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.

2014 Elections, Partnership for Growth, U.S. Relations

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

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.

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

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

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

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

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

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

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

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

Growing Opposition?

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

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

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

During his May 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.