President Obama in El Salvador: Facing the Central American Challenge James M
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22 WebMemo Published by The Heritage Foundation No. 3203 March 21, 2011 President Obama in El Salvador: Facing the Central American Challenge James M. Roberts and Ray Walser, Ph.D. President Obama’s visit to El Salvador on March El Salvador, with its dollarized economy, active- 22 concludes his first presidential trip to South and ly sought membership in the Central American– Central America. In El Salvador, he will meet with Dominican Republic Free Trade Agreement leftist President Mauricio Funes, visit the tomb of (CAFTA-DR). Today, the U.S. is the destination for Archbishop Romero, and tour a Mayan ruin. The more than 50 percent of El Salvador’s exports. Con- visit to El Salvador is designed to shore up rela- tinued economic reform efforts have, until recent- tions with a country highly representative of the ly, improved El Salvador’s rating in The Heritage challenges and dilemmas facing the U.S. in Central Foundation/Wall Street Journal’s Index of Economic America. Like its neighbors, El Salvador is buffeted Freedom. In 2006, El Salvador and the Millennium by serious economic, social, and security problems Challenge Corporation (U.S.) signed a $461 million and persistent political polarization. compact aimed at education, infrastructure, and Thirty Years of Close U.S.–Salvadoran Rela- service development and poverty reduction—by far tions. In 1980, when President Jimmy Carter was the largest undertaken in the Western Hemisphere. in the White House, El Salvador was a nation torn Centrist or Leftist Democracy. In March 2009, between rule by its military and conservative elite ARENA dominance ended when former journalist and an insurgency led by Marxist-Leninist guer- Mauricio Funes of the FMLN won the presiden- rillas supported by Fidel Castro’s Cuba. During cy with 51.3 percent of the vote. As the nation’s the Reagan Administration, the U.S. conducted chief executive, Funes has steered a largely centrist, a two-pronged strategy aimed at preventing a pragmatic course. His party, however, is still built Marxist-Leninist victory while seeking to curb the around a core of disciplined, old guard guerilla mil- extra-judicial terror of the extreme right and an itants whose anti-American sentiment leans toward unprofessional military. Castro-style communism and the populist authori- With the waning of the Cold War, the George H. tarianism of Venezuela’s Hugo Chavez. While Funes W. Bush Administration worked diplomatically to has reportedly battled more radical elements of the help end the conflict with a sweeping accord that FMLN on issues such as recognition of the Hondu- opened the door for political participation by former ran government of President Porfirio Lobo, he also guerrillas of the Farabundo Marti National Liberation Front (FMLN). Between 1992 and 2009, the right- of-center, pro-business Nationalist Republican Alli- This paper, in its entirety, can be found at: ance (ARENA) dominated the national executive and http://report.heritage.org/wm3203 Produced by the Center for International engaged in competitive multiparty elections. ARENA Trade and Economics (CITE) presidents aligned closely with the U.S., supporting Published by The Heritage Foundation U.S.-led coalition efforts and sending troops to Iraq. 214 Massachusetts Avenue, NE Washington, DC 20002–4999 (202) 546-4400 • heritage.org Nothing written here is to be construed as necessarily reflecting the views of The Heritage Foundation or as an attempt to aid or hinder the passage of any bill before Congress. No. 3203 WebMemo March 21, 2011 broke with ARENA policy by restoring diplomatic status in the U.S., especially if many participants are relations with Castro’s Cuba. Funes inclines toward illegal residents in the U.S. In short, the program the left represented by Brazil’s former President as it stands presents more questions than answers Lula da Silva and current President Dilma Rouseff. and must be approached with extreme caution. He professes a strong desire to maintain close ties The potential for bureaucratic and political abuse with the U.S., international financial institutions, remains high. and the West. Security and Transnational Crime. In the past The Economy and Immigration. El Salvador’s two decades, El Salvador has suffered from high lev- economy suffered during the 2008 economic cri- els of criminal violence and persistent gang activity. sis. Its