Republic of El Salvador
Area: 21,476 sq. km. (8,260 sq. mi.); about the size of Massachusetts.
Cities: Capital--San Salvador (pop. 1.7 million). Other cities--San Miguel, Ahuachapan, Santa Ana, Sonsonate.
Terrain: Mountains separate country into three distinct regions--southern coastal belt, central valleys and plateaus, and northern mountains.
Climate: Semitropical, distinct wet and dry seasons.
Nationality: Noun and adjective--Salvadoran(s).
Population (2000): 6.2 million.
Annual growth rate (2000): 1.85%.
Ethnic groups: Mestizo 90%, indigenous 1%, caucasian 9%.
Religion: Largely Roman Catholic, with growing Protestant groups throughout the country.
Education: Free through ninth grade. Attendance (grades 1-9)--82%. Literacy--72% among adults.
Health: Infant mortality rate (2000)--28/1,000. Life expectancy (2000)--males 67 yrs., females 74 yrs.
Work force (about 2.4 million): Agriculture--25%; services--21%; commerce--22%; manufacturing--19%; construction--7%; transportation and communication--4% other--2%.
Constitution: December 20, 1983.
Independence: September 15, 1821.
Branches: Executive--president and vice president. Legislative--84-member Legislative Assembly. Judicial--independent (Supreme Court).
Administrative subdivisions: 14 departments.
Political parties (represented in the Legislature): Farabundo Marti National Liberation Front (FMLN), Nationalist Republican Alliance (ARENA), National Conciliation Party (PCN), Christian Democratic Party (PDC), and the National Action Party (PAN), United Democratic Center (CDU).
Suffrage: Universal at 18.
GDP: $13.1 billion. ($24 billion PPP)
Annual growth rate: 2.5%.
Per capita income: $2,096. ($4,000 PPP)
Agriculture (12% of GDP): Products--coffee, sugar, livestock, corn, poultry, and sorghum. Arable, cultivated, or pasture land--64%.
Industry (22% of GDP): Types--food and beverage processing, textiles, footwear and clothing, chemical products, petroleum products, electronics.
Trade: Exports--$2.8 billion: textiles, coffee, sugar, and shrimp. Major markets--U.S. 63%, Central American Common Market (CACM) 25%, European Union (EU) 4%. Imports--$4.6 billion: consumer goods, foodstuffs, capital goods, raw industrial materials, and petroleum. Major suppliers--U.S. 52%, CACM 16%, Mexico 6%, EU 2%, Japan 3%.
El Salvador's population numbers about 6.2 million; almost 90% is of mixed Indian and Spanish extraction. About 1% is indigenous; very few Indians have retained their customs and traditions. The country's people are largely Roman Catholic--though Protestant groups are growing--and Spanish is the language spoken by virtually all inhabitants. The capital city of San Salvador has about 1.7 million people; an estimated 42% of El Salvador's population live in rural areas.
Before the Spanish conquest, the area that is now El Salvador was made up of two large Indian states and several principalities. The indigenous inhabitants were the Pipils, a tribe of nomadic Nahua people long-established in Central Mexico. Early in their history, they became one of the few Mesoamerican Indian groups to abolish human sacrifice. Otherwise, their culture was similar to that of their Aztec neighbors. Remains of Nahua culture are still found at ruins such as Tazumal (near Chalchuapa), San Andres (northeast of Armenia), and Joya De Ceren (north of Col�n). The first Spanish attempt to subjugate this area failed in 1524, when Pipil warriors forced Pedro de Alvarado to retreat. In 1525, he returned and succeeded in bringing the district under control of the Captaincy General of Guatemala, which retained its authority until 1821, despite an abortive revolution in 1811.
