Abuses in Textile Maquilas and Hotels

Last Friday we posted that Northern Triangle and U.S. governments are proposing more neoliberal economic policies in order to create jobs and thereby address the emigration crisis and high levels of violence. Their plan, in part, is to attract more textile maquilas, agro-industries, manufacturing, and tourism. We think it’s a bad idea and will result in even greater inequalities and more emigration.

Over the past couple of days we came across a couple new articles that demonstrate why more sub-poverty minimum wage jobs in textiles, manufacturing, and tourism won’t address the serious issues that El Salvador and other Northern Triangle face.

Gangs and Maquilas

On Monday, the Inter Press Service (IPS) reported that employees of LD El Salvador, a Korean textile maquila that operates in San Marcos, just south of San Salvador, is using gangs and death threats to break up an employee union. One employee told IPS “They would call me on the phone and tell me to quit the union, to stop being a trouble-maker.” Another employee says, “they told me they were homeboys (gang members) and that if I didn’t quit the union my body would show up hanging from one of the trees outside the company.”

These are probably not empty threats. In January 2014 Juan Carlos Sánchez Luna, a member of SITS from the LD El Salvador maquila was assassinated. He began receiving threats at the end of 2013 after he participated in a press conference denouncing threats made against organizers at the LD El Salvador maquila. Less than a month later was gunned down in what officials classified as a “common crime.

Of the 780 employees at LD El Salvador, 155 used to belong to the Salvadoran Textile Industry Union (SITS, in Spanish). Since the threats began the number of union members has dropped to 60.

LD El Salvador is not the only company using gangs to prevent their workers from organizing. The IPS article references a report published in January 2015 by the Center for Global Worker’s Rights and the Worker Rights Consortium titled Unholy Alliances: How Employers in El Salvador’s Garment Industry Collude with a Corrupt Labor Federation, Company Unions, and Violent Gangs to Suppress Worker’s Rights. The report contains several accounts of maquilas using gangs to threaten and intimidate workers, and documents many other abuses.

As we pointed out last week, there is nothing in the Northern Alliance Plan that will protect workers rights and ensure that the very employers that are supposed to be part of the “solution” aren’t abusing workers and colluding with criminal organizations.

Tourism and Hotels

On Sunday, the Center for the Study and Support of Labor (CEAL, in Spanish) wrote an update on two hotels in Acajutla, Sonsonate. Both have long histories of abusing worker’s rights and the environment. The two hotels are the Vernaneros Hotel and Resort and the Decameron Salinas Hotel. Both tourism facilities have long histories of abusing workers rights and the environment.

Over the past several years, Vernaneros has faced several legal issues regarding the violations of El Salvador’s labor laws and the destruction of a valuable coral reef. In 2013, the Ministry of Labor found that Vernaneros owner Larry Alberto Zedán owed his workers $17,000 in compensation for not paying overtime, holidays, and overtime and other wages. Inspectors found that employees “worked most of the day, and in some cases 60 hours a week, but did not receive the minimum wage, did not have written contracts, and that [the hotel] operated informally with total disregard for labor standards.”

As a result of the abuses group of workers formed the Food, Restaurant, Hotel and Tourism Industry Union (SITIGHRA) with employees of The Decameron Hotel and other facilities. After they formed the union representatives wrote to the owners of several hotels and asked for a meeting. Larry Zedán responded by firing the 15 of his employees who had joined the union.

The Verdaderos has also received a lot of attention over the years for their destruction of a large reef off the coast from their resort. They destroyed the reef by installing a seawall to make their beach more pleasant for their guests. The reef, located in a region called Los Cóbanos, was the only place between Mexico and South America on the Pacific side, where coral grew.

The Decameron Hotel has its own share of labor disputes. In September 2013, the Decameron fired 145 workers for supporting the SITIGHR union, the same union that the Verdaderos employees had been fired for joining. One worker told Contrapunto in 2013 that they formed the union because “a lot of the bosses and supervisors treated us really poorly.”

These are just a couple of real examples in the news this week of what the globalized race to the bottom looks like. El Salvador needs solutions – economic inequality, emigration, and violence are all serious problems. But selling off the labor force and environment to the lowest bidder won’t resolve anything.

Related to these issues:

With regard to tourism, we came across a short peice on Cancun and what tourism development has done to local Mayan populations and environment. This is relevant for a lot of reasons, including that developers in El Salvador have proposed turning the Jiquilisco Bay into the “Cancun of Central America. Here is a link:

Our friends at CISPES are hosting an event in the DC area this week – Estela Ramirez, the General Secretary of the Salvadoran garment workers’ will be in DC this week to talk about their work. This will be a good opportunity to hear from on-the-ground organizers.

More Neoliberal Economic Policies Will Not Stop Unaccompanied Minors From Seeking Refuge

DSCF0020March 2-3, Vice President Joe Biden was in Guatemala with leaders from El Salvador, Guatemala, Honduras, and the Inter-American Development Bank (IADB). Their agenda was to “accelerate the implementation of the Plan for the Alliance for Prosperity in the Northern Triangle (the Plan).” The meeting came just a month after Vice President Biden announced that the Obama Administration would ask Congress for $1 billion in aid for the region.

The purpose of the Alliance’s Plan, $1 billion fund, and the March meeting is to address the surge of unaccompanied minors leaving the Northern Triangle for the U.S. It’s an important goal. In FY2014, more than 60,000 youth were caught trying to enter the U.S. and government officials expect more than twice that in FY2015.

While the Plan arguably contains some constructive approaches towards decreasing violence, the emphasis is on implementing neoliberal economic policies. The proposal reads more like CAFTA-DR 2.0 or a World Bank structural adjustment plan, than an effort to stem the flow of emigration. The Northern Triangle and U.S. governments are proposing that foreign investment, more integrated economies, and free trade – and a gas pipeline – will provide the jobs and opportunities necessary to keep youth from seeking refuge in the U.S.

