2014 Elections

El Salvador’s Constitutional Court Considering Claim Against Presidential Candidate Tony Saca

The Constitutional Court of El Salvador yesterday accepted a claim filed by Ramiro Peña Marín y Wilmer Humberto Marín Sánchez that the presidential candidacy of Tony Saca is unconstitutional.

The Court is considering three claims – 1) Saca, who was President of El Salvador from 2004-2009, isn’t eligible to run again until 2019; 2) he is guilty of fraud during his presidency; and 3) he has shares in corporations that have state contracts, which is a violation of Article 127 of the Constitution.

Tony Saca, who is running as a candidate for the UNIDAD party, is not the defendant in the case; rather it is the Supreme Electoral Tribunal that has to prove the constitutionality of their decision to certify his candidacy. The Court has given them 10 business days to submit a brief justifying their certification of the Saca candidacy. After the TSE has submitted its brief, the Court will send the case to the Attorney General’s Office to get their opinion.

The first claim argues that a former President cannot run for another term until he has been out of office for an entire term. Article 152 of the Constitution says, “The following shall not be candidates for the President of the Republic:

1st – He who has filled the Presidency of the Republic for more than six months, consecutive or not, during the period immediately prior to or within the last six months prior to the beginning of the presidential period.

The plaintiffs argue that the former president is ineligible to run again until after the new President takes office in 2014, and he couldn’t begin a second term until 2019.

The second argument is that Tony Saca committed fraud in 2009 when his administration submitted its final report. The plaintiffs argue that there was no way the administration could complete the report appropriately until those who had positions in the administration had finished going through their final audits, which did not happen until 2010.

The third argument the Court is considering is that Tony Saca is ineligible to be President because he holds shares in corporations that have government contracts. Article 152 .7, which refers back to 127 .6, of the Constitution prohibits a President from having government contracts. The plaintiffs argue that his ownership of Grupo Radial Samix, which has government contracts, makes Saca ineligible to run. They also argue that his involvement in the National Telecommunications Administration, which also has government contracts, makes him ineligible. Saca has argued that he transferred interests in these corporations to family members to avoid a conflict with the Constitution, but the plaintiffs argue this was insufficient and just an attempt to circumvent the constitutional requirements. He also argues that the concessions were to corporations, and while he was on the board of those corporations he did not own the concessions.

Tony Saca responded to the claims by saying he is sure the Constitutional Court will resolve the claim in his favor. He also said the claims show that the ARENA party is afraid of his candidacy and that they have had to resort to a dirty campaign. The former president also pointed to polls that show his candidacy will guarantee that no one candidate will win 50% of the vote on election day, forcing a runoff.

There were six other claims of unconstitutionality related to the Presidential Candidates – 4 others against Tony Saca (UNIDAD), one against Norman Quijano (ARENA), and one against Sánchez Cerén (FMLN). The court did not validate these complaints; they only agreed to consider the three against Tony Saca.

El Faro.net points out that if the Court agreed to hear the case, it means that there is a real constitutional issue to debate – this is not just a formality. All five members of the Court signed off on the decision.

Tony Saca is not having a good week in the press. On Tuesday (November 19, 2012) El Faro published an interesting report on Saca’s earnings during his presidency. They found that in 2003, the year before he became president, Saca was worth roughly $600,000 and had an annual income of  $200,000. By 2009 and the end of his Presidency, Saca was worth $10.5 million, more than 16 times what he was worth the year before he was sworn in as President.

If the Constitutional Court decides to annual Saca’s candidacy, it will most likely favor Norman Quijano and the ARENA party. Polls indicate that Saca is splitting the more conservative votes, giving Cerén and the FMLN a boost. The argument is that if Cerén can’t win in the first round, he’ll be able to peel away enough Saca supporters to win in the second and become President.

The last polls from La Prensa Grafica, however, show a close race with the Cerén and the FMLN ahead with only 29.4%. Quijano and the ARENA are close behind with 28.3%, with Saca is a distant third getting only 9.8% of the vote. Approximately 30% of voters remain undecided, which means this race is still far from over.

2014 Elections

Latest Presidential Polls out of El Salvador

IUDOP released the results of a new survey and FMLN presidential candidate Sanchez Cerén seems to have moved ahead in the polls with 36% support. Former Salvadoran President Tony Saca, who is representing a Unity party, is second with 28% support, and ARENA candidate Norman Quijano is in third place with 25%.

If there were a second round of voting, which occurs if no candidate receives more than 50% of the vote, Cerén would defeat Quijano 43.6% to 41%. If it were Cerén and Saca facing off in a second round, the polls show a virtual tie (42.5% Ceren, 42.8% Saca). If a second round of voting matched Saca against Quijano, Saca would win 39.2% to 30.1%.

The FMLN is generally enjoying more support than the other parties. Based solely on party, if the elections were today the FMLN would get 44.1% of the vote, while the ARENA would get only 25%. The GANA party, which comprises much of Tony Saca’s coalition would only get 12.9% of the vote.

