From: rich@pencil.cs.missouri.edu (Rich Winkel)
Subject: El Salvador: Proceso 528: Legislation
Followup-To: alt.activism.d
Originator: rich@pencil.cs.missouri.edu
Organization: PACH
Date: Sun, 6 Sep 1992 21:43:19 GMT

/** reg.elsalvador: 163.0 **/
** Topic: Proceso 528: Legislation **
** Written 11:39 am  Sep  5, 1992 by cidai@huracan.cr in cdp:reg.elsalvador **
From: cidai@huracan.cr (Centro de Informacion Documentacion y Apoyo a la Invest. - UCAJSC)
Subject: Proceso 528: Legislation

Center for Information, Documentation and Research Support (CIDAI)
Central American University (UCA)
San Salvador, El Salvador
 
PROCESO 528
September 2, 1992
 
LEGISLATION:
The State at the service of coffee capital
 
     The Legislative Assembly unanimously passed a law whose avowed
goal is to compensate coffee growers for the precipitous drop in
international coffee prices. The mechanism consists in the issuance
of $45 million worth of bonds used to pay each grower $15 per 100
lbs. produced. This is not a subsidy, but rather an advance, since
$4 will be returned from each 100 lbs. exported starting with the
1994/95 crop, until the entire $45 million are paid back with
interest.
     In principle, the creation of a stabilization fund of this
nature is socially a good idea since, as stated in the preamble to
the bill, protecting coffee is a short-term boon for environmental
protection and job creation. This must have been what motivated the
legislative deputies to pass the bill, especially those from the
opposition. The problem is that the honorable deputies probably
failed to read the bill carefully; here we see how the old adage,
"once the law is passed the trap is set" [hecha la ley, hecha la
trampa], has come true. Especially noteworthy are four articles.
Art. 3 establishes that "the Direction and Administration of the
Fund will be in the hands of the Salvadoran Coffee Council." This
Council is an organization which does not represent all producers,
since the coffee oligarchs control it entirely. Cooperatives, which
produce about one-third of all coffee, only have one representative
on the Council.
     Although in the text it is reiterated several times that
compensation will go "to the producers," articles 13 and 14
describe the true beneficiaries of the Fund. According to Art. 13,
the Council "shall pay" producers "through the coffee processing
exporters." And Art. 14 states, "The compensation referred to in
this law will serve first to pay the obligations incurred by coffee
growers directly with the banking system or coffee processing
plants..." In order to banish all doubts, Art. 15 insists that
financial institutions and coffee processing exporters must turn
over copies of their credit portfolios with coffee growers "in
order to withhold from producers the necessary funds to amortize
their respective obligations."
     Therefore, the goal is to obtain $45 million in order to,
first, maintain the profits of coffee processing exporters and,
second, help recently privatized banks improve their debt
portfolios. If we think about who the owners of the chief coffee
processing plants are, and who have taken control of some of the
reprivatized banks, the law smacks of another traditional way for
the coffee oligarchy to gain control over the political apparatus
-with the president of the Republic at its head.
     But things do not end here: the funds are to be obtained by
issuing a series of bonds valued at $1,000 or more each. These
bonds will be repaid at a rate of 1.5% over the prime rate of the
U.S. banking system. This level of profitability is not high enough
to lead us to believe that those who have a few thousand dollars
"squirreled away" will spend them to acquire these bonds. But have
no fear: the free market ideologues toss the market into the
wastebasket by ensuring that, in Art. 20, "The Official Autonomous
Institutions, excepting the Central Reserve Bank, shall invest part
of their resources in acquiring the bonds..." The public resources
of the Salvadoran people will be put at the service of the declared
enemies of the public sector! The State will be used by market
apologists to prevent market forces from working! Again we see how
the bourgeoisie is only opposed to the role of the State when the
latter is not completely subjected to the former. The ploy is
certainly intelligent: autonomous state institutions will invest
their reserves in low-yield bonds, thereby depreciating the wealth
of the nation. This is one more argument for the campaign against
public sector "inefficiency."
     (Note: this payout can operate in a different way: the bonds
-in dollars- could be acquired by the nation's wealthy, in other
words, the coffee processing exporters, at an exchange rate of
8.5:1. And a few months later, the national currency could be
devalued, say, to 12:1, so that each $1,000 bond for which 8,500
colones has been paid will yield 12,000 colones plus interest when
amortized.)
     This leads us to wonder how the opposition could have voted
for this bill without amendments, a law which reflects such a
classically burlesque scheme on the part of the coffee oligarchy.
Is it possible that the deputies from the Christian Democratic
Party, Democratic Nationalist Union and Democratic Convergence
believed that the direct beneficiaries of the law (the Cristianis,
Borgonovos, Duenas, Salaverrias, etc.) will become reconciled with
them as a result of a measure which so favors their interests? If
so, then the honorable deputies should rest assured that the
potential votes cast by these ten or so families will not offset
those of the harvest workers, whose salaries will not improve one
iota from these $45 million, or those of the Social Security and
Public Employees' Pension Institute beneficiaries, whose funds will
be used to help coffee exporters obtain the same share of the
profits they have been taking for the last century.
 

** End of text from cdp:reg.elsalvador **

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