In 1821, El Salvador and the other Central American provinces declared their independence from Spain. When these provinces were joined with Mexico in early 1822, El Salvador resisted, insisting on autonomy for the Central American countries. Guatemalan troops sent to enforce the union were driven out of El Salvador in June 1822. El Salvador, fearing incorporation into Mexico, petitioned the U.S. Government for statehood. But in 1823, a revolution in Mexico ousted Emperor Augustin Iturbide, and a new Mexican congress voted to allow the Central American provinces to decide their own fate. That year, the United Provinces of Central America was formed of the five Central American states under Gen. Manuel Jose Arce. When this federation was dissolved in 1838, El Salvador became an independent republic. El Salvador's early history as an independent state--as with others in Central America--was marked by frequent revolutions; not until the period 1900-30 was relative stability achieved.
The economic elite ruled the country in conjunction with the military, and the power structure was controlled by a relatively small number of wealthy landowners, known as the 14 Families. The economy, based on coffee growing, prospered or suffered as the world coffee price fluctuated. From 1932--the year of Gen. Maximiliano Hernandez Martinez's coup following his brutal suppression of rural resistance--until 1980, all but one Salvadoran temporary president was an army officer. Periodic presidential elections were seldom free or fair.
From Military to Civilian Rule
From the 1930s to the 1970s, authoritarian governments employed political repression and limited reform to maintain power, despite the trappings of democracy. During the 1970s, the political situation began to unravel. In the 1972 presidential election, the opponents of military rule united under Jose Napoleon Duarte, leader of the Christian Democratic Party (PDC). Amid widespread fraud, Duarte's broad-based reform movement was defeated. Subsequent protests and an attempted coup were crushed and Duarte exiled. These events eroded hope of reform through democratic means and persuaded those opposed to the government that armed insurrection was the only way to achieve change. As a consequence, leftist groups capitalizing upon social discontent gained strength. By 1979, leftist guerrilla warfare had broken out in the cities and the countryside, launching what became a 12-year civil war. A cycle of violence took hold as rightist vigilante death squads in turn killed thousands. The poorly trained Salvadoran Armed Forces (ESAF) also engaged in repression and indiscriminate killings.
After the collapse of the Somoza regime in Nicaragua that year, the new Sandinista government provided large amounts of arms and munitions to five Salvadoran guerrilla groups. On October 15, 1979, reform-minded military officers and civilian leaders ousted the right-wing government of Gen. Carlos Humberto Romero (1977-79) and formed a revolutionary junta. PDC leader Duarte joined the junta in March 1980, leading the provisional government until the elections of March 1982. The junta initiated a land reform program and nationalized the banks and the marketing of coffee and sugar. Political parties were allowed to function again, and on March 28, 1982, Salvadorans elected a new constituent assembly. Following that election, authority was peacefully transferred to Alvaro Magana, the provisional president selected by the assembly.
The 1983 constitution, drafted by the assembly, strengthened individual rights, established safeguards against excessive provisional detention and unreasonable searches, established a republican, pluralistic form of government, strengthened the legislative branch, and enhanced judicial independence. It also codified labor rights, particularly for agricultural workers. The newly initiated reforms, though, did not satisfy the guerrilla movements, which had unified under Cuban auspices--while each retained their autonomous status--as the Farabundo Marti National Liberation Front (FMLN). Duarte won the 1984 presidential election against rightist Roberto D'Aubuisson of the Nationalist Republican Alliance (ARENA) with 54% of the vote and became the first freely elected president of El Salvador in more than 50 years. In 1989, ARENA's Alfredo Cristiani won the presidential election with 54% of the vote. His inauguration on June 1, 1989, marked the first time that power had passed peacefully from one freely elected civilian leader to another.
Ending the Civil War
Upon his inauguration in June 1989, President Cristiani called for direct dialogue to end the decade of conflict between the government and guerrillas. An unmediated dialogue process involving monthly meetings between the two sides was initiated in September 1989, lasting until the FMLN launched a bloody, nationwide offensive in November of that year.
