Thus Came the Modernizers

September 25, 2007

Several miles west of San Salvador, set off a few hundred yards from the main road, there is a tall, white monument. The grass around it is overgrown. The flame that was to burn eternally is out. Hardly anyone goes there anymore. It is a monument to the Revolution of 1950, billed with much fanfare as the opening of a new era in Salvadorean history; likened to the industrial revolution that led to rapid capitalist development in countries that El Salvador wished to emulate. Emerging victorious from the power strug- gles of the late 1940s, a coalition of military men, technocrats, and a tiny industrial bourgeoisie made an alliance with a sector of the coffee oligarchy-- principally those in- volved in export. Their project was to moder- nize Salvadorean capitalism through agricultural diversification, industrialization and political reform. What brought these disparate forces together and made the plan possible was the post-war boom in coffee prices from 1945 to 1950.Earnings from coffee sales rose from $18.7 million to $76 million, with bonanza crops recorded in 1950.2 Something had to be done with the surplus. In the same period, U.S. investors were eager to invest abroad. It was the beginning of a major shift in international production patterns. Gone were the days when third world countries would produce only agricultural goods for consumption in the metropolitan centers. Their labor force-cheap and abundant-was ideally suited to produce manufactured goods and profits. U.S. capital, in El Salvador as elsewhere, would develop a strong stake in the economy and play a major role in making sure that politics protected that stake. In 1950, Colonel Oscar Osorio became president in elections that were widely at- tacked as fraudulent. His neatly trimmed crewcut suggested the, modern soldier-cum- technocrat, inaugurated in the era of developmentalism and reform. Developmentalism was the creation of con- ditions to permit the expansion and modern- ization of Salvadorean capitalism, largely restricted to agriculture until the 1950s. Reformism was the policy of adjusting ex- isting structures to keep the system one step ahead of its own contradictions. If things got out of hand, repression would be applied discreetly. As the first order of business, the anti- industrial laws of Martinez had to be buried and replaced by strong incentives. A govern- ment office was created to coordinate the development of commerce, industry and min- ing. The power of the state was dramatically in- creased. New taxes were imposed on coffee exports to transfer resources to new areas of investment. A modern infrastructure was built, starting with the 5th of November Dam to generate electrical energy. In 1957, ground10 NACLA Report was broken for a new highway running the length of the country along the Pacific Coast. It opened new lands that were ideally suited to cotton and cattle. Politically, the official party was born -the Revolutionary Party of Democratic Unification (PRUD). Sponsored by the military and the modernizing bourgeoisie, it was designed to involve new sectors of society in the "Revolu- tion": professionals, a growing service sector linked to the phenomenal growth of the state, and the proletariat created by industrializa- tion. To attract the latter, industrial unions were legalized but carefully controlled, and social security benefits were established. KEEPING THE CONTRACT Industrialization, the chief priority of the modernizers, took the form of import substitution, i.e., creating industries to pro- duce manufactured goods that were previous- ly imported. The problem was ob- vious. The concentration of wealth in so few hands meant that the country's internal market was tiny-reduced to the privileged few able to buy canned ham, jellies, soap, crepe paper and the like. An obvious solution would have been to break up the great concentrations of land owned by coffee, cotton and cane growers. In theory, a caste of small farmers would emerge with adequate purchasing power to spur in- dustrial growth. Moreover, El Salvador's dependency on basic food imports, along with the cost of feeding its labor force, would be reduced. So much for theory. Politically, it would have been suicide. Agrarian reform meant violating the basic terms of the contract that brought the modernizers to power: the land would not be touched. As development proceded in the 1950s, even the landowning sector began to diversify its investments. But the implicit understand- ing was that no one, no program, no govern- ment would touch the pillar of its wealth. All development would have to proceed on the basis of existing patterns of land tenure. To the theorists who argued that without land 10 NACLA ReportMarlApr 1980 reform the internal market would never be, modernizers countered that another option was available. ECONOMIC INTEGRATION Economic integration - a free trade zone that would permit the unrestricted flow of goods, capital and people among the five republics-- became the chosen path toward industrialization. It would obviate the need for structural reform, or so it