Tag Archives: sanchez ceren

Johnny Araya suspends campaign in Costa Rica

johnny After the February 2 first-round votes in both El Salvador and Costa Rica,  I wrote that even though the Costa Rican vote was tighter than the Salvadoran vote, it was easier to predict that Luis Guillermo Solís would defeat San José mayor Johnny Araya (despite just a 1.3% lead for Solís in the first round) in the April 6 runoff than Salvadoran vice president Salvador Sánchez Cerén (with a nearly 10% lead in the first round) would defeat San Salvador mayor Norman Quijano in the March 9 runoff.costa_rica_flag

Sure enough, while Sánchez Cerén is the favorite to win this weekend’s vote in El Salvador, the bigger news from Central America this week was Araya’s decision to suspend his campaign after a University of Costa Rica poll earlier this week showed the Solís held a staggering 44-point lead over Araya, winning 64.4% to just 20.9% for Araya (pictured above).

Though that poll included a sizable undecided vote (around 14.6%), it showed that Araya had lost ground in the past month — he won 29.6% of the first-round vote.

Facing the ignominy of leading Costa Rica’s most enduring party, the center-left Partido Liberación Nacional (PLN, National Liberation Party) through even more embarrassment, Araya suspended his campaign on Wednesday, with one month to go before the runoff.

The reasons for Araya’s decision were clear from the moment the Araya-Solís race were established — or before: Continue reading Johnny Araya suspends campaign in Costa Rica

The US whispering campaign against Sánchez Cerén

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There’s a segment of the US foreign policy community that simply doesn’t care much for the likely winner of this weekend’s Salvadoran presidential election, Salvador Sánchez Cerén — and it’s making its displeasure loud in the days leading up to Sunday’s runoff vote.el salvador

First, Elliott Abrams, former deputy national security adviser under US president George W. Bush, argued back in early January in The Washington Post that Sánchez Cerén (pictured above) represents a backslide for El Salvador, arguing further that ‘democracy and peace in Central America are again at risk’:

The likely impact of a Sánchez Cerén victory on U.S.-Salvadoran security and counter-narcotics cooperation is dangerous. The United States has a key forward operating location in El Salvador to monitor and deter drug trafficking, and the FBI cooperates with local police against trafficking by Salvadoran gangs. Could such activities continue in light of the FMLN’s ties to the FARC and to the Venezuelan government?

Yesterday, José R. Cárdenas, also a former official in the Bush administration, added his alarm in Foreign Policy, where he echoes the same kind of panic over a Sánchez Cerén victory:

What an FMLN victory means for El Salvador and the region under a Sánchez Cerén presidency is particularly worrisome. Unlike current President Mauricio Funes of the FMLN, with Sánchez Cerén there is no pretense to moderation. Beneath the democratic mask, he still adheres to the hard-line agenda of the FMLN, honed during the dirty war against the Salvadoran state in the 1980s.

Funes, as the candidate of the Frente Farabundo Martí para la Liberación Nacional (FMLN, Farabundo Martí National Liberation Front), the guerrilla group from the 1980s that transformed more than two decades ago into El Salvador’s primary center-left political party, won the presidency for the Salvadoran left for the first time in the country’s postwar history.  Sánchez Cerén is more ideologically motivated than Funes, who came to politics from journalism, unlike Sánchez Cerén, who came to politics directly from the front lines of El Salvador’s 1979-92 civil war.

Sánchez Cerén’s running mate, Óscar Ortiz, is the widely popular mayor of Santa Tecla and a moderate figure within the FMLN, and many Salvadorans believe it always should have been Ortiz leading the FMLN’s 2014 ticket.  His appeal is one of the reasons Sánchez Cerén seems like such a lock to win Sunday’s election (at least as much as the ‘masterful political ads that managed to convert a battle-hardened ideologue into a kindly, old grandfather’ that Cardenás attributes to the FMLN’s success).  Sánchez Cerén, who has served Funes loyally as vice president for five years, and Ortiz, who will want to succeed Sánchez Cerén in 2019, both have an incentive to pursue continuity with the relatively moderate Funes government.  Sánchez Cerén would not be the first Latin American firebrand to govern with a pragmatic approach in office — e.g., Peruvian president Ollanta Humala.

Following the end of the civil war, El Salvador developed a relatively stable trajectory and, until 2009, the center-right Alianza Republicana Nacionalista (ARENA, Nationalist Republican Alliance) won every consecutive presidential election.  It’s true that the Funes administration has nudged Salvadoran public policy leftward, especially with respect to social welfare, and that Funes has availed his country of some of the economic benefits of closer ties with Venezuela and other US opponents in Latin America.  But ultimately, his administration hasn’t abandoned the broad Salvadoran consensus toward neoliberal economic policy or the country’s decision a decade ago to abandon its national currency in favor of dollarization.  Funes’s leftism has been more of the pragmatic, business-friendly lulista variety than the populist, dogmatic chavista alternative: 

But as president, Funes has expanded social welfare benefits — abolishing public health care fees, combatting illiteracy, providing food and clothing to schoolchildren, granting title to disputed land claims, introducing monthly stipends and job training for the poorest Salvadorans, and signing legislation to protect women, sexual minorities and indigenous communities.  He’s also oriented El Salvador closer to the Venezuela-led Alianza Bolivariana (ALBA, Bolivarian Alliance) while retaining strong ties with the United States.

By the way, the Salvadoran business community has welcomed Funes’s outreach to Venezuela and ALBA because, as Frederick Mills wrote late last year in a great primer on the Salvadoran race, the private sector is enjoying access to new markets in addition to its long-standing access to US markets.

In the first round of the election on February 2, Sánchez Cerén won 48.92% of the vote, while center-right San Salvador mayor Norman Quijano won 38.95%.  The third-place candidate, former president Elías Antonio ‘Tony’ Saca won just 11.44%.  Saca, notwithstanding his former ties to ARENA, has so far refused to endorse either Quijano or Sánchez Cerén in the runoff — that’s a blow to Quijano, who hopes to consolidate the right-leaning vote to pull off an upset in the March 9 runoff.

But there’s some troubling revisionism in both hit pieces by Cardenás and Abrams that should leave us all skeptical about their narratives of the current election campaign.  Continue reading The US whispering campaign against Sánchez Cerén

El Salvador’s experience in dollarization

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On the way back home from Honduras, my plane landed briefly in El Salvador at San Salvador’s airport.el salvador

Not wanting to pass up a brief opportunity to try my first Salvadoran pupusa in El Salvador*, I started looking for a cash machine to withdraw some local currency.  