Social crisis: social solution

What is happening with the political center?

Social conflict and the absence of presidential leadership

About the new bank law

News Briefs

SOCIAL CRISIS: SOCIAL SOLUTION

Violence is not the solution for problems of an eminently social nature. The violent confrontations between ex–Civil Patrol members of the Armed Forces and the National Civilian Police demonstrate how little El Salvador has learned from the experiences of the past war, when it was thought that violence could resolve problems of a social and political nature. Having recourse to violence in order to make demands which are considered just, as well as to contain those who make demands basing themselves on force, leads the country down a dead end street. What both parties are seeking is not to get caught among bullets and night sticks.

The greater responsibility in holding back what could become a spiral of violence and a new factor for social instability falls upon the Flores government. The long period of time during which the ex–Civil Patrol agents served in the Armed Forces and, in the last analysis, to the government, ought to be recognized in some way. To argue the lack of economic resources to do so does not, in any way, contribute to the solution of the problem. The maneuver by which the legislative branch and the executive branch of government try to hold each other mutually responsible does not help in any way. To propose jail sentences and repression for those who are discontent, as President Flores has done, only contributes to exacerbating the tensions and will increase the number of victims in the ranks of the ex – Civil Patrol and the police.

To refuse to give a rapid and truthful response, the Flores administration is leaving the field free for groups or persons with unconscionable interests to take advantage of the situation of the ex–Civil Patrol agents, and their needs. This is the opportunity for the Flores administration to demonstrate the capacity of one of the promised alliances in order to resolve a serious social conflict. It is now when President Flores ought to act in favor of the Salvadoran poor so that he might be able to look them in the eyes when his mandate is over. It is true, at this point in time, that public resources are scarce, but if the government were willing, it could find the resources necessary for dealing with the needs of the rural poor, without having to look to the international community. Apart from this, he will not respond to the demands upon the Salvadoran government as long as he is not interested in confronting the conflict.

The basic problem, aside from what might have been outside manipulation, is the poverty in which the rural population of this country lives. The leaders of the protest movement demand payment in the form of indemnization for services to the army, but their members emphasize that, more than this, they want land, housing, health, education, credit, work, that is to say, the means to live in a dignified manner. This is the ancient cry of the rural poor, and it is this that lies at the root of the recently past civil war. If this marginalized population submerged in the most abject poverty could find adequate means to rise above its current situation, the protest movement would be left without a banner.

The fact that this movement is fundamentally rural and that the majority of its actions take place in the countryside ought not to lead us to commit the error of underestimating its strength. One cannot ignore the strength of its power to move the rural population, nor the willingness and determination of its members to pressure through the use of force in order to demand what they consider to be just and right. In its actions, the movement has demonstrated a surprising organizational capacity, which gives rise to doubts as to his autonomy; although, neither should one ignore what was learned during the time at which they were in the service of the Armed Forces, nor forget the relationship that its leaders maintain with the retired generals of the "tandona". The protest movement moves with military discipline and is apparently armed —another "inexplicable" false step by the ARENA government. It is ironic that those who were formerly appreciated as a key element —even a heroic element— in the Salvadoran state are now looked down upon as rebels without a cause; but it is understandable because the benefits of peace were shared out among the politicians of the big parties and the generals, forgetting the weakest sectors in the machinery of war which they had used.

President Flores declares himself to be on the side of the Salvadorans, he says that the economic situation is worrisome and declares that he himself is worried; but in response he only promises measures which he will make known in the future. The popular majorities want concrete and viable responses in order to confront a crisis in jobs and living conditions, which become more serious with each passing day. To judge by the lack of responses, it would seem that the Flores government is not prepared to assume the leadership of economic and social matters for the country. The current economic and social crisis is no surprise. We have seen it coming since the end of the second ARENA government. What the government team overlooked and did not, therefore, foresee, must now be confronted as a crisis with higher human and material costs.