was thought by the bourgeoisie. El Salvador and Guatemala, as the two most developed countries in the region, saw enormous advantages in the scheme: new markets for industrial ouput, new investment opportunities throughout Central America and, for El Salvador, new outlets to relieve the troublesome problem of overpopulation. In the late 1950s, economic integration was being viewed as a panacea by other forces as well. In particular, the United Nations Economic Commission for Latin America (ECLA) played an important role in pro- moting the idea of an economic union. ECLA set out a plan for Central American intergration that would allow for a " gradual, step-by-step approach focused on locating the best kind of activities in the right place."3 The emphasis was on planned, balanced develop- ment among the five countries, toward eliminating competition and duplication of capacity. Most importantly, ECLA argued for a restricted and highly regulated role for foreign investment. The Salvadorean bourgeoisie didn't like the sound of these proposals. Neither did a powerful neighbor to the north. Initially hostile to economic integration, U.S. policymakers soon realized that such a scheme could make political and economic sense under certain conditions. The advent of the Arbenz regime in Guatemala (1950-1954), bent on reforms and ex- propriating United Fruit holdings, indicated that trouble was brewing in the region. With the aid of the CIA, Arbenz was ousted in 1954, but the causes of unrest remained. 4 According to the U.S. view, economic in- tegration could prevent future Guatemalas, while providing new outlets for U.S. capital, bursting to invest abroad in the post-war period. Furthermore, it could redirect Cen- tral American trade toward the United States, at a time when Europe and Japan were mak- ing important inroads. The flow of U.S. capital into the region would be accompanied by rising demand for U.S. products as in- dustrial inputs.' U.S. approval of the scheme meant that restrictions on foreign investment had to be scratched, alongside notions of mutual co- operation and balanced development. The Salvadorean bourgeoisie, enjoying a clear ad- vantage over its neighbors, was also eager to give the free market its rein. In 1961, the Cen- tral American Common Market (CACM) was born. Over half of all foreign investments in El Salvador during the 20th century were made in the 1960s. Relative to Latin America as a whole, El Salvador continued to absorb a very small portion (less than 1%) of direct U.S. in- vestment." But the steady rise in the 60s was clearly aimed at controlling the country's growing industrial sector. Foreign investors flocked to the most dynamic branches: food products, textiles, chemical, petroleum, paper products and pharmaceuticals. In most cases, these investments took the form of joint ventures with the Salvadorean bourgeoisie. In 1950, the book value of direct U.S. in- vestment in El Salvador was $19.4 million, none of that in the manufacturing sector. By 1967, the total had risen to $45 million, with roughly a quarter invested in industry.' The effects of the integration scheme and foreign penetration were quick to be felt. The volume of intra-regional trade increased significantly, at an annual rate of 32% be- ,tween 1961 and 1968; its composition shifted from unprocessed agricultural goods to non- durable consumer goods, often produced by foreign firms and their domestic partners. The annual growth rate of intra-regional trade in manufactures was 26% between 1960 and 1972.8 The other side of the coin of "Central Americanization," however, was heightened dependency on the United States. A large portion of foreign investment went into "last- touch" and highly import-intensive in- dustries. That is, they conveniently required large amounts of industrial inputs not locally available- but easily supplied by U.S. sources. As a result, El Salvador and other 11NACLA Report countries began to experience severe strains in their balance of payments. 9 Economic integration did not eliminate duplication, resulting in excess plant capacity and high production costs-witness six oil refineries in the five republics! Moreover, the benefits of integration were not shared equal- ly. The less developed members (Honduras and Nicaragua) ended up paying more for imports than before, since regionally pro- duced goods were often more expensive than U.S. products; they attracted less foreign in- vestment than the more developed markets of El Salvador and Guatemala; and their fiscal revenues declined as untaxed CACM trade replaced taxed extra-regional imports.' 