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Proceso 1125
December 7, 2004
ISSN 0259-9864
Editorial: Four challenges
Politics: Scenes of political confrontation
Economy: The role of the institutions in a dollarized economy
Four challenges
Among other things, December is -or would have to be- a
month of reflection. A reflection about what was accomplished or what was not
done in the year that is about to end, but also about those projects that have
been left unfinished, those unavoidable challenges for the future. This is not
only valid at an individual or a personal level, but at a social, an economic,
and a political level. From this perspective, it is evident that, as a country,
El Salvador has a series of challenges that, at some point, will have to be
undertaken by the elite and the society itself; otherwise, the social and the
cultural deterioration will follow their inexorable faith. The country has to
face many and complex challenges, as well as unfinished tasks; nevertheless, for
the sake of prioritizing that which is fundamental, it is important to consider
four crucial challenges:
1. The reconciliation with the past. Certainly, it is not easy for a society to
face a past of pain and suffering. It is not easy to speak about the
responsibilities connected with that pain and suffering, mainly when those who
caused this kind of situations or were accomplices of the attackers have created
for themselves an image of honest people committed with the goals of democracy.
Yet, to return their dignity to the victims is a crucial step to build a truly
democratic society. If this does not happen in El Salvador, if the victims of
the State’s and the paramilitary terror of the Eighties can not have their
dignity somehow restored -and in order for this to happen the identity of the
people in charge of that terror would have to be publicly revealed, and the
innocence of the victims would also have to be publicly acknowledged- the lies
and the manipulation will continue being the traditional currency in the
different scopes of the social, the economic, and the political life.
2. Political parties committed with the common welfare. This it is a challenge
that cannot be avoided, if the intention is to construct, on solid bases, a
democratic order. What this society has had is a political performance based on
the particular interests of small groups, without an integral vision and long-
term strategies. In the case of ARENA this situation is more than evident: tied
up to the most influential and economically powerful groups, the last thing they
have been doing since1989 is to administrate the country for all the
Salvadorans. Thanks to ARENA, El Salvador -its assets and its public resources-
have slowly become the patrimony of a group of businessmen whose voracity, today
as in the past, does not have any limits at all. Although the term seems
anachronistic, a new oligarchy controls the country; they do as they please with
the legal, the environmental, and the economic matters... The present State’s
apparatus allows them to do so. In the case of the FMLN, things are not better.
It is not attached to powerful economic groups, like ARENA; but it is closely
connected to its ideological beliefs, to their undemocratic practices, and their
old leaderships. As a result of it, the FMLN has failed in its assignment to
come up with a proposal for an viable, a realistic, and a credible
administration. Both the FMLN and ARENA have betrayed the society. There are
many who doubt that something good can come from these political parties; there
are good reasons to encourage this pessimistic belief. However, indeed, because
both parties have failed to act according to the interests of the society, it is
important to evaluate not only their performance or their internal structures,
but also their relation with the external groups of pressure. While other
political options are not available, both of these parties must face their dull
social anchorage and do something to transform themselves -and leave behind the
particular interests that keep their hands tied- in order to take care of the
most common problems of El Salvador.
3. The combat against corruption. Corruption is a plague that eats away the
different spheres of the State. Its impact is not only economic -by the amounts
of the frauds-, but moral as well, because the behavior of the corrupt public
officials can end up becoming a model of conduct for the rest of the society.
Obviously, to fight corruption it is necessary to know the magnitude of the
problem, as well as its mechanisms and the way it propagates itself. And there
is plenty to be done in this sense. There is only a very vague notion -focused
on some cases that once in a while are usually are opened- of the magnitude of
corruption. When these cases have been revealed, only a few aspects have been
discussed about the complicity that sheltered them and made them possible;
however, its intimate mechanisms -surely because they involve powerful people-
have remained in the dark. There are many founded suspicions of corruption acts
that are not investigated: for example, the presumed illicit fortune of former
president Cristiani, or the presumed Taiwanese financing to ARENA’s last
electoral campaign. For an act of decency, more than because of a political
convenience, corruption must be fought back; this it is a basic consensus that
all the Salvadorans would have to share. While this consensus does not exist,
there will always be someone who will protect those that, shielded by the power
that their position provides, take advantage of the resources that actually
belong to the people.
