Salvadoran President Mauricio Funes, who swept the party of former leftist guerrillas into power last year, has staked his presidency on national unity and improving the lives of the poor. To the surprise of many, Funes has marked his differences with the left, even dismissing as “cheap populism” his party’s congressional vote to abolish basic monthly telephone fees charged by telecommunications providers.
Meanwhile in Panama, straight-talking supermarket magnate Ricardo Martinelli, flag-carrier for a coalition of pro-business parties, has pledged to clean up corruption and also fight poverty. Shortly after his inauguration last July, Martinelli faced down the energy industry and got the companies to slash monthly charges by 30 percent for individual users. Soon afterwards, he showed up at the Amador Causeway to oversee the bulldozing of fences put up by a developer who was encroaching on public land. He then issued an ultimatum to the developer to comply with a court order to pay arrears on a sweetheart concession.
In a region once marked by bitter conflict, these non-traditional politicians have taken center and centrist stage. Funes and Martinelli represent a more pragmatic left and right, respectively, fighting for the hearts and minds of ordinary citizens. Their administrations mark a progression from the brutal civil wars or military domination of the 1980s, and, more recently, the conflicts over economic ideology that range from the hardcore neo-liberalism once espoused by Washington policymakers to the expansive state control of President Hugo Chávez in Caracas. But Funes and Martinelli have declared that, as outsiders, they intend to bring tangible improvements to the lives of people in El Salvador and Panama. More than agents of change, they want to be agents of success, following the model of Brazilian President Luiz Inácio Lula da Silva, who has promoted business alongside programs to alleviate poverty.
“The region is in the process of reinventing itself,” said Mario Arana, executive director for the Nicaraguan Foundation for Economic and Social Development, in Managua.
“There is a recognition of the need to deal with the [rising] economic expectations of the population and that the government must solve the social disparities,” Arana said. “The biggest challenges for the current leadership are to rebuild consensus, strengthen institutions and improve transparency.”
Both Martinelli and Funes preside over countries with skewed income distribution. The nations of Central America are also burdened by a long heritage of civil strife, weak institutions and inefficiency. Modernization has burnished the region, but in many areas the new shine is superficial. Panama, although not officially part of Central America, has shared part of the same heritage.
“We cannot continue having a country where 40 percent of the people are poor, a country where the transportation, health and education systems don’t work,” Martinelli said in a speech after his May 2009 victory.
So far, Martinelli has implemented a $20 government subsidy for every student toward the cost of uniforms and supplies; enacted a $100 monthly pension for the elderly; and raised the minimum wage by an average of 16 percent to a sliding rate of as much as $416 a month. “This is an increase that fair business owners will accept, [but] not the ones who are only thinking of their profit margin,” said Martinelli, a proponent of free enterprise, who nevertheless railed against “savage capitalism” on the campaign trail.
The Panamanian president’s message has been clear from day one. He conceded that he may make mistakes but repudiated corruption. “In my government, you can put your foot in your mouth, but you can’t put your hand in the till,” he said.
“I would call myself a hardworking man,” he told Latin Trade. “I don’t believe in the left and the right, I believe in solving problems so people can live better.”
While Martinelli’s administration will be boosted by the $5.2 billion Panama Canal expansion, his government faces a slowdown in an economy that had been riding a wave of new construction and rising world trade. After five consecutive years of average annual growth exceeding 9 percent, Panama’s economy edged up by only 2.5 percent in 2009. It is forecast to grow by 4.5 percent this year.
“Martinelli feels he can change the pendulum in Latin America and stop it tending to the left,” said Salomón Shamah, Martinelli’s campaign-creative-director-turned-tourism-administrator.
“No traditional party ever solved the problems of the people,” Shamah added. “He feels that if he can succeed in his social agenda, then he can set an example for the region.”
The social agenda is also on the forefront in El Salvador.
After a bruising presidential campaign in El Salvador, Funes told a post-victory rally: “I see the election results as a victory for my proposal of national unity.”
His moves so far have surprised many who expected the leader of the Salvadoran leftists to draw closer to the Venezuelan president. Chávez did not attend his June 1 inauguration and Funes ruled out joining the Venezuelan-led ALBA, or Bolivarian Alternative for the Americas, a competing accord to U.S. trade and investment treaties like the North American Free Trade Agreement or the Dominican Republic-Central American Free Trade Agreement. Funes has left the dollar as the country’s currency and has not touched CAFTA.