In early 1990, following a request from the Central American presidents, the United Nations became involved in an effort to mediate direct talks between the two sides. After a year of little progress, the government and the FMLN accepted an invitation from the UN Secretary General to meet in New York City. On September 25, 1991, the two sides signed the New York City Accord. It concentrated the negotiating process into one phase and created the Committee for the Consolidation of the Peace (COPAZ), made up of representatives of the government, FMLN, and political parties, with Catholic Church and UN observers.
On December 31, 1991, the government and the FMLN initialed a peace agreement under the auspices of then Secretary General Perez de Cuellar. The final agreement, called the Accords of Chapultepec, was signed in Mexico City on January 16, 1992. A 9-month cease-fire took effect February 1, 1992, and was never broken. A ceremony held on December 15, 1992, marked the official end of the conflict, concurrent with the demobilization of the last elements of the FMLN military structure and the FMLN's inception as a political party.
GOVERNMENT AND POLITICAL CONDITIONS
El Salvador is a democratic republic governed by a president and an 84-member unicameral Legislative Assembly. The president is elected by universal suffrage and serves for a 5-year term by absolute majority vote. A second round runoff is required in the event that no candidate receives more than 50% of the first round vote. Members of the assembly, also elected by universal suffrage, serve for 3-year terms. The country has an independent judiciary and Supreme Court.
The most recent presidential election, in March 1999, was free and fair, but voter turnout was low (39%). ARENA presidential candidate Francisco Guillermo Flores Perez faced Facundo Guardado of the FMLN party and won with 52% of the votes. Since Flores received just over 50% of the votes, a runoff was not required. Francisco Guillermo Flores Perez of the ARENA party began his 5-year term as president in June 1999, and cannot succeed himself. In the March 2000 legislative races, FMLN won 31 seats in the Legislative Assembly, the ARENA won 29, the National Conciliation Party (PCN) 14, the PDC five, and the Coalition Democratic United Center (CDU) and National Action Party (PAN) won 3 and 2 seats, respectively.
As of March 2002, defections and realignments in the Assembly left ARENA with 29 seats, the FMLN with 26, the PCN, 15, and the FMLN-splinter "Renewal Movement (MR)" 5. The governing ARENA party retains a working majority (43) with its PCN allies. The defection of five FMLN dissidents (MR) also stripped the FMLN of its ability to block qualified (two-thirds) majorities required for major legislation, including approval of international loans and confirmation of supreme court justices. The FMLN retains the capital city of San Salvador, where Hector Silva was re-elected overwhelmingly in 2000. Low voter turnout (35% in 2000) remains a concern.
ARENA is El Salvador's leading political party. Roberto D'Aubuisson and other hard-line conservatives, including some members of the military, created the party in 1981. His electoral fortunes were diminished by credible reports that he was involved in organized political violence. Following the 1984 presidential election, ARENA broadened its base, particularly in the private sector. ARENA almost won the election in 1984, with solid private sector and campesino support. By 1989, ARENA had attracted the support of business groups, and Alfredo Cristiani won the presidency. Despite sincere efforts at reform, Duarte's PDC administration had failed to either end the insurgency or improve the economy. Allegations of corruption, poor relations with the private sector, and historically low prices for the nation's main agricultural exports also contributed to ARENA victories in the 1988 legislative and 1989 presidential elections.
The 1989-94 Cristiani administration's successes in achieving a peace agreement to end the civil war and in improving the nation's economy helped ARENA--led by standard-bearer Calderon Sol--keep both the presidency and a working majority in the Legislative Assembly in the 1994 elections. ARENA's legislative position was weakened in the 1997 elections, but it recovered its strength, helped by divisions in the opposition, in time for another victory in the 1999 presidential race that brought President Flores to office.
In the March 2000 legislative and municipal elections, ARENA won 29 seats in the Legislative Assembly and 127 mayoral races. In December 1992, the FMLN became a political party, composed of the political factions of the wartime guerrilla movement, and maintained a united front during the 1994 electoral campaign. The FMLN also came in second in the legislative assembly races. However, internal political differences among the FMLN's constituent parties led to the breakaway of two of the FMLN's original five factions after the 1994 elections.