4. A society aware of its rights and its responsibilities. This challenge, as
well as the previous ones, is very complex, and that is why it is urgent to do
something. If the Salvadoran society does not defend its rights with seriousness
and determination -which is one of the society’s first responsibilities- the
abuse and the arrogance of the powerful ones will continue striking the society
without mercy. The social passivity only favors those who, from the economic and
political power, do not have any intentions but to take advantage of the
society. That passivity must be neutralized: the restructuring of both the
organizational bonds and the public commitment must become the main features of
the reconstruction project of a social tissue destructed by poverty,
marginalization, the abuse of the power granted by the authority, and violence.
Scenes of political confrontation
The public opinion surveys about the performance of the
Saca administration in his first six months have been already published.
According to the preliminary results, the President counts with a good level of
acceptance among the Salvadoran population. Somebody can ask what is the use of
so many surveys, in the sense that there is not an institutional channel for
these results to influence the political organization of the country.
Nevertheless, although this is a controversial subject, the role of the surveys
in the modern democracy, which we will not discuss in this article, there is no
doubt that the politicians are using this new tool, especially in an
administration where the President holds a considerable share of the political
power.
The strength of the president
Ever since he arrived to the Presidential House, Saca has made the public
opinion his favorite subject . The goal of the multiple departmental visits of
the President and his presence in the rural communities is to keep his image
fresh in the mind of the humblest Salvadorans, so they can see him as a
politician who fulfills his campaign promises. As he said in his inauguration
speech, that his administration would be close to the people, he has made an
effort to fulfill these promises.
Saca’s campaign team has widely advertised an image of a President who is
willing to negotiate and listen to all the sectors of the society. The
innumerable discussion groups that have been created intend to reinforce this
idea. The President’s team has not gotten tired of repeating that any problem
has a solution, and that he is willing to discuss the problems of the country.
This profile, willfully crafted and constantly praised by the President’s
collaborators and friends, has granted him the support of a considerable portion
of the population. The President now rides in the crest of the public opinion
surveys. A considerable number of Salvadorans believe that he has carried out
his work with efficiency. However, on the other hand, there are certain issues
that do not seem to change, such as the economic crisis, the low employment
level, and delinquency. In other words, although the Salvadorans support the
President, they also hope that he actually fulfills his campaign promises. Good
manners and good intentions are not enough.
As a corollary of the good health that Saca reveals in the opinion polls of his
party, he has found a position in the political arena. The leaders of his party
openly appear before the public opinion, praising the achievements -although in
fact no one has yet seen those achievements- of their President. A survey of a
local newspaper affirms that the party would have an excellent performance if
the elections were developed at this moment.
In this context, there is no room to display the internal fights for the control
of the official party. When there are favorable electoral results, the old
structures of authoritarian control of the right-wing party work without
problems. While Saca remains as the politician with a better public evaluation
-a position granted by the Salvadoran voters-, there will not be any parallel
leaderships arising to confront his enormous amount of power over this
organization. In the mean time, the President has taken advantage of the
situation to place his most loyal collaborators at the top positions of the
right-wing party.
The weak aspects of the FMLN
Before the evident political sympathy that ARENA enjoys, its main rival, the
FMLN, is still a lost soul trying to find its way. After several critical
months, which were the outcome of the unfavorable electoral results of last
March, the left-wing party has not been able to find its inner peace. It is
expected that the internal elections that were recently celebrated have a degree
of certainty so that this party can improve its image. In any case, the members
of ARENA seem to bet for an electoral decline of the FMLN due to its internal
problems. In reference to this issue, René Figueroa declared to a local
newspaper that "that pantomime about the internal elections has worn them out
(to the FMLN), because the orthodox boot prevailed, and it squashed and
repressed those that had a point of disagreement".
Beyond the veracity or the falseness of the declarations made by the Minister of
Governance, there is no doubt that the subject of the internal divisions in the
FMLN is a factor that affects their race for the affection of the electorate.
Those that lost the elections, the group of the “new” renovators, have refused
to accept the results announced by the electoral organization. Without being
able to present a convincing piece of evidence that could sustain their
statements, they keep showing that there was a fraud in the election of those
who would conduct the party. Without a doubt, these rumors, wisely reproduced by
the press that follows the steps of the official line, made quite an impression
in the sympathy that the left-wing party could create among the people.
