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     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.

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INDEX

EDITORIAL

    The FMLN has scandalized the right-wing. This time it is about a document in which the FMLN details its strategy for the years to come. This “scandal” is pure nonsense. When the adversary's strategy is revealed, it should be easier to know how to react. The FMLN is giving the right-wing a new material, and now they can stop repeating the same ideas they have about the left-wing. At least the FMLN has a project that contains valuable and provocative ideas, something the other parties do not have, since they only think about how to win more votes in the next elections using the same discourse of empty promises. Apparently, the right-wing is shocked by the FMLN's proposal: a struggle to establish a revolutionary government, a government that saves the population from what this party calls "the Neoliberal transition of globalization". The FMLN seems to be wiling to rise the flag of the "revolutionary democratic transition".

The alternative transition that the FMLN proposes is to "put human beings at the center of the political activity, against the perverse logic of attaching life to profits". Without a doubt, this approach has revolutionary tendencies. However, it is not something extraordinary. John Paul II keeps saying the same: humans, and not profits, should be the center of the state's policy. And he has made it very clear: work should be more important than capital. At the same time, he has severely condemned the present form of capitalism, to which he refers to as "savage", for disrespecting a person's rights.

With this as a context, it is clear that the FMLN is not away from the social lessons of the church, or is it perhaps the Pope who is now closer to the left-wing? Even if that was the case, the scandal of the right-wing is unnecessary. In a website, which seems to belong to a very unhappy sector of ARENA, the party's National Executive Council is accused as well. Several followers, discontent with the excessive importance that the capital has over ARENA and its governmental policies, demand a radical reform in the most emblematic right-wing party in the last years. The language that this discontent group uses when it refers to capitalists is frankly contemptuous and insulting. At least the FMLN makes an exception and assures that its policy is not is not aimed "against all of the right-wing capitalist businessmen". It accepts capitalism but under certain rules. The FMLN and the discontent group of several ARENA members agree in their critics to the economic model that the government encourages. The Pope's speech, the discontent at ARENA and the FMLN keeps calling everyone's attention.

The conservative right-wing should not be alarmed by the methods that the FMLN proposes to fight for the revolutionary change, since all of those methods are democratic. The FMLN intends to use to use "the social and vindicating struggle, the parliamentary struggle, and the electoral struggle". What happens is that the right-wing has bad habits: being authoritarian and servile. It is afraid of the democratic procedures, the public questioning drives it out of its mind, avoids the political debate, and it prefers a blind obedience instead of facing opinions and postures. It is understandable why it is so afraid of the possible electoral results, given the turbulence that presently affects it from within, caused by the capital's voracity and their inability to manage the party and the government. However, the most critical threat against the continuity of its political hegemony comes from its own ranks rather than from the FMLN. The right-wing is in trouble, it does not have the leaders nor the ideas to rule the country in the middle of a crisis.

On the other hand, it seems as if the FMLN has finally realized that a struggle not only takes place in the legislative and the municipal context, but also in the social context: "we need more from the people" and "build a social and political block of forces". It seems as if the FMLN has understood that isolation does not lead anywhere. It also seems as if the corner in which the right-wing, the Legislative Assembly and the media confined the FMLN has helped this party to realize its situation. Its impotence has convinced it that it has to go back to its roots, that is, go back to the people, the ones it should have never abandoned. It suffered an illusion caused by the power it gained, and now that it sees how that power has been reduced, it reflects and it looks for a way to go back to its natural ally: the popular majority, in which it should find the reason of its existence.

It will not be easy to get the required social support to win the next presidential elections. It will not be easy to establish an alliance with other social forces either. The isolation period has been a very long one, and forgetfulness has been too painful for those who, in the past, blindly believed in the FMLN, to the point of trusting them their sons and daughters unconditionally. The wounds and the suspicion caused by the arrogant attitude cannot be erased with two elections. However, it does not have a choice. What it has chosen is the best and the only way to neutralize the temptation of power, which is a potential danger whenever things come out right. This comeback will not be easy, and it will need plenty of time to be materialized, since it will have to defeat disenchantments and frustrations first. After an unconditional trust and a serious abandonment, it is not easy to believe again. Disloyalty has a very high price.

