A questioned occupation

Will the disinformation campaign go on?

There is no law that supports this; however, the political commentators usually give some time to the recently elected president to get to know the situation of the country, and to the analysts to study the new turn that the affairs of the State will take. This frame of time, which lasts for approximately 100 days, is supposed to be important because the policies that a new president adopts are generally different from what is announced during the campaign. Even if there were an exact coincidence between the proposals and the actions, it would be prudent to observe the performance of the new actors and examine the first results of the adopted decisions before making any judgments.

This self-imposed rule should not be any different in the case of Antonio Saca. That is why the question that is at the top of the list of this comment, more than a critique made about the new governmental team, it should be understood as an advice, an advice that asks not to repeat the worst mistakes committed by the Flores administration. The apparent results of the constant political manipulation of the information should not lead the new government to a rushed emulation.

Beyond the electoral results in the short term, the country’s democratization is damaged. A true statesman learns to give more importance to the supreme “interests” of the people. However, no matter how idealistic such affirmation might sound, a good statesman is someone who knows how to combine the practical needs of the political duties with a certain doses of hope.

Flores, the paradigm of deception
In the case of Flores, to analyze his administration is to accept that he has been a relatively successful president, that ended his governmental project with an acceptable reaction from the public opinion, and that he conducted the new candidate of his party to an electoral triumph. However, as everyone knows, in politics, a short-term success does not buy immortality or an eternal positive image. Flores will undoubtedly be remembered as a mediocre statesman, who spent five years manipulating the Salvadoran population, and that intensified the weakness of the democratic institutions of the country. Flores never had a perspective that could improve the political progress of the citizenry. He wanted immediate results and not permanent national projects.

He had much to do with the wear-and-tear of the main institutions of the State due to his intransigent attitude before the possibilities of reaching any kind of political understandings with his adversaries. In the case of the presence of the Salvadoran soldiers in Iraq, he endlessly repeated that it was a request of the United Nations, when everyone knows that the Security Council is deeply divided, and that the most powerful countries of the world do not approve of the presence of the United States in Iraq. He has not been concerned about the safety of the soldiers, despite that this has become a very delicate issue after Spain, Honduras, and the Dominican Republic withdrew their troops from the area. It seems that the most recent events have not been enough for Flores to modify, not even slightly, his declaration concerning the support that his administration is giving to the war in Iraq.

During the presidential campaign, the institutions of the State were used to favor the image of his party. Even if Flores did not intervene much in the anti-Communist disinformation campaign that was designed, he did encourage his ministers, and even some diplomats, to become part of it. All kinds of rumors were heard about what could happen with the country in case that the left wing were to win the elections. Even after the electoral results were revealed, some of those who are close to the government keep saying that the Salvadorans went to vote “because a person has to be very naïve not to realize about the chaos, the revenges, and the corruption that would come upon the country if the Communists had won the elections”. That is how the Salvadorans would have gone out and vote in order to defend their freedom, their jobs, and the future of their families.

Saca does not go beyond ambiguity
The recently elected president seems to have a suspicious political attitude, which sadly reminds us of the behavior of Flores. Ever since it was revealed that he was the elected president, Saca has dedicated himself to perform a series of activities to get the attention of the population. On March 22nd, he worked with the cleaning of the multi-million dollar campaign that had been placed on the posts and the walls of the city. Saca sold this action as the first signal of his will to fulfill his promises. The most important news media of the country complimented the actions of Saca, and his gesture was called “generous” and “extraordinary”. Some of them even dared to say that Saca’s actions seemed to be a new way to do politics.

The second act that follows the propaganda line of Flores and which Saca seems to have already adopted, is the election of an alleged “council of wise men”, which will recommend the names of the ministers who will become part of his new cabinet. When the council was introduced, it was mentioned that “they were chosen because of their honorability, their professional experience, their qualification, their commitment to the country, and because they identified themselves with the governmental plan called ‘A Safe Country’”. At the same time, one of the members of the commission stated that he gladly accepted the invitation issued by Saca because this was all about building the destiny of the country from a set of different perspectives. “The future of the country is a commitment that everyone has, and not exclusively of just one political party. This is the time to leave the sterile confrontations behind and search for a new way to make agreements work”, said one of the members of the commission.

This gesture shows the new negotiating personality that Saca intends to promote. Despite the lack of union between some members of the commission and their party, the opposition has been asked to get involved in the negotiation process of the national affairs. The commissioners have already invited the opposition to change their confrontation discourse and replace it with a dialogue, based on the alleged new political attitude adopted by Saca. According to them, the “pluralist” fashion in which the commission has been integrated is enough evidence to believe in the will of the new president to promote the negotiation between the different political forces of the country.