Despite the defections, the FMLN was able to consolidate its remaining factions and present itself as a viable option to ARENA in the 1997 elections. Divisions between "orthodox" and "reformist" wings of the FMLN crippled the party in the 1999 elections. In the March 2000 legislative and municipal elections, FMLN won 31 seats in the Legislative Assembly, which was three more than rival party ARENA. The 2002 defection of five reformist legislators, however, left the FMLN with 26 seats. FMLN also won 77 mayorships and 10 municipalities in coalition with other parties, including major population centers. The right wing of the National Conciliation Party (PCN), which ruled the country in alliance with the military from the 1960s until 1979, maintains a small electoral base, and gained 10 seats in the March 2000 legislative election. Several smaller parties have in recent years fought for space in the political center with limited success. The PDC--which won more municipal elections in 1994 than did the FMLN, and won the presidency in 1984--is now down to five seats in the Legislative Assembly and is no longer a significant electoral force.
Compliance With the Peace Accords
The peace process set up under the Chapultepec Accords was monitored by the United Nations from 1991 until June 1997 when it closed its special monitoring mission in El Salvador. By January 2001, the government instituted the last outstanding component of implementation of peace accords, establishing a program of benefits for wounded war veterans. The UN voiced its readiness to declare the implementation phase closed but required the agreement of both signatory parties to officially declare the accords implemented. The FMLN has yet to agree to such a declaration. The Government of El Salvador cancelled a 10-year anniversary celebration set for March 15, 2002, after the FMLN threatened to boycott the event for political reasons, and UN Secretary General Annan cancelled his participation. The Government of El Salvador declared the accords finished and asked the UN to do the same.
During the 12-year civil war, human rights violations by both left- and right-wing forces were rampant. The accords established a Truth Commission under UN auspices to investigate the most serious cases. The commission reported its findings in 1993. It recommended that those identified as human rights violators be removed from all government and military posts, as well as recommending judicial reforms. Thereafter, the Legislative Assembly granted amnesty for political crimes committed during the war. Among those freed as a result were the ESAF officers convicted in the November 1989 Jesuit murders and the FMLN ex-combatants held for the 1991 murders of two U.S. servicemen. The peace accords also established the Ad Hoc Commission to evaluate the human rights record of the ESAF officer corps.
In 1993, the last of the 103 officers identified by this commission as responsible for human rights violations were retired, and the UN observer mission declared the government in compliance with the Ad Hoc Commission recommendations. Also in 1993, the Government of El Salvador and the UN established the Joint Group to investigate whether illegal, armed, politically motivated groups continued to exist after the signing of the peace accords. The group reported its findings in 1994 stating that death squads were no longer active but that violence was still being used to obtain political ends. As of 2002, representatives of the full range of political movements, including communists, participate freely in public life and government. There is no evidence of violence being used for political ends. The peace accords provided for the establishment of a Human Rights Ombudsman's Office.
In accordance with the peace agreements, the constitution was amended to prohibit the military from playing an internal security role except under extraordinary circumstances. Demobilization of Salvadoran military forces generally proceeded on schedule throughout the process. The Treasury Police, National Guard, and National Police were abolished, and military intelligence functions were transferred to civilian control. By 1993--9 months ahead of schedule--the military had cut personnel from a war-time high of 63,000 to the level of 32,000 required by the peace accords. By 1999, ESAF strength stood at less than 15,000, including uniformed and non-uniformed personnel, consisting of personnel in the army, navy, and air force. A purge of military officers accused of human rights abuses and corruption was completed in 1993 in compliance with the Ad Hoc Commission's recommendations. The military's new doctrine, professionalism, and complete withdrawal from political and economic affairs leave it the most respected institution in El Salvador.