It is true that the FMLN needs "more revolutionaries", but to get them it is necessary to recover the utopia of a more equitable and humanitarian society. It is necessary to rise the symbol of the social justice, an ideal that remains in the minds of the population, but which until now has not found its place, not even in the FMLN. It makes sense to acknowledge that "the expectations to win through the parliament and without confrontations weakened the social struggle for the vindicating flags". When people really come first, contradictions and conflicts are unavoidable. The future will tell if the present leaders are capable to overcome their age, to abandon the comfortable positions that they have occupied for ten years, and get rid of their arrogance. That is the only way to count with the people and their struggle.

    As well as the other political parties of the system, the FMLN is getting ready to face next year's legislative and municipal elections. The debates have the tendency to turn into confrontations. The legislative decisions encouraged by the right-wing somehow show the intense activities that presently prevail inside the left-wing party. Its most important leaders take advantage to stay away from the right-wing’s proceedings. In addition, they claim that they are the victims of a complot planned by their adversaries, in order to make their presence irrelevant at the Legislative Assembly. These considerations made by the FMLN’s leaders might be right (about not having much power to participate in the decisions that the Legislative Assembly makes). However, there is no doubt that in the present pre-electoral situation, the Salvadoran voter needs to evaluate the performance of the FMLN. It is necessary to discuss the obstacles that this party had to face in a context dominated by a right-wing alliance.

To elaborate the analysis, it will be necessary to confront the reality with the proposals made by the left-wing. It is also necessary to remember that FMLN promised a series of measures aimed to resolve many of the problems that the Salvadorans face. As for the economic field, the left-wing party had the purpose to encourage "legislative and political actions to construct an alternative model to the Neoliberal scheme that the country suffers". Among the strategies created to resolve these problems, they agreed to use a series of mechanisms to encourage "the concerted efforts, the importance of the internal demand to attend the basic needs of the population, the orientation of the external demand towards the construction of a national productive structure with an integral articulation; the support for the micro, the small, and the medium business companies and for the structural unemployment problem; and to grant the state with a vital role in the economic reactivation and in the social development of the country".

As for the legislative measures, they offered the approval of a series of laws that should, among other things, "assure the competition (between the economic actors); reduce the Value Added Tax (IVA, in Spanish) to 10%; reform the SIGET law, to regulate the profits and the costs of the electrical companies; reform the baking system's law and the one of the BCR in order to regulate the interest rates and assure the credit distribution in the different branches of the economy; approve a public bid law to guarantee transparent and honest procedures; approve a Public Administration Responsibility law to deduct responsibilities from the officials in reference to their decisions related with the state's funds; to reform the FIGAPE law in order to make the financial aid more accessible, and strengthen the support given to the small and the medium business companies; to encourage an agricultural code with a gender perspective, so that it can offer a juridical security to this sector of the national economy", and, finally, "to structure and strengthen the Investment Fund for the Local Development”.

About the public safety issue, the program of the FMLN intended to favor the social prevention of delinquency, encourage the constant acquisition of professional skills for the PNC, and turn the prisons into rehabilitation centers, among other objectives. Everything was inspired by the dramatic situation that the public safety suffered back then, which evidently drove to the edge the aspirations of many Salvadorans. In addition to the measures such as the control of the fire arms, the assignation of adequate resources to the General Attorney's Office, it tried to encourage the civilian participation, elaborate a coherent criminal policy with an emphasis on prevention.

Considering the environmental problems of the country, the left-wing party intended, in its legislative program, to encourage a sustainable development strategy. The key factor of this strategy would be the environmental safety. From that perspective, it proposed, among other subjects, to look after the completion of the Environmental Law, and encourage either the approval or the reform of certain laws such as the Forestry Law and the Water Resources' Protection Law.

