Proceso is published weekly in Spanish by the Center for Information, Documentation and Research Support (CIDAI) of the Central American University (UCA) of El Salvador. Portions are sent in English to the *reg.elsalvador* conference of PeaceNet in the USA and may be forwarded or copied to other networks and electronic mailing lists. Please make sure to mention Proceso when quoting from this publication.
     Subscriptions to Proceso in Spanish can be obtained by sending a check for US$50.00 (Americas) or $75.00 (Europe) made out to ‘Universidad Centroamericana’ and sent to the above address. Or read it partially on the UCA’s Web Page: http://www.uca.edu.sv
     For the ones who are interested in sending donations, these would be welcome at Proceso. Apdo. Postal (01) 575, San Salvador, El Salvador.

Proceso 919
September 20, 2000
ISSN 0259-9864
 
 

ÍNDEX

Editorial National emergency
Politics Will the superintendent of Electricity and Telecommunications resign?
Economy The price of petroleum: the State versus the market?
Society About princes, villains and justice which does not come to pass
 
 
 

EDITORIAL

    The Flores Administration’s strategy of improvisation is an attempt to cause panic among the population as a last ditch effort to induce the population to react to the epidemic of hemorrhagic dengue. This is the real content of the hasty declaration of a national emergency when it is already too late and when the carrier of the virus which transmits the sickness is already widespread and out of control. A national emergency should have been declared from the very first minute when the Ministry of Health vacillated in recognizing the first cases of this terrible social disease, the final explanation, which is to be found in the poverty and the lack of education, both of which can easily be dealt with by means of a coherent plan of action, a firm willingness and efficient implementation.

    Faced without he first outbreaks of the disease, the Ministry of Health tried to cover up its existence, alleging that they were unconfirmed cases. The sickness was announced in time. There was even a case last year which ought to have alerted the health authorities, but they preferred to consider it an isolated case and let it pass, hoping that the worst would not happen. When the first outbreaks occurred at the beginning of this year, the health authorities continued to consider them isolated cases which, in their judgement, would not issue in an epidemic.  Last year the risk arose and they escaped. This year they adopted the same attitude and the result is a growing list of children hospitalized or dead as a result of hemorrhagic dengue fever. The government administration’s reaction was too late to halt the deaths, although it is indispensable for containing the epidemic.

    The declaration of the national emergency carries with it, moreover, the proposal to call for aid from the international community. Some of its representatives have already indicated that they are not going to give money to the Salvadoran government. In reality, it is not money what is most needed, but technology to control the carrier of the virus: equipment and medicines to keep the children who have been infected alive. Scientific assistance, an activity to which the Salvadoran government has paid no attention, is indispensable for all of this. But the national emergency ought to comprehend more than the epidemic of hemorrhagic dengue fever, given that the epidemic has shown up the general crisis of the health system of the country which, perhaps, should, itself, be called into a state of national emergency given that it does not have the capacity to provide health care for the Salvadoran population. Given this set of circumstances, all possible forces must be mobilized—even the army—in order to contain the effects of the expansion of the carrier of the disease. But once the crisis is overcome, one more step ought to be taken without waiting for the next epidemic and to begin seriously to examine the precarious state of public health and its possible solutions.

    The right-wing has always lacked confidence in the organization of the citizenry and popular forces for fear that such organization will slip through their fingers and move towards democratic formations which it cannot directly control. For this reason, it has encouraged neither governmental decentralization nor community organizing, which is what is called for now. If the population was even minimally organized around their local and community governments, it could now offer the aid for which there is no substitute in order to combat the epidemic of hemorrhagic dengue, public insecurity and other social ills affecting society at the present time. Social and/or community organization is the key to overcoming these problems. In this sense, it is the responsibility of everyone. But the government is the principal responsible party, precisely because it is the government the one who administrates public affairs. The improvised mobilization of teachers and schools—by the Ministry of Education, with doubtful efficacy—would have been unnecessary had good local organization been available.