National Civilian Police
The new civilian police force, created to replace the discredited public security forces, deployed its first officers in March 1993, and was present throughout the country by the end of 1994. As of 1999, the PNC had more than 18,000 officers. The United States, through the International Criminal Investigative Training Assistance Program (ICITAP), has led international support for the PNC and the National Public Security Academy (ANSP), providing about $32 million in nonlethal equipment and training since 1992. The ICITAP program plans to spend $1 million on assistance to the PNC in 2002. The ICITAP mission is to help the ANSP and the PNC to develop more experience in police techniques and procedures and assist with the development of an efficient operation and administration.
The PNC has faced many challenges in building a completely new police force. With common crime rising dramatically since the end of the war, more than 650 PNC officers had been killed in the line of duty. PNC officers also have arrested a number of their own in connection with various high-profile crimes, and a "purification" process to weed out unfit personnel from throughout for force was undertaken late in 2000. U.S. assistance--about $2 million--has been critical in helping start innovative community policing programs that attack the gang problem head-on, training criminal investigators, and improving the training of police supervisors.
Both the Truth Commission and the Joint Group identified weaknesses in the judiciary and recommended solutions, the most dramatic being the replacement of all the magistrates on the Supreme Court. This recommendation was fulfilled in 1994 when an entirely new court was elected. The process of replacing incompetent judges in the lower courts, and of strengthening the attorney generals' and public defender's offices, has moved more slowly. The government continues to work in all of these areas with the help of international donors, including the United States. Action on peace-accord driven constitutional reforms designed to improve the administration of justice was largely completed in 1996 with legislative approval of several amendments and the revision of the Criminal Procedure Code--with broad political consensus.
More than 35,000 eligible beneficiaries from among the former guerrillas and soldiers who fought the war received land under the Peace Accord-mandated land transfer program, which ended in January 1997. The majority of them also have received agricultural credits. The international community, the Salvadoran Government, the former rebels, and the various financial institutions involved in the process continue to work closely together to deal with follow-on issues resulting from the program.
Principal Government Officials
President--Francisco Guillermo FLORES Perez
Vice President--Carlos QUINTANILLA Schmidt
Minister of Foreign Relations--Maria Eugenia Brizuela de AVILA
Ambassador to the United States--Rene LEON
Representative to the OAS--Margarita ESCOBAR Lopez
Representative to the UN--Roberto ANDINO Salazar
El Salvador maintains an embassy in the United States at 2308 California Street NW, Washington, DC 20008 (tel: 202-265-9671). There are consulates in Chicago, Houston, Los Angeles, Miami, New Orleans, New York, and San Francisco.
The Salvadoran economy continues to benefit from a commitment to free markets and careful fiscal management. The impact of the civil war on El Salvador's economy was devastating; from 1979-90, losses from damage to infrastructure and means of production due to guerrilla sabotage as well as from reduced export earnings totaled about $2.2 billion. But since attacks on economic targets ended in 1992, improved investor confidence has led to increased private investment.
Rich soil, moderate climate, and a hard-working and enterprising labor pool comprise El Salvador's greatest assets. Much of the improvement in El Salvador's economy is due to free market policy initiatives carried out by the Cristiani and Calderon Sol governments, including the privatization of the banking system, telecommunications, public pensions, electrical distribution and some electrical generation, reduction of import duties, elimination of price controls on virtually all consumer products, and enhancing the investment climate through measures such as improved enforcement of intellectual property rights.
The post-war boom in the Salvadoran economy began to fade in July 1995 after an abrupt shift in monetary policy was followed by a June increase in the value added tax (VAT) and price hikes in basic public services. The slowdown lingered into 1996. Growth in GDP in 1996 was a mere 2.1%, but by 1997 it had picked up to 4%. In 1998, El Salvador's economy grew by 3.2% compared to the 4.2% growth posted in 1997. The damage caused by Hurricane Mitch to infrastructure and to agricultural production reduced 1998 growth by an estimated .5%. Growth weakened further (to 2.6%) in 1999 due to poor international prices for El Salvador's principal export commodities, weak exports to Central American neighbors recovering from Hurricane Mitch, and an investment slowdown caused by the March 1999 presidential elections and delays in legislative approval of a national budget. It picked up slightly to 3% in 2000. Because of the earthquakes that struck the country in January and February, the economy grew less than 2% in 2001. Inflation for 1998 was 4% and remained stable in 1999-2000. Thanks to the introduction of the U.S. dollar as legal tender and despite the earthquakes, inflation in 2001 was only 3.5%.
