The coalition, on the other hand, will probably be forgotten. The person who will face most of the negative effects of an electoral debacle will be, without a doubt, Hector Silva. For many years, Silva remained as the favorite politician of the Salvadoran population, strong enough to become the next president. However, after he left the FMLN, his political career seemed to be going nowhere. In case that this thought becomes a fact after the elections, it will also become one more evidence of the strength that the FMLN and ARENA have.

The institutions did not pass the test
Throughout the year 2003, the institutions once again proved that they are not capable to respond to the aspirations of the Salvadorans. An analysis of the diagnosis made by several private organizations about the dysfunctional aspects of the national political life seems enough to understand the dimensions of the problem. The Salvadoran Foundation for the Economic and the Social Development (FUSADES) reports the negative perception that many Salvadorans have about the legislators. According to FUSADES, “The Salvadoran population has an negative opinion about the performance of the Legislative Assembly and about the way that democracy works. (...) One of the aspects that they criticized is that those who represent the society do not respond to the claims and to the aspirations of the electorate”

A deficient Legislative Assembly
The Salvadoran population does not have a positive image of the Legislative Assembly, according to the different opinion polls that have been published throughout the last year. One of the negative aspects of the system is that the decisions of the legislators are not close to the issues that concern the citizenry. In an opinion poll performed by the IUDOP in May of 2003, an 82.9% of the Salvadorans considered that the laws promulgated by the former legislature were not aimed to benefit the citizens. On the other hand, a 79.3% of those interviewed said that they felt that their interests were not actually represented by that organ of the State.

In the beginning of the present legislative period, and according to the opinion polls, the Salvadoran population chose to wait and see how qualified the performance of the new legislature was. According to the opinion poll of the IUDOP, a 57.1% of the population thought that the Legislative Assembly would improve its performance with the new composition of the Legislative Organ. At the same time, three out of every ten Salvadorans thought that the laws that favor the population should be approved, at the time that a 27.3% of those interviewed expected that the fight against corruption would become a priority for the Congress.

By the end of 2003, it is not very clear what is the perception that the Salvadorans have about the performance of the legislators. However, the lack of opinion polls about this particular issue is no impediment to formulate a hypothesis. In the first place, there are enough elements to affirm that the Legislative Assembly has deceived the Salvadorans once again. The electoral context has been an obstacle for the daily coexistence of the legislators. Even if no one has heard about any corruption cases inside that institution, the same cannot be said about the actions of several important employees of the Assembly. In several occasions, the press has revealed that certain employees of the Assembly had the bad habit of modifying the laws after they had been approved. The responsibility of the legislators in this issue is not the result of presumptions, but the result of the passive attitude that has been adopted to look for the guilty ones.

The Assembly has been part of the corruption that affects the other public institutions. There have been debates about the corruption in the ANDA (The National Administration of Aqueducts and Sewage), and the revelations about the alleged responsibility of a former member of that institution who once occupied a prominent position inside ARENA. On the other hand, certain politicians of the FMLN have also been allegedly involved in the case of the garbage disposal system in the municipalities of San Salvador. However, the coverage of these controversial cases has not made the work of the congressmen any more respectable. The reason is that these issues have not been handled seriously. They made it seem as if their objective was to discredit the reputation of its adversaries, or to defend the actions of their own people. As far as the combat against corruption goes, the Legislative Assembly, because of its disastrous performance in the most controversial cases, left the Salvadoran citizens thirsty for justice.

This leads us to examine the issue connected with the capacity that the legislative organ has to control the other institutions of the State. And there is no doubt that this topic is still one of the tasks that remains to be seen. The congressmen did not seem to be competent enough to control the performance of the different ministries. The 2002 performance reports of these ministries are still inside the warehouse of the Legislative Assembly. This incapacity of the legislative power to control this kind of situations is also evident in the relations between this organ and the Executive power.

In this sense, the relations between these institutions have been tumultuous and have been accentuated by a lack of mutual respect. The best example is the Minister of the Internal Revenue Service, Juan Jose Daboub, because his declarations against the legislators are no longer a secret. When Daboub reflected about the behavior of the congressmen, and when he reacted about the fact that the general budget of the nation had not been approved, he made the following statement: “this is a passive attitude, a conspiracy, who knows what they are up to!” According to the minister, the congressmen of the opposition “manipulate the Revenue Commission in a demagogic manner”.

An authoritarian Executive Power
The arrogance and authoritarian attitude that can be reflected in the statement of the Minister of the Internal Revenue Service that was formerly quoted is not only a small example of the general tonic that determined the relation between the Executive organ and the Legislative Assembly. President Flores was the main detractor of this institution. He did not only insist on mining the credibility of the opposition, but he also treated the Legislative Assembly as if it were a pariah. The different organisms that promote and defend the human rights were also the victims of the President’s contempt. His declarations about the approval of the Anti-Gang Law are an example of the formerly discussed ideas. In this occasion, and shielded by the alleged support of the population to the police actions against the young gang members, did not hesitate to accuse those who did not approve of his law project about how they “favored” delinquency.

Without a doubt, President Flores is a clear example of a person who is not willing to fully adjust to the requirements of the performance of a democratic system. Back when, thanks to the collaboration of the PCN, his party had more power to make the decisions inside the Legislative Assembly, he ignored the opposition. He did not even discussed with them his most controversial decisions, those decisions that had a critical effect over the lives of the Salvadorans. His arrogance towards the opposition was clear during the earthquakes of January and February of 2001, and after the sudden approval of the dollarization project of the economy.

