I’ll tell you who you are

There is a saying “Tell me who you walk with and I’ll tell you who you are”. This is what is happening in Ecuador. With whom is our country walking? With Venezuela, Nicaragua, Iran, Bolivia, Greece land, etc. What do these countries represent for the whole world? They carry with them: arrears, shutdown, poverty, in short, no future. I think that it would be worthwhile to begin emulating countries such as Chile, Brazil, Panama, Singapore, Switzerland, Peru, etc, whose message is: the future in action, that is, prosperity, improved living standards. Even more, in the penultimate day of February, Chile was beaten by a catastrophe and in a week, was able to rearm enough infrastructures to sustain basic operations. The constructions standards reflected efficiency because the geology and drainage –by changes in climate – continuously change and perhaps with this earthquake their standards will be reset. Chile is a united country facing a challenge which nature has given them and because they have taken providences doing things well, they have “a piggy bank” allowing them making solutions. Its reaction was immediate and organized. While they have savings for emergencies we have spent them in an inefficient way, turning from blue into red. It’s a country in which “crisis” and opportunity is the same thing. While Chile talks about Chile, in our country the government creates confrontations among regions and races making believe sometimes that there would be several countries inside one. Lastly, we are shocked that politicians continue demonizing certain issues like that “corruption is part of neo liberalism”, and it’s time for them to not repeat it again. Ecuador has never had neo liberalism, while Chile has; even more, with Chile’s positive example neo liberalism gets an A+. So that corruption neither comes from neo liberalism nor the new populism but from a tiny group of people which in the past and currently have taken control of the republic, torment the civil society and depredate it with the usual corruption. ¡The civic revolution is nothing else than the destruction of citizenship! Eng. Joyce Higgins de Ginatta

Guayaquil, February 2010

Why did Sebastian Piñera win Chile’s Presidency?

Dr. Julio Dittborn Chile’s Deputy There are many ways to answer the question posed by the title of this article. A supporter of Piñera, like me, would obviously use different arguments to those of an opponent. That’s the reason why answering this question, the best option is using Piñera’s own words. In an open letter to all the Chileans, published at the end of 2009, the today elected Chilean President summarizes briefly and accurately their positions and proposals which justify the need for a change of Government in Chile. As we now know, the mentioned change was done through elections the past17th of January, in an impeccable civic journey which will be crystallized on next 11th of March. Here are some of this open letter paragraphs: “More than 100 years ago, as Chile was ready to celebrate its first centennial of independent life, Enrique Mc Iver, from the stands of Santiago’s Athenaeum, delivered a speech that remained emblazoned in our history. The prominent politician then complained: “I think we’re unhappy”, adding: “Comfort has turned into austerity”; the energy in laxity”; trust into fear”;”Expectations into disappointments”. Why did it seem that Chile had stopped it’s powerfully flight that the Republic had started taking? He wondered. A little more than a century after, and near to celebrating its Bicentennial, similar questions come to our minds: What has happened to the promise to arriving to 2010 as a developed country free of poverty? Where are the solid growth and the offers to promoting innovation and entrepreneurship? What has happened to Chile in which offenders terrorize day after day on streets, squares and parks? Where has been left our admired tradition of efficiency and probity in public service? When it was that incompetence and corruption poisoned it? When and why did Chile lose its leadership? Why do we have an unemployment which affects almost 750.000 fellow citizens? The answer to all these questions is one: The Conciliation which has ruled us in the last 20 years has been exhausted; it lost the ideas, the strength and the will. The Conciliation is not the same as yesterdays. Yesterdays Conciliation had a mission, ideals, principles, projects and unit. It was a valid option and certainly fulfilled an important role. However, 20 years in power, wrinkled its face and soul. Where mission was, today there is only the desire to cling to power. Where projects were, there is only improvisation. Where principles were, opportunism prevails. Just watch as many of its member’s behaviour. Those which were Democrats have no problem agreeing with communism. Those who embraced the values of Christian humanism, today surreptitiously open the doors for abortion. Those who fought for free elections are now champions of electoral intervention. The deep sense of the coming election is clear. Chile will opt between the past and the future. Chile must choose between keeping stagnant or open wide its doors and windows to let in fresh air and for the sunlight to shining and illuminate them.

If Chile opts for the past it will have more of the same. Einstein said it best: “Do not pretend that things will change if we keep doing the same things”; and more of the same, we already know what it means: unemployment, crime, corruption and stagnation. In other words: more frustrations. If Chile opts for a change, we will have a better future and more hope for everybody. Just as in 1988, after 17 years of military rule, the change was necessary to open the doors to democracy, the change is urgent today to open the doors to progress. A new majority committing to something as simple and profound as the government’s restoring the culture of doing things well; the culture of doing things with honesty and thinking about the people; the culture of doing

things with urgency and immediacy. The change we wish goes far beyond the replacement in the government of a political group by another and that everything remains the same, as in the “El Gatopardo” of Lampedusa. Our target is really changing Chile’s way to governing. Let’s see what the changes must be. Firstly, the way of exercising the Presidency of the Republic. The nowadays problems and challenges require an all terrain President, one which works 24/7. We need a President who rolls up his sleeves. Takes care of problems and leads the solutions. In the government for the Conciliation for the Change, for example, the responsibility of winning the battle against delinquency must be assumed by the President and not by a Secretary. Do not fool anybody and for the criminals, bear this in mind. The Government for the Change won’t be neutral in this combat. It will always be aware of the victims, of battered women, those living in fear in their own home or businesses and must be gathered just as the sun sets. A full force of the law will be applied to those who to this day, almost always stay unpunished, walking as if they were in their house, streets, squares and parks, acting without God or Law.

A second aspect of this new way to governing promoted by the Conciliation for the Change refers to the end of the political quota. The Estate will no longer be war booty nor will be captured by political operators. The jobs will be allocated by capacity and experience, not for favours or protection of a chief or political godfather. We will respect, value and promote hundreds of thousands of real efficient and caring public servers. No one will be asked to present its militant identification card, but everybody will be required to presenting a resume of excellence, honesty and dedication to public service. We will govern with the best; with a real national

selection and the rule will be simple: the one, who doesn’t show efficiency, will go home; the one who is dishonest must confront the justice. Third, we will reintroduce the culture of making things right for people and not for television news. No more opening ceremonies of hospitals that are not ready and whose patients are false. No more non working railway opening ceremony which only seek winning votes for election times. True public service is the one serving the citizens and not political parties. Fourth, we will impose the sense of urgency. If there is place in which time can’t be wasted, it’s in the government. Each lost day is another day of unemployment and pain for millions of Chileans and their families. For each lost day the waiting lists in hospitals increases. For each lost day, millions of young people don’t receive quality education which they deserve and need. For each lost day more than a thousand new Chileans are victims of crime. There are each day more kids and young people destroying their lives because of drugs. Each new day a growing number of Chilean women are victims of domestic violence. Each lost day is a day which is gone and won’t be recovered. Therefore, things must be done well, in an honest and urgent way. It isn’t only a political problem, but mainly a moral one.*

Fukuyama, poverty and income distribution

Dr. Manuel Hinds Former Minister of Finance of El Salvador Francis Fukuyama, author of “The End of History” and “The Last Man”, recently gave a conference in El Salvador in which he noticed a high degree of poverty, an uneven income distribution, and that the country will not have a viable democracy until these problems are solved. As a solution, Dr. Fukuyama recommended that the country made a pact that set as its objectives the reversion of inequality and social exclusion. Dr. Fukuyama’s ideas where received by many people in a highly original way, as the sign of change in the ideology of the right wing. The truth is that they aren’t original, not from the right or the left wing. There are two main problems in Dr. Fukuyama’s ideas; however both are linked to the emphasis that was given to inequality rather than give it to poverty reduction. In first place, he didn’t say how inequality could be reduced when distributing the income. To tell what should be done, anybody can do it, but the important part is the knowhow. Secondly, a moment of reflection shows that the main objective must be reducing poverty, and not inequality, because in a great proportion of the taken decisions a conflict could rise among these two objectives. Let’s suppose that there is an economy in which everybody has the same income (low but even), for instance, collecting and exporting coconuts. Let’s imagine that among the population, somebody decides to start a business to extract the water from the coconuts and make a drink mix, which can sell at three times the profit provided by the coconuts, even if you pay people twice the wages currently earned. This project would increase the country’s production, lowering substantially workers poverty, but worsen income distribution because the employer would earn three times while the workers would earn only the double. This situation would happen in any investment in which the investor and managers earn more than the workers. Should investments stop so income distribution doesn’t worsen? Some people believe that although conceptually there is a clear difference, in reality establishing as a national goal the elimination of the income gap and establishing it as poverty elimination, is the same thing; and the fact of attacking the first and defending the second position is very difficult because in practice the two tend to produce the same effect. Taking this position is ignoring the most important lessons of XX century, in terms of social development. It’s ignoring the lessons of three of the modern founders of modern socialism such as Felipe Gonzalez from Spain, Tony Blair of the United Kingdom and Deng-Xiaoping of China, who taught the word when they transformed the concept of social policy that generated poverty in seeking to eliminating it. The innovation of these left wing politicians has been fundamental. Since Marx’s times, the classic socialism (in its time was the name of what is now called communism)