As long as Flores declares that mechanisms for solution to legitimate demands exist, the leadership of the rural movement emphasizes its openness to negotiate and seek mediators. The question, then, is why those mechanisms which Flores says exist have not come into play. Could it be because his administration has considered beforehand that the demands posed are not legitimate? Illegitimacy cannot come from its content, the violent means used or the presumption that ex–generals are behind the movement. If the ex–generals from the war period are the real leaders of the protest movement, what is the State Intelligence Office doing that it does not make this evident and begin to take legal action against them? There are two possible responses: lack of capacity or that they are involved in it. A good state intelligence unit ought to advise the executive branch ought to advise the executive office that a crisis is coming up; if it has not done so, the width and breadth of its intelligence is very small; if it has done so and no one has done anything about it, the President of the Republic committed a serious error in judgment.

The behavior of the government and of Flores himself in the crisis that is shaking the country —the Department of State and the U.S., always meticulous about the security of its citizens, has already published advisory warnings about how dangerous it is to travel to El Salvador— much doubt is thrown upon his ability to unite Salvadorans.

WHAT IS HAPPENING WITH THE POLITICAL CENTER?

One of the few surprising things occurring during the past presidential elections was the rise of the United Democratic Center (CDU) to third place in voters’ preference, in contrast with the notable reduction in the number of votes received by parties with a long history, such as the Christian Democratic Party (PDC). And, although the leadership of the CDU assumed their new position of victory in the political spectrum, what is certain is that that ascent owed more to the electoral disaster experienced by the Christian Democrats and the National Conciliation Party (PCN) in the elections together with the discontent among those of the left who traditionally voted for the FMLN —who, having no other option, voted for Dr Zamora—, than to a substantial increase in the number of voters supporting the CDU.

In fact, the improvisation and negligence which was part of the March 7 electoral race, far from making this coalition attractive —made up, as it is, of the Democratic Convergence (CD), the Democratic Party (PD) and the Popular Labor Party (PPL)—, contributed to maintaining the new center parties in the relative anonymity which characterizes them. And so things go: the position reached by the CDU is, although privileged for the moment, highly unstable. Conscious of this —when all is said and done, the coalition leaders are not new at politics—, the leaders of the parties which make up the CDU decided to set a process of fusion in motion which will culminate, if all turns out as planned, by the end of the year 2000, in a single party.

It is true that, among other things, the coalition now participates in the decisions taken by the Supreme Electoral Tribunal and has become a much more attractive political force for the FMLN when the time comes to think about an alliance. But also, when dealing with public opinion, it has not ceased to be one of those political groupings for which it is not clear what they are proposing, with whom they identify nor what social groups they represent. This is part of a phenomenon which might be called the "crisis of the center". Reference is frequently made to the crisis of the left and on some occasions one hears the "crisis of the right" mentioned, but what about the political center? In the current situation of El Salvador today, what are its perspectives?

The recent past in El Salvador is marked by a confrontation between two big groupings: the extreme right and the extreme left. During the war, ARENA identified openly with the first and the FMLN —with all of the various shadings of color in that party— made up the second. Once the Peace Accords were signed, as well as finding a space in the democratic wherewithal for the FMLN, a space was opened up which was more fertile and promising than in earlier times for parties wishing to enter the political system and become part of it. It was an opportunity for the center to become a real political force which would balance the weight between both extremes and make a mark on democratic institutionalization on the process. The center was charged with offering subtle shadings in contrast with the overwhelming weight of the two polls made up by the right and the left.

This was the case for more than eight years. The current political situation in the country is not the same as it was then. In spite of the persistence of extremist and authoritarian right-wing niches and the persistence, as well, of certain left-wing nostalgia which refuses to abandon old criteria for the evaluation of society, politics and the economy of El Salvador today, at least at the level of discourse, there is no room for extremes. On the one hand, the contemporary world of the "ultra" has begun to be perceived as politically incorrect, owing, perhaps, to the fanaticisms of all types which obstruct economic and commercial relations as much inside societies as on an international level. On the other hand, weary as Salvadoran voters are of a political class incapable of looking out for their interests, what they least want to hear, at this point in time, are disputes over ideological questions.