0 It was only a matter of time before the shaky foundations of economic integration would crumble. THE FIVE-DAY WAR The U.S. press dubbed it "the football war"-- a name designed to ridicule more than reveal the basic causes. Tensions had been building for some time. The Honduran market was swamped with Salvadorean goods, while its raw materials went to feed Salvadorean industry. Domestically, the Honduran government was under pressure to carry out reforms and redistribute land. In 1969, Honduras began a campaign against Salvadorean products, refused to renew a migration treaty and froze Salvadorean capital. The agrarian reform program was kicked off by expropriating the lands of Salvadorean immigrants. Three hun- dred thousand had settled in Honduras; many were descendants of those who fled the peasant massacres of 1932. The Honduran government began to drive out the Salvadorean settlers, who brought back terrible tales of atrocities that were exploited by the Salvadorean press. A soccer match added fuel to the fires. On July 14, 1969, the army of El Salvador invaded Honduras. Five thousand died. El Salvador claimed victory, after the OAS declared a cease-fire and forced it to with- draw its troops. But the full effects of the war Expelled Salvadorean settlers returning from Honduras just before the war of uly 1969. 12Mar/Apr 1980 13 took time to be felt. The entire country, save a tiny, unpopular few, had rallied to defend the patria. With Honduras, El Salvador lost its largest market for industrial goods. Honduras closed the road to Nicaragua and still more trade was affected. The Common Market was in shambles, but the Salvadorean bourgeoisie recovered rapidly by securing markets in Europe and the United States. No such solutions were found for the political consequences of the war. The forced return of farmworkers had a profound impact on the political crisis about to unfold. The Salvadorean government reneged on promises to give them land. Instead, they were herded into camps-and eventually dispersed to ancestral regions they had long forgotten." The memory of 1932 became more vivid as a series of protests began. They came close upon the heels of a strike wave in the cities, where teachers, bus drivers and industrial workers defied the labor laws and battled the National Police. The urban work force was still very small (less than 500,000 in 1971), with only 9% organized in unions." 2 Organizing was hampered by restrictive labor laws, repression and the preponderance of small shops in the industrial sector. The labor movement was also divided into two competing factions. The General Con- federation of Unions (CGS) was pro-govern- ment and heavily influenced by the AFL-CIO. The Unified Federation of Salvadorean Unions (FUSS) was influenced by the outlawed Communist Party. By the strikes of the late 60s, however, economic conditions had led to a radicaliza- tion of the movement as a whole. The govern- ment could no longer count on its cronies to control the rank-and-file. Repression was in- tensified to control the unrest, but had the opposite effect. Twenty years of modernization-- that "neutral" word- had only shortened the long- term prospects of the ruling elite. But they didn't know it yet. The large landowners still resisted change and rejected reform. In- dustrialists, many with landholdings as well, refused to risk a confrontation. They, too, kept a watchful eye on the worker's movement-ready to crush any challenge with the army at their side. In the countryside, the number of landless increased more than two-fold in the 1960s.' 3 Migrants swelled the cities,living in turgurios, or slums, with no basic services and little hope of employment. New sectors had emerged in the 50s and 60s: the middle class, employed in the public sector, professionals, small merchants in the cities and towns. They would become the "moderate opposition." Many would radicalize themselves and others upon realiz- ing that moderate methods were an exercise in futility. The bourgeoisie was blind to its own fate. THE ELECTORAL OPPOSITION Fifty years of military rule in El Salvador have been punctuated by farce and fraud--otherwise known as elections. Every five years, Salvadoreans would elect a new colonel or general as president. Every two years, they would choose a parliament to ap- prove his every decree. In the late 50s, a fall in world coffee prices provoked renewed unrest. The regime of Osorio's successor, Colonel Jose Maria Lemus, was unacceptably corrupt. A coup was launched in 1961 by an alliance of petty- bourgeois reformers and democratic sectors of the military. The experience of 1944, Martinez' fall, was repeated: The conspirators did not seek popular support and after three months, the modernizers reconstituted their coalition and installed a new government. In 1962, the discredited PRUD was resur- rected as the Party of National Conciliation (PCN)- the official party representing the in- terests of the bourgeoisie and running military candidates. The 1962 elections were uncontested, bringing Colonel Julio Rivera to power. New parties would emerge, but for the next 17 years, the PCN would dominate the electoral process. The Rivera regime (1962-67) coincided with the Alliance for Progress-- Kennedy's answer to the Cuban Revolution and the need to pacify the hemisphere. Kennedy praised the Salvadorean model: "Governments of the civil-military type of El Salvador are the most effective in containing communist penetra- tion in Latin America."' 