established as its objective reaching equality of wealth and income. The only way to do this is that nobody has anything, which is accomplished with which the estate becomes the owner of all means of production –i.e. around the capital. The Soviet Union, China, Vietnam, Cuba and other communist countries adopted this objective. The most dramatic case to illustrate the cost of making this goal and benefits of change for poverty reduction is given by China. During Mao’s era, the ideal for equality was intensely searched to the point in which the clothing was made uniform and worn by all Chinese (men, women and children). China didn’t achieve total equality. At the end of the 60’s, the index of economic inequality in China was 0.16 in the Index of Gini, in which Zero is the absolute equality and One, is the absolute inequality (one person has it all and the rest, nothing). But reaching such a low index (developed countries, which are the most egalitarian are between 0.3 and 0.4) was a milestone for the communist government. But this achievement effect was devastating for the country. As you can see in Graphic No. 1, it can hardly be poorer than China was in 1981, after 30 years of seeking to reduce inequality in the communist regime. In 1981, 97.8% of the population earned less than 2.00 dollars daily and 84% less than 1.25 dollars daily, both levels with very high indexes of poverty.

Graphic No. 1

Graphic No. 2

It was in those days that Deng-Xiaoping leaded a group of reformers of the Communist Party, to change China’s economic and social objective, of searching equality and wealth, this is, elimination of poverty. His simple sentences changed the psychology of China: “Poverty isn’t socialism. To be rich is glorious”; “That some people become rich first (to lead economic growth); “When thousands of our Chinese Students which are studying abroad return to China, you’ll see China’s transformation”. Following one of his phrases: “Seek truth from facts” in the two graphics you can see what happened with the change of goals. Graphic No. 1 shows how economy’s growth increased rapidly. The economic stagnation of communism had been terrible. In 1961 the GDP per person was of 552 dollars, exactly as the one in 1913 (48 years before). This stagnation in poverty was the cost of targeting income equality. Secondly, note in Graphic No. 2, that the Gini inequality increased substantially, from 0.16 to 0.45 (to take an order of magnitude, note that the flag of El Salvador is 0.49). In third place, for 2005, the percentage of population with income less than 2.00 dollars daily had dropped from 98.7% to 36%, and the ones less than 1.25 dollars per day, from 85.4% to 15.9%. This is the modern and positive socialism. Deng-Xiaoping wasn’t the only socialist leader who was aware that the socialism of yesteryear, focused in reducing the income inequality only lead to misery. Felipe Gonzalez in Spain and Tony Blair in England, opened the way towards modern socialism, focusing on the creation of wealth in economy and the human capital investment in the social area. Believing that it’s the same thing looking for a decrease of inequity and poverty reduction does not understand the fundamental role which these world leaders had in modernization of socialism. It’s not being aware of the essence of the problem which they understood and solved so clearly. What is called the China’s miracle isn’t a miracle. It’s the result of throwing into the wastebasket the objective that the country had pursued for decades of communism: eliminating the income inequity –for a more rational one-, reducing poverty and enrich the country. Hopefully the right wing won’t commit the mistake of adopting an

objective which isn’t rational and that the great leaders of social democracy already demonstrated that only led to misery. It’s obvious that only an envious would prefer remaining in poverty so that no one earns more than he/she. Only an envious would dare saying that China should have stopped investments which has almost eliminated its poverty because as a result some Chinese have become wealthier than others. Thus, we first need to define that what we want is to decrease poverty, not reducing inequality. The next step is finding a way to reducing poverty. Being education the source of all wealth, it’s clear that one of the measures we need to strengthen is to give the poor access to better education and health. This should be a pact like the one Fukuyama, like many others, has proposed for the country. The problem is, while the population listens to populist words and avoids thinking in a serious way about the country’s realities, a serious analysis about the growth problem, won’t be sexy for politicians. If this continues, Fukuyama’s visit to Latin America will be added to the long list of visitors which have noted that the region isn’t developed, that there is poverty, that income distribution isn’t equal and that Latin Americans should do something about it. Anybody can say this.

Theory of Legal Certainty

Dr. Jorge Zavala E.*

1. Certainty in the Constitutional Set: Budget and Management of the Law.

Our Constitution begins stating that providing security for the effective legal disposition of human rights and fundamental freedom of women and men is a priority duty of the Ecuadorian State and is textually prescribed as follows: Art. 3 – The Government’s prime duties are:

1. To guarantee without any discrimination the effective rights established in the Constitution and international instruments….to reiterate:

Art. 11.9 – The main duty of the State is to respect and enforce the rights guaranteed in the Constitution. I.e. that is a primary duty of the State (the highest precedence) to ensure the effective exercise of fundamental rights enshrined in the Constitution, the absolute respect that really consists of the fundamental rights of the individual. The Constitution requires the State as a whole, the duty to exercise positive actions aimed at achieving two clear purposes: a) ensure the possession of fundamental rights; and b) to develop and implement programs of permanent action, containing measures for people to be able having effective and full possession of such rights. Obligations that our Constitution creates in the development of article 11 of the previous mentioned. The constitutional provision establishes first a clear link of all public authorities (including the judicial) in a direct and immediate way, to the observance of fundamental rights. Consequently, it must be done without subjection – for the concretion in everyday life – to the promulgation of an Act or any other legal norm. There is no intermediary among the constitutional statements and its application, whereas, it’s direct and immediate. It’s easy to observe that our constituent links legal security of Ecuador’s people to human rights and fundamental freedom, with its effective and immediate legal disposition, subject to Law treatment, with the imposition of the pro liberates interpretation, with the prohibition that even that Law restricts its essential core. That is, the budget, the basis, content and purpose are legal security’s goals. Then, Ecuador surpassed the stage where the concept of legal security was limited to the rule of legality, the validly of Positive Law as sufficient for its important validity, although not enough. In effect, the empiric of the Law, the written Law has been

transcendent for an effective legal security. However, the Anglo-Saxon legal systems demonstrates that the above mentioned can also be achieved by applying the legal precedents which substantially, follows the English North American and The Scandinavian country’s system, notwithstanding the existence or non-written Law. On the other hand, it’s of great importance to follow the formulation of Elias DIAZ when he differences the improperly called legal security that is based on the simple legality , legal security that is only true based on the legitimacy of that law, which was born of their establishment and democratic exercise, but above all the assumption of fundamental rights and freedom enshrined in contemporary historical status of the more developed societies and the conquest of which is irreversible making legitimate its ignorance 1. But in addition, in our constitutional system the legal certainty is a subjective public right recognized by the supreme rule of article 82. Such recognition does not mean anything else than qualifying the legal certainty as a fundamental right, which is necessary to meet a vital need of human beings. As Professor H. COING explains, by saying that security is “an owning wish in the mind of men”, and also feels frightful “in front of his existence’s insecurity given the unpredictably and uncertainty to which he is subject”. He continues saying: that’s why “it is one of men’s basic needs which Right seeks to meet through security’s legal dimension….” As Jose Luis MEZQUITA DEL CACHO, author of one of the best studies of the current legal security, quotes: “Security is certainly a desire of every man rooted in his survival instinct and therefore initially raised in the necessity in which social organization supports itself; as being the Law its instrument, it’s logic to point it out for its objectives. But it’s a goal that at least to a certain extent, is done intrinsically from within the establishment of Law and as a result of Order which itself makes; so it’s logical to also qualify it as objective of immediate effect….”3