Income inequality and violence are the driving forces behind youth seeking refuge in the U.S., but its hard to imagine how more neoliberal economic policies, which many cite as the reason for inequality over the past 25 years, will do anything except ensure the region’s rich will remain so. A skeptic might even argue that the U.S. and Northern Triangle governments are using the “crisis” of violence and emigration in order to implement policies that further their own economic interests.

Increasing Foreign Investment and Investing in Our People

The Alliance Plan and other related documents emphasize that the solution to emigration, violence and inequality has to be economic – attracting foreign investment, unifying regional economies, increasing competitiveness in global markets, and training the workforce. The Plan, which was first published in September 2014, offers four Strategic Lines of Action. The first, and most detailed, is to stimulate the productive sector. The second is to develop opportunities for our people. Of the $1 billion grant from the U.S., $400 million will support these two lines of action.

Stimulating the productive sector means “attracting investment and promoting strategic sectors capable of stimulating growth and creating jobs… we will make more efficient use of our regional platform to reduce energy costs that stifle our industries and the national treasury, overcome infrastructural and logistical problems that curb growth and prevent better use of the regional market, and harmonize our quality standards to put them on par with what the global market requires.”

The Plan identifies four productive sectors: textiles, agro-industry, light manufacturing, and tourism, none of which are new to the Northern Triangle. Textile maquiladoras, sugarcane producers, factories, and tourism have exploited the region’s labor force and natural resources for years. They have created jobs, but ones in which workers are paid a sub-poverty minimum wage and endure a myriad of human rights abuses. Saskia Sassen wrote in 1998, and other since then report that so far the global economy has produced “a growing supply of poorly paid, semi-skilled or unskilled production jobs.” That has not changed in the past 17 years. When unions and workers try to negotiate better wages or working conditions, manufactures and investors simply leave. The environmental impacts of these sectors have been equally devastating, and will get exponentially worse if large-scale tourism, a gas-pipeline, and other industries are allowed to move forward.

While CAFTA-DR pretends to address labor and environment, and the “race to the bottom”, Northern Alliance governments provide detail about the concessions they will give to foreign investors. These include lower energy costs, infrastructure, and “harmonization” of standards, which some believe means an agreement on a very low bottom.

The U.S. and Northern Alliance countries have been implementing neo-liberal economic policies since the early 1990s; the same period that crime and gang violence began to proliferate. Privatization, dollarization, free trade agreements, maquiladoras, Millennium Challenge Corporation grants, Partnership for Growth, Public-Private Partnerships, and more have all been implemented over the past 25 years. The same period that crime and violence has skyrocketed.

As academics (good articles here and here) and campesino leaders in rural El Salvador, Guatemala, and Honduras have articulated for years – globalization and neoliberal economic policies are the reason for the high rates of inequality that has resulted in the high levels of crime and violence, and lack of opportunities that have forced youth to flee. Poverty and inequality are nothing new in the Northern Triangle, but Globalization and neoliberalism is simply the latest tools the elite use to maintain and grow their wealth.

Just this week, El Faro published an article titled “The Neoliberal Trap: Violent Individuals or Violent Situations ” that is based on 2013 study in El Salvador. The authors found that communities that are more isolated from the global community and depend sustenance agriculture were less likely to experience social isolation, gangs, crime and violence. Communities that have a greater market mentality are more socially isolated and prone to crime. The article argues, “The neoliberal reconstruction has renewed and amplified the conditions of alienation. Meanwhile, some elites embrace neoliberal reconstruction as a means of assuring their position in the new “transnational capital class of global capitalism, while a large part of the population is left out and has to fend for themselves.”

Colette Hellenkamp drew a similar conclusion in her piece War and Peace in El Salvador. She concludes, “The wealthy few in [the El Salvador] do whatever is necessary to maintain their riches and quench their thirst for comfort and power. Their status and wealth will not be threatened as long as they ensure that the masses remain uneducated and in chaos.” The crime and violence in El Salvador has certainly caused such chaos that instead of opening small shops and providing services the region’s otherwise hard-working and industrious workforce is leaving en masse.

Academics also point out that proponents of neo-liberal ideologies believe their model is perfect – “everyone benefits, not just some, all.” Those that don’t are referred to as the “underserving poor or the underclass that demonstrate two characteristics – they are underserving and predisposed to unlawful behavior. Proponents argue that free market, neoliberalism is perfect and if people don’t benefit, its not the market’s fault, it’s because people are lazy and prone to violence.

The Northern Alliance Plan is to double down on the neoliberal policies that sustain the same economic inequalities they say they are want to correct. Bur more sub-poverty, minimum wages will only serve to further stratify the economic and social classes.

Albert Einstein said, “We can not solve our problems with the same level of thinking that created them.” But that’s what the Northern Triangle Plan seems to want to try and do.

Violence and Security

Instead of focusing on more neoliberal economic policies, the Plan must focus on putting an end to the high rates of crime and violence.

Analysts agree that most of the youth detained on the U.S. border were fleeing violence. A report published by the UN High Commissioner for Refugees found that 58% of the minors interviewed “were forcibly displaced because they suffered or faced harms that indicated a potential or actual need for international protection.” The report identified two sources of violence – “organized armed criminal actors and violence at home.” A report written by Fulbright Fellow Elizabeth Kimberly found, “59 percent of Salvadoran boys and 61 percent of Salvadoran girls list crime, gang threats, or violence as a reason for their emigration. Whereas males most feared assault or death for not joining gangs or interacting with corrupt government officials, females most feared rape or disappearance at the hands of the same groups.” Other reasons for leaving included the lack of economic opportunities and reunification with family members in the U.S. But of those youth, “most referenced crime and violence (the chaos) as the underlying motive for their decision to reunify with family now rather than two years in the past or two years in the future.”

