The limits of democracy

Economy

Concerning the new law governing free-trade zones

Society

Concerning the document Bases for a national plan

News Briefs

THE LIMITS OF DEMOCRACY

Critical opinions concerning the frustrated National Convention of the FMLN have still not been dissipated. Beyond the momentary phenomenon of the convention, with its logistical and organizational difficulties known to all, especial importance has been given to the divisions which that left party is currently suffering and which impede —that is, they have impeded it up to now— making specific a political formula which internally expresses the interests of the tendencies struggling with each other and, which, externally , might be capable of arresting the rapid onslaught launched by ARENA —now fully engaged in its electoral campaign— in order to promote its candidate, Mr. Francisco Flores.

All in all, the recent experience of the FMLN, however, invites one to engage in another kind of reflection, centered less on its successes or failures and more on unearthing the idea of democracy which that left party, at least from the vestibule outwards, aims to defend. Let us begin from the following premise: except among the leading militants of the FMLN, everywhere else the thesis that the last national convention was a disaster has been imposed, and this as much because of the lack of capacity of its organizers to design even the basic mechanisms for dealing with possible scenarios as because of the resistance of the embattled factions to cede one to the other in favor of the much acclaimed "commitment to the program".

Curiously, on the side of those who sympathize with the FMLN project, the predominant opinion has been that, in spite of the failures in the specific experience of the convention, the democratic intention which animated the convention was good. Moreover, there are those who have noted that with this the FMLN has already given a lesson in democracy to the rest of the political parties, especially to ARENA, which is accustomed to appoint its candidates simply by naming them. What, then, is the merit of the FMLN? Is it that it aimed to elect its candidates to the presidency and vice-presidency by means of electoral primaries —not to be understood as primaries in the manner used in the U.S. where the definition of the candidacies by the party leadership is an intrinsic part of the process— but rather in a sui generis modality in which, at the very moment of the celebration of the convention those to be candidates would be elected by direct vote. We are dealing here, say many and widely varied analysts, with a radicalization of democracy, the sole intent of which merit our recognition. If the FMLN had succeeded in moving forward in this, those deriding democracy in this country would be other people altogether.

But critics of this proposition are, of course, not lacking. This is to say that there are those who see in the FMLN initiative either a cheap pantomime of democracy or a haggard populism embedded in the authoritarian vocation of a party to which democracy is something foreign, given its political-military history. These voices are raised mainly from intellectual and political circles close to the right and center-right. One does not, however, have to be linked to the right —nor does one have to be a right-wing sympathizer— to pay close attention to all or some of the objections posed.

It is, by all means, pertinent to deal with a topic which, up until now, has not been explicitly touched upon by any of the analysts who have examined the FMLN dynamic. This topic might be dealt with by formulating the following question: is the conception of democracy which the FMLN aimed to implement in the election of its presidential formula a viable and possible one? This is not to pose the question of the intentions which guided the leadership of the FMLN —which certainly could be praiseworthy— nor for how ideal it would be to enjoy precisely that set of circumstances representing a democratic practice which were attempted by that left party as an ideal devoutly to be wished —among many other things: for example, an ideal economy, an ideal education, ideal healthcare.... The question must deal with effective possibilities, because, when democracy is discussed —when the topic of its actual implementation is dealt with—, part of that discussion must inevitably involve its viability.

Is it viable to implement a process of primary elections in which those voting —the convention members— decide, without significant impediment, the formula which will represent the party? Is it possible that those elections could be implemented without the contenders —and the interest groups which support each of them— engaging minimally in negotiations for the distribution of quotas of power? Is it possible for these interest groups and the personalities involved in them to begin from a tabula rasa with respect to their own personal ambitions and submit themselves absolutely to decisions by the party rank and file? Is it possible that the rank and file of the party might be intellectually mature enough and absolutely conscious of the transcendental nature of their decisions?

The experiences of diverse contemporary democracies demonstrate that, in general, the answer to these questions is ‘no’. That is to say that experience demonstrates that direct democracy —taken up in all of its manifestations and consequences— is not viable. And here it is not a question of good or bad intentions; nor is it a question of treason against ideals. It is rather a question of practical realities, unquestionable interests and human limitations of all kinds. Democracy must deal with these realities and not pretend that they do not exist. It is, above all, a conjunct of rules and procedures for conciliating diverse interests, not of abolishing them. The exercise of direct democracy which the FMLN wished to implement has failed —as it has failed in all other parties— because it ignored the differences of all kinds which exist inside the party.

