PROCESO — WEEKLY NEWS BULLETINEL SALVADOR, C.A.

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Proceso 1051
June 4, 2003
ISSN 0259-9864
 
 

INDEX




Editorial: Flores and the people

Politics: Francisco Flores: four years later

Society: The discourse of President Flores through the light of the numbers

Economy: The macroeconomics of the Salvadoran families: the magical realism of the government?


 
Editorial


Flores and the people

 

Eight out of every ten Salvadorans think that they did not receive much benefits from the Flores administration, according to the last opinion poll made by the IUDOP, which evaluated his fourth year at the head of the Executive power. However, that was not enough for the President to reflect about his behavior. The critics about the performance of ARENA also point to the same direction: the absence of social policies and an inefficient economic administration. In his annual message, made public in the Legislative Assembly, President Flores repeated that the country is going in the right direction. He used a series of overwhelming percentages, which was an inappropriate thing to do in a discourse of this nature. He also brandished a few lies when he said that he had reduced the fiscal deficit, that he had not raised the taxes, that the electricity bill has misleading information, and that he has supported the agricultural, the cattle-raising and the seafood sectors. If he were telling the truth, the failure of ARENA during the last elections would have been the result of the people’s lack of understanding or the result of their ungratefulness. Therefore, we keep looking at the abyss that separates the governmental discourse from the perception of most of the population. Without trying to close the circle in order to cross the bridge, it will be impossible for Flores to get closer to the Salvadorans and resolve their social and their economic problems.

What the people expect from Flores is clearly explained in the last opinion poll. The people are asking to improve their economic situation, that is, to create employment, reduce the level of poverty, and raise the minimum salary. On the other hand, the people are also asking to improve the control of delinquency and resolve the conflict of the public health system. In general terms, the people are asking both the President and ARENA to improve the general welfare. The question is how to satisfy these legitimate and justified demands in less than a year and with an Executive power that insists on the idea that the country is going in the right direction. The consequences of these different perspectives are reflected on the electoral preferences, which favor the FMLN and not ARENA.

President Flores somehow has gotten the message, since he has adopted a defensive attitude. The enormous percentages that he misused during his annual message in the Legislative Assembly intend to respond to the critics made inside and outside ARENA. He used these percentages to demonstrate –although he was not convincing at all- that he implemented the best administration that the country has had in decades, even better than both of the former ARENA administrations. He has an endless list of accomplishments: the education coverage; the attention to the children and the youth; the construction of museums, sports’ scenarios, parks, roads, streets, plazas, and housing; the access to the health services, to potable water, electric energy, and communications; the rescuing of rural communities, the creation of employment, food supplying for the people who live in the country side; the arrival of the new technology, an organized transportation system, the beltway, et cetera. In a word, “El Salvador is nowadays a synonym of success in any field” and enjoys “a great international prestige” because of “our successful program to combat poverty, our democratic transition, and the transparency and the effectiveness of our administration”.


The greatest challenge of Flores and ARENA is that most of the population does not share this perspective. Therefore, the word “our” is just a cosmetic utterance. The population only acknowledges the construction of roads and streets. Most of those interviewed (almost 50%) do not see any accomplishments, and the rest was not able to identify any accomplishments. Both opinions are sustained by more than half of the population interviewed (61%). It should not seem odd then if the evaluation of this fourth year is low (5.01), the second worst evaluation of the Flores administration. The first one (4.84) was obtained in February 2000. With the perspective of the four years of administration, most of the population does not see any positive changes. Almost eight out of every ten people think that the country is the same or worse. Almost half of those interviewed think that Flores did not have an efficient performance. On the other hand, 25% of those interviewed think that he has done a good job, and the rest think that he had a regular performance.

Those subjects that were criticized are the same: the economy and the civilian security. The public health conflict is now added to these problems. Most of those interviewed think that the economy is now worse or that it has basically not improved. Both of these perceptions add up to an 80%. Only a small percentage of the population (14%) thinks that the economic situation has improved and that this is a good government. The free trade agreements do not appear as the solution for the Salvadoran crisis. Six out of every ten people think that these sort of treaties can only be favorable for the business owners; and three out of each ten people think that the free trade agreements can only favor the wealthiest sector of the society.

Most of the population is convinced that ARENA is administrating the country exclusively for the wealthiest people. Most of those interviewed think that the delinquency level has increased, and that the public health conflict has not been resolved because of a lack of will. It is not flattering at all to see that 75% of the population think that the President is not actually listening to their demands when he insists that he is willing “to improve the life standards of the Salvadoran families”. The measures that he proposed after the last municipal elections are interpreted as a political survival strategy.