The proposal for decreasing violence in the Northern Triangle is a mixed bag at best. The Plan wants to invest more money into the same heavy-handed, militarized, law enforcement policies that have been failing for 25 years. Alexander Main provides a good critic of these policies in his Truthout article, Will Biden’s Billion-Dollar Plan Help Central America.

But its not all bad. There are some proposals in the Plan that focus on alternative conflict resolution, safe schools, trustworthy community policing, modernizing the justice system, and giving civil society and churches a greater role in prevention and rehabilitation. There are also needed reforms for ensuring better governance and addressing organized crime. One of the more positive ideas is to “improve prison systems, including infrastructure based on prisoner risk profiles, the capacity of prison staffs, and rehabilitation programs, including those focused on juvenile offenders and their prison conditions.”

El Salvador has even proposed an ambitious $2 billion plan that proposes similarly progressive policies for ending violence at the national level. The plan “promises parks, sports facilities, education and training programs for the country’s 50 most violent municipalities, as well as improvements to the worst prisons where the country’s biggest gangs – Mara Salvatrucha 13 (MS13) and Calle 18 – have proliferated over the past decade.”

If implemented, these projects could help decrease levels of crime and violence, and calming the chaos that helps maintain high levels of inequality. But if academics and campesino leaders are right, and globalization is the cause of the inequality, these positive steps are unlikely to have any lasting impact. The undeserving poor will still be limited to working sub-poverty wages and have little if any social and economic mobility.

If Not More Neoliberal Economic Policies…

Stemming the flow of emigration is a complex task, and the Northern Triangle and U.S. governments are right to consider a multi-faceted approach that aims to provide economic opportunities, end violence, and address other deficiencies.

Instead of more neoliberal economic policies, the Northern Triangle and U.S. governments, and the IADB should focus their plan on making the region safe from crime and violence. There are very smart, informed civil society leaders who have put forth some very reasonable proposals. The governments should do more to work with them to implement their ideas and proposals on a large scale. The plan articulates some of these ideas, but instead of taking second place to more neoliberalism, they should be at the heart of the proposal.

The solution should include creating economic opportunities, but that does not require foreign investors or selling out the region’s workforce and environment. Salvadorans, Guatemalans, and Hondurans are known as hardworking and industrious. Instead of building infrastructure and providing incentives to multinational corporations, the governments should focus those investments on supporting and incentivizing local, small businesses. That does not mean small business loans, but it might mean making it more difficult for international corporations like Walmart to run all the mom-and-pop shops out of business. Family businesses do more than provide jobs; they build neighborhoods and social networks.

Instead of promoting agro-industry and exports, as proposed by the Plan and Partnership for Growth, governments should support communities in their efforts to promote food security and sovereignty. El Salvador’s family seed program, for example is an example of a relatively low cost government action that supports small family farmers that are trying to feed their family and contribute to their local economy. In 2013, the United Nations Conference on Trade and Development called for a “rapid and significant shift from conventional, monoculture-based and high-external-input-dependent industrial production towards mosaics of sustainable, regenerative production systems that also considerably improve the productivity of small-scale farmers.”

There are solutions. The only question is motive and whether policy makers are really interested in addressing emigration, violence, and economic inequality, or using the chaos and “crises” as means to further their own economic interests. This month, President Sanchez Cerén and the Legislative Assembly declared March 26 as the National Day of Peace, Life and Justice – a day in which all Salvadorans will unite and demand an end to the violence and chaos. But even this simple idea of bringing people together was too much for the business class. ANEP (El Salvador’s Chamber of Commerce) came out against the Day of Peace, Life, and Justice, argues that celebrating a National Day of Peace would cost El Salvador $56 million in lost economic opportunities. ANEP representatives argue, “the suspension of just one day of work will cost Salvadorans more that 56 million dollars, and could result in the loss of contracts from export businesses, and thus the employment of workers.”

Their position could be one of pure practicality. More likely it is a true reflection of their priorities – money and profits over peace, life, and justice.

Is Selling Sugar to China Really Such a Sweet Deal for El Salvador?

Salvadoran government officials recently announced a deal to export 52,000 tons of sugar (12% of the country’s annual production) to China in a deal worth $15-20 million to local producers. El Salvador has sold sugar to South Korea, Taiwan, the U.S., Mexico, Canada, Indonesia, and the European Union, but this is the first time exporting to China.

Sugarcane burning in the Bajo Lempa

Sugarcane burning in the Bajo Lempa

With Partnership for Growth pressing El Salvador to produce more exports, sugarcane has become a larger part of the country’s economic plan. Already, sugarcane production has created 50,000 direct jobs and 200,000 more indirect jobs. This week Vice President Oscar Ortiz said “This is the key, this is the solution for our country: to diversify our production of exports. We are unable to be alone in a market, we have to be open to a variety of markets and in this direction we have to have the ability to improve our process of commercialization.”

Exporting $15-20 million of sugar to China and creating 250,000 jobs may sound like a sweet deal, but El Salvador is paying a substantial price. In addition to labor, agrochemicals, machinery, processing, and shipping, there are enormous costs related to the environment, public health, food sovereignty, and local culture. The individuals and corporations profiting from sugarcane exports don’t pay these costs. Instead they pass the debt on to the country’s poor who earn sub-poverty wages, suffer from chronic renal failure and other diseases, live in depleted ecosystems, struggle to feed their families, and are forced to migrate to urban areas.

