Momentum Against the MCC and other U.S. Policies May be Building

On May 2^nd, organizations and communities representing thousands of people from the Bajo Lempa region of Jiquilisco, Usulután held a press conference in San Salvador to denounce the Millennium Challenge Corporation (MCC), the Law on Public Private Partnerships (P3 Law), and the tourism projects they promise to support. The Salvadoran labor movement also held a press conference on May 2^nd denouncing the MCC and P3 Law, which they believe will adversely affect much of the labor force.

Jose Acosta (Voices’ Field Director) speaking at a press conference with Ricardo Navarro (CESTA), Jose Santos Guevara (ACUDESBAL), and Manuel Calderón (ADIBAL)

Other than opposition from the labor movement and Bajo Lempa, the MCC proposal and the P3 Law have not created the huge public outcry that other issues have in recent years – attempt to privatize health care (2002), Central American Free Trade Agreement (2006), or Pacific Rim’s efforts to mine gold (2005-present).

But momentum against the MCC and the P3 Law seemed to get a boost on May 1 when Vice President and FMLN presidential candidate Sanchez Cerén announced he and his leftist party do not support U.S. agreements like Partnership for Growth and “the project that has been presented to the Legislative Assembly.” The project Cerén was referring to is a package of laws President Funes presented to the Legislative Assembly in October 2012 and includes the P3 Law.

Cerén’s statements were qualified however, and it remains a little unclear where he and the FMLN stand on the MCC and P3 Law.

Overview of Partnership for Growth, MCC, and the P3 Law

Partnership for Growth is President Obama’s development program that is being implemented in four countries – El Salvador, Ghana, Philippines, and Tanzania. In El Salvador, Partnership for Growth identified security and low production of tradables (exports) as the two main barriers to economic development. As a result, all U.S. programs and funding in El Salvador have to address one or both of these barriers.

In 2004, the Bush Administration created the MCC as its signature development program, investing funds on infrastructure and business development in countries around the world. The first round of MCC funding for El Salvador (2007-20012) invested $463 million in a new highway that spans the northern region of the country, high school and university scholarships, and capital for small businesses. If approved, the second round of MCC funding will be worth $413 million and likely contribute to the expansion of the Litoral Highway along El Salvador’s southern coast and invest in public-private partnerships, which include as many as 30 different tourism projects.

To receive more MCC funds, the U.S. Embassy said El Salvador must pass the Public-Private Partnership Law, which has been lingering in the Legislative Assembly since last year. The bill creates favorable conditions for private investors, and would pave the way for leasing and contracting out State resources and services, including water, education, health care, prisons, air and sea ports, and much more. Critics of the bill fear it will result in the loss of thousands of public sector jobs and adversely affect wages across the labor market. They also fear it will diminish the quality of public services.

Growing Opposition?

In his remarks yesterday, Sanchez Cerén said, “with respect to Partnership for Growth, we want to say that the project that has been presented to the Legislative Assembly, we as the FMLN do not back it.” As pointed out by Diario El Mundo, Cerén was referring to a package of laws that the Funes Administration presented to the Legislative Assembly on October 18, 2012. The purpose of the laws is to implement the Partnership for Growth action plan and include the Public-Private Partnership Law that residents of the Bajo Lempa and the Salvadoran Labor Movement denounced at their press conferences.

Cerén explained that the FMLN does not support Partnership for Growth because it includes mechanisms for privatizing health, education, and prisons. The Diario El Mundo article also reports that FMLN official José Luis Merino confirmed the party’s position on Partnership for Growth adding that they want the United States to respect El Salvador’s sovereignty.

The FMLN, and Cerén, also announced they have drafted their own proposal for increasing investment and promoting public-private investments, but in a manner that will safeguard the interests of the State and ensure that important services (health social services, public security and justice, water and education, and the National University) will not be privatized. It is unclear whether their proposal will satisfy the U.S. Embassy’s prerequisites for the MCC funding. It also remains unclear whether Cerén and the FMLN would also support tourism projects in the Bajo Lempa and respect the region’s desire to protect their communities and natural resources.

