Center for Information, Documentation and Research Support (CIDAI)
E-mail: cidai@cidai.uca.edu.sv

Central American University (UCA)
Apdo. Postal 01-168, Boulevard Los Próceres
San Salvador, El Salvador, Centro América
Tel: +(503) 210-6600 ext. 407
Fax: +(503) 210-6655
 

     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 01-168, San Salvador, El Salvador.

INDEX

EDITORIAL

    In El Salvador, whether they like it or not, the political parties are permanently evaluated by the citizenry: the media takes care of it. How do the Salvadoran people see ARENA and the FMLN?

    If there is something everyone can be sure about is that what the Salvadoran people see in both parties is strongly influenced by what the media   —most of all, the powerful news media enterprises— makes them see. ARENA’s case is particular, because it not only counts with the communication media on its side, which openly supports the party  —probably because of ideological coincidences—, but ARENA has also found in them the space to display their strategic worries as issues in the media’s informative agenda. In other words, ARENA counts with an important media space to make the Salvadorans see what is convenient to the party’s interests. Being the owners of newspapers, television channels, and radio stations, accompanied by an entourage of journalists, collaborators and analysts, they are not only ready to deliver editorial, informative or reflexive issues that are important for the party, but also to coordinate its advertising demands.

    The media offer, favorable for ARENA, is of such proportions that people see almost the same issues  —which are daily filtered with very particular interests— in the everyday information. What is seen about ARENA in these media with a right-wing tendency? The most recent “advertising construction” shows an economically successful party, united in its fundamental doctrinal lines; a jealous defender of freedom; an enemy of terrorism, chaos and anarchy; and a combination of experience, maturity and discipline.

    The COENA’s most recent renovation has been the new advertising image of ARENA: with the arrival of Roberto Murray Meza and his people —this is the message for the party members and the Salvadorans in general—, the business success will be shared by everyone, the problems suffered in the governmental administration will be resolved, and the internal differences at the official party will no longer exist.

    Will all these expectations created by advertising strategies come true? It is highly probable that they do not, because it is not realistic to expect that the business success is shared by everyone, that the governmental administration is improved, or that the differences inside the party disappear. Does it matter if those expectations come true? That is not important, since all that matters is that the meaningful sectors of the society believe in ARENA’s advertising campaign. And, even if it sounds silly, more people that anyone might be willing to accept will surely fall, as in other occasions, into the advertising trap set by the right-wing party.

    Therefore, it does not matter what actually happens inside ARENA, but what this party makes the Salvadoran people see, and if they believe it.  From the electoral perspective, that is what counts, because it is from what is believed  —whether if it is true or not— that many sympathies or political hate are configured. Until now, ARENA has made many Salvadorans believe an infinity of things without any real basis; the most recent advertising wave is part of the same manipulative logic aimed to the collective imagery, over which it intends to have an influence with symbols and business slogans.

    The counterpart of what happens in ARENA is the FMLN. What is that the Salvadorans see in the left-wing party? They see endless disputes, imminent ruptures, political incoherence, lack of clearness in their ideas, and all kinds of mistakes in the daily political activities. The right-wing media are in charge of making the Salvadorans remember that the FMLN is precisely that: chaos, incoherence, rivalry and both political and ideological confusion. It is not that everything is an invention of the media; it is not that in the FMLN there are no institutional problems. However, the right-wing media not only permanently makes the Salvadoran see the signs of such problems, but it also makes all those aspects that best reflect “the FMLN’s decadency” look like a show, and, by the way, these aspects sometimes are useful to contrast the image of ARENA that is being created.

    In the meantime, the FMLN leaders help the people to see the worst side of what is happening inside the party. Maybe because of ingenuity, or because of a misunderstood “openness” to the society, the FMLN leaders deliver in the hands of the media the evidence of the internal fights, and the evidence of their political and ideological incoherence. The media, with the delight of its owners, reporters and collaborators, delivers this information to the public with enormous headlines and in full color.