    Evidently the population does not wish its sons and daughters to die of hemorrhagic dengue. Nevertheless it is skeptical and apathetic to the calls for organization issued by the government. Even when boys and girls are being exposed to a real danger, Salvadoran families lend very little credibility to the government’s message. The current Salvadoran government does not enjoy the credibility with which to mobilize the citizenry for its own direct good to protect itself against this threat which could prove to be fatal. The population pays the government with the same coin by being distant, insensitive and lacking in confidence that the government has treated the population during recent years. The celebration of the September 15 Independence Day, with its military parades, festive atmosphere and waste of resources turned out to be incompatible with the state of national emergency. It is incomprehensible that, having declared a national emergency and faced with a lack of equipment, medicine and personnel for the public hospitals, the government has sponsored an expensive and showy military parade. The festive atmosphere of government spectacle is far removed from the tragedy of the families with sick or dead children. The government celebrates with symbols that presumably speak of freedom and independence at the expense of the population’s health. Faced with such superficial insensitivity, it is no surprise that government agitation falls on deaf ears.

    Faced with this lack of credibility, the government has had recourse to panic as a desperate measure, counting on the population to react from fear. The premise underlying the declaration of a national emergency is very similar to that which the government used when it saw itself threatened by popular organization, which later became a military movement. At that point in time, the military government had recourse to terror to contain popular protest and armed uprising. Now, the discredited civilian government can find no other alternative than to provoke generalized panic. Terror is the methodology used by authoritarian governments precisely because they gave not influence upon the population, which watches them with indifference, resentment or even hatred. For this reason, these governments synchronize the mass communication media in order to present its messages. This has been the habitual practice of Salvadoran government from time immemorial. The imposition is seen by the government as necessary because of the rejection by the population that it now confronts. But this methodology only provokes more rejection and fear, in general, provokes a reaction exactly the opposite of that hoped for: the population withdraws even more from the government. The dilemma of the right-wing government administration is evident. Just as it has persistently denied the organization of the population out of fear of real democracy, when it wishes its messages to be heard by the population, it must have recourse to panic or terror.

    This right-wing, which considers itself enamored of democracy and freedom lacks that very thing which is most important which means that it has no other recourse than that of imposing its will. The population recognizes words that have the ring of truth and reality. To these words it pays attention and is willing to act.

POLITICS

     The least that might be expected following the publication of the determination absolving CTE-Telecom—by the Board of Directors—in the case of alleged “telephonic espionage” is the resignation of the Superintendent for Electricity and Telecommunications, Ernesto Lima Mena. Some three months ago when the finding by the superintendent was published in the case of the denunciation of Saltel against C-CTE-Telecom in which CTE-Telecom was fined for violating secrecy in communications, the feeling that, at least some public official was taking his responsibilities seriously was an encouraging sign. Nevertheless, the decision of the Board of Directors, the body charged with analyzing the appeal of the previous finding which condemned the superintendent, brought forth pessimism and led to the burial of the last hopes held by the most optimistic.

     The Board of Directors establishes, in its decision or finding, that the superintendent had not correctly evaluated the instruction denominated B9. Its members concluded that the use of the said code did not, in and of itself, signify telephonic intervention. In so doing, the Board abrogated the previous decision by the superintendent because they considered it to be not fully adherent to the reality of the situation. In this way, the innocence of the Telecom Corporation is ratified while, at the same time, the capacity of the superintendent who did not know how to give the concepts their correct technical interpretation is questioned. For this reason, the functionary in question ought to resign from his post because the new resolution by the Board of Directors does nothing more than reproach his ineptitude. On the other hand, however if the superintendent is sure that he complied efficiently with his responsibility as he has declared to the press on repeated occasions, he ought also the present his resignation as an indication of his lack of agreement with the Board of Directors who have discredited him and which has ignored a decision which complied with the dictates of the law.

     All appearances to the contrary, however, it is not simply a question of personal prestige and pride in the case of this functionary. It is more a question of what posture the superintendent will assume in a case where official circles are making an effort to close the door on reality which, it would seem, is smearing a personality who is very influential in national right-wing circles. This could be the principal reason for the jealous cover-up taking place as evidenced in the actions of the president and his spokespersons on the topic of telephonic espionage, which is so important in clearing up the current national state of affairs on questions such as kidnapping and organized crime. High level functionaries seem to be very secure in the notion that prominent members of the right wing who are victims of kidnapping are not seen to be affected by the murky structures emerging from telephonic espionage. Were the opposite the case, they would be very interested in letting it all come out.