There is stiff competition to achieve power, as much inside political parties as in governmental spheres. Leaving the problem of internecine warfare to one side, ARENA and the FMLN have mutually made things more difficult, with the passing of time, and both have made things even more difficult for the rest of the political parties. The extremes of yesteryear have been obliged to moderate their political postures. This is the case even with ARENA, which has been more stubborn in lowering the level of its belligerence against the "red enemy", and is today speaking of conciliation and consensus. The FMLN, on the other hand, although the leadership circle is presided over, in its majority, by "orthodox" members, what might be foreseen is a greater level of openness and flexibility.

In these new conditions, what is the role of the center parties in El Salvador. If, in the halcyon days following the recent signing of the peace accords one might have hoped that "the small parties" would play a role in fomenting moderation —being, as they were, capable of mediating between two irreconcilable positions—, now that the formerly irreconcilable forces say they are seeking moderation and, even more, their programmatic offerings are coming closer and closer together, the future of the political center is more and more uncertain. In the first place, the small parties, made up, as they are, of dissidents from other parties, do not find support or credibility among the masses of voters. It may not be too bold to state that it is more the case that these parties appear to be made up of those whose intentions were to achieve leadership positions in other parties and saw those intentions frustrated.

In second place, the small parties have not been sufficiently able to attract voters —when the opportunity was presented on a silver platter as a result of voter discontent with the big parties during electoral periods. As was mentioned above, the way in which these parties approach elections appears to be characterized by improvisation, lacking even in efforts to consolidate an ideological identity which would serve as a means of presenting themselves to the voters, and this has made them almost completely unknown except at election time.

In third place, every time they take the public stage, the proposals presented by the minority parties appear to be diffuse. The fact that their platforms are distinguished by very little from those of the majority parties, on the one hand, gives rise to suspicions about their actually belonging to the center and, on the other, gives their electoral campaign a rhetorical cast and contributes, thereby, to the lack of confidence which enshrouds them. So it is, then, that the multiple alliances and innumerable changes which take place within the small parties of all kinds and the fact that their compasses point towards "replacing ARENA" or becoming the majority party which they are far from being, makes it difficult for voters to develop a clear and realistic appreciation with respect to what they really are and what they can really do in the political system.

As things stand, it appears improbable that the center might reach a definitive consolidation and might, as well, contribute, with this, to the empowerment of the democratic process in the country. For this to happen, to begin with, a definition of what the center is and aims to be would be necessary, over and above the simple ideological tag identifying them as social democrats or Christian democrats. Secondly, the setting of some concrete goals which adhere closely to the reality with which the voters might identify and which they might feel motivated to support.. And thirdly, they will have to achieve a real independence with respect to the big political parties in such a way that the population might see in them the possibility of third or fourth ways by which decisions might be made. In taking on these urgent tasks, the Salvadoran political center seems to be destined to failure, or to the eternal search for alliances which would allow it to survive, with clear objectives in the national political spectrum.

SOCIAL CONFLICT AND THE ABSENCE OF PRESIDENTIAL LEADERSHIP

The economy is not going well; the country is not going well: on this almost all social sectors are in unanimous agreement. Meanwhile, the luxurious presidential cabinet of Francisco Flores does not make its presence known. Flores himself is absent. Isolating himself from the press or avoiding dealing with basic problems affecting us, the president is beginning to show signs that the task he recently assumed is overwhelming him and that he is not able to control it. He and his team have not given signs that they are able or that they wish to overcome the improvisation and lack of realism which characterized the previous government.

In the little in which Flores has been effective, up to this point, is in his already characteristic pseudo-intellectuality which, aside from providing material for the country’s political cartoonists, serves the country not at all. "There is no problem which Salvadorans united cannot overcome" or "perfection is the enemy of the good" are some of the president’s memorable phrases. So, then, Flores, busy making speeches, seems to have forgotten state politics: neither government plans nor realistic diagnostic analyses of the situation of the nation have been made known.

On the other hand, trade union and ex–Civil Patrol agent demonstrations during recent weeks and the posture adopted by Flores about these give us pause to declare that Salvadorans cannot expect much from the president and that, even more seriously, he begins to show signs of allowing the supposition to emerge that his supposed distancing from the dirty games of national politics —his commitment with a "new way of doing politics"— is as real as it is consistent with is work for the poorest of the poor.