The Flores administration is, therefore, worn-out; and, what is worse, the President lacks credibility. His defensive attitude confirms it. According to this analysis, the results and the electoral perspectives do not favor ARENA. If this party intends to keep leading the Executive power, it will have to save the remains of this government. The Flores administration is a thing of the past. The President will not be able to do much during the year that he has left. He does not have time, or resources, or credibility. Therefore, President Flores leaves his party in bad conditions for the next elections. Without any immediate positive changes it is almost impossible to gain time for the ARENA administration. It is true that Flores is greatly responsible for what has happened, but ARENA is also responsible for supporting his unqualified administration. The party deserves the legacy that Flores leaves behind.

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Politics


Francisco Flores: four years later

 

On last June 1st, President Flores attended to a solemn session at the Legislative Assembly. The objective of the ritual was to present the situation of the country to the legislators. Since the law does not stipulate that sincerity and transparency are the key elements of this kind of reunions, Flores took advantage of the situation to flaunt about the accomplishment of his administration. He insisted to speak before his detractors –the 80% of the Salvadorans who, according to the last opinion polls, disagree with the policies of Flores- about an endless list of actions that, in his opinion, were possible thanks to his governmental team. Flores said that he outperformed his most important goals. If “the success of a government is measured by the fulfillment of his promises –Flores said-, that is why I am here, not with vague ideas, but with the certainty of actual results, to say that I have completed my tasks”.

The pressing journalists will have to investigate if the roads, the hospitals, and the schools were actually built. It will also be necessary to find out if it is true that the inhabitants of San Salvador do have access to potable water, as Flores mentioned in his speech. The economists will be able to tell if it is true that his administration has managed to “reconstruct the country, honor our debts, duplicate the public investment, build the most important social structure in the history of the country”. They also should be able to tell if the fiscal deficit has been reduced without increasing the taxes. The experts of the Comptroller’s office will have to confirm if everything has been done “with a clear mind and honesty”. Finally, it will be necessary to investigate if the Salvadoran children are not dying anymore from dengue, malaria, or tuberculosis, just as the President announced.

However, beyond the verification of each deed from the self-proclaimed governmental contributions, there is a difference between the presidential discourse and the reality that most Salvadorans live. Flores said that four years ago he made the commitment to “work in order to transform El Salvador into a better country”. On June 1st of 2003, his intimate conviction allows him to affirm with a paraphrase of the second epistle from Paul to Timothy, that his government has fought a good battle, that he has completed his job, and that he is about to capitalize the results.

It is evident that the presidential discourse had the objective to stop the amount of critics that the Flores administration has received during the last few days. In this context, the target was the FMLN. That is why the President declared that “we Salvadorans have managed to build the present every day –even during the adverse situations- the present that we want and the future that we expect. The foundations are firm, the way is outlined, let us not stop, let us not delay. We cannot overlook our objectives because of those who irresponsibly intend to throw away our efforts. Our children cannot start all over, because we have walked a long way. Let us appreciate what we have accomplished. It has not been easy, and it has not been enough, but it has been ours, and it has not been imposed by the ideologies that have repeatedly failed”.

On the other hand, Flores addressed his words to his “brothers from ARENA”, who have questioned the performance of his administration. He reminds them that his government has been the only one that has resolved the perennial problems, such as the construction of roads of access to the rural communities, schools, and sports facilities. “Fifty poor and isolated municipalities are now connected to the development process through paved roads and 162 new bridges. The roads than several generations needed are now a reality”. In addition, the figures that Flores offers seem superior than the ones offered during the past four years, and sometimes these figures duplicate the indicators.

Finally, behind the words used by Flores, there is a wink aimed to the Salvadoran voters. The President is reminding them about the endemic situation that has characterized the country. Without saying it, he thinks that his predecessors –including Calderon Sol and Cristiani- were not able to resolve the problems caused by poverty, the lack of roads, or the deficient availability of potable water. Despite of this –probably because a presidential reelection is not allowed-, he recommends that the people should consider to vote for his party. Flores asked the Salvadoran population not to throw away what he has worked so hard for during the four years of his administration.

No one can deny that Flores has the right to defend the actions of his administration. All of the international laws and the National Constitution acknowledge that the people have the right to defend themselves. And, to tell the truth, during the last days, the Flores administration has been vilified by most people. Therefore, the President used the tribune of the Legislative Assembly in a moment when everyone expected the report of his actions, in order to start defending his administration.

