Proceso 907
June 21, 2000
ISSN 0259–9864
 
 
 

INDEX

Editorial Continuity and change in the ARENA party
Politics The FMLN and the current situation
Economy The current state of the pension system
 
 
 

EDITORIAL

    The results of the March elections had a more than dramatic effect in the ARENA party rank and file. Immediately after learning of these results, tempers began to boil in that right-wing party. On the one hand, there were those who saw a failure for ARENA in the election results, which obliged them not only to identify those who were directly responsible, but to make them pay for the errors they had committed. Seen from this point of view, what had failed was the leadership of the party. For this reason, what was called for —imperiously— was a restructuring of the party, which, in practical terms, meant placing all the cards on the table on the question of the amount of power concentrated in the hands of Alfredo Cristiani.

    It was unnecessary for their spokespersons to shout such a situation to the four winds nor that they should do so in a vexed and angry manner for everyone to understand what was happening. But they did so anyway. And they were not satisfied to discuss the matter behind closed doors in the party, as would have been the customary manner in the ARENA party practice. No, they did not hesitate to fill up the media space in the media always so anxious to offer it up to anything new. Their public declarations, for as much as they focussed on the necessity for totally justified change, many ARENA party members’ tempers boiled and —while they were conscious of the fact that things could not stay the same in their party— they nevertheless were not pleased that their political rivals—together with all of society—were now becoming aware of the internal conflicts which wracked the ARENA party.

    So it is that this right-wing party began to hatch not only a more moderate position, but even an institutional position in which were grouped those who believed that the situation was not so dramatic that it merited a radical transformation in the party —though they did not cease to be concerned about the election results. Nor were they in agreement that ARENA party members might break with the tradition that party problems should be solved internally within the party.

    Those who took up the banner of this position knew that they faced problems on two fronts, both difficult to control and convince: (a) those not in agreement with the party leadership of Cristiani, who demanded radical changes in the party structures and who could, more and more, count on politically agile members in rural areas of the country, and (b) those who insinuated —Cristiani among the first to do so— that in ARENA there was nothing needing change, given that the results of the elections had been a few simple mistakes and that the party was as strong as ever. For the first group and its position —who supported their claims for change as self-proclaimed “founders” of the party— it was a question of moderating their impulse towards change and transformation, convinced that the change would take place, but only by means of the same recognized institutional channels always used. For the second group, it was a question of selling the idea that some few minimal changes were necessary in order to maintain internal stability and position themselves on the electoral scene, but that these changes signified neither a loss of influence nor a loss of power for them.

    It was not an easy decision or solution because each of the sectors at loggerheads pushed with all its strength to obtain its objective. The possibilities of each group, nevertheless, were not completely equal in their ability to influence the decisions of those who held high the banner of the need for an immediate solution. In fact, those who pushed for drastic changes in ARENA —as much as they called attention to their status as “founders”— had several things against them. The first —and most immediate— was their having made public their unhappiness with the way the party was led and directed.

    In taking this step, they had broken with one of the almost sacred pacts which every ARENA member establishes with the party; that of not to engaging in public criticism of party leaders or of the party itself. All had sworn this oath and those who broke with it were, first of all, ostracized and later expelled —although it could be called self-expulsion. So it was that as much space as they occupied in the media, those who characterized the post-electoral situation of ARENA as dramatic in character were most severely rejected by those who thought that the party (as Roberto D’Aubuisson had taught them) was above personal or group interests. And, when they were rejected, they lost all possibility that what they, very reasonably, had to say might be heard. They lost, as well, all possibility of winning over people in the party who might support their cause.

    In second place, another factor which operated against those who surrounded the “founders” is more of a structural matter: it has to do with the depressed status of the agricultural sector as part of the national economy as well as with the predominance of the service sector, particularly on the question of finances. In effect, the “founders” claimed —and continue to claim— political weight which they no longer wielded inside the party or in the economy itself. The need to declare such a thing indicated the subordinate position which they now occupied. When the ARENA party was formed, they were all of the party —and in the economy. The situation, however, had now changed. On the basis of their strength in the financial world, Cristiani held a quota of economic power which he very cleverly knew how to translate into a quota of political power —from his vantage point in the ARENA leadership body. From this followed his capacity to influence decisions taken in ARENA party, once he had left the presidency of COENA.