That is why when he is in control of the situation, Flores behaves as an authoritarian chief of a tribe that overlooks his adversaries. His disdain for the opposition, especially for the FMLN, says plenty about his adhesion to the democratic principles. His legislative majority once established arrogance as the interaction mechanism created to deal with the rest of the politicians. Flores has demonstrated that he does not understand what a dialogue is, especially a dialogue with his detractors.

G

 

Economy


The economic balance

 

The economic balance
A global and an objective view to the economic performance of El Salvador in 2003 allows us to see the up-coming challenges of 2004. How can we describe the economic activity of El Salvador? Did it meet the expectations of the government? What were the prevailing policies in the economic strategy of the Executive Power?

The results of the economic policies implemented in 2003 confirm the Neoliberal profile of the government. The concern for the macroeconomic stability and the search to rubricate new free trade agreements has prevailed in the agenda of ARENA. However, the same cannot be said about the Salvadoran microeconomic activity. Three years after the dollarization process of the Salvadoran economy was imposed, no one has been able to demonstrate in what way this measure has improved the economic growth or how it has attracted the attention of the foreign investors.

On the other hand, the fiscal policy implemented by the government has shown us its limitations. The present risks are already pointing at the obstacles of the next year. The fiscal health of the country will suffer a severe deterioration.

The commercial policy seems to be the sharpest edge of the government. The year 2003 will be remembered by the efforts that were made to rubricate the free trade agreement with the United States. During the whole year, the ministry of Economy technically became a virtual “ministry of commerce” because it concentrated most of its efforts in the materialization of the treaty. To do this in only one year is a record for this kind of negotiations. The deal was completed by December 17th. In this context, the main governmental aspiration has been fulfilled, now it only has to be ratified by the legislative assemblies of the different governments.

Production
In 2003, the economy grew very slow because of a passive internal demand. During the first semester of the year, the construction sector and the services area grew by 1.45%, while the industrial and the agricultural sector both collapsed. For the second semester, the main indicators seemed to contract. In July, the Index of the Economic Activity Volume (IVAE, in Spanish) fell by 0.41% as a consequence of the recession of the financial services’ sector (-5.2%), the transportation services (-4.3%), and the manufacturing industry (-1.2%). The gross result, according to the preliminary information of the Central Bank of Reserve (BCR, in Spanish), was that by the end of the year the GNP had increased by 2.0%, this percentage was much higher in 2002.

Therefore, the perspective of the country’s productive sector for 2003 was a generalized stagnation effect. In fact, this tendency has been steady since the year 2000. In that year, the GNP grew by 2.2% but it was reduced in 2001 (1.7%) because of the impact of the earthquakes and other factors. In 2002 the GNP increased (2.1%), and it finally remained steady in 2003 (2.0%).

According to the report of the Economic Commission for Latin America and the Caribbean (CEPAL, in Spanish), published in Santiago de Chile, the Salvadoran Economy, despite the fact that it has a positive growth rate of 2.0%, the product per capita percentage has not increased in four years. This report indicates that the slight growth can be explained by the increasing external demand through the expansion of the maquila exportations. Nevertheless, according to the CEPAL we cannot get out of the economic stagnation because during the last years there has been a systematic deterioration in the terms of exchange, which dropped by 1.3% in 2003, by 0.8% in 2002, and by 3.1% in 2001.

These reasons are not compatible with the declarations of Luz Maria de Portillo, the President of the Central Bank of Reserve of El Salvador. She thinks that the positive growth of 2003 is due to the growth of the exportation level, the increasing amount of family remittances, the dynamism of some sectors, the low inflation rates, the reduction of the fiscal deficit, and the financing of the banking system to the productive activities that have better financial conditions.
The sectors that contributed the most with the expansion of the GNP of 2003 were the industrial, the commercial, and the financial sector. However, the agricultural sector fell by 0.6% due to the slow recuperation of the prices of coffee and sugar in the international markets. For 2004, according to the BCR, there are better perspectives to support growth. Since the world’s economy is expected to improve, new opportunities will come along with the Free Trade Agreement with the United States and the access to other markets will improve. According to the BCR, the increasing number of family remittances, the investments on infrastructure, a better agricultural production, and the low inflation level are also positive signs.

The performance level of the Salvadoran economy is located in the line of the international surroundings. According to the International Monetary Fund (FMI, in Spanish), in 2003 the United States’ economy grew by approximately 2.6%; and the Latin American economy grew by 1.1%. The same organism calculates that, in the cases of the United States and Latin America, the economic growth for 2004 will reach approximately between 3.6% and 3.9%, respectively. The external perspectives are, therefore, a little more positive.

However, when it comes to examine the internal factors, such as the investments, it can be observed that the public investment decreased in 2003 by the time that the program destined to repair the damages of the earthquakes of 2001 ended. On the other hand, the private investment increased in a modest fashion, that is why this was only a slight improvement because of the up-coming natural declination that surrounds an electoral environment.

Prices and salaries
As for the inflation rates of 2003, according to the information of the BCR, the inflation process was reduced in El Salvador from 2.8% to 2.6%. According to this institution, this indicator can be explained through the fact that the dollarization of the economy has had positive effects over inflation. Despite a more considerable growth of the prices in the last couple of months, inflation kept a low level, and this somehow helped to maintain the interest rates. In September, the prices grew by 0.1%, and the annual inflation rate reached a level of 2.1%. The largest increase of the prices was allegedly the increase of the prices in the health and the transportation sector,

Nevertheless, the prices’ activity is not an indicator of a higher level of purchasing power. The strength of that inflation level seems to be based in a “macro-economic stability” at the expense of the family’s micro-economy. This means that such variable has somehow deteriorated the income of the workers using the excuse that the objective is not to generate inflationary pressures. The strategy has been to keep the salaries at its lowest levels and make sporadic increases to create a facade and without actually increasing the real purchasing power of the people.