With regard to trade union actions, these took off under the leadership of the Integrated Labor Organization Movement (MOLI, for its initials in Spanish), which is made up of the trade union members in education, health, public works, courts and customs office workers, among others, on July 18, announcing a series of work stoppages in various state institutions. These actions, which, according to MOLI leaders, aimed to apply pressure for salary increases, were immediately interpreted by ARENA functionaries as part of a plan to destabilize the new government —a plan in which the FMLN was actively participating. As the weeks passed and government silence continued, MOLI threats increased in intensity and the country’s postal workers took part while MOLI leaders warned that if their demands were not heard, they would proceed to occupying public buildings.

Flores’ response to MOLI leaders has taken the road of evading the problem and isolating himself in his peculiar use of words instead of presenting an efficient response which would at least warm the souls of the trade unionists. With the exception of the overtures of the Ministry of Education, the cabinet seems to be paralyzed. In this sense, the fact that the president has characterized the trade union actions as irrational and has attributed them to a strategy for returning to the past, only serves as a facile excuse for not sitting down for talks with them. Flores is right when he declares that the trade union actions are out of place because to strike was the first and not the last activity to which the unionists had recourse in order to make themselves heard. But it is, from all points of view, reckless to hold to this point in order not to deal with the matter, especially when simultaneous work stoppages in, for example, schools, social security and the courts would cause serious problems for the population. With his behavior, the new president appears to be acting more in the manner of Calderón Sol than in accord with the much-touted democratic and intellectual virtues which were bandied about during the elections.

The case of the ex–Civil Patrol agents is more serious. This is so not only because the last chapter of their activities concluded with a violent confrontation which left two patrol agents dead, a dozen wounded (including PNC agents) and 55 arrested, but because, as a result, it has come to light that the Association of Agriculture Producers (APROAS), which brings together the ex–Civil Patrol Agents as a sector, received from the previous government administration, 10 million colones in exchange for maintaining a truce during the electoral period and orienting their members (according to APROAS, some 45 thousands) to vote for the then-candidate Flores.

The responses which Flores has given when faced with these events are not satisfactory; rather, they awaken suspicion. In the first place, the president has not clarified, nor has he ordered the PNC to clarify, why he permitted police agents and not anti-riot police alone, to put down the demonstration when it is obvious that the first do not have either the psychological preparation nor the necessary equipment to resolve this kind of riot without occasioning fatalities. In second place, Flores has not concerned himself about determining the responsibility of the state with regard to the demands of the ex–Civil Patrol Agents (should the state respond for the "services" rendered by a group of paramilitary agents who, financed and led by the army, committed innumerable human rights violations during the war?). On the contrary, given his attitude, he has accepted a state of affairs in which their demands are to be considered legitimate and has transmitted the message that it is a lack of funds and the violent attitude of APROAS which has impeded the satisfaction of their demands.

In third place, arguing that he has no knowledge of the facts, Flores has refused to order an investigation on the question of the buying of votes and the willingness of APROAS members with state funds. Obviously, on this point in particular, the president is in serious straits because either his distancing himself from reality is so severe as not to be aware of the dirty tricks used by important ARENA members in order to favor their candidate (among these are Calderón Sol, his political godfather; Acosta Oertel, his current Minister of the Interior, and Walter Araujo), or he was aware of the misuse of funds and with his attitude aims to cover-up his acts.

The misuse of part of the funds for the homeless left by hurricane "Mitch" is useful in applying a new reading of APROAS actions. It is evident that the deal —illegal as it was—which the organization established with the government of CalderÓn Sol gave wind to the sails of the ex–Civil Patrol Agents. If they had already received a part of the indemnization which they demanded —at least 5,000 of them, to the tune of 2,000 colones each one—, was only a questions of applying pressure to oblige Flores —the candidate of the party who bought their votes— to give them the rest. They were mistaken. The only beneficiary of the deal was Flores, who obtained a number of votes which will never be determined with any certainty. APROAS, for its part, for its efforts got only a sound beating: two dead and the assurance that the 10 million they received were only a one-time payment for services rendered and not a down payment for the a sum which they, possibly, will not receive.