    Obviously, when ingenuity or the FMLN’s indiscretion get together with the right-wing’s communication media perversity, the results are disastrous for the FMLN’s pretensions: to be seen by the Salvadorans as an alternative to ARENA. Evident examples of these aspects are the coverage that the right-wing media made about the FMLN’s internal activities, after the terrorist attacks perpetrated against the United States, as well as after the coverage of the FMLN’s behavior and the opinion of the party’s leaders about such event. Because of a happy coincidence for the right-wing, ARENA’s new advertising strategy was accompanied by a series of political and diplomatic nonsense committed by some of the FMLN’s leaders, which were conveniently highlighted by editorialists, reporters, photographers, and the collaborators of the right-wing’s communication media.

    If the FMLN’s leaders are more pleased with their moral satisfaction than with wining the elections, it is their problem: they will not become the first choice, and, in a certain way, they will remain as losers, since a party who does not hope to win an election (worst of all, that does everything to lose it) is a party that has failed at one of its fundamental purposes. In the meantime, ARENA, a party created to win elections, will take advantage of the FMLN’s resignation to seriously compete for the power, and will continue to renovate the elections for its authority to administrate, more for worst than for better, the destiny of the Salvadorans.

    In El Salvador, the border line that separates the citizenry's  social demands from the  main political authorities' decisions has grown so much wider during the last few days that it becomes necessary to move the boundaries, and to call the attention of the responsible ones for the social tension state that the country suffers. It seems as if the present international situation has pulled away the attention from the social problems that threaten the tranquility and the peace of the citizenry.

    In fact, ever since the January and February earthquakes, those who closely observe the country's social, economic and political activities feel how disturbing is the nonconformity that appears in the horizon. The public transportation business, different unions and associations, or even civilian groups spontaneously organized have believed that it is necessary to raise their voices to protest against this situation. It looks as if the country is sliding down to an unavoidable social instability. However, what seems even more odd is that the authorities do not seem to realize how serious it is to accumulate such levels of dissatisfaction among the different social sectors.

    The precarious situation in which the earthquake victims are has to be analyzed once again. The thousands of families who became helpless when they lost their homes and their belongings, after the strong earthquakes that shook the country seven months ago, have been forgotten. No one talks about governmental projects aimed to respond to their needs anymore. And, according to the present international situation, it is probable that the government is not even able to execute the most basic projects that not too long ago it promised to deliver. In addition, the strong recession the world's economy is running into does not allow to predict the arrival of the funds promised at the Madrid's Consulting Group meeting —which were not enough even at the time of such congress.

    Because of this cruel reality, it is not even possible to talk about a national plan of reconstruction. About this subject, not only the politicians have seemed uninterested, but also the business companies' owners have shown their disagreement to pay more taxes than they already do. The story that, because of the recession, the taxes have to be reduced for the elite business companies, is enough reason to ignore the perennial need that some of the most important national amounts of capital contribute with the reconstruction. The government is not too worried about this situation. That is what the police or the army are for, in case it was necessary, to repress the uncontrollable social demands. This might answer to the question of why, after the events in the United States, the "local" terrorists, always prone to participate in protests against the government, should be pursued.

    In the second place, the situation of thousands of victims affected by the dry season in Central America  —ever since the terrorist attacks against the United States— has been forgotten. No one has said a word about this subject, and the politicians do not seem to remember this either. At least, that is what can be inferred from the silence that the official national press  —so willing to cover the most irrelevant governmental actions— has kept about this issue. There are no more news about the deaths by starvation in Guatemala and Nicaragua, which not too long ago occupied the headlines of the national newspapers. Just like the governments, the public opinion has forgotten about the disasters' victims.

    In the same way, the different union organizations and guilds have expressed their discontent about the harshness of the social and the economic situation. Even before the September 11th attack, a series of protest measures from the public transportation owners had already been announced. Despite that the last international events have reduced the ability to convoke the ones familiarized with this discontent, it cannot be said that that their reasons have dissipated. In fact, many protest movements organized by former patrol members, among other social groups, —upset with the government's inability to respond to their demands— have been registered in the last few days.

