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In May, El Salvador passed a Law on Public-Private Partnerships (P3 Law) to facilitate foreign investment and increase the private sector’s role in managing and providing public services. The U.S. Embassy made the law a prerequisite for their approval of a second round of Millennium Challenge Corporation (MCC) funding.
The Legislative Assembly, led by the leftist FMLN party, passed the Law with reforms that exempt certain public goods and services from public-private partnerships. The public assets exempt include water, education, health care, and the prison system – all of which the government deems to important to contract out.
For a few months it seemed as though the passage of the P3 Law, even with the reforms, as enough to satisfy U.S. officials, and in September the MCC board approved a second round of funding.
Last week, however, Mari Carmen Aponte, the U.S. Ambassador, said that the Legislative Assembly would have to reform the P3 Law to take out the exceptions in order to get the MCC funds. The Embassy is also requiring that El Salvador have an anti-money laundering law in place.
Sigfredo Reyes, the FMLN president of the Legislative Assembly, responded to Ambassador Aponte’s new requirements saying that the pretentions that a person would impose such conditions on El Salvador that they would not adopt in their own country was unacceptable. He also stated, we are grateful that the government, or more the MCC has granted this second round of funding, as they call it, but the Salvadoran legislative branch moves to its own rhythm that Salvadorans determine.
Communities in the Bajo Lempa of Jiquilisco, Usulután responded to the Ambassador’s latest threats with the following statement (the original is in Spanish, with an English Translation below):
APROBAR LA LEY DE APP, FUE UN ERROR, REFORMARLA ES AGRABAR EL ERROR
Desde que surgió el proyecto de Ley de Asocios Público-Privado, las organizaciones sociales, sindicales, ambientalistas, de derechos humanos y campesinas, la rechazan debido a que los resultados serán: control transnacional de servicios e industrias estatales necesarias, incremento de los costos de servicios básicos, peores condiciones laborales para los trabajadores y la pérdida de ingresos para el Estado.
Durante el debate en la Asamblea Legislativa, los partidos llegaron a un acuerdo para proteger por lo menos varios bienes públicos, incluso el agua, la educación, la salud y los sistemas de justicia. También hicieron reformas importantes para garantizar más supervisión por la Asamblea. Estas modificaciones son positivas, pero no suficientes para evitar que bienes como el aeropuerto, los puertos, presas hidroeléctricas, carreteras y otros que actualmente son propiedad de todos los salvadoreños y salvadoreñas sean susceptibles de ser concesionados a empresas privadas; pero más grave aún es lo que puede pasar con las playas, los bosques de manglar y las reservas naturales.
Con la aprobación de la Ley de APP, El Salvador continúa asumiendo la receta neoliberal dictada por el Banco Mundial, El Fondo Monetario Internacional y el gobierno de Los Estados Unidos, principales “asesores” y promotores de esta Ley. A pesar que las medidas neoliberales fracasaron en todo sentido, las promesas de empleo y de crecimiento económico que acompañaron las privatizaciones, la dolarización y la firma del CAFTA-DR, jamás se cumplieron y en su lugar la pobreza, la violencia, el deterioro del medio ambiente y la corrupción se incrementaron.
A pocos meses de su aprobación la gran empresa privada y el gobierno de los Estados Unidos están presionando por introducir reformas en beneficio de los inversionistas, al respecto la Embajadora de los Estados Unidos en El Salvador, públicamente ha amenazado con detener el segundo compacto del FOMILENIO, si no se aprueban tales reformas.
Este chantaje viola la soberanía del pueblo salvadoreño. Son los y las salvadoreñas, no el gobierno de los Estados Unidos, quienes deben determinar la política económica de El Salvador. Por lo que ante las presiones externas de reformas a la Ley, es imprescindible que la Asamblea Legislativa reaccione y comprenda que aprobar la ley fue un error, introducirle reformas es agravar el error.