DSCF0037Last year, Voices staff spoke with a team of migrant workers from Santa Ana cutting cane in a field in Usulután. They said they earn the agricultural minimum wage for cutting sugarcane 14-hours a day during the hottest months of the year. In 2014, the minimum wage for agricultural workers was $3.79/day. In 2015, it is up to $3.94/day. That is less than half of what is needed to feed a family. When these migrant workers arrive in a field of ripe sugarcane, they begin by burning the field to defoliate the cane, making it faster and cheaper to harvest, transport and process. The next day, as the field smolders, workers use machetes to cut the cane and pile it into rows. A tractor then loads the cane into tractor-trailers that deliver it to a processing plant. Yes, these and others workers have jobs, but they still live in abject poverty.

Another issue with sugarcane exports is way it is grown – large-scale monoculture production that relies on agrochemicals and is burned before harvest. Monoculture production of any crop destroys local ecosystems and displaces or kills the wildlife and people that once depended on them. When an ecosystem is destroyed, soil structures and natural defense systems deteriorate, requiring inputs such as fertilizers, herbicides, pesticides, and many other toxic agrochemicals that contaminate local communities, rivers, streams, fields and forests. Many of these chemicals are linked to high rates of chronic renal failure, cancer, and other diseases common where sugarcane is produced.

Perhaps the most egregious practice with sugarcane production is burning the fields before harvest. Once alight, sugarcane burns quickly, flames and smoke snapping acre to acre, throwing thick black smoke, ash, and soot high into the air before snowing down on schools, soccer fields, homes, farms, and communities. The particulates include residues of all the agrochemicals that had been sprayed on the fields the months before. In addition to contaminating surrounding communities, burning sugarcane emits large quantities of greenhouse gases that contribute to climate change.

The use of toxic agrochemicals and burning of fields motivated residents of La Tirana, Monte Cristo, San Juan del Gozo and other communities to oppose large-scale sugarcane production next to mangrove forests on the San Juan del Gozo Peninsula. Residents fear that Glyphosate and other agrochemicals would have an adverse affect on their health and destroy the valuable and fragile ecosystem that they depend on.

In addition to the environmental impacts, large-scale sugarcane production also disrupts the local economy and culture. Rural communities in El Salvador have traditionally supported themselves by growing corn, beans, rice and other crops. Farmers generally keep a portion of what they grew to feed their family and sell the rest at local markets to generate a modest income. While small-scale farming will not generate the kind of concentrated wealth that large-scale monoculture can, it is a more sustainable way to live. And the campesino culture has always been one of humility, respect, and simplicity.

In 2013, the UN Commission on Trade and Development published a report titled “Wake Up Before It’s Too Late”. One of the report’s findings is “the world needs a paradigm shift in agricultural development: from a ‘green revolution’ to an ‘ecological intensification’ approach. This implies a rapid and significant shift from conventional, monoculture-based and high external-input-dependent industrial production towards mosaics of sustainable, regenerative production systems that also considerably improve the productivity of small-scale farmers.”

El Salvador’s focus on producing more sugarcane and other export crops does just the opposite. It is doubling down on monoculture production at the cost of small-scale farming. Monocultural production displaces families when they rent, sell, or otherwise lose their land sugarcane producers. There has been a long trend of farming families moving to urban areas where at best they work for minimum wage jobs. Idle youth lack access to education and are subject to the violence and gang culture that El Salvador has become famous for.

Selling $15-20 million in sugarcane may be good for a few Salvadorans, but the money does not pay for or trickle down to people who are bearing the environmental, health, economic, and cultural impacts. The demand for sugarcane is going to grow and the Salvadoran and U.S. governments will continue to promote it as a way to develop the stagnant economy. But Salvadorans should have to an informed debate about whether they are willing to pay the real costs of sugarcane.

The Case of Privatizing Happiness

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Dozens of reporters, spent an entire day, braving the heat to cover a story concerning one of the major issues Voices is currently working on. The story is about the implementation of mega-tourism, sponsored by the Millennium Challenge Corporation in the Lower Lempa Region of El Salvador. The main theme is it’s negative impacts on the communities living in and around the Jiquilisco Bay.

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IMG_0040 IMG_0055  IMG_0031 An article published by the Foreign Policy Journal said: “U.S. foreign aid is expected to promote poverty alleviation and facilitate developmental growth in impoverished countries. Yet, corporations and special interest groups have permeated even the most well-intended of U.S. policies.”

The United States has $277million in aid money to grant El Salvador and much of it will promote tourism in the Jiquilisco Bay by funding infrastructure projects like wharfs ans marinas in order to encourage private investment.

IMG_0116 IMG_0108 IMG_0092 IMG_0134Voices has been working extensively with communities and NGO’s in the Lower Lempa region to ensure that residents are bring represented, rights are being protected and those in charge are being held accountable for non-ethical practices. La Tirana and El Chile are two communities most affected by the plans and have expressed concerns about the potential threats to the land, the water, the culture and the economy of their communities. Voices even collaborated with them to create a detailed report on the situation.                >> Read the report here                                                                                                        >> Read the article here

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IMG_0149  IMG_0009“They are privatizing our happiness. They are stealing our smiles.”  La Tirana’s community leader said as he looked over the bay where kids were playing. Thanks to the efforts of leaders like him, many of these people here know what’s going on. They know that this isn’t free money coming into their communities and they are banding together to demand that their lives and rights be taken into consideration.

The day’s event was a great opportunity for exposure. Many diverse, national and international journalists were able to experience the reality these communities face. These communities have been taking good care of the natural resources through climate change, contamination and even flooding with little to no help from the government. To them, these resources are their lifeline. This is something that tourists who are primed to vacation here will never understand.

