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Proceso 1156
August 10 2005
ISSN 0259-9864
Editorial: The uncertain implications of the CAFTA
Politics: The ANEP and the PNUD before the presence of the democratic governance
Economy: Approved!
The uncertain implications of the CAFTA
A very important event took place in the beginning of
August: The American Congress ratified the CAFTA. In El Salvador, the media had
been displaying the governmental propaganda connected with the enormous benefits
that the CAFTA would bring.
Such initiative was sold as the best that could happen to El Salvador, not only
economically speaking, but also in reference to the social situation, since the
benefits that would be brought by the CAFTA would allegedly transform the life
of the Salvadorans. The commitment of the most important personalities of the
Salvadoran government was so intense –with President Saca leading the way- in
reference to the American Congress’ decision to approve the CAFTA, that they did
not skimp on efforts to directly do some lobbying in the high circles of power
of the United States with the intention to fulfill a dream. To go against that
dream was considered as an offense to the country. Those who did not agree with
the CAFTA were nothing but the bad seeds of El Salvador, the enemies of welfare,
and the enemies of the national progress.
This is how the governmental circles faced the issue of the free trade agreement
with the United States. The critical voices were shut down by the deafening
sound of anticipation, the thought that the CAFTA was just around the corner.
From the political opposition, specifically from the FMLN, nothing much was
done; their internal conflicts got more attention than the approval of a free
trade agreement that connects the country with the planet’s most powerful
nation. The society, as in other occasions in which critical decisions have been
made, was not involved in what the fourth administration of ARENA planned behind
the people’s backs. There were certain social actors that were indeed included
in the decision-making process: the business elite connected with the third
sector of the economy, those who will not be affected in a negative manner by
the CAFTA.
The way things were, the future and the welfare of El Salvador depended on the
decisions of the American Congress. That is why the days before the final
decision were filled with tension and nervousness. It is true that the “good
friend” George W. Bush had promised to do anything he could to get the approval
for the free trade agreement in the Congress, but not everything depended on
him. That is why there were good reasons for Saca and his governmental team to
be tense and nervous.
After July 26th, there were no more reasons to be nervous, because that morning
the Salvadorans found out that the American Congress had approved the CAFTA.
Since what had been sold to the public opinion was the idea of an immediate
happiness after the ratification of the trade agreement, the logical thing to do
was to expect that those who had defended that idea would show how happy they
were. However, that did not happen. A day after it was approved, the tone of its
defenders was not full of joy anymore. The most eloquent example of this is the
prudent turn taken by President Saca. He indicated that “the CAFTA is not a
blank check, and it does not mean that we have resolved all of our problems”.
What is the matter now? Did not they say that the CAFTA was the solution for all
of the country’s problems? Did not he say that El Salvador was ready to get the
best benefits of it? Did not he say that with the approval of the American
Congress everything would go just smooth for the Salvadoran population?
Without a doubt, the prudence of President Saca arrived late, because from now
on everything that happens to the Salvadoran economy will go beyond the control
of both the government and the most influential business groups. Prudence should
have been the golden rule during the negotiation phase as well as during the
final stages of its approval. Prudence should have also accompanied the
declarations of the public officials when they spoke about the CAFTA and its
implications. This way, the expectations of the citizenry -especially those of
the people who will not get any benefits from the agreement- would be more
realistic, the same as the expectations of those who, in the government, have
the purpose to improve the lives of the Salvadorans.
The CAFTA has been ratified by the American Congress. That was the missing link,
something that had to be completed so that the free trade would definitively
connect Central America with the United States. The most radical and the most
analytical studies do not predict anything good for most of the population in
Central America, although they do reveal in a way that, in procedures of this
nature there are always winners: the business groups that have their nests in
the field of trade and investment. There are plenty of optimistic opinions as
well, mostly prepared by people that belong to business’ foundations. However,
what these studies offer belongs to the field of what “could” happen if certain
variables were to behave in one way or another.
The implications of the CAFTA are uncertain. Practically, no one can say what
will happen once the CAFTA becomes active. The problem is that if its
implications are critical for the country, to walk away from this project would
be difficult and expensive.
The ANEP and the PNUD before the presence of the democratic governance
The main concern about the democratic governance in El
Salvador can be reflected in several studies that have worked with this issue.