In reference to the underhanded recriminations that Francisco Flores made about his colleagues, there is no sign of a more intense rebelliousness. The legislators from ARENA offered a press conference to praise their President. The most important morning newspapers, known by their support to the official party, endorsed the declarations made by Flores. Both of the former presidents, who did criticize the Flores administration for the deficient results obtained during the municipal elections, did not make any observations about the discourse of Flores. However, despite the secrecy that has surrounded the events, there is no doubt that his discourse will not contribute to ease the relations between the “elephants” of ARENA. In this context, to agree about the name of the ideal presidential candidate can become a difficult exercise for the most influential members of the party. Francisco Flores once expressed, in a solemn manner, his resentment and his frustration about the declarations made by the honorary presidents of the party after the municipal elections.

The opposition, on the other hand, especially the FMLN, immediately called the President a liar because of his alleged achievements. The leaders from the FMLN made public that they disagreed with the presidential discourse. For them, the results that were made public by the President are not realistic. This is how the left-wing party supports the results of the opinion polls that evaluated the negative aspects of the governmental performance. They also upbraided the governmental decision that indicates that the city halls cannot collect their taxes through the telephone receipts. This measure is a low blow against the municipalities because it becomes an obstacle to obtain resources and take care of the demands made by the population. Flores seems to be willing to sacrifice the municipal autonomy in order to make it seem as if the bill of the electric energy has been reduced.

The most crucial question should be “did the President achieve his goal or not?”, in order to make the population and his adversaries see if they made a fair evaluation about his governmental performance. In this country, the news media do not organize this sort of opinion polls. It would have been interesting to ask the Salvadorans, in a brief and a serious opinion poll, their point of view about the presidential discourse, after the comments of the opposition. In any case, despite the evident flaws of the news media’s coverage, it would be convenient to analyze a governmental strategy that insists on advertising the great achievements of the Flores administration.

It is necessary to notice that the incompatibility between the official interpretation of the country’s situation, and the opinion of the Salvadorans, which has been a constant ever since Flores arrived to the Presidential House. The President’s stubbornness has been his trademark when it comes to this subject. His speech probably did not have the desired effect in the population. They have not been able to improve their purchasing power because of the economic irrationality that has been implemented.

Flores used the wrong communication strategy once again. The solution for a sick person who thinks that he will inevitably die –even if it were an imaginary illness- is not to deny the veracity of his symptoms. It is necessary to make a diagnosis with the collaboration of the patient in order to help him accept and understand the perspective of the doctor. On June 1st, Flores told the Salvadorans that the economic situation is not bad and that everyone should stop pretending that there is something wrong with it. Politically speaking, this attitude only goes to show that the government is not listening to the problems of the population.

In addition, Flores forgot to mention the most important aspects of those problems. The strike at the social security system, which has been the most vulnerable subject during the last months, was not even mentioned by the President. Flores chose to ignore that a considerable amount of citizens either sympathize with the workers of the public health system or see in his attitude an intransigent position that makes him avoid his responsibilities. Once again, the President shows his political myopia.

Flores has been fighting against the interests of the voters ever since he became President, compromising the image of his party. That is why if ARENA loses the presidential elections, its members will harshly criticize Flores’ self- pleasing speech.

Without a doubt, Flores could have taken advantage of the circumstances to renew his compromise with the Salvadoran population. It would have been a bold decision to sacrifice his Minister of Health and the director of the Social Security Institute as a sample of his good will to resolve the conflicts of the public health system. Instead, the government decided to praise an obviously obsolete public health system. It seems as if the President does not fully understand his role.

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Society


The discourse of President Flores through the light of the numbers

 

The discourse of President Flores through the light of the numbers
In the report of the fourth year of his administration, President Flores mentioned what, according to him, are the most important transformations of the last years, despite the earthquakes and the droughts. In his speech, he briefly analyzed how the country looked a few decades ago and how it looks now. Flores also mentioned the positive results of his administration and the economic achievements. These achievements, according to Flores, are now a reality despite the critical economic situation of the world, which has affected the national economic activity.


This speech has unleashed a series of reactions inside the different sectors of the society. For the opposition, it has been “a storm of lies” that has nothing to do with the every day life of the Salvadorans. For the political center, represented by the CDU, the discourse of the President indicates the existence of a country that is very different from the one perceived by the Salvadorans. Due to these observations, the disagreements between the Executive and the rest of the social actors are evident.