During his May 1^st speech, Cerén urged members of the FMLN not to abandon the party and permit the right-wing ARENA return to power. The plea was a recognition that the FMLN is somewhat divided right now, in large part over Partnership for Growth, the MCC, and the P3 Law. The FMLN can’t afford to loose the labor movement and entire regions like the Bajo Lempa and expect to defeat the ARENA candidate (Norman Quijano) in February 2014.

For now anyway, momentum against the P3 Law and the MCC seems to be growing.

USAID and SolucionES to Invest $42 Million in Gang Prevention Programs

The US Agency for International Development (USAID) announced that it will contribute $20 million to SolucionES, a public-private partnership led by the Foundation of Businesses for Economic Development (FEPADE, in Spanish). The program’s goal is to decrease youth violence and crime in El Salvador.

The program, which was first reported by the Miami Herald and elsalvador.com, will begin this month with a focus on youth development and in 50 communities across five municipalities. SolucionES has identified San Martin and Cuidad Arce as the first two municipalities where they will start.

The program will last five years and an alliance of Salvadoran businesses and non-governmental organizations will match the USAID funds with $22 million they will raise from “foundations, businesses, municipalities, and civil society.”

A USAID press release announcing the project focused as much on the funding and organizations involved as the projects themselves. It describes SolucionES as a new and innovative focus on prevention of youth crime and violence in Salvadoran communities through a partnership between the private organizations and municipal governments.

The Alliance of NGOs includes the National Foundation for Development (FUNDE, in Spanish), the Salvadoran Foundation for Health and Development (FUSAL, in Spanish), Glasswing International, the Salvadoran Foundation for Economic and Social Development (FUSADES, in Spanish), and FEPADE. All five organizations have strong ties to the Salvadoran business community and the right-wing ARENA party.

The Alliance will work alongside local government to provide workshops on prevention of violence, youth leadership, entrepreneurship training, and extracurricular clubs. The program will also work with businesses on violence prevention programs for their employees, and finance studies that will inform policy makers on effective strategies for crime prevention.

The USAID contribution is part of the Partnership for Growth initiative that has identified security (i.e. crime and violence) as one of the two main barriers to economic growth. The other barrier identified is low production of tradable goods.

Partnership for Growth and SolucionES are not the only ones to link economic growth to security issues. Last year, leaders of El Salvador’s gangs signed a truce to reduce violence. In doing so, they said that economic disparities and lack of jobs are main factors that drive youth to gangs in the first place. In order for the truce to hold, gang leaders called for support programs by the government for ex-gang members.

In an interview published yesterday in La Pagina, Viejo Lin, the leader of the Mara 18, said, “if we want our brothers to stop robbing and extorting, you have to create the right conditions.  The conditions that permit them to get dignified jobs.” Later in the interview he says, “our companions are not asking for thousands of dollars a month, they ask for a job that lets them work based on their strengths. It’s a right.”

USAID and SolucionES are steering clear of rehabilitation of gang members, focusing entirely on prevention – keeping youth from joining gangs.

A statement made by Haydée Díaz, the Director of the Strengthening Education Program for USAID said that “this initiative [SolucionES] is not related to the truce between the gangs, and the objective is not to eradicate the gang problem, but to prevent it.” Voices staff spoke with a USAID official who said the same thing – this is not about working with gang members, it is about preventing violence among youth not already involved in gangs.

Prevention is certainly important and a $42 million investment in youth, depending how the programs are implemented, can yield real benefits. It seems shortsighted, however, to believe that a prevention-only program will dramatically decrease rates of crime and violence in El Salvador. There will still be roughly 50,000 gang members in El Salvador who are marginalized and unable to participate in the formal economy, which will leave them few options other than crime and violence.

Gang prevention projects are pretty safe. All involved can feel good about investing in youth and sho that they are committed to helping El Salvador. Businesses look good for giving back to the communities. NGOs and their benefactors look like good, productive citizens. Politicians get to say they are taking action without worrying about looking like they are giving into the gangs. And USAID gets to report back to the American taxpayers that their money is being used to address one of the two barriers to economic development in El Salvador.