Las comunidades del Bajo Lempa, una de las regiones del país, principalmente afectadas con este tipo de leyes, claramente han manifestado:
La ley de asocios público privados y El Fomilenio II, han sido diseñados a partir de los intereses políticos de Los Estados Unidos y como tal se convierten en instrumentos de manipulación y dominación de nuestro pueblo, al mismo tiempo que destruyen los recursos naturales y generan división y conflictos entre comunidades. Además, expresan: Teniendo en cuenta que con la aprobación de la Ley de Asocios Público Privados todos los partidos políticos han perdido credibilidad, las organizaciones y comunidades del Bajo Lempa reiteramos una vez más nuestra determinación a defender la vida y el territorio hasta las últimas consecuencias.
Approving the Public Private Partnership Law was a Mistake, Reforming the Law Will Only Make it Worse
Since the beginning of the Public-Private Partnership Law project, social organizations, unions, environmentalists, human rights organizations, and peasant (campesino) communities have rejected it. They believe the law will result in the control of important state services and assets by transnational corporations; increase in the costs of basic services; worse labor conditions; and lost income for the State.
During the Legislative Assembly’s debate of the issue, the political parties came to an agreement to at least protect various public goods from the law, including water, education, health, and the prisons. They also inserted mechanisms to give the Legislative Assembly a greater supervisory role in overseeing public-private partnerships. While these modifications were positive, they were insufficient to ensure that assets like the airport, ports, hydroelectric dams, highways, and others that belong to the Salvadoran people but are now subject to concessions with private, for-profit corporations. The most serious results could be occur with the selling off of the beaches, mangrove forests, and natural reserves, which are currently targeted for tourism projects.
With the approval of the P3 Law, El Salvador continues to implement the neoliberal agenda dictated by the World Bank, International Monetary Fund, and the government of the United States, which is the principal advisors and promoters of the law. The neoliberal policies have failed the people of Salvador in every sense – the promises of employment and economic growth that were to accompany privatization, dollarization, and the signing of the Free Trade Agreement have never materialized. In their place, poverty, violence, deteriorating environment, and corruption have all increased.
A few months after the approval of the P3 Law, large private corporations and the United States govenrment are pressuring the Legislative Assembly to adopt reforms to the law that will benefit investors. The U.S. Ambassador to El Salvador, Mari Carmen Aponte, has threatened publicly to withhold the second round of funding from the Millennium Challenge Corporation if the Legislature does not pass the reforms.
This blackmail violates the sovereignty of the Salvadoran State and its people. Salvadorans, not the U.S. government, ought to be the ones who determine the economic policies of El Salvador. It is imparitive that the Legislative Assembly recognize these external pressures, and state that passing the law was a mistake in the first place, and introducing reforms would only compound previous errors.
The Communities of the Bajo Lempa, one of the regions of El Salvador most affected by these types of laws and the implementation of neoliberal policies, clearly states:
The Public-Private Partnership Law and the second round of the Millennium Challenge Corporation have been designed to benefit the political and economic interests of the United States, an as such have been converted into a tool of manipulation and domination of our communities and people, while destroying our natural resources and generating conflict between communities. We also state that with regards to the adoption of the Public Private Partnership Law, all political parties have lost credibility, and the social organizations and communities of the Lower Lempa once again reiterate our determination to defend our life and territory to the end.
The peninsula of San Juan del Gozo, located in Usulután, is a 30-mile stretch that curves out from the Pacific coastline of El Salvador, embracing the Bahia de Jiquilisco and its wealth of sparsely inhabited, thickly forested islands. The peninsula is home to a scattering of subsistence fishing communities, and the lives of the residents of the bay are inextricably bound up in the life of the mangrove forest (manglar, in Spanish), which covers much of the interior coastlines and estuaries.