The paralysis which the FMLN is currently experiencing is the result of a conception of democracy which has already demonstrated its impracticability in diverse parts of the world. Although it may not seem so, direct democracy, when carried to extremes, leads to political and social immobility. It may seem attractive for all of us to participate in all aspects and in everything —or, continuing with the example of the FMLN— that all of its militants should participate directly and without mediation in the election of its candidates. But given that, in reality, each member of the society has his or her own particular interests and tends, as a result, to form groups to express these interests, the result will be that the decision-making process will issue in decisions which do not necessarily coincide with the interests of the groups in question. Procedural democracy aims to avoid precisely this paralysis which results from the exercise of direct democracy by using, instead, mechanisms of representation. It may be more to the purpose of the FMLN to look to the use of these mechanisms than to continue to throw its lot with the exercise of direct democracy.

CONCERNING THE NEW LAW GOVERNING FREE-TRADE ZONES

Since the activity of the maquilas, or, runaway shops, began in this country, they have been the subject of widely-varied polemics concerning their functioning because of the treatment of workers in these shops. Conflict because of this reached such levels that on several occasions strikes were called and massive dismissals of workers took place.

From an economic point of view, the maquila shops have advanced openly during the decade of the 1990’s, coming to substitute for the principle categories of exportation —even coming to account for 44% of all exports in 1997. In terms of production, these shops represent a respectable 9% of industrial manufacturing production and it is estimated that they have generated no less than 50,000 jobs: this is equivalent to 13% of the population engaged in industrial manufacturing.

Among the most obvious causes for this spectacular growth of the maquila has been the fiscal exemption which these shops have always enjoyed as well as the relatively low salary levels in effect in the country. Maquila activities have been exempt from the payment of all taxes: income tax, taxes for the transfer of ownership of goods, export taxes, municipal arbitration, customs payments and value added taxes. At the same time, they base their activities on the hiring of members of the work force with few capabilities, principally in sewing garments, for which they are paid mainly the equivalent of the current minimum wage.

In order to take advantage of these benefits and opportunities, the maquila businesses must only commit themselves not to sell their products on the domestic market because this would represent unfair competition with enterprises which do pay their taxes and which, as a result, operate on the basis of higher costs.

A new law concerning Free-Trade Zones was recently passed, the principal content of which is precisely the abrogation of the prohibition against the sale of maquila production goods on the local domestic market, but only when the items to be sold include 50% domestic national material in their elaboration. Although this law appears to enjoy the support of the principal business guilds, it is worthwhile to stop for a moment to review the implications —specifically in the case of textiles, which will be the area most affected by this new legislation.

Two branches of the manufacturing industry will be affected by this legislation: items made from textiles and the production of garments. The effects felt in each of these areas will be distinctive. While in the first case, an increase in the demand for its products will be felt; in the garment industry, however, a greater level of competition will be felt, owing to their freedom to commercialize maquila production.

It should be pointed out here that, up until now, the raw material used in the maquila shops has been supplied through tax-free imports. As was mentioned previously, with this new law, the maquila shops which wishing to sell on the domestic market will have to use 50% nationally obtained raw materials in the construction or sewing of the final product. This could be good news for textiles and articles sewn with textile materials because it will mean that they will become providers to the maquila enterprises, something unheard-of in the history of this sector.

But on the down side, sectors principally dedicated to sewing garments will face a sudden increase in the offer of similar products which have been produced in maquila shops under conditions more advantageous for owner profits [i.e., flooding the market] because they pay the lowest salaries possible and, even so, obtain high productivity from their workers. In effect, as the mean salary for local industry is reviewed, one discovers that this is really much above minimum salary. For example, during 1996, the mean salary for industry in general was 1,5557.3 colones, while the salary paid in the maquila shops (the legal minimum wage) was 1050.00 colones.

It cannot be denied, as well, that the maquilas impose a rigid work discipline, to the point that the workers are not permitted to leave their work stations —to the extreme that a time clock may be used when operators enter the bathroom.

The impact on these two branches of textile could be considerable, especially if one takes into consideration that the maquila shops have grown so much that they practically reproduce the level of all production in both branches. For 1997, textiles, articles sewn with textile materials and garments represented a total production in the amount of 682.4 and 232.5 million colones at constant prices for 1990, respectively. Together, these areas taken as a whole represented 914.9 million colones. The maquila shops, for this same year, produced 813.4 million colones at fixed prices for 1990. These figures make it clear that the most vulnerable area of production is garment, which represents not even 28.5% of maquila production.

In addition to the aspects pointed out above, there exist reasonable doubts as to the institutional capacity to comply with the law. The principal obstacle consists in how to guarantee that maquila shops in reality use 50% domestically produced or obtained raw material, how to guarantee that the remaining 50% of imported raw materials in reality pay the customs tariffs they should and, finally, how tax exemption will actually be implemented. This last point is the most delicate, given that it has implications for the kind of competition which will prevail in the garment industry. Evidently, if the maquila shops succeed in continuing to produce on a tax-exempt basis and sell on the domestic local market, unfair competition will become rampant because local producers will continue to be required to pay all of the taxes currently in force.

