Salvadoran Social Programs In Peril


US State Department and IMF push privatization of government industries For the first time in its history, the Salvadoran State has placed itself in the service of the people. Under the leadership of the Frente Farabundo Martí para la Liberación Nacional (FMLN) party, the nation’s first leftist government is providing services and opportunities to vast sectors of the population that have been historically marginalized and neglected. But these groundbreaking initiatives in areas of healthcare, education, agriculture and public works face new and serious threats. The attack is two-pronged: first, the International Monetary Fund (IMF) is pressuring the state to gut social spending in the name of austerity and second, the US is backing initiatives to privatize state services through “Public-Private Partnerships.” While these efforts offer abundant profit opportunity to transnational corporations, they pose a serious threat to labor conditions and social welfare in El Salvador. Upon the election of the FMLN in 2009, the Salvadoran government enacted unprecedented increases in social spending, from approximately $35 million in 2008 to over $201 million in 2012. The effects have been extraordinary: over one million public school students are receiving school supplies, shoes and uniforms while over 180,000 adults will have graduated from the National Literacy Program by the end of 2012. In three years, 33,000 land titles have been granted to families who have been fighting to legalize their properties for decades—2,000 more than the total granted over the last 30 years. With 246,000 family famers receiving of bean seeds this year, harvests are at record highs. But as quickly as these gains are advancing, business elites and the international financial institutions that serve them are maneuvering to reverse their progress. The IMF has been exercising considerable pressure upon the Salvadoran state to reduce social spending in the name of fiscal austerity. The nation’s current deficit of $906 million is some $200 million above the limit established in 2011 by the IMF, which approved a “Stand-By Agreement” that grants El Salvador access to a $790 million fund. The government has thus been forced to negotiate with the IMF to ensure continued access to the funds. The IMF’s blades are trained on government subsidies to the nation’s poorest sectors for basic services like gas, electricity and water, though President Funes has held his ground thus far, proposing only to cut transport industry subsidies in the 2013 budget. The other major threat to these programs comes in the form of the proposed Public-Private Partnerships (PPP) Law, which some in El Salvador have termed privatization ‘lite.’ The law, released by the Office of the President of El Salvador, is an initiative of a bilateral US-El Salvador agreement called the Partnership for Growth (PFG). A 5-year commitment, which was drafted and signed without debate or vote from either country’s legislature, the PFG names insufficient foreign investment as the principal culprit for low economic growth in El Salvador and proposes “public-private partnerships” as a solution. If passed, the PPP Law would set the stage for a fire-sale on state services, with everything from ports, airports, and roads to municipal services and higher education on the auction block. The PPP Law is the latest effort in a decades-long strategy by the Salvadoran elite to move state assets into private hands, starting with the banks in 1989 and telecommunications, electric energy distribution and pensions in 1996. The consequences hit the nation’s poorest sectors hardest: from 1996-1998, electricity rates went up an average 47.2% for the lowest-level consumers. Labor conditions plummeted. At the airport, security, cargo and cleaning services were all privatized in 2001; today, those workers earn some $240/month, while the unionized airport workers, now a principal target of the PPP Law, have a minimum salary of $552/month. As Salvadorans found the promises of “more efficient” private services to be baseless and struggled to pay skyrocketing rates as unemployment levels rose, public opinion turned staunchly against privatization. In 2003, ARENA’s efforts to privatize the national healthcare system were met with massive outrage and popular mobilization, with a hundred thousand healthcare workers and supporters taking to the streets. These actions were successful, and the initiative failed.  “Now that the word ‘privatization’ generates a [negative] impact, they come and camouflage it,” says Jose Alberto Cartagena Tobias, Secretary of International Affairs for the SITEAIS airport workers union. “But for us, the Public Private Partnership is nothing more than privatization.” Essentially, the law would create a standardized mechanism to auction off public services, granting concessions for periods of up to 40 years. Under current Salvadoran law, all public services being considered for privatization must be proposed, debated and voted upon in the nation’s legislature before being approved. If passed, the PPP Law would send all concessions through the administration for approval, exempting them from public debate and legislative vote. The proposal includes costly measures to entice foreign investment, for example, requiring that the first company to bid on a concession be paid 1% of the bid amount regardless of whether or not they win the concession. The current draft legislation contains exemptions for primary education and healthcare, but not, for example, for university education. As Gilberto García, a coordinator at the Center for Labor Studies and Support (CEAL), points out, “Nothing guarantees that the current draft, which says that they will not privatize healthcare, that they will not include primary education [will be approved as is]. Nothing guarantees that ARENA and the right-wing bloc won’t put them back in when it comes time to approve it.” The Salvadoran social movement is mobilizing to defend the gains of the FMLN-led social programs by fighting the PPP Law and voicing their support for these popular policies. But with the US government exerting pressure on the Funes administration and through the IMF, their call for international solidarity is urgent: “It is very important to show solidarity and to support the sharing of how diverse social movements have confronted such measures in different latitudes,” says García emphatically.

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