Ecuador’s Anonymity

Humans usually go unnoticed seeking anonymity. That was my way of thinking for more than twenty years, but for a country disappearing from the map means driving it under; this has been done to our country. Any nation that wants progress and create opportunities should be placed on the world‟s map like a shop window where its virtues are marketed and focused, its attractive conditions for development, trade liberalization, their absolute respect for private property, strong legal security, economic freedom, its free expression, etc. On May 26th, as IWF‟s President (International Women‟s Forum) Chapter Ecuador, our directive joined to the Global President, Allyson Maynard Gibson, Bahamas Senator, and were honored welcoming in Guayaquil, 350 world leaders to the global Conference which was held from the 26th to May 28th “ECOWORLD: Ecology, Economy & Enterprise”. These leaders of five continents and thirty countries came for the call of our global organization for the topics and lecturers. The interesting thing is that they unanimously stated: “we ignored the existence of this nation; we have found a wonderful country that we will recommend to our family and friends when returning home”. It was rewarding for our Forum in the closing ceremony, that during ten minutes we received a standing ovation and the qualification that this conference had been the best of the last twenty five years. Indeed, we achieved showing them our marvelous and beautiful country, with first class services, quality people, different and real, non abusive, non confrontational, with professionalism. That is: a virtuous Ecuador. Until when should we tolerate anonymity? we have become a parenthesis were the map of South American Pacific Coast do not exist for investors which are work manufacturers, which only enter to Chile, go through Peru and from there to Colombia and Panama. Ecuador doesn‟t exist for them. What are we waiting for to react and continue allowing a budget of 805 million dollars for the expenses for the Presidency and instead accept that the item to the Ministry of Tourism reaches only 34 million dollars, which should be in reverse. Placing this tiny figure is perverse, as the country to tourism promotion would put us on the map; we would no longer be anonymous and not only that, but attracting tourists with good economic capacity, would give lots of opportunities and therefore thousands of jobs; so from there on we wouldn‟t be talking about spending such as the Presidency ones but it would be an investment; Ecuador should shift from an anonymous country to a nation visible on the positive and we would be a tourism showcase for investment and future. Because we continue being ANONYMOUS in good things and VISIBLE in the bad. As an example: visible as members of the ALBA Club ( Bolivarian Alternative for the Americas) regarded internationally as the Club of the poor, or visible as the only country in the Pacific Coast which hasn‟t signed any Free

Trade Agreement (FTA). Where is the point of being visible, while Spain, Peru and Colombia signed the FTA with Europe? Is Ecuador pending on the subject? Then, let‟s reverse this trend in which at the end of each year, we recall what we have left undone, because by not moving we move back (while) the rest of countries move forward. Just as if yesterday was, in 1996 I published the Macroeconomic Program “Ecuador into the century and millennium”; fifteen years have passed, we are in the middle of 2010 of XXI century; the world has moved forward, and we remain static. Let‟s think about and until when will this situation continue? Ing. Joyce Higgins de Ginatta

E V E N T S

Opening cocktail of the IWF at the Cristal Palace

From 26 to May 28 was held in Guayaquil a World Conference called “ECOWORLD”: Ecology,

Economy & Enterprise which the IWF (International Women‟s Forum) organized in our country in the

Hilton Hotel in Guayaquil.

Members of IWF Chapter Ecuador sharing the opening evening, from left to right, Ing Joyce de

Ginatta, Mrs. Haydee Miranda de Garcia and Mrs. Cecilia Luna de Armstrong.

Guayaquil‟s Vice Mayor, Dr. Guillermo Chang, sharing with the IWF members at the Cristal Palace

A group of IWF members from left to right: Ilse Meinschmidt, Cecilia de Armstrong, Haydee de Garcia,

Joyce de Ginatta, Lorraine de Frei, Patricia de Estrada and Virginia Schneidewind.

The forums were held on 27 and May 28 at the Guayaquil Hilton Colon Hotel

meeting rooms. Several national and international members shared this great

event.

From left to right, Lucy Laso de

Ycaza, Mrs. Rebeca Eljuri de Kronfle,

Ing Joyce de Ginatta, Mrs. Sandra

Benalcazar and Mrs. Sara Carpio de

Benalcazar, members of IWF,

Chapter Ecuador.

In the middle, we can see Senator

Allyson Gibson, Global President of

IWF sharing with some leaders of

other countries.

Guayaquil’s vice Mayor, Dr. Guillermo Chang, giving recognition to the Senator

Allyson Gibson, in her stay in our city.

Ing. Joyce de Ginatta, President of IWF Chapter

Ecuador, together with Mrs. Barbara Barrett a

member of IWF of Montana-USA.

This is a small reminder that

Barbara Barrett left in her training

as an astronaut in her coming to

Ecuador to participate in the IWF

Conference held from 26 to May

28, 2010.

Some of the members gathered for the IWF Conference, Chapter Ecuador. From left to right: Lucy de

Ycaza, Paola de Benalcazar, Margarita de Jaramillo, Rebeca de Kronfle, Joyce de Ginatta, Sara de

Benalcazar, Patricia de Estrada, Maria del Pilar de Chiriboga, Sandra Benalcazar, Virginia

Schneidewind and Rosana Malo.

Discurso de Inauguración de la Ing. Joyce de Ginatta, Presidenta capítulo Ecuador, en el evento de la IWF realizado el 27 de mayo en el Hotel Hilton

Colon de Guayaquil

Hoy es un día muy especial. Abrimos nuestro país y nuestro corazón a todo el mundo.

30 naciones de los 5 continentes están representadas en este congreso. Razas, religiones y lenguas diferentes bajo un mismo paraguas; un compromiso en busca de un enlace; un vínculo entre la ECOLOGIA, ECONOMIA Y EMPRESA; el compromiso de crear un futuro en acción para las generaciones venideras… Necesitamos construir puentes y destruir los prejuicios. Tenemos que aprender a escuchar y componer una sinfonía de inclusión y respeto de sí mismo No podemos sostener el mundo en la forma en que vamos. Nos hemos descuidado del sentido común, inflando un globo que está a punto de explotar.

Tenemos que pasar tiempo y participar incluso fuera del campo de juego de nuestros negocios. Tenemos que hablar y participar para que nuestras voces sean escuchadas. Tenemos que crear negocios. TENEMOS QUE APRENDER Y ESCUCHAR Y LO PODREMOS HACER AQUÍ EN ESTE EVENTO. Vamos a escuchar la sapiencia y experiencia de muchos oradores. VAMOS A HABLAR, A PREGUNTAR, A DISCUTIR Y ACTUAR. Y en eso, somos realmente buenos. Somos líderes en acción y cambiamos al mundo paso a paso en todos los campos, desde la medicina hasta las artes; desde los negocios hasta la política. Y hablando de acción, recuerdo el día, 10 años atrás en Singapur, donde Ecuador fue confirmado como miembro del FMI Éramos 20 mujeres las fundadoras, decididas a participar pues veíamos al FMI como una institución ofreciéndonos el espacio para ayudar a reforzar el

Estamos creando empresas y generando ingresos y riqueza. ¿Estamos creando valores? ¿Estamos agregando valor para nuestros accionistas, para la sociedad y para nuestro planeta? ¿Están los gobiernos dándonos las herramientas y el espacio para desarrollar esta capacidad en las sociedades libres y abiertas? Tenemos que volver a las bases, siendo simples y eficientes y para recuperar la moderación y el sentido común. Debemos restablecer la creación del valor real sobre la especulación y liberar la mente creativa de nuestro pueblo.

valor de una red de verdaderos líderes DISPUESTO A APOYAR LA DEMOCRACIA, CREACION DE OPORTUNIDADES, RESPONSABILIDAD SOCIAL, EL MEDIO AMBIENTE, Y UN NUEVO ORDEN SOCIAL DE INCLUSION Y COHERENCIA. Estamos en la mitad del mundo. Estamos aquí cerca de 400 personas sentadas, dispuestas a abrir nuestras mentes y corazones para aprender, para crecer como seres humanos y ofrecer nuestro trabajo por un mundo mejor… Gracias nuevamente por estar aquí y disfrutemos de un maravilloso congreso!!!!!!

Opening Speech of Mr. Joyce Ginatta, President Chapter Ecuador, in the event of the IWF made on 27 May at the Hotel Hilton Colon

Guayaquil Today is a special day. We open our country and our hearts to the whole world. 30 nations of 5 continents are represented in this conference. Different races, different religions, different languages under one umbrella, one commitment searching for a liason, a link between ECOLOGY, ECONOMY AND ENTERPRISE, a commitment to create a future in action for the coming generations..... We need to build bridges and destroy prejudice. We need to learn to listen and to compose a symphony of inclusion and self respect. We cannot sustain the world in the way we are going. We have neglected common sense, blowing a balloon that is about to explode. We are creating businesses and generating income and wealth are we creating value? Are we adding value for our stakeholders, for society and for our planet? Are government giving us the tools and the space to develop this capacity in free and open societies?.

WE NEED TO LEARN AND LISTEN AND WE CAN DO THIS HERE IN THIS EVENT. We will listen to the wisdom and experience of many speakers. WE WILL SPEAK, WE WILL ASK, WE WILL ARGUE AND WE WILL ACT. And this is where we are really good at. We are leaders in action and we change the world one step at a time in all of our fields from medicine to the arts, from business to politics.

We need to go back to basics.

To be simple and efficient. To repair moderation and common sense. To restore real value creation over speculation and to free the creative mind off our people. We need to spend time and get involve even outside the playing field of our businesses. We need to speak, to participate to let our voice be heard. We need to create jobs.