Polls released last week from CIOPS/UTEC had somewhat different results. Based on party affiliation, they show a near three-way tie between the ARENA (29.5%), the FMLN (28.5%) and Unity (23.4%).

The elections are not until February 2014 so there is plenty of time for Quijano to connect with rural voters or any number of factors to sway voters one way or the other.

 

Economy

Dollarization: “A Sack of Unfulfilled Promises”

In January 2001, El Salvador began the dollarization process, which changed the official currency from the Salvadoran Colon to the U.S dollar. According to an article posted on Tim’s El Salvador Blog, former President Francisco Flores and his Minister of Finance, Manuel Enrique Hinds, made the change in order to keep interest levels low, control inflation and increase foreign investment.

In the twelve years since, Salvadorans have engaged in a constant debate over dollarization – has it been good or not, and should they keep the U.S. currency or revert back to the Colon. In June 2011, we posted an article on this blog looking back at ten years of dollarization, concluding that it has not brought about the positive benefits promised.

Others have reached the similar conclusions, including the current President of El Salvador’s Central Reserve Bank, Carlos Acevedo who earlier this month said dollarization was “a sack of unfulfilled promises.” The Central Reserve Bank is a government-controlled entity that regulates many aspects of El Salvador’s economy, including its currency, and Acevedo’s opinion carries some weight.

This is not the first time Acevedo has criticized dollarization. In March 2012 he penned an opinion piece for El Faro that described the process of planning for and implementing dollarization as “hasty and improvised.” He also said that reversing dollarization (de-dollarization) would be even more detrimental. Acevedo, however, also told Contrapunto that “the next government will be forced to consider the possibility of de-dollarization to allow for a monetary policy that provides greater flexibility of public finance, and so it will be able to return to printing money and adjusting interest rates to stimulate the economy.

Bank President Acevedo made his most recent statements (reported by Active Transparency) following the release of a government study on dollarization, which reached some rather negative conclusions. The report found that many key economic indicators, including exports and GDP fell, while inflation and interest rates rose. Dollarization has failed to shield the economy from downturns and instead made El Salvador more susceptible to instabilities in the U.S. economy, as witnessed during the 2009 recession. The Economista published an article yesterday reaching very much the same conclusions.

In his statements this month, Acevedo said dollarization was “badly designed, improvised and lacking consultation,” and that El Salvador’s fiscal performance with dollarization was the worst in sixty years. He also said the performance was so poor that even proponents of dollarization could not ignore its negative impacts. Even in his most recent comments, however, Acevedo stressed that the Funes administration is not considering de-dollarization and that doing so would cause more economic hard and instability. One of his fears is that Salvadorans would make a run on the banks, withdrawing dollars before they were converted to Colones or another currency.

While President Funes may not have de-dolarization plans for the last year of his administration, Vice President and FMLN 2014 presidential candidate Sanchez Ceren said in May 2012 that dollarization was the cause of the current economic recession and that El Salvador’s currency had to be changed back to the Colon.

Norman Quijano, the Mayor of San Salvador and the ARENA party’s 2014 presidential candidate stated in the past that dollarization would be beneficial to consumers. In a more recent interview he said, “reversing dollarization would be the worst thing to do.” Former President Tony Saca, who may run as the GANA party’s 2014 presidential candidate, stated in the past that he supported dollarization and that de-dollarization would be detrimental.

Acevedo’s comments paint a pretty difficult position for El Salvador in terms of the country’s economic policy. Dollarization has been bad, but de-dollarization would be really bad. While the current slate of presidential candidates have made general statements, it is unclear whether they are open to more nuanced positions that will give government economists more tools to promote a more stable economy.

2014 Elections, El Salvador Government

ANEP (National Association of Private Enterprise) taking on Presient Funes, Again!

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.

 

2014 Elections

ARENA ahead of the 2014 Presidential Elections

With the 2014 presidential elections “just around the corner” in El Salvador, political parties are well into the process of picking their candidates. Like other countries, Salvadoran political parties go through a nominating process to decide who will represent them in the general election. While the FMLN has all but officially chosen Sánchez Cerén, the current Vice President of El Salvador, as their candidate, the ARENA party has yet to select their candidate. Some in the ARENA party are still are still trying to change the way party officials will choose their 2014 representative.

El Faro reported on Monday that a group of ARENA reformists have proposed changing the nominating process. The party’s top leaders would still choose the candidate, but their vote would be secret. One party spokesman said, “if passed the reforms could change the invisible structure of the party.”

While it may seem counter-intuitive that secret ballots would somehow eliminate the “invisible structure of the party,” the idea is to provide those who cast votes with some anonymity so they can vote on merit. According to the El Faro article, four main power blocks finance and control the ARENA party. A former official in the Saca Administration (2004-2009) said these interests exert the most influence during the nomination of presidential candidates. Once a president is elected they may try to push an issue every now and then, but for the most part they leave them alone.  The secret ballots during the nominating process would in theory decrease the influence these four powerful interests have over the nominating process.

