GDP (2007): $20.4 billion; PPP GDP $41.56 billion (2007 IMF estimate).GDP annual real growth rate (2007): 4.7%.Per capita income (2007): $3,547.21; PPP per capita income $5,842 (2007 IMFestimate).Agriculture (11.2% of GDP, 2007): Products--coffee, sugar, livestock, corn, poultry, andsorghum. Arable, cultivated, or pasture land--68% (2005).Industry (20.6% of GDP, 2007): Types--textiles and apparel, medicines, food andbeverage processing, clothing, chemical products, petroleum products, electronics, callcenters.Trade (2007): Exports--$4 billion: textiles and apparel, ethyl alcohol, coffee, sugar,medicines, iron and steel products, tuna, light manufacturing, and paper products. Majormarkets--U.S. 50.8%, Central American Common Market (CACM) 33.7%. Imports--$8.7billion: petroleum, iron products, machines and mechanical devices, cars, medicines,consumer goods, foodstuffs, capital goods, and raw industrial materials. Majorsuppliers--U.S. 35.6%, CACM 16.8%, Mexico 9.8%.PEOPLEEl Salvadors population numbers about 5.7 million. Almost 90% is of mixed Indian andSpanish extraction. About 1% is indigenous; very few Indians have retained theircustoms and traditions. The countrys people are largely Roman Catholic andProtestant. Spanish is the language spoken by virtually all inhabitants. The capital cityof San Salvador has about 1.6 million people; an estimated 37.3% of El Salvadorspopulation lives in rural areas.HISTORYThe Pipil Indians, descendants of the Aztecs, and the Pocomames and Lencas were theoriginal inhabitants of El Salvador.The first Salvadoran territory visited by Spaniards was Meanguera Island, located in theGulf of Fonseca, where Spanish Admiral Andrés Niño led an expedition to CentralAmerica and disembarked on May 31, 1522. In June 1524, the Spanish Captain Pedrode Alvarado started a war to conquer Cuscatlán. His cousin Diego de Alvaradoestablished the village of San Salvador in April 1525. In 1546, Charles I of Spaingranted San Salvador the title of city.During the subsequent years, the country evolved under Spanish rule; however, towardthe end of 1810 many people began to express discontent. On November 5, 1811,when Priest José Matias Delgado rang the bells of La Merced Church in San Salvadorcalling for insurrection, the people began to band together for freedom.In 1821, El Salvador and the other Central American provinces declared theirindependence from Spain. When these provinces were joined with Mexico in early1822, El Salvador resisted, insisting on autonomy for the Central American countries. In1823, the United Provinces of Central America was formed of the five Central Americanstates under Gen. Manuel Jose Arce. When this federation was dissolved in 1838, ElSalvador became an independent republic. El Salvadors early history as anindependent state--as with others in Central America--was marked by frequentrevolutions; not until the period 1900-30 was relative stability achieved. Following adeterioration in the countrys democratic institutions in the 1970s a period of civil warfollowed from 1980-1992. More than 75,000 people are estimated to have died in theconflict. In January 1992, after prolonged negotiations, the opposing sides signed peaceaccords which ended the war, brought the military under civilian control, and allowed theformer guerillas to form a legitimate political party and participate in elections.