As far as the health issue is concerned, they concluded that it "occupies a fundamental place, that is why our proposal intends to overcome the critical situation that the people and the National Health System suffers, its integral transformation must not be delayed to guarantee the access and quality of the health services for the entire population". That is why they mentioned the need to "increase the public investment for the Health Sector, with a prevention model that that improves the quality standards, its efficiency, the coverage range, and the free access to the public health services, as well as to reject the privatization of these services".

The FMLN's legislative program also intended to touch issues such as education; the childhood, adolescence, and youth policies; the lives of women; and the international relations. With each one of the measures, the FMLN wanted to stay away from the right-wing, promising a better attention for the population and to the interests of the majority. The left-wing party knew very well what were the obstacles. According to the FMLN, it would be necessary to have a "growing and a permanent civilian organization in general", as well as “a decisive effort to build a wide concentration of social and political forces", in order to achieve these transformations.

Almost at the end of this legislative period, it is sadly confirmed for the Salvadoran voters that the FMLN has not been able to transform into laws none of the items that its legislative program contains. The left-wing party has not been able to satisfy the aspirations of the voters and become a catalyst for the national political life. It is possible that there are explanations to support that failure. For that matter, the right-wing alliance has played a decisive role. However, no extenuating circumstance would be enough to erase the fact that the FMLN, even when it had the legislative key of 56 votes to approve certain laws, knew how to make enough pressure as to encourage some of its multiple proposals.

That is why the Salvadoran political reality obliges the left-wing's party leaders to reflect for a moment on the present situation. The inability of its leaders has been evident when it comes to make agreements with other political forces. That is why it can be said that the votes for the left-wing party have not contributed to improve the lives of the Salvadorans. And at this point of the legislature, it is almost impossible to do something better, considering that the present correlation of forces overshadows the FMLN's strength as a party that can improve the performance of the legislative organ.

The FMLN should not be surprised when the electoral abstention increases, or with the fact that the Salvadorans still see the politicians as instances incapable to complete its electoral promises. The most important aspect for the Salvadorans is not that the FMLN continues to complain about being victims of a right-wing complot that prevents them from fulfilling their promises. The political environment has been a hostile one for the FMLN during this legislative period, however its leaders have been incapable to carry out their proposals, since from the beginning they had enough opportunities to avoid the present debacle.

    In his most recent public declarations, the Hacienda Minister (Internal Revenue Service), Juan Jose Daboub, suggested that the country's economic situation is comfortable and that practically all the macro-economic indicators reflect positive tendencies: the production keeps growing, the prices are steady, the public debt is at acceptable levels, an the employment as well as the remittances and the exportations are positively increasing. Even if the tendencies that Daboub mentions are true, his final conclusion is questionable.

The macroeconomic analysis cannot only present the results without showing how the different factors involved have intervened in its constitution, it cannot ignore the previous tendencies of the variables, specially when the growth rates are included in the analysis. For instance, it is clear that the production and the remittances have been growing, although their increase is extremely inferior to the one observed three or four years ago. In the same way, the exportation rates have grown, however this growth is not relevant if the importation rates grow more rapidly. Therefore, in the end, the country buys more than it can sell. The situation turns worse when it is considered that many imports have either taken several medium and small business companies out of the market or put them in a critical situation.

The three ARENA administrations have adopted as a rule to make a partial and propagandistic interpretation of the economic indicators. Both the fiscal deficit and the commercial balance issues have been systematically evaded; in the meantime, the economic slowdown has not been taken seriously either, reducing its importance with partial attitudes, such as the one of Minister Daboub, who points out that "the economy keeps growing". Although this publication has insisted on discussing the most critical economic tendencies, it is necessary to update the information about the macro-economic behavior of each one of the variables that the Minister has mentioned, not only to refute his interpretation, but to examine the indicators all together, and their recent historic tendency, that is, from a perspective that intends to make an economic analysis and not a politically "convenient" interpretation.