Fiscal policy has been the biggest challenge for the Salvadoran Government. The 1992 peace accords committed the government to heavy expenditures for transition programs and social services. Although international aid was generous, the government has focused on improving the collection of its current revenues. A 10% value-added tax, implemented in September 1992, was raised to 13% in July 1995. The VAT is estimated to have contributed 51% of total tax revenues in 1999, due mainly to improved collection techniques. A multiple exchange rate regime that had been used to conserve foreign exchange was phased out during 1990 and replaced by a free-floating rate. The col�n depreciated from five to the dollar in 1989 to eight in 1991, and in 1993, was informally pegged at 8.73 col�nes to the dollar, later adjusted to 8.79.
Large inflows of dollars in the form of family remittances from Salvadorans working in the United States offset a substantial trade deficit and support the exchange rate. The monthly average of remittances reported by the Central Bank is around $150 million, with the total estimated at more than $1.9 billion for 2001. As of December 1999, net international reserves equaled $1.8 billion or roughly 5 months of imports. Having this hard currency buffer to work with, the Salvadoran Government undertook a "monetary integration plan" beginning January 1, 2001, by which the dollar became legal tender alongside the col�n. No more col�nes are to be printed, the economy is expected to be, in practice, fully dollarized, and the Central Reserve Bank dissolved, by late 2003. The FMLN is strongly opposed to the plan, regarding it as unconstitutional, and plans to make it an issue in the 2003 legislative elections.
Foreign Debt and Assistance
El Salvador's external debt decreased sharply in 1993, chiefly as a result of an agreement under which the United States forgave about $461 million of official debt. As a result, total debt service decreased by 16% over 1992. External debt stood at $2.8 billion at the end of 1999. Debt service amounted to 2.5% of GDP in 1998 and is considered moderate. The Government of El Salvador has been successful in obtaining significant new credits from the international financial institutions.
Among the most significant loans are second structural adjustment loans from the World Bank for $52.5 million, another World Bank loan of $40 million for agricultural reform, a $20 million loan from the Central American Bank for Economic Integration to be used to repair roads, and a $60 million Inter-American Development Bank loan for poverty alleviation projects. Total non-U.S. Government aid, excluding nongovernmental organizations (NGO) assistance and bilateral loan programs, reached $38 million in1999. Although official figures show relatively small and diminishing aid flows, the total is probably larger. Significant amounts come in through NGOs and are channeled to groups not generally included in official statistics, such as political parties, unions, and churches.
Some $300 million has been contracted from international institutions and governments for infrastructure works and social programs to be undertaken. The debt profile is expected to increase over the next several years as the international donor community has pledged $1.26 billion to finance El Salvador's reconstruction and modernization. Large loans now being sought to finance reconstruction from the 2001 earthquakes will further alter the country's debt profile.
Hurricane Mitch (1998) and the Earthquakes (2001). Hurricane Mitch hit El Salvador in late October 1998, generating extreme rainfall of which caused widespread flooding and landslides. Roughly 65,200 hectares were flooded, and the Salvadoran Government pronounced 374 people dead or missing. The areas that suffered the most were the low-lying coastal zones, particularly in the floodplain of the Lempa and San Miguel Grande rivers.