These studies do not always have the same objective or the same amount of
scientific rigor. However, they share the same concern: that El Salvador becomes
a country able to improve its democratic governance. To understand the most
representative perspectives about this issue it is enough to examine a couple of
documents: the ninth chapter of a report about Human Development in El Salvador,
prepared by the PNUD, of 2003, in which they analyze the governance issue, and a
document of the businessmen published for the fourth annual meeting of the ANEP.
Both documents reveal the perceptions of the different political, social,
economic, and intellectual sectors in reference to the governance issue.
ANEP and governance
Beginning with the vision of the businessmen about this problem, it is important
to say that their concern has to do with the need to resolve the present
problems of the country in order face in an adequate manner the challenges
brought by the new order of the world. In that sense, according to the document,
“since the democratic governance is essential for the country to reach a higher
level of development, it is necessary to look for a fundamental political
agreement so that El Salvador can grow based on, at least, a minimum level of
consensus that can be legitimized by the different sectors”. If the governance
is improved it will be possible to eventually strengthen the democratic
institutions, to set new goals for the national political activity, to create a
new sense of economic development, and achieve the social development.
In reference to the performance of the institutions, one of the first
observations of the document is that to improve the human development indicators
in the country it is necessary to strengthen the democratic sense of the
institutions. For them, “El Salvador is a typical example of a society in
transition. The quality of the institutions, the behavior of the different
sectors, and the kind of life led by an average citizen indicate altogether that
the country requires more efforts to strengthen the democratic institutional
sense”. That is why they indicate that the country has not followed the same way
of other democracies such as Chile or Costa Rica, where the average level of
institutional development and its performance is way beyond the numbers
reflected by El Salvador.
Businessmen do observe several differences, for instance, in the way justice is
administrated, in the incapacity of the political actors to reach a minimum
level of consensus, and the lack of transparency in the administration of the
public affairs. “According to these approaches and in the light of the recent
experience, El Salvador –according to the document of the ANEP- has among its
main challenges to improve the performance of the public institutions and to
strengthen the juridical background that supports governance and the democratic
sense of the institutions in which the system of freedoms is based”.
In reference to the political activity, even if it is considered that the
participation of all the forces and the political tendencies in the national
frame of action is a positive piece of information, they believe that there is
still plenty to do. In this line, they indicate that the transparent financing
issue of the political parties, the way in which the congressmen are chosen,
that does not respond to the constitutional principle of the necessary degree of
representation, and it does not promote the responsibility of the chosen ones.
Based on these statements, the document of the ANEP concludes with the
following: “the performance of the Salvadoran political system, even if it shows
plausible features that do support the democratic process, it also shows certain
signs that affect governance itself. Therefore, it is crucial that the political
actions are at the service of the most important objectives of the country, in
order to strengthen the institutional structure and consolidate the democratic
governance”.
In addition, to make governance effective, from a business perspective, “what
the country requires today is to improve and polish the actions that revolve
around the model of the social economy of the market, in order to guarantee the
basic freedoms, satisfy the essential needs of the Salvadorans, and increase the
welfare level in a competitive frame with equal opportunity relationships able
to strengthen governance and human development”.
Businessmen believe that the kind of social development that the different
sectors of the country have dreamt about will arrive. However, they observe that
the public sector has serious restrictions that affect their capacity to
effectively respond to the demands of the Salvadorans. “For such reasons, it is
necessary to prudently administrate the social conditions with a vision. The
worst that could happen to the country is that the social problems were to be
used as a political flag, with a strong populist approach that does not resolve
the essential problems, but complicates the situation even more”.
In other words, the document of the businessmen adopts the conservative
statements of the trilateral commission that connected the lack of governance
with the paternalist interventions of the State in the public life. Even if some
people talk about the need to strengthen the institutions and apply the rules of
the game, they do not admit an eager intervention from the political
institutions. In other words, even if the businessmen do admit the need to
combine political stability with the improvement of the life of the Salvadoran
people, they are still afraid of the consequences.
PNUD and governance
The most recent document of the PNUD about the democratic governance in El
Salvador approaches the problem with an ample criteria. The document begins with
an observation about the urgency to discuss the governance issue in the country.
“If the up-coming events are analyzed from a historical perspective, it is
possible to see how urgent it is to discuss the democratic governance issue.
Presently, there is an actual separation between the option to continue in the
same road of the last years, avoiding the strategic understandings and the
creation of a basic institutional sense able to assure a sense of democracy and
stability, and the alternative to build a tissue of political agreements able to
develop a new institutional sense aimed to produce a well-integrated society,
socially and politically speaking, and able to offer a sustainable democracy”.