The members of the FMLN seem to be worried about the situation in which they are
if compared to ARENA. El Diario de Hoy (December 6th), approaches the subject.
According to the reporters, a document that circulates inside the party would
allegedly include the most crucial doubts of the members of the FMLN about the
operation of their party. The leaders of the left-wing organization would be
worried about the fact that "ARENA tries to use Saca’s image for the 2006-2009
elections. "In order to do that –according to the leaders of the FMLN-, a media
strategy is being promoted and uses the dialogue tactic in a demagogic sense,
managing to keep a good level of acceptance".
Ideal electoral scenes
The next year will be a pre-electoral year. It will be also a year of campaign.
It is expected that ARENA will follow the way that it has drawn up for itself, a
strategy that has provided them with good results so far. In order to put it in
the words of the Minister of Governance, René Figueroa, "the COENA has not
rested. We have our minds set on the intention to regain control of the city
halls. The president works with the Executive power, but the COENA has not
rested". The official party thinks that it will continue working to increase its
chances, whereas the FMLN keeps growing weaker. For ARENA, the electoral ideals
need the same propaganda that emphasizes the personal kindness of the President
and his magnanimity in reference to the political adversaries. This way, they
understand that they will be able to continue presenting him as an extraordinary
politician, whose only concern is the search of the country’s well-being.
As for the left-wing party, once the trauma of the internal elections is left
behind, the intention is to face the challenge. In order change their present
image, their leaders try "to establish the procedures and the control mechanisms
that allow us to overcome and to correct those conducts that go against the
ethics of the party”. In other words, the FMLN thinks that the best way to get
good results in the next elections is to silence the voices of internal protest.
The ideal scene to confront the elections is a silent one, the members of the
party that are not satisfied with the performance of the leadership should
remain silent according to this perspective. The document indicates that: "we
must immediately stop the recruitment processes of the party that debilitate our
organizational quality, as well as to end with the internal electoral dispute
that drives us away from the demands of people".
The role of the institutions in a dollarized economy
The neoclassic economic thought has sustained that the
market performs at its best when the State and the institutions do not
intervene; in other words, that the organization of the production, capital, and
labor factors operate with effectiveness only under the forces of both the
supply and the demand. Nevertheless, to think that the efficiency and the
productivity of the market are reached only with currency, people, and
technology is to have a partial vision of the economic reality.
In spite of the faults and the limitations of the market, it seems as if some
people still think that the lack of intervention of the State, the lack of
protection, and deregulation all together turn the nations into economies ready
to compete in the international market, automatically creating "efficient and
competitive markets".
According to the Mexican economist René Villareal, the markets do not become
efficient nor competitive because the assets of the State are privatized or
because the economic activities are regulated, not even if the obstacles that
reduce the incentives of the private investment are eliminated. These measures
are necessary conditions but they are not enough. "This should not be taken as a
dogma", stated Villareal.
The institutional approach argues that the market does not have to be reduced
only to the basic relations of prices, demand, or supply; but that it is also
necessary to consider the structural context in which it operates, that is, to
consider fundamental aspects such as the legal frame and the characteristic of
the political system. This is called "the rules of the game". The key aspect of
this approach is that as the formal and the informal efficiency factors of the
institutions improve: their laws, organization, control, dispositions, norms,
and the quality of the operation mechanisms of the economy will also improve.
In this sense, frauds, cover-ups, corruption, and money laundering, among others
crimes, are part of a structural problem and they occur, mainly, in the nations
with a weak institutional frame. That is why it is important to strengthen the
institutional performance.
The most recent evidence of the feeble institutional performance of the country
is that the Superintendence of Values (SV) ignored that the Stock-Exchange
Operations of Central America (OBC, in Spanish) was involved in the
disappearance of a fortune. The most recent investigations indicate that this
has been happening since 2001, and that the SV was not informed about the
situation until 2004.