4 Rivera returned the compliment. The clasped-hand logo of the Mar/Apr 1980 13NACLA Report Alliance was adopted as the official symbol of the PCN. In keeping with the semblance of political pluralism advocated by the United States, the Rivera government opened the way for the emergence of the first opposition parties and the first truly contested elections since 1931. Buoyed by the success of its industrialization scheme and the CACM, the PCN felt confi- dent that its program could withstand the electoral test. The government's control of the electoral machinery made any serious loss unlikely. Three major opposition parties emerged in the 1960s to challenge the PCN: the Christian Democratic Party (PDC), the first and largest; the National Revolutionary Move- ment (MNR); and the Party of Renovation (PAR). In 1962, a group of professionals, many of them educated abroad, formed the Christian Democratic Party of El Salvador. Supported by Christian Democracy in Europe, its success was phenomenal. In 1964, the party's can- didate became mayor of San Salvador. By 1968, the PDC won 19 seats in the Assembly to the PCN's 28. It also controlled one-third of the country's municipalities, including the three largest cities. Jose Napoleon Duarte, mayor of San Salvador, became the most charismatic leader of the PDC. An engineer by profession, he was a moderate reformer by creed. Politically, the PDC stood for a program of "national development" and reform within a capitalist framework. Its modernization pro- gram differed from that of the PCN by pro- mising to share the benefits more broadly. In the cities, its program and style appealed to the growing middle class. Its rural consti- tuency was the middle peasants and small merchants. Its Christian veneer attracted those who wanted change but feared associa- tion with more radical forces. Its concern with morality also contrasted sharply with the known corruption of the PCN. A second reformist party emerged in 1968, the National Revolutionary Movement (MNR). It remained small in numbers, com- prising professionals and intellectuals, but it would play a significant role in formulating the strategy of the petty-bourgeois opposition. Radical opposition to the PCN was focused first in the Party of Renovation (PAR) and later in the National Democratic Union (UDN). Both reflected the politics of the Salvadorean Communist Party, outlawed since 1932, and its emphasis on electoral struggle. PAR attracted radical professionals and sectors of the urban working class. Its presidential candidate, Dr. Fabio Castillo, placed a respectable third in the 1967 elec- tions, despite intense harassment. Immediate- ly after the elections, the party was officially banned and ceased to exist. In the late 60s, the Communist Party and remnants of PAR were influential in the for- mation of a new party, the National Democratic Union. UDN emphasized modernization, independent development and the electoral path. FORMATION OF THE UNO The 1968 elections marked the high point of the electoral opposition. It looked forward to further gains in 1970. But the war with Honduras changed the political climate abruptly. A nationalist euphoria pervaded all political discussion. The PCN ran heroes of the Honduran war as candidates. It won 60% of the vote and regained control of city halls and assembly seats. In defeat, the opposition found an impetus toward unity. The Christian Democrats, the MNR and the UDN formed a coalition- the National Opposition Union (UNO) to prepare for the approaching presidential campaign. Its chances were improving as the economic and political effects of the war set in. POLITICAL-MILITARY ORGANIZATIONS Electoral defeat, as the result of fraud, had a different effect upon more radical sectors of the opposition. The Communist Party (PCS) continued to insist on the peaceful road to change and to seek alliances with petty bourgeois sectors as the only way of defeating the oligarchy. But many within and outside. the party disagreed. In 1970, two new organizations emerged, emphasizing the need to give the revolu- tionary struggle an armed capacity. The Popular Liberation Forces (FPL) developed 16MarlApr 1980 17 from a split within the PCS, precipitated by the party's support for the government's war with Honduras. A second group had its roots in the left wing of the Christian Democratic Party. Other leftists joined them to form a federa- tion of guerrilla groups called the People's Revolutionary Army (ERP). One distinction between the two was the FPL's emphasis on mass organizing as well as military action. Within the ERP, disputes over the importance of mass work reportedly led to the execution in 1975 of ERP member and poet, Roque Dalton Garcia, who saw it as a key element. His death caused a split within the ERP, with Dalton's supporters forming the National Resistance (RN), with its own armed wing, the Armed Forces of National Resistance (FARN). The early activities of these political- military organizations were small-scale, and without broad impact on the popular strug- gle. Their importance grew rapidly, however, as the electoral road led to nowhere, time and again; as popular organizations were created 50 YEARS OF MILITARY RULE 1931-34 General Maximiliano Herndndez Martinez 1934-35 General Andres Ignacio