Another questionable point of law, although not so important as those discussed above, is that electronic items will be excluded from sale on the local market. These belong to the sector —as opposed to textiles— which are not produced in the country and this could imply important benefits for local consumers and even for the work force, without prejudicing national industry.

The most questionable aspect of the maquila shops is that they are founded upon the basis of big concessions offered by governments, while they only supply jobs which are, in their majority, low category jobs which are poorly paid. Experts in competition, like Mr. Michael Porter, have indicated that the possibilities for development are reduced if the aim is to promote growth on the basis of the maquila shop industry because "only countries which have little to offer attract tax-free investments".

In order to attract foreign investment it is not necessary to promote laws which open more and more doors for the collapse of national industry. It is, rather, necessary to improve the qualifications of the work force so that they can earn better salaries vis-à-vis the production of products with greater profits than the textile industry.

The foregoing presupposes that if the government desires to promote development by means of growth in the maquila industry, it should increase its investment in human capital with an eye to improving the income of the workers.

CONCERNING THE DOCUMENT

The document entitled Bases for a National Plan was presented on January 16 of this year to President Armando Calderón Sol by the National Commission on Development. The Commission was created by mandate of the President of the Republic himself, for the purpose of drawing up a draft of a national plan. That is to say, a provisional document in which a global diagnostic was to be presented concerning the situation of El Salvador, based on economic, social, political and cultural blueprints.

It is important to insist on the fact that we are dealing here with a provisional —not a definitive— document. The final version of the document will be the result of corrections made as a result of consultations with civil society concerning the document. In fact, according to information published in the national press, citizen consultations held in diverse parts of the country have already been accomplished. Meanwhile, specialized workshops in which intellectuals and politicians in the country will participate —will be finalized in October of this year. It is only then that the National Commission on Development will proceed to draw up the final document which will surely not be called Bases for a national plan, but rather The National Plan.

The foregoing having been said, we can ask the following question: What are the principal merits of the document? There are, basically, two: (1) to propose an overall vision of the principal national problems —something which, up until now, did not exist—; and (2) to have opened up a process of public discussion of these problems. On the first point, the criticisms of the Calderón Sol government were available early on, because the present administration, it would seem, did not have a clearly designed governmental plan. The impression was that that the Calderón Sol administration dealt more in improvisation than in logic in the program previously established. In a way, the announcement of the Bases for a National Plan supported the government, the political benefits that the publication of the document brought with it being obvious. Certainly President Calderón Sol insisted that what was presented was not a document by his government, but which, after all, was a document drawn up by a commission he himself had appointed.  On this second point —to open a process of public discussion of national problems—, the document gave official status to something that was under discussion everywhere: poverty, insecurity, economic lag, the absence of a political culture… The document undertook to say to society: these topics can and should be discussed by all Salvadorans without exclusion of any kind. It dealt with another point favorable to the government: public debate of national problems was supported from the height of political power. Nevertheless, the two merits indicated also have their limitations, and we will be concerned with these limitations below.

In the first place, the overall vision of the country presented in the document, although it does demonstrate some merit, does not present the national problems in hierarchical order according to the requisite rigor or clarity which ought to be required in a document of this nature. The document highlights three national problems: structural poverty, social and cultural marginalization and traditional political power.

The thesis clearly presented is that "structural poverty is the principal national problem". It even posits, at one point, that structural poverty is the root of all of the other problems in the country.

Taking responsibility for this central these, one would assume that members of the National Commission for Development would derive the phenomena of social and cultural marginalization and traditional political power from the phenomenon of structural poverty. These factors are presented, surprisingly, in inverted order: structural poverty, the ultimate source of the national problematic, ends up being posed as a result —an effect— of the first two: social cultural marginalization and traditional political power.

What was originally posited as the cause inexplicably becomes the result. In this way, structural poverty is quickly eliminated as a central focus of attention. Moreover, the solution to it—which would be a series of structural reforms applied to the structure of property—do not appear at all in the document. This is the central void in the document: it does not take responsibility for the implications of its central thesis. If structural poverty is fundamental, it is this phenomenon to which one must pay attention. If social and economic marginalization or traditional political power are fundamental, finding the solution to structural poverty is relegated to second place. This was an easy out for the National Commission on Development.

In second place, opening up the process of public debate on national problems is highly important; nevertheless, the procedure followed by the National Commission on Development on this point might awaken some doubts.