     The controversial decision of the Board of Directors has caused stupefaction in national public opinion circles. At the time when diverse reactions by people implicated in the telephonic espionage scandal are coming to the fore, public opinion expects conclusive findings from the investigations begun by the Legislative Assembly and the Attorney General’s Office in the case. Nevertheless, while the guilt or innocence of those involved is under consideration, it is important to analyze the way in which the topic of telephonic espionage has been dealt with from the moment when it was revealed in the declaration by the superintendent. Appearances to the contrary, the finding of the Board of Directors seems to take place in the context of official the official effort to pooh-pooh the topic of telephonic espionage and the reason for the calls that had been diverted. Given that the principal suspect is the State Intelligence Organism, this organism and the functionaries involved in the topic of telephonic espionage are being protected. A brief description of the attitude exhibited by the principal authorities in this polemical case is presented below.

     From the moment that the telephonic espionage scandal broke, the reaction by diverse authorities has not contributed at all to the best possible resolution which the majority of Salvadorans considers as a widespread practice and which was characteristic of the activities of the state intelligence forces during the recently ended civil war and after the signing of the Peace Accords. From this it follows that a commitment is expected, given the peace achieved to resolve with all due haste and sincerity the shameful case of telephonic espionage.

     The first speech by the President of the Republic, Francisco Flores, on the case made it clear that he had no interest in collaborating in the clearing up of the denunciation made concerning telephonic espionage. From the very beginning, without yet having at hand a single shred of proof, the president described the complaint presented by Saltel as a commercial dispute between two telephonic corporations. In this sense, he ignored the complaint in the measure in which it exhibited political implications because, as it focussed on a specific corporation, it pointed to a state organism that had interests in intervening in the telephone lines and conversations of certain clients. On the other hand, the president did not ponder the gravity of the topic even given the fact that it took place in the context of competition between two corporations.  In other words, if the wire-tapping took place in the context of a commercial war between rival corporations, nothing could prevent systematic illicit wiretapping against other people or the use of wire-tapping by organized crime.  At this point in time, the president demonstrated a surprising nonchalance concerning the case—a nonchalance which, certainly did not augur well for the legal findings in the case in the short run.

     At the same time as Flores was stating his position on the case, so were diverse declarations being made by ARENA party deputies on the topic we are dealing with. So it was that the ARENA deputy, Gerardo Suvillaga, did not skimp in his efforts to discredit the FMLN deputy, Humberto Centeno, who, for his part, declared unceasingly, that he had resounding proof (which he stated was in his possession), of the existence of a network set up by the State Intelligence Organism on the topic of telephonic espionage.

     Neither has the Public Ministry shown signs of being up for dealing with the situation. The expectations created by the Attorney General’s Office are not encouraging if the hope is to reach a satisfactory solution to the problem of telephonic espionage. If it is true that all parties have had their hearing, the weakness of the investigation concerning the role of the State Intelligence Organism in the case belies a certain lack of willingness by Belisario Artiga, the Public Prosecutor, to get to the bottom of the matter. The hopes awakened by Mr. Artiga and the search of the State Intelligence Organisms office cannot be more disconcerting. And in showing no indication that he will go further in the investigation of the calls diverted by Telecom, Mr. Artiga publicly announced his visit to the offices of the State Intelligence Organism so that he could later say to the press that he had found no proof of telephonic espionage.

     Definitively speaking, the behavior of some of the important functionaries in the government—such as President Flores and Prosecuting Attorney Artiga—do not bode well for finding a satisfactory resolution to the topic of illegal wire-tapping. The final reason and objective of the intercepted calls continues to be unclear in these diverse investigations. Up until the present time, no technical investigations have been practiced in order to confirm or corroborate the truth of the reports on the case upon which the Superintendent based his condemnatory findings against Telecom. For that reason alone, there is still much more water under the bridge to be tested on the topic of illegal wire-tapping. But the worst of it all is that one cannot help but feel that that in El Salvador insecurity and malaise as to one’s personal security is not caused only by common crime. Everything seems to indicate that there are state agents active in systematically promoting a climate of insecurity and who use monitoring of opposition figures—be they political or business figures—as its principal means of persuasion.