This idea can be verified by just taking a quick look at the evolution of the minimum salary levels of El Salvador. It was not until May 22nd of 2003 that the minimum salary was increased after five years. However, such increase was so small that it did not resolve the problem of the purchasing power level to buy the basic food basket. The government of ARENA has not used the salary’s policy as an instrument to generate a new and an equitable distribution of the income.

This is how the consensus reached in 2003 was aimed to increase through a decree the minimum wages that, until this date, had been established at a level of $144 per month, a Pyrrhic increase. The rural sector was literally left out of the direct benefits of this economic policy. The salaries of both the sectors of commerce and services were to be increased by 10%; that is why there is a new minimum monthly salary of $158.40. In addition, for the industrial sector the proposal was to increase the minimum salary by 7.5%, that is $154.90 per month. For the maquilas, the proposal of the private business companies originally intended not to modify the minimum salary; however, with the negotiation, the salary was increased by 5% and now the minimum wage for this sector is $154.60 per month. In addition, some agreements were made about a group of economic measures to lower the cost of living and to create jobs.

The former different increases show the privileges of certain business sectors, such as the ones of the maquila industry, which characterizes itself for paying low wages and for rendering a small number of benefits for the workers. This can be added to the fact that the contribution of the maquilas to the national investment at the long-term is not very high due to the volatile nature of this kind of business. The salary for the agricultural field workers, however, was not increased. The excuse was that the agricultural sector is not able to face a wage increase because of the crisis that it is going through. This perspective can be contrasted with the vision of the external sector, which points at the fact that the agricultural sector qualifies to be included to compete with other sectors in the Free Trade Agreement with the United States.

All of these ideas show the burdens of a policy that keeps rural poverty as part of an endogenous vicious circle. Even if the minimum salary of the industry is able to cover the value of the country’s urban Basic Food Basket (CBA, in Spanish), that minimum salary is not enough to cover the expenses on clothing, housing, and recreation.

The 2003 Human Development Report indicates how the calculation of the CBA suffers of a number of serious deficiencies (is not realistic) because it is behind the times. The products that integrate the CBA were determined through an income and expenses poll that took place in 1991, and it is natural if to this point (12 years later) the alimentation patterns have changed. In this sense, the purchasing power of the agricultural salary is much lower than other salaries because it is not enough to get neither the rural nor the urban CBA. According to the report of the National Foundation for Development (FUNDE) presented on October 27th, 2003, in order that the agricultural salary manages to cover the value of the rural CBA, this should be increased by approximately 30%.

 

Minimum salaries for 2003

SECTOR

Percentage

Increased Salary

Present Salary

COMMERCE AND SERVICES

10 %

$158.40

$144.00

INDUSTRY

  7.5 %

$154.80

$144.00

MAQUILA

  5.0 %

$151.20

$144.00

AGRICULTURE

     0 %

$   74.06

$   74.06

Source: Ministry of Work and Social Prevision


As for the real minimum salaries, they have continuously made people lose their purchasing power. The real minimum salaries behave similarly to the economy: they grew in an annual average of 2.4% during the first five years of the nineties, and then they decreased –2.3% in the following years, creating as gross result a growth close to 0.1% for the whole period. This reflects that the economic growth has not made an impact on a considerable sector of the workers.

The external sector
According to the Central Bank of Reserve (BCR, in Spanish), the Salvadoran balance of payments closed the year 2003 with a surplus of $266 million. This has been the consequence of a gross balance between a deficit of $617 million in the regular account and a surplus of $883 million in the capital account. These pieces of information reflect the strong external dependency of the Salvadoran economy.

This is the reason why it does not sound so positive to hear the BCR say that the exportation grew by 6.3% during 2003, when the importation activity has increased twice as much. According to the bank, the new markets have promoted the peak reached by the exportation activities. These new markets have been created by the free trade agreements with Mexico, the Dominican Republic, Chile, and Panama. What seems to be clear is that the small and the medium companies will not be able to take advantage of this opportunity. The large business companies do take advantage of this chance. This is reflected in the growth levels of the maquila industry, which is one of the most important sectors in the exportation business, and has created sources of employment in this field.

On the other hand, in the annual report of activities of the Ministry of Economy it was clear that “closing the deal for the Free Trade Agreement with the United States is a great achievement for the country’s commercial sector in 2003”. This agreement was finally negotiated on December 17th, 2003. The country allegedly obtained favorable asymmetries of 5, 10, 15, and even 20 years for the different national productive sectors.

Among the sectors that might receive the benefits of the agreement there is the poultry farming sector, and products such as the dairy products, sugar, textile and clothing. However, the piggeries were affected. For the industrial and the agricultural sectors, the benefits that they already had were kept with the Initiative of the Caribbean Basin (ICC, in Spanish). According to the Ministry of Economy, in the case of the sugar, with the Free Trade Agreement the exportation percentage of the sector will increase by 24 extra tons.