The manglares at the western end of the peninsula, in the estuaries near the community of La Tirana, are home to the oldest and largest mangrove trees on the Pacific coast of Central America. This is due in part to the decade of civil war El Salvador suffered in the 1980s, which caused people to flee the area, leaving the saltwater forests to grow unmolested for years.
Today, residents of La Tirana harvest crabs (known locally as punches) in the large manglar. Other communities take fish and a variety of other shellfish (mariscos) from the waters of the mangrove estuaries and the bay. A few locals take boats out to sea for larger catches; though, no one lives on the ocean side of the peninsula, leaving it as a prime location for endangered hawksbill, olive ridley, leatherback and green turtles to lay their eggs. Communities in the peninsula rely completely on what they take from the water for their survival; there is no other industry except some small-scale eco-tourism outfits and restaurants to serve day visitors. There is one exclusive, boat-in resort in the region but none of the locals we met with report any employment or secondary economic benefits from the operation.
The entire peninsula – with its wealth of migratory birds, rare sea-turtle breeding grounds, magnificent manglares and untouched beaches – is now the focus of a 25-year tourism development plan, launched by the Salvadorian government in 2004. According to government documents, by 2026 there will be accommodation for 2,500 visitors, with a projected 932,000 overnight stays per year. The government first unveiled the plan at an invitation-only event attended by mega-resort developers from around the world, and presenters described the region as the Cancun of Central America. This was a two-fold reference; first to the similar peninsular geography; and second to the plans to create a resort region which would provide tourists with a self-contained vacation destination that would provide accommodations, shopping, hospitals, golf courses and more. At that event, a consultant hired by Salvadorian government outlined the first two steps to developing large-scale tourism in the region: building a new highway and buying large tracts of land.
The only way to get to the peninsula by car is by taking the Litoral Highway to San Marcos Lempa turning south and traveling 12 miles through the Bajo Lempa down to La Canoa (Comunidad Octavio Ortiz). Potholes and sections of washed-out road define the drive between San Marcos and La Canoa. The 20 miles from La Canoa out the Peninsula, however, is a freshly paved, well-maintained stretch of highway.
Residents of the Bajo Lempa and Jiqiulisco Bay take the highway’s construction as a sign of impending development. It was also a warning that land speculation* was about to re-ignite a struggle for land ownership in the region. Since 2004 when the government announced their plans to turn the region into the “Cancun of Central America,” land values have skyrocketed. In 2003, the average price for a hectare of land was $1,000 USD; today, the average has climbed to $10,000 USD and $40,000 USD per hectare for waterfront property.
CESTA, a Salvadoran environmental organization that works extensively in the region, has documented several ways in which government agencies appear to be fostering a positive climate for land speculation and development. CESTA notes that in 2004 there were four agricultural collectives in the peninsular region. All four have since dissolved, the result of government efforts to convince cooperative members that it was better to hold individual title to the land. Since dissolution, many former cooperative members have sold off their land, some because they wanted cash; others because without the shared machinery and support of the collective they could no longer work the land.
CESTA also believes that the government has used the agrarian reform process another way to transfer land to speculators and developers. CESTA representatives have documented cases in which the government has granted land to people who have no agricultural experience or knowledge, and as soon as they receive land titles they sell.
Whether or not communities have legal title to their land is one of the most pressing legal issues facing the residents of the peninsula today. In La Tirana, where all the resident families have legal title (or escritura as it is called here), the townspeople have agreed amongst themselves not to sell their properties to anyone from outside, knowing that they are in both a prime tourism development area, and also an extremely sensitive environmental zone. While land within La Tirana is relatively safe for the time being, wealth Salvadoran investors have already bought up larger tracts just outside of town. Some use the land for cattle or growing crops, others are sitting on the land until developers are ready to build hotels, golf courses, and shopping centers.
Land in other communities is also vulnerable. In El Chile, a small community down the Peninsula, no one holds title to their property, although they were nominally granted the land as part of the agrarian reform program following the peace accord. The land is still technically owned by the state, which now appears to be selling off lots on the edge of town.