growth rate in 2009 recovered to 3.5 percent, El Salvador has one of the highest homicide rates in remaining below the rate required to make further the Western Hemisphere, well above that of Mex- inroads against poverty. Increases in the cost of fuel ico. The presence of transnational criminal gangs, and food imports have the potential to seriously or maras, is deeply rooted throughout the country. erode El Salvador’s balance of payments and pru- Government pressure on criminal organizations in dent macroeconomic policy. Mexico is pushing criminality and drug trafficking An estimated 2 million Salvadorans reside in into Central America, where the police and judicia- the U.S., many of them illegally. Salvadorans send ry are poorly prepared to handle increased criminal approximately $3.5 billion in remittances back to activity. their homes annually. An estimated 22.3 percent of The U.S. and Salvadoran governments coop- families in El Salvador receive remittances. erate closely to combat narcotics trafficking and A BRIDGE Too Far? The Obama and Funes organized crime. El Salvador is home to the Interna- Administrations are pursuing ways to leverage tional Law Enforcement Academy, which provides remittance flows away from private consumption to training to police, prosecutors, and other officials create a development tool. According to a new pro- from across the Latin American region. El Salvador’s gram, “Building Remittance Investment for Devel- Air Force installation near Comalapa Airport houses opment Growth and Entrepreneurship,” or BRIDGE a monitoring facility that monitors narco-traffick- for short, Salvadorans in the U.S. will have an alter- ing routes in the Eastern Pacific. The FBI partners native to standard wire transfers and will be able to with El Salvador’s National Civilian Police to oper- deposit and transfer funds via a private bank net- ate a Transnational Anti-Gang unit. The Obama work. Banks will then use deposited funds to make Administration is also upgrading its Central Ameri- loans and raise longer-term capital for investment can Regional Security Initiative (CARSI), which is for Salvadoran development ventures, including the designed to complement support for Mexico and in construction of new roads and bridges, clean water which El Salvador is a central player. projects, and loans for small businesses. Spotlight on Central America. While in El Sal- The BRIDGE initiative was unveiled by Secretary vador, President Obama will direct attention to the of State Hillary Clinton in September 2010. A simi- close connectivity between Central America and the lar program has been outlined for Honduras. While U.S. and the multi-dimensional challenge posed by BRIDGE may have initially inspired optimism, political polarization, weak governing institutions, a considerable margin of ambiguity surrounds crime, and economic insecurity. The President its potential operations. Primary issues at stake needs to deliver several strong messages: include: the extent of government intervention by Democracy. The region must strengthen demo- the U.S. and El Salvador in the planning, funding, cratic institutions and civil society to resist creep- and financing of BRIDGE; the cost to taxpayers; the ing authoritarianism, corruption, and political potential for sequestering private property; the abil- instability. ity to keep the BRIDGE program politically neutral, Economic Freedom. Recognize that El Salva- and the impact—perceived or real—on immigrant dor’s development depends on the continuation page 2 No. 3203 WebMemo March 21, 2011 of its market-friendly, export-led growth model challenge for the Obama Administration is to keep rather than on any state-controlled scheme, such as a focus on the troubled region that extends beyond BRIDGE. a glitzy one-day stopover in San Salvador. Security. Make El Salvador a central participant —James M. Roberts is Research Fellow for Econom- in a comprehensive and sustained effort to combat ic Freedom and Growth in the Center for International transitional crime and drug trafficking in Central Trade and Economics and Ray Walser, Ph.D., is Senior America. Policy Analyst for Latin America in the Douglas and Too often, U.S.–Central American relations are Sarah Allison Center for Foreign Policy Studies, a divi- adjourned until a crisis such as the June 2009 polit- sion of the Kathryn and Shelby Cullom Davis Institute ical crisis in Honduras galvanizes U.S. action. The for International Studies, at The Heritage Foundation. page 3.