And speaking of action, I remember the day , 10 years ago in Singapore where Ecuador was confirmed as an IWF member. 20 women the founder decided to participate because we see IWF as an institution offering us the space to help reinforce the value of a network of true leaders WILLING TO SUPPORT DEMOCRACY, CREATION OF OPPORTUNITIES, SOCIAL RESPONSIBILITY, THE ENVIRONMENT AND A NEW SOCIAL ORDER OF INCLUSION AND COHERENCE. We you are in the middle of the world. We are here, almost 400 people sitting here willing to open their minds and their hearts to learn, to grow as human beings and offer our work for a better world.... thank you again for being here and lets have a wonderful conference!!!!!!!

Ecuador is stunning. Though our visit was only a few weeks, we saw a majestic nation with

hospitable, hard-working people. We enjoyed seeing the remarkable endemic species of the

Galapagos, standing among the docile blue-footed booby and snorkeling among the playful and adroit

sea lions and penguins. Of course we heard about the spread of invasive species in the Galapagos,

the effects of deforestation in regions of Ecuador but we observed a fertile land bedecked with

abundant beauty. My personal observation of Ecuador‟s remarkable assets gave me a new

perspective on the strength, importance and bright future of this under-appreciated nation.

The inspiration for my visit to Ecuador was the invitation by the Ecuador Women‟s Forum to a

conference in Guayaquil for all members of the International Women‟s Forum. The IWF conference

focused on Ecology, Economy and Enterprise: just what I had seen all around me during my

preceding two weeks in the highlands, cloud forest, coastal plain and the Galapagos.

Our Ecuadorian adventure began with a spirited horseback ride at El Cahuapi not far from

Quito. Due to the altitude we prepared for the chill and possible rain by donning light jackets.

Towering Ecuadorian Andes framed neatly tended farmlands along Central Volcanoes Avenue. We

gazed in wonderment at the scene during our full day on horseback. We rode between ancient

volcanoes, along river-rock paved roads, among potato and onion fields, through pine plantations and

across virgin high altitude grasslands. Our guide, Marco, was a local genius who provided our every

need: fast, willing, sure-footed horses, tasty morsels, explanation of local flora and fauna (paper trees,

caracara and more) and ready advice! We were aware that the breathtaking sights and sounds we

cherished in the Andean highlands were uniquely Ecuadorian.

After our day on horseback, we flew to Guayaquil and on to San Cristóbal to embark on the

cruise of our dreams. On board the M/Y Grace with our dear friends, we toured the Galapagos

Archipelago for seven spectacular days. We began on the famous island of San Cristóbal where

Charles Darwin reportedly encountered a pair of giant tortoises feeding on cactus during his first

landing in 1835. Setting out, the Grace followed the coast of San Cristóbal past powdery beaches and

sandy lagoons frequented by flamingos, Darwin Finches, mockingbirds and sea turtles.

Throughout the week, we explored such

magical locales as a partially submerged

caldera, known as “Bird Island” in recognition of

its thousands of red-footed boobies, storm

petrels and short-eared owls that make it their

home, and the Tortoise Reserve where we were

able to observe the friendly ancient creatures in

their natural environment. On the archipelago‟s largest island, Isabela, we docked in quiet Tagus

Cove to hike over rock formations fashioned by six shield volcanoes. From our vantage there,

surrounded by Ecuador‟s most productive waters, we spotted dolphins, rays and whales, each

performing their particular dance as our „Grace‟ coursed through the glistening sea.

Urbina Bay and Dragon Hill, a raised coral reef and a rocky prominence topped by two

lagoons, were unique sites due to their healthy populations of the famous giant land iguanas.

The M/Y Grace

Majestic Ecuador: Land of Adventure and

Enchantment

Mrs. Barbara Barrett

Embajadora Estados Unidos

Similarly, Pinnacle Rock on the island of Bartolome was memorable due to the penguins that

surrounded its base and the sea lions that proved to be an underwater delight.

A UNESCO World Heritage site and the center of the great restorative efforts throughout the

islands, the Charles Darwin Research Station is famous for rescuing the remaining sixteen Galapagos

Giant Tortoises in 1970 and nursing the population back to over 1,000 that are said to now exist on

Hood Island. Our time at the Station reminded me

of the importance of ecological conservation and

how the islands preserve their prized species. As

our time on the Grace and in the Galapagos came

to an end, we flew back to the mainland.

In the highlands near Quito I tested a few

more of the vigorous pursuits offered by

exceptional Ecuador. We biked down Cotopaxi,

the world's highest active volcano. The next day

we hiked high into a cloud forest to a spectacled

bear preserve, then enjoyed a stroll to „cock of the

rock‟ waterfall and then drove to a steamy bird

sanctuary to take in the enchantment of seemingly

tireless hummingbirds dive-bombing each other, lying in wait and attacking from a hidden lair. Finally,

during a quick, late visit to the “Equatorial Park” I tried my hand at balancing an egg on a nail head,

successfully, eventually.

The next day was particularly heartwarming: elegant, colonial Cuenca with the most

hospitable family in the hemisphere! From the Airport in Cuenca we learned the history,

manufacturing process and fashion of the Ecuadorian/”Panama” hat. Cuenca charmed us with its

cathedral, its market, silver, ceramics, bougainvillea, weavings, vistas, broken bridge and most of all

its incomparable hospitality. The greatest privilege of my visit to Ecuador was the joy of a lovely

private luncheon at the home of my cherished friend, Sarita in Cuenca. From the flowers to the

crocheted tablecloth and thoughtful conversation, every detail was perfect. The highlight of my first

(but not last!) visit to Cuenca was the warmth of the welcome by my Ecuadoran friends.

From Cuenca it was time to fly to Guayaquil. In Guayaquil insightful Giovanni Ginatta offered

a morning drive through the coastal plain to a remote highly professional, orderly Ecuadorian cacao

and banana plantation run by Sergio and Gloria Cedeño. What a treat! It was packing day at the

banana plantation so I observed the care taken to ship flawless bananas to the global market.

Learning about the science of plant selection, secretions, and threats made it a fascinating morning.

Across the road in the cacao plantation I observed the complex process of chocolate making:

propagation by cloning, disease prevention techniques, harvesting, drying, roasting, fermenting,

packing, lab testing and importantly, tasting. Ecuador deserves to be proud of its heritage in banana

and cacao production!

After getting an on-site look at agriculture from high altitude potatoes, onions and evergreens

to coastal banana and cacao plantations and after visiting bird and bear refuges, after observing the

source of the Darwinian theories in the Galapagos, it was time to settle down

in a conference room for the International Women‟s Forum conference. Discussions with

business leaders, farmers, artists, ecologists and others set the stage for an enlightened discussion

Giant Land Iguana

about the balance among the sometimes compatible and occasionally competing interests of ecology,

economy and enterprise.

A magnificent success beyond even the high expectations, the International Women‟s Forum

Conference in Guayaquil energized IWF members to learn about Ecuador. Hundreds of the world‟s

leading women explored the relationship between the economy and the environment. The conference

also created countless business opportunities for the people of Guayaquil and Ecuador. The world‟s

top ecologists joined IWF members and guests who in turn joined forces with the people of Ecuador to

serve up a triumph for everyone.

As a biologically diverse country with significant resources, Ecuador may be a leader in

balancing environmental regulations and market development. Ecuador‟s uniquely bio-diverse

hotspots and “hope spots” such as the Galapagos Islands are key to the global future. How can

competing interests be balanced? My exposure to majestic Ecuador highlighted the importance of

ecological questions and economic issues in advance of the conference discussion.

On a light note, who among the conference attendees will ever forget the presentation by

Dame Jane Goodall, the famous British primatologist and chimpanzee expert! With little preamble, Dr.

Goodall greeted the IWF assembled with her imitation of a friendly chimpanzee greeting. Her vocal

imitation of the primal welcome lifted everyone‟s spirits – a special IWF moment.

It had been two eye-opening, awe-inspiring weeks, but just when I thought the setting couldn‟t

have been more fitting as a reminder that we exist on a living, breathing planet, the volcano erupted.

Indeed, during my last day in Ecuador after the International Women‟s Forum conference in

Guayaquil, and its energizing discussions on Ecology, Economy and Enterprise, I was intensely

reawakened to that fact by a force that affected all three “E”s. The eruption of the Tungurahua

volcano spewed an ash cloud into the atmosphere disrupting businesses and closing the Guayaquil

Airport from which I intended to depart.

Stranded briefly, the unexpected eruption gave me time to reflect. Yes, even though man can

circle the globe in 90 minutes in the International Space Station, Mother Nature‟s power dwarfs the

paltry power of man. Forces of nature control. Mere mankind, when faced with the force of nature,

must alter plans and reset priorities.

Though on past trips to Ecuador we had experienced the urban business settings of Quito and

Guayaquil and previously we had even taken a Galapagos cruise, this time we focused on the

countryside and the interaction between mankind and our planet.

The sum of Ecuador‟s unique ecological treasures is astounding. With nine expansive eco-

zones within its borders including cloud, dry and rain forests, alpine tundra, mangroves and the world‟s

most celebrated ecological paradise, the Galapagos Islands, Ecuador is one of the planet‟s top twenty

most biologically diverse nations. With over 4,000 species of Orchids and more than 100 types of

hummingbird, Ecuador abounds in spectacularly colorful, often endemic species.

Congratulations to the Ecuador Women‟s Forum! Their invitation to Guayaquil opened my

eyes (and many others‟ eyes too, I suspect!) to the global treasure called Ecuador. Well-rounded with

exceptional hospitality, quaint towns, a city of churches, expert handcrafts, and majestic condors,

Ecuador is a leader in ecological tourism. We were especially fortunate to be included in a rare

sighting of one of Ecuador‟s iconic caracaras and a distant South American condor.

