EL SALVADOR'S NEW BEGINNING




Over the last few years, the remarkably resilient people of El Salvador have been taking meaningful strides to overcome long-standing adversity and their efforts have created a new beginning that is catapulting the country into the vanguard of Central America's rising stars.  With a history of conflict, poverty and natural disaster, Central America's smallest nation has countered its misfortune and emerged as a stable society with one of the region's most dynamic economies.  A complex interaction of domestic and international influences have resulted in sustained economic opportunity which is based partly on signficant connections to global trade and investment.  The ongoing changes are motivating and challenging the country's self-reliant people who are striving for prosperity without compromising national self-determination.  While El Salvador's sudden prominence seems to be improving the quality of life, there is a growing dependence on foreign investment and multinational corporations.  There are questions about whether the new prosperity will continue to benefit the local economy or be funneled to large overseas sponsors as the economy expands.  Moreover, the cost of living is increasing and some areas of the country have experienced a rise in crime rates as the society experiences rapid transition.  Salvadorans are cognizant of the complex challenges that remain and the need for ongoing efforts to ensure lasting improvement and to overcome the negative side effects that have occurred.  Yet there is a rising level of confidence and increasing optimism in a land where possibilities are expanding along with the country's stabilization.  With high expectations, the people of El Salvador are taking an active role in setting a pragmatic agenda as the country adjusts to a new era.

EXPANDING HORIZONS

The OAS publication, "AMERICAS," offers an insightful report that elaborates on recent developments while emphasizing a positive view for the future.  According to the article, the country has a stable economic system and a democratic government with elections that are characterized by one of the highest voter participation rates in the world.  With a 3.5% growth rate and a GDP that is around $17 billion, El Salvador is one of only three Latin American countries with an investment grade rating.  El Salvador has adopted the U.S. dollar as its currency which has reduced government overhead and made the country more attractive to overseas investors.  Investment is also encouraged by the lowest interest rates in the region as well as the country's embrace of the Central America Free Trade Agreement.  Since CAFTA provisions tend to favor the capacity of large corporations, El Salvador is taking steps to support small and mid sized companies as they strive to adapt and compete in a changing market place.  It is hoped that intensive investment and economic expansion will diminish the extensive poverty that remains in some areas of the country.  The Millennium Challenge Corporation (a U.S. Development Agency) has allocated over half a billion dollars for assistance and infrastructure programs in El Salvador's poorest region where nearly one million people live in extreme poverty.  El Salvador's government is planning a number of development projects which are said to be public works programs aimed at reducing poverty and improving the standard of living.  Construction of the "Dry Canal" is the largest public works project currently in progress and it is an ambitious undertaking.  Construction of a deep water port that can accommodate the newest and largest ships is being combined with a new road to Puerto Cortez in Belize.  Supported by $198 million in Japanese financing, the state-of-the-art port is intended for new ships that are too large for the Panama Canal.  When the Port of Cutuco is complete and the road to Puerto Cortez is established, there will be a rapid six hour transit linking the Atlantic and Pacific oceans.

SALVADORANS SHAPING THE FUTURE

The foundation for today's prosperity has been created largely by the Salvadoran people themselves.  Nearly 3 million Salvadorans live and work abroad.  Their remarkable talent and initiative has driven the surge in El Salvador's fortunes as remittances contribute 3 billion dollars to the country's economy.  This money sent back from earnings abroad accounts for a substantial portion of El Salvador's Gross Domestic Product and the United States is the primary source of this income.  An epic migration has been underway for over three decades and it is a reflection of one of Central America's most tragic events.  El Salvador experienced a large scale exodus during the turbulent 1980's when nearly a quarter of the country's population became refugees from the bloody civil war of 1980-1991.  While many Salvadorans believed that American involvement exacerbated the conflict, the U.S. was also viewed as a safe haven for refugees.  Of the three million people who left El Salvador, 95 percent moved to the United States.  California alone is now home to over one million Salvadorans and there are large Salvadoran communities in New York and Florida.  The Salvadorans adapted well to American life and have been providing substantial support to relatives back in El Salvador.  This remittance is increasingly directed toward expanded forms of support as American Salvadorans are financing economic innovation and offering business knowledge gained through experience in America.  As a result, traditional trades and skills that have served El Salvador's people for centuries are being applied through small business endeavors.  The American Salvadorans are investing large sums in El Salvador's economic infrastructure and this pivotal contribution is creating a solid foundation for the country.  The well integrated and broadly based economy draws on a wellspring of modest enterprises that are responsive to the country's needs.  This versatile, grassroots economic system accommodates the natural environment and reflects the culture of El Salvador.  Participation from overseas Salvadorans has been instrumental in guiding El Salvador's course of action and it has been a primary catalyst for the country's resilience.

THE SALVADORAN PARADOX

While the "AMERICAS" article is informative and insightful, it is somewhat incomplete and it tends to overlook several crucial issues.   There is some concern that the influence of Salvadorans at home and abroad could diminish as economic expansion becomes increasingly dependent on the asymmetric dynamics of a global economy.  The basic disparity between the developed and undeveloped world has often resulted in the usurpation or co-opting of the smaller economy by the larger economy.  Moreover, national sovereignty can be compromised when interaction with global organizations is unilateral in nature and dependent on initiatives from one side.  El Salvador is walking a tightrope, balancing the demands of global economics with the requirements of national determination and economic independence.  The country is attempting to connect with the macro scale resources of international institutions without compromising the local control that has been fostered by Salvadorans at home and abroad.  This paradox could represent a valid paradigm for the Third World if interaction with the global economy is responsive in nature and includes a decision making process that is accountable.  To preserve its local entrepreneurial economy and to avoid the pitfalls of monopoly from overseas companies, El Salvador needs participation that is active and interactive.  Active in shaping the goals of the country and interactive with the global institutions that are impacting the country's future.  Interactive participation is the key phrase that serves as a litmus test for determining valid exchange.  Responsive trade is important for the public interest and for free enterprise.  The powerful influence of globalization tends to overwhelm fragile Third World governments and shift the policy focus away from internal goals toward the objectives of the global economy.  large scale international transactions effect the national interest of the countries involved and the public interest is sometimes undermined in the process. Globalization can also stifle free market forces by disrupting the natural dynamic of economic exchange through conglomeration and the monopoly of economic resources.  To safeguard the public interest and to protect free market economics, it is imperative to have an open and interactive exchange in the global arena.  Interactive participation modifies globalization so that it becomes responsive to market forces and accountable to the public interest.  The Salvadoran experience moves from paradox to paradigm when there is participation in the global economy rather than dependence on globalization.  There are some positive indications for El Salvador as the country moves forward.  Time will tell if the reciprocity of interests will continue to overlap in support of a brighter future.

BRANDON PRESS