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 17th 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 17th 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 17th 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 15th 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 17th 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.