    In this sense, if it is true that ARENA succeeded in building a certain consensus around the need to carry out institutional changes; he also succeeded in bringing about a certain consensus among those who were the responsible parties in implementing them. It is clear that Cristiani’s influence and that of his group made itself felt. So it is that, in ARENA, a process of moderate change was evident, by means of which a solution implying continuity in the party structure which was waffling under Cristiani’s control and leadership would surely be maintained. There is perhaps no better guarantee that this should be the outcome than Walter Araujo, a good party man, but one who belonged to the generation of ARENA leaders formed under the Cristiani style of leadership. To the question of which would predominate to the greater extent—change or continuity—perhaps one could respond with relative certainty that it will be more the second than the first. What cannot be foreseen with any certainty is that what will happen with the ARENA-party members who advocate more change and less continuity. Will they stay with their arms crossed? Will they continue in their efforts to turn the tide of Cristiani’s political power? Will they abandon, as others have done, the party rank and file? These and other questions continue to await answers once the internal dynamic of ARENA is stabilized around the new leadership which has just been established.

POLITICS

    The results of the elections of last March are weighing heavily upon national political life. In ARENA, the government party, the alarm of change has sounded: preparations must begin to avoid a greater electoral defeat in the future. In the FMLN, the principal opposition political force, internal consolidation is being spoken of so as to discern which road is to be taken upward into the preferences of the voting populace. In summary, national political parties —at least two of the most important— have entered into a period of internal reflection aimed at arriving at an “objective” analysis of the results of the last elections as well as implementing preparations for confronting the challenges which reality is beginning to impose.

    In the context of the foregoing are to be situated the most recent events inside the FMLN. That party celebrated an Extraordinary National Convention on Sunday, June 18 with the objective, according to Salvador Sanchez Cerén, head of the FMLN legislative faction, of “representing the majority, raising up an alternative project, intensifying the struggle and preparing for the democratic victory of 2004”. To succeed in arriving at these objectives means reforming the party statutes where democracy, participation and cohesion become the cornerstones. There is, nevertheless, no unanimity in the FMLN rank and file about which is the best road to take in order to arrive at the stated proposals. The struggle between two tendencies —the revisionist tendency and the revolutionary socialist tendency— seems to augur moments of tension and intense disputes at the heart of that left party. The differences between the two principal tendencies are a public secret and the struggle is not only to control the arenas where party decisions are taken but the vision of the role which that party ought to play in the life of the country are at stake in such a way that, should government control be achieved, large and serious national problems would have to be confronted.

    The day before the National Convention of the party, that is, on Saturday June 17, the “revisionist” wing of the FMLN organized an assembly with an eye to defining the agenda of topics to be negotiated with the “orthodox” wing of the same party. While these last see in the existence of parallel structures a threat to FMLN unity, the revisionists defend the existence of the parallel structures as a way of avoiding verticalism characteristic of a monolithic structure. As a consequence, they propose a series of statutory changes which include the necessity for institutionalizing tendencies, together with the modality of direct voting in internal elections as a mechanism for assuring participation and democracy. In their opinion, by means of this modality they would respond to the demand for democratization of political parties which has been called for by diverse sectors of Salvadoran society.

    In this sense, the internal struggle in the FMLN could be read in the following way, in code, as it were: the verticalists, defenders of the status quo and the revisionists who have taken up the banner of change. Things are not, however, so simple. What is presented as a mere struggle between the “orthodox” wing and the “revisionist” wing could have as a backdrop the big question which is currently being posed to the left regarding its identity and its protest against the prevailing neoliberal capitalism. This is the state of affairs to such an extent that the animosities between the orthodox and revisionist branches ought to arrive at a questioning of the FMLN’s identity as a party. This is to say, the differences within the FMLN ought to pave the way for an internal debate which goes beyond simple negotiation between tendencies.

    A first possible response —the most common one and that which is much taken up by the principal media in the country— is the question of whether the identity of the FMLN could be circumscribed by the current national situation and state of affairs currently obtaining. In this sense, the FMLN is a party of the ex – guerrilla incorporated into civilian life after the Peace Accords. On the basis of these agreements, different actors in the country’s political life committed themselves to encourage the democratic process of the country. The FMLN committed itself to lay down its arms and incorporate itself into the struggle for political power in a political party system according to fair and equal rules. Today’s reality, as a consequence, demands going beyond verticalist schema characteristic of guerrilla organizations. The democratic process demands abandonment of old structures. The FMLN, then, should bring itself up to date with the times, which pose the challenge of a serious discussion and, finally, a discussion of its identity, goals and perspectives in a process of democratization.