In order to respond to the challenges of the sense of governance, and as part of
a diagnosis about the situation of El Salvador, the document of the PNUD wonders
about the state of the democratic governance:
1. What is the level of legitimacy and how is the government supporting this
from a social perspective?
2. What is the stability level of the government or how conflictive is it?
3. What is the performance level of the government?
The effort to respond to these three questions leads the PNUD to analyze the
performance of the country’s political system.
In reference to both the legitimacy level and the level of social support that
the Salvadoran democracy counts with there is a critical tendency that the
political actors should consider. The turning point is that legitimacy can be
achieved through the electoral support, the support to the democratic system and
to the social consensus before the actions of those who make the decisions.
Because of the former considerations, and analyzing the specific information of
the country’s political life, it is possible to conclude that the “electoral
legitimacy has gone through a deterioration process in the last nine years”. It
is also possible to see that “the support to the democratic system has a couple
of stages. The first one begins with the Peace Accords and ends between 1998 and
1999, characterized by a growing level of support to the system. The second one
begins between 1999 and 2000, and it is what we have today: a consistent
deterioration of the support granted to the democratic system in El Salvador”.
In the same way, in reference to the social consensus “there is a third stage
that has nothing to do with the former ones, and which emerges sometime in 2000
reducing the number of available spaces to discuss and coordinate the actions of
both the civil society and the politicians, the resentment grows, and the parts
eventually develop a lack of communication”.
About the level of the conflict, the PNUD observes that in the period considered
for the analysis, both of the indicators that allow to measure the relation
between the Executive and the Legislative power had been deteriorated. “By the
end of the fourth year of the Flores’ administration, there had been 41
presidential vetoes, that is, more than in any other administration. If we
consider that the vetoes represent a way to break with the construction process
of a law (Article 137 of the Constitution), the enormous amount of accumulated
vetoes would be revealing the lack of pacts and the high tension that has
characterized the relations between the Executive and the last three
legislatures. As for the General Law of the Budget, the lack of coordination
between the different organs of the State and the parties has allowed that the
approval of the Nation’s Budget can be delayed and therefore approved until the
last days of the year or even the next year, after having feelings of
uncertainty and tension”. In reference to the governmental performance, the
document indicates that, in general, the Salvadorans are not satisfied with the
services offered by the governmental institutions. There is no doubt that the
lack of efficiency in the public administration system affects the possible
supports to the political system.
However, these documents do have a problem. In the first case, the text of the
private business companies about governance, as it has been said before, defends
the thesis of the most conservative sectors about governance. However, against
this position, no one can keep talking about avoiding a deficient governance
while they take away from the State its capacity to intervene in the social and
the economic affairs. In any case, history has taught us that a free economy, by
itself, cannot resolve the coexistence problems of a society.
Approved!
The CAFTA was approved in the Congress of the United States
on Wednesday, July 27th. After a very difficult process of negotiations and
lobbying between the Democrat and the Republican congressmen, the scale was in
favor of the fraction that supported the interests of President Bush. In the
final voting there were also several officials from Central America. A while
right before the voting began, the officials were nervous because it was not an
easy task. By the end of the journey, the results were 217 votes in favor and
215 against. This result puts an end to three years of commercial negotiations
between the United States and Central America to allow the free trade.
Once the news were revealed, people reacted immediately. In El Salvador there
were reactions that went from joy to deception. The first one to celebrate the
ratification of the CAFTA was the Salvadoran Executive power. Late at night,
just a few minutes after the agreement was approved, the Salvadoran President
sent a message through television saying how happy he was about this
achievement. For Saca, the CAFTA is the tool that the country needed to get
ahead and increase the investment levels. A day after the ratification of the
treaty, several business associations would also reveal how pleased they were
about the ratification. Along with them there were also several representatives
of the State’s offices, such as the Minister of Economy and the Minister of
Agriculture, would support the position of President Saca. The FMLN stated that
they regretted the approval.
The position of the government, the private business companies, and the
opposition
Because of the ratification of the CAFTA, the President referred to the moment
as “a very important night for the country, for Central America, and for
democracy”. With these words, the President supports the ideas of the American
President in the sense that the agreement has a strong political component. Both
think that free trade will enable to consolidate freedom and democracy in the
region. In the last few days, the President has invited the Salvadoran
population to accept the treaty by adopting a new perspective to take advantage
of the new sources of business that will be opened in the medium term.
