Fiasco

Politics

The lack of wisdom of the FMLN national convention

Economy

Considerations on the proposal to reduce the value added tax

Politics

Concerning the FMLN convention

News Briefs

FIASCO

The FMLN’s process for selecting its presidential and vice-presidential candidates was exemplary and set a very important democratic precedent for the political practice of the country up until the point at which the first results of the election were made known. Given that, according to established procedure, none of the contending candidates for the presidency had won half of the votes plus one, it was necessary to proceed immediately to a second round. But the convention was not prepared for this eventuality: neither objectively nor subjectively. The organizers of the convention had not made provision for this possibility and therefore, once the first round of voting was concluded, they dismantled the electoral infrastructure.

Neither had the contending factions considered this possibility. Both had calculated that there would be a winner in the first round. It is not strange, then, that the spirit of the convention was altered, giving rise to the extremes of shouting, booing , insult and threat. The winning faction requested—shouting-- that the regulation providing for a second, which had been approved hours before, be abrogated. The authorities of the party had a hard time containing their militants and announced the postponement of the second round.

The first reports from the FMLN alleged that the process was interrupted for lack of time and because of the high spirits of the militants. Both explanations are well-founded because the convention began very late and was carried out at a pace which caused desperation, and because the spirit of the convention was, effectively, heated up to the boiling point, making it inadvisable to continue with the internal electoral process. In this sense, the authorities of the FMLN acted prudently and opted for the better choice of maintaining the legality of the procedure.

Seen from another perspective, however, the panorama is distinct. As the results of the first election were made known, instead of proceeding immediately to a second round—as had been agreed—the commissions and politicians of the party met for many hours. According to official sources, the candidates were asked their opinion about what step to take next because there was no infrastructure to implement a second round. According to others, efforts were made to get Mr. Hector Silva to resign his candidacy in favor of Victoria de Avilés, who had won ten more votes than Mr. Silva. The bases upon which the number of votes necessary to win had been calculated was questioned as well. It was suggested that this should have been calculated on the basis of the number of conventioneers present and not on the basis of those registered on the ballot. Meanwhile, the atmosphere of the convention was about to boil over.

In these circumstances, the FMLN authorities announced the proposal for a second round and the canceling of the proclamation of the candidacies, which had been scheduled for the next day. Recognizing that they could do nothing else, one must ask oneself, nevertheless, what the cause of such passion and aggression was: these attitudes cannot be explained by alleging lobbying which was permitted inside the convention hall. At this point, the only possible explanatory response is the internal power struggle between the factions of Mr. Shafick Handal and Mr. Facundo Guardado.

The FMLN has always insisted that the most important of all is its government program and not its candidates. In practice, however, the candidates are important and not the government program. Dra. Victoria de Avilés as well as Dr. Hector Silva have sufficiently solid credentials to be good candidates for the Presidency of the Republic. It can be assumed that both would be in agreement with the fundamental premises of the party’s government plan. The animosity, therefore, that their aspirations awaken in the rank and file of the FMLN is only explainable if one understands that each one represents one of the factions in the internal power struggle--unless there are two substantially different government plans which have not been discussed openly. In the context of this internal struggle, then, the candidates themselves are not what is important but rather the triumph of the faction which he or she represents.

In this scheme of things, then, it would seem that the candidacies of Dr. Avilés and Dr. Silva are being utilized by those who are engulfed in that internal power struggle, and this brings into question both political reason and ethics. Neither of the two candidates come from the FMLN’s rank and file; both have been proposed because they are citizens with a recognized social and ethical history of practice and not because they are FMLN militants; both have the potential to unify the party and attract votes. But if the FMLN does not overcome this internal feud it will be difficult for either of the two to contribute to the necessary unity for leading the party to an electoral victory.

The vice-presidential candidacy brings with it its own problematic. By decision of the previous convention, one of the candidates of the electoral formula must be a woman. Given that Dr. Silva aspires only to the candidacy for the presidency and Dr. Avilés is disposed to accept either of the two positions, whether she wins or loses the candidacy for the presidency, the election to choose the vice-presidential candidacy will be meaningless. If Dr. Salvador Arias wins the vice-presidential candidacy, neither will the election for the presidential candidate make sense. If the convention member voted to choose a candidate for the presidency and the vice-presidency on the same vote, and, moreover, were obligated to comply with the conditioning in favor of gender, it is not clear why the review of the election returns should be carried out separately. Up to what point is it convenient to impose a condition of this nature on an electoral process without its losing its validity? What should be the priority, gender or number of votes?