    In summary, there are quite a few elements in the air predicting that, in a brief period of time, a certain confrontation environment will be created between the society’s different sectors and the state's institutions. If the social anxiety situation and the authorities’ disregard attitude continue, the former patrol members, public transportation owners, syndicates and different unhappy social sectors could increase their pressure over the authorities. That is why it is probable that this situation contributes to intensify even more the social tension points, and that the country experiments a higher level of social instability. At the moment, the international situation has been an important factor to hold back the different groups willing to protest against the governmental elite's incapacity to answer to the population's problems.

    In addition, the government does not seem to be in a good condition to effectively confront, pacifically and through a dialogue, the social conflicts that might come upon the country. Mostly, it seems to be willing to use the repression against any social demonstration. It has already been proved in the repression —a few months ago— of the first protests made by the residents affected by the January and February earthquakes, who demanded a better distribution of the international aid. Another issue is the state's violent answer against the former armed forces members' protests, this is a bad symptom of this situation. At either one or another situation, the PNC has been noticed by its outstanding brutality in its efforts to end with the demonstrations, on the streets and roads all over the country.

    In any case, the “official” press, until this moment, has developed a fundamental role by contributing to turn off the discontent voices, and to either ignore or discredit any protest movement against the present government. The situation’s evolution will tell if the repression and the discredit campaign against the leaders that head these demands will keep showing the same tendency. On the contrary, the Flores' government will have to give a different treatment to the protests made by the population if it wants to avoid an increase of the confrontation and the violence against the activists.

    It is probable that the national political situation intensified, in the first place, by the division inside the left-wing party and, followed by an apparent positive public perception  —revealed by certain opinion polls— of ARENA's new authorities, contributes to create higher levels of arrogance at the official sectors, and transforms into an even poorer disposition to dialogue and negotiate with the discontented groups.  Defensiveness has been a characteristic feature of the present government, for which the social protests and demands that do not come from the ANEP are disqualified beforehand for being "anti-governmental". However, the way things are going, and if the present ARENA leaders want to confront the next elections with a certain legitimacy before the public opinion, they will have to demonstrate that they have more imagination skills to face the social demands. On the contrary, it would not be absurd if their next electoral campaigns coincide with uncontrollable social protest movements.

    A decade after the tax reform, the public finances' situation continues to be the same or it is even worse than it was eleven years ago. In 1990, the fiscal deficit increased to 1.2% from the Gross National Product, while for 2000 it reached a 2.3%, and for 2001 it is expected to increase up to a 3.5%.

    Without a doubt, a good part of the problem is due to the disappearance of the traditional sources of income (even some of them now demand public resources, such as the coffee case) and, in addition, to the fact that with ARENA's tax reform only a taxation transference was made from the business sector to the wage-earning sector. The final effect was not very significant. This does not mean that the business sector is not paying taxes, but it does pay less taxes than it did before the tax reform. It is enough to mention that, just on the income taxes, the companies enjoyed a reduction of half of their taxes because the profits' tax was reduced from 50% to 25%.

    Generally, ARENA's tax reform was in favor of the business companies, and the vision about the management of the public finances has not changed much, to judge by the President's public declarations, and by the recent tax proposals made by the Internal Revenue Service Ministry. Ever since his designation as the President of El Salvador, Flores offered to "keep healthy public finances", to what he later added specific measures about how to reduce the public expense, simplify the Value Added Tax for the informal sector, eliminate the Value Added Tax exemptions to food and medicine, create a tax code, fight smuggling and eliminate the tax exempt base of  75,000 colones, for the income tax payment.