With less than a year before the 2014 presidential elections in El Salvador, these appearances matter. But we’ll see if prevention-only will actually improve the security situation.

ANEP (National Association of Private Enterprise) taking on Presient Funes, Again!

At 2:40 the morning of August 17, the Salvadoran Legislative Assembly finished a series of reforms that changed the way 19 autonomous state entities elect their boards of directors. The reforms, which proponents downplayed as relatively minor, drew the ire of ANEP (National Association of Private Enterprise) and further exposed an ongoing feud with President Funes and the FMLN party.

The reforms target entities such as the CEL, which operates El Salvador’s hydroelectric dams, and CEPA, which oversees the country’s ports including the Comalapa International Airport. They also target ANDA, which manages El Salvador’s water and waste management systems, FOVIAL, which takes care of the highway and roads, and ISSS, part of the government health care system.

Though these entities operate like private corporations and enjoy some autonomy from the government administrators, they exist to provide public services and are regulated by law. The President of El Salvador has always appointed the heads of these institutions. The August 17^th reforms expand the President’s authority by giving him a role in choosing members of the boards from the non-governmental sector. When these 19 entities need new board members from the non-governmental sectors, they will present the President with a slate of three candidates of their choosing and he will select one. It used to be that ANEP appointed the board members from the non-governmental sector, but the reforms diminish their role in the process.

The relationship between ANEP, the government, and these autonomous state institutions is a little complex. According to their website, ANEP is a nonprofit organization created by Salvadoran businesses in 1966. Its mission is to “coordinate efforts of private initiatives to promote the economic, social, and cultural development of the country, and defend the free enterprise system in El Salvador.” ANEP represents more than 49 trade guilds and 14,000 employees from all sectors of the Salvadoran economy.

Over the years, ANEP has been a driving force behind El Salvador’s embracing free trade and deregulation. In addition to local trade guilds, ANEP’s membership includes 153 large transnational corporations such as 3M, Kimberly Clark, Microsoft, Nestle, British American Tobacco, Sherwin Williams, Texaco, and many others. (see The Nation in the Global Era: Conflict and Transformation, by Jerry Harris, Brill 2009). Each year, ANEP and these transnational corporations hold an economic conference call ENADE (National Gathering of Private Enterprise) from which they generate a report recommending reforms and legislation – many of which are enacted. According to Jerry Harris, this is how larger international corporations influence the government and create a favorable business climate in El Salvador.

Last week, an editorial piece in Diario CoLatino posed a valid question – why does ANEP have to be part of the government? The editorial also asks, “is it legitimate and inclusive that ANEP has representatives in these autonomous organizations, making it part of the government without obligation to a [political] party or government program?” The author indicates that ANEP cites their business expertise to justify their involvement, and that they are a civil society organization and should be responsible for appointing civil society representatives.

While that may be, its more probable that ANEP’s role in these autonomous entities, which provide such important public services, is more a product of their close relationship with the conservative ARENA party. Since the mid-1980s ANEP and members of ARENA have had many of the same political and economic interests. Leaders of El Salvador’s business sector, which is represented by ANEP, have also been the most ardent supporters of, and at times leaders of, the ARENA party. For example, before he became President of El Salvador in 2004, Tony Saca was a prominent business leader in El Salvador and served as president of ANEP. Because they shared so many economic and political interests, and were often comprised of the same people, it made sense for ARENA to carve out a space for ANEP by giving them significant control over the autonomous entities.

Their historical relationship with the ARENA party may help to explain the current conflict with President Funes and the FMLN party. It is already election season. Even though the Salvadoran presidential elections are a grueling 18-months away, the ARENA and FMLN parties began focusing on control of the executive branch immediately after the March 2012 municipal and legislative elections. The language coming from both sides indicates that the feud is political.