The other political parties cannot help but smile as they see the fiasco of the FMLN election primaries and thus feel more comfortable with authoritarian procedures than with democratic procedures. The primary elections carry with them the risk of division and public exposure of the differences and weaknesses of a political party, but it is the most democratic way as well as the most democratizing way in existence to choose candidates for the candidacies for popular election. The risks are worth it and cannot be avoided. It is here that the FMLN will have to make an effort because it cannot attempt to practice democracy and at the same time hold onto authoritarian practices. The "comandantes" should step aside for the politicians.

THE LACK OF WISDOM OF THE FMLN NATIONAL CONVENTION

The launching of the presidential candidacy of Mr. Francisco Flores was a successful and considerably important political event. Initially it was evaluated as something healthy and new what appeared to be the expression of one sector of ARENA which was not part of the traditionally dominant leadership group. A little afterward, it was learned that behind the candidacy of "Paquito" were not be found only young ARENA party members, but also, in a determining measure, the current president of the republic and his allies.

It was then that the bitter polemic was unleashed on the subject of the existence of power cliques inside the principal right-wing political party. The national press was drowned in the push and pull between journalists and ARENA leaders; the first seemed to be defending at all costs the thesis that inside the government party there existed at least two groups engaged in a ferocious and irreconcilable power struggle; the second explained that the affirmation of the existence of such power cliques was false and that their party could continue to enjoy an enviable solidity.

And what happened after that? Nothing outstanding. ARENA simply made the candidacy of Mr. Flores official and made it possible to spread the idea that the aspirations of the "young intellectual" were supported by each and every one of his fellow party members. Since that time and up until now, few seem to remember those events. It has been said that, after the "boom" of the pre-candidacy, "Paquito" has lost the acquired popularity. Nevertheless, and considering the current situation of the political dynamics, that lack of notoriety could be convenient enough for the party. Mr. Flores stopped being so prominent during a period of some months and people forgot the rumors of power cliques and all was prepared to begin an electoral campaign that no one was prepared for.

Today it is the FMLN which fills the public opinion spaces and occupies the pens of political analysts. It appears to be the case that, after a long period of waiting, August 16 finally arrived: the day in which the second largest and most powerful political party was to elect its presidential formula. It was a long wait, first of all because the premature election of the ARENA candidate implied a tacit urgency for the left party in the search for its possible representatives. Secondly, because to know the presidential formula of the FMLN was equivalent of knowing the possible future government leaders of the country.

But there is something more. To some of the leaders of the principal opposition political party leaders the expectation which was growing naturally around the election of its formula was not enough; rather they decided to make it grow by openly proclaiming their preferences and lending themselves to the game of internal party polarization. For months now the FMLN has been in the sights of public opinion as a result of the know feuds between the "progressive" faction and the "orthodox" faction. Last Saturday’s national convention could have been a good opportunity to overcome the internal feuding and demonstrate that every FMLN party member was disposed to submit to the will of the majority.

But it was not to be like that: from the beginning, the pre-electoral process of the FMLN has limped from one blunder to another. The first was to declare the priority of the party’s government plan over and above its electoral formula for the presidency—this because of the pressure of the imminent election of Mr. Francisco Flores and the evidence that there was no one inside the party who could be launched as a candidate. And what happened? Nothing. Because the much touted governmental platform had only begun to be made public after the chaos of the last national convention. The second—when possible names had begun to take on a high profile—was to impose upon the aspirants for candidacy the requirement of affiliating themselves with the party, a requirement which cost them the valuable opportunity of including Dr. Hector Dada Hirezi in the formula.

The third was to have supported so visibly one or the other of the pre-candidates. Mr. Facundo Guardado did not miss an opportunity to declare himself publicly in favor of the mayor of the capital city, Dr. Hector Silva; and Mr. Shafick Handal, although much more prudent than his ideological adversary, accompanied the lobbying movements inside the party carried out by Dr. Avilés that it was impossible not to relate his political interests to the candidacy of Dr. Avilés.