In the first place, the production can be growing, but that is not enough to say that the economy is growing stronger. The economy's growth rate becomes weaker every time, and if this tendency continues, a recession could be reached (for example, with a partial migration rate of the maquilas). The 2001 growth rate was 1.8%, a very low rate that supports the nineties’ gradual descent (during the first five years, the economy grew beyond 7%). It is necessary to mention that, in part, the fall in the growth rates of some sectors was the result of the earthquakes' secondary effects. It is also necessary to remember that the national reconstruction process has turned into a new dynamism injection for the sub-sector dedicated to build infrastructure, especially because of the public investment’s increase from $378 to $640 million -in other words, a 70%-. For the first trimester of 2002, the construction sector has shown its energy again, and its Volume Index of the Economic Activity (IVAE, in Spanish) increased: 20.2% compared with a 3.93% of the industry, its closest contender, and the negative rate of -4.09% of a weak agricultural sector.



In the second place, the stabilization of the prices is an important aspect, which is being observed since the mid nineties, but that obeys much to the economic policies of the present governments. The stabilization of the prices is parallel to the steadiness of the currency’s rate of exchange
-probably the main source of inflation- in effect since 1992, when the exchange rate was 8.72 colones per dollar, something that has been possible -as it has been mentioned before in these pages- thanks to the gigantic flow of family remittances, which annually comes to the country, allowing to finance the deficit of the commercial balance. Other countries would have collapsed already with such a pernicious tendency as the one the El Salvador faces.

The public debt, in the other hand, is not something the government can be proud about, since it shows a strong tendency to keep growing, specially because more than half of the public expense must be financed with international loans. This situation shows that the tax revenue is not at the height of the needs. Between 2000 and 2001, the external debt of the central government went from $2,317 to $2,633 million, with the aggravating consideration that -given the aforementioned chronic lack of financing opportunities- it will always have the tendency to increase, until it exceeds the level that the Minister considers as "manageable".

The increase of the employment rate cannot be taken as a relevant feature either. In the housing construction sub-sector alone, it is estimated that 25,000 workers have lost their jobs in the last year, while in the beginning of this year, approximately 7,500 public employees were indemnified and fired, increasing with them the long unemployment lines. If the fall in the international prices of coffee and the working hours demanded at the haciendas are both added to this situation, the result is an indicator that points out to the reduction of the employment levels in the rural area. As if this was not enough, the maquila is growing at inferior rates, going from a 20% recorded in 2000, to a 5% for 2001, which means that this sector is absorbing less workers (mostly, less women) than it did two years ago. In fact, an alarming social phenomenon, such as the numerous concentration of unemployed people (who had jobs as construction workers in San Salvador, Ciudad Arce, and other areas).

The remittances, the "lifesaver" of the Salvadoran economy, have been growing in average levels close to 20%; however, since 1999 these levels dropped down to 3%. In 2000 they increased again, only to fall a year later to a level that hardly went over 3%. This situation can be associated to the slowdown of The United States economy, experimented since the early 2000. Therefore, once this economy increases its rates, it could be expected that the remittances would grow as well in the near future. However, a model based on in the remittances has clear economic and social implications that cannot be ignored any longer: the economy’s division in three sectors, the external dependency, the passive attitude of the authorities in charge of the economy, delays in the insertion process aimed to the international market, consumption, family disintegration, among other issues.

Finally, about the exportations issue it must be observed that their growth cannot be considered simply as a sign of the good performance of the external sector. It is necessary to examine the behavior of the importations to know the commercial balance (a deficit, in this case). Between 1990 and 2001, the deficit of the commercial balance showed a tendency to increase going from $593 to over $2,100 million, which represents an increase that goes beyond 254% between those years -in 2001, the acclaimed free trade agreement with Mexico increased the commercial deficit in $44.13 million with that country.

The assessments of the governmental officials seem to come from people who interpret the reality in a partial and suspicious way. The danger of this sort of interpretation is that it ignores the tendencies that can eventually lead the country to a recession, higher levels of unemployment, and to an economic crisis. Measures such as the increase on the taxes to those who earn more money, the increase of the public expense for education and productive infrastructure, as well as the protection and the reorientation of the agricultural sector and the industry are priorities, even if the governmental officials intend to make believe (or if they really believe) that the economy in El Salvador is at an extremely profitable level.

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