Ecuador: What a country!!

In tribute to Joyce Ginatta de Higgins, the Ecuador Women‟s Forum would not exist without

the dedication of our treasured friend Joyce.

I speak for the entire International Women‟s Forum when I salute Joyce and the exceptional team of

women leaders of Ecuador who welcomed the International Women‟s Forum. Hundreds of the world‟s

leading women and their guests travelled to Ecuador, explored the majestic land and learned about

ecology, economy and enterprise in an inspirational land. You have influenced many lives through

your generosity!! Thank you!!

Behind the scenes of UNASUR

Lic. Agustina Leonardi Economist of Freedom Foundation

Argentina Last May, former president and current national Deputy, Nestor Kirshner, was unanimously appointed Secretary General of the Union of South American Countries (UNASUR).Many questions arose from his appointment, both from the Argentinean opposition as well as from analysts, politicians and

intellectuals of our country and the region, which deserves making an analysis of it. To do this in first instance, the history of this block must be known and afterwards analyze how this Patagonian comes to occupy this position and what is expected of his leadership in the union. The UNASUR is a regional organism composed of 12 countries which are: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam Uruguay and Venezuela. This association‟s fundamental purpose is strengthening the already existent regional integrations and address common policies on several axes with an eye toward success such as the European Union. Even though the constituent treaty dates back to December 2008, it was preceded by several relevant agreements. Specifically, the conformation of this block is an initiative of the Brazilian diplomacy in 2001 when at that time Fernando Enrique Cardoso was President of that country. Precisely when commemorating five centuries of the arrival of the Portuguese in Brazil, the President call on eleven South American colleagues to move forward with the construction of this body whose aim was integrating socio economic, cultural and political aspects in the region. In December 2004, the South American Community of Nations war formed as several South American Presidents gathered in Cuzco (Peru). This community continued progressing with other meetings where it should be noted the Brasilia Summit, in September 2006, which defined the priority agenda and community action program. Then, in December of that year and under a strategic commission of reflection, the bases for the establishment of the union were given. In September 2006, in the Summit of Cochabamba, a declaration was signed in which the integration compromise was repeated, although new substantial steps were agreed. As a result of these treaties, in April 2007 the Presidents –gathered in Margarita island- decided to re define the community name by UNASUR signing the Incorporation Agreement on May 23, 2008 in the Brazilian capital. Similarly, it appears that this organization aims to build a participatory and consensual, area of integration and unity in the cultural, social, economic and political among their people, giving priority to political dialogue, social policies, education, energy, infrastructure, financing and the environment. All the previous with a view to eliminating socioeconomic inequality, achieving social inclusion and citizen participation, strengthening democracy and reducing asymmetries within the framework of strengthening the sovereignty and independence of the Estates. These are over-ambitious goals indeed. Thus, the UNASUR is seen as the convergence between the Andean Community of Nations (CAN) and the Southern Common Market (MERCOSUR), the major business groups of the region, which also implies an important challenge because these groups with own rules and procedures in legal and economic fields must coexist in the region, which won‟t be easy. However this sequence of events described as an ordered series of events and without resistance, was not such. The formation process not always had the support of all the countries while this body has important institutional weaknesses, which will be explained next. In the 2004 Peru‟s Summit, four Presidents were absent. Besides Nestor Kirshner, Jorge Batle (Uruguay), Nicanor Duarte Frutos (Paraguay) and Lucio Gutierrez (Ecuador) didn‟t assist either. The Argentinian President refused the invitation, showing a clear lack of interest in this integration and sent as his replacement vice-president Daniel Scioli. On the other hand, the low level of institutionalism is reflected in the fact that since the beginning of this group, only five (Bolivia, Ecuador, Guyana, Peru and Venezuela) of the twelve countries have ratified in their parliaments UNASUR memberships as stipulated in its constitution. Neither Brazil, promoter of this block or Argentina who won the general secretariat, have done it, because according to the treaty, it is required the approval of nine of the twelve member-block for it to enter fully into force. Another aspect that draws attention on the formalization of this group is the one pertaining to the Pro tempore President. As stated in the minutes, this would be held successively by each one of the presidents of member states, in alphabetical order for annual periods. But the first one to hold the position, was the Chilean President, Michelle Bachelet, without respecting the stipulated about

alphabetical order starting with the “C”. Added to the previous, comes the delay of two years in the appointment of the Secretary General, when President Borja resigned the mentioned post in 2008. That is, this block looks currently inconsistent, because its weak formation coexists with ambitious and strategic purposes. This contradiction turns by moments into something more virtual than real. Regarding in how this Santa Cruz native got taking the Secretary General, its important knowing some significant aspects relevant provisions of the regulations. The Secretary General of UNASUR which is based in Quito (Ecuador) is the governing body that executes the mandates conferred on the bodies and exerts its representation by their express delegation. According to the statute, the Secretary General is designated by the Head of State and the proposal of the Council of Ministers of Foreign affairs for a period of two years, renewable only once and could not be succeeded by a person of the same nationality. Also, during the course of their duties, they won‟t neither seek nor receive instructions from any government or entity outside the UNASUR and refrain from any action incompatible with their position as international officials responsible only to the international body. How does Kirshner accede to this post? One day before the UNASUR‟s treaty signature was constituted, Ecuador‟s former President, Rodrigo Borja irrevocably resigned to occupy the Secretary General of the union because of disagreements with the majority of the representatives of the block, a position he held since April 2007. Since then, two names came up as possible substitutes; the Bolivarian Pablo Solon (Evo Morales‟s consultant) and Nestor Kirshner, who was the one having more support since the beginning. In this context and after a private meeting in mid August 2008 in Olivos between Correa and Cristina Kirshner and her husband, the Ecuadorian President, who currently occupies the bodies Pro Tempore presidency, proposed the former Argentinean president as Secretary General. The Presidents of Colombia, (Uribe), Uruguay (Tabare Vazquez) and Peru (Alan Garcia) were opposed to this designation while Lula da Silva wasn‟t against the Argentinean candidature showed at the beginning.. For this reason, Kirshner‟s appointment was delayed because it needed unanimity for his designation. By the way, his application failed two years ago because he didn‟t have the support of Tabare Vazquez, who veto the nomination, mainly because of the border blockade that keeps for years Argentina for the installation of the Botnia pulp mill in the city of Fray Bentos, but also because the Uruguayan president doubt the ability of the Argentinean to perform that regional duty. Things changed in a significant way since the election of the new President of the neighboring nation, Jose Mujica, with whom the Kirshners had great affection since the beginning. Thus, at the Summit in Buenos Aires, former tupamaro lifted the veto of his predecessor and even if he abstained from voting, he didn‟t oppose his nomination, and thus support his candidacy making possible his final designation. So, after several hurdles, the twelve members of the union representatives gave the approval for the Argentinean to fill the post. It should be noted that the Presidents of Colombia and Peru didn‟t participate in the Summit and sent their Secretaries of State as their representatives. After many twists and turns in this designation in conjunction with a block that hasn‟t all the institutional aspects required by an organization of this type, many questions arise. Is the UNASUR “virtual” or a consolidated union? What is the real background for Nestor Kirshner‟s nomination? Is the former president prepared to exert this position? What are our expectations of his leadership towards this organization? Let‟s try to answer all these questions briefly. In first place it should be noted that the UNASUR although it has undergone major advances in a block that has not yet achieved the status of regional union such as outlined in the constitution. The ratification to establish memberships of the countries are pending in most of them; the unnecessary delay in the appointment of the secretary and some ideological differences among its members, show that this union is built on shaky foundations. Under this, one can infer that the appointment of the Secretary General didn‟t create more obstacles than the already commented. Surely in a more mature body not only more doubts could have risen about the candidacy of the Argentinean but also had tried to solve this question more quickly and not delay their resolution two years. Anyway, regarding the background of the Argentinean nomination, should not be overlooked the ideological affinity that Kirshner has with the presidents of several of the member countries. Chavez,