The fourth was to decide to make gender in the formula obligatory. Could it not be the case that such obligatory determinations might undermine democratic intentions and the freedom of choice of the FMLN party-members? What would have happened if Dra. Avilés had proclaimed her confidence in Mr. Facundo Guardado? Or if Dr. Arias had been the only target of the sympathies of the conservative wing of the FMLN?

Finally, the day of the national convention, at the moment in which the FMLN tried to correct its miscalculations and overcome its impasses and carry out a good democratic election for a presidential formula, it became rather a space in which the rank and file gave free rein to its ideological preferences. Visibly excited—a result as much of the obvious internal polarization that the leadership took responsibility for fomenting, as of the deficient organization of the event—the FMLN followers seemed to lose the notion that it was important to elect a candidate. They threw their lots not with the process of choosing a formula but with the triumph of one "grouping" over the other.

In these circumstances, the decision to opt for a second round and delay the election for fifteen days only swelled the ranks of a long list of inadequate decisions. The intention to move the party towards democratizing itself was reduced to a handful of fury and improvisation. And, after August 16, nothing was left but the impression that neither all of the aspirants nor all of the leaders were disposed to accept the decision of the rank and file without feeling themselves to have suffered a defeat.

So it goes: the future of the FMLN does not seem very promising at this point in time. The possibilities of routing ARENA from the presidency have been drastically reduced since the last national convention. On the one hand the fact that both Dra. Avilés as well as Dr. Silva will have a hard time of it to get enough votes to become president. The first great refreshing support of some of the sectors of the FMLN has already been seen, but it seems improbable that its sympathy could extend to become national in scope.

The second problem is to examine if there is sufficiently heavy ballast to limit his merits when the crowds turn out for the polling places in 1999: for Mr. Silva to have accepted a candidacy after having declared repeatedly that he was not interested in the presidency would have left the mayor’s timid administration inconclusive and almost invisible and to have found himself with such rotund and overwhelming support from Mr. Facundo Guardado—with which he lost the possibility of becoming a factor for cohesion--, among other concerns.

It would be impossible to declare that the election of a presidential candidate for the party in office was not problematic, but neither were the problems inside ARENA so serious as they were presented as being, nor will they present impediments to that party continuing to be the principal political force in the country. On the other hand, the enormity of the problems which actually confront the FMLN are serious indeed. That ARENA has been weakened is true, but the FMLN has not known how to strengthen itself by capitalizing upon this weakness. Its course of action in recent days makes one think that perhaps the critics of the left are not deceiving themselves when they declare that the FMLN is not yet prepared to govern. If it cannot obtain consensus within its own ranks, how can it hope to do so in the country as a whole?

CONSIDERATIONS ON THE PROPOSAL TO REDUCE THE VALUE ADDED TAX

The reduction of the Value Added Tax (IVA, for its initials in Spanish) played a preponderant role in the electoral offerings of the FMLN in the past elections for deputies to the Legislative Assembly. In practice, this proposal has not been made concrete, but in recent weeks has been taken up again by that left party.

Doubtless, the topic of taxes takes on a special interest for any government, not only because it is the principal source of financing for its budget, but also because it can become an instrument for fomenting economic and social equality, equality and a progressive schedule for tax structures. Economic and social equality refer to the reduction of inequality between the income levels and lives of the different social groupings. Tax equality, on the other hand, implies that the burden of taxes ought to be distributed in relation to the economic capacity of the contributor. On the other hand, the progressive nature of the tax structure comes about as a result of the evaluation of whether the tax rates are related to the income capacity of the contributors. One tax structure is progressive if its rates increase in the measure that it increases income or wealth, is neutral if it maintains everything equal and is regressive if the tax rate is higher for groups with lower incomes.

The government administrations of the Nationalist Republican Alliance (ARENA) have shown themselves to be more in favor of a neutral and even regressive tax structure because they have dedicated themselves to encourage a reform which is characterized by measures such as the following: the elimination of taxes on exports and patrimony, reduction of taxes of imports, diminution by half of income tax for businesses and the introduction of IVA. This has led to a state of affairs in which in the respective tax rates, the sectors with greater income pay less taxes and the sectors with lesser income pay more.