For Minister Lacayo, this successful deal means “we will sweeten the holidays for the North American people”. However, according to North American sources such as the Washington Post, with the closed deal of the Free Trade Agreement with the United States, contrary to the vision of the Salvadoran government, the true winner of the agreement is North America itself. When the basic aspects of the agreement are analyzed, this newspaper accepts that “the American exporters will receive the benefits (…) and even too many benefits; the agreement is evidently in favor of the United States”. While the markets of the four Central American countries that have signed the agreement to this date (El Salvador, Guatemala, Honduras, and Nicaragua) with the United States will be completely open to the American exporters that provide financial, telecommunications, and technological services. The protections to the American sugar and textile industries will be kept for a permanent period because they are not competitive enough.

This is how the results that might be expected from the Free Trade Agreement with the United States for 2004 do not seem to be promising in any way. As for the Free Trade Agreement with Canada, the process had been frozen because of all the attention that was paid to the United States; however, the plans of the Flores administration, according to the balances, are to conclude it by the first trimester of 2004.

As for the foreign investments, mostly the investments made on the maquila, they have kept a positive level of growth. According to the Ministry of Economy, today there are 16 areas with maquilas operating in the country. The level of industrial areas grew 64% in relation to 2002, and in the country alone there are 1,173,000 square meters of construction.

In reference to the family remittances, they have continued to grow and therefore the country depends even more on them each day that goes by. The family remittances sent by those Salvadorans who live abroad represent 14% of GNP, and promote the private consumption. According to the Ministry of Economy, the family remittances will reach approximately $2,050 million. The government has said that this is the result of the extension of the benefits brought along by the TPS and the economic growth that the United States reported in the third quarter of the year.

On the other hand, during 2003, despite a higher deficit of the balance of trade, the regular account seems to have improved slightly; however, this is due to the considerable growth of the family remittances. Between January and August, the deficit of the balance of trade increased approximately 12% in reference to the same period of the last year, since the importation level grew more than the exportations. During this period, the exportation level grew 6% leaded mainly by the exportations of the maquila (7.6%) and the traditional products (2.5%).

The importation level grew 13.6% due to the increasing number of external purchases of consumption goods and petroleum. This was reflected in a deficit of the balance of trade of $1,738 million. The compensation came with a balance of remittances of $1,355.4 million (between January and August, the family remittances covered 80% of the deficit of the balance of trade). During this period, the family remittances sent by the Salvadorans who live abroad increased by 4.9% and were equivalent to 64% of the value of the exportations. By the end of the year, the amount of remittances might increase and reach an amount close to $2,032 million, that is 13.5% of the GNP. Adding this to an adequate flow of income provided by tourism would allow the country, according to the BCR, to reach a deficit of the regular account close to a 2.3% of the GNP.

The external debt of El Salvador is kept at an acceptable level. However, it is getting closer to the limits of what is considered “manageable”. The estimated balance of the external debt for 2003 is $3,800 million, an amount equivalent to 1.2 years of exportations, and to 25.7% of the GNP. In the last years, the external debt has increased as the result of a higher fiscal deficit.

El Salvador is also in danger to lose the present level of investment. By the end of 2003, Moody’s Investors Service Agency examined the debt that El Salvador had. This analysis evaluated the governmental capacity and the capacity of the BCR to face future events of financial nervousness, and if these institutions would actually be able to provide support to a banking system that has to operate within the limits defined by a dollarized economy. A few years ago, the formerly mentioned agency stated that El Salvador was able to absorb a certain level of investment due to its successful transition to an economic and a political stability after 12 years of civil war. However, the deterioration of the country’s fiscal accounts and the low level of international reserves are factors that would be put against the qualification of the country. The Standard and Poor’s and the Fitch Rating Services have repeatedly announced their opinion during 2003 with a speculative category, and have kept the outlook in a stable position; however, according to the information of January 2004 the outlook is now negative.

In the year 2003, the international reserves have had a slight recuperation, as a consequence of the adequate flow of the currency provided by the remittances, tourism, and the exportations. So far, the reserve’s balance has approximately increased 7.5%. The predictions are that by the end of 2003 there might be a balance of reserves of $1,700 million, the equivalent to 3.8 months of importation activities.

The public sector
In the field of the fiscal matters, the 2003 revenue was higher than the one of the last years. By October, the Non Financial Public Sector (SPNF, in Spanish) had a regular income of $1,921 million. Out of that amount, a 75.1% came from the tax contributions, 11.5% came from the social security contributions, a 9.0% did not come from the taxes, and a 4.4% came from the surplus of the operation. By the end of the third trimester of the year, the foreign donations added up to a total of $41 million.

By the end of the third trimester, the yearly regular expenses of the SPNF added up to $1,698 million. The consumption expenses represented the highest proportion of the regular expenses (74%), followed by the payment of interests (15.8%) and the regular transactions (10.2%). The expenses of the capital were $388 million, out of which $382 million came from the gross investments, and the rest came from the transactions of capital. It is important to notice that most of the expenses made by the State, as it has been typical in the past, are connected with the regular expenses (81.4%).

By October, the regular savings of the SPNF were approximately $223 million. This, according to the Ministry of Hacienda (The Internal Revenue Service), was approximately 1.5% of the estimated GNP for 2003. At the same time, the global deficit (including donations) was $122 million, a little more than 0.8% of the estimated GNP for 2003.

In this year, the PNUD, ANEP, and FUSADES expressed the need to make some important changes regarding the fiscal matters in order to make the debt of the State sustainable for the long-term. According to the information provided by the Central Bank of Reserve (BCR, in Spanish), the total debt of the Central Government had, by October of 2003, a balance of $5,655 million. A 68% of this amount has to do with the external debt, and the remaining 32% are financed with the internal debt. It is important to say that this debt represents approximately a 37% of the estimated GNP for 2003. In other words, almost two fifths of the GNP are destined to pay for the debts that the State presently has. In the last years, the government has managed to turn the short-term debt into a long-term debt, looking for a larger margin of time to achieve an economic reactivation capable to turn the country’s debt into a sustainable element.