The congressman of the FMLN, Salvador Arias, does not agree with this
perspective. For him, the agreement was negotiated through blurry conditions
that ended-up imposing the interests of the Bush administration. Arias stated
that “the vote divided the American society, they had to twist it, and brake
their own laws”. The legislator showed his discontent after his visit to
Washington, where he campaigned against the treaty. In addition, the FMLN seems
interested to file an appeal of unconstitutionality against the treaty. For the
opposition, the agreement has a couple of unconstitutional aspects: it takes
away the sovereignty from the territory, and reduces the attributions of several
institutions of the State.
On the other hand, for Federico Colorado, the president of the National
Association of Private Business Companies (ANEP, in Spanish), the ratification
of the agreement is excellent news. For the president of the ANEP, the
businessmen should get ready to face the treaty in the best way possible.
Antonio Cabrales, president of FUSADES, said how pleased he was about the CAFTA.
He also said that even if the country is not totally ready for the treaty, the
important thing is that now that it has been ratified, it will help the country
to prepare itself for the arrival of new products. Claudio de Rosa, the director
of the Association of the Salvadoran Banking System (ABANSA, in Spanish) said
that now “it is urgent to systematically invest in human resources to revitalize
the productive spirit of companies able to offer better salaries”. The Catholic
Church also indicated its position in reference to the treaty.
For the Archbishop of San Salvador, Fernando Sáenz Lacalle, the free trade
agreement, is a reality that cannot be overlooked, and the Salvadoran population
has to make a considerable effort to take advantage of the agreement.
A victory for President Saca?
For the Salvadoran President, to promote the CAFTA was one of the main
challenges that he undertook once he was elected as the President of the
country. During his first year of administration, he tried hard, inside and
outside the country, to present the treaty as the solution to the problems of
the nation. However, the agreement can also become in the future a way to
evaluate the level of efficiency of the Saca administration. This also happened
with Francisco Flores.
The former president, by the end of his administration did not get good reviews
from most people, this was due, in part, to the imposition of the dollarization
process. What Flores presented as an alternative before the lack of investments,
did not create new sources of income for the country and intensified the
tendency to increase the prices. The same thing can happen with Saca.
The CAFTA was not only presented as an alternative to the country’s economic
problems. It was also indicated that the agreement would bring improvements in
the field of politics. Specifically, for the President, just like his American
colleague, the CAFTA will help to consolidate democracy. In this case, there is
also a new parameter to measure the effectiveness of the presidential
administration in the future. In this context, the country might be affected by
the trade agreement. Saca has presented the agreement as “a victory for
democracy”; however, during the process of negotiation, the priorities were the
interests of the country’s business elite. In the famous “next door room” –the
room where the negotiation took place- there were only the most important
businessmen of Central America. Other social sectors were never invited to
participate in the discussions.
El Salvador is not ready for the CAFTA
For the Minister of Economy, Yolanda de Gavidia, in this kind of commercial
agreements “no one will ever be ready, until it is time to be part of a process
that requires quite an amount of effort”. In other words, even if the country is
not ready for the CAFTA, what is important for this public official is that now
that the agreement is a reality, the business companies should get ready for it.
The president of the Agricultural Chamber of Commerce (CAMAGRO, in Spanish),
Ricardo Esmahan, “agriculture should be restructured to be able to compete with
the American products”. Also the representatives of the of the Chamber of
Commerce, the Salvadoran Association of Industrialists agree on the fact that
the country is not ready for the agreement, the important thing is to get the
support of the State and gather efforts in order to take advantage of it.
Nothing can be more irrational than to do things at the last minute. Where is
the image of the kind of businessman that gets ready in advance to take
advantage of the market’s opportunities? The representatives of the different
business associations, because of their lack of preparation to face the treaty,
now ask for the help of the State through a new industrial policy in the
country. Now that the Free Trade Agreement is a reality, the businessmen want
the government to help them create a strong and a competitive industry. Now, at
the last minute, they want to do it all at once: to develop a qualified labor,
to reduce the production costs, to improve the industrial processes, etc.
For many, the CAFTA is a treaty that will provide what the governments in the
history of the country have not been able to provide. If decades ago the
governments did not do much to improve education, to develop an adequate
commercial legislation, to train workers to increase the productivity, to create
conditions of safety and eliminate the high transaction costs; according to the
promises of the official party, now many think that that the Free Trade
Agreement with the United States will be able to unleash all of those benefits.
It is important not to be wrong: what was not done during decades, will hardly
be accomplished in just a few years.
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