Menendez 1935-44 General Maximiliano Herndndez Martinez 1944... General Andres Ignacio Menendez (ruled for several weeks after a popular uprising toppled Martinez) 1945... Colonel Osmin Aguirre y Salinas 1945-48 General Salvador Castefieda Castro 1948-50 Military Government Council 1950-56 Major (later Colonel) Oscar Osorio 1956-60 Colonel Jos6 Maria Lemus 1960-61 Government Revolutionary Junta 1961-62 Civilian-Military Directorate 1962... Dr. Rodolfo F. Cord6n (lawyer) 1962-67 Colonel Julio A. Rivera 1967-72 Colonel (later General) Fidel Sanchez Hern~ndez 1972-77 Colonel Arturo Armando Molina 1977-79 General Carlos Humberto Romero that bridged the Left's isolation from the masses; and as repression and deprivation continued to set the stage for revolt. BREAKING POINT The 1972 elections-an enormous fraud favoring the PCN over the UNO--marked a definitive breaking point in El Salvador's saga of class struggle. Implicitly, it was a test of the possibility of achieving structural reform by taking the electoral route to power. Both sides failed the test. The UNO's candidate in 1972 was Jose Napoleon Duarte, the Christian Democratic mayor of San Salvador. The PCN ran Colonel Arturo Molina, a semi-literate career soldier, representing the modernizing tendency. Wealthy landowners, portending a split with the modernizers, ran General Jose Alberto Medrano, war hero and former head of the Naional Guard. The blatancy and extent of the fraud shocked even the most cynical. Once the doc- tored results were announced, militants of the UNO called on Duarte to declare a general strike. Duarte did nothing. One month later, a sector of the Army jonied with civilian elements to attempt a counter-coup. The initiative failed, among other reasons, because Nicaragua (under Somoza) and Guatemala (under military rule) sent troops and planes. They did so under the aegis of the Central American Defense Coun- cil (CONDECA), founded and promoted by the United States to control subversion and police the region. U.S. military advisors reportedly coordinated these activities from their communications center at the U.S. em- bassy in San Salvador." A wave of repression was unleashed against the entire spectrum of opposition. Duarte and other leaders were exiled; the National Univer- sity was closed for nearly two years; trade unions were taken over, their leaders impris- oned or exiled. Persecution of the Church and rural workers led to bloody massacres. The parties that comprised the UNO would continue on an electoral course until elections were definitively canceled, in 1979. But new groups emerged to rival their support and challenge their strategy. The balance of forces began to shift--slowly, but irreversibly. THUS CAME THE MODERNIZERS 1. Osvaldo Escobar Valedo, "Patria Exacta," Patria Exacta (San Salvador: UCA Editores, 1978), p. 149. 2. Hector Dada Hirezi, op. cit., p. 28. 3. Ibid., p. 88, citing the Second resolution of the First Meeting of the Committee for Economic Coopera- tion of the Central America Isthmus. August 27, 1952. 4. NACLA, Guatemala (Berkeley: NACLA), 1974, 5. Marc Herold, unpublished manuscript on direct U.S. investment in El Salvador (March 1980), p. 20. 6. Ibid., p. 28. 7. OECD, Stock of Private Direct Investments by D.A.C. Countries in Developing Countries, End 1967 (Paris: OECD, 1972); U.S. Department of Commerce, Foreign Investments of the United States (Washington, D.C.: Government Printing Office), 1953. 8. "Central America: Patterns of Regional Economic Integration," Bank of London and South America Review (June 1979), p. 340-342. 9. M. Herold, op. cit., p. 21. 10. Ibid., p. 22. 11. Rafael Menjivar, "El Salvador: El Eslabon Mas Pe- queno," Le Monde Diplomatique en Espanol (Mexico Ci- ty), September 1979. 12. Chavarria Kleinhenm, op, cit., p. 451. 13. Burke, op. cit., p. 483. 14. Anderson, op. cit., p. 157, citing Mauricio de la Selva, "El Salvador: Tres decadas de lucha," Cuadernos Americanos, No. 21 (January-February 1962), p. 196-200. 15. NACLA, Guatemala, op. cit. 16. Fabio Castillo, "Testimony," in Human Rights in Nicaragua, Guatemala and El Salvador: Implications for U.S. Policy. Hearings before the Subcommittee on Inter- national Organizations, House of Representatives (Washington, D.C.: Government Printing Office), 1976. Information on the political-military organizations is difficult to find. FAPU publishes an international bulletin; LP-28 has just begun to publish theirs. All three popular organizations publish newspapers. Information in this article on the popular and political-military organizations came from their publications as well as un- published interviews by international journalists and per- sonal interviews by the author. ALAI, the Latin American Information Service in Montreal, has republished documents of the Salvadorean left. Some can be found in their political documentation series, Nos. 4 and 5, La Izquierda Centroamericana (I) and (II). Their address is ALAI, 1224 Ste-Catherine O. 403, Montreal, Quebec H3G IP2 Canada.

Tags: El Salvador, ISI, economic integration, football war, 1972 electoral fraud

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