In this context, in order to create a sustainable economic reactivation it is necessary that the government plays a key role. However, the structuring of the general budget of the nation does not fully contemplate the importance of those areas that promote the economic development. By the end of the third trimester of the year, the State had spent almost two thirds of the budget ($1,812.9 million). Only $177.5 million, which represented 9.8% of the budget, was dedicated to the economic administration of the country. According to the law proposal for the national budget of 2004, it seems that the tendency in the different administrative areas is the long-term. An amount of $283.7 million has been destined to promote the country’s economic development in 2004. This amount only represents 10.2% of the State’s total budget. As it can be noticed, the present government is contracting a considerable debt, and it is not generating the necessary conditions to reactivate the economy and face the future obligations of the State.

 

The budget in the administrative areas by the third trimester of 2003

(In millions of dollars)

Areas

Modifications

Earnings

Administrative performance

   258.7

  183.6

Administration of Justice and civilian security

   335.1

  231.8

Social development

1,141.8

  770.8

Support to the economic development

   273.1

  177.5

Public debt

   432.1

  304.0

General obligations of the State

   124.6

  106.9

Public business production

     38.3

    38.3

 

Total

 

2,603.7

 

1,812.9

 

Source: www.mh.gob.sv

The monetary and the financial sector
The dollarization process of the Salvadoran economy became more intense in 2003. By the end of the year 2002, the amount of circulating colones added up to a total of $61.2 million. By October of 2003, the amount of circulating colones in the economy was equivalent to $40.6 million. As it can be noticed, during the first nine months of the year, an amount equivalent to $20.6 million has been subtracted. In other words, the amount of circulating colones has been reduced by 33.7% between December of 2002 and October of 2003.

In the banking system’s market, the pondered average interest rates show the following characteristics:
- For the short-term loans (less than a year), the active interest rate tends to be low.
- In the early 2003, the banks charged an approximate rate of 6.7%.
- By October and after the slight reductions made during the former months, the rate can be placed in a 6.51%. It is important to notice that by August, such rate suddenly increased from 6.56% (July) to 6.94%. Later on, the same rate had a steep fall.
- For the long-term loans (for more than one year) the interest rate reached its peek in the month of May with a value of 8.38%, and in October it became 7.57%.

The behavior of the country’s credit line is following the variations of the active interest rates. By the end of September of 2003, the total balance of the granted credits practically grew by 9.0%, in relation to September of 2002. This is an interest feature, since after the implementation of the dollarization (in January of 2001) the market of credits did not immediately improve itself, as it was expected. It was only by the end of 2002 that the credit demand of the economic agents was intensified, generating positive growth rates. The banks with the highest amount of loans are the Banco Agricola, Banco Cuscatlan, and the Banco Salvadoreño. The credits granted by those banks represent 67.9% of the credits granted by the national banking system.

By October of 2003, the total value of the credits granted by the national banking system added up to $3,851.5 million. The economic sectors that to that date had received the highest level of credit were the following: the commercial area (27%), the manufacturing industry (19.3%), and the sector of services (10.8%). The mining sector and the quarries had the lowest level of credit with only 0.03% from the total number of credits granted by the banking system.

ABANSA stated that the tendency to make overdue payments had been considerably reduced during 2003. By September, out of the total number of granted credits, only 3.1% were overdue. This tendency is important, especially if one takes into consideration that the reduction of the number of overdue payments is fundamental in a economy where the economic transactions are made with dollars. This reduction is important because right before the dollarization of the economy a 7.33% of the credits of the banking system were connected with overdue payments. This was a strong observation that the financial analysts had made in the past, in case that the government had plans to dollarize the economy. In the present, the overdue payment of the credits connected with the leading banks of the country represent more than half of the existing overdue payment of credits in the banking system at a national level.

The total balance of the term deposits did not follow a regular pattern during the year. From January to June, the deposits (in the long, the medium, and the small term) increased by 9.0%. Between June and October, the total number of these deposits added up to $2,985 million, an amount much smaller than the one that closed the year 2002 ($3,004.2 million).

Ever since the beginning of the second semester of the year, some of the international rating companies put their eyes in El Salvador. This is the result of two things: the situation of the country’s public finances and the pre-electoral environment. Both of these aspects have been combined to analyze the country’s level of risk, and the rating is not good enough to attract the foreign investment. However, Fitch Ratings of Central America considers that this kind of classification is fundamentally due to the country’s pre-electoral environment.


Perspectives
For the next year, the economy is expected to improve. The government stated that in 2004 the GNP is expected to grow between 2.5% and 3.5%. The improvement of the economy is fundamentally based on the hopes that the present government has to ratify a Free Trade Agreement between the Central American region and the United States. However, for many analysts, an improved economy will begin to show after the first semester of the year, since it is necessary that both Legislative Assembly of El Salvador and the Congress of the United States ratify the treaty in the first months of 2004.

The number of Salvadoran exportations are expected to increase with the agreement, especially the exportations of non-traditional products, which seem relatively more dynamic than the traditional products. It is expected that, once the trade agreement is ratified, the Central American products can be well accepted in the American market.