Correa, Morales and Lugo are in this list, and all of them in the path towards what are known as the “XXI Century Socialism”. And although many basic economic aspects aren‟t shared, Argentina has good relations with Brazil (the country with the greatest interests in UNASUR (given its growing global weight) and Chile. Indeed, he was able getting support also of these nations. Concerning to Peru, at first it was opposed to this designation, but afterwards President Alan Garcia reversed his opinion and gave his support (the president recently visited that country seeking for it), while something similar can be said from Colombia. It also has to be noted that the leaders of these countries, as previously mentioned weren‟t present in the recent Summit of Buenos Aires showing certain apathy for this block and for the nomination that was discussed at that meeting. The relation with Uruguay was the one which gave more headaches when Tabare Vazquez was President, and this situation changed when Mujica got the leadership of that country. It seems that Kirshner‟s nomination was delayed waiting for the oriental elections. About the Argentinean capacity to occupy this post many things can be mentioned: Four years of being our country‟s President were enough to corroborate his limited interest in foreign policy and his permanent confrontation style. In addition after completing his term and as president of the Justicialista party leaded by his wife and President, this last aspect was deepened. During 2003-2007, Kirshner, faithful to his policy of isolation, conducted very few trips abroad and the majorities were inside the country. His participation in Summits and Conferences was minimal, to the point in which he didn‟t even attended to the UNASUR‟s opening, held in 2004 in Cuzco. He hasn‟t either shown any enthusiasm in being part of an each time more globalized world, through different commercial agreements and has strengthened his idea of “living with what we have”, through barriers to import and exports and disconnecting Argentina from the world. What we have seen in return, is a strong link with Venezuela, with whom he has advanced in numerous agreements, now stained with irregularities and corruption suspicions. If all the above wouldn‟t be enough, he hasn‟t any diplomatic experience and tradition at the same time that he doesn‟t have a good image abroad. As far as he‟s concerned, his confrontational style of practicing politics was also glimpse in his four years of the presidency which also remains nowadays. Attacks to the Press, to the church, on the opposition to various productive sectors and to all who show disagreement with his ideas, show clearly that this is beyond the dialogue and the search of consensus. These aspects show that the Argentinean profile isn‟t the adequate for a multilateral organization as UNASUR, where integration, the opening towards the world and consensus, are pillars for its progress and consolidation. Of course you would think that his ideological similarity with many of its members would be a plus in a task that doesn‟t look easy at all and for which he doesn‟t qualify. Finally, another question that opens, is whether its new feature is compatible with his parliamentary duties, although the last mentioned doesn‟t seem to take his time, given that he has only attended the commission session conformation. This has already generated discussions in the local political sphere, but for now he continues keeping both positions. Indeed, UNASUR has many unresolved matters. A long path for consolidation remains ahead, if the wish is following the European Union steps. This is a task that doesn‟t seem to be simple once knowing the ideological differences that the region has and because we have the feeling that there isn‟t much interest among their members to strengthen the block. In this context, Kirshner could overcome the various obstacles that came into his way and accepted the Secretary General of the organism, although neither its leadership formation nor styles are the appropriate to exert this post. This nomination will be added to his ambitious political career; it will offer new links and opportunities which surely he will use to strengthen his power and image, even more if he aspires to a new presidential mandate for 2011. And why not, you might think that he will find in this international achievement, the benefit of diplomatic immunity for the various court cases that are likely to arise. Will this last be the true background of his persistent interest in achieving the job? As you can see, there are many questions and few answers behind the scenes of UNASUR. Surely time will be the only one to tell if the designation of the Patagonian has been a success or not in this position of world ranking.

Greek Crisis

Economist Mauricio Pozo

When everyone thought the storm of financial crisis, which originated in the United States in mid-2008, had ended, the Greek crisis arose. This crisis has revealed certain anomalies in the management of economic and fiscal policy in the old continent. The lack of control of the public institutions continues showing its consequences, as well as the abusive use of financial instruments to disguise the structural problems. In October 2009, with the rise to power of the New Greek government, it is revealed that Greece would have to finish the year with a fiscal deficit of about 12% of GDP, well above the 3% limit or Euro Zone economies, as well as a public debt that exceeded the 114% of GDP. From that date until the end of the previous year, the economic authorities already showed their concern about the large Greek fiscal deficit, and began to demand adjustment measures. In December 2009, the Hellenic government announced adjustment actions to reduce the deficit despite this measure; the major rating agencies lowered the rating of the Greek sovereign bonds, with

the prospect that saving measures and adjustment announced by the Prime Minister of Greece are insufficient to eliminate the long term risks. An evident consequence of this problem in the financial markets was the continuous Euro depreciation regarding to the American dollar, fearing that the Greek economy can become the first in the Euro zone to fall into a suspension of payments. In February this year, Greece assumed the compromise of reducing its fiscal deficit from 12, 7% of GDP to 8.7% at the end of this year. Raised for the effect measures such as increase in AVT (21%), reduction in salary bonuses in the public sector (30%), freeze the pensions of estate servers, and higher tax rates for those earning more than 100.000 Euros per year, and for owners of large properties. It should be noted that 75% of the total state spending is for wages and social benefits. Greece‟s budget deficit for May was upwardly revised (13.6% of GDP according to new estimates of Euro stat), and the Greek sovereign bonds were downgraded to the category of “junk bonds”, with a premium of more than 700 basis points over their German peers. According to Bloomberg‟s data, Greece‟s debt with Europe reached 296.000 million Euros. 1 It is estimated that if this debt is declared in “default”, creditors could recover 30% to 50% of their investment, meaning that their loss would exceed 200.000 million Euros. This situation would directly affect the Euro zone and their main commercial partners.

Consequence for the EU The European Union, fears that the Greek economy collapse, rests on the countries of the community most affected by the crisis in 2008, in addition dragging with it the Euro; countries such as Spain, Italy Ireland and Portugal are in the spotlight, as imbalances in the public accounts and public debt in relation to GDP generate financial weakness which financial investors are worried about. (See Table 1) The prime example of this situation is the constant devaluation of the Euro posting from Greek fiscal adjustment in late December; so the dollar exchange rate of 1.52 per Euro happened in late 2009, to 1.27 at May 2010, marked a deprecation of more than 16.4% in five months (See Table 2). 2

Table 1

Public Debt / GDP

Year 2009

Ireland 63.70%

Greece 113.40%

Portugal 75.20%

Italy 113.20%

France 67.70%

Spain 50.00%

Source: IMF, CIA

Elaboration: Multienlace

Table 2

Euro/USD EURUSD=X -1.55 -1.50 -1.45 -1.40 -1.35 -1.30 -1.25 July 09 Sept 09 Nov 09 Jan 10 Mar 10 May 10

Source and Elaboration: Yahoo-Finances After the meeting in Brussels on Sunday May 10

th, the European Union, the Central European Bank

and the IMF, decided to finance Greece. The agreed amount was of 110.000 million Euros, and 30.000 were financed by the IMF (with an immediate pay out of 5.000 million); the remaining 80.000 million will be paid by the countries which belong to the EU. The implementation of this program will be supervised every three months by the IMF 3.

Table 3

Greek Financing

Euros-Million

IMF 30,000

Germany 22,400

France 16,800

Italy 14,700

Spain 9,800

Holland 4,800

Belgium 3,000

Portugal 2,000

Other Euro 2 Countries 6,500

Total 110,000

Source: IMF

Elaboration: Multienlace It was agreed, a mechanism of financial assistance to help countries of the community which register problems paying the public debt. The operation will handle about 750.000 million Euros (including loans and guarantees) to provide as follows:

60.000 million-European Commission

440.000 million-Countries of the Euro zone

250.000 million-The IMF 4 The first payments will be until May 19

th, date which marks the first installments of the Greek bonds.

As expected, as soon as the economic measures were published the European stocks rallied after having closed down on Friday May 7

th, with a dropping of 3% (excepting the London stock which had a

drop of 2, 6%). On May 10

th in the morning, Madrid‟s stock showed a rise of 11.8%, as well as in Paris with an

increase of 8.24%, 9.77% in Lisbon, 9.57% in Milan, 5.78% in Amsterdam and 5.06% in London. In Asia the Tokyo‟s stock closed in rise of 1.60% and Hong Kong 2.54%. The banks in turn quoted their value instruments with increases of up to 20%. The oil barrel reached a 3% increase being located over 80 dollars. However, the best indicator was the recovery of confidence towards the euro, which reached 1.302 Euro/USD on Monday 10

th, after having reached to 1.275 on Friday 7

th of the same month. There was

an increase of 2% since the announcement was made. Conclusions Governors have decided to save the Euro “at all costs”. The political decision has been made, the programs approved and the consequences are to be seen.

During the next two years the eyes of the world will be in Greece, Spain and Portugal.

The fiscal and financial controls will be higher.

The public debt will be purchased. Latin America estimates that it will receive an impact for what has happened in Greece, in the specific case of Ecuador where there is anticipated a reduction in remittances and exportations. The best way to care in Ecuador is to resume early fiscal austerity generating savings and improving the foreign

image to allow having open doors for international financing. 1 European Commission: eurostat.ec.europa.eu/ 2 http://finance.yahoo.com/q?s=EURUSD=X

3 “Agreement with Greece”. International Monetary Fund 10/05/2010 Note: The contributions from the Euro group will be made in proportion to its

Athens Economic Shock

Econ. Vicente Albornoz Director of CORDES

Greece is implementing an adjustment program that surpasses anything we‟ve seen on our Earth. The government‟s spending is lowering its costs and charging more taxes, just as the country is in full recession. And it isn‟t the IMF who‟s pushing these reforms but the richest countries of Europe. I don‟t think that for the unfortunate Greeks it‟s easy applying this tremendous adjustment. Reductions in public spending and in all areas (including health and education) are being implemented; bureaucracy income is going to be lowered between 5% and 30%; there have been increases in social security contributions and retirement age went up. This sounds worse than the ugliest nightmare that may have harassed a Finance Minister in Latin America. Is it maybe that the Greeks are so insane to implementing such a painful and unpopular plan? Can it be true that the governments of Germany and France which are providing financial assistance are also crazy? How can they happen to apply an austerity plan as hard when the country is in recession?

Very simple; none of the involved is crazy and there isn‟t another option. Raise taxes, lower spending and reduce welfare benefits are the least likely in a recession, but if the involved country hasn‟t got money and confronts difficulties obtaining loans, there is no sensible alternative; (the unwise option would be to print money, but that would imply abandoning the Euro, with all the costs which this implies). The Europeans haven‟t got any other option as to help the Greek and avoid the Euro‟s collapse, but as they couldn‟t give them the money, they help ensuring their debts with some harsh conditions. And the IMF is only supporting what the French and German said to support it. Greece came into debt year after year during this decade; its public debt exceeds what the country produces over one year and its fiscal 2009 deficit was more than 12% of GDP. In short they had lived beyond their means and some time would have to tighten their belts. The global crisis just accelerated the adjustment and hardened. Greece was raising their salaries much more than other countries with Euro. For example, between 2003 and 2009, in Holland wages raised 11%. In Greece which also has the euro, they were increased in 37% in the same period of time, and with it their manpower was more expensive and the country less competitive. And since they cannot devaluate, their situation turns more complicated for them. Poor Greek, but at least they must have had lots of fun lately, spending more than they had, with astronomic fiscal deficits. But now the hangover came after the binge. By the way, in Ecuador the minimum wage has increased in 69% since 2003, while in the United States (who also has dollars) has grown 15% in the same period of time. If Ecuador‟s government carries out this year‟s budget, it will have a deficit near to 8% of GDP, similar as the one Greece had two years ago. And as declaring illegal and illegitimate all debts, no one wants to lend money. What is it going to do once they‟re out of money? What a nightmare just thinking.