But really, in spite of the abolition of important taxes, taxable income has not fallen in recent years owing to the higher payments of IVA which grows from year to year. Between 1996 and 1997 alone, IVA came to represent 58% of the total tax income to representing close to 61% of it.

Although IVA represents an important source of income for the state, it cannot hide the fact that it is a tax which fundamentally affects consumers, who pay the greater part of the tax. On the other hand, businessmen limit themselves to passing the tax on from the consumers to the state and, even come to the point of not even paying IVA on the products they consume. This benefit is added to the amount tat the businessmen receive with the abolition of the tax on exports, on patrimony and the reduction by half of the businesses’ income tax. In this context, it would be of some interest to review the proposal to reduce the IVA in order to highlight what would be the effect upon income taxes, upon the fiscal deficit, upon prices and upon tax structure. Finally, some possible options for tax reform alternatives to the proposal for reducing IVA are considered.

Theoretically, a reduction by three percentage points of the IVA would imply a reduction by 23% in the total income generated by this tax; that is to say, a reduction of some 1,338 million colones —the equivalent of 14% of tax income. This would imply that —should this come to be the case— the fiscal deficit would grow to double that of the fiscal deficit for 1997.

The positive side of a reduction in the IVA ought to be a proportional diminution in the prices of goods and services which are affected by this tax; however, this may not be so sure a thing. Current business practices in El Salvador do not contemplate, in any possible scenario, any reduction in prices, even when costs of production or operation are reduced or, for example, when taxes on imports are reduced. What is most probable is that any reduction in IVA would not affect the behavior of prices and that prices would stay the same or grow as if IVA had not changed.

The tax structure, on the other had, would be affected in the measure that participation of indirect taxes might be reduced and the participation of direct taxes is bettered, but, in any case significant advances would not be achieved in what includes reduction of the tax charges. What would be reduced is only the payment by the consumers —and this without increasing the offering by the businessmen and sectors with greater income.

In this sense, the reduction of IVA would be inconvenient because it would imply an elevated reduction in tax income without obtaining any benefit for the consumers. Moreover, such a reduction would also not have any implications (of any consideration) on the tax structure.

In the current state of affairs, the tax structure is clearly based on taxes which, in general, affect consumers, without taking notice of their levels of income. Some 61% of the taxes are obtained from taxes for the final consumer —among families— except, of course, the families of businessmen which are able to discount even their consumption of the payment of IVA. On the other hand, taxes applied to sectors with greater income have been eliminated or diminished (exports, patrimony, income tax).

This configures a panorama of in which there exists a tendency towards a regressive tax structure and clarifies the parameters in which any intent to reform the tax structure ought to be considered. The proposal to reduce IVA, in theory, points toward a greater movement towards a progressive tax structure, but would bring with it more costs than benefits. In the final analysis, a greater fiscal deficit and greater levels of inflation would end up provoking a reduction in real income and in the quality of life of the whole population.

The proposal to reduce the IVA could turn out to be not a good idea if its goal is to diminish the tendency towards regressive tax structures; nor would it reduce the public finance deficit in a sustained way. Far from diminishing taxes, what is needed currently is to increase them, but fomenting, at the same time, a greater tendency towards a progressive tax structure. This would imply increasing taxes among the sectors with greater income, all to the contrary of the spirit of tax reform implemented by the last two ARENA government administrations.

In this context, one would have to think, for example, of new reforms to the Law governing Income Tax which re-establishes the rates previously imposed on businesses and which would promote a state of affairs in which natural persons with greater income would pay, percentage-wise, more than sectors with lesser income. Additionally, the possibility of re-establishing taxes on exports ought to be evaluated because, as recent history has shown, exemption from taxes does not necessarily translate into an increase in exports. Complementary to the previous point, it should be considered as necessary the implementation of plans which aim to reduce tax evasion, estimated at levels higher than 50% in recent years. The proposal to reduce IVA, then, is not a particularly convenient one for the maintenance of macroeconomic equilibrium, nor would it result in a search for equality and progressive tax structures.

CONCERNING THE FMLN CONVENTION

A little less than a month ago, in this same column, with the electoral process of the Farabundo Marti National Liberation Front approaching, we wrote to present a premise which involved a somewhat critical attitude concerning the challenges facing that left party (see Proceso, 816). After witnessing the process and preliminary results of the Sixth National Convention of the FMLN, we are not going to occupy the same space to say the same things. What we are going to do, however, is attempt to reflect on the dynamic reflected in the convention and the implications that this dynamic has for the future of the FMLN.

