Economic reforms pushed by the US would “leave the State like a public relations office for big business”


On September 20, President Funes’ Chief of Staff Alex Segovia presented a package of economic reforms related to foreign investment as part of a plan that the Salvadoran Executive Office is calling the “New Cycle for Investment, Development and Employment.” The reforms are the result of ongoing US pressure on El Salvador through the bilateral Partnership for Growth agreement, unveiled in November 2011, to incentivize foreign investment in the country. While these measures offer abundant benefits to US and transnational corporations, they pose a serious threat to labor conditions and public services in El Salvador, and therefore to the wellbeing and dignity of the Salvadoran people.

The plan unveiled by Segovia contains both proposals for new laws and reforms to existing laws that seek to provide additional incentives for service, tourist and logistic industries along with the maquila sector. The proposed incentives include additional tax breaks for foreign capital, mechanisms to streamline legal procedures for foreign companies looking to invest in El Salvador, and contractual security for up to 15 years for foreign corporations, essentially shoring up their interests against potential changes in popular and political will.

A draft proposal of a Public Private Partnership Law that creates the legal framework to auction off public services to private bidders was also part of the packet of reforms which, according to Segovia, “constitutes the most serious and aggressive commitment that a government has made in recent decades” and “will form the base of a new economic structure in El Salvador.”

In his visit to New York City for the United Nations General Assembly in September, President Funes addressed the Council of the Americas, a conservative business association, hailing the Partnership for Growth and touting the proposed reforms. “We are of the opinion that the only way that we can grow is if there is more private investment,” declared Funes.

Funes’ embrace of neoliberal economic policy comes as the US government and its international financial appendages like the World Bank and the IMF are pushing policies of fiscal austerity and private investment as the recipe for stimulating economic growth and threatening to withhold access to loans if the Salvadoran government does not comply. But social movement leaders and many economic and labor experts in El Salvador recognize that the insistence on foreign investment is part of the same failed economic strategy imposed for decades under the previous right-wing Nationalist Republican Alliance (ARENA) administrations. This strategy has produced precisely the poor economic conditions that foreign and national financial elites now decry. Dr. Salvador Arias, economist and advisor to the Farabundo Martí National Liberation Front (FMLN) party’s legislative group argues that “investment now is a mechanism to extract money… We have been exporting capital.”

And according to Gilberto García, a coordinator at the Center for Labor Studies and Support (CEAL), measures like the proposed Public Private Partenrship law, will only “leave the State like a public relations office for big business.”

As Funes’ proposals head to the Legislative Assembly for consideration, labor and social movement groups are going on the offensive, presenting counterproposals around foreign investment and fair labor practices, pressuring legislators to oppose these neoliberal measures and informing their bases about the dangerous implications of proposals like the Public Private Partnership Law.

Meanwhile, communities across the United States continue to face similar efforts to privatize public goods and weaken labor protections. “We don’t have an isolated situation in this country, but a generalized economic current throughout the world,” says Gilberto García, “It’s very much related to all the mobilizations that occurred last year in Wisconsin against efforts to take away the rights won by the working class, and it’s very much related to the recent movements in defense of teacher’s labor rights in the United States; it’s very much related to the fact that it’s the 1%, the wealthiest, who would benefit, giving them more investments, ‘bringing more meat to the wolves,’ as we say.” In the transnational fight against the interests of big business, solidarity between peoples is, as ever before, a critical tool in the defense workers’ rights and the public good.

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