    Except for the two first ones, all of these measures have been implemented or are already being discussed at the Legislative Assembly. The most recent proposals that have been discussed or that will be discussed in the Internal Revenue Commission are three: the elimination of the income tax payment exemption, which the micro-business companies (those with profits up to 75,000 colones) enjoyed; a tax violation law (both of them already approved); and measures to assign a tax rate to those informal sector workers with an income over 4,166 colones. This contribution, called "single tax", would oblige a great amount of informal workers who until now do not pay taxes to pay them. Contrary to the first public versions and to the declarations of the Vice-president, Carlos Quintanilla, President Flores has said that the single tax does not count with the support of the government, and that it is, mostly, an initiative of a party from the opposition.

    However it might be, the context of these measures is influenced by a low taxation, a strong tendency to the fiscal deficit, and by the next discussion in the Legislative Assembly about the nation's general budget for 2002. The three issues are connected and intimately related to ARENA's fiscal policy. In fact, one of the reform's objectives was to simplify the tributary system and increase the taxation, but the truth is that this one has not been substantially increased and it remains as one of the lowest in Latin America. This situation turns specially crucial because of the public expense's growing tendency, the deficient social expense, and the new demands imposed by the post-earthquake reconstruction efforts.

    The insufficiency of the taxation turns evident when it is proved that, during the last six years, the fiscal deficit has been increased, but it also has slightly evident signs related with the social development’s serious deficit, an area the state is responsible for. The health and education services deficit, and the serious housing deficit are unmistakable signs that the social expense is not enough and that it has descended. In fact, the social expense in relation to the GNP has fallen into levels inferior to 5%, under the 6% levels that prevailed during the seventies and the early eighties. Therefore, the problem is not only that every year we run into a fiscal deficit that must be financed with loans and by issuing debts, there is also an enormous social deficit that has to be paid.

    On the other hand, the debate about the nation's general budget for 2002 is another element that explains and determines the government's new tax proposals. Year after year, the nation's general budget financing has turned into one of the most controversial and repetitive issues at the Legislative Assembly. The 2002 budget will not be the exception, since it requires a $681.8 million financing (almost a 5% of the 2002 GNP) which, according to the Internal Revenue Service Ministry's opinion, it should be obtained through loans and the issuing of debts.

    Because of this complex scenery, the new tax proposals intend to provide the state with an additional revenue of approximately $50 million, that is, close to a 7.3% of the financing needs estimated by the Internal Revenue Service Ministry for 2001. The impact of these tax measures over the public finances will be very modest but, instead, its impact over the available income of micro-business companies and informal workers will be specially strong.

    The former ideas show again the regressive and business like behavior of the tax policy practiced by ARENA, during the last twelve years. Practically, the public finances depend on the income tax payment and the Value Added tax, two taxes that are fundamentally paid by the working class sectors. The taxes aimed to the business sector have been systematically eliminated or reduced with the excuse that such action would liberate investment resources, and therefore generate employment, and improve the social situation.

    Twelve years after those measures took effect, it can be said that the preferential treatment that the business men have received has not rendered the expected results. After five years of strong economic growth levels (1991-1995), a low growth period has been unleashed, and it has lasted five years already (1996-2001), and it threatens to grow deeper (for 2001 it is expected that the GNP's growth level reduces down to a 1.5%). In addition, although the Value Added tax was created, the elimination of taxes in favor of the business men prevented from resolving the fiscal deficit's problem, without improving the investment, production, and employment levels.

    ARENA's present tax proposals intend to tax the micro-business companies, however those proposals do not affect the medium and the large companies, which evidently have much more capability of paying those taxes than a small company does, that hardly obtains annual profits of 75,000 colones, that is 6,250 colones per month.

    In general terms, the most recent tax proposals affect the lower income sectors, whether these are micro-businessmen or informal workers; they are difficult to administrate and they are not a significant palliative for the fiscal problems. In addition, the government is falling into a strong contradiction by intending to perform a redistribution function and a promotion of the social development, which actually are the duties of the state, through taxes that reduce the lower income families’ available earnings, their consumption, and the basic needs satisfaction. This situation will hardly give viability to the projects of the Salvadoran society since, in the present conditions, the most reasonable thing to do is to examine the medium and large business companies’ income taxes, something difficult to do in a country governed precisely by those companies owners.