Reconstruction from Mitch was still underway when, in early 2001, the country experienced a series of devastating earthquakes that left nearly 2,000 people dead or missing, 8,000 injured, and caused severe dislocations across all sectors of Salvadoran society. Nearly 25% of all private homes in the country were either destroyed or badly damaged, and 1.5 million persons were left without housing. Hundreds of public buildings were damaged or destroyed, and sanitation and water systems in many communities put out of service. The total cost of the damage was estimated at between $1.5 billion and $2 billion, and the devastation thought to equal or surpass that of the 1986 quake that struck San Salvador. Given the magnitude of the disaster, reconstruction and economic recovery will remain the primary focus of the Salvadoran Government for some time to come.
Response. The Hurricane Mitch disaster prompted a tremendous response from the international community governments, NGOs, and private citizens alike. Sixteen foreign governments--including the United States, 19 international NGOs, 20 Salvadoran embassies and consulates, and 20 private firms and individuals provided El Salvador with in-kind assistance. The Government of El Salvador reports that 961 tons of goods and food were received. The Ministry of Foreign Affairs estimates that contribution in cash given directly to the Salvadoran Government totaled $4.3 million. The U.S. Government has provided $37.7 million in assistance through USAID and the U.S. Departments of Agriculture and Defense.
Following the 2001 earthquakes, the U.S. embassy assumed a leading role in implementing U.S. sponsored assistance. The U.S. Government responded immediately to the emergency, with military helicopters active in initial rescue operations, delivering emergency supplies, rescue workers, and damage assessment teams to stricken communities all over the country. USAID's Office of Foreign Disaster Assistance had a team of experts working with Salvadoran relief authorities immediately after both quakes, and provided assistance totaling more than $14 million. In addition, the Department of Defense provided an initial response valued at more than $11 million. For long-term reconstruction, the international community offered a total aid package of $1.3 billion, over $168 million of it from the United States.
El Salvador historically has been the most industrialized nation in Central America, though a decade of war eroded this position. In 1999, manufacturing accounted for 22% of GDP. The industrial sector has shifted since 1993 from a primarily domestic orientation to include free zone (maquiladora) manufacturing for export. Maquila exports have led the growth in the export sector and in the last 3 years have made an important contribution to the Salvadoran economy.
El Salvador's balance of payments continued to show a net surplus. Exports in 1999 grew 1.9% while imports grew 3%, narrowing El Salvador's trade deficit. As in the previous year, the large trade deficit was offset by foreign aid and family remittances. Remittances are increasing at an annual rate of 6.5%, and an estimated $1.9 billion entered the national economy during 2001. Private foreign capital continued to flow in, though mostly as short-term import financing and not at the levels of previous years. The Central American Common Market continued its dynamic reactivation process, now with most regional commerce duty-free.
In September 1996, El Salvador, Guatemala, and Honduras opened free trade talks with Mexico. Although tariff cuts that were expected in July 1996 were delayed until 1997, the Government of El Salvador is committed to a free and open economy. Total U.S. exports to El Salvador reached $2.1 billion in 1999, while El Salvador exported $1.6 billion to the United States. U.S. support for El Salvador's privatization of the electrical and telecommunications markets has markedly expanded opportunities for U.S. investment in the country. More than 300 U.S. companies have established either a permanent commercial presence in El Salvador or work through representative offices in the country. The Department of Commerce maintains a Country Commercial Guide for U.S. businesses seeking detailed information on business opportunities in El Salvador.
Agriculture and Land Reform
Before 1980, a small economic elite owned most of the land in El Salvador and controlled a highly successful agricultural industry. About 70% of farmers were sharecroppers or laborers on large plantations. Many farm workers were under- or unemployed and impoverished. The civilian-military junta, which came to power in 1979, instituted an ambitious land reform program to redress the inequities of the past, respond to the legitimate grievances of the rural poor, and promote more broadly based growth in the agricultural sector. The ultimate goal was to develop a rural middle class with a stake in a peaceful and prosperous future for El Salvador. At least 525,000 people--more than 12% of El Salvador's population at the time and perhaps 25% of the rural poor--benefited from agrarian reform, and more than 22% of El Salvador's total farmland was transferred to those who previously worked the land but did not own it. But when agrarian reform ended in 1990, about 150,000 landless families still had not benefited from the reform actions. The 1992 peace accords made provisions for land transfers to all qualified ex-combatants of both the FMLN and ESAF, as well as to landless peasants living in former conflict areas. The United States undertook to provide $300 million for a national reconstruction plan. This included $60 million for land purchases and $17 million for agricultural credits. USAID remains actively involved in providing technical training, access to credit, and other financial services for many of the land beneficiaries.