Voices staff visited El Chile in mid-June and spoke with the president of the community’s council (or junta directiva). He showed us a large plot of forested land on the edge of town that has been fenced off with barbed wire and decorated with ominous signs warning “No entre” (No trespassing). The fence goes all the way down through the manglar to the water’s edge. As the community president pointed out, no one can own the manglar, it is against the law, and the fence is blocking off what should be public property. Law enforcement has done nothing to address the claim on this land and the fence has come to exemplify the community’s tenuous position without formal land titles. Residents of El Chile know they have a legal right to their land; but they do not have the legal or financial resources to register themselves as owners.
In neighboring Isla de Mendez, almost all residents have a legal title to their land. The only people that don’t have titles are those that live on the waterfront – the most desired and valuable land. With a focus on developing tourism in the region, their position is especially vulnerable.
Life in La Tirana, El Chile, Isla de Mendez and other communities along the Peninsula is still simple and relatively quiet. But if developers have their way that will all change soon. At risk are majestically mangrove forests, nesting grounds for several species of sea turtles, and a sustainable agrarian way of life.
*Land speculation is the practice of buying up properties with the intention of reselling them for a profit. Often land speculation is done by wealthy investors with insider knowledge of coming development or infrastructure, but land speculation can also be self-propelling because when one investor who is known to make profitable speculations starts buying in a region, others often follow, creating a strong sellers’ market.
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.
On May 2nd, organizations and communities representing thousands of people from the Bajo Lempa region of Jiquilisco, Usulután held a press conference in San Salvador to denounce the Millennium Challenge Corporation (MCC), the Law on Public Private Partnerships (P3 Law), and the tourism projects they promise to support. The Salvadoran labor movement also held a press conference on May 2nd denouncing the MCC and P3 Law, which they believe will adversely affect much of the labor force.
Other than opposition from the labor movement and Bajo Lempa, the MCC proposal and the P3 Law have not created the huge public outcry that other issues have in recent years – attempt to privatize health care (2002), Central American Free Trade Agreement (2006), or Pacific Rim’s efforts to mine gold (2005-present).
But momentum against the MCC and the P3 Law seemed to get a boost on May 1 when Vice President and FMLN presidential candidate Sanchez Cerén announced he and his leftist party do not support U.S. agreements like Partnership for Growth and “the project that has been presented to the Legislative Assembly.” The project Cerén was referring to is a package of laws President Funes presented to the Legislative Assembly in October 2012 and includes the P3 Law.
Cerén’s statements were qualified however, and it remains a little unclear where he and the FMLN stand on the MCC and P3 Law.
Overview of Partnership for Growth, MCC, and the P3 Law
Partnership for Growth is President Obama’s development program that is being implemented in four countries – El Salvador, Ghana, Philippines, and Tanzania. In El Salvador, Partnership for Growth identified security and low production of tradables (exports) as the two main barriers to economic development. As a result, all U.S. programs and funding in El Salvador have to address one or both of these barriers.
In 2004, the Bush Administration created the MCC as its signature development program, investing funds on infrastructure and business development in countries around the world. The first round of MCC funding for El Salvador (2007-20012) invested $463 million in a new highway that spans the northern region of the country, high school and university scholarships, and capital for small businesses. If approved, the second round of MCC funding will be worth $413 million and likely contribute to the expansion of the Litoral Highway along El Salvador’s southern coast and invest in public-private partnerships, which include as many as 30 different tourism projects.
To receive more MCC funds, the U.S. Embassy said El Salvador must pass the Public-Private Partnership Law, which has been lingering in the Legislative Assembly since last year. The bill creates favorable conditions for private investors, and would pave the way for leasing and contracting out State resources and services, including water, education, health care, prisons, air and sea ports, and much more. Critics of the bill fear it will result in the loss of thousands of public sector jobs and adversely affect wages across the labor market. They also fear it will diminish the quality of public services.