GOVERNMENT AND POLITICAL CONDITIONSEl Salvador is a democratic republic governed by a president and an 84-memberunicameral Legislative Assembly. The president is elected by universal suffrage byabsolute majority vote and serves for a 5-year term. A second round runoff is required inthe event that no candidate receives more than 50% of the first round vote. Members ofthe assembly are elected based on the number of votes that their parties obtain in eachdepartment (circumscriptive suffrage) and serve for 3-year terms. The country has anindependent judiciary and Supreme Court. Legislative and municipal elections will beheld in January 2009. Presidential elections will be held in March 2009.Political LandscapeHard-line conservatives, including some members of the military, created the NationalistRepublican Alliance party (ARENA) in 1981. ARENA almost won the election in 1984with solid private sector and rural farmer support. By 1989, ARENA had attracted thesupport of business groups. Multiple factors contributed to ARENA victories in the 1988legislative and 1989 presidential elections, including allegations of corruption in theruling Christian Democratic party which had poor relations with the private sector, andhistorically low prices for the nations main agricultural exports.The successes of Alfredo Cristianis 1989-94 administration in achieving a peaceagreement to end the civil war and in improving the nations economy helped ARENA--led by former San Salvador mayor Armando Calderon Sol--keep both the presidencyand a working majority in the Legislative Assembly in the 1994 elections. ARENAslegislative 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 presidentialrace, bringing President Francisco Guillermo Flores Perez to office. Flores concentratedon modernizing the economy and strengthening bilateral relations with the UnitedStates. Under his presidency El Salvador committed itself to combating internationalterrorism, including sending troops to aid in the reconstruction of Iraq. El Salvador alsoplayed a key role in negotiations for the Central American Free Trade Agreement(CAFTA-DR).Taking advantage of both public apprehension of Flores policies and ARENA infighting,the chief opposition party, the Farabundo Marti National Liberation Front (FMLN), wasable to score a significant victory against ARENA in the March 2003 legislative andmunicipal elections. ARENA, left with only 29 seats in the 84-seat Legislative Assembly,was forced to court the right-wing National Conciliation Party (PCN) in order to form amajority voting bloc. However, in 2003 the PCN entered into a loose partnership withthe FMLN, further limiting ARENAs ability to maneuver in the legislature.Despite these constraints, ARENA made a strong showing in the March 2004presidential election, which was marked by an unprecedented 67% voter turnout.ARENA candidate Elias Antonio "Tony" Saca handily defeated the FMLN candidate andparty head Shafik Handal, garnering 57.7% of the votes cast. The defeat of the FMLNspresidential candidate rekindled an internal FMLN struggle between hardliners andmore moderate members who saw the partys 2004 defeat as a call for reform. Inaddition, the PCN and the two parties that comprise the center/center-left coalition, theUnited Democratic Center (CDU) and the Christian Democratic Party (PDC), faceddissolution for failing to each capture at least 3% of the vote.In March 2006 legislative and municipal elections, the ruling ARENA party garnered 34Assembly deputies and 147 mayoralties, while the opposition FMLN won 32 legislativeseats and 51 city halls (plus 8 additional mayoralties in which they participated as partof a coalition). The PCN, PDC, and CD carried 10, 6, and 2 Legislative Assembly seats,
respectively. As with the 2003-2006 Assembly, the combined 44 seats of ARENA andtheir center-right PCN allies are sufficient for all legislation requiring a 43-vote simplemajority, while the FMLN can still block legislation requiring a two-thirds (56 vote)supermajority. El Salvadors political parties are preparing and planning for 2009, whenpresidential, legislative, and municipal elections will be held in the same year for the firsttime since 1994.Human Rights and Post-War ReformsDuring the 12-year civil war, human rights violations by both the government securityforces and left-wing guerillas were rampant. The accords established a TruthCommission under UN auspices to investigate the most serious cases. The commissionrecommended that those identified as human rights violators be removed from allgovernment and military posts. Thereafter, the Legislative Assembly granted amnestyfor political crimes committed during the war. Among those freed as a result were theSalvadoran Armed Forces (ESAF) officers convicted in the November 1989 Jesuitmurders 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 evaluatethe human rights record of the ESAF officer corps.In accordance with the peace agreements, the constitution was amended to prohibit themilitary from playing an internal security role except under extraordinary circumstances.Demobilization of Salvadoran military forces generally proceeded on schedulethroughout the process. The Treasury Police, National Guard, and National Police wereabolished, and military intelligence functions were transferred to civilian control. By1993--9 months ahead of schedule--the military had cut personnel from a war-time highof 63,000 to the level of 32,000 required by the peace accords. By 1999, ESAF strengthstood