The President clearly stated that the most important measures adopted by his administration to maintain the economic stability were: the implementation of the Monetary Integration Law (LIM, in Spanish), to have honored the debts of the country on time, and the reduction of the fiscal deficit without increasing the taxes. The accomplishments achieved in the external sector, according to the President were the encouragement and the increase of the Salvadoran exportations as the result of the ratified free trade agreements.


It seems as if the four aspects that have been mentioned in this article are the most important achievements of the present ARENA administration in the macroeconomic field. In order to appreciate these achievements it is necessary to take a look at the following information.


For the President, one of the most important reasons to implement the LIM was to reduce the interest rates in order to reactivate the economy through the growth of the public investment. However, despite that the interest rates have dropped, it can be said that the private investment has not increased during the last years. In fact, in 2001 the credit did not expand towards the private sector. This was the result of the small growth of the economy and the lack of investments from the private sector (CEPAL, 2001).

During the Flores administration, the credit destined to the private sector has been practically stagnated. That is why the government chose to dollarize the economy, so that the economic agents had a better access to the credits. However, despite of this measure, the families and the business companies are not responding to that stimulus. In 1999, when Francisco Flores became President, the credit to the private sector presents an annual balance of $5,500 million. By the end of 2002, the balance was approximately $5,316. As it can be observed, during the Flores administration, the credit for the private sector has presented a negative rate of 3.35%.


The President has also been flaunting about how the country has managed to honor its debts on time. This is true. However, the administration of the external debt of the public sector is questionable in general terms. There are figures that indicate how the government, despite the fact that it has to take care of its present obligations, is about to overflow the control parameters of the debt, which were established by the international financial organisms. It is not possible to talk about substantial economic achievements when the source of these achievements is fundamentally the external loan, and the national production has not had a considerable increase.


In 1999 the public external debt was approximately $2,788 million. In 2002, according to the preliminary information, the public external debt was $3,457 million. During the Flores administration, the public external debt has grown considerably by 43.01%. Among the components of this debt, the central government is heavily in debt with the international creditors. During the last four years, the external debt of the central government grew approximately by 50%. This means that even if they are honoring the debts, this is happening through the generation of a new additional debt.

As for the fiscal matters, the control of the deficit is still incipient, despite the existence of an aggressive taxation policy. In this sense, it is important to notice that the fiscal sector is very fragile. That is why it is necessary to have more control over the fiscal variables, trying to eradicate the unnecessary administrative expenses and look for a more efficient process to collect the taxes.

Among the achievements advertised by the President, there is the strengthening of the exportations. Certainly, the exportations have managed to grown considerably, despite the adverse international economic situation. However, it is necessary to notice that the importation process has reached a higher level. That is why the balance of the commercial scale has usually shown a deficit during the last years.

In 1999, the exportation level grew and reached $2,510 million. Four years later, according to the preliminary information, the exportation level has reached a value of $2,992.2 million. During this period, the exportation level of this country has increased by 19%. In 1999 the importation level reached a value of $4,094.7 million. In 2002, they reached a value of $5,190.2 million. During the last four years, the importation level has varied by 26.75%. These results allow us to see that the importation level grows faster than the exportation level. With this, the commercial deficit becomes even more critical.

This information indicates that what the President said during his speech is an exaggeration of the actual economic achievements. Generally, no one can deny the existence of certain achievements, however, it is important to mention that these transformations are still incipient. That is why it is necessary to make substantial changes in the economic administration of the country.

In summary, the President reiterated his wish to establish a free trade agreement with the United States. For Flores, this measure is enough to activate the Salvadoran productive apparatus, especially the agricultural sector. However, it is necessary to consider the enormous differences between the national agricultural sector and the American one. In this sense, the government has to understand that it is necessary to play a leading role, in order to look for a substantial improvement not only in the agricultural sector, but also in the economy in general as well.

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Economy


The macroeconomics of the Salvadoran families: the magical realism of the government?

 

The report of the fourth year of the Flores administration was incoherent. The country described by the cupola of the Executive power has nothing to do with the microeconomic reality perceived by the Salvadoran population, which is continuously asphyxiated by poverty.

The President stated that “to improve the life standards of the Salvadoran families” has been the main objective of his administration. If the welfare of each Salvadoran family is the unity to measure the development of the country, and if it can be proved that such level has increased, then there should not be any objections; therefore, the performance of the Executive power should be considered a success. However, when it comes to verify the quality of the population’s life standards, and their appreciation of the success of the economic policies, this reasoning falls down like a plane without a pilot.