In justifying the reforms, President Funes and the FMLN skipped right over the question addressed in the CoLatino editorial – why does ANEP have a role in the first place? Funes instead said that greater government oversight was needed because ANEP did nothing to investigate or prevent the corruption perpetrated by leaders of some of the autonomous entities. The President specifically mentioned the 2002/3 ANDA scandals in which Carlos Perla made off with millions of dollars that should have been used for a water project (click here for a good summary of the Carlos Perla case). He also mentioned corruption scandals in the ISSS (a government health care provider) and BFA (Agricultural Bank). Funes placed responsibility on ANEP and ARENA without explicitly accusing them of involvement, since the scandals happened during their watch.

In response to ANEP’s reaction to the reforms, President Funes said he did not even know why they were taking such a strong position. He also accused them of trying to dynamite the negotiations that ended the constitutional crisis. He added, “there are groups busy creating a destabilizing environment. ANEP has been destabilizing the country, torpedoing the situation [negotiations] and has tried to manipulate the roundtable.” Since Funes took office in June 2009, there have been allegations that the most extreme members of the conservative parties have tried to destabilize the FMLN and Funes Administration by causing social and economic crises.

ANEP began their attacks against the FMLN and Funes administration in May, accusing the administration of mismanaging the economy.  The most heated rhetoric started coming in June and July when this summer’s constitutional crisis flared up. (For more on the constitutional crisis, we recommend Tim’s Blog). ANEP publically stated that as long as the President and his administration “continues their assault against democracy, the independent judiciary, and respect for the constitution, the private sector will not participate in the Economic and Social Council, CES.”

In response to the August 17^th reforms, ANEP posted a statement to their Facebook page saying, “What Funes did today is exactly the same that other non-democratic presidents of ALBA countries [Bolivarian Alliance for the Americas, which includes Venezuela, Bolivia, Ecuador, Nicaragua, and Cuba] have done. And now those countries are immersed in the worst crisis of authoritarianism and lack of freedom in all of Latin America.” ANEP President Jorge Daboub also called the Funes government a dictatorship.

This is the same language that ARENA candidates and their surrogates and supporters have used against the FMLN for many years. Staff at the US Embassy and even members of the U.S. Congress used similar language during the 2004 campaign when ARENA candidate Tony Saca defeated FMLN candidate Shafick Handal. Members of Congress tried to influence Salvadoran elections again in 2009 when FMLN candidate Mauricio Funes defeated ARENA candidate Rodrigo Avila. This summer Mary O’Grady has used her position on the Wall Street Journal editorial board to post op/ed pieces laced with this same kind of extreme rhetoric, attacking both the FMLN and Sanchez Cerén who will represent them in the 2014 elections.

The August 17^th reforms that decrease the role of the ANEP in these autonomous government agencies is probably not a bad thing. Not because ANEP is corrupt or incapable, but as Diario CoLatino editorial piece noted, because its not really their place to have such a large role in these public entities.

The 19 entities targeted by the reforms manage over $1.6 billion in public resources and have a profound impact on the lives of every Salvadoran. Voices on the Border’s partner communities in the Lower Lempa, for example, struggle every year with flooding caused in large part by the September 15^th Dam managed by the CEL, one of the entities affected by the reforms. The CEL makes more money when their reservoirs are full at the end of the hurricane season – they are able to generate more electricity farther into the dry season. Full reservoirs, however, means that if there is a big storm, like Tropical Storm 12-E that dumped 55 inches of rain in El Salvador last October, communities downstream will likely flood. The August 17^th reforms increase the likelihood that someone from the Lower Lempa or at least sympathetic to their flooding issues could get appointed to the CEL board and influence management of the dam.

 

ARENA Nominates Norman Quijano

COENA, the ARENA’s executive committee, announced that it has selected San Salvador mayor Norman Quijano as their 2014 presidential candidate. Other possible ARENA candidates included former Vice President Ana Vilma de Escobar, Diputado Edwin Zamora, and former Chancellor Francisco Laínez.

Quijano is a 64 year-old dentist from Santa Ana. His political career began in 1994 when he was elected to the Legislative Assembly, where he served for fifteen years. In 2009, he was elected the mayor of San Salvador, defeating FMLN incumbant Violeta Menjívar. This March he won a second term as a cadre of ARENA candidates won other former FMLN strongholds throughout the San Salvador metropolitan area.