Economic Freedom in Mexico: Actions & Perspectives

Dr. Roberto Salinas Leon

President of Mexico Business Forum Mexico

Talking about Economic Freedom, in these times of global financial crisis, recession and huge encouragement programs never seen before, has become a difficult mission. The condemnations to “neo-liberalism” or ambiguous notions as “the end of capitalism” have become scapegoats for all the wrong things caused by modern interventionism, in monetary and financial fields. Nowadays, this false association between the crisis and freedom has become the main purpose of group analysis, with politicians, legislators, journalists, trade unionists, several businessmen and members of civil society. That is why, despite the great rhetorical difficulties which we face, it‟s imperative to take up again the issue of economic freedom and its importance to develop an agenda for sustainable high growth. In essence, economic freedom doesn‟t stop being a scope over which develops the individual‟s freedom, at the same time as freedom of expression and other freedoms. So, in essence, the answer to the question about the meaning of economic freedom seems simple: the recognition of individual‟s rights to dispose as they please in their lives, jobs, and property, as well as their ability to interact voluntarily with others through peaceful exchange of goods and services.

Therefore, economic freedom is the recognition that all individuals have equal opportunity, and it‟s required a well-defined right framework for actions and transactions that each individual chooses freely. Unfortunately, in these times of crisis, the most important thing for the great majority of people is following a system that offers tangible results; for example a better social welfare. However, precisely here lies the importance of the Annual Report of Economic Freedom in the World. When examining the pages of this document, one finds an extended study, with high empirical content which considers the basic elements of economic freedom in the approach to the allocation made in the degree of economic freedom, within the universe of countries under consideration: personal choice, voluntary exchange, free entry and competition in markets and the protection of people‟s and property rights. This is how a range of 141 countries, using over 40 parameters which are based or derived, from these basic elements, are being analyzed. The study shows different results, such as an unobjectionable positive correlation between economic freedom and per capita product, the economic level growth, the direct foreign investment, income of the poorest, hope for life, political rights, transparency or the environmental protection. That is, it gives us an extraordinary tool of empirical context to explain and support the notion that greater freedom gives greater opportunity for development. The conclusion in the Mexican case could be said in current terms that to greater freedom, more likely to live better. Mexico‟s rating in economic freedom has remained stable in the last three years: 6.83 for 2005, 6.84 for 2006 and 6.80 for 2007. Even if this qualification maintains Mexico as a moderate free country besides being one the freer in Latin America‟s region, its stagnation still worries despite of its backward step in relation with the world. If in 2005 it was ranked 59, for 2007 is 67, from 141 evaluated countries. On the other hand, when we observe the qualification in the near past, a great advance stands out. In the 80‟s, populist policies inherited from the previous decade during the “tragic decade” of Echeverria and Lopez Portillo which left Mexico with a strong intervention in different aspects of economic life, which reflects in the low qualification, around 5 points. However, since late 80‟s and in the nineties, after a process of structural reforms promoted by the governments of Salinas and Zedillo, the rating on the index has been rising, reaching some in 6.5. The political paralysis brings with it, a change in 2.000 (which for the first time in more than 60 years, allowed the alternation in government) and has prevented further progress. An efficient legal structure, a clear definition of property rights and a proper Rule of Law are the greatest challenges which Latin American nations have to confront. However, in this area, a mediocre performance has been shown, and no wonders that it received the worst rating of 5.3. The courts depend in important measures of political power and the core of vested interests. Moreover, their judgments tend to show no partiality. In general, corruption in the legal system is significant and there is a lack of transparency which generates a vicious circle. The Property Rights aren‟t well defined, and therefore the qualification in this area lowers (5.15). Article 27 of the Constitution establishes that “The Nation shall have all times the right to impose on private property what public interest dictates”. Of course “public interest” isn‟t defined being subject of arbitrary criteria of the prevailing authority. This combination of ambiguity and arbitrariness extends into the expropriations, for they are carried out “because of public utility”. However, the expropriation risk can be qualified as (in a pragmatic way) low. One of the fundamental changes that Mexico has undergone in the last twenty years has been its opening towards foreign commerce. In 1994, the FTA in North America entered into force on par with other treaties with Central America, Colombia, Chile, Israel, Uruguay and the European Union. Nowadays, approximately 90% of exports and 70% of Mexican Imports are done with countries members of the FTANA. This rises to a much larger amount if you add them to all of the ones having FTA, i.e. those who didn‟t apply tariffs. The previous is a consequence of the distortion that prevents other countries trading with Mexico in equal terms.

Of course not only tariffs involve trade restrictions. Regulations such as non tariff barriers, regulations, zoo sanitary and many formalities, as well as corruption at customs, represent direct transactions costs that limit the commercial freedom. In terms of economic freedom Mexico represents a case in which there are still challenges to confront and a long way to go, despite having had some advances. Some of the reforms which could contribute achieving the previous are the following:

1. Simplify the tax system substituting definitively the IRS for the IETU Single Tax). The current dual system has only further complicated the tax compliance costs, which already supposed the Complex Income tax. The IETU (Single Business Tax Rate) is a simple tax which encourages investments to deduct the same, thereby resulting in positive incentives. Other improvements in the tax system could pass through the elimination of vehicular tenure tax, and excessive special taxes.

2. Liberalize the energy sector. The State Enterprises continue without allowing private

investment, which explains the lack of investment in research and development, as well as refineries, which represents an important problem for the country‟s sustainability in energy area. The lack of competition can also be seen in the deficient quality and high prices of fuel and provision services of electric power. To achieving the previous mentioned, it would be necessary to reform the constitutional articles that infringe in property rights, especially in Article 27 of the Constitution.

3. Reform the Constitution to definitely clear property rights. The low qualifications in this area, force driving a new constitutional reform for the property rights to be recognized and not awarded, encourage investment and reduce the risks of expropriation. For example, article 25 of the Constitution, says that the State has the mandate to “plan, coordinate, conduct and manage” all the activity of the national economy. This disposition is clearly incompatible with economic freedom and with a system of well defined property rights.

4. Liberalize the labor market. Flexibility boost by allowing the dismissal because economic causes (seasonal decrease in demand, etc). Also recommended eliminating the exclusion from the unions to prevent employers hiring workers who aren‟t members of it. It also should promote the change in labor by a vertical structure that encourages productivity, by allowing workers differentiated payments that deserve it.

Transformation goes beyond the macroeconomic adjustment, private agreements or national developing plans. If the government takes part in the distribution of wealth, it will be taking away a portion of the factors of production of other areas of the economy. The challenge of transformation is replacing the wealth distribution (the very low yield of expenditure) for the distribution and growth of opportunities for all citizens. Douglas North, 1993 Nobel Prize in Economics, argues the importance of institutions within the framework of the long term incentives, in economic development: *The institutions define the limitations designed by the human being to shape human interaction. * The institutions reduce uncertainty when providing a basic structure for everyday‟s life. In other words, there are legal conditions which determine the development at long term. The very act of sharing, whether between two people or two million and up to two billion people, presupposes the institution of contract, protection of property rights, and the premise that one side wins only if the other wins. In the absence of guarantees to work and its results, there are problems of uncertainty, economic loss calculation, of inefficient resource allocation, as well as the anomaly that some are more entitled to the product of others work – precisely what has happened when handling the state interventionism-. Specifically, without the right of property

to facilitate economic transactions, the open market‟s driving force disappears, meaning the incentives. The report of Economic Freedom, in its annual publication, has shown in a reliable way, with facts and statistic correlations, that there is a higher proportion between cause and effect between economic freedom scores and higher rates of growth. That is, for more freedom there is more prosperity. That view is no longer an informed speculation, but an empirically demonstrable reality. Therefore, the structural reforms must be focused to expand the spaces of election freedom, if they really try improving the life conditions of national homes. That is the difference which economic freedom does: the reduction of unnecessary barriers, price stability, low tax rates plus greater opportunities and prosperity. The challenge therefore isn‟t only changing the legal frame to obtain grow the one and only objective, which is: transforming Mexico‟s huge wealth potential into richness and allow their people to achieve a greater life level and live better. This means real wealth.

Fiscal Government’s Expansion

Pablo Lucio Paredes

One of the most significant characteristics of the Government of the Citizen Revolution in these three and a half years (and will remain the same for the rest….) is the enormous emphasis on placing the Government in the center of social and economic action. This is of course an ideological vision which starts from the idea that the private sector has an individualistic bias, while the Estate is capable to look towards the common wealth, both from the point of view of done things (the private tend to offer goods and services not always useful for society, the State focuses on right) and the timescale of implementation (the private are myopic, the State has a correct long term vision. To which are added three additional elements:

a) There are key sectors which must be with preference in hands of the State, and if this isn‟t possible, at least should be severely regulated. There are the so called strategic sectors (oil, electricity, and telecom), the food chain, construction, finances, education and communication.

b) We must promote the development of the micro and medium enterprises too; these are the only ones who fulfill their social function, because the medium to large companies always abuse the environment, worker, customers and the State.

c) Redistribution of wealth and poverty reduction is a more important goal than the generation of wealth. And equipped with this baggage of ideology and concepts is how the State has grown enormously.