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The Price for a $277 Million MCC Grant

Since Sanchez Cerén became the President of El Salvador on June 1, his administration has said securing the $277 million Millennium Challenge Corporation (MCC) grant is a top priority. Vice President Oscar Ortiz said they want to get it done within their first 100 days in office, which means within the next three months.

The MCC approved the grant in September 2013, but the US Embassy blocked the release of the funds until the government met conditions such as reforming the Public Private Partnership Law (P3 Law) and restructuring a popular seed program.

The P3 Law facilitates government contracts with private entities to provide public goods and services. The US Embassy made the P3 Law a prerequisite for the MCC funds but they don’t like the law passed by the Legislative Assembly. They don’t approve of the oversight role the Legislature created for itself – a committee that must approve all P3 contracts. The Embassy and business community also don’t like that the law exempts important public goods and services like water, health, education, and public security from public private partnerships.

One of the most vocal opponents of the P3 Law has been El Salvador’s labor movement. Unions fear that public private partnerships will result in a loss of jobs, decrease in wages, and even worse working conditions as private investors maximize profits. Other civil society organizations fear the P3 Law, even with the exemptions, will lead to the privatization of important goods and services – like water, health care, and education.

The US Embassy also doesn’t approve of the Seed Distribution Program operated by the Ministry of Agriculture (MAG). Officials argue the procurement process violates the Central American Free Trade Agreement (CAFTA) because the government only buys seeds from Salvadoran Farming Cooperatives, excluding international seed producers like Monsanto. The program provides thousands of jobs for people working for the cooperatives and ensures that more than 400,000 farmers have quality, non-GMO seeds.

Last week US Ambassador said that the Embassy’s problem was not with the seeds, but with the process. On May 2 Voices wrote an article arguing that the problem was not the seeds or the procurement process, but CAFTA.

The MCC program is popular with a lot of Salvadorans and politicians who see it as free money for development projects. But a growing number of environmentalists, unions, and communities argue that the Embassy’s conditions are too high a price to pay for development projects they don’t want anyway. And many see the conditions as an encroachment on El Salvador’s sovereignty.

Among those who oppose the MCC program outright are environmental groups and communities in the Jiquilisco Bay. MCC funds will support tourism development in the Bay and residents fear it will cause irreparable harm to mangrove forests, nesting grounds for the critically endangered Hawksbill sea turtle, and El Salvador’s most fertile agricultural land. (Voices has written about Tourism on this blog in the past – here are two reports we wrote on tourism in the Jiquilisco Bay).

Roberto Lorenzana, President Sanchez Cerén’s Chief of Staff said two weeks ago that the administration already has a draft Fomelinio Law (in El Salvador the MCC is called Fomelinio) that they will send to the Legislative Assembly soon. It’s unclear what is in the Fomelinio Law, but it likely contains all of the reforms the US Embassy is requiring for release of the MCC funds. Even before he became Chief of Staff, Lorenzana said the new administration is going to open the procurement process to national and international seed producers, in an apparent effort to satisfy the Embassy’s concerns.

While some Salvadorans have spoken out against the second MCC compact, the P3 Law and other neoliberal policies, many have not. The politics of opposing neoliberal economic policies grew more complex when the leftist FMLN party took office in 2009 and again on June 1, 2014. People and groups that organized against privatization, dollarization, CAFTA, and the first MCC compact (all policies adopted by the rightwing ARENA party between 1994 and 2008) have not been as critical since the leftist FMLN party took power. The result is that opposition to these destructive policies is less now that the FMLN is power.

El Salvador will soon get a $277 million grant from the U.S. Millennium Challenge Corporation, but it should be clear – this is not free money.

The 17 farming cooperatives that have been growing seed corn and beans for the MAG’s Seed Distribution Program will pay for the MCC grant when they have to compete with Monsanto and other international seed giants.

Communities that depend on the mangroves for their survival will pay for the MCC grant when developers cut down forest to build resorts and golf courses.

The Salvadoran labor force will pay for the MCC grant when private contractors take over government services and cut jobs and wages to increase profitability.

And all Salvadorans will pay if public goods and services like water, education, and health are contracted out to for-profit entities, especially if there is no oversight in the process.

 

Free Trade Threatens El Salvador’s Seed Distribution Program

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Agricultural workers in the Bajo Lempa harvesting seed corn for the MAG’s distribution program

In recent months conservative groups and the U.S. Embassy in San Salvador have criticized a popular seed distribution program run by the Salvadoran Ministry of Agriculture (MAG). They allege the Ministry’s procurement of seeds violates section 9.2 of the Central American Free Trade Agreement (CAFTA) and lacks transparency.

Salvadoran farmers, however, argue that the seed distribution program provides real benefits to farmers and farming cooperatives, and that if there is a problem it is rooted in CAFTA and free trade.

Since 2004, the Salvadoran Ministry of Agriculture (MAG, in Spanish) has provided seed packages to small farmers in one form or another. The latest incarnation of the program is part of the Family Farming Program. In 2012, Vice-Minister Hugo Flores told the UN Food and Agriculture Organization that “after 20 years of neo-liberalism – a model that has neglected subsistence farmers, which total some 325,000 in the country, and left them in a situation of extreme poverty – a targeted approach had to be put into action given the lack of technical assistance for these sectors.”

Every year MAG buys beans and white corn seed, primarily from Salvadoran producers, and distributes them along with 100 pounds of fertilizer to peasant farmers. The seeds program amounts to a small agricultural subsidy of less than $100 per family, covering only part of the cost of producing corn and beans.

The program is very popular with the cooperatives that produce the seed and the small farmers who receive them. Will Hernandez, a member of the Nueva Esperanza Model Cooperative, told Voices on the Border, “the seed program has strengthened our cooperative, both economically and technically. Before it was just transnational corporations that had the capacity to produce seeds [on a large scale], now we also have the technical capacity.” In addition, the seed program generates employment in rural areas. Mr. Hernandez said that in 2013 the seed program resulted in $1.5 million in wages in rural communities, which is particularly important for thousands of peasant families.