The convention in question reflected various things. In the first place, one must say that the event in and of itself, as it was planned by the party in question, reflects efforts and intentions, although not so carefully distilled, to make the part pass through the mechanisms and institutional procedures which assure it some level of democracy inside the party. Nevertheless, in second place, the event last weekend revealed not only the strong differences which prevail in that political party, but also revealed some extreme attitudes of intolerance and the difficulties in dealing with these internal differences. In the third place, the FMLN convention demonstrates the persistence of the domination of political activism and pamphleteering attitudes which took precedence over attitudes of political maturity in the debate over options for the party. Finally, and among other things, it demonstrates the difficulties facing the FMLN as it attempts to unify itself around an electoral project it seems that a good part of the FMLN party members were more concerned to make the hegemony of their political line prevail than to obtain an electoral victory in 1999.

Let us reflect rapidly on each and every one of the aforementioned points. First. It should be recognized that the FMLN has made significant efforts to develop institutional mechanisms which would guarantee a certain level of democratic practice inside the party. In comparison with the practices which prevail in most of the other political parties, the FMLN demonstrates exceptional efforts in attempting to substitute leadership decisions and the naming of people by central committees and national executive councils with voting mechanisms more or less representative of the rank and file of the party. Although such mechanisms for voting still do not completely guarantee the necessary representation of the rank and file of the party, they do permit, or aim to promote, an exercise in choice which goes beyond the leadership, submitting the important decisions to criteria of a broader assembly of representatives. This is a good sign, at least in the efforts of the party to implement mechanisms which permit it to function as an institution and not as a club of friends which share certain political ideas.

Nevertheless, what happened last weekend highlights the difficulties of in practice of efficiently constituting a model of political institution which might be open, tolerant and sufficiently mature in order to deal with the differences. After the morning session in which order, discipline and attitudes of "compañerismo" prevailed among the delegates, the convention (in the process of voting which took place in the afternoon) became a chaos which, for many, could constitute a warning concerning the way in which the FMLN can resolve matters at other levels. The attitudes of intolerance, verbal aggression and Manichean fanaticism acted out by part of a group of convention members dominated the electoral dynamic of the party. Far from the reading that some of the political leaders of the party give it (i.e., that these attitudes can be attributed to a "normal" excitement which prevails in some of these processes), these attitudes become worrisome because they come not from the rank and file of the party but from a supposed select group of representatives made up of convention members and this included some of the current deputies of the Legislative Assembly; in addition to which the lack of capacity of the leadership of the party to control this polarizing dynamic in which the convention became submerged and which came to the point of causing more serious consequences was evident.

This incident which prevailed in what was probably the most crucial stage of the convention not only revealed the profound differences which could affect the FMLN in its exercise of the dynamic for defining its course, but also, what is even more important, revealed the party's lack of capacity for resolving differences and for being able to deal with distinctive positions inside the party. Although it has been said that one cannot judge the whole party by the behavior of only part of its members, the truth is that the attitudes of intolerance, aggression and lack of confidence inside the party were sufficiently generalized to the point of placing in danger the very process of the election of candidates and have definitively placed in check the future unity of the FMLN.

As we stated above, the convention under discussion also demonstrated that the FMLN cannot succeed in definitively inaugurating the mechanisms of open dialogue and tolerance which would permit the resolution of internal differences without causing wounds and resentments. Instead of this it continues to be the case that pamphleteering practices and political activism to which the left has preferred to use historically continue to weigh heavily. So it is that what we witnessed last weekend was an event in which , at its most crucial point, shouting prevailed over dialogue and insult prevailed over proposal.

The manner in which the convention unfolded highlights the fact that most of the people in the FMLN are more concerned with making their political line prevail than in consolidating and making prevail the mechanisms which guarantee the possibility of a victory in the elections of March 1999. In saying this, we do not refer to the fact that the FMLN ought to make a decision in favor of a specific candidate (both pre candidates have their potential which, if well utilized in each case, could represent a possible victory over ARENA): we refer to the fact that for many FMLN militants it is more important to guarantee by whatever means the preeminence of their candidate, of their political line than to negotiate, enter into agreements and elect a strategy and a personality that would lead them to electoral victory. The problem does not come, therefore, from the question of who wins the internal election of the FMLN, rather that, given the interest for giving privileged position to a particular political vision, many were willing to ignore institutional mechanisms of the party and (as the whole country watched) revert back to attitudes which place in check the supposed democratic voting of the FMLN militants. Finally, the convention members seemed more interested in winning their private election than in demonstrating to the citizenry of El Salvador that they are a mature and democratic alternative for governing the nation.