Let‟s start raising some figures. The income and expenses of the public sector (adding everything but the State‟s financial area), have increased from 25% to about 40% of GDP, and even making certain adjustments, it‟s less than 10% of GDP. Which incomes have increased? 7 points and a little more oil, and more than 3 point the non-oil. What about the spending? Around 7 point more in current spending and 5 point in investment. This is clearly what happens. Some considerations about these concepts and figures:

1) There is the belief that production is only one of the factors which generate wealth, and the truth is that it‟s the only one. If there isn‟t production, there isn‟t wealth. Obviously wealth doesn‟t generate other factors such as: happiness, social unity, confidence etc… which are other valuable items of personal life and society, but material wealth can only be obtained by producing.

And particularly in the current government of Ecuador the vision is the following: being an entrepreneur isn‟t an essential factor in society, besides it‟s easy, and if it is a medium-large size entrepreneur he necessarily achieved success through abusing others (while politicians in power aren‟t obtaining their successes through supposedly abuse). There is little knowledge that any economy is based on a pyramid where there are rather few large firms intensive in capital that fulfill the role of generating economies of scale and efficiencies, and then medium and small more numerous, more intensive in manpower and fulfilling its function of supply and integration with the rest of the society. Of course this pyramid must be improved through processes (especially in foreign opening) maintaining competition but not from the government trying to distort the pyramid to small businesses. That only decreases global wealth.

2) The State cannot increase the material wealth; it can only take from few to give to others. This redistribution might be valuable to society, but even if so, we must be aware that it is about taking from few to give to others. And in that process something will inevitable be destroyed to build something: that is, at the time taxes are charged to someone this person stops doing something, consuming, saving or investing, to move those funds to the State which in turn does something whether current expenditure or investment. Then the State‟s actions can‟t be judged simply for what he did, but by the comparison between what was done and what the taxpayer didn‟t do.

This analysis needs to be very accurate. Take a positive example of State‟s action: a person when paying taxes fails buying an imported tie and with those funds a poor child gets education. Almost everyone will agree that there has been an improvement into society. And now, an example which could at best is neutral: A person fails to pay taxes, to invest and create employment; there are one more unemployed and a son who cannot be educated, and with these funds the State gives a poor child education. What has society won? It probably lost. Finally, a negative event the person who pays taxes, doesn‟t consume or invest; there is less production and employment; in return the Government generates bureaucracy which introduces more controls on personal and business life or build a “white elephant”; it‟s obvious that society has lost. That‟s what must be analyzed, but we can be almost sure that negative events are more than the positive ones, because the State grows more and turns into a burden for society, which doesn‟t mean that they don‟t have to do certain things to a certain amount. But even when we say “do things” that doesn‟t mean they have to be done directly. For example: the State can promote to universalize education which is right, but there are no monopolistic and not direct ways to achieve them. By giving bonuses for students to choose where they wish to receive education, allowing tax deductions for natural or legal persons who want to directly support the education of low-income people instead of paying those funds to the State to do so, etc….There isn‟t a better solution than the one implemented as close to people, and the State‟s direct action should be only the last alternative.

3) The Government is a group of people who on average do not have to be better than the rest of the citizen, so that on average there is no reason for them to make better decisions, or ensure more the common wealth, nor having a long term conception. Even more, they don‟t use their

own money, and therefore they don‟t have to care about so much. It‟s possible that average decisions may be worse than the rest.

The State representatives in average pursue personal interests as the rest such as increasing their salaries; increase their power, status or any other factor. And the important thing is making the State grow to get the benefits, as an entrepreneur trying to get benefits from its business growth. This is the way how today in our country we have reached a State that weighs 40% of GDP and constitutes a burden on the economy. That‟s why we can see that in spite of the spending increase, economy grows very little besides having less employment opportunities. We must remember that in any developed country today, when having Ecuador‟s development level, public spending exceeded 15% of GDP: The excessive public sector generates low productivity and development (if we measure it as the goods and services people wish to have and be provided), and much uncertainty.

4) In Ecuador‟s case, the economy has become addicted to spending and that‟s serious because it means we are operating with one motor only (the exports increase slightly, the household consumption only to the extent it is driven by public spending and private investment declines). Hence public spending “should” continue to grow and at some point will be found with a limit of financing because their sources will be exhausted: the IEES, the rising price of oil, the use of international reserve. And while the country has debt capacity, the sources do not exist for actions, such as the forced 2009 debt repurchase. Then we can fall into a vicious circle or stay on the current uncertain plateau with little dynamics which is not very encouraging….

So there are concepts, approaches and magnitudes which have to be redirected…

“How can you know that the poor aren’t credit

worthy if you have never tried?”

Muhammad Yunus

Dra. Ana Kessler Executive Director – Kessler Office

Argentina

The term “microfinance” refers to the provision of financial services to people in poverty or low-income customers, including consumers and self employed in a sustainable way 1. Big mistake is confusing the microfinance with microcredit. The microfinance are aimed at a wide range of financial needs of people in poverty, then covering the microcredit, that are small loans to humble people who don‟t qualify for a traditional bank loan. The MSMEs (micro, small and medium enterprises) constitute a major portion of the economic activity. In most countries of the world, more than 90% of businesses are MSMEs. Almost every big private business started this way. The micro enterprises employing up to ten employees and are characterized by the leading role of the owners, that in general, know the business but have no knowledge of the market overview. Their main strength are the easy way of adapting to changes (who decides is the same that executes) and its proximity to the consumer. However they suffer the dependence to reduced markets, inefficiency at costs level and difficulties to accede to information, to new technologies and the modern management techniques. The

result of the previous is that only one from five survives in the lapse of a year and only 10% after two years. Many of these problems can overcome through the support of public private organisms to obtain access to credit, technology and knowledge. There are essentially three types of policy measures which in principle can be used to increase the financial system‟s credit of MSMEs. A first type of measure is the one that subsidize the financial institution to cover the additional costs involved in lending to MSMEs. Others are those which reduce the costs for collecting information and allow the banks a better identification of the MSMEs with lower risks in relation to the expected returns. Finally there are those that establish specific funds for microfinance. However, the traditional banking technologies haven‟t given effective answers to serve the poorest micro entrepreneurs sectors. Several banks have adapted their procedures, but are still in an incipient stage. This raises the need to implement a specific regulatory framework that promotes the development of this market. Here we find two types of regulations for the banking system: reasonable regulations must be applied to entities that take deposits from the public to protect the financial system and small depositors of each institution in particular. There must be a regulating institution to observe and control the solvency of the non reasonable regulating institutions that take those deposits. The non reasonable regulations are linked to the institutions‟ proper functioning, oriented to promote the development of that activity, the transparency and avoid fraud. An example of the above is establishing maximum interest rate. Breaking paradigms: Muhammad Yunus

Contrary to popular belief, 2006 Peace Nobel Price, achieved innovations not through technological advances, but through the breaking of many established paradigms in the traditional banking sector. Its result was the creation in 1984 of the GrameenBank or “bank for the poor”, and its purpose is in awarding small sums of money without any guarantee. In twenty years he achieved reaching to 30.000 villages helping 12.000.000 million people. Paradoxically to thought, as destroying the mainstream ideas of “how to effectively manage a banking business”, the GrameenBank has the lowest percentage of bad loans in the world: only 2% (well below any conventional bank). Some of the first clients of the bank, thanks to the microcredit received achieved leaving behind the extreme poverty, allowing their children go to school, and some of them, even to University. Nobel Prize continues: nowadays he makes public the creation of “social enterprises” to channel the altruistic aspects of human being. Still governs the principle of maximization of the firm‟s profits but changes the business objects: it contributes to social well-being, and as an example, Grameen Danone, produces yogurt with nutrients to eliminate child malnutrition. Microfinance in Latin America

According to the Global Microsoft environment for microfinance 2, this studies the regulatory framework, the investment climate and institutional development; Peru and

Bolivia lead the global microfinance index. From the first ten countries, six are Latin American and Caribbean (Peru, Bolivia, Ecuador, Nicaragua, Colombia and El Salvador); two are from Asia (Philippines and India), and two correspond to SSA (Ghana and Uganda). The countries occupying the first places of the index share a series of characteristics. In first place, their governments seek to promote the market development through favorable policies for microfinance activities. Even if in those cases in which the sector doesn‟t have specific laws and regulations, the more general regulatory framework that rule microfinance allows the industry to progress. Those countries governments tend not to promote initiatives or programs with large scale public financing, and in those cases where there are such programs and financing, these, -at least for now- have failed to displace the specialized financial institutions, the NGO and the cooperatives that provide microfinance assistance. The previous makes the degree of competition in the market and the product and service range offered by the institutions in these countries are attractive. In other cases the governments have created specialized units of microfinance within their central banks, with the intention to help developing the sector. Another key point for microfinance development is the access to the banking financial services. According to the Latin American financial Federation there is the need for the country‟s regions to improve the quantity and quality of the information over the access to financial services of the population. In 2009 regional summit of Latin America and the Caribbean was held about Microcredit in Cartagena (Colombia) with the participation of prominent figures such as Mohammed Yunus, Indonesia‟s President and Dr. Alejandro Toledo (former President of Peru). More than 900 delegates of 50 countries assisted to the Summit. The above, included managers of institutions and microfinance nets of the region Several topics were discussed within this summit, such as the need to overcome regulatory and legal barriers to capture savings in the context of the financial crisis affecting the world and concluded with the launch of Microfinance Transparency, an initiative to enhance transparency in determining the interest rate for microfinance institutions and their customers worldwide. Microfinance in Argentina The global microfinance index gives our country a score of 30.8% over 100 much lower than other countries of the region such as Peru (73.8), Bolivia /71, 7) or Ecuador (59.7). However we can remark a raise in the score of 155 regarding to 2008. This improvement can be explained through different factors. The 2006 Microcredit Law assigns a fund of one hundred million pesos to the Ministry of Social Development (Plan “Let‟s do it”) to be distributed among institutions (Nonprofit Corporations, Cooperatives, Mutual Societies, Foundations, Institutions of the Indigenous Community and Mixed Governmental Organizations) engaged in turn to deliver microcredit to poor people This fund will be channeled according to the project, through the allocation of grant funds, loans and guarantees on money, as well as full or partial subsidy of interest rates, operating expenses and technical assistance to institutions. The objective is promoting and regulating the development of microcredit institution and thus stimulate the comprehensive development of social vulnerability situation.