As for the monetary sector, the remittances are expected to represent in 2004 a 14.1% of the GNP, that is, an amount higher than $2,000 million. These calculations are based on the fact that during the last years the amount of dollars that comes to the country is getting higher and higher. It is necessary to realize that those resources are extremely important for the national economy, since they provide the country with a certain volume of money for the national and the international transactions. A sudden reduction of the amount of money that comes to the country could create a number of serious problems connected with the flow of cash in the short term, and certain national financial problems.

Inflation is also expected to increase by 2% or 3% during 2004. This is connected with the flow of remittances. It is necessary to remember that with the Monetary Integration Law the BCR does not control the total amount of currency of the country. The fluctuation of the prices is somehow attached to the development of the monetary policy of the Federal Reserve of the United States, that is why the variation tendency of the prices could be similar to the behavior that it has in that part of North America. The prices of some products might be the same in both markets if there is a commercial openness between Central America and the United States.

For 2004, the Internal Revenue Service expects to close the year with a fiscal deficit of 1.1% of the GNP. This is a very ambitious goal, especially if it is considered that this calculation does not contemplate the necessary changes that have to take place in the taxation system of the country, and it does not reflect about the expenses made to pay for the pensions either. In this context, many social sectors have asked the government to maintain a strict fiscal discipline, which, in order to be effective, should generate a number of substantial changes in the taxation system and the policy of expenses.

As for the fiscal matters, the external debt is expected to reach a 34.8% of the GNP in 2004. The debt represents an alarming figure and tends to get closer to parameters that the international institutions use to detect economic dangers. That is why several analysts agree that it is necessary to make some changes, so we do not have to sacrifice the financial stability that the country presents to the international community.

For the first semester of 2004, the presidential elections are expected to create uncertainties for the economic agents. The economic variables are also expected to behave in a similar fashion, according to the tendencies observed during 2003, especially the ones of the last semester.

G

 

Society


The society

 

The electoral process had a great influence on last year, and the commercial negotiations were intense. Yet, there are many unresolved social conflicts. Several transcendental decisions have been taken about the elections and about the economic transactions. On the one hand, during the year 2003, the Flores administration dedicated itself to negotiate with the Central American region the possibility of a Free Trade Agreement with the United States. Nine rounds of negotiations characterized a process of endless journeys through which the region spoke about its sensible economic issues; topics such as agriculture were discussed. According to the vision of the news media, El Salvador and the rest of countries that signed the agreement would be able to take advantage of its new relation with the United States. On the other hand, as for the electoral process, the Salvadoran population was officially invited to participate in the presidential elections with a defined electoral offer.

However, there is not a well-defined agenda for the society. This historical context demands a set of immediate actions to reduce the poverty, the marginality, and the unemployment levels. After 12 years of war, and after the Peace Accords, the country has not been able to take advantage of the potential offered by the new situation. The social areas seem to be the great debt of the end of the third ARENA administration.

Questioned by the different public opinion polls that were published throughout the year, the Salvadorans resent that the present government did walk away from the people’s most evident needs despite the fact that the electorate supported the official party. Many citizens did not hesitate to say that that the present administration has been, among its predecessors, an institution that has not fulfilled the social demands.

In order to be elected as President, Francisco Flores appeared in 1999 accompanied by a select group of bureaucrats who have led the country to an open economy concept, and to the religious adoption of a number of measures dictated by the international financial organizations. The most vulnerable social sectors have been left unprotected. And the social agenda proposed by the Peace Accords has vanished: the reunification of the society, the preparation of a national development plan, the reduction of the poverty line, the extension of the coverage provided by the basic social services, the increase of the family income, the creation of decent sources of employment... The list goes on.

No national development plans were created, and the sectors that criticized the inefficient administration of the country were not heard. On the contrary, the authoritarian attitudes and the lack of agreements have been the rule inside the different levels of the national reality. The news media have ignored all of the critics that were made to the governmental circles, and when this information has been considered by the media, it has been used to discredit certain sectors by calling them “communists” and “terrorists”.

The earthquakes that took place during the first trimester of 2001 allowed the country to increase the public investment and activated the construction sector in the sense that many jobs were created. However, the rural areas that were more affected by the earthquakes did depress the action of the agricultural sector, especially the coffee-growing activities. In fact, many people were left without a job in this sector when their subsistence has depended for years on their work at the haciendas that are now abandoned. The social crisis of coffee is one of the debts that will affect the year 2004.

Flores seemed to realize about the gap that separates him from the population after the electoral results of March, when the FMLN managed to take away from ARENA the title of “the first political force of the country”. Urged to keep his party and his administration in a privileged position, President Flores reviewed the social situation right before departing from the Presidential House. Immediately, he announced the execution of certain measures to pay attention to the family economy, and he tried to “get closer to the people”. Later on, while fighting with the Constitution, he imposed the approval of an anti-gangs law and the execution of repressive plan against the gangs. These measures brought back to ARENA and to his administration the electoral sympathy that was lost in March.

This has been the social agenda of the present administration. Measures and initiatives aimed to keep the fundamental aspects of the established social order, nothing beyond the minimal survival requirements. All kinds of national efforts to promote a dialogue or a number of agreements have been discarded. These actions still seem to be a strange procedure to resolve the problems of the country.

The social matters
Even if with the permanent campaigns of the media the Salvadoran society assimilated the elections of March, the preparations for the presidential elections of 2004, and the negotiations of the Free Trade Agreement with the United States (CAFTA) as the most relevant aspects of the year, the social matters are definitively not present in the national agenda. In other words, the political and the economic aspects have been the priorities of a society that characterizes itself precisely because of the social stagnation. That is why the social affairs are a problem. Therefore, why are the social matters the historical problem of the country and why the country has not been able to resolve it even after the Peace Accords?