The FMLN has a historical responsibility with the future of the country, whether they can or cannot win next year's elections. Their historic responsibility resides in demonstrating that there still exist alternatives in the political spectrum in e Salvador.

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This article is a presentation by the University Institute on Public Opinion of the UCA (IUDOP, for its initials in Spanish).

FMLN. The convention by means of which the FMLN aimed to elect its presidential formula, held on August 15, was frustrated when it did not achieve a definitive result. The candidates, Dr. Hector Silva, Dr. Victoria de Avilés and Dr. Salvador Arias, announced their willingness to hold a second electoral round at the end of this month. In the voting held, Dr. Avilés won 10 votes more than Dr. Silva; nevertheless, none of the candidates won the number of votes necessary to declare themselves elected. The statutes demand that the candidates win 518 votes minimum, of the 1,034 convention members registered. Dr. Avilés won 441 votes, while Dr. Silva won 431. Dr. Salvador Arias, for his part, according the apparent preliminary results, won all of the needed support for the vice-presidency. Ms. Norma Guevara of the Electoral Commission, explained that negotiations will take place in order to change the electoral system so that the candidates for the presidency and vice-presidency will be elected separately, taking into account the agreement that the formula must be made up of a man and a woman. The three candidates requested that the commission reform the party’s statutes so that in a second round it will be unnecessary to win half plus one of the 1,034 convention members’ votes, but rather only a simple majority (LPG, August 16, p. 4 and August 17, p. 4).

PRESIDENCY. On August 17, Mr. Francisco Merino of the PCN assumed the Presidency of the Controllers’ Office of the Republic of El Salvador. The institutional change took place in the context of a scandal involving earlier undue practices in external controls which weakened the financial process of the institution. Moreover, it was learned that [there had existed] irresponsibility on the part of the public administrators, "contradicting the basic principles of administrative management, converting the Controllers’ Office into a co-administrative body for activities which the organization itself was obliged to control permanently", according to a statement by the ex president of the institution, Mr. Hernan Contreras. Likewise, Mr. Contreras recognized that the institution is awaiting strengthening of some areas of the institution considered to be sensitive, such as human resources training, planning and administrative support. The new president, for his part, declared his desire for a substantial change inside the institution, at the same time as he promised to conduct himself in an ethical and transparent manner. According to his statement, society ought to be "the principal motor force for combating corruption through opportune denunciation which permit the institute to act in a preventive manner". Mr. Merino also said that he will not conceal audit reports which the Controllers’ Office will produce at the same time as it applies preventive actions (LPG, August 18, p. 6).

MONEY-LAUNDERING. On August 18, the Attorney General’s Office (FGR, for its initials in Spanish), the National Civilian Police (PNC, for its initials in Spanish) and the Supreme Court (CSJ, for its initials in Spanish) signed a memorandum of understanding in order to establish joint mechanisms which will facilitate combating narcotics trafficking and money-laundering. Authorities will meet during this week to determine the aspects of a strategy which permits, on the one hand, the harmonizing of existing penal legislation and direct it more specifically towards crimes relating to these activities. On the other hand, it is hoped that efforts will be unified so that unemployment not be a factor favoring traffic in other drugs. The Director of the PNC, Mr. Rodrigo Avila, took advantage of the meeting in order to criticize current penal legislation for ordering the freeing of various classes of persons accused of narcotics trafficking and for not contemplating the use of undercover agents as a tool for the police in investigations in these cases. Likewise, sources in the CSJ declared that they will attempt to coordinate work of the judicial bodies of the state with diverse international organisms in order to be able to combat narcotics trafficking in the country. At the end of the conference, the representatives of each institution coincided in indicating the need for a law against money-laundering in order to typify, with greater precision, the crimes related to this activity (EDH, August 19, p. 2).