Friends of Quijano have a website up with more biographical information including a 10 minute video.

More than 18 months before the March 2014 elections, both of El Salvador’s major political parties have selected candidates. In May the FMLN chose Sanchez Cerén, the current Vice President under FMLN President Mauricio Funes. It also appears as though former President Tony Saca (2004-2009) will run for another term as President, this time representing a coalition of the GANA, CN (Concertación Nacional – formerly the PCN), and PES (Partido de la Esperanza) parties.

Norman Quijano’s nomination is no surprise. In a July survey, 71% of respondents indicated that Quijano would be their best candidate for the ARENA party. On the contrary, 76% said that Vice President Cerén would not be the best candidate for the FMLN. The survey also found that 32.6% of respondents supported ARENA, while only 20.7% supported FMLN. GANA came in a distant third with only 4.6% support. Almost 40% of respondents didn’t have a preference for any of the parties. Perhaps the most telling was that 60% thought the ARENA would win back the presidency.

Despite his popularity, the ARENA mayor has sparked his share of controversy this year. In March 2012, the Salvadoran Institute for Municipal Development (ISDEM) sued Quijano for using his position in the Institute for political purposes.

A month later, the Court of Accounts found that as Mayor of San Salvador, Quijano had mismanaged over $580,000 in 2010 and 2011. The funds were provided by the Fondo para Deserrollo Económico y Social (Fodes) for public infrastructure projects, but Quijano used them to cover administrative expenses. As of August 11, the Mayor still hasn’t responded to the Court’s request for more information. Last week an official from the Mayor’s office denied that the funds were used for administrative costs.

With these allegations pending, Quijano recently led a group of ARENA mayors to request support from their conservative colleagues in the Legislative Assembly to increase the amount Fodes contributes to municipalities for infrastructure projects.

As the Salvadoran presidential race (more like an ultra-marathon) gets under way, it’s easy to look at polls like the one above, and conclude that Quijano will be the next president of El Salvador. But nothing is that straight forward, especially in Salvadoran politics. Each candidate has strengths and weaknesses, and Tony Saca could end up having a lot of influence over the outcome.

The FMLN Chooses a Weak Candidate for the 2014 Presidential Elections

As of last week, Sánchez Cerén appears to be the FMLN’s candidate for the 2014 presidential election. The current Vice President went as far to say that he was the FMLN candidate and stepped down as the Minister of Education.

Analysts, and even high profile members of the FMLN, agree that Sánchez Cerén’s prospects for winning the presidency in 2014 are limited at best.  Recent polls show only 13% of those surveyed believe that Sánchez Cerén is the best candidate to represent the FMLN in the upcoming elections.  Party leaders are certainly aware of the challenges that a Sánchez Cerén candidacy would represent for the FMLN.  Nevertheless, they are determined to nominate a seemingly weak candidate.

Until the 2009 elections, the FMLN nominated party hardliners as their presidential candidates resulting in predictable defeats.  The rejection by the Salvadoran electorate of the party’s orthodox leaders was seen as the result of a long-standing campaign by right-wing groups to propagate fear of a leftist government, both nationally and internationally.  To assuage those fears, the FMLN created an alliance with Mauricio Funes, a moderate, center-left candidate, who commanded a strong following among a broader sector of Salvadoran society.

Mauricio Funes, however, was, and still remains, an outsider.  To many in the party, his election was an empty victory because he did not represent the orthodox-wing of the party, and was not part of the historical leadership that fought in the country’s civil war.  Most importantly, Funes does not share the party leadership’s ideology and political agenda.

Nevertheless, Funes’ election was an important step in the FMLN’s long-term strategy.  His government served to dispel all the apocalyptic consequences that many feared would befall on the country if the FMLN ever achieved the presidency.  The leadership of the FMLN seems to think that the population is now open to electing a candidate that truly represents the party’s ideological roots.

Party leaders, however, also know that they must appeal to a border cross-section of the population to have a realistic chance of winning.  They hope to do this by nominating a vice presidential candidate from outside the party who can appeal to moderates and independents.

