Caribbean & Central America - March 2012 (ISSN 1741-4458)

All eyes in El Salvador are on the congressional elections on 11 March. However, the outcome of this is likely to be far less significant than the evolution of an economic agreement with the US designed to drive the country’s development on myriad fronts. The government of President Mauricio Funes is desperate to push up growth rates in order to raise more revenue for social programmes to reduce poverty and create more jobs to keep disillusioned youths from drifting into crime.

Congressional elections in El Salvador rarely throw up many surprises. Unless the ruling left-wing Frente Farabundo Martí para la Liberación Nacional (FMLN) or the main right-wing opposition Alianza Republicana Nacionalista (Arena) manage to secure an unprecedented majority of 43 in the 84-seat legislative assembly, there is unlikely to be much change. These elections are much more interesting than past contests in the sense that independent candidates can stand for the first time, and voters can express their preference for specific candidates on party lists rather than the party simply frontloading lists with bigwigs who are thus guaranteed to reclaim their seats election after election. But, ultimately, the elections are likely to produce a similarly balanced result where neither the Left nor the Right controls congress.

The biggest concern for El Salvador is not minor musical chairs in congress but bolstering the economy, which grew by just 1.4% in 2011, the lowest rate of growth in the region, and has by and large stagnated since dollarisation in 2001. The prime objective of the Partnership for Growth (PFG), which El Salvador signed with the US on 3 November, is to identify barriers for improved growth to spur development and help to reduce poverty.

A joint US-El Salvador economic team, which conducted an analysis of the constraints to growth in El Salvador, concluded that crime and insecurity and low productivity in tradables were the most serious constraints. No great surprise. It produced a five-year plan for 2011-2015 to tackle these constraints, including improving infrastructure, investing in human capital, and encouraging financial capital. The goals for tackling crime and insecurity include strengthening rule of law institutions and professionalising the police, although this problem clearly requires a totally holistic approach, as it provides a classic ‘Catch-22’ challenge: without economic growth, tackling all the causes of insecurity is beyond the State; but, unless insecurity is reduced, the environment required to foster economic growth is very difficult to create.

The PFG is trying to address this. At the end of February the two countries agreed upon a ‘monitoring and evaluation framework’ to track progress towards meeting 20 specific goals such as: reducing the national homicide rate; improving the public perception of insecurity; increasing prosecutions and convictions as a percentage of violent crimes reported; generating per capita GDP growth; increasing exports as a percentage of GDP; and raising foreign direct investments as a percentage of GDP. It hopes that by transparently monitoring specific goals in this manner other donor governments and international institutions will be encouraged to participate, as well as civil society, and gradually a real difference can be made.

Eric Postel, USAID’s new Assistant Administrator for the Bureau of Economic Growth, Agriculture, and Trade, who is overseeing the PFG, said El Salvador was a long way ahead of the other three countries pursuing a PFG - Ghana, the Philippines and Tanzania – as the Funes administration has also created a ‘council of growth’ including five high-profile Salvadorean businessmen and five government officials to help develop a strategic agenda to feed into the PFG.

• Security

US Secretary of Homeland Security Janet Napolitano visited San Salvador during a mini-tour of the region at the turn of the month. She signed an agreement with retired General David Munguía Payés, the justice and public security minister, affirming shared commitment to enhancing information sharing and aviation security. The orthodox wing of the FMLN alleges that the US conditioned the approval of the ‘Partnership for Growth’ scheme with El Salvador on the replacement of Munguía’s predecessor, Manuel Melgar, a former FMLN guerrilla. Munguía denied the new accord would lead to an increased militarisation of public security although since his appointment another military man replaced another guerrilla at the head of the national police (PNC) [RC-12-02].