After Vice President Salvador Sánchez Cerén, one of the veteran comandantes of the Farabundo Marti National Liberation Front, declared his support for Chávez and to “confront the empire,” Funes insisted: “We have a strategic alliance with the United States.” Funes scolded lawmakers from his own party and the rightwing ARENA for voting to eliminate the $10 monthly charge for basic telephone service. Calling the decree an “irresponsible decision and one loaded with cheap populism,” Funes warned this could scare away foreign investment, like that of Mexican telecommunications tycoon Carlos Slim, whose América Móvil is the largest telecommunications company in El Salvador.
THE BUSINESS APPROACH TO GOVERNMENT
While Funes clearly defines himself as a leftist, he sounds much like a business executive concerned with competitiveness.
“The deterioration of institutions, the lack of strategic public investment and the absence of responsible and long-term government policies have meant that in the past five years, El Salvador has fallen 30 places in the [competitive] ranking done by the World Economic Forum,” he said when he announced the creation of a National System for Innovation and Science and Technology Development.
In El Salvador, where 47 percent of the population is classified as poor, Funes’ policies are like those taken by Martinelli. He announced that the government would purchase a school uniform, shoes and supplies for each of the country’s 1.4 million school-age children. He launched a World Bank-funded program giving monthly stipends and job training to the poorest citizens and has begun providing pensions to the elderly.
The two presidents mirror each other in other ways, such as raising taxes on goods and business groups to try to increase government revenue. Panama and El Salvador have among the lowest rates of tax revenue as a percentage of the gross domestic product – 12 percent for Panama and 13 percent for El Salvador.
In El Salvador, Honduras and Nicaragua, the poorest 20 percent of families have double the tax burden of the wealthy because of consumption taxes, according to Jonathan Menkos, a tax expert from the Central American Institute of Fiscal Studies. Governments in the region lack funds to build highways, schools and other infrastructure.
“There can be no national development strategy without a tax plan to sustain it,” Menkos said.
Nicaraguan Arturo Cruz, a professor at the INCAE Business School and an expert in regional politics, said he was surprised that Funes was emphasizing the need to redistribute wealth rather than nationalizing industry, a goal of some in the FMLN. But the emergence of a strong small business sector in El Salvador has created an economy distinct from the one once dominated by a few families and a middle class that is divided between the ARENA and the FMLN.
“The dominant political forces of the right and left have abandoned their ambitions for radical change since neither side alone has the capacity to make changes at will,” said Cruz, who played a role in the former Reagan administration’s drive to oust the leftist Sandinistas in Nicaragua and also later served as Nicaraguan ambassador to Washington under President Daniel Ortega.
Ideological enemies, who once unleashed death squads and rebel warfare, are now mostly willing to settle their scores at the ballot box. Funes’ election gave the left a victory after a decade of rebel warfare and two decades in the opposition. Right-of-center candidate Sebastián Piñera is president-elect of Chile. The right last came to power in Chile through the 1973 coup staged by Gen. Augusto Pinochet against the elected government of leftist President Salvador Allende.
NO MORE COUP D’ETATS
In Central America, military activism has become especially politically unpalatable. The international community moved almost immediately to denounce the Honduran army last June, when soldiers stormed the presidential residence in Tegucigalpa, disarmed the presidential guard and put pajama-clad President Manuel Zelaya on a flight into exile. The legal basis for Zelaya’s expulsion was his defiance of a court order to cancel an opinion poll on reforming the constitution. The backdrop was criticism that Zelaya had grown too close to Chávez. But the lightning rod for condemnation was the military’s involvement.
President of Ecuador Rafael Correa, Nicaraguan President Daniel Ortega, former Honduran President Manuel Zelaya and Venezuelan President Hugo Chávez.
“Politics, much like a science, is being installed in Latin America,” said former Argentine President Eduardo Duhalde, during a meeting of the Council of the Americas in Miami. Duhalde called the military involvement “a huge error.” Zelaya could have been removed legally, Duhalde said, adding that the days of international support for military governments are over. “This is very important for the region. No more coup d’états,” he said.
While some political pundits keep score over whether Latin American elections are spawning or halting a tide of leftist governments, for leaders like Funes and Martinelli, the stakes are high should they fail to deliver on their promises. Early results were promising. According to polls taken late last year by CID-Gallup in Costa Rica, Funes, with an 85-percent approval rating, and Martinelli, with 82 percent, led the region’s leaders in popular appeal. Chile’s outgoing President Michelle Bachelet was a close third with 80 percent.
The breakdown of consensus is not necessarily a return to the regional polarization of the 1980s, said Mexico’s former foreign minister Jorge Castañeda.
“It is more a multi-polar reordering of new centers of economic power, headed by Venezuela, Brazil and Asian nations,” he said, noting that U.S. influence in the region has waned as it has disengaged.
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