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Monday, November 26, 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. President Funes has generally pursued moderate policies that have enabled him to form cross-party coalitions in the National Assembly, but 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, but faces a number of serious challenges. His political influence has weakened since ARENA replaced the FMLN as the largest party in the legislature and the attention of both parties has turned to the 2014 presidential contest, which President Funes is constitutionally barred from contesting. Nevertheless, Funes successfully mediated a resolution to a months-long standoff between the Salvadoran judiciary and legislature over the composition and power of the Supreme Court in August 2012. In the economic realm, the Funes Administration is seeking to boost investment and growth, which has been inhibited by low productivity, natural disasters, and insecurity in the country. 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 has 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 the Funes Administration. During a March 2011 visit to El Salvador, President Barack Obama and President Funes pledged to strengthen cooperation through the new Partnership for Growth (PFG) initiative. The PFG commits both governments to work closely together to boost competitiveness and reduce insecurity in El Salvador. U.S. bilateral assistance, which totaled $28.2 million in FY2012, as well as aid provided through the Central American Regional Security Initiative (CARSI), is supporting PFG priorities. The Administration requested an increase in funding—to $41.8 million—for El Salvador for FY2013. The Millennium Challenge Corporation (MCC) recently closed out a five-year $461 million program that helped develop El Salvador’s northern border region. MCC has determined that El Salvador is eligible to submit a second compact proposal to develop its southern coastal region. It is as yet unclear how the U.S. Treasury Department’s designation of the MS-13 gang as a major transnational criminal organization whose assets will be targeted may affect bilateral anti-gang efforts. See: CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress, by Peter J. Meyer and Clare Ribando Seelke.

Date of Report: November 14, 2012
Number of Pages: 24
Order Number: RS21655
Price: $29.95

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