Everything appears, definitively, to indicate that the country will have a long period of social disturbances. Flores’ resistance to negotiating with MOLI and the lack of willingness to clear up the role the president played in diverting the funds for APROAS do not appear to point to a situation for which a short-term solution will be found. The only good thing about all of this is that the population will be able to come up with a more realistic image of their president—an image above and beyond his wordplay and his gentlemanly manners. Although being realistic, the presidential scandal and even the two dead of APROAS, will matter little two or three years from now because why should the population place any importance on one political scandal among many? Who remembers, for example, what demands were raised by the ex–combatant who died during the eviction of the Fund for the Protection of the War-Wounded?....

ABOUT THE NEW BANK LAW

For almost a week, the Legislative Assembly has been in a special plenary session to discuss, article by article, the new bank law, with which financial institution activities will be governed on diverse questions such as the handling of financial crises and the establishing of interest rates. The preamble of this new bank law has been a series of financial institution crises, mainly provoked by fraud committed with public funds. The cases of fraud in CREDICLUB and FINSEPRO/INSEPRO (Proceso, 765) and the bankruptcy of CREDISA (Proceso, 841) are the closest reference points motivating the formulation of this new law.

One of the most outstanding aspects of the law under discussion is that it considers the creation of control and reaction mechanisms in cases of crises in financial institutions, as well as the rules to which banks must submit themselves in order to carry out their activities, including the establishing of interest rates.

During the decade of the 1990’s, the bank went from being a state bank with evident problems in micro and macroeconomic inefficiency, to becoming a private bank with improved levels of microeconomic efficiency, but which still presents problems of macroeconomic inefficiency and inspires little confidence among bank users and savers. In fact, it has been this last aspect which has pushed forward the modification of the bank legislation, although fundamental dispositions among which the most outstanding was the proposal that the Central Reserve Bank (BCR) be the entity charged with establishing the interest rates charged by banks.

The new bank law offers some provisions which, according to those sponsoring the bill, will contribute to improving the efficiency and security of the financial institutions. Among the measures which will make this improvement possible: combating illegal fundraising, opening up competition in the system, empowering the supervision and creation of an Institute to Guarantee Deposits.

Nevertheless, the most polemical aspect of the law has been the proposal that it be the BCR which establishes interest rates because, for bank representatives —and for the government party— this measure is an attack on economic stability. Even the president of the BCR, Rafael Barraza, has indicated his opposition, given that, in his judgment, it could have "negative" effects such as restrictions on credit for the very small and small businesses as well as for the agriculture and construction sectors; a lowering of the level of deposits; a lag in the stimulation of foreign competition and, finally, it would provoke increases in interest rates.

Examining the figures offered by the BCR itself, the proposal to control interest rates would not make much sense because the rates are apparently maintaining their stability. Nevertheless, the truth is that those same facts give evidence that the margins for financial mediation by the bank are increasing. Additionally, it might be pointed out that average interest rates published by the BCR do not reflect some aspects of reality for the financial market for two reasons: they do not present passive rates paid by the current savings deposits and, secondly, neither do they present average interest rates that the bank charges for personal loans.

According to the data exhibited in the graph below, during the last two years, interest rates have undergone changes that, in the medium-range, show a slight downward tendency; a tendency which is seen more in the case of passive rates (those which banks pay on deposits). Between December, 1996 and March, 1999, passive rates on long-term deposits of 180 days go from 11.97% to 10.93% while average active rates moved from 16.68% to 16.52%. This rate behavior implies that during this period the margin for financial mediation by the banks broadened, given that the rates paid on deposits diminished much more than they did for interests charged on loans.

On the other hand, passive interest rates presented below suggest that the lower rate which could be obtained on deposits in March, 1999 was 10.89%. Nevertheless, if interests paid on regular savings accounts are considered(an average of 4%), the panorama changes. This niche in the financial system operates with rates which are noticeably lower and participate in a very significant way among the total deposits because the current savings accounts represent more than 38% of this total for March, 1999.