The nominating process has always been top-down, with the party base having little to no input. The secret ballots won’t change that power structure at all. The party leaders will still be the ones casting votes and the base won’t know whom they voted for. The main shift would be a consolidation of power away from the four interest groups back to the party leaders. One ARENA founder suggested the party give the base a voice in choosing candidates by moving to a party-wide vote. Doing so would bring the party more in line with the independent and inclusive voting practices that the Supreme Court has been discussing for the past year.

The El Faro article indicates that former President Alfredo Cristiani supports the reforms and is currently surveying the AREANA leadership to see if he can muster up a consensus to vote them into the party bylaws. While he has benefited from the current system over the years – it got him elected president in 1989 – it he would likely benefit from the changes. Instead of having to answer to the power blocks, party leaders will have more control.

The proposed reforms are not new; party leaders have been considering secret ballots for many years but they have not had the internal support to get them passed. Opponents of secret ballots argue that the current system has served the party well for the past 31 years and that there is no need for reform. They also argue that the current open system is more transparent.

The 2014 election is important for ARENA. They lost the presidency to the FMLN in 2009 and they want it back. ARENA did well in the March 2012 municipal and legislative elections, taking control of the Legislative Assembly and winning several municipal seats that have been in the hands of the FMLN for many years.

A few names have been tossed around as possible ARENA candidates for 2014. Norman Quijano just won his second term as mayor of San Salvador, and is often mentioned as a possible candidate. He said shortly after the elections that he would certainly be open to the idea of running. Another possible candidate is Ana Vilma de Escobar, who was Vice President under Tony Saca (2004-2009) and is the wife of one of El Salvador’s wealthiest businessmen. As already mentioned, Sánchez Cerén is the likely candidate for the FMLN party, and former-president Tony Saca may try to run as a GANA party candidate. Back in April, Tim’s Blog posted short bios on each of these candidates.

 

 

 

El Salvador Government, News Highlights, Politics

Saca Buys a 12th Radio Station

On Wednesday, former Salvadoran President Antonio Saca announced that the Samix Group, of which he is president, has reached a deal to buy the channel 12 radio station from the Carnaval Group.  In an interview with elfaro.net Saca said, “we have now arrived at an agreement and we are in the final stage of negotiations.”  This latest purchase is the most recent step in the Samix Group’s powerful control of Salvadoran radio.  With the purchase of channel 12, Samix will own a dozen radio stations, the most of any conglomerate in the country  (its closest competitor, the Radio Corporation, owns only seven stations). Six of Samix’s stations now offer both regional and national coverage.  This purchase raises questions about Samix’s control of the market given Saca’s political history and his status as a national political figure.

Samix’s purchase of channel 12 raises questions about the integrity and independence of the journalism on the stations that he owns.  Saca is a member of the right-wing ARENA party and served as president of El Salvador from 2004 to 2009.  His history in the media business, however, predates his political ambitions considerably.  In his conversation with elfaro.net, Saca denied any conflict of interest that might arise from both being a public political figure and owning such a large share of the radio market.  “I understand that there would be some logic to people thinking that I would use the radio for my own political interests, but they shouldn’t forget that I have more than 30 years of experience as a radio announcer and several years of experience as an owner of radio stations,” said Saca.  Nevertheless, since leaving the presidency, Saca has left open the possibility of returned to elected office.  In April he said, “I would have every right in the world to participate [in the 2014 presidential elections] if it were a propitious political moment.”

Despite the Samix Group’s assurances that nothing will change channel 12’s reporting, the new leadership at the radio station has already caused internal dissent.  Ricardo Rivas, former director of the channel, left in July, shortly before negotiations began with Grupo Samix to buy channel 12.  When asked about his reasons for leaving, Rivas refused to comment on his departure.  Pencho Duque, who hosts the program “A primera hora” with Aída Farrar on the station, succeeded Rivas, but his stay was brief.  On Tuesday, the day before Saca announced Samix’s purchase of the channel, both he and Farrar announced their departure from the station.  Duque also declined to comment on the reasons for his departure other than to say that it was for purely work-related reasons.  He did say, however, that he did not want to speak about “this political matter.”  Saca denied any involvement in the resignations.

This is not the first time that Saca’s radio empire has raised conflict-of-interest questions.  In the past, he has also been accused of pushing a particular political agenda through his radio stations, despite his claims to the contrary.  In 2007, FMLN congressman Sigfrido Reyes accused Samix of refusing to sell ad space to the FMLN party for electoral propaganda on their radio stations.  Since Samix is the largest radio conglomerate in the country, such restrictions can have a huge influence on a party’s ability to communicate with voters and constituents.  El Salvador is not the only country in Central America where political figures play a large role in the media.  A 2002 article in the periodical Journalism by Rick Rockwell and Noreene Janus titled “The Politics of Coercion: Advertising, media and state power in Central America” describes how Guatemala, Nicaragua, and Honduras have all seen close relationships between politics and the media that have often resulted in a lack of journalistic independence and integrity.