Saca has launched a campaign of visits to the Evangelic churches. The elected president says that he wants to ratify his intention of being close to the people. On the other hand, he says that he wants to renovate the offer he made during the campaign, that is to guarantee the freedom to choose a religion in the country. According to him, since the Salvadorans chose freedom and not the Communist menace, he does not only have to thank them for their decision, but he wants to also reiterate his compromise with the defense of their freedom in general. While some people are speaking about negotiation and understanding, they keep repeating that no one was fooled during the electoral campaign, and that it is necessary to keep following the same pathway.

The deception remains
The formerly described position that Saca has adopted ever since it was made public that he had won the elections, far from leading us to believe in a dialogue or in a negotiation process, they revived the ghost of a confrontation. The most important news media and several characters that usually make a fortune out of their jobs with the government prefer to look away from all this so that they do not have to reflect about the actual situation of the country. The opposition is still blamed for the lack of agreements and the intensification of the political confrontation, without considering the political manipulation of the information inside the high circles of the official party.

How can we analytically affirm that the commission named by Saca to help him select the names of the future ministers is a step towards a political openness and negotiation? The members of the commission, who dare to make such declarations in a superficial manner, should explain what is their specific range of decision in the country and what sectors of the political life do they exactly represent. They seem to forget that a political negotiation takes place between political actors who have a specific amount of authority in the country, and that control a certain amount of power assigned by the population.

They have not explained either what are the specific tasks that the future ministers will have after the selection process is over. Most people know that they will be chosen based on their loyalty to the official party, in order to implement the projects proposed by Saca. That is why they cannot be considered as a group of ministers that has emerged from a process of negotiation. As it is convenient for an elected president, he will apply his policies just as he understands them, since the electoral results should be interpreted as an agreement with the vision that ARENA has about the country.

However, if the intention is to act in a decent manner, they should stop trying to sell Saca’s decision as a sample of a new political will. It is not that, not even with the designation of a commission of experts; it is not that just because he has visited churches, or because he has taken off some of the propaganda that was displayed in the city. These gestures are not enough to talk about a new political profile, as some people insist to speak about Saca’s attitude. They are just gestures for a gallery, so that the new president remains in the minds of the citizens during this dead time between the election until the official act in which he will undertake his duties as president.

Those who insist on believing the contrary are not only going against the grain of the manipulation of information, but they are also promoting a political deception. In addition, instead of sketching the actual challenges for a sincere dialogue and a real negotiation process between the political actors, these actions only promote the fact that those who have more political and social responsibilities will keep ignoring the most important problems and accusing their adversaries for being both radical and intolerant, instead of fulfilling their own responsibilities.

The direct foreign investment in El Salvador

As a product of globalization, during the last decade the percentage of the Direct Foreign Investment (IED, in Spanish) has increased in most countries. In the specific case of El Salvador, the IED has had a considerable participation in the development of the economic activities after the Peace Accords were signed. These Accords established a set of “new rules for the game” inside the social and the political sectors. In this context, it is important to remember the role played by the Structural Adjustment Programs and the Monetary Stabilization Policies that existed before the end of the war.

To understand the evolution of the IED in the country, it is necessary to consider that the most important economic policy that had an influence on the development of this variable was the implementation of the privatization process. It is through the sales of the assets of the State that many international companies manage to get inside the local market for the first time. These companies get involved with sectors such as the electric energy field and telecommunications. It is in 1997 and 1998 when most of the money that comes to the country arrives through the IED.

The considerable amount of IED that comes to El Salvador cannot be entirely understood without saying that its presence is due to the fact that the most important companies of the world are looking for new spaces to increase their capital. In this sense, it seems attractive and profitable to invest in the companies that once belonged to the State. However, the IED is not one of the essential elements to build a stable and a healthy economy. The expected results never came true, and the existing achievements have been blown out of proportion in order to favor certain interests of the business elite and the government.

According to the modern economic theory, the IED favors the economic growth of a certain country. As long as a country opens its economy to receive this kind of investments, it will probably develop a long-term stage of economic growth. Because the IED is a long-term project, it is important to achieve a special kind of growth: a sustainable economic growth. During and after this kind of growth, many economic and social variables experience a number of positive transformations, such as the reduction of the unemployment level, higher salaries, more commerce, more infrastructure, and a strong bond among the members of the industrial net.