    On the other hand, the Salvadoran people regard —from the point of view of the democratic exercise of alternating power, the changes which have taken place within the left party with some sympathy and would, perhaps, be willing to confide in the FMLN the “enormous” responsibility of leading the future destiny of the state. A palpable demonstration of this ascension into the realms of popular recognition is to be found the results of the recent elections. The FMLN has not only grown in voter preferences but governs the majority of Salvadorans through its municipal town halls. So then, as a counterweight and in order to continue growing politically among their sympathies, the FMLN ought to do a good job and play a good role. It ought to govern the municipalities in its power in an efficient way, which would permit them to undergo public scrutiny with some solvency. At the same time, it ought to send unequivocal signals to society on the question of its internal democratization, which gives assurances that it is on the road to overcoming its old ideologies and policies which are a throwback to previous times.

    On the other hand, a reading of the differences between the orthodox and revisionist wings demand of the FMLN a greater movement towards moderate center positions. The Communist or Socialist past is not much approved of by significant sectors of the population. To them it symbolizes internecine warfare and ideological extremism. But the problem is not simply one of image. A certain dose of pragmatism is necessary. The current state of neoliberal capitalist development imposes a certain margin for movement among peoples and political movements. It is a question of joining together pragmatism and intelligence in order to obtain the best possible in a hostile world environment. According to this argument there would be not need to struggle for an alternative world order —indeed, such a struggle is not even feasible. The first premise of this argument imply movement within what is permissible and possible. And, along the same lines of thinking, the FMLN would be nothing more than just another party, the fact that it calls itself a left party notwithstanding. Left formations —understood in the sense of seeking alternative models— are not viable in the world today, which means that it ought to assume the prevailing weight of the new world order.

    There is no room for doubt that the process of democratization within the FMLN ought to continue. It must, moreover, submit itself to public scrutiny. For all the rest, as a party which seeks a quota of state power, a certain political pragmatism would seem to be de riguer. Nevertheless, these demands upon democratic and political schema ought not to allow for any detours in the need to define its identity as a left party which should, under no circumstances, allow itself to be confused with a neoliberal right-wing party, or reduce itself to immediate electoral concerns. Nor is it true that the current situation confuses left and right in the same way and in the same measure. Such a proposition would ignore the crucial reality of poverty and social exclusion which the current model generates —even though it might dress itself up in revisionist or realistic clothing. Such a party would abdicate from the struggle to introduce important changes in the social, economic and political order of things at the present time. On this point it might be useful to call to mind some of Jorge Castañeda’s ideas. “If, in many countries welfare states have been constructed which, in spite of their infinite inefficiency and corruption, protected millions of Latin American people who are poor, this is a result of the obsessive insistence of the left on social topics. If some contemporary governments put more sensitive neoliberal policies into practice which are less dogmatic than others, and at least simulate the struggle against poverty, this is, also, in part, attributable to the left” (Utopia Disarmed (Barcelona: Ariel, 1995).

ECONOMY

    The pension system reform unleashed a wide variety of opinions on whether it was pertinent to take up the reform proposed by the government or if it were better to adopt another model. Diverse and divergent signals were sent out, the most outstanding among which are the supposed intentionality of broadening the area for accumulation for the business sector and the negative effects on disposable income of workers who, nevertheless, did not avoid the approval of the model proposed by the government which is currently in effect.

    Previous government administration functionaries justified the reform of the pension system in various ways: they argued that it would translate into financial kickbacks for the workers, individual capitalization, windfalls and kickbacks, greater availability of investment funds, greater pensions for retired workers and the incorporation of informal workers into the pension system. Additionally, they proposed that the new pension system should introduce competition into the pension sector, provoking an improvement in services and reductions in commissions charged to those affiliated.

    At the present time, or, two years after the form of the pension system, the situation is ambiguous because positive and negative signals about the same thing are to be seen, as, for example: greater financial kickbacks which are greater than active rates, but fewer opportunities for stock investments; fusion and disappearance of AFPs which could result in a single AFP which will administer the market; a heavy additional weight on public finances in coming years; and an already noticeable reduction in income available to workers.