In his remarks yesterday, Sanchez Cerén said, “with respect to Partnership for Growth, we want to say that the project that has been presented to the Legislative Assembly, we as the FMLN do not back it.” As pointed out by Diario El Mundo, Cerén was referring to a package of laws that the Funes Administration presented to the Legislative Assembly on October 18, 2012. The purpose of the laws is to implement the Partnership for Growth action plan and include the Public-Private Partnership Law that residents of the Bajo Lempa and the Salvadoran Labor Movement denounced at their press conferences.
Cerén explained that the FMLN does not support Partnership for Growth because it includes mechanisms for privatizing health, education, and prisons. The Diario El Mundo article also reports that FMLN official José Luis Merino confirmed the party’s position on Partnership for Growth adding that they want the United States to respect El Salvador’s sovereignty.
The FMLN, and Cerén, also announced they have drafted their own proposal for increasing investment and promoting public-private investments, but in a manner that will safeguard the interests of the State and ensure that important services (health social services, public security and justice, water and education, and the National University) will not be privatized. It is unclear whether their proposal will satisfy the U.S. Embassy’s prerequisites for the MCC funding. It also remains unclear whether Cerén and the FMLN would also support tourism projects in the Bajo Lempa and respect the region’s desire to protect their communities and natural resources.
During his May 1st speech, Cerén urged members of the FMLN not to abandon the party and permit the right-wing ARENA return to power. The plea was a recognition that the FMLN is somewhat divided right now, in large part over Partnership for Growth, the MCC, and the P3 Law. The FMLN can’t afford to loose the labor movement and entire regions like the Bajo Lempa and expect to defeat the ARENA candidate (Norman Quijano) in February 2014.
For now anyway, momentum against the P3 Law and the MCC seems to be growing.
The president of El Salvador, Mauricio Funes, will be in Washington DC this week to meet with U.S. officials, business interests, and the International Development Bank (IDB). His agenda includes discussions about regional security issues, the gang truce and reduction of the murder-rate in El Salvador, as well as the temporary protective status (TPS) for Salvadorans. President Funes also said he would be meeting with business interests regarding the possibility of new investments in El Salvador.
Funes will meet with Secretary of State John Kerry to discuss, in part, security and the gang truce. Last month marked the one-year anniversary of the truce, which seems to have resulted in steep declines in the official homicide rate – the official murder rate in 2011 was 4,371 and in 2012 it dropped to 2,582. While gang leaders credit the reduction in homicides to their commitment in transitioning to a more peaceful society, the Salvadoran government has attributed the decrease to improvements in their security efforts. Funes will also meet with officials from the IDP and participate in a meeting on regional security issues.
Discussions with US officials about temporary protective status (TPS) for Salvadorans in the US are timely, as the US Congress is trying to pass comprehensive immigration reform. TPS allows many Salvadorans to live and work in the U.S., but they have limited rights and no clear path to residency or citizenship. Immigration reform is an opportunity to create mechanisms for Salvadorans to convert their TPS to a more permanent status, which will afford them more rights.
On Thursday, President Funes will meet with business interests that have “an important announcement about a multi-million dollar investment that they want to make in El Salvador.” Salvadoran officials said the meeting would be with “businesses that are willing to make important investments in the area of new technology.” The announcement comes during a time when the U.S. is encouraging the Salvadoran Legislature to pass a Law on Public-Private Partnerships (P3 Law) as a prerequisite to signing a second Millennium Challenge Corporation (MCC) compact. The P3 Law and the MCC are fairly controversial issues in El Salvador. While Funes is in favor of both, there is disagreement in his party over support of these new initiatives.
This trip is an opportunity for President Funes to convince U.S. officials that his administration is making the kind of progress (lower murder rates and more foreign investment) and reforms (P3 Law) they want before approving more aid or giving the Salvadoran Diaspora more rights.
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.
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 tourism – hotels 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.