ECONOMY

    Price fluctuation of petroleum-derivative products is a key to understanding the functioning of the economy, because a wide range of economic activities depend upon petroleum-derivative products and are therefore sensitive to the price fluctuation to which these products are prone. So it is that when the prices of these products rise, they provoke an increase in costs and prices, reductions in the rates of economic growth and can even contribute to causing economic recessions. It must be remembered that the world economic crisis of the 1970’s was caused precisely by sharp price hikes in international prices for petroleum and this had a strong impact on consumer countries especially in Europe and North America.

    Fundamentally, price increases in petroleum derivative products respond to price increases for petroleum on the international market, which are fixed by the influence of policies adopted by the Organization of Petroleum Producing Countries (OPEC). This entity is charged with fixing quotas for production for its member countries in such a way that international prices are kept within the margins which guarantee the profitability of the extraction and commercialization of crude oil. In other words, OPEC can be charged with distorting the free market. At the present time, the policies adopted by OPEC have become so restrictive as to provoke considerable increase in international prices per barrel of petroleum crude oil as has happened during the last 18 months, the period during which prices for this product have gone from U.S. $18 to more than U.S. $32, the equivalent of a 77.8% jump in prices.

    The international context such as was just described above has undoubted repercussions on the national situation in many different ways. In the case of El Salvador, it is of interest to review the way in which the increase in international prices of petroleum introduce new elements into the debate on the question of state limits and market functioning—even beyond the inflationary effects and the effects of these price increases on production. Meanwhile, the government has proposed the necessity for regulating the margins of intermediation by the petroleum companies, using the argument that distortions in the market exist. The petroleum companies have expressed their lack of agreement with state price regulation because it means changing the “rules of the game”—which is to say, the “rules of the free market”. This posture has been supported, as well, by the National Association of Private Enterprise (ANEP), for which reason, state intervention in the petroleum market cannot be justified from any point of view.

    The main fuse causing the detonation of this polemic was the bill approved by the Legislative Assembly which established a maximum for the profit margins which the petroleum companies could charge (see PROCESO 916). After this bill was passed, a push and pull process began between the government administration and the petroleum corporations which, in the end, turned into an agreement in which the government ceded its initial aims and accepted a reduction in the profit margins which only represent a third of those fixed by the legislative bill. Curiously enough, in spite of the foregoing, the Minister of the Economy, Miguel Lacayo, declared that he had succeeded in his efforts to reduce the impact of international price increases for petroleum on consumers. The truth of the matter is that this reduction in the profit margins is insignificant in the face of price hikes for petroleum and petroleum-derivative products. During the last two weeks alone, prices of special gasoline has gone up by 1.43 colones per gallon, or seven times more than the reduction negotiated by the government.

    But the profit margin of the petroleum companies is only one of the factors influencing the final price of fuel because the Value Added Tax (IVA) must also be taken into account, as well as subsidies for diesel and propane gas, profit margins for gas stations and international prices. Among these, only the last cannot be affected by economic policy. The government can alter the remaining factors. By the same token, better options for mitigating price increases in fuel can be found. In fact, ESSO, Standard Oil itself indicates in an open letter that, “owing to high prices higher taxes than expected are being collected”, especially the Value Added Tax. In this way, total IVA applied to fuel has risen by 187% during the last 20 months, which implies that that tax, as applied to each gallon of special gasoline, for example, has increased by almost 4 colones. To eliminate this fallout, the government might succeed in a much more significant lowering of gasoline prices that the 21 cents so arduously negotiated with the petroleum companies. The petroleum companies themselves counter-attack using precisely the same argument which was most convenient, “the temporary reduction of IVA on fuel, given that, as a result of high prices, more taxes are being collected”. To the foregoing must be added that the profit margin for gas stations must also be reviewed, while the subsidy on diesel for public transport together with that for propane gas could be obtained through less regressive taxation (such as applying a higher income tax to big corporation profits and income).

