BTI 2020 Country Report El Salvador This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2020. It covers the period from February 1, 2017 to January 31, 2019. The BTI assesses the transformation toward democracy and a market economy as well as the quality of governance in 137 countries. More on the BTI at https://www.bti-project.org. Please cite as follows: Bertelsmann Stiftung, BTI 2020 Country Report — El Salvador. Gütersloh: Bertelsmann Stiftung, 2020. This work is licensed under a Creative Commons Attribution 4.0 International License. Contact Bertelsmann Stiftung Carl-Bertelsmann-Strasse 256 33111 Gütersloh Germany Sabine Donner Phone +49 5241 81 81501 [email protected] Hauke Hartmann Phone +49 5241 81 81389 [email protected] Robert Schwarz Phone +49 5241 81 81402 [email protected] Sabine Steinkamp Phone +49 5241 81 81507 [email protected] BTI 2020 | El Salvador 3 Key Indicators Population M 6.4 HDI 0.667 GDP p.c., PPP $ 8317 Pop. growth1 % p.a. 0.5 HDI rank of 189 124 Gini Index 38.0 Life expectancy years 72.9 UN Education Index 0.566 Poverty3 % 8.5 Urban population % 72.0 Gender inequality2 0.397 Aid per capita $ 23.7 Sources (as of December 2019): The World Bank, World Development Indicators 2019 | UNDP, Human Development Report 2019. Footnotes: (1) Average annual growth rate. (2) Gender Inequality Index (GII). (3) Percentage of population living on less than $3.20 a day at 2011 international prices. Executive Summary The results of the 2018 legislative and municipal elections and the 2019 presidential elections were the salient expression of political trends in El Salvador during the past two years. In the case of the legislative elections, the political equation was altered significantly: the ARENA party on the right increased its seats from 35 to 37 while the FMLN party on the left dropped from 31 to 23 seats. The 24 remaining seats were split up among smaller parties mostly on the right, which have been characterized more for their opportunism than their ideological consistency. These results were seen by many as a forecast of the 2019 presidential election: a resurgence of ARENA and its return to control of the government. However, the presidential elections held on February 3 turned into a political revolution. Nayib Bukele (37-years-old), a former mayor of San Salvador (2015-2018), ran as the candidate of his own political movement, Nuevas Ideas, but under the banner of GANA, an offshoot party of ARENA. He won in the first round with 53% of the vote, while the ARENA candidate got 31.7% and the FMLN candidate 14.4%. However, only 51% of registered voters bothered to cast a ballot. Thus, the voting age population expressed both a rejection of traditional party preferences and a considerable indifference toward political participation. The new president assumes office in June 2019. He will have no formal legislative support other than the ten GANA legislators (out of 84 in total) but will have to face a number of issues that continue to challenge the executive and legislative branches of government. One was the near- crisis of the government’s fiscal solvency in 2018, both in terms of regular social and administrative expenditures and of support for pension plans, which had not been able to meet their obligations to retired people. The negotiations between right and left produced an agreement that many criticized as a stopgap measure, which, nonetheless, has provided more time to negotiate a long-lasting solution based on firmer demographic data and reforms of existing pension plans. BTI 2020 | El Salvador 4 The government’s fiscal solvency also was addressed by the Supreme Court, when it ruled in 2017 that the national budget approved by the legislature was unconstitutional because it did not adequately fund certain outlays. It ordered the legislature to reform the budget accordingly and to suspend all new hirings and purchases until these concerns had been addressed. This decision is in line with a more assertive role by the Court in the political debate, which many believe is necessary for the future health of democracy in El Salvador. The work of the office of the attorney general has also been praised for investigating the cases of corruption involving former presidents of the Republic. This is a notable break with the tradition of presidential immunity and in line with president-elect Bukele’s promise to stamp out corruption; however, this would also require that the new attorney general (chosen recently from the ranks of ARENA) continue the work of his predecessor. The results of the 2019 presidential elections will provide an opportunity for testing the lessons and experiences of the past years, especially with regard to issues that cannot be postponed much longer, above all the sluggish performance of the economy, the continued high levels of social violence and spending on education and health in order to meet the country’s commitments to various international development goals. History and Characteristics of Transformation El Salvador’s authoritarian political system began to unravel in the late 1970s when civil disobedience reached levels that made the country ungovernable. The military, which had run the country for nearly half a century, tried to repress dissent but the country sank into civil war. When peace was signed in 1992, a new political system came into existence based on political and civil rights, as well as an economy organized more than ever before along lines of private enterprise and free markets when compared to the much greater level of state intervention and counterinsurgency policies during the war years. Since then, the political debate has involved primarily the ARENA party as the main force on the right and the FMLN on the left. ARENA has become the mainstay of private enterprise and fiscal responsibility. Its candidates won all four presidential elections after 1989 and controlled the executive branch of government until 2009. During their tenure in office, the country experienced an initial period of rapid economic growth and lowered its customs duties. ARENA also presided over the dollarization of the economy in 2000. After 2000, economic growth was less pronounced and practically stopped during the 2008 world economic recession, after which it has been very modest. In 2009, the FMLN’s candidate won the presidential election and there were concerns that the new government would undercut the free-market policies of the ARENA years. Instead, what has characterized the FMLN governments up to the present is a commitment to the disadvantaged sectors of the population via increased spending in education and health, which, together with BTI 2020 | El Salvador 5 government support for pension plans, has put increased pressure on government finances. By 2017, government debt and budget deficits reached a point that was deemed untenable to the point that a law was passed to require the government to prepare budgets with limits on deficit spending and indebtedness. Low economic growth and increases in budgetary outlays are a formula for political confrontation: ARENA demands more fiscal responsibility and the FMLN insists on the need to address the country’s social inequities. To this must be added the explosion of social and criminal violence of the last decade that has fueled a very intense and acrimonious political debate over how it should be addressed. Most agree that social and economic disadvantages are the root problem, aggravated by a large number of children and young people who have been left to fend for themselves after their caregivers (parents mostly) have emigrated in search of better opportunities abroad. There are a number of other issues and problems that have been accumulating over the years. The country is one of the most environmentally degraded on the continent, the result of high levels of population density together with non-sustainable farming practices (peasant farming on slopes and chemically intensive production of crops for export, for example). Water shortages are bound to increase as urban populations grow unabatedly while reliance on food imports is very high. As electoral promises of the past years have failed to materialize, there is growing disenchantment with traditional political parties, compounded by the very serious cases of corruption in the office of the president and other levels of government. This contributed to the election of Nayib Bukele in February 2019 elections, a former mayor of San Salvador who was allied with the FMLN but was expelled from that party for insubordination and who has allied himself with a small party of disgruntled former members of ARENA. His platform is extremely ambitious and has been criticized as not viable or fundable, but it does not represent a departure from the basic consensus on private enterprise and free markets. BTI 2020 | El Salvador 6 The BTI combines text analysis and numerical assessments. The score for each question is provided below its respective title. The scale ranges from 1 (worst) to 10 (best). Transformation Status I. Political Transformation Question 1 | Stateness Score The state’s monopoly on the use of force in principle covers the entire territory of El Monopoly on the Salvador. Since the end of the civil war in 1992, no irregular armed group threatens use of force the state’s ultimate control of any region of the country. However, there are particular 6 pockets where crime levels are persistently high enough to suggest a significant loss of state control over population and territory and its ability to guarantee basic civil and human rights. The state’s police forces – reinforced in some cases by army troops – are mostly unchallenged when patrolling over any portion of the country but some areas, mostly in and around the capital of San Salvador, are strongholds of youth gangs that dispute control over the territory of their neighborhood.