The SMSs Secretary also works through different assistance plans for productive microenterprises, leader‟s training of cooperatives and mutual‟s and credit programs. The MSMEs program was approved in 1992 and developed operations in the period December 1993 to December 1998. Its main objective was to expand access and coverage both of credit as of technical assistance to Argentinean micro entrepreneurs, and improve their employment and income levels through productivity increase in activities such as production, marketing and provision of services. In that sense, projects were fund for the acquisition of fixed assets, provision of working capital and provision of consulting services for technical training. The complementary objective was the institutional development and strengthening of intermediary bodies engaged in providing training and technical assistance to MSMEs. The IDB loan amount was US$ 45.0 million, which added to the counterparty of local resources was US$ 15.0 million, gave a total of US$ 60 million for the MSMEs. In 1998 an agreement was made with the Nation Bank for a financing and technical assistance program called Micro Nation for US$ 200 million. In 1999 an IDB loan of US$ 100 million was approved for the implementation of MSMEs II program which started working in 2002 under the name of Global Credit – IDB Program. At Estate level we can also name a program called Pro-Huerta of the INTA addressed to the population in poverty, promoting a more balanced diet of small scale self production of fresh foods by their recipients. Recently, various private agents began contributing to the Argentine Microfinance. The ANDARES foundation proposed to accompany and support the Microfinance agents so they can serve a greater number of Micro Entrepreneurs in poverty. RADIM is the first second grade organization dedicated to the development of Microfinance. The Supervielle Group created CORDIAL to give access to quality financial services in an efficient way and in massive scale to segments which are at the base of the pyramid, taking in account the social impact. The BBVA Foundation ‟s mission is affordability as a tool for people‟s better future. Women 2.000 is a NGO that promotes the communities development of neighborhoods with small economic resources through strategies that promotes social, cultural and economic progress. The Provincia Bank created Provincia Microenterprises to address the unmet needs of those entrepreneurs that haven‟t got access to quality financing services. In April 2008, a seminar took place entitled “Microfinance: Toward financial inclusion of everybody”, organized by the IDB-FOMIN and Women‟s World Banking which was attended by IDB‟s president, Luis Alberto Moreno and Princess Maxima Zorreguieta, who attended as member of the Advisory Group of the United Nations Financial sectors. She made clear her opinions about the Argentinean Microfinance state. “It‟s very important that governmental policies are oriented to strengthen microfinance sectors and not use them as social political instruments. Not only is it important to develop the ability to access credit but also to save safely”. She also added that this country needs to review topics such as the VAT effect in microfinance institutions and limits on interest rates to be able to develop the sector” Also warns of the risk involved in the “imposition of limits on bank interest rates”. The Princess questioned that in Argentina the financial system “still can‟t be called accessible”, and therefore “governments should promote an open and competitive market”. We must emphasize that it isn‟t enough just getting credit available only for microenterprises‟. The formation of multidisciplinary work teams through institutions,

both public and private, that provide support to these projects initially, is fundamental to make all this possible. There is also the need of changing people‟s mentality at social level to encourage the entrepreneurial spirit of the poor. They must be aware that a grater wealth is possible, that you can aspire to much more than a social plan and that if one doesn‟t take the first step, no one else will do it for you. There are many examples of successful social projects along the country and we must find a deeper entrepreneurial spirit that takes roots in Argentinean society. “If you want to feed a man once, give him the fish: If you want to take hunger away forever, teach him how to fish”. 1 Ledgerwood Johanna, Microfinance Handbook: an Institutional and Financial Perspective. Washington DC: The World Bank, 2000

2 Economist Intelligence Unit, ,Tthe Economist, 2009.

Transparency and Accountability

Anunziatta Valdez Larrea

With the Organic Law of Transparency and Access to Public Information (LOTAIP) adopted since May 18

th, 2004, Ecuador gave an important step in building a transparency culture and strengthening the

active participation of civil society. Therefore, the Citizen‟s Participation Corporation (LOTAIP, in Spanish) is conducting since 2005, an innovative project called “Monitoring the Public Administration” which is currently in the fourth phase. The program‟s objective is improving the levels of transparency in the management of public and private institutions that receive State funds through the application and enforcement of LOTAIP. To the above we must add the conformation of citizen‟s forums, the measurement of public perception of provided services by these institutions, participation and public pronouncement of the citizenry on issues of interest through impact actions, and compliance monitoring to send annual reports to the Ombudsman about the proceedings that has continued to process the resources requested access to information for citizenship. This project is implemented in agreement with the Ombudsman, responsible institution to monitor compliance with the LOTAIP and punish those responsible, if they do not. It also has the support of the Universities such as: the Catholic of Guayaquil, the Pacific, the Polytechnic and University of Guayaquil. As a result of the mentioned activity, 7 of the 18th monitored have reached a 100% of transparency and the remaining has improved their level of fulfillment.

However, transparency goes beyond compliance with a website, since it also implies that public bodies are open to providing citizens the additional information they require without limitation of any kind, since the only thing which cannot be delivered to citizenship is classified information, previously declared as such and regarding to aspects that have to do with national security. Transparency produces more democracy, greater effectiveness and efficiency on the public, reduces corruption and abuse of power. It‟s the most powerful way to increase the voice of citizens in formulating policies, generating more information, since without it there isn‟t the possibility of citizen‟s advocacy. Transparency implies that the public must be of public knowledge, and that public officials see themselves as stewards of the public and not as its owners, therefore, they cannot limit or expand the information. Accountability responds to the same principle of transparency, and is expressed by the obligation of public officials, elected or of self removal, as well as the legal representatives of public or private companies that handle public funds or carry out activities of public interest, to inform the public about compliance with the proposed plan at the beginning of its management. It must be based in the fulfillments of objectives and strategic plans, processes of public recruitment, of declarations emanating from the Function of Transparency and Social Control or the State Attorney, compliance work plan, in cases of popular election of authorities. For their part, private companies that manage public funds must submit annual balance sheets and levels of compliance with labor obligation, tax and compliance objectives. Accountability, according to the law of citizen participation and social control in force, is mandatory for the mentioned authorities, at least once a year… However, accountability is often interpreted as a simple recount of activities. Moving from a culture of secrecy and subject to the public on the criterion of “national security” that has ruled for centuries, to a culture of transparency, isn‟t easy. It involves shifting from a totalitarian and concentrator model to a social state of law, where the highest duty of the State is ensuring compliance with citizen‟s human rights. As it usually occurs, it is a challenge that everybody must assume, if we want to live a real democracy.

Responsibility Level

Dr. Mauricio Rodas Espinel 1

Several analysts have evaluated, with varying degrees of seriousness, the work of the current government in diverse fields. These diagnoses have yielded results in favor and against what has been done by President Rafael Correa, but in many it has been clear that the ideological leanings left or right of the authors have weighed heavily in the interpretation of reality In order to offer a different perspective of analysis, transcending conceptual disputes between labels, such as left and right, hardly attuned to the new circumstances that the world is living, I have allowed myself evaluating the regime‟s management according to their level of responsibility. To that effect, I used the Model of Responsible Government (MRG) whose promotion is one of the objectives of Ethos Foundation, an institution which I direct from Mexico. The MRG is a set of parameters that make up a Government management aimed at the welfare of the population and development. It consists in one hand, of fundamental principles such as defending the democratic values, freedoms and human rights, and on the other hand, of criterion for the design and implementation of public policies, in the economic, social, environmental and civic participation fields. These principles and criterions were formulated based on the main consensus generated in the academic sector at international level and observation of best governance practices in various countries, representing the antithesis of those measures which aren‟t oriented towards the collective progress, that are populists or authoritarian regardless ideological origin that can be attributed to them. The Model pursues two purposes. First to be used as a framework for public policy analysis, so that they can be evaluated, not according to whether they are liberal or socialists, revolutionary or not, but what can be more important for citizenship; i.e. that they so much adhere to a set of parameters aim to responsibility. Second, provide a framework to governments for their decision-making processes.

The table bellow contains a summary of the analysis of ten fields of the government of President Correa during his three and a half years of management according to the parameters of the MRG. The objective isn‟t only for obtaining conclusions about his specific successes and failures, but also projecting a balance sheet with respect to how is the regime in terms of responsibility.

Government Actions 2007-2010

Main Results Does it fulfill the MRG parameters?

Concentration of Power and Threaten

Against Fundamental Rights

*Recurrent interference of the President of the Republic in the decisions of other State Functions. *Violation to the right to dignity through a violent and aggressive Language (only in the Saturdays Connections in 2009, the President Raised 171 insults. *Violations of freedom of expression. Between 2006 and 2009 the qualification of Ecuador in the Index of Press Freedom by Reporters Without Borders, worsened by almost 25% Dropping from place 69 to 84 in this International Ranking.