MAG officials say the seed distribution program promotes domestic production of basic grains and food security for the population. They report the program resulted in a record 22.6 million bushels of corn and 2.7 million bushels of beans at harvest in 2013.

In April, MAG distributed more than 188,000 seed packages to small farmers throughout El Salvador. MAG officials plan to distribute more than twice that amount the first week of May to reach of total of 400,000 packages for the year, almost all small farmers in El Salvador.

In January, Vice-Minister Flores said that MAG will “prioritize domestic seeds and the importation of seeds will depend on the offers that we have. Last year we imported 8% of the seeds, because the cooperatives were unable to satisfy demand.” In fact, last year 17 Salvadoran Agricultural Cooperatives, three of which are located in the Bajo Lempa region of Jiquilisco, Usulután, supplied more than 91% of all the seed used in the MAG packages. The remaining 9% was from Guatemala and purchased on the Bolsa de Productos y Servicios de El Salvador (BOLPROS, in Spanish) market. The domestically produced seed cost the MAG $124 per quintal while the imported seed bought at the BOLPROS seed cost $132 per quintal. The domestic seeds used in the program are a specific hybrid and the MAG carefully monitors its quality.

The decision to buy domestic seeds was not just MAG’s. In December 2012 the Legislative Assembly passed Law No. 198, entitled the “Temporary Special Provisions for the Promotion of Certified Production of Corn and Bean Seed.” The law required that all seed used in the agricultural packages be purchased from Salvadoran farmers. Law No. 198 expired in December 2013, at which time the Legislature passed the Temporary Special Provisions to Promote the Production of Basic Grains, which governs the seed program this year. The new law allowed the MAG to purchase seed directly from Salvadoran farmers without going through an open bidding process or purchasing on the BOLPROS. The justification was that the Ministry did not have time to go through the procurement process and still have the seeds ready to distribute by April and May.

There are several reasons why it is more beneficial for the MAG to purchase seeds for the distribution program from Salvadoran cooperatives. As Vice-Minister Flores and Mr. Hernandez pointed out, the program invests in the technical capacity of farming cooperatives. Similarly, the money invested in the seed distribution program, $25 million in 2013, remains in the Salvadoran economy and generates jobs rural communities where they are needed most. Another benefit is that the domestic seeds in 2013 were $8/quintal less than the seed from Guatemala bought off the BOLPROS. This is likely due in part of the cost of transporting seeds from Guatemala to El Salvador. Another reason for contracting with Salvadoran growers is that the MAG can more easily monitor the quality of seed they are buying. The government works directly with farmers on producing hybrid seeds that are able to better withstand El Salvador’s increasingly extreme climate, which can present drought and floods in the same growing season.

Despite the economic and social benefits, John Barrett, an Economic Advisor for the U.S. Embassy, and Amy Angel, an agricultural economist with FUSADES, argue that requiring MAG to buy seed from domestic producers violates CAFTA. Section 9.2 of CAFTA requires the Salvadoran government to give domestic and international providers equal consideration and treatment when procuring goods and services. If the government wants to buy seeds or any other goods or services, Section 9.2 requires that it treat all interested vendors the same, without giving preference based nationality or country of origin.

Amy Angel and members of the ARENA political party also argue that the procurement process this year violated the Law on Acquisitions and Contracts for Public Administration (LACAP, in Spanish) and lacks transparency. Ms. Angel argues that Article 72 of LACAP requires specific conditions to be in place in order for the MAG to directly purchase seeds from the Salvadoran cooperatives, and that the seed purchases did not meet any of the conditions. She rejects the argument that the MAG did not have time to go through a formal bidding process. Ms. Angle says that even if they did not have time they could have gotten a third party to contract with buyers or just bought seeds off the BOLPROS, which would have made the procurement process transparent and CAFTA-compliant.

In January when the Legislative Assembly passed the Temporary Special Provisions to Promote the Production of Basic Grains bill, the rightwing ARENA political party accused MAG of ignoring LACAP and transparency norms in order to give “benefits to one of the FMLN businesses, Alba Alimentos.” Members of the leftwing FMLN party created ALBA in 2006 as a framework for working with the Bloivarian Alliance for the Peoples of the Americas, an economic trade alternative created by Venezuela. In April,Minister of Agriculture Pablo Ochoa reiterated that the reason for bypassing the formal procurement process was a time issue, and the claim that ALBA is at all involved in the seed program was a politically motivated claim that is untrue.

The seed program’s apparent violation of CAFTA is one of several issues that is currently holding up the release if the Millennium Challenge Corporation funds – a $284 million grant from the U.S. government to help develop El Salvador’s economy. While there is no indication that the U.S. government is planning to file a complaint against El Salvador over the program, John Barrett said “the seed issue is very important because it is an example of where the Salvadoran Government has to give confidence in how it will respect their obligations to free trade.”

According to Jose Santos Guevara, Coordinator of the Movement of Victims of Climate Change, the problem is not the seed program – it’s CAFTA. He believes the U.S. Government is using free trade to allow giant transnational organizations like Monsanto take even more control over El Salvador’s agricultural sector. Monsanto is the largest seed company in the word, controlling more than a forth of the global seed market. A few years ago Monsanto bought Semillas Cristiani Bunkard, the largest seed company in Central America, for more than $100 million, taking control of the regional seed market.