It’s therefore, a legal right that satisfies a human need. Being understood as legal good, an organization that is protected or guaranteed by Law and is necessary for human being’s fulfillment, such as life, honor and presumption of innocence. More than consider it as people’s fundamental right, the legal certainty (for its guarantee) is the subject of the action provided in article 95 of the Political constitution, when any act (whether by action or omission) from the public authority intends damaging or pretends doing it in an imminent way. Thus, under Action of Protection (Amparo) would avoid the violation or immediately remedying the sustained injury. Thus, under our Law, legal certainty turns into its budget, but not by its adherence to the law, but by its connection to the rights that support or sustain the entire constitutional order. Later we will discuss the problem of legal security principle and legal value, even if it’s an item that corresponds only to the Philosophy of Law, rather than to a General

Theory of Law which is the one we pretend studying. While this is the Science of Law, the first one is a Law estimate from the axiological point of view, and crucially, from the vantage point of Justice as an absolute value of the Law. II. Subjective and Objective Aspect of Legal Certainty The legal certainty shows itself as an objective reality, meaning that “it is shown as an objective, of regular structural and functional requirement of legal system through its rules and institutions….”But the subjective aspect is presented as certainty of Law, i.e. as a projection in the personal situations of objective security. Therefore, we need the possibility of knowledge about the Law by their recipients. “The certainty represents the other hand of objective security: reflected in the behavior of the subjects of the Law. This premise leads to encrypt the exploration of the sense of security in the character set that report and connotes its objective dimension….” The legal certainty is therefore of structural appearance (objective), which is inherent in legal system, the rules of law and its institutions and, hence derives from the subject that is bound by the legal system which acquires certainty of the consequences of their actions and those of others, this is, the subjective aspect. III. the Positivity of Law as a requirement of Legal Certainty For the fulfillment of legal certainty in its objective aspect, this is, structural, G. RADBRUCH 6, Professor of University of Heidelberg, argues that positive Law is required and that meets at least the following conditions:

1. That positivity be established through laws: 2. That positive Law is based in facts and not the discretion of a judge. 3. That these facts are “practicable”, i.e. subject to verification; and 4. That positive Law is stable.

While Lon L. FULLER, imposes eight requirements for the positive Law to fulfill structurally the requirements of legal certainty.

1. Generality of the rules; 2. Promulgation; 3. Retroactivity; 4. Clarity; 5. Consistency; 6. Possibility of fulfillment; 7. Stability; and 8. Consistency between the provisions of the law and its application.

Whatever the demands of positive Law that creates legal security, according to G.RADBRUCH are, there must always be positive Law, then, “if nobody is able to fix what is right, someone has to establish what should be law; and whether the right

must satisfy the function of putting an end to the struggle of conflicting legal concepts through a failure of authoritarian rule, there has to be given the imposition of a will that is able to enforce it against any legal conception that is opposed. One who is able to enforce the law proves that he’s called to set it….” PEREZ LUÑO defers regarding to that he doesn’t believe that positivity can be subsumed in security, because “positivity is a necessary element of the legal organization of any type of society. While security is a value which could be or not be given in the different historic ways of legal positivity, there have been legal precarious or nonexistent security ordinances, but none of them with lack of positivity….” In fact, history shows us multiple legal positive systems who have secured legal insecurity and lawlessness rather than providing adequate security to people’s fundamental rights, just remember the National Socialist legal system in Germany. Therefore the so needed legitimacy of legality mentioned before. Regarding to this, J.L. MEZQUITA DEL CACHO says: “In fact, there is to have in mind that the Ordinances established by a State of undemocratic structures, are “all” the key concepts of Law which remain distorted, starting without doubt by the Legality. Not because of prominence to Security, on all other values, but because the idea of Security is deformed, making it back to their status of “Legal security” (inherent to the law lawfully acted and established) to the “proto legal security”, resulting of an imposed Law, that cannot therefore be described as “Legality” but of “supplanting Legalism; “Laws which aren’t Law”, as they may be times qualified. At the end of the day, in dictatorships it’s also characteristically proclaimed by all the official authorities and in all “Fundamental Regulations” an ambiguous and messianic conception of “Justice” which supplants the spontaneously intuited in societies whose regimes survive. This does not make Justice suffer any devaluation, once normality and sense are established. IV. Act Requirements in a correct Positivistic Law, for structural legal certainty. In the regulatory field, the interpretation of the requirement to be met by the Law for the proper structuring of legal certainty arises from the stage of legal enlightenment with the expression of Anselm VON FEUERBACH; nullum crimen nulla poena sine lege (Article 76 No. 3 of our Constitution). Their achievements are not confined to criminal Law; therefore, the interpretation of the term lege extends to all the rules of legal Ordinance, whatever its location berween the sources of Law, i.e., not only limited to the “Law” formally conceived, but demands the following requirement:

1. Lege promulgata, refers to the need of written laws and its publication for everybody’s knowledge since there isn’t more insecurity than living in ignorance of the consequences of one’s actions and the actions of others. This, historically, is the equivalent of living as the commoners of Rome prior to the XII Tables, which were unaware of the prevailing Law which was only known by the upper classes of Roman society sector.

2. Lege manifiesta is the requirement of brightness of the law, avoiding its

darkness, its double sense. Brightness requires an unambiguous characterization of the alleged facts and a limitation on the expected consequences, then, thus avoiding the discretion of the organs responsible for its implementation.

3. Lege plena, implies the absence of regulatory gaps in the legal system. There must always be a normative answer to any situation that could occur. Therefore, the legal systems builds its system of sources, foresee the integration, the broad interpretation, the analog and the application of general principles of Law and, thus, avoid the so called regulatory constituent gaps of legal insecurity.

4. Lege stricta, refers to the principle of Reserve of the Law, which only the general and abstract rule, formally issued by Parliaments, can regulate certain matters relating to personal freedom and their rights and guarantees, its criminal responsibility and everything regarding to the right of property, including the tax system. In this field of action of the trust Law, in these areas by the hierarchy the legislation source, to prevent inferior standards, such as regulations or ordinances, unless administrative action may amend or repeal people’s fundamental rights (Article 132 and 133 of our Constitution). This is the field reserved for Law’s action and therefore, it’s unconstitutional for any legal norm or another rank, under the Law, and seeks amending or repealing any of the referred matters.

5. Lege previa, implies that it should always be able to predict the consequences of an action because they are known in advance. That is, the goal is to make possible “the previous calculation from the juridical effects of conduct”. Therefore, this requirement contradicts the retroactivity of laws, claiming PEREZ LUÑO, that “this guarantee is reflected in the requirement of non-retroactivity of the rules by which you cannot extend the application of the laws to conduct prior to its enactment that therefore, were made before one could know its contents”.

6. Lege perpetua, refers to the needed stability of Law which is fundamental to generate certainty in its contents. Moreover, it constitutes the basis for the existence of two necessary institutions for people’s legal security: res judicata, which has the quality to conferring immovable legal decisions not subject to any appeal proceedings, and the acquired rights which protect the legal situations arising under the laws in force at the time of its configuration, to changes in legislation that may affect ex post facto, i.e. retrospectively.

In this way, the legal system must be structured for its proper operation, which has the immediate effect on legal security required by society and the individual. But, as the Spanish Constitutional Court, says, the legal security is “an amount of certainty and legality, hierarchy and advertising regulations, the non-retroactivity for unfavorable things and prohibition of the arbitrariness….but if it runs out in the addition of these principles, it wouldn’t have been expressly stated” (Judgment 27/1981 of July 20th).

V. The functional correctness of the Law as a condition for the validity of Legal Certainty. In this case, it isn’t about a determined structure of legal rules in a system, but its proper functioning, basically, the restraint of the authorities to the principle of legality, in the same way as the required submission to all citizens. “The linking of all those public and private people to the law, which emanates from popular sovereignty through their representatives and that addresses the recognition and protection of fundamental rights, is the keystone of the Rule of Law….”11. For now, the guarantee of the protective action (Article 88 of the Constitution) and the actions of unconstitutionality of general effects and administrative rules for private effects (Article 436 No. 2 of the Constitution), besides the non-application of law power with judges (Article 428 of the Constitution), are guarantees for the proper functioning. Thus, the arbitrariness is prevented to any public authority and forewarns the transgression of the Law with impunity by any particular jure ET jure of the knowledge of Law by all the citizens, since their lack of knowledge or ignorance doesn’t excuse anybody (Article 13 of the Constitution). For the proper Law operation which affects legal security we can quote two wrong things regarding Public Administration of legal bodies: The administrative silence, which has tried to be overcome with the substitution of the law’s will of the competent authority, either positive or negative. On the other hand, undue delay of procedures and processes which undermine the proper application of effective judicial protection. Making a compilation of several Spanish authors 12, they state that “the right to legal security in the broader sense comprehended and summarizes all the individual’s rights” and break down the functional correction of legal certainty by stating that this must be specified at these points:

1. Respect for the hierarchy of the rules , mandatory requirement of any Rule of Law ;

2. In a strict control of its constitutionality, to allow the adequate protection of the Constitution.

3. In the unity of jurisdictions, the process of disappearance of the various special privileges that currently coexists.