The social matters become a problem because they are not present in the national agenda, because they appear as an attachment of the political and the economic activities. Without the intention to ignore the political and the economic activity of a nation –because both of them are key aspects of any organized society-, the social matters must have their own place in the administration of a country because they are a priority. A Ministry of Planning and the presence of a commission to coordinate the social policies of the government appear as the key institutions of a country. However, just to mention those institutional figures causes a certain feeling of resentment in the present public administration.

After the disaster caused by the earthquakes in 2001, this publication mentioned that politics had become the main attraction in a country that had just witnessed the end of a war. “There are many books, articles, discussions, and seminars dedicated to politicians and to politics. Everything has been discussed: the transition and the consolidation of democracy, the activity of the party system, and both the shortcomings and the solid aspects of the electoral system (...). Most of the population lives within a structural risk, and this is the most important issue, more important than the political problems”. This fragment of an editorial published by Proceso reflects that the author was both wrong and right at the same time. Even if the social issues became the national priority at the time, the Salvadoran society once again paid attention to the political agenda. In that context, the social aspect of reality is a structure of public policies and public activities aimed to fulfill the most important demands of the population. This means that it is necessary to make certain political decisions and adopt several economic measures in order to reach the pre-established goals. It would be too idealistic to believe in the absolute autonomy of the social matters. That is why it is necessary to review the main events of the year.

The society and the elections
The legislative and the municipal elections of March 2003 were the main feature of the year. Over one million voters elected the 84 congressmen who would represent the interests of the people for the next three years. At the same time, they elected 262 councils that would continue to work until the year 2006. In November, the Supreme Electoral Tribunal (TSE, in Spanish) officially invited the citizenry to participate in the presidential elections of March 2004.

Even before the official announcement of the campaign was made, the political parties had already presented a series of proposals. The objective was to be elected. The results were favorable for the FMLN, especially in the Metropolitan area of San Salvador; and for ARENA, in the rural areas of the country.

The public health issue was the main topic in the context of the elections. A strike of the union of workers and the doctors of the Social Security Institute did not end until the first days of July. The strike had begun nine months ago in the main sectors of the Salvadoran Social Security Institute (ISSS, in Spanish) in the middle of a sterile negotiation between the authorities and the strikers. Several centers of the public health net added themselves to the strike. Throughout those nine months, the organized social movements participated in several demonstrations trying to stop the privatization of the public health care system. These movements raised the expectations of the society, due to their capacity to organize the demonstrations and to attract the presence of the supporters.

Francisco Flores and the directive board of the ISSS denied the existence of an intention to privatize the public health sector, and they kept their position until the end of the strike. The lack of negotiations was the main feature of this confrontation. Despite all of the expectations that were created, the reform of the national health system remains untouched.

The year 2003 will be considered as one of the periods when epidemics strongly affected the health of the Salvadoran population. Pneumonia took the lives of approximately 378 people throughout the year. From July to September, the authorities of the public health system rang the alarm of a national alert, and $3.5 million were invested to take care of the patients. Conjunctivitis and several gastrointestinal diseases were the main cases that the national net of hospitals had to deal with.

There was another confrontation when the political opposition tried to approve the increase of the funds assigned to the municipalities (through the Fund of Economic and Social Development, FODES). There was an argument between the Legislative and the Executive Organs after a decree was issued. The decree was aimed to increase by 8.0% the transference of the regular expenses of the State’s General Budget to the 262 city halls of the country. The Executive Organ resented the decision of the parliament, and stated that this measure would affect the public finances. The Executive Organ also stated that the decree would make the authorities reconsider the budget assigned to the sensible areas, such as education, health, and housing. The claims of the Executive power ended with the presidential veto.

In the context of the dispute, the Minister of Hacienda (the Internal Revenue Service), Juan Jose Daboub –with his usual demagogic discourse- sold the idea that, if the budget of the city halls were increased, the public investment sector would have to face a number of negative consequences. According to him, over 2,000 houses, 13 health care units, and 533 classrooms would not be built if the budget of the city halls were increased. The mayors offered to build and repair the rural streets, to bring potable water to more territories, and to expand the electric light services.

On July 30th, the congressmen from the opposition added their 56 votes to annul the veto that Flores presented against the legislative decree. On September 24th, the Supreme Court of Justice resolved the case in favor of the Executive Organ. The magistrate Victoria Marina de Aviles voted against her colleagues at the Constitutional Hall. She stated that they had an extremely poor concept of the municipalities. In the end, the decentralization of the Salvadoran State was left in the air.

Right at the end of the year, the education issue became once again the object of a public debate. Antonio Saca, the presidential candidate from ARENA; Schafik Handal, the candidate that represents the FMLN; Hector Silva, who represents the presidential candidacy of the coalition CDU-PDC were all invited to a forum organized by a University in San Salvador. In the forum, they all agreed that the public investment should be increased, especially in the educational field, if the country intends to obtain satisfactory results in that sector at the mid-term. The forum called the attention of the national news media; however, this was only circumstantial. The press basically responded to the invitation of a university concerned by the elections, and witnessed how the candidates expressed their good intentions. That was all.

One of the articles of this weekly publication reported that “It is very probable that once the scandal of the media is over, the educational affairs will return to its usual state”. And that is exactly what happened until the end of 2003. Other aspects of the education problem were not discussed, such as the budget increase for the public education sector, and the modernization of the University of El Salvador, the promotion of the magisterial duties, the alphabetization projects, and an objective evaluation of the educational reform and its performance.