Generalities
According to the Document of Labor of the Central Bank of Reserve (BCR, in Spanish), titled “Diagnosis of the Direct Foreign Investment in El Salvador (1998-June 2003)”, the arrival of the IED to the country can be fundamentally divided into a couple of periods. The first one, between 1976 and 1989 presents an average IED of $12 million per year. The second period can be located between 1990 and 2003, a time when several transformations take place inside the country’s economic structure hand in hand with the privatization process of the actives of the State. This is the period that will be reviewed in this article.

Because of the privatization process, a considerable amount of IED comes to the country. In fact, between 1997 and 1998 approximately 76% of the IED that arrived to this country was due to privatization itself. In addition, during this period the government performed a considerable number of actions aimed to create better conditions for the arrival of investments. The creation of new laws, such as the law of investments, the law for the maquila industry areas, and the law for the reactivation of exportation are a sample of this effort in order to make the country attractive for the international investors.

Until June of 2003, the balance of the IED was $2,501.7 million, and the countries with more investments in El Salvador were: the United States (67%), Venezuela (12%), France (9%), Spain and Panama (4%). The business companies of these nations were placed in the different productive branches. The representatives of the foreign capital accept that the most important benefits of the last years regarding the arrival of investments are the macroeconomic stability, the external openness, the initiatives of the laws that promote the investment, and privatization.

The IED per economic sector
The IED can be found in nine economic sectors: the manufacturing industry, commerce, services, construction, communications, electricity, agriculture, and fishing, as well as the financial sector and the maquila. If the IED that has arrived to the country were not considered due to the process of privatization, the total balance of the IED would be $1,536.7 million. This means that privatization has played a crucial role in the behavior of the IED, not only in El Salvador, but in Latin America as well.

The sectors of the economy that have been the recipients of the highest percentages of investment, in a descendent order, are: electricity, manufacture, communications, and commerce. However, if in this classification we put aside all of those flows destined to the sectors that have received the benefits of the privatization process, the order changes and it can be reconfigured in the following manner: 1) manufacture, 2) commerce,
3) maquilas, 4) finances.

The countries with the highest investment rate in El Salvador
(In millions of dollars)

Country Amount of investment United States 886.3 Venezuela 309.5 France 214.7 Spain 161.4 Panama 102 Source: BCR

According to this chart, the United States has the highest rate of investment in El Salvador. The participation of North America is much higher than the one of Venezuela, which is the second most important one. The importance of the North American investment is so relevant that, even if all of the investments of the other nations were combined, they would not go beyond the amount of money that the United States has brought to the country in the last couple of years. That is why it can be said that to keep a commercial bond with the United States is necessary to shape the Salvadoran market. However, such action might not be exactly connected to the improvement of the social development, but to the consolidation of a certain business sector.

The employment created by the IED
The IED has created in the country approximately 119,600 jobs. Most of these positions are concentrated in the maquila industry (58%), the manufacturing sector (19%), and commerce (11%). In 2002, the amount of direct employment created by the companies financed with IED was 120,900 jobs, which means that between 2002 and 2003, there has been a reduction of the level of employment created with an investment of this nature. The areas of the country where there is a higher amount of companies that work with foreign capital are San Salvador and La Libertad, and it is there where this kind of business companies demand a higher number of workers. The companies of other sectors of the country gather less than 20% of the jobs due to the IED.

Conclusion
The most important results that, according to the modern economic theory, the arrival of the IED builds in a country are, fundamentally, the creation of better salaries, a closer industrial linkage, and a sustainable economic growth. Let us see if these results have taken place in El Salvador.

Although in the last years the country has not been a strong recipient of the IED due to the September 11th attacks, it cannot be denied that during that period a considerable amount of international business companies have come to El Salvador to invest. Most of the IED is placed in the manufacturing industry, and that is why there is a higher level of employment inside the maquilas. The maquilas, or sweat shops, are a type of investment that creates a low added value level, and therefore, the people who work in that sector are subjected to low levels of remuneration. In that context, those who work there cannot aspire to have an income level that is high enough to have a decent life. In fact, an opinion poll conducted in 2003 indicated that the maquilas are looking forward to establish themselves in the country because it is attractive for them to find a market of inexpensive labor.

Due to the privatization process, there is a considerable portion of the IED that never becomes a productive investment, since it is located inside the commercial sector and the area of services; such areas do nothing but transfer the value produced by the primary sectors of the economy. Those who work in the sector of services have a higher level of salaries. However, that salary is not supported by the generation of a true added value for the local economy.

In general terms, the IED located in El Salvador has been far from generating the expected results. The IED should not be the only strategy to achieve a successful presence in the international market; it is necessary to create a successful social policy. In the future, it is important to try to guide the IED towards a productive kind of investment, seeking that the profits obtained by the companies that work with this kind of capital can be transformed into improved salaries, and into higher investments for the local areas.