4. In the consecration of the principle that no one can be condemned without being heard and without a regular process and,

5. In short, in the observance, respect and individual and collective guarantees, recognized nowadays in any democratic system of government.

Summarizing the foregoing we can say, therefore, that legal security is not reduced to a pure legalism and requires consolidating in its objective aspect, both structurally as functionally, as well as in related subjective condition of certainty. As the Spanish Professor quoted previously: “the concept of Legal Security covers Legality as a main

but not exclusive qualifying expression, and isn’t a simple sequel of it. Legal Certainty is a suitable term to understand any formula to counteract any kind of danger to citizen’s confidence in the Law, whatever the danger of risk and the inherent subjective impact whether it be stable in certain knowledge of the rule, of faith in the proper functioning of the institutions, or consciousness of the own value of the orderly legal community….”13 VI. The Need of a System of Rules (Primary and Secondary) which have certainty effects of the legitimate legality 14

Assuming the existence of primary rules or rules of conduct and the secondary ones,

that is, rules over other rules, a legal System must produce certainty as to the Legality

and stability, producing effects in reference to:

At the very birth of the laws, under the requirements of gestation,

promulgation and publication.

To extinction by way of demands and requirements of formal repeal.

A compatibility and interferences between laws (the so-called incomplete and

imperfect exceptions)

These are the effects regarding to the information of the contents of the laws that

make some counterweight to the presumption of the right of knowledge of these laws

by all citizens.

The Spatial scope of its validity (special territorial Laws and extraterritorial

effects over Law).

The temporary scope of that effect (legal vacation and entry into force,

transitional rules; normal and exceptional retroactivity, etc).

The personal abstract scope of rules to individuals’ addressee, among which

discrimination cannot occur for any reason, under the constitutional principle

of citizen’s equality before the Law.

The proper hierarchical order among laws of different rank, according to the

gradation established in the Constitution.

In the margins of creative policy, complementary and of development to fit the

Administration through the regulatory authority and under certain conditions

one another in the Constitution; and the effective knowledge of its exercise,

given the requirement of official publication of those provisions.

Besides creativity additional ruling to leave jurisprudence of the Court, given in

the Constitution and the Organic Laws that develop them.

At the existence of that case and the principles declared by it, through the legal

requirement for publication of the court judgments.

The existence of habits, through legal rules or law cases regarding on its

admission, extension and testing.

VII. The need for the rule of the principle of legality upon the administration

As the author quotes, besides of the fact of certainty, regarding to the production of

Law, the Principle of Legality creates certainty, that the established Law will be

effective and strictly applied to the administrative level.

The guarantees needed as a derivation of the Principle of Legality in the performance

of Public Administration are:

The Administration’s self control through the principles of regulation,

jurisdiction and procedure which our Constitution, prescribes in Article 226 and

guarantees in Article 76.3 thereof, regulating the Procedure in the Statute of

Administrative Legal Regime of the Executive Function.

The control of the regulatory power.

The legal control of any Administration Act,

The judicial control of any act of the Administration, whether it is legal, in

effectively fulfilling the regulatory authority, as a strictly executive act, as

provided in Article 196 of the Political Constitution when it states that

“administrative measures generated by any authority of other State’s functions

and institutions, may be disproved before the corresponding organs of the

Judicial Function, in the way the law prescribes it”.

In the control of the Constitutional Court who can judge any administrative act,

whether it is legal or executive, of general or private effects, as required by

article 436,2 and 3 of the Constitution.

The control which can be exercised over the administrative activity the

Ombudsman, as required by Section 96 of the Constitution and the Organic Law

of Ombudsman.

The validity of the Administration’s responsibility, their delegates and dealers,

who will be obliged to compensate individuals for damages caused as a result

of inadequate provision of public services or the acts of its officials and

employees in the performance of their duties (Article 11 of the Constitution).

To the above mentioned it must be added the fulfillment by the Judicial Power of the

guarantees of the proper process which Article 76 of the Ecuadorian Constitution

foresees, and then we will have a structural and functional correction of legal security

in our society, to give certainty to people, living with the conviction of having

fundamental rights.

Thus, we will find a proper formulation of positive Law, always based in people’s

fundamental rights and the collective rights of groups oriented towards its effective

validity, and an authentic legal and legitimate security.

VIII. the legal certainty, principle or legal value?

The difference between value and principle is given because the first one is above its

rules, and therefore, even in a different dimension to the General Principles of Law.

The second one has a clear ruling function; because it’s a General Principle “while its

role to informing the legal system, which is able to replace -and precisely of its great

generality- which other rules suffers the lack of resources which in spite of having an

essential general character to any legal rule, pre configured determinant legal limits,

situations and circumstances which could also be insufficient….” Therefore, under this

point of view the legal security is a principle and not a value, which has a lack of ruling

capacity. Instead, as a principle; the legal certainty is the source of Law and replaces

any concrete legal lack.

The fact is that in our Constitution, the legal security is seen as a value to be reached or

be specified by the State, because there isn’t any explanation that it is considered as a

priority State’s right (Article 3 No. 1 of the Constitution), and thus no longer a simple

application of a supplementary source of Law and similar to “Justice “value.

What has to be considered is that Justice is the final value of Law, while legal certainty

is instrumental value regarding to the other one. It consolidates and it’s the guarantee

structure and functionality to achieve justice. Legal certainty is a base value, while

Justice is a well-founded value and even more.

But the transcendent is that whatever the legal security value range is, it’s the most

immediate to Law, or as MEZQUITA well quotes, the first one in the logical-temporal

order, the most direct motivator of the whole legal system. This is a reflection which

reminds RECASENS SICHES when saying that “the right wasn’t born in human’s life for

the desire to paying tribute and worship the idea of Justice, but to fill an inescapable

requirement of security and certainty in social life. To the question of why and for

whom do men make the Law, there won’t be an answer of the quintessence of the

idea of Justice, nor its entourage of egregious complementary values, but of a

subordinate value: the security for a human need….”16

Then, let’s admit a range of legal values in order to admit the legal security as an

instrumental value for the achievement of Justice which is the absolute value for the

Law.

*Professor of Administrative Law at the Catholic University of Guayaquil and Political Law at the University Espiritu Santo. Member of the Ecuadorian Academy of Constitutional Law and Administrative Law. 1 See infra notes 3, 4 and 5. 2 Quote of Antonio- Enrique PERZ LUÑO, The legal security, ARIEL; Barcelona, 1994, page 24. 3 Legal Security and caution system. BOSCH, Barcelona, 1989, page 48. 4 Idem page 29 5 Ibidem, pages 29 and 30. 6 Law Introductions to Philosophy. PEREZ LUÑO’s quote, Ob. Cit., Note 33. 7 Law Philosophy . 4th Edition Editorial, Privare Law Magazine, Madrid, 1959. 8 Ob. Cit. page 31. 9 J.L. MEZQUITA; Ob. Cit.pages 76/77 10 Ob. Cit. Page 34. 11 PEREZ LUÑO, Ob. Cit page 35/10 Ob. Cit page 34. 12 J. DE ESTEBAN (S: VARELA DIAZ; F:J: GARCIA FERNANDEZ LLOPEZ GUERRA and J.L. GARCIA RUIZ) political development Spanish Constitution. ARIEL; Barcelona, 1973, pages 34/35. Quotes from MEZQUITA DEL CACHO; Note 44, page 72. 13 Ob. Cit. Page 78. 14 See Ob. Cit. J.L. MEZQUITA DEL CACHO; pages 87/92. 15 MEZQUITA, Ob. Cit. Page 219 16 Quote od MEZQUITA DEL CACHO; Ob. Cit. Page 222.

The new Law of Higher Education: A challenge

for everybody

Educ. Marcia Gilbert de Babra Principal of Casa Grande University

According to the current Constitution, the Ecuadorian Higher Education system must be ruled by a new Law. Therefore, this situation turns into an historic opportunity for the Ecuadorian education once more, making a qualitative and quantitative forward leap and be in condition to confront the complex XXI century, multi polar world, a world that needs to reinvent itself constantly. The challenge is huge and demands from the common citizen, of the media, the Ecuadorian university family, of the diverse groups which offer proposals regarding to this Law, -as an example: SENPLADES and CONESUP- and from the legislators, an open and constructive attitude to confront wisely this huge task.