The society and the free trade
Without a doubt, the negotiation of the CAFTA has been one of the most important aspects of the governmental agenda. Since the official announcement of the formal negotiations, on January 8th, until these negotiations were closed, on December 16th, the national press made an intense coverage of the official discourse, but it did not include the necessary information for the citizenry. The perspective of the press was not an impartial approach to the negotiations,

In a few words, the Executive Power rubricated the agreement and the population does not know what can be won or what can be lost in the context of the free trade agreement established with the United States. Common sense indicates that the most powerful and competitive businessmen will be the winners, and that the owners of the micro and the small business companies –beyond the official discourse- will run the risk of losing their source of income.

At this point, only a few people believe that the Free Trade Agreement will be able to reduce the poverty levels of the country. That is why it is necessary to mention the opinion of several foreign personalities –something that the national business elite really likes to hear in order to be told what to do- who think that the Salvadoran society is not prepared to deal with the challenges of the CAFTA. In December, the morning paper El Diario de Hoy partially quotes a Honduran newspaper that presents the declarations of an official from CEPAL, Rebecca Grynspan. She thinks that poverty, social exclusion, the low levels of education, and the weak structure of the productive apparatus are the main challenges of the regional countries that are doing business with the United States. Each country –concludes Grynspan- has to conceive a development program in order to face the challenges of the Free Trade Agreement.

Beyond the organization of public demonstrations against the Free Trade Agreement and the globalization process –a couple of realities that El Salvador will inexorably have to face in 2004- the civil society will have to find a way to neutralize the negative effects of this phenomenon.

The society and the news media
In El Salvador, the largest communication enterprises have played a crucial role to maintain the established order ever since the official party arrived to the Executive Organ. Their evident alliance with both the economic and the political elite has allowed them to sustain the rules of the game when the official order has been threatened. All the same, the privileged social position of the media elite has allowed it to design the country’s agenda together with the governmental structures.

During the first trimester of the year, a few days before the legislative and the municipal elections took place, the owners and the directors of the most powerful communication enterprises of El Salvador had the opportunity to complain in a meeting with the Inter-American Press Society (SIP, in Spanish). During four days –and with an enormous press coverage-, the businessmen of the communication enterprises of the continent discussed the situation of the freedom for the press in the American continent. They condemned all of the obstacles that, according to their perspective, do not allow them to fully enjoy that right established in the international juridical body.

The Salvadoran media owners emphasized on the fact that the SIP considers that “in El Salvador, the right to have access to the public information is not fully guaranteed, although there is a constitutional regulation about the petition right”. In addition, these businessmen stated that they do not accept “the actions of the FMLN or the actions of other parties that promote the violence against the media and against the journalists”. Throughout the year, the media made every effort to neutralize the presence of the FMLN in the news, except when the party was criticized.

Nevertheless, the news media made many important journalistic investigations that revealed a number of controversial corruption cases in the apparatus of the Salvadoran State. The most relevant example is the ANDA case. Among other important events that were followed by the press, there are the corruption evidences that were discovered in the Social Security Institute, the National Comptroller’s Office, the Legislative Assembly, the Social Fund for Housing, the Agricultural Encouragement Bank, several judicial centers, and several municipalities (among which there are many in San Salvador administrated by the FMLN).

The agenda of the media ended the year with a couple of issues that were mentioned in the beginning of this article: the presidential elections and the Free Trade Agreement with the United States. It should not seem strange if, on the one hand, the media adopted the tendency to favor the official party with the news coverage and the editorials. Or if, on the other hand, the media reproduced the discourse of the Free Trade Agreement, a procedure presented as the magic solution for all of the social problems.

Society and violence
Year after year, El Salvador remains at the top of the list of the Central American countries that have the highest violence rates during the main holidays. During Eastern and during the Christmas holidays, the statistics of violence increase year after year. The population feels that the lack of security is the most crucial problem in their lives, besides its economic situation.

In that sense, the first national balance prepared by the Attorney General’s Office reported, during 2003, approximately nine murders per day. This piece of information is beyond the statistics of the police, which only reported six homicides in a year. The Attorney General’s Office –with information collected between January and November- determined, in addition, that every day a couple of homicidal intents took place at a national level. In total, the Public Affairs Ministry reported 3,160 homicides, while the National Civilian Police only reported 2,161 cases for the same period. The institution took notice of 95,000 cases of people who pressed charges for different reasons.

However, the most impressive display of statistics in this sense had to do with the 3,000 arrests of gang members performed through the “Iron Fist Plan” that President Flores imposed since last July. That plan had an overwhelming impact in the history of the country, despite the fact that it was not effective at all: only a few dozens of people had a trial. With the pre-fabricated scandal of the gangs, the actual intentions of the Executive Power were questioned as far as the combat against delinquency is concerned. The root of the problem was not touched.

The social agenda
The most respected national and international reports indicate the presence of a high number of unfulfilled needs as far as the social matters are concerned. That might be why this aspect is the most important challenge for the government that will be implemented in July 2004. “The greatest social task of history” that Flores refers to in his discourses is nothing but a chimera. The social aspect of the whole matter has not been touched yet. The social aspects have to be seen as an independent issue, and in order to do that it is necessary to reach an agreement and elaborate proposals that are not based on a political set of criteria. Finally, it is necessary to design a national strategy of development, and this task requires the political will that this government lacks.

G

 

 
 
 


Please, send us your comments and suggestions
More information:
Tel: +503-210-6600 ext. 407, Fax: +503-210-6655