Economy, Environment, Tourism, violence

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.

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Partnership for Growth, U.S. Relations

Law on Public Private Partnerships Seems to be Moving Forward in El Salvador (Please sign the Petition Below!)

Countrapunto reported Wednesday that the Legislative Assembly’s Treasury Commission gave a green light to the proposed Law on Public Private Partnerships (P3 Law). The full Assembly should have a chance to vote on the bill as soon as today, Thursday May 23.

Since the Funes Administration introduced the bill last year, opposition has grown, in part, around the fear that if passed that State would be able to privatize important state services and assets. Members of the Treasury Committee tried to address some of those concerns with amendments. FMLN Diputado (Representative) Orestes Ortez, said “at least how it has been modified through today, in agreement with all the other diputados, the bill does not open space for privatizing those goods that have a public or social interest.”

According to the Contrapunto article, the Committee took out a section that required the Legislative Assembly to vote on a contract within 45 days of receiving it. Ortez pointed out that no country in the world imposed such tight time limits on legislative functions. The Committee also created a roll for itself in negotiating the terms of P3 contracts. The original bill only gave them the right to approve or oppose a contract, but not contribute substantively to its content.

Among the other changes, the reforms require that all contractors abide by El Salvador’s labor laws, which they would presumably have to do anyway. This seems to be an attempt to pacify the labor movement, which has been the law’s most vocal opponent. The reforms also exclude services like water, health, education, the public university, the public insurance system, and El Salvador’s jails from P3 contracts.

According to La Prensa Grafica, the bill that left the Treasury Commission should have enough support to pass the Legislative Assembly.

But the reforms seem insufficient to pacify the bill’s opponents. Estela Ramírez, a representative of the Private Sector Worker’s Union Federation (FUERSA), told a group of supporters, “we are here from the private sector to accompany public sector workers in their opposition to the P3 law, not only out of solidarity for those workers’ rights, but because of the impact that this law would have on private sector workers by raising the costs of social services and further bankrupting the state.”

Residents of the Bajo Lempa reigon of Jiquilisco, Usulután share the labor movement’s concerns about the P3 law’s affects on the labor market and access to public services. Their main concern, however, is that the P3 Law is a prerequisite for the second round of Millennium Challenge Corporation funds, which will fund public-private partnerships for developing tourism throughout the region. Residents of the Bajo Lempa have stated on several occasions that they do not want large tourism projects or other mega-development projects that will continue to disrupt their agricultural economy and peaceful way of life.

Yesterday, more than 70 residents and civil society leaders in the Bajo Lempa gathered to discuss the P3 Law and the reforms, as well as the MCC projects. Even after reviewing the changes approved this week by the Treasury Committee, the representatives at the meeting remain 100% against the P3 law and MCC. The reforms did not change their view that the P3 law was written to benefit corporations and wealthy people, and has not taken into consideration the needs of the communities.

One person at yesterday’s meeting made the point that since 2005 civil society has tried to get the Legislative Assembly to consider a Water Law they drafted. Their bill enjoys widespread support because it tries to protect the interests of communities and people. But the Legislative Assembly has never tried to move the bill forward. The P3 Law, however, appears to be zipping through the legislative process even though people, communities and civil society organizations have spoken out against it.

The labor movement is organizing a protest today outside the Legislative Assembly, presumably around the time the diputados will be debating and possibly voting on the P3 Law. They, along with residents of the Bajo Lempa, will continue to protest the law and its application if it is approved.

So far the P3 Law has enjoyed the most support from the U.S. Embassy in San Salvador. U.S. Ambassador Mari Carmen Aponte has appeared in the Salvadoran news several times over the past few months calling on the Legislative Assembly to pass the law, stating that it is a prerequisite for the second Millennium Challenge Corporation grant worth $400 million.

Support for the P3 Law amongst Salvadorans doesn’t necessarily come from common sense that public-private partnerships are the key to economic growth, though there are some who are believers. It comes from the th.reat that if the law is not passed, the U.S. will withhold the $400 million MCC fund – an investment that people in the Bajo Lempa don’t want anyway

This morning our friends over at CISPES sent around a petition by CEAL (a Salvadoran Labor group) asking that members of the Legislative Assembly reject the P3 Law, which “was proposed by the Executive branch under the pressure of the United States Embassy.” Instead they call on the Legislative Assembly to approve fiscal reforms quickly that require those that have more to pay more taxes in order to finance more social projects that benefit Salvadoran communities without needing to privatize government assets and services.

Please take a moment to sign the petition – it’s an important way to let the U.S. Embassy and the Legislative Assembly know that you believe that the interests of the Salvadoran people should come before those of wealthy corporations that are already thriving in the neoliberal economic model the U.S. has been implementing since the early 1990s.

agriculture, Economy, El Salvador Government, Environment, Mining, U.S. Relations

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.