The Superintendent of Values, Omar Rodriguez, defended the performance of the
institution: "we informed about the non-authorized operations in the OBC, we
notified the Attorney General’s Office, and immediately we had the evidence to
corroborate the fact. We are calm, we have collaborated and we will continue
collaborating with the Attorney General’s Office, because, in the end, we want
to resolve the problem of the people affected with these operations". The public
official also admitted that the Superintendence was not aware of the
transferences made by the OBC to the United States. "When we realized what was
happening, we took action".
At the moment the Attorney General’s Office has asked a justice court to perform
an meticulous official examination of the case. That is why they have designated
a number of experts from the Superintendence of the Financial System to the
case. In this report, according to a source of the Attorney General’s Office,
they will determine if the supervision of the State’s authorities on the
stockbrokers has been appropriate or not.
On the other hand, it has been detected that the president of the OBC, Julio
Villatoro Monteagudo, has properties in El Salvador; However, the Attorney
General’s Office will have to investigate if they have been legally acquired or
if they are the product of illicit activities.
Until now, the investigators have managed to freeze the banking accounts of the
OBC, which add up to $144,000 dollars. This is a very small amount if compared
to the amount of money removed from the country. At the moment, the Stock-Market
of Values has $519,000 that belong to the OBC.
The investors of the OBC describe the Superintendence of Values as "an
inoperative" institution. Rossana Rodriguez, one of the affected investors,
stated "the superintendent assures that they cannot control them[ the
stockbrokers ], that we are the ones who have to pay attention [ of any
irregularities ], in order to inform [the Superintendence ], but if they cannot
fulfill their duties, the Superintendence is inoperative. We have realized that
there were anomalies from 1997 to July of 2004".
And in fact, when reviewing the financial statements, the accounts’ statement
and the comparative general balance sheet of May 31st, 2003 and 2004, it was
clear that, although the operational income increased by $34,620 dollars, it was
not higher than the expenditure. And the administration account of both the
general expenses and the stock-exchange operations personnel, contemplates the
most representative figure within the expenditure, because for 2004 it was
$96,970 dollars, whereas in 2003 it reached $104,550, revealing a net loss of
$75,790 dollars in the present year, and $120,550 during 2003. It is in this
account where it would be possible to suppose that the withdraws were not
revealed.
A dollarized economy
This type of situations become worse in a dollarized economy, since in those
conditions the country depends on the arrival of capitals and the external
indebtedness. The dollarized economies are more vulnerable to the internal
financial crises, since the function of the Central Bank of Reserve (BCR, in
Spanish), as the last moneylender of the banking system, disappears.
Among some of the necessary considerations about this problem are the following
factors: First, the banking system becomes fragile. In a dollarized economy, the
BCR cannot manipulate the monetary instruments. Therefore, the active policies
of the BCR were important, not only to guide the basic direction of the economic
policy, but also to restrain the possibilities of an economic or a banking
crisis. Since the Federal Reserve of the U.S.A. is not willing to play the role
of a possible last type of moneylender for a foreign country and because the
country does not issue dollars, each bank must have its own moneylender, a
requirement that only the foreign banking system fulfills. Therefore, a
considerable amount of reserves are lost to replace the circulating one. That is
why a banking crisis in a dollarized country would make the National Banks
disappear. In other words, the country has put into the hands of American
institutions the essential aspects of its economic policy.
That is why out of the $6.3 million dollars that the OBC defrauded, according to
the Superintendence of Values, it will only be possible to recover $475,000, an
amount that only represents 8% of the embezzlement.
In the second place, the country is in a stage of slow growth, and the
dollarized countries are typically subjected to a recessive scheme. In addition,
the economic cycles of a dollarized country follow those of the United States,
and that is why the recessions take a turn for the worse.
Another fundamental aspect has been the loss of reserves that the country has
had because of the dollarization, since the U.S.A. forced to destine a
considerable part of the capital to create a new currency. The government gave
away certificates of the Secretariat of the Treasure of the United States,
equivalent to the amount of national currency that was in circulation.
When losing the possibility of manipulating all this type of monetary
instruments, the internal and external financial crisis becomes more severe in
an economy as the Salvadoran one. That is why it is important to strengthen the
institutional sense of the country. When the organizations are transparent, they
provide a proper control of other institutions and, therefore, the control of
the market, only then it is possible to have an effective economy.
Tel: +503-210-6600 ext. 407, Fax: +503-210-6655 |