This strategy is not likely to overcome the weakness of Salvador Sánchez Cerén as a candidate.  In the March 2012 legislative and mayoral elections, Salvadorans rejected candidates with a similar background as that of Sánchez Cerén in former FMLN strongholds of Soyapango, Apopa and Mejicanos: party loyalists linked to the orthodox-wing of the FMLN and former civil war commanders.

One of the central themes that emerged out of the March 2011 elections was that of an electorate growing more independent and less beholden to rigid ideologies and party loyalties. La Prensa Grafica’s latest poll, conducted in May 2012, showed that only 9% of Salvadorans believe that the most of important factor in deciding who to vote for was party affiliations.  Sixteen percent said the most important determinant was ideology.  In contrast, 32% considered campaign promises and 35% the candidate to be the primary factor in their voting decision.

These trends may foretell a likely defeat for the FMLN in the 2014 presidential elections.  The FMLN’s leadership is once again miscalculating the mood of the Salvadoran electorate.  Salvadorans are demanding competent leaders that respond to the necessities of voters, not the interests of the party and its political elites.

ARENA ahead of the 2014 Presidential Elections

With the 2014 presidential elections “just around the corner” in El Salvador, political parties are well into the process of picking their candidates. Like other countries, Salvadoran political parties go through a nominating process to decide who will represent them in the general election. While the FMLN has all but officially chosen Sánchez Cerén, the current Vice President of El Salvador, as their candidate, the ARENA party has yet to select their candidate. Some in the ARENA party are still are still trying to change the way party officials will choose their 2014 representative.

El Faro reported on Monday that a group of ARENA reformists have proposed changing the nominating process. The party’s top leaders would still choose the candidate, but their vote would be secret. One party spokesman said, “if passed the reforms could change the invisible structure of the party.”

While it may seem counter-intuitive that secret ballots would somehow eliminate the “invisible structure of the party,” the idea is to provide those who cast votes with some anonymity so they can vote on merit. According to the El Faro article, four main power blocks finance and control the ARENA party. A former official in the Saca Administration (2004-2009) said these interests exert the most influence during the nomination of presidential candidates. Once a president is elected they may try to push an issue every now and then, but for the most part they leave them alone.  The secret ballots during the nominating process would in theory decrease the influence these four powerful interests have over the nominating process.

The nominating process has always been top-down, with the party base having little to no input. The secret ballots won’t change that power structure at all. The party leaders will still be the ones casting votes and the base won’t know whom they voted for. The main shift would be a consolidation of power away from the four interest groups back to the party leaders. One ARENA founder suggested the party give the base a voice in choosing candidates by moving to a party-wide vote. Doing so would bring the party more in line with the independent and inclusive voting practices that the Supreme Court has been discussing for the past year.

The El Faro article indicates that former President Alfredo Cristiani supports the reforms and is currently surveying the AREANA leadership to see if he can muster up a consensus to vote them into the party bylaws. While he has benefited from the current system over the years – it got him elected president in 1989 – it he would likely benefit from the changes. Instead of having to answer to the power blocks, party leaders will have more control.

The proposed reforms are not new; party leaders have been considering secret ballots for many years but they have not had the internal support to get them passed. Opponents of secret ballots argue that the current system has served the party well for the past 31 years and that there is no need for reform. They also argue that the current open system is more transparent.

The 2014 election is important for ARENA. They lost the presidency to the FMLN in 2009 and they want it back. ARENA did well in the March 2012 municipal and legislative elections, taking control of the Legislative Assembly and winning several municipal seats that have been in the hands of the FMLN for many years.

A few names have been tossed around as possible ARENA candidates for 2014. Norman Quijano just won his second term as mayor of San Salvador, and is often mentioned as a possible candidate. He said shortly after the elections that he would certainly be open to the idea of running. Another possible candidate is Ana Vilma de Escobar, who was Vice President under Tony Saca (2004-2009) and is the wife of one of El Salvador’s wealthiest businessmen. As already mentioned, Sánchez Cerén is the likely candidate for the FMLN party, and former-president Tony Saca may try to run as a GANA party candidate. Back in April, Tim’s Blog posted short bios on each of these candidates.