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Monday, August 27, 2012

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

Clare Ribando Seelke
Specialist in Latin American Affairs

The United States has maintained a strong interest in developments in El Salvador, a small Central American country with a population of 6 million. During the 1980s, El Salvador was the largest recipient of U.S. aid in Latin America as its government struggled against the leftist 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 successive Nationalist Republican Alliance (ARENA) governments rebuild democracy and implement market-friendly economic reforms.

In March 2009, Mauricio Funes, a former television journalist and the first FMLN presidential candidate without a guerilla past, defeated Rodrigo Ávila of the conservative ARENA party for a five-year presidential term. His inauguration marked the end of more than 20 years of ARENA rule and the first transfer of 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 legislative elections. During the first half of his term, President Funes generally pursued moderate policies that enabled him to form cross-party coalitions in the National Assembly, but which caused periodic friction between him and more radical members of his party.

Now in his fourth year in office, President Funes still has high approval ratings (65% in June 2012), but faces a number of serious political, economic and security challenges. Since Funes is constitutionally barred from seeking reelection, his political influence has weakened since ARENA replaced the FMLN as the largest party in the legislature as a result of March 2012 elections and both parties have started focusing on the 2014 presidential contest. Nevertheless, Funes is currently trying to help resolve a standoff between the Salvadoran judiciary and legislature over the composition and power of the Supreme Court. The Funes Administration is also seeking to strengthen El Salvador’s recovery from the 2009 global economic crisis. Although the country received significant support from international donors to support its recovery, economic growth has been inhibited by low productivity, natural disasters that have damaged agricultural crops, and insecurity that has deterred investment. Finally, in an attempt to address the country’s high rate of violent crime, the Funes government endorsed a historic—and risky— truce involving the country’s largest gangs. The truce seems to have resulted in a dramatic reduction in homicides since March 2012.

Maintaining close ties with the United States has been a primary foreign policy goal of successive Salvadoran governments, including the Funes Administration. During a March 2011 visit to El Salvador, President Barack Obama praised Funes’ “courageous work to overcome old divisions in Salvadoran society and to show that progress comes through pragmatism.” Both leaders pledged to work together to boost economic growth in El Salvador through the new Partnership for Growth (PFG) initiative and to more effectively ensure citizen security. The PFG commits both governments to work closely together to boost competitiveness in El Salvador and reduce insecurity in the country. U.S. bilateral assistance, which totaled $28.2 million in FY2012, as well as aid provided through the Central American Regional Security Initiative (CARSI) and the Millennium Challenge Corporation (MCC) is supporting PFG priorities. El Salvador is the only country in Latin America for which the Administration requested a substantial increase in funding—to $41.8 million—for FY2013. In addition, the MCC has determined that El Salvador is eligible to submit a proposal for a second compact to develop its southern coastal region.

Date of Report: August 13, 2012
Number of Pages: 21
Order Number: RS21655
Price: $29.95

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