    Little can be said of the pensions paid by the Salvadoran system except that their total amounts will not be known for several years yet. There have not yet been retirements among those affiliated and pensions paid up until now by the AFPs have been the result of demands by those insured for work-relat4d accidents or the death of the affiliate. In spite of this vacuum, available data give evidence that the current situation of the new pension system has already yielded some results in its two years of functioning.

    According to reports published periodically by the Superintendence of the Financial System (SSF), for the early months of 2000, return rates paid by the AFPs to those paying quotas rose to levels greater than passive rates paid by the banks. On the other hand, the same source assigned 97.8% of pension funds to be found invested in public instruments or issued by banks and financial institutions while approximately 2.2% are seen to be invested in instruments issued by other private businesses which are not financial institutions.

    So it is that, although, in the pension system greater return rates are obtained than in the financial system, resources for productive investment are not being facilitated. It should be noted that this, in reality, would not be a problem for the pension system, but rather for the financial system and economic policy, given that the system does receive resources from the public, but there are no options for investment in businesses which could encourage the growth of production. However the case may be, pension system reform has not translated into facility for financing for productive investment, which has not ignored the fact that this does charge for the costs of the reform, such as reduction in the available income for workers and additional fiscal burdens for the state.

    Since the implementation of the reform it became clear that quotas paid by workers to the pension fund increased. At first the quotas went from 1.5% of the salary to 4.5% —which is to say, an increase of 300% and the problem was worsened when it was considered that the major part of the discount was absorbed by the commission charged by the AFP: 3.5% went to the commission and 1% to the individual pension fund. Currently, the commission has been reduced to a maximum of 3.25% of the salary (although one AFP charged 2.9%) and saved 3.25%, which implied that the AFPs will do good business with the workers, who will practically be paying the commissions which are almost equivalent to what was saved. On the other hand, those paying quotas can hope for an increase in the amount of the average pension system. Nevertheless, it would seem that they must pay it for a long period which —in the opinion of those who are experts on the subject— could be within the range of 30 or 40 years which is the length of time during which the pension system in Chile took to improve the pensions of its affiliates.

    To the foregoing might be added the fact that, as a result of the reform, the government assumed the payment of the affiliates’ pensions, which implies that this year it will pay a total of 454 colones which will increase enormously during the following four years, even to the amount of 3,354 million colones in 2004 and provoke major pressures on public finances which are already stretched thin.

    And if this were not enough, it turns out now that neither will the introduction of “competition” within the pension system owing to the fact that recompositions have taken place in the market which point to the creation of a monopoly. On the one hand, the dissolution of the smallest AFPs is announced (i.e., Profuturo) and, on the other, the fusion of the three remaining AFPs is announced (i.e., Máxima, Porvenir and Prevision) to form a single AFP, which implies that, in practice, workers find themselves with no choice among pension systems.

    To the fusion of the AFPs is added the fact that since its creation, these have belonged to families with interests in the banking and agricultural exporting sector, for which reason it can be said that they facilitated a major concentration of property. Only Profuturo, the AFP which will be dissolved, was the property of diverse investors associated with the construction industry and then with transportation cooperatives.

    As the pension system situation takes shape, at least four challenges take shape as well: first, to succeed in articulating the pension system in an adequate way with investment opportunities for productive activities; to regulate and review commissions (especially if an AFP fusion comes about); to seek counterparts in order to cover the fiscal burden to be assumed by the state; and, finally, to harmonize the objectives of the pension system reform —and the privatization of that system as well— with the search for the development of the wholesaling sector of the country and not only for a select group of businesspeople allied to the government.

    Evidently, this is a challenge to the judicial context of the pension system, which can and ought to perfect itself, the case being that compliance with the law is not an end in and of itself, but only a means to achieve higher objectives: a pension system which offers pensions which are worthy pensions in less time and at less cost and which, at the same time, are articulated with the remaining economic sectors, facilitating the financing of investments. Here the topic of influencing economic policy comes once again into the picture because, although resources for financing investments could exist (in fact, do exist), do not have a stock market which would facilitate contact among financiers and investors nor even a policy to encourage production among strategic economic sectors. >From this perspective, it is completely necessary for the government to define development poles and encourage investments in them using the resources provided by pension funds which, up until now have been under-utilized, while many activities which might generate exportable products which might find a viable market need financing.