at less than 15,000, including uniformed and non-uniformed personnel, consistingof personnel in the army, navy, and air force. A purge of military officers accused ofhuman rights abuses and corruption was completed in 1993 in compliance with the AdHoc Commissions recommendations. The militarys new doctrine, professionalism, andcomplete withdrawal from political and economic affairs leave it one of the mostrespected institutions in El Salvador.More than 35,000 eligible beneficiaries from among the former guerrillas and soldierswho fought in the war received land under the peace accord-mandated land transferprogram, which ended in January 1997. The majority of them also received agriculturalcredits.National Civilian PoliceThe National Civilian Police (PNC), created to replace the discredited public securityforces, deployed its first officers in March 1993 and was present throughout the countryby the end of 1994. The PNC has about 16,000 officers. The United States, through theInternational Criminal Investigative Training Assistance Program (ICITAP) and nowthrough the Department of States Bureau for International Narcotics and LawEnforcement Affairs, led international support for the PNC and the National PublicSecurity Academy (ANSP), providing about $32 million in non-lethal equipment andtraining since 1992.JudiciaryFollowing the peace accords, both the Truth Commission and the Joint Group identifiedweaknesses in the judiciary and recommended solutions, including the replacement ofall the magistrates on the Supreme Court. This recommendation was fulfilled in 1994when an entirely new court was elected, but weaknesses remain. The process ofreplacing judges in the lower courts, and of strengthening the attorney generals and
public defenders offices, has moved slowly. The government continues to work in all ofthese areas with the help of international donors, including the United States. Action onpeace accord-driven constitutional reforms designed to improve the administration ofjustice was largely completed in 1996 with legislative approval of several amendmentsand the revision of the Criminal Procedure Code--with broad political consensus.Principal Government OfficialsPresident--Elias Antonio "Tony" SACA GonzalezVice President--Ana Vilma Albanez DE ESCOBARMinister of Foreign Relations--Marisol ARGUETA DE BARILLASAmbassador to the United States--Rene Antonio Rodriguez LEONRepresentative to the OAS--Abigail CASTRO DE PEREZRepresentative to the UN--Carmen Maria GALLARDO de HernandezEl Salvador maintains an Embassy in the United States at 1400 16th Street NW,Washington, DC, 20036 (tel: 202-265-9671). There are consulates in Atlanta, Boston,Chicago, Dallas, Houston, Las Vegas, Los Angeles, Miami, New York, and SanFrancisco.ECONOMYThe Salvadoran economy continues to benefit from a commitment to free markets andcareful fiscal management. The economy has been growing at a steady and moderatepace since the signing of peace accords in 1992, and poverty has been cut from 66% in1991 to 30.7% in 2006. Much of the improvement in El Salvadors economy is a result ofthe privatization of the banking system, telecommunications, public pensions, electricaldistribution and some electrical generation; reduction of import duties; elimination ofprice controls; and improved enforcement of intellectual property rights. Capping thosereforms, on January 1, 2001, the U.S. dollar became legal tender in El Salvador. Theeconomy is now fully dollarized.The Salvadoran Government has maintained fiscal discipline during post-warreconstruction and reconstruction following earthquakes in 2001 and hurricanes in 1998and 2005. Taxes levied by the government include a value added tax (VAT) of 13%,income tax of 20%, excise taxes on alcohol and cigarettes, and import duties. The VATis the largest source of revenue, accounting for about 52.2% of total tax revenues in2007. El Salvadors public external debt in May 2008 was about $5.5 billion, 27.02% ofGDP.Years of civil war, fought largely in the rural areas, had a devastating impact onagricultural production in El Salvador. The agricultural sector experienced significantrecovery, buoyed in part by higher world prices for coffee and sugarcane and increaseddiversification into horticultural crops. Seeking to develop new growth sectors andemployment opportunities, El Salvador created new export industries through fiscalincentives for free trade zones. The largest beneficiary has been the textile and apparel(maquila) sector, which directly provides approximately 70,000 jobs. Services, includingretail and financial, have also shown strong employment growth, with about 48.7% ofthe total labor force now employed in the sector.Remittances from Salvadorans working in the United States are an important source ofincome for many families in El Salvador. In 2007, the Central Bank estimated thatremittances totaled $3.7 billion. UNDP surveys show that an estimated 22.3% offamilies receive remittances.Under its export-led growth strategy, El Salvador has pursued economic integration with