    As a result of the foregoing, in all fairness, it must be recognized that the conflict between the government and the petroleum companies has placed on the agenda the topic of the necessity of state intervention in order to regulate anomalies such as the forming of monopolies or oligopolies which cause two serious distortions: excessively high prices and “artificial” scarcity of a specific product. The fact that the petroleum companies might accept the reduction by 21 cents as outlined above and that, moreover, they might voluntarily reduce their profit margins beginning on July 10 reflects a situation in which this market is obtaining extremely high profits at the cost of the consumers who are obliged to pay a higher price than that which might be fixed on a competitive market.

    It is in just such cases that a certain amount of state intervention into the market ought to be acceptable: cases that require the correction of distortions provoked by the domination of one or several corporations or businesses. In this way, neither the strongest apologists for a free market could be outraged by state intervention in a market in which petroleum-derivative products because by means of that intervention benefits might be re-established (or established) which are generated by means of the efficiency which the free market assigns to scarce resources.

    Simultaneously with the foregoing, the government has announced that it will promote an entrance by more businesses offering petroleum products that are independent of the transnational petroleum companies into the market thereby introducing greater competition and efficiency. For this reason, the government is considering a 40million-colon investment in the construction of a new silo for storing petroleum-derivative products.

    All in all, the hydrocarbon fuel market is only a small sample of the existence in El Salvador of monopolies and oligopolies and that, even so, there are businesses within businesses which are opposed to state intervention which use the argument that the “free market” would be violated. But what is true is that in the case of many activities, which include those involved in buying and selling petroleum-derivative products, such as beer, soft drinks, telephones, electricity distribution, cement, steel, air transport and the financial system which continue to follow criteria which have nothing to do with the functioning of a “free market”.

    Although there may be dissenters on the question of the effects of the negotiation between the state and petroleum companies on the question of reducing profit margins—and this because many other components enter into play in establishing and affecting the price of fuel products which ought to be reviewed—one ought not to forget the need to promulgate a Law for Free Competition. Such a law would guarantee a minimum of order and efficiency in the “economic liberalization” processes so much in vogue today.

SOCIETY

    In the dark corridors where the destiny of this country has often hung in the balance, not everyone is allowed to enter. Roberto Mathies Hill is well aware of this. He is the central pawn in the game of the financial scandal originating in his investment enterprises FINSEPRO and INSEPRO. This formerly promising citizen, member of the most protected elite in the country, born and raised within the circle of powers and prerogatives which open and close doors, which have dictated up until now when, what and for whom in politics and in the economy. For this reason, when the national press offered him a privileged page to open the Book of all of his silences—never has there been a better way to say all that was left unsaid from his prison cell—this dubious ex-businessman did nothing more than confirm what was so obvious to everyone: that in reaching a conclusion or sentence in his legal case, are at stake more interests than those which concern the mere application of justice. The favor conceded him for cleaning up his image acquire a double forcefulness that, for the benefit of the doubt which he merits, it is possible to consider that poor “Robertío” (little Roberto) didn’t know how to prevent.

    The profile which the journalists from El Diario de Hoy wished to offer up to public opinion concerning Mathies Hill was, doubtless, a publicity bomb almost impossible to pass up. To hold up to view before the population and those who were cheated the face of the one who was responsible for one of the biggest swindles made public in El Salvador, implied, in a certain way, bringing to life a debate which was frozen behind the congenital obstacles of justice. And Mathies Hill did a good job of opening and closing the doors that gave life to that debate, just as he would have done had he still held his place among the wealthy classes. The harm or benefit to be won with this maneuver is yet to be seen, but his words have already brought to life many reactions, all shelter skelter… all indicating with greater or less dissimulation to he who was guilty of the disaster or, or as one might read on the pages of El Diario de Hoy, “one of the fourteen”.

    It is precisely because of this certainty that a sort of halo has formed around the figure of Mathies Hill in such a way that his words have become a double-edged sword, as we said above. On the one hand, the accused tries to clear up some of the gaps which the investigations into the case had not been able to fill. In this sense, and turning to those objections that his situation obliges him, the ex-businessman confirms the pressures applied by high-ranking government functionaries—among them the then President, Armando Calderón Sol—to proceed in the way they did toward his business. In the judgment of Mathies Hill, his businesses, although currently in difficulties, could have moved ahead with just a little time; time which was never conceded him. Of course, none of these declarations manage to clear up the doubts about his work in FINSEPRO and INSEPRO that fall upon him with even greater weight. But what probably interested the ex-businessman was leaving in the hands of justice the resolution of those doubts and questionings. What he dedicated himself was to throw more light on what he did which placed him behind bars, as it did.