The United States, Central American countries, and the Dominican Republic all signed and ratified CAFTA in 2006. By 2011 U.S. exports to El Salvador had risen more than a billion dollars, a number the U.S. government says was low due to a spike in fuel prices. During the same period Salvadoran imports to the U.S. rose half that amount, resulting in a significant trade deficit that did not exist pre-CAFTA. More relevant to Salvadoran peasant farmers, in the seven-years between 2006 and 2013 U.S. agricultural exports to El Salvador doubled to $467 million. The US claims that under free trade they have increased its agricultural exports around the world by $4 billion. The U.S. maintains a trade surplus in agricultural products in part by ensuring that U.S. farmers, which receive large agricultural subsidies, have access to foreign markets and can compete in the kind of procurement opportunities like the MAG’s seed distribution program. While free trade has been good in allowing U.S. farmers to access to Salvadoran markets, it has been bad for the Salvadoran economy and the peasant farmers who are trying to survive and feed their families.

Every dollar (and it is dollars because in 2001 El Salvador traded the Colon for the U.S. dollar) that El Salvador spends on agricultural imports is a dollar that leaves the local economy and not invested in local farmers and agricultural workers. If MAG officials are forced to allow international producers to bid on contracts for the seed distribution program, it is likely to increase the trade deficit with the U.S even more. It will mean the 17 cooperatives that have been providing the seeds will lose their most stable source of income, and agricultural workers will loose their jobs.

Perhaps the MAG’s seed distribution program violates the Central American Free Trade Agreement, but that does not make it a bad program. It is just another reason why CAFTA and free trade are bad policies.

The Debate Over Public-Private Partnership Law and MCC Funding in El Salvador

Last week Pacific Rim Mining Company announced it is seeking $315 million dollars in damages from El Salvador. It was a stark reminder that the 8-year old mining debate, which included several years of threats and violence between mining supporters and opponents, has yet to been resolved and could still result in a devastating economic blow to El Salvador.

As the mining issue continues, another debate with the potential to become just as volatile is brewing. In March the Funes Administration provided some details about its proposal for a second round of funding from the Millennium Challenge Corporation (MCC), a US aid program started by President Bush in 2004. The proposal is worth $413 million dollars, half of which will likely go towards an infrastructure project like improving the Litoral Highway that runs along El Salvador’s southern coast. The other half is likely to help finance public-private partnerships and improve human capital, which seems to mean education.

As details of the proposal emerge, opposition to a second round of MCC funding is growing. So far, opposition has opened on two fronts. The Salvadoran labor movement has been the most outspoken opponent, denouncing the proposed Law on Public Private Partnerships (P3 Law) since last year. Environmentalists and communities in the Lower Lempa region of Usulután have been less outspoken, but oppose the MCC proposal because the public-private partnerships will support tourism, which they strongly oppose. In 2011, members of the anti-mining movement also spoke out against the P3 Law fearing it would result in mining activities.

Mangrove Forests near La Tirana, a community targeted for a large tourism project

Mangrove Forests near La Tirana, a community targeted for a large tourism project

Because politicians within the FMLN are supporting the MCC, the politics of opposing the P3 Law and tourism are a little more complicated than opposition to mining was. Other than a protest outside the US Embassy in March and other small activities organized by the labor movement, opposition has remained largely behind closed doors, which may change soon.

            The Public Private Partnership Law

US Ambassador Maria Carmen Aponte said in October 2012 that approval of a second round of MCC funds relies on the passage of the P3 Law. The labor movement and their international supporters, argue that the P3 Law will privatize government operations including the airport, seaports, health care facilities, and other important services. They fear it will result in the loss of thousands of jobs, increasing the country’s already high rates of unemployment and driving wages down even further.

The labor movement and other opponents also do not want the private sector to control important resources and services like water, education, and health controlled. For example, Salvadoran civil society has fought against privatization of water for many years, making it such a toxic issue that politicians are unable to advocate for it publicly. Just like the government has not been able to privatize water, civil society organizations have not been able to pass a water law they have been promoting for over 8 years. Among other things, the law would protect water resources from privatization. Similarly, in 2002 then President Francisco Flores tried to privatize part of the health care system, but health care workers and many others took to the streets and forced the government to back off. Opponents of the P3 law fear it will make it easier for the government to accomplish what it has failed to do in the past – privatizing water and health care.

Supporters of the P3 Law, including President Funes, counter that public-private partnerships are not privatization, and the government will not privatize any important services, like health and education. They argue, instead, that public-private partnerships will result in more foreign direct investments, injecting capital into services and industries that are lagging behind.

The labor movement and other activists fear, however, that while not called privatization, the P3s are a way to accomplish the same goals. Concessions could last as long as 40 years, which means the state is essentially relinquishing control of an asset. Similarly, while capital investments are needed, the P3 Law will allow private, international investors to generate profits from basic services in El Salvador and take the profits overseas instead of re-investing in El Salvador.

Public-private partnerships are not new in El Salvador – they government has contracted out many operations to private companies over the years. One regular criticism is that these relationships prioritize profits over the well being of Salvadorans. For example, in the aftermath of the October 2011 floods, communities and organizations in the Lower Lempa blamed the CEL for washing them out. The CEL is the state-owned agency that manages the dam, generating electricity that private power companies sell for profit. The more electricity produced, the more money the companies make. In the months after the 2011 floods CEL representatives responded frankly, stating they operate the dams to make electricity and generate profits, not protect the people downstream.

FESPAD and Voices on the Borders 2012 legal interns recently published a full analysis of the P3 Law.

Tourism and other Investments

One of the public-private partnerships being proposed in the second MCC compact is tourismhotels and resorts being built along El Salvador’s Pacific coast. In December the government solicited proposals from the private sector and received 49 responses, 27 of which are tourism projects in Usulután, La Paz, and La Libertad.