In March 2001, President Flores met with President Bush in Washington, D.C., to discuss the disastrous earthquakes that had recently struck El Salvador, and U.S. support for the process of recovery and reconstruction. Salvador is a member of the United Nations and several of its specialized agencies, the Organization of American States (OAS), the Central American Common Market (CACM), the Central American Parliament (PARLACEN), and the Central American Integration System (SICA). It actively participates in the Central American Security Commission (CASC), which seeks to promote regional arms control. El Salvador also is a member of the World Trade Organization and is pursuing regional free trade agreements. An active participant in the Summit of the Americas process, El Salvador chairs a working group on market access under the Free Trade Area of the Americas initiative. El Salvador has joined its six Central American neighbors in signing the Alliance for Sustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSA to promote sustainable economic development in the region.
In July 1969, El Salvador and Honduras fought the 100-hour Soccer War over disputed border areas and friction resulting from the 300,000 Salvadorans who had emigrated to Honduras in search of land and employment. The catalyst was nationalistic feelings aroused by a series of soccer matches between the two countries. The two countries formally signed a peace treaty on October 30, 1980, which put the border dispute before the International Court of Justice (ICJ). In September 1992, the Court issued a 400-page ruling, awarding much of the disputed land to Honduras. Although there have been tensions between citizens on both sides of the border, the two countries have worked to maintain stability and signed an agreement in November 1996 to establish a framework for negotiating the final disposition of citizens and property in the affected areas. El Salvador and Nicaragua dispute some Honduran claims in the Gulf of Fonseca, and El Salvador may appeal this aspect of the 1992 ICJ ruling. El Salvador and Honduras share normal diplomatic and trade relations.
U.S.-Salvadoran relations remain close and cordial. U.S. policy toward El Salvador seeks to promote the strengthening of El Salvador's democratic institutions, rule of law, judicial reform, and civilian police and national reconciliation and reconstruction, economic opportunity, and growth.
Bilateral aid in general has declined since the end of the war with FY 1999 total economic assistance projected at $38 million. The Salvadoran Government relies increasingly on loans from international lending institutions to finance special projects.
U.S. ties to El Salvador are dynamic and growing. More than 9,000 American citizens live and work full-time in El Salvador. Most are private businesspersons and their families, but a small number of American citizen retirees have been drawn to El Salvador by favorable tax conditions. The embassy's consular section provides the full range of visa, passport, federal benefit, absentee voting, and related citizenship services to this community. The American Chamber of Commerce in El Salvador is located at 87 Avenida Norte No. 720, Apto. A, Col�nia Escalon, San Salvador, El Salvador (tel: 011-503-223-3292; fax: 011-503-224-6856).
Principal U.S. Embassy Officials
Ambassador--Rose M. Likins
Deputy Chief of Mission--Philip French
USAID Mission Chief--Mark Silverman
Political Counselor--Kevin M. Johnson
Economic Counselor--Matthew Rooney
Public Affairs Officer--Marjorie Coffin
The U.S. Embassy in El Salvador is located at Final Blvd. Santa Elena, Antiguo Cuscatl�n, La Libertad (tel: 011-503-278-4444; fax: 011-503-278-6011).
Other Contact Information
U.S. Department of Commerce
International Trade Administration
Office of Latin America and the Caribbean
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 202-482-1658; 1-(800)USA-TRADE
Caribbean/Latin American Action
1818 N Street, NW, Suite 310
20036 Tel: 202-466-7464