Appropriate policies in education and health as

well as for the development of people

with disabilities

*Increased budgetary support to the educational sector. Successful programs of text, school breakfast and lunch. The Tests Being Ecuador of academic return are an important step to evaluate educational quality and eventually raise it. *Improvement in the care of public hospitals and equipping themselves with new technology. *Effective care for people with disabilities, through initiatives such as Manuela Espejo and mechanisms to ensure their employability. The actions developed by the Vice-Presidency, place Ecuador at the forefront of this field.

Failure to boost productivity and

employment generation

*Despite having the greatest oil boom in our history, the average economic growth in Ecuador, between 2007 and 2009 was only 3.1%, lower than our neighboring Peru (6.5%) and Colombia (3,4%) 2 *Unemployment rate in Ecuador was increased from 6.06% in November 2007 to 9.09% in February 2010. 3 *The trade balance swung from a surplus of 1.449 million dollars in 2006 to a deficit of 301 million in 2009. 4 *While in 2009 Colombia and Peru received 7.021 and 4.760 million

dollars of direct foreign investment respectively, Ecuador attracted only 312 million. 5 *In the 2009 Global Competitiveness Index according to the World Economic Forum, Ecuador is ranked 105 among 135 countries. In contrast, Colombia was located in place 69 and Peru in 78.

Failure in the fight against insecurity

*The homicide rate per 100.000 inhabitants, increased from 17.8 in 2006 to 18.7 in 2009 (the world average according to the UNO, is 8), while robbing people in the same period increased by about 25%, from 11.427 to 14.221. 6 *According to the Peace Index, developed by the Institute for Economics and Peace, and considers factors such as violence and crime in 1444 countries worldwide. Ecuador was the South American country with the worst ranked performance between 2007 and 2009, dropping to place 109.

Positive policies on housing

*The programs My First Home, the Migrant Bond, Rural Housing Bond, Urban Marginal and Title to Property Bonds, have supported more than 210.000 low income families for the construction, purchase, remodeling and home legalization, thus contributing to a key sector in the country‟s social development.

Lack of commitment to the anti corruption fight

*Investigation hasn‟t been driven and less the clarification and eventual sanctions against a number of complaints (Coca Codo Sinclair case, Fabricio Correa‟s contracts as well as the allegations against staff members which he made, the government‟s advertising contracts, among others). The Executive has also influenced to block inspection processes in the Assembly, such as former Minister Chang and the District Attorney Pesantez. *Abuse of emergency decrees by the regime for public contracts without bidding process, is a breeding ground for corruption and opacity. *In the Corruption Perception Index of 2009, of International Transparency, Ecuador is located at the site 146, joined with Paraguay and Venezuela, the group of Latin American countries

rated worse.

Environmental Progress

*The “Forest Partner” program in line with similar initiatives successfully implemented in other countries, helps protecting native forests, reduce CO2 emission and improve the living conditions of the rural population. Until 2009 more than 40.000 people had the benefit, keeping 417.000 Hectares of native forest and moorland, 8. Although actions such as Forest Partners, the boost to CDM (Clean Development Mechanism) and the recent promotion to bio fuel still not reach a significant impact, they represent progress in the right direction.

Advertisement Saturation

*Ecuador is the country with the highest number of national advertising networks in Latin America. Between January 2007 and March 2010, there were 707 national TV and/or Radio advertising networks (without counting the ones on Saturdays), with a duration of 6.164 minutes. 9 With the exception of Ecuador, Venezuela and Nicaragua, hardly a country in the region, overcomes 8 advertising networks per year. Such use and abuse in our country extends beyond what they should meet, that is, reporting on issues of real importance, to become an instrument of propaganda. *In addition, the governmental advertisement through TV, radio, newspapers, internet, poster boards, brochures and other printed materials have been overwhelming and at a level never seen before in our country. The billionaire‟s public resources that are used to finance this huge propaganda are inconsistent with the country‟s poverty reality, and even worse if used with clear political and proselytizing purposes rather than strictly informational.

*In the last 3 years, Ecuador received approximately 18 thousand million dollars for oil income, a similar figure to the obtained in the previous years (2000-2006) cumulatively. 10 Part of these resources have been used in a positive way, but an important

1 General Director of Ethos Foundation 2 Sources: BCE (Ecuador) BCRP (Peru) and DANE (Colombia) 3 Sources: INEC 4 Sources: BCE (Ecuador‟s Central Bank) 5 Sources: CEPAL

6 Sources: INEC and Citizen‟s Security Plan. 7 Ministries of Urban Development and Housing 8 Environmental Departments 9. Sources: Communication National Secretary 10 Sources: CORDES. 11 Sources: CORDES: 12 Sources: Secretary of the Treasury of Ecuador, Colombia and BCRP (Peru). 13 Sources: CORDES and SENPLADES. 14 Sources: INDEC (Argentina) and INEI (Peru).

Wasteful public spending

percentage hasn‟t had that luck. *Examples of excessive wasteful spending, is the increase of bureaucracy. The current government has doubled the number of ministries, with all the costs that this entails. Between 2006 and 2009, the total number of public servers in the country passed from 360.000 to 454.000 (an increase of 26%) *Besides the oil resources, the government used the billionaire funds of the reserve that it inherited from previous governments, such as CEREPS and FEISEH: However all the previous hasn‟t been enough to satisfy the spending appetite of the regime, plus having taken the IEES resources which also failed to cover the entire deficit for 2010 that exceeds 4.000 billion dollars. *In 2010, the deficit related to the GDP is 7.1%, much higher than the Colombian (4.5%) and Peru (1.6%). 12

Poor performance in fighting poverty

*While between 2003 and 2006 the urban poverty was reduced by almost 13 points (from 38.7% to 25.9%), in the period 2006-2009 it only decreased 0.9% (from 25.9% to 25%) despite the extraordinary oil incomes12. In contrast to this modest result, Argentina reduced its poverty during the same period (2008-2009) in more than 13 points and Peru in 10 points. 14

Fiscal fragility about work bonds

Ec. Jaime Carrera Director of Fiscal Observatory Policy

The economic model is based on the prevalence of government action over the private, in this context, public investment as a boost to economic growth and employment generation. These last three years private investment in GDPs terms decreased from 17% to 12% and the public rose from 5% to 12%. However, the 2008 high economic growth, as a result of oil boom, was reduced to 0, 3% in 2009 and for 2010 it‟s expected no more than 2, 5%. While in 2006-2009, total public spending rose from 26% to 46% of GDP. Poverty remains about 35% of the population, unemployment and underemployment afflict 60% of the EAP. In 2009 public investment spending could be sustained due to an expensive credit with Petro China for $ 1.000 million, the placement of IEES bonds for $ 550 million, the FLAR‟s loan for $ 480 million, the IMF‟s gift for $ 402 million and the use of $376 million from the Central Bank‟s reserves of gold revaluation. In 2010, due to mistrust in the State model and the adopted economic policies, the options for financing a potential deficit of 8% of GDP are used up. The high country-risk of 963 points to June 18th, one of the highest in Latin America, reflects the closure of markets for external credits. Internally, the placement of domestic bonds hasn‟t had acceptance. Under governmental pressure, the IEES is the only one that bought bonds for $ 550 million. Until May 2010, of $7.500 million foreseen in the budget for public investment was carried out at just 27%; 60% of current expenditure was for salaries and no payment to the IEES to the value of 40% of transfers for pensions of retirees. There is evidence of inability to sustain public spending and investment levels that support the model. Fiscal illiquidity is latent despite oil prices in the first five months of the year exceeded the $70 per barrel, a level above $65 considered in the budget. The possible payment of public works with government bonds reflects the fiscal fragility and untenable situation. Therefore, it becomes more uncertain for private investments plus the lack of confidence on the country‟s economic feasibility.

Freedom and Democracy

Dr. Miguel Valarezo Tenorio UTPL’s Researcher Teacher

Fear can be our worst enemy or our best allied if we know how to handle it. How would life be for many people if they had been afraid to make important decisions? Most people don‟t live the life they want to live and each day or their lives reflect the life they wouldn‟t want to have. Fear is more common and above all has greater impact on people‟s lives and is the fear of freedom. There is fear living outside the “social structures”, without a “good job”; afraid to live life in an “unconventional way”; fear of changing activities. There is fear of not having a “defined schedule” and set rules activities on how to live each day. From an early age each individual is taught to think and experiment feelings that might not be theirs. If the early education doesn‟t achieve the above, the social rules will do it. In shaping what society provides to human beings through social rules, it prepares the individual through his character so that it approximates the common social character. The more a human being has freedom, the more it turns him into an individual; the dilemma of joining the world becomes greater through the conditions that society places upon him, or seeks some way of security. What current society presents us as freedom is only centered in what it wants from us, how to work, produces and get around in society. It‟s not whether we are destined to be slaves of our society, but the way of getting out of it, involves a series of internal conflicts related to society. Fromm understands individualism, not as an insurmountable vice of modernity, but as most social innovation. Although freedom implies responsibility, not exercising it means leaving a space to authoritarianism and others decide for us. As Erich Fromm teaches us, democracy doesn‟t save us from the risk of totalitarianism. The more freedom people have, more isolated and lonely they feel; fear builds up and is most likely to arise in them the desire for someone to lead them: a religious, cultural or political leader. This is the way our society starts accepting domination processes which contradicts the essential democratic values. Never as in the present moment, have democratic mechanisms been manipulated so skillfully to dismantle democracy itself. This means that domestically we are building a tyranny in which the institutions, the division of powers and reliable voting systems, have been dismantled in a slow, progressive and systematic way. From this point of view, populism and the construction of a media image, conspire to sell the idea of a democratic process where the masses have the power through the exercise of the ballot but the election of rulers becomes at the same time, delivering a blank check that allows them operating the public at the discretion of a small elite, only loyal with the clientele attitude of the leader.