    As a result of his efforts to clear up some doubts about his handling of the financial institutes implicated in the swindle, Mathies Hill has attempted to discharge part of the responsibility upon the government administration in office at the time. This government administration, overwhelmed by an unfavorable context (the legislative and municipal elections have left him in a very bad state of affairs), expiated part of his guilt jailing he who was a dupe difficult to resistant the moment. Something of a conspiracy was woven when the government of Calderón Sol acted to “safeguard” the stability of the financial system and the security of those who invested their funds in the financial institutes headed by Mathies Hill.

    Evidently, none of this even forms a part of the investigations that are being pursued today. And this in spite of the fact that the “revelations” of Mathies Hill do not represent in and of themselves anything new, because, although it may be significant that he may have dared to suggest that background, there are very few Salvadorans which, at this period in time, believe themselves to be part of the story that it was the ambition of a single man which led them to swindle the national economy out of hundreds of millions of colones in a few months. In fact, a group of 450 people affected by this swindle (who have formed a group called IN/FIN S.A.) gave an important spin to the demands of justice and directly involved public functionaries which, by commission or omission, contributed to the swindle and illegality of the Mathies Hill companies. If, at some moment, it might be possible to demonstrate that the activities of these functionaries influenced the unfolding of events in the illicit businesses of INSEPRO which affected those of FINSEPRO, then it would have an effective transcendence what the ex-businessman has dared to suggest from his jail cell.

    On the other hand, and more than the attempt to clean up the image of a prince who became a villain, the Mathies Hill declarations can be located within a conflict which goes beyond the necessity of the law and justice for the one who was simply an accused person. That conflict is, precisely, that of social justice that the wealthy class of this country needs in order to clean up its image before the population. Much has been said of the personal motivations which led Calderón Sol to turn on one of the men who enjoyed his confidence, but what is true is that none of these speculations is stronger than that in which strong groups, with more complex interest, occupy a place—and in which more than a prominent public figure could be involved—and whose pretensions overwhelmed personal jealousies or fears by protecting the nests of those in power.

    In the same way in which one comes to learn about the way in which Mathies Hill and friends had proceeded in order to safeguard the capital which supported his businesses, the most powerful classes in this country watched as his reputation was destroyed. The harm which this young businessman caused to that core of those who pretend to live and behave as a superior caste from any point of view, ought to be repaired, although it might imply that condition of one of its finest sons might have to become a renegade. And this because the rumors which have always existed with regard o the dubious practices by means of which these people made their wealth and reproduced it were tolerable as long as they were only rumors, only the hidden truth behind the walls of that caste which reproduced itself. And then appeared Mathies Hill and the commotion of his being put in jail touched the sensitive fibers that maintained that equilibrium between a desirable image and a reality that could not and ought not to have a name.

    In this way, to give back to Mathies Hill what is left of his prison term, what is lacking in order to make his image what it was before (the young man most likely to become a president from among the modernizing right-wing of El Salvador) and what is lacking in order to pay back those who trusted his business and who, in return, received nothing more than this swindle: all that will still be owed by him perhaps forever to the economically powerful class of this country which came out of this so badly. In publishing the profile of a businessman behind bars who has not abandoned his creative impulse and his supposed spirit of service (call it charity or whatever you like) perhaps the idea was to try to recreate the myth of the rich man who, from his privileged pedestal, operated from within the limits imposed by honor and service. In this sense, this could be one of the first checks to be made out in the effort to repair the harm to those who have always been more important in the circle surrounding Mathies Hill: his colleagues and friends, rich men and women all. And if, in the end, it is decided not to sentence the accused and remove all guilt for the commission of the crime of which he is accused, there will always be the justice which will not fail to arrive for this poor little rich boy and for that group of powerful men and women who felt themselves to have been smeared by the publication of his confidences.