With no money and isolated, Nayib Bukele begins confiscations

Some scenes at bus stops on routes 42 and 152 recalled, on the morning of Monday, March 14, the days of war, natural disasters and economic crisis in the capital of El Salvador. Dozens of passengers waited in long queues for the buses they take every day to go to their work and offices. But there weren't enough vehicles or drivers. The cause of the chaos was not, this time, urban combat or a flood; the source of the disorder was in the Presidential House.

President Nayib Bukele announced, on Thursday night, March 10, on a national television network, 11 economic measures to help El Salvador cope with the economic consequences of fuel increases attributable to the Russian invasion of Ukraine. The epilogue of that announcement has been the chaos and confiscation of the buses and buses of the two routes, which serve the populous southwest of the capital.

One of the measures is the temporary suspension - for three months - of a tax applied to the collection of hydrocarbons, of USD 0.16 per gallon, which according to the same government generated USD 3.84 million per month, with which the State will add, in 90 days, USD 11.52 million to the fiscal gap of USD 1.4 billion that it now has.

Another gasoline tax, of US$0.10 per gallon, which was used to finance millionaire subsidies that the State has been giving public service carriers for decades will also be suspended. In El Salvador, the State owns public transport lines and routes, which it concessions to private individuals for their daily operation.

The State, Bukele told its finance minister, should find other ways to pay this subsidy to public transport, which is supposed to force carriers to keep ticket prices fixed; that is, the president suspended the source of income for three months to pay the donation to Salvadoran busseros, but it will continue by paying the subsidy, which, for three months, will add more pressure to public debt.

Following his televised address and the announcement of the measures, Bukele warned on his Twitter account that the government would go after carriers that increased the passage. “Don't play with fire,” he warned them. Then came the show.

On Friday, March 11, agents of the National Civil Police (PNC) deployed in the streets of San Salvador began to issue fines on vans that were supposed to have increased the price of the ticket. Then, on Saturday night, March 12, the PNC captured Catalino Miranda, a controversial transport leader who hours earlier had been in a meeting with other colleagues from his guild and Bukele at the Presidential House. The authorities then confiscated some 300 vehicles from Acostes de RL, the public transport association that Miranda presides over.

The first thing the PNC said was that Miranda's capture had to do with improper charges on the buses in Acostes and, according to Ernesto Castro, a bukelista deputy and president of the Legislative Assembly, the disrespect of the route concession contract, but then the director of the police, Mauricio Arriaza, said that they had arrested the carrier for resistance to arrest.

During the first days of the week following the presidential announcement, the capture of Miranda and the confiscation of the vans, San Salvador experienced a scene that has already become commonplace in these Bukele years: the massive presence of soldiers on the streets. This time, the uniformed men were in front of buses that the government circulated to meet the demand and the buses seized from Acostes, but it was all chaos: there were not enough drivers or vehicles, the soldiers did not know the routes well... Thus, thousands of Salvadorans who move around the corridor every day southwestern part of the capital, which serves the confiscated routes, were stranded for a long time.

The confiscation of the buses, rather than the capture of Miranda - the leader of a guild, that of the buseros, associated with abuse, violence and political opportunism - has set off several alarms in El Salvador, which is why some describe it as a new display of authoritarianism by Bukele and not a few understand it as an announcement of new measures confiscatory.

Bukele and his spokespersons have justified the seizures by saying that they applied articles 110 and 112 of the Constitution, which empower the State to resume the public services it has granted, such as transport, but not without first exhausting an administrative process.

“These powers can never be interpreted as an abrupt occupation of a company's assets, and a suspension of the right, all without prior procedure,” warns Daniel Olmedo, legal adviser to the National Association of Private Enterprise (ANEP), in conversation with Infobae.

Olmedo also points out that the Constitution, in this case, “refers to the provisional administration of the (intervened) company, and that means that the authority has assumed responsibility for fulfilling the company's obligations (labor, financial, contractual). If any of these points are not met, then we would not be faced with a legitimate application of article 112 of the Constitution, but rather a covert confiscation; and that is unconstitutional.”

A Salvadoran business leader who spoke with Infobae anonymously for fear of facing government reprisals, gave another example to illustrate the confiscation. “El Salvador's law also provides that the State can grant radio spectrum to television or radio companies, but if this logic of buses is followed, it is as if tomorrow they decide to withdraw the concession from local television stations and also keep their studios, buildings, cameras, etc.”, he says.

Sulen Ayala, a Salvadoran lawyer specializing in labor law and criticism of the president, sees in this action “a new staging of the government, which wants people to believe that they are doing things for their own good.”

Ayala also sees a further intention in the confiscation of buses, a warning to anyone who dares to challenge the government of Bukele.

“It is interesting to see that Mr. Catalino Miranda is not the owner of the buses on routes 42 and 152; the owner is a legal entity called Acostes de R.L.; that is, a person has been illegally arrested and is being attacked individually by the government, but the buses have been confiscated from a legal entity. This is a clear message of intimidation and bullying towards all businessmen in the country,” says the lawyer.