The first concern has to do with citizen participation. Has this participation been effective? This appears not to be the case, as would have been expected in the drawing up of the national plan. Meetings have been called in several places for the discussion of the document, but no one can guarantee that the citizens called to participate —how were they chosen?— could offer valuable ideas for the elaboration of a national plan.

The second concerns itself with the specialized workshops which have focussed on the discussion of specific aspects of the document. When the list of participants has been reviewed, doubts begin to exist as to whether these are not the same participants forever present; that is to say, those who make up the circle of intellectuals committed to the government (or who aim to obtain benefits from the government). To this is added the willingness of many of the personalities invited to jockey for power and attempt to gain positions. Here one suspects that many of them will take advantage of the spaces opened by debates in order to promote themselves personally instead of seriously discussing the national’s problems.

By all counts, the successes of these consultations will only be made known at the end of the process of discussing the document. Meanwhile, one must continue to wait for serious and decent work.

The document, Bases for a National Plan could become an important document for diagnosing national reality as well as a starting point for designing a series of measures which could deal with its principal problems. Putting them into practice will be the commitment of future governments. The limitations of the document might be overcome during a process of consultation which is still be to implemented. If this is the case, we will have a more complete and useful document for the country. If not, its failings will not allow for serious treatment of the national problematic.

ARMS. The Defense Commission of the Legislative Assembly announced on September 2 that it has prepared a new Law for the Control of Firearms, Munitions, Explosives and Similar Articles. This law will be known as the "Arms Law", to differentiate it from the law now currently on the books, in order to make a distinction between carrying and possessing arms, two different sets of circumstances which require two different licenses. The law concerning possession will permit natural or legal persons only the possibility of having and using firearms in a specific place such as a residence, business or other. In this case, one would be allowed to move the arm from the specifically designated location only when it is in a disassembled state and only with the permission of the Ministry of Defense. In order to obtain this license, what will be required in addition to the legal procedures, will be a course of instruction and follow-up evaluation on the handling of arms. The National Civilian Police (PNC, for its initials in Spanish) will supervise and inspect the physical inventories and controls on possession and carrying arms. Members of the Armed Forces and the PNC will not be subject to this new law; nevertheless, police and soldiers off-duty will be required to comply with the new requirements. On the other hand, those who buy and sell firearms will be subject to a ruling which will be drawn up in a specific modality for this sector and will define limits governing the quantities of arms and munitions which they will be allows to buy and sell (LA PRENSA GRAFICA, September 3, p. 4).

MAQUILAS (RUNAWAY SHOPS). With the new Law concerning Tax-Free Zones, the maquila enterprises will be able to sell all of their products on the local domestic market. This new law was supported by the Treasury Commission of the Legislative Assembly on September 2. According to the Law Governing Tax-Free Zones and Fiscal Regulations for Industrial Parks, the enterprises located in these industrial parks will be able to sell a maximum of 15% of their production. With the new law which goes into effect beginning on September 3, there will be no limit for the commercialization of production. However, businesspeople will be required to pay the corresponding taxes —the value added tax (IVA), income tax and customs tariffs. In the same way, it was agreed that the construction or sewing of products must include at least 50% raw materials obtained in the region, in the case of textile and garment production. The law was supported by the ARENA, PDC and PCN parties, although it did not enjoy the support of the deputies from the USC and the FMLN, who noted that the possibility for unfair competition exists. Mr. Humberto Centeno, the FMLN deputy, explained that there are no guarantees that the raw material used in production will not come from outside Central America , with the allegation that it is local raw material to avoid paying taxes (LA PRENSA GRAFICA, September 3, p. 5).

BUDGET. The amount designated for the General Budget of the Nation for 1999 is 17,458.3 million colones. This amount represents an increase of 875 million colones, or 5.3 per cent over and above the 1998 budget. The budget proposal will be presented to the Legislative Assembly next September 16 for analysis. The budget has been organized taking into account the petition of the Supreme Court for 1089 million colones. Nevertheless, only 877.6 million colones are available for this organism. In this sense, the proposal presented by the deputies is to cut funds to 14 organisms and projects in order to comply with the request by the Supreme Court. Nevertheless, education, health and public security sectors will not be affected by this situation. According to the President of the Supreme Court, Mr. Eduardo Tenorio, this institution requires a budgetary increase "in order to function in a solvent manner and implement some initiatives to better the application of justice". "In soliciting the increase [we are not acing ]in an arbitrary manner; [we are acting] in accordance with an institutional development plan for the coming year," argued Mr. Tenorio. He explained that the budget destined for the Supreme Court will be distributed in three categories: construction of judicial buildings on a national level, policies for salary increases and equipment for law offices which lack important resources (LA PRENSA GRAFICA, September 5, p. 28).