Tourism is not inherently bad, but communities in the Lower Lempa of Usulután fear that building hotels and resorts in and around their important and fragile ecosystems will cause irreparable harm. One Lower Lempa community targeted for a tourism project is La Tirana, an isolated and economically poor community located at the edge of one of the most pristine mangrove forest in Central America. In addition to its immense natural beauty, the forest supports thousands of species of flora and fauna. The nearby beaches are protected as a nesting ground for several species of endangered sea turtles. Residents of La Tirana fear tourists would damage the fragile mangroves with construction of houses and resorts, jet skis and motorboats, and solid waste and sewage, while displacing local residents and their farms.

Proponents of tourism argue that resorts and hotels in places like Tirana would provide jobs and spur the local economy. They believe this to be especially important in communities, such as those in the Lower Lempa, that have had their agricultural economy diminished by free trade. But locals doubt resorts will help the local economy. They know that hotels are much more likely to hire bilingual youth from San Salvador who have degrees in hotel management than poor campesinos who barely have a sixth grade education.

Voices staff recently met with community members in La Tirana, and they are very much against outside investors building resorts in their region. Recognizing that they live in a special place, the community board is proposing that the community build a series of small, humble cabanas that would have a small ecological footprint, but provide comfortable housing for a small number of guests. They are also proposing that the community build a small community kitchen that could feed guests. The community wants to develop its own small eco-tourism industry that it can regulate and ensure does not harm the forest or turtle nesting ground. It would also mean that the money from tourism would benefit the community, and not just make wealthy investors in San Salvador or abroad even richer.

Other communities in the region are even more vulnerable than La Tirana. In El Chile and other small communities, many residents still do not have title to their land. They fear that if a private investor wants to build a hotel or resort the State could take their land and they would have no legal recourse.

Our staff also met with other communities in the Lower Lempa – Comunidad Octavio Ortiz, Amando Lopez, Nueva Esperanza – and several local organizations. They are also completely opposed to tourism projects in the region. They fear that hotels and resorts will further destroy agricultural land, use up limited water resources, and destroy local culture. The community of Octavio Ortiz even wrote in their strategic plan that they see tourism as a large threat to farming and their peaceful way of life.

While most of the public-private partnership proposals involve tourism, there are quite a few agricultural projects. According to PRESA, the government agency managing the project proposals, they received 14 requests to support production of exports in dairy, mangoes, limes, and honey. In order to be considered for a public-private partnership, investors have to have $100,000 in capital and be producing export crops. The capital requirement means local farmers will not be able to participate. And the requirement that products be grown for export means even more land will be dedicated to products that do not contribute to food sovereignty, which is a top priority for the region.

There are also civil society leaders and academics in El Salvador who oppose the MCC because they see it as the latest phase in implementing a neoliberal economic agenda in their country. They hold it in the same regard as the privatization of state assets (1990s), dollarization (1995-2001), Central American Free Trade Agreement (2006), the first MCC compact (2007-2012), and Partnership for Growth (2011). Similarly, Gilberto Garcia from Center for Labor Studies (CEAL, in Spanish) believes the

highway projects, including the northern highway funded by the first MCC compact and the Litoral Highway project planned for the second compact, are part of an effort to build a land bridge in Guatemala. The “Inter-Oceanic Corridor” will connect ports on the Pacific coasts of Guatemala and El Salvador with Caribbean or Atlantic ports in Guatemala. ODEPAL is managing the project in what they call a public-private partnership. The land bridge is located in Guatemala, but it is right on the borders with El Salvador and Honduras, giving both countries easy access.

Politics of Opposing the MCC and P3 Law

Building a strong national movement around opposition to the second MCC compact and the P3 Law may be more difficult than organizing Salvadorans against mining. While the anti-mining movement was able to reduce the debate to a single issue that all Salvadorans could understand – i.e. gold mining will destroy water resources for 60% of the country – most people believe that tourism, better highways, and other capital investments are always good. Similarly, the P3 Law is fairly abstract and difficult to reduce into a simple message that the majority of Salvadorans can relate to their everyday lives.

The politics around the MCC and P3 Law will make it more difficult to achieve the kind of nation-wide opposition that the anti-mining movement was able to garner. During the mining debate, the FMLN (leftist political party) was the opposition party and had the political freedom to take an anti-mining position. The FMLN is now in power and has to consider the economic and political interests that helped them get there. President Funes and FMLN presidential candidate Sanchez Cerén support the P3 Law and MCC compact, arguing the investments will be good for the economy. According to anonymous sources, many of the same business interests that helped Mauricio Funes with the 2009 presidential elections will benefit from the P3 Law and MCC funds. FMLN legislators have been a slower to sign on to the P3 Law. At times FMLN legislators have said it was not their top priority, and more recently they have tried to negotiate amendments to exclude certain sectors such as health and education from public-private partnerships. Officials from the conservative ARENA party have accused the FMLN legislators of not supporting the law because they want to implement a socialist economy agenda.

But the civil society organizations, communities, and labor unions that are opposed to the P3 Law and the MCC funding generally make up much of the FMLN’s base. If Sanchez Cerén and his supporters continue to embrace the P3 law and the MCC funding, while many in their base protest against it, it could exacerbate an existing split within the party in the months leading up to the February 2014 presidential elections. Many former FMLN militants and supporters, especially in the Lower Lempa, already believe the movement they once fought for no longer represents their interests and values.

Though the US and Salvadoran governments want to pass the P3 Law and sign the MCC compact before the elections, many opponents are gearing up for a long struggle. Even if the P3 Law passes, when the government wants to enter into a public-private partnership the Legislative Assembly will have to approve it. They are likely to face great scrutiny and opposition. Similarly, developers wanting to break ground on tourism projects in La Tirana and other communities are likely to face some rather significant legal and social barriers – much like Pacific Rim faced in Cabañas.