Contrary to the opinion of the Executive, it can be said that:
1. The dollarization process has failed as the economic policy destined to improve the life standards of the population. Ever since it was implemented, its alleged advantages have not turned into tangible benefits for those who have less resources: the cost of living increased because the prices were “rounded up”. This measure has mostly affected those who live in extreme poverty. On the other hand, the reduction of the interest rates, which was considered the key aspect to reactivate the economy and increase the purchasing power has been a fiasco and not an effective economic policy.


2. It is necessary to consider that those who live in extreme poverty are not those who generally buy cars or use credit cards. They are those who, according to the General Direction of Statistics and Census, are not even able to afford the value of the basic food basket (CBA, in Spanish). In addition, there are those who live in a relative poverty. Their income is equal to the value of two CBA; however, they are not able to afford many other expenses such as education, health, housing, et cetera. Therefore, it is not realistic to affirm that these sectors have increased their purchasing power by saying that “Ten years ago, there were 100,000 vehicles circulating in El Salvador. Now that the income of the Salvadorans has improved, they have access to credit through the monetary integration process, and now there are 500,000 circulating vehicles in the country”.


It is not realistic to think that the increasing number of vehicles is a way to determine the economic welfare that the population achieved thanks to the Monetary Integration Law. The market is subjected to other factors, such as the incidence of the remittances (the lifesaver of many Salvadoran families), and the growing black market of used vehicles, among other factors.


3. The government should not overestimate the decreasing inflation either, since this index has not improved the people’s purchasing power. The prices of the national products have been fluctuating downwards, especially the prices of the agricultural products and not the ones of the imported items. The structural terms of exchange are, therefore, deteriorated.

4. Certainly, the interest rates were reduced; however, the active rates were not as low as the passive ones. And the scenery gets even darker. With the premeditated erosion of the monetary policy, the government has exposed the country to the impact of the future external economic shocks and its negative consequences. The budgetary restrictions of our fiscal policy leave the country in a paraplegic state in case a recession in the United States or a regional financial crisis occurs. In other words, the state will not be able to protect the vulnerable and the productive sectors.


5. In the macroeconomic field, the free trade agreements are a fallacious economic strategy, allegedly aimed to improve the people’s economic options. With the free trade agreements already rubricated, those exportations that have been increased are not the ones of the micro, the small or the medium producers. Those that have actually grown are the ones that have the wealth, the technology, and the competitiveness to be a part of the highly competitive markets, that is the business elite. The employment opportunities that have increased in the maquila sector are not encouraging either, and they do not reflect a successful development process, since the positions are scarce, and the salaries are not enough to afford the basic food basket.


6. It is ironic to say the increasing job positions at the maquila industry are a victory, since they do not offer but inadequate working conditions, and when every year 72,000 people emigrate to the United States in search for better employment opportunities. In addition, 11,000 people graduate from the university every year and start looking for a job, when the employment offer for that sector does not even cover 50% of the demand. For instance, the employment agencies reveal how difficult it is to find a job, since they can only guarantee that they will place three out of a hundred people (see La Prensa Grafica, 4.29.03). On the other hand, the boom of the non- productive consumption has only favored the foreign companies and not the small and the micro business companies of El Salvador or the small farmers. The percentage of the importation is almost twice as high as the total of the exportation.


7. Most of the focal points of the extreme poverty can be found in the agricultural sector, and this is reflected in the way the structure of the currency has changed. This reality can be confirmed if we observe that by 1978 the traditional agricultural exports represented 81% of the national source of income, while by 2000 they only represented 17%. The vicious circle of poverty is a dead end, especially when the workers are not fairly remunerated in order to reach a decent life standard. What are the options? For those who do not find a job, the option is to emigrate, and for those who cannot leave the country the option is to become part of the informal employment sector. That is why the remittances represent now an incredible 67% of the national income when back in 1978 they only represented an 8%.


That is why the “freedom” that is considered as a paragon of development by the present Neoliberal economic model can present the alleged achievements at a macroeconomic level. However, it hides an omnipresent reality in this country: those who have the resources are the ones who get the best “opportunities”. That is why President Flores is right when he says that “freedom and opportunities do not appear by chance. They are part of a constructive process that has a very clear goal”. The problem is that this process of “the freedom to chose” has been clearly leaded to favor the capitalist business elite and not the population in general.

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