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Thursday, January 20, 2011

El Salvador: Political, Economic, and Social Conditions and U.S. Relations

Clare Ribando Seelke
Specialist in Latin American Affairs

Throughout the last few decades, the United States has maintained a strong interest in El Salvador, a small Central American country with a population of 7.2 million. During the 1980s, El Salvador was the largest recipient of U.S. aid in Latin America as its government struggled against the Farabundo Marti National Liberation Front (FMLN) insurgency during a 12-year civil war. A peace accord negotiated in 1992 brought the war to an end and formally assimilated the FMLN into the political process as a political party. After the peace accords were signed, U.S. involvement shifted toward helping the government rebuild democracy and implement marketfriendly economic reforms.

Mauricio Funes of the FMLN was inaugurated to a five-year presidential term in June 2009. Funes won a close election in March 2009, marking the first FMLN presidential victory and the first transfer in political power between parties since the end of El Salvador’s civil war. Funes’ victory followed strong showings by the FMLN in the January 2009 municipal and legislative elections, in which the party won a plurality of the seats in the National Assembly and the largest share of the municipal vote.

President Funes still has relatively high approval ratings (69% in November 2010), but faces a number of political, economic, and social challenges. The National Assembly is fragmented, which means that Funes has to form coalitions with other parties in order to advance his legislative agenda. The global financial crisis and U.S. recession negatively impacted El Salvador’s economy, increasing the country’s already widespread poverty. A three-year $790 million agreement signed with the International Monetary Fund (IMF) in March 2010 is helping support economic recovery, but will constrain the Funes’ government’s future fiscal policies. In addition to these political and economic challenges, El Salvador’s violent crime rates remain among the highest in the world and still need to be addressed.

Maintaining close ties with the United States has been a primary foreign policy goal of successive Salvadoran governments. Although some members of Congress expressed reservations about working with an FMLN administration, relations between El Salvador and the United States have remained friendly. After a March 8, 2010, meeting with President Funes at the White House, President Obama said that he was “very favorably impressed by the steps that [Funes is taking] to try to break down political divisions within the country ... focusing on prosperity at every level of Salvadorian society.” Both leaders pledged to continue working together to expand trade through the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), foster development, and combat organized crime. U.S. bilateral assistance, which totaled an estimated $57 million in FY2010, as well as assistance provided through the Central American Regional Security Initiative (CARSI), is supporting those bilateral goals.

Date of Report: January 3, 2011
Number of Pages: 14
Order Number: RS21655
Price: $29.95

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