its Central American neighbors and negotiated trade agreements with the DominicanRepublic, Chile, Mexico, Panama, Taiwan, Colombia, and the United States. CentralAmerican countries began negotiating an Association Agreement with the EuropeanUnion in 2007. Trade agreements with CARICOM and Canada are also undernegotiation, while an agreement with Israel is being considered. Exports in 2007 grew7.4% while imports grew 13.1%. As in previous years, the large trade deficit was offsetby family remittances.The U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR),implemented between El Salvador and the United States on March 1, 2006, provides ElSalvador preferential access to U.S. markets. Textiles and apparel, shoes, andprocessed foods are among the sectors that benefit. In addition to trade benefits,CAFTA-DR also provides trade capacity building, particularly in the environment andlabor areas, and a framework for additional reforms on issues such as intellectualproperty rights, dispute resolution, and customs that will improve El Salvadorsinvestment climate. For sensitive sectors such as agriculture, the agreement includesgenerous phase-in periods to allow Salvadoran producers an opportunity to becomemore competitive.U.S. support for privatization of the electrical and telecommunications markets markedlyexpanded opportunities for U.S. investment in the country. More than 300 U.S.companies have established either a permanent commercial presence in El Salvador orwork through representative offices in the country. The U.S. Department of Commercemaintains a Country Commercial Guide for U.S. businesses seeking detailedinformation on business opportunities in El Salvador.On November 29, 2006, the Government of El Salvador and the Millennium ChallengeCorporation (MCC) signed a five-year, $461 million anti-poverty Compact to stimulateeconomic growth and reduce poverty in the countrys northern region. The grant seeksto improve the lives of approximately 850,000 Salvadorans through investments ineducation, public services, enterprise development, and transportation infrastructure.The Compact entered into force in September 2007 and it is expected that incomes inthe region will increase by 20% over the five-year term of the Compact, and by 30%within ten years of the start of the Compact.Natural DisastersLocated on the Pacifics earthquake-prone Ring of Fire and at latitudes plagued byhurricanes, El Salvadors history is a litany of catastrophe, including the Great Hurricaneof 1780 that killed 22,000 in Central America and earthquakes in 1854 and 1917 thatdevastated El Salvador and destroyed most of the capital city. More recently, anOctober 1986 earthquake killed 1,400 and seriously damaged the nationsinfrastructure. In 1998, Hurricane Mitch killed 10,000 in the region, although ElSalvador--lacking a Caribbean coast--suffered less than Honduras and Nicaragua.Major earthquakes in January and February of 2001 took another 1,000 lives and leftthousands more homeless and jobless. El Salvadors largest volcano, Santa Ana (alsoknown by its indigenous name Ilamatepec), erupted in October 2005, spewing sulfuricgas, ash, and rock on surrounding communities and coffee plantations, killing twopeople and permanently displacing 5,000. Also in October 2005, Hurricane Stanunleashed heavy rains that caused flooding throughout El Salvador. In all, the floodingcaused 67 deaths and more than 50,000 people were evacuated at some point duringthe crisis. Damages from the storm were estimated at $355.6 million.FOREIGN RELATIONSEl 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, and the Central American IntegrationSystem (SICA). It actively participates in the Central American Security Commission(CASC), which seeks to promote regional arms control. From 2002-03, El Salvador waschair of the OAS anti-terrorism coordinating body, CICTE. El Salvador also is a memberof the World Trade Organization and is pursuing regional free trade agreements. Anactive participant in the Summit of the Americas process, El Salvador chairs a workinggroup on market access under the Free Trade Area of the Americas initiative. ElSalvador has joined its six Central American neighbors in signing the Alliance forSustainable Development, known as the Conjunta Centroamerica-USA or CONCAUSAto promote sustainable economic development in the region.El Salvador enjoys normal diplomatic and trade relations with all of its neighboringcountries including Honduras, with which it has previously had territorial disputes. Whilethe two nations continue to disagree over the status of their maritime borders in the Gulfof Fonseca, they have agreed to settle their land-border disputes with the InternationalCourt of Justice (ICJ). In September 1992, the Court awarded most of the territory inquestion to Honduras. In January 1998, Honduras and El Salvador signed a borderdemarcation treaty to implement the terms of the ICJ decree although delays continuedue to technical difficulties.U.S.-SALVADORAN RELATIONSU.S.-Salvadoran relations remain close and strong. U.S. policy toward El Salvadorpromotes the strengthening of El Salvadors democratic institutions, rule of law, judicialreform, national reconciliation and reconstruction, and economic opportunity andgrowth. El Salvador has been a committed member of the coalition of nations fightingagainst terrorism and has sent eleven rotations of troops to Iraq to support OperationIraqi Freedom.U.S. ties to El Salvador are dynamic and growing. More than 19,000 American citizenslive and work full-time in El Salvador. Most are private businesspersons and theirfamilies, but a small number of American citizen retirees have been drawn to ElSalvador by favorable tax conditions. The Embassys consular section provides a fullrange of citizenship services to this community. The American Chamber of Commercein El Salvador is located at World Trade Center, Torre 2, local No. 308, 89 Av. Nte. Col.Escalón, phone: 2263-9494.