Another niche in the system which is very atypical is that of personal loans, which are based on contracts with rates which can easily be higher than 21% and can come to represent approximately 7% of the total credit extended by the financial system. It is by means of the current savings accounts and the issuing of personal credits that the bank obtains its best profit rates, but also by means of commissions for service which apply, which noticeably increase credit costs but do not reflect the nominal rates which BCR publishes. In fact, one of the bills currently being presented would provide for the publishing of that effective interest rates on which additional costs are included.

The new bank law would be an important measure of support for improving the mechanisms of control and credibility for the financial system, although not for regulating interest rates and not for the assignment of credit, which —in spite of having much to do with economic behavior— are considered taboo by private enterprise and by government. In examining the bank as a topic, one cannot ignore the fact that although solutions for the problem of its macroeconomic inefficiency are called for which would reflect the fact that these are to be found in an unarticulated state in the agricultural, livestock and industrial sectors, which, for this very reason, are not contributing to the building of productive foundations to sustain economic growth.

PRE-CANDIDATES. In the San Salvador Departmental Assembly of the ARENA party of August 15, ex–President Alfredo Cristiani was presented, along with the ex–director of the national Civilian Police, Rodrigo Avila, and the ex–Foreign Relations Minister Oscar Santamaría as pre–candidates for deputy. These names have still not been presented to the National Executive Council (COENA), headed by Cristiani himself and charged with presenting the lists of pre – candidates. The next step is that these names must be supported by the party’s National Assembly, programmed for September. It would seem that Cristiani did not expect his being named as a pre–candidate. "This support has taken me by surprise. I will have to think about it", he stated. Cristiani called for the choosing of "winning" candidates. "It is more and more difficult to win", declared the ARENA leader. The possibility for obtaining the majority in the congress and in the municipalities is the goal. "With this improved governability for President Flores would be achieved", he added. Other pre – candidates are the director for the youth sector, Guillermo Gallegos; a departmental leader, Yudy Castillo; Francia Brevé, Monica de Samayoa and Deputies Gerardo Suvillaga, René Figueroa and Julio Gamero. Although the candidacy was not presented to the plenary, Cristiani promised that the election would be held in less than a month (La Prensa Gráfica, August 16, p. 4 and El Diario de Hoy, August 16, p. 3).

FUSION. The Democratic Convergence (CD) and the Democratic Party (PD), present at the Third Ordinary National Convention of the CDU, held on August 5, agreed to join their parties together after the elections in the year 2000. Juan Ramon Medrano of the PD stated the following: "We believe that it is the most convenient. Our political thinking coincides now for years and it is now necessary to unify efforts to continue advancing, in order to become a real option for power and for taking over from ARENA at some point in time". During the convention, the CD elected its new authorities, including Ruben Zamora as Secretary General. The CD also redefined its ideological position, reiterating its social democratic line of thought. On the other hand, Zamora indicated that support for the re–election of Hector Silva as the capital city’s mayor would be viable as long as clear bases for participation in an eventual coalition were established. He clarified that Silva has not been asked to renounce his militancy in the FMLN in order to support the CDU. "What we wish to make clear is that if we support him that he refer to a coalition as supporting him and not to a party" (La Prensa Gráfica, August 16, p. 5).

DEMONSTRATIONS. Workers in the health sector have threatened to suspend outpatient services in 10 public hospitals in the country. Employees of ANDA, public works, courts and customs also plan work stoppages on August 16. These decisions respond to the fact that the Integrated Movement of Labor Organizations (MOLI) has called a strike. "This measure will be called to pressure the government to suspend plans for the privatization of public services and cut off the bill for applying IVA to basic grains", explained René Amaya, Vice–President of the National Association of Workers in the health Ministry (ANTMPAS). To comply with the salary law and reform the Budget Law also figure in the demands raised by the trade unions and state employee associations. The week before, these unions and organizations presented Flores with an ultimatum for resolving the labor problem. The protests, according to MOLI, are caused by various factors. Among many, they oppose the five month delay in the approval of the General National Budget and are protesting the provisions of Article 11 of that bill, the application of which would hold back the public sector employees’ salaries and salary increases for the period of January through May of this year (La Prensa Gráfica, August 16, p. 8).