It requires starting by a real diagnosis allowing us to determine, with a good degree of agreement with the reality, searching what the strengths and weaknesses are, the opportunities, and threats of the current Ecuadorian university. Unfortunately, Mandate 14 of the Constitution ruled that within a year the National Council of Higher Education (Consejo Nacional de Educacion Superior CONESUP) and the National Council for Evaluation and Accreditation of Ecuador’s Higher Education (Consejo Nacional de Evaluacion y Acreditacion de la Educacion Superior del Ecuador CONEA) carry out an evaluation of the Universities and Technological Institutes of the country (over 300). In such a limited period of time, this included the design of this atypical Evaluation Model and there could be expected that the evaluations couldn’t be able to deliver a reliable “baseline” to take decisions regarding to the new Law and less, make radical recommendations, such as suggesting the close down of Universities or categorize them. To make a simple analogy, if a patient doesn’t receive the correct diagnosis, it’s possible that the therapeutic elements to be applied are not only useless but can produce iatrogenic effects. It requires that the proponents and legislators of the new Law start from a holistic, systematic and historical vision of the Ecuadorian university, considering besides, the Latin American and world’s context. When we move away from this perspective there is a chance and risk of proposing a Law that generates a system (which really is a sub system) very little articulated to the realities of the context, and therefore, with lack of real meaning. It’s important that proposals of the new Law of High Education, be born of constructive proposals that haven’t been contaminated by stereotypes as those attributed to private education, without understanding that the previous is an important allied for the system’s jointed progress

The stereotypes that fuel the anti-university speech are not only harmful by themselves, but their reiteration ends replacing a diagnosis that necessarily requires objectivity to be valid. I specifically refer to aspects such as remarking that the Ecuadorian Higher Education has been “limited” being a market’s sound box” without understanding all the other components which are behind of an academic project and an university project whether it is public or private. Another trendy stereotype is that Universities have “reproduced social inequalities”, assertion which doesn’t resist the slightest analysis at the scale of quantitative growth of the Ecuadorian University in the last years, adding each time more social classes to it. The great access to Higher Education has been one of the privileged elements of social rise and consequently of equity. To deny the above mentioned really feels damaging. Continuing with the trendy stereotypes, it’s repeated that education has failed because of “the little regulation” that has existed, associating without much discussion, and the regulation to quality. To support this tremendous asseveration they always appeal to the same example of one or two

universities (out of 77) which in the past have committed wrongful actions and were punished in due course. Those negative cases have had a disproportionate and unfairly impregnation on the perception of universities in the country. At all means there must be avoided falling into the usual vices, this is, to wrongly associate control to quality which could give as a result an extreme result of a Law. The excessive bureaucratic controls will never achieve quality and definitely kill the innovation and creativeness. The real processes for change must have the intellectual and emotional support of all the involved. Finally, the private education is permanently questioned, attributing it a kind of essential and structural malevolence which is quite fundamental. The organizations, according to their nature present various ways of perversion, thus, particularly when education is diverted from its main course, might –and I repeat the word- might become a purely commercial operation, which must be condemned. On the other hand, when public universities deviate from its main objective, they could become a highly political and bureaucratic project and turn ungovernable. Therefore, any analysis that seeks to attribute all evil to a single type of education, for example, the private and all the kindness to others, which is inconsistent and naïve. We have to put pressure for an authentic participation, when designing a new Law of Highly Education, because the elements those so far are limited to fuel reflection and dangerously biased.

What would Guayaquil’s Firefighters do in a

similar situation as the one in Chile?

Crnel. Martin Cucalon de Ycaza

Institutional Arrangements for the Answer

Currently Guayaquil’s Fire Department is constituted by an operative level of 6 brigades, 5 divisions and a training Academy for fire training exercises The brigades are distributed at strategic sectors of the city, which allows us to timely response to incidents that occur. We also have specialized divisions which support the brigades in the different sectors, responding to emergencies not only because a fire, but of pre hospital type, rescue, hazardous materials and rescue in rivers or marshes. The institution has an infrastructure of 39 dependences (between fire stations and companies), which are distributed in sectors: Industrial north, north, centre, south and south east of Guayaquil. It has an immediate response contingent composed of: 57 firefighting units, 5 supplying tankers, 3 tank trucks with a capacity of 10.000 gallons for supply also, 2 units called MB (bombas portatiles de alto rendimiento) (high performance portable pumps), 2 units for emergency management of hazardous materials, 15 ambulances for pre hospital care, 5 heavy-rescue cars –whose priority level of response is the attention to traffic accidents and collapsed buildings -, 2 water rescue boats, 3 stair trucks, a tower ladder and 2 snorkels for height or support rescue to combat fires; as well as human contingent represented by 1.300 volunteer firefighters. Communications

Regarding to communications, an important element in front of any emergency, we have an Alarm Centre, which using trunked VHF frequencies and devices –both analogue and cellular- maintain constant communication with all the institutions an organisms that would be engaged assisting critic events. A threat that we would have in our Centre, is that it is physically located on the top floor at the main Fire Station (downtown), for its antiquity hasn’t anti-seismic building standards, which before a seismic event prone to structural damage and thus would remain disabled. In front of this possibility a unity was created called “Incident command”, which has portable communications systems and can be located in a safe zone of the city to manage and coordinate in an excellent way the responses to emergencies. Likewise, we are developing a project for a replacement communication Centre, with a geographic location, from a security point of view in front of seism, and are the facilities of the Firefighters’ Academy of Guayaquil, located at Km. 30.5 of the Perimetral via (ESPOL)-Prosperina).

Coaching and Training

At the end of the 90’s, the Fire Department in Guayaquil, received an international training program offered by the Disaster Assistance Office of the Agency for International Development of USA, (USAID OFDA), which had among its training programs two courses called: Search and Rescue in collapsed Buildings and Rescue in Light collapsed Buildings. These have been given from that date until now to Firefighters officials, and must comply as a pre requirement to have the approval of a course in Advanced First Aid Assistant and another one of First Response to Hazardous Materials incidents. In 2000, Guayaquil’s Fire Department is restructured at operative level, being created a Specialized Rescue Division, and has among its main functions the creation of a Group called Urban Search and Rescue (USAR), which is an active element of the system for initial emergency response, which aims to search, locate, access, stabilize and rescuing (or recovering deceased) persons who have been trapped in a collapsed structure. This group of human beings has acquired the equipment, tools and necessary accessories to develop efficiently their tasks. Likewise, they have a constant training with local exercises or attending international operations to allow them to get used to and operate under realistic as possible conditions. in Search and Rescue in collapsed Structures operations, such as preparation, activation/mobilization, operations and deactivation/demobilization. Response Levels

To an event of medium proportions, for example the collapse of a structure, house or building, the Fire Department is operatively capable to answer immediately, coordinating with its qualified personnel and, with a logistic of combat units against fire, ambulatory, rescue, heavy machinery, equipment and tools, appropriate for work in such type of incidents. If the event was of great magnitude involving various sectors of the city of Guayaquil, and whose incidents of collapsed structures would be innumerable, our ability responding would be limited, having for that purpose to seek outside help, whether national or international. It’s important considering that the response to fire events generated after an earthquake, could be mitigated quickly considering the location of the various brigades in the city, as long as the roads and water supply for the firefighter units, aren’t an obstacle. Regarding to pre-hospital care (ambulances), its effective response would be seen tied to factors of taxiways and service demand.

Inter Institutional Support

Coordination and communication at institutional level is important, to post-quake, to perform an analysis of the damage in the city and its structures, because this will depend on the projection of the operations to be performed. This analysis must consider the types of structures, city’s geographic location and levels of activity. In addition to this, there must be considered the capacity and condition of the centers for medical attention with which must be established a tight link for sending and receiving victims. Our institution has been practicing fire drills and trainings with related institutions during many years, with the desire to handle a same protocol to the reported incidents.

Google, Facebook and competitiveness

Econ. Carolina Pozo D. *

Is your company taking advantage of Internet tools?

The amount of information, web pages and social networking available on the internet is increasingly involved and the population access to it each time more. The market’s, marketing and publicity investigation tools which Internet offers are essential for businesses strategies to achieve competitiveness. Google and Facebook are perhaps the best examples of key instruments that companies must consider when formulating their business strategies. Why Google?