The rest of the measures proposed by the president to alleviate the economic crisis have to do with the suspension of import tariffs on products in the basic basket, which some specialists believe will not have immediate effects to alleviate the pocket of Salvadorans and rather could generate more inflation and disincentivize even more so the dying domestic agricultural production.

“Many of the products mentioned pay zero percent tariff and they won't be relief either... that measure is going to have a limited impact and it's not going to be what the president said,” economist Luis Membreño told a local newspaper.

This analyst also understands that the new measures will have a negative impact on the fiscal deficit and, eventually, on the possible default scenario that looms over El Salvador. “The government takes away the collection and puts more expenditure on the subsidy, more employees (bus drivers) and other measures that will generate expenses. This is deteriorating the fiscal situation of a country that has been overindebted for two years,” he warns.

From the Russian invasion to the expropriation of vans

The Salvadoran president's political and propaganda scripts are increasingly crazy and, judging by the reactions of his fellow citizens on social networks, less effective. The principle of the confiscation of vans is, however distant it may seem, in the war in Ukraine.

Bukele returned to a national television and radio station, his preferred form of political communication after Twitter, after several weeks of absence, marked by lack of conviction of his government to the Russian invasion of Ukraine and the international isolation that bad relations with the United States have brought to El Salvador.

Between the end of February, when the Russian invasion began, and its March 10 announcements, the presidential agenda had revolved around a pet hospital, which was supposed to be built with profits from the purchase of Bitcoin, and a silent attempt to place among international investors the so-called Bitcoin bond, with which El Salvador wants to replace the USD 1.3 billion of a loan from the International Monetary Fund (IMF) stagnant since last year following the cooling of negotiations after San Salvador adopted the cryptocurrency for official circulation.

The announcement of the economic measures also marked the first time that President Bukele referred to the Russian invasion, but he did so to try to explain the effects of that conflict on international oil prices and how the rise in oil prices affects the pockets of his governed. There was no condemnation of the Russians in the speech.

Salvadoran law states that only the president and the minister of foreign affairs can define El Salvador's international policy. Foreign Minister Alexandra Hill has barely commented on anything in the Bukele government. In the case of the Russian invasion, it was the president who finally established the country's position in that chain in which he announced the suspension of taxes on gasoline.

In general, Bukele adopted the Moscow speech. He referred to the invasion as a “conflict between Russia, Ukraine and the North Atlantic Treaty Organization (NATO)” and attributed the rise in oil prices solely to the international decision, led by Washington, to impose economic sanctions on Russia.

Since last year, when the Biden administration in Washington sanctioned several Bukele officials accused of corruption and a court in New York advanced the possibility of studying criminal charges against bukelists accused of agreeing with the MS13 and Barrio 18 gangs in the name of the Salvadoran president, the diplomatic relationship between El Salvador and the White House fell apart. Bukele then began to strengthen lobbying among Republicans close to former President Donald Trump and to look for winks in Russia and China.

For El Salvador, the biggest shadow, rather than that of the Russian bear or the American eagle, remains the non-payment of the debt, which Bukele's finance minister, Alejandro Zelaya, has vehemently denied. “There is zero risk”, of it happening, the official said last week in a television interview. But, apart from official optimism, there is very little faith among analyst companies at risk that El Salvador will reach January 2023, when it is due to pay $800 million, with the bills made. Fitch and Moody's have already lowered the risk rating of El Salvador to place the value of their debt in rubbish categories.

The stalemate in negotiations with the IMF, in which Bukele's poor relations with the Biden administration play no small role, has forced the Salvadoran to seek alternative sources of financing. One of them in countries traditionally far from Salvadoran orbit, such as Vladimir Putin's Russia, where Bukele is scheduled to travel in June.

Two Salvadoran executive officials and two analysts studying El Salvador from the US stock exchange confirmed to Infobae that Bukele sent Minister Zelaya to Spain to seek to place the so-called Bitcoin bond, which the Salvadoran government intends to support with publicly funded investments in cryptocurrency. There is still no information on the results of that tour, as there was not even public information about the trip, but there are some indications.

One of the executive officials who spoke with Infobae confirmed that the Salvadoran government has met with several groups of investors, especially in Europe, but that most are not yet convinced to buy. “There are still a lot of doubts,” said a risk analyst who spoke to investors who have listened to the Salvadoran proposal.

The temporary measures to deal with inflation and high fuel prices, which Bukele announced following his pro-Russian tirade on national television and which led to chaos at the bus stops in San Salvador, opened the discussion to another of the elephants who roam the glassware of Salvadoran finance: the reform of the pension system, for now in private hands.

Questioned by the failure of the military operation to replace the seized vans and the possibility of changing the pension system, which the government has been announcing for months without giving details, Carlos Hermann Bruch, a Bukelite deputy, advanced the possibility that Bukele will prepare to nationalize pensions.

Bukele did manage, once again, to distract a large part of public opinion by the chaos of buses while pension reform is being cooked in the dark and the country navigates to the international orbit where leaders such as Vladimir Putin, the Russian autocrat, inhabit.

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