To optimize the Internet’s opportunities, you must take into account the trends over Ecuadorian users. A key tool for research of consumer behaviour, particularly over Google’s Trends (www.google.com/trends); this tool offers comparative statistics, about what Ecuadorians look for in Google Trends in a period of time. It also allows measuring the search of any word, even at the cities level, making it a powerful mechanism for the analysis and understanding of the consumer’s interests in different segments through time; as well as the power of the media and news to affect these interests. Why Facebook? Facebook (www.facebook.com) has turned into the social net with the most amounts of users around the world. If Facebook would be a country, it would be the third biggest worldwide with 400 million people, after China and India. The growth statistics in Facebook’s number of users shows that Ecuador is among the 30 countries with bigger growth in the world, with more than 10%. There are currently around 700.000 users in Ecuador, of which 26.7% are between the ages of 18 to 24, and 29.5% between the ages of 25 to 34 years (Source: www,facebook.com). These statistics are a clear demonstration of the opportunities which this net offers, and should appear on the agendas of strategic marketing for companies. It’s noteworthy that in terms of costs there are many advantages in these virtual media, since there are many ways to advertise free or at a low cost. Facebook has several applications such as: “groups”, “events”, “causes”, “fans”, “marketplace”, among others, which means they have become widely used within this social net.

The use of cell phones to access the Internet is very common in users, especially with the creation of social nets such as Twitter (www.twitter.com) and the Google’s recently released Google Buzz (www.google.com/buzz), where the focus are information updates, either public or private, in real time. These new trends shows that the social nets have become spaces that go beyond connecting people, but rather are an incredible source of anthropological analysis and a way of keeping a diary of your life, as well as of leaving a record of consumer tastes and preferences in an “automatic way”. Technology for Competitiveness The gap of use and access to this technology in developed countries versus developing

countries is enormous. In the Ecuadorian case the number of Internet users is

increasing, but there is still a large segment of the population which can’t accede to

this privilege. This digital gap means not just an asymmetry accessing to information

but also an obstacle for the development of competitiveness in the country. The

government’s role is investing in technology; it’s an essential pillar for Ecuador’s

development in which the access to Internet turns into a key element for citizens’

needs and understanding. Internet and social nets are in many countries, the axes for

the promotion of people’s participation, thus becoming a living electronic democracy.

For a country to be considered competitive in the globalized world, competitive

companies are needed; It isn’t enough talking about a supposedly estate of

competitiveness and growth. It’s responsibility both of governments as well as of

companies, maximizing the investment for investigation and technology development

having in mind that the current demand and global trend in the massive use of internet

which is unstoppable.

The focus of sustainability of a country is based among other things on the investment

and education, and technology is an integral part thereof. One way would be a

significantly government‘s investment to “free” software development and access

since it is a key component to use for all citizens, businesses and public

administrations. In addition there is to emphasize not only in the governments

expenses for technology but the ability of management and administration of the

invested resources.

These types of investments require planning a long term agenda, considering the enormous benefits they would have over the businesses and country’s competitiveness. So it’s urgent ensuring the true sovereign interests of citizens in a globalized world, i.e., the real interest of growth which Ecuadorians have.

*Free Software is concerned to user’s freedom to executing, copying, distributing, studying, changing and improving software. More precisely it refers to four pieces of freedom which software users have: *The freedom to use the program, with any purpose (freedom 0) *The freedom to study how this program works, adapting it to our needs (freedom 1). Access to the source code is a precondition for this. *The freedom to distributing copies, with which you can help your neighbour (freedom 2). *The freedom to improve the program and make them public to others, so that the whole community benefits (freedom 3). Access to the source code is a precondition to this. Source: http://hispalinux.es/SoftwareLibre *Studied economics in the York University of Toronto, United States and Master in Public Management from SDA Bocconi School of Management of Milan, Italy.

Chile: the guide of America

Mr. Alberto Medina M. Argentinean journalist

The Chilean runoff could not be ignored and not only by the outcome but by the teaching of democracy and civic maturity shown by the trans-Andean country with gestures which few modern democracies can show with so much reliability. The Chilean electoral process has ended which was the one that led the candidate Santiago Piñera to the presidency. After 20 years of democracy, and of an unbroken string of electoral victories by the powerful left Coalition of Parties, there was the turning point. Time is now for the opponents of the ruling coalition that dominated the local political spectrum these last decades. It could be another choice, a simple domestic electoral wish with internal significance of the Andean country. Staying in the anecdote would be denying the historical testimonial value which this election had. This hinge in Chile’s history and the impact it had on the continent, in fact without precedents, and not because its results nor the implicit political spin, but for its deep institutional and democratic meaning. Chile is without doubt, the Latin American country who has obtained more achievements in the last years. It has had an economic progress; it consolidated as a strong democracy being able to discuss unexpected topics for the poor political agendas of the continent, being constituted as a reference of what can be achieved when some things are properly done. The trans-Andean country has many problems as all countries have. It faces conflicts, must overcome its own limitations, and has undone subjects. It’s clear that it’s not the earthly paradise. But in spite of all their flaws, all which has been progressed can’t be overshadowed. A consolidated economy in many respects, societies open to the world, integrated with the international community with multiple agreements, which has a boundless respect for the ability to meet commitments; for its reliability and dependability of the agreements, by their sometimes neglected equanimity and foreign policy. Not all the citizens agree with what has been obtained. There is much more to be done. But it is clear that Chileans completely trust that this “improvement process”, can only be fulfilled joined to solid institutions, of a democracy, which has a lot to evolve, has made progress and outstanding achievements, which will be seen once people focus on solving them, as has happened with each of its local achievements.

America is a continent with few mature democracies, full of everyday signs of intolerance and violence. We have hostile communities which have economic deployment reciting progress but doing the reverse. America is often verbose, tumultuous, full of conflicts, but always embedded in a populist and demagogic debate that has only made permanent setbacks. In this context, Chile has become a beacon, a guide, a north (a paradox), and a mirror in which everybody wants to be reflected. With their virtues and defects, there is much to copy and admire about this country and especially their way of doing things. The speech of their political leaders, winners and losers of the contest is just one example. Scenes of the current President and the new one praising crossed mutual thanks and wishes of success for the future, in spaces shared with TV channels, public transparency, speaking of a political and civic maturity, and a thorough understanding of what living in democracy means. It’s a democracy that has nothing to envy the most traditional civilizations on the planet. Some may prefer to ignore the recent event, taking this January 2010, as just an assortment scale of Latin American electoral calendar. The result shouldn’t blind the analysts. The ideological leanings and political passions –shouldn’t interfere in any way- the meaning that Chilean society brings to the continent. Other could have been the electoral result, and much of what has been said, would have had the same value. When our America and the world, understands the almost mathematical correlation between the progress of nations, economic growth, productive development, the full exercise of individual freedom, strong democratic institutions, then the planet’s history may give a positive spin of what we want. The populist governments –so much present in our Latin geography- The isolated but

still existing dictatorships on the globe and the fragile democracies plagued by

opportunism and demagogy, aren’t the right path to walk towards a better world.

There aren’t economic processes or societies capable to overcome themselves, in which mediocrity or contemporary messianic leaders reigns, or the parodies of contemporary democracies which are so much known and suffered by us. To achieve the ideal formula is always difficult, but certainly the main ingredients for building a society capable of generating positive changes, comes with a democracy without conditions and develop a strong respect for institutions in constant evolution. Without these components, our communities, our nations, are condemned to an eternal failure. Chileans have still much to improve; their aspirations are pending by the day. But it is clear that in a so weak continental context, Chile is the guide of America.

The European Union and the XXI Century Socialism in

Latin America

Maria Lorca-Susino, PhD *

In the last five years Latin America has been immersed in several political changes which are negatively impacting over the economic development of the area. The XXI Century Socialism has entered in an abrupt way and the economic data shows that countries that are following this same line are suffering a severe economic downturn. In an each time more globalized world, the former socialist countries that hate their past and luckily Europe which was never socialist, watch this evolution with concern. The European Union is formed by 27 countries, each one of them with different political past. The last ones entering in 2004 and 2007 were satellites of the First Big Bang of History: The Soviet Union. This block of countries is taking advantage in a laborious way of the European opportunity to achieve levels in the economic, political and social areas with the countries founders of the Union. Even so, the comparative figures among the group of countries which belonged to the EU and the recent ones of the Soviet bloc have a conclusive data. The countries with a socialist past suffer from a lower growth rate, monetary and fiscal imbalances, high unemployment, and in general the “risk country” is bigger than for other members. Table of contents 1, shows the measures by compared countries from 1997 to 2009 of representative macroeconomic data.

TABLE I

Specifically, the communist past of East Germany has proved crucial to its current economic situation. Thirty years after its Reunification, that was especially beneficial for East Germany, the numbers show that the “economic gap” continues open and that East Germany is still poorer than the West one. We must only compare the unemployment data in the East which was 16.9 while the West Germany, had 7.5 in 2001.1

Spain started being part of the EU in 1986, as one of the poorest. When in 1992 the Treaty of Maastricht was signed this established the requirements to adopting the Euro, and Spain didn’t fulfil with any of the previous mentioned demanded by the Socialist Government at the time. However, the change towards a Government of Liberal-Conservative ideology achieved the “Spanish Economic Miracle” with the Euro entering in 1999, against all odds. The estimates for when the countries coming from “Real Socialism” will be prepared to adopting the Euro and fulfil the economic and monetary requirements are different as shown in Table II

TABLE II

Latin America continues fighting for developing, improving and integrating. The XXI Century’s Socialism continues rowing in the opposite direction at the time in which Latin America should try talking through one voice. There is a clear division among the countries of the ALBA (directed by Cuba) to oppose the Free Trade Agreement (FTA) from which they were expressly excluded. ALBA members playing in Europe a pattern known as “Axis Powers” the Autocephalous Confederation with a Central Bank and the Sucre as a common currency backed up by Venezuelan oil. However its implementation is delayed by the different economic, ethnic and cultural structure. From Europe the ALBA, a project, mixture of Marxist Populism-Bolivarian Marxism is seen by us as confusing, abrupt, expressly created to oppose what history teaches us concerning that no operation as the mentioned, would have succeeded. Tables III and IV compares the economic forecast for 2010 of some of the countries most significant two groups.

TABLE III

The possibility that the main promoter of the idea, Venezuela, could enter into a “hyperinflationary” spiral is latent which would turn that brotherly country in a Republic of Weimar, or in the cyclical economic catastrophe that shakes Argentina since the Alfonsin’s “hyperinflation “of the Austral and other decades ago. Table IV shows that the countries which remain outside and follow a pattern of economic and strictly ordered behaviour are improving the growth levels, the purchasing power and living standards of their citizens. They are the countries which eventually have resigned joining the ALBA Club and –as Europe did at its time- they should start little by little as the Union of Carbon and Steel (CECA) did, which was the beginning of the EU. For example, the subcontinent could start by sharing a proposed union of Communication and Infrastructures in which an extra territorial is recognized to the project with an effective and independent Supranational Authority, which is an essential step to build any coherent, possible and sustainable economic union. At the same time, an accurate census is needed to actually know the number of citizens and their location, which is a minimum condition to operating any data that yields reliable results.

TABLE IV

Karl Marx, the mastermind of all these failures, didn’t almost have anything of his own ideas and rather took them from others to pass to history. Neither theory of surplus value or about religion nor the methodology used was created by him. He was a melancholic man, whose father, a successful lawyer and converted Jew, reproached hatching his melancholy by reading books at an oil lamp. Horace Greeley2 asked Marx for several ideological pieces of work for the New York Daily Tribune, a document for

history, which showed how absent Marx was when criticizing “Das Kapital”3, and It also showed his mother telling him that instead of criticizing so much the Capital, he should worry more about his family who was tired of eating boiled potatoes, as well as living in a poor two bedroom apartment. Marx however, will help me finish this article, because in his work “The 18th Brumaire of Louis Bonaparte” he wrote that history always repeats itself. In his case it’s about the takeover of the Napoleons in France to which he was openly opposed, as the impact statement that he chooses to summarize his work, can be of great impact at this current times; the quote is the following: “While the share of power in France by Napoleon I was a tragedy, the ascension to the throne of Napoleon III was a farce” Mutatis mutandis the Bolshevik coup in 1917 was a real TRAGEDY; the now advertised Socialism of XXI Century... is a FARCE. *International Economics Instructor, Department of Economics and International Studies Centre Associate Editor of the European Union. University of Miami 1 Dr. Bernhard Seliger, “Almost there”. Central Europe Review, Vol 3, No. 5, February 5, 2001. http://www.ce-review.org/01/5/seliger5.html (January 20, 2009). 2 Horace Greeley (February 3, 1811-November 29, 1872), was an American journalist and politician. He was one of the founders of the Republican Party (1854) and Director of the New York Tribune, the most powerful newspaper of the United States between 1840 and 1870. Source: Wikipedia. 3 Das Kapital, from Karl Marx, is, as its subtitle states, a treaty of criticism of political economy, at the same time it can be read as a historical study on the specialty of modern society.

Development of stock markets as tools of prosperity

Dr. Enrique Arosemena, Former Director of Stock Exchange of Guayaquil Stock exchanges around the world have had and still have great impact on economic development and welfare of the population of industrialized countries. It’s no coincidence that every developed country or in the process of developing has or will have a strong stock market. This is the result of the double functions which these institutions carry out. On one hand, credit conditions improve resources of the applicants (firms, financial institutions, State, etc.) when opening the access to resources of longer terms and lower interest rates. On the other hand, in turn, they democratize the corporate ownership and improve the investor’s income through a diverse range of financial assets. The stock market is part of the financial market that fulfils the role of channelling the savings towards investment. They do it through the money market, in which the banks and other intermediaries provide financing on short term. The stock market also provides long term financing at lower cost, using instruments such as bonds, equities, securitization, etc. Its importance and success lie in the transparency of information, the competence and investors security, which allow authorized agents (called Brokerage office in Ecuador) to do transactions on behalf of their clients. In this country, the stocks markets of Guayaquil and Quito were created in 1969 as stock companies. Later in 1993, they were transformed according to the Securities Market Law, in civil non-profit Corporations. This first law gave an important boost to stock market activity. In 1998 a new stock market law is issued, which strengthens the nascent business and beside recognizes the importance which State’s Power sees in it. Thanks to this legal reforms, the operations registered in the stock markets at national level, increased from the GDP’s of 4.77% in 1994 to 12.51 in 2008. The progress is significant. In fact, according to the latest data of the Superintendence of Companies, permits for emissions of the different instruments of financing the stock exchange have risen in the last two years, as shown in the table below.

Consolidated Public Offering Approvals by Sector and Type of Value

In thousands of dollars

Nevertheless of the above mentioned, the way for this market to becoming a real catalyst for development promoter and national prosperity is just beginning. Factors such as the nonexistence of a secondary market, low performance in stock culture, low dematerialization, lower stock and financial culture, poor incentives for savings and long term investments, and incentives to becoming public those companies, as well as the legal framework that allows a regulator and a weak supervisor, among other juncture and structural reasons, inherent and outside the market, now have been prevented with a fully developed market. Therefore, precisely in 2009 and by the initiative of the Executive a new legal framework was presented (currently in process of socialization) that includes significant changes to support this activity by incorporating schemes that increase the depth of capital markets, impels savings and productive investment, Improves the competition and transparency at all levels of the stock exchange, and promotes an independent Controller with capable, timely, fair, effective and efficient management. This Law Project establishes these fundamental principles: safeguarding the public faith, the unskilled investor shelter and promoting the development of productive sectors, strengthening the regulatory, normative and risk oversight, compliance with international standards, among others. The Law regulates the value markets, and its

participants are: investors, stock markets, securities intermediaries, support entities, instruments, etc. It also includes aspects such as the transformation of the stock, in corporations or the mandatory participation as a buyer of titles of the IEES (Social Security). While not advocating the regional equity framework in investments, the emitting of papers and holdings by public companies, as well as the creation of a Superintendence of Securities are the most relevant topics of the Draft Securities Market Act. The project proposes the creation of a Central Security Deposit of the public sector, which would compete with the private sector. This makes us think that the beneficiaries of these competences would be the users, securities companies, financial institutions, public institutions, private investors, etc because in this way, both deposits look to offering the best service, increase efficiency and security levels for their clients participating in market. All the above will allow greater dematerialization of titles, which facilitate the fractionation of issuing securities in multiple divisions of minimum value, a preservation of financial assets (which prevents deterioration) and above all, access to greater number of small investors. Simultaneously, the Draft Law on Securities Market, the Centralized Repository of Securities Clearing and Settlement separate their activities in: 1) deposit and custody, and 2) securities clearing and settlement, as the practice is increasingly widespread in the world. Similarly, establishing the transformation of Stock Exchanges into Public Companies, and as it is in many South American countries, leaving the current figure of Civil Corporations. All the above with the purpose of encouraging further development of stock exchanges, technological innovation, investment, transparency and competition. It also outlines establishing a technological platform to the stock market to boost the existence of a single market which must meet international standards. This is a good opportunity. In this way, it opens the possibility that actors within and outside the market have access to information of these institutions, revealing even more its management, enabling a better control by shareholders to the work of the administration of these institutions which are truly is heading the development and promotion of the stock market. In this project, a special treatment is given in items of issuing securities for small, medium and micro enterprises (SMEs) to gain access - through the market value- to financing and thus popularizing the stock market culture. The aim is that the citizenry has different investment options of the banking system for their savings and above all, improvement of access to financing these companies. According to this bill, a key player in the stock market is the Affiliate Bank, for proposing an investment banking that will fulfil the following functions:

1. Participation in the capital market, through the purchase and sale of papers of fixed rent and variable.

2. Structured financing, to finance public or private investment projects, and 3. Corporative Banking, which could assist in sales, mergers and acquisitions. The

fundamental role of the Affiliate Bank in the stock market is “market maker”, creating a dynamic with liquidity secondary market.

Besides, this project demands the fulfilment of international standards to all the actors of the market, both public and private. So, in a reasonable period of time, the stock market comes closer to the existing international practice, at least in Latin American countries, which obviously would result in improvements in every sense, both for users as well as for investors and clients. It poses a more strict and rigorous control of support agencies, ratings agencies, external auditors, deposits and securities clearing and settlements. All the above is to avoid frauds or offences which could harm investors, for which severe sanctions for offenders will be established. If there is any problem or complaint of investors, the bill creates the Defender of the Investor, to collaborating with the investor to defend their interests and channel the demands to the respective authorities. Another important topic of the project is the strict regulation of the Economic Groups which are part of the stock market; and the Offer for Public Acquisitions-OPAs- which are related to the acquisition of corporation’s control and minority investor protection. A fundamental topic is the obligation of all the participants of the stock market, to applying the practices of a good corporative government, to establishing the ground rules among the shareholders, managers and commissioners, so there won’t be prejudices among the constituent parts of the company and defend the minority shareholder. The bill raises the creation of a Superintendence of Security, as the specialized agency responsible of auditing, monitoring, intervene and control the participants of the stock market. Finally, it advocates the creation of local entities, the Regulator and Supervisor with authority and strength, but above all, the independence and impartiality, so as to providing efficiency, reliability and security to the stock market. In relation to Fund and Trusts Managers a specialization is planned for activities such as Common Fund Management, Trustee businesses and Receivable stocks. The first named will manage the open and closed investment funds, the commercial Trusts of investment, of guarantee and receivables, and the ones in charge of financial investments. The Trustee businesses will exclusively administer the Trusts to be qualified (assets) or the future flows (future roads toll).

With all these reforms, the authorities have declared the intention that the Ecuadorian Stock Market will exceed its current 12% of GDP to 100% in 10 years. In this sense the adoption of measures such as the IEES mandatory participation through the Affiliate Bank, analyzing the quality projects to be safe, is a very important step. Likewise, I consider that a proposal to be included and impelled, might be analyzed the conformation of funds for capital investment, seeds, to boost businesses related to information and technology promoting formal community activities, through association and conformation of legal entities that can access to specialized fund among others. This project demonstrates that there is political will by the authorities on the need to develop this market to reach levels of economic and social welfare. It’s a new window which opens opportunities for the country’s socioeconomic agents. This is intended for Ecuador’s undertaking a more predictable path to sustainable development and prosperity.

The small and medium size hotels which aren’t globalize,

will have serious difficulties to survive in the future

Andre Obiol, MBA*

The hotels of small and medium dimensions are facing critical moments of their life cycles: they must decide to specialize and globalize or continue with an empirical administration and be out of the market. Currently there are a great amount of low quality hotels, with lack of processes of specialization and diversification of its product; this is, without adding value to be differentiating factors of competence. To this must be added that Ecuador has lost competitiveness in the tourist offer by different economic factors and specially again for the blunders that occur day by day both in the consolidation of the tourism product as well as with their marketing strategies. Moreover, inexperienced businessmen in the hotel industry, consider that opening a hotel is an easy task with high economic returns. As a result shortly after they obtain a misaligned product for supply and demand, with many difficulties to position, and what is worse, to operate it. This already happens in several cities of the country in which also low indexes of unemployment are shown; as a great solution, hoteliers decide lowering their rates. Therefore they don’t win either by occupation or for rates, this is, that eventually they will kill the hotel offer which already is complicated and dying. While Ecuador is still positioning itself as a global touristic destination, there are greater challenges and commitments for hotel operators, they must meet specialized expertise in some cases and unfair in others, and moreover must seek new channels of distribution. However, the biggest problem is that still they aren’t aware that to sell them, they must first have the product. The creation of the hotel product is something that goes uphill for the empirical hoteliers, because as in many cases they have created white elephants, entirely misplaced in the market. On the other hand they must: update and renew its infrastructure, implement the best equipment and technologies, build business/operative processes and control mechanisms for efficient and quality services. Finally they must integrate a skilled and trained human resource. Consequently if the hoteliers of small and medium dimension do not take the path of globalization, the consequences could be: *Loss of competitiveness. *Loss of quality service and product. *Loss of opportunities for business. *Finally, loss of money, even including the business.

Advantageously there are ways to escape from these hotel disasters. The mechanisms to get out of the crisis could be: *Search for advisory or consulting in companies or specialized persons. *Submit your hotels to specialized national or foreign operating companies. *Search for product improvement through the purchase of franchises. *Avoid taking on new businesses if there is no know how to do it. *Get associated with hotel chains. *Get associated with central reserves. *Diversifying the product. *To specialize the service and product. If the hotel management of the new era follow these steps, it could achieve a successful business. Finally, they should base themselves in successful hotelier business, of countries which have really understood the concept of what tourism is. Some of them are France, Costa Rica, Thailand, Spain, United States, among other world destinies. *Executive Master of INCAE’s Business School. He is the current Executive Director of Services at the Private Technical University of Loja (UTPL); Researcher at the University Teaching.

Economic News from Ecuador

Refinery Studies

The government subscribed a contract with a South Korean company SK&EC, to finance the basic engineering stage for the implementation of the Pacific Refinery. The contract amount is $259.9 million of which was cancelled a deposit of 10% or $26 million. Public sector expenses For October 2.000 the non financial Public Sector spending reached $ 15.531 million or the GDP’s 30%, without including spending in fuel subsidies of about $ 2.000 million. It’s hoped that at the end of 2009, the spending exceed the $ 20.000 million. Higher salaries for bureaucracy

By decision No. 22 of 2010 the Ministry of Labor Relations approves a new pay scale for public employees. Grade one goes from $ 478 to $500 monthly, grade 20 –the highest- goes from $3.220 to $ 3.380. Increases are in force since January 2010. Oil production continues declining In January 2010, in relation to January 2009, oil production drops 8%, from 15.6 to 14.3 million barrels. In relation to December 2009, the production reduces 1.5%. Accounts for petroleum products import By Decree No. 253 of February 20th, it is established that the Central Bank could supply in the Financing Account for Oil Products, with the oil resources, the differences that Finance requires to import oil products which takes resources from the Treasury. Petroleum products import goes upward

Between 2009-2006, the import volume of petroleum products grew 24%. The imports of high octane gasoline grew by 24% and 23 % diesel. Consumption continues growing while subsidies of petroleum products grow because the prices are tied up.

Paradox: declining public debt and high risk

In January 2010 the local debt dropped from $2.842 million to $ 2.826 million and the foreign, lightly increased from $ 4 million, to $ 7.68 million. The public rate ratio to GDP does not exceed 20%, however, the country risk of 810 points is the highest in Latin America. The country has no access to financing. Insignificant foreign investment In the first three-month periods of 2000 the direct foreign investment was of $469 million, 44% less than 2008. It represented a quarter of the remittances. Financing of public expenditure in 2009 In 2009 the budget expenditures could be financed by distant sources of market confidence: IEES bonds $550 million, loan of Petrochina $ 1.000 million, FLAR loan $ 480 million, donation from the IMF $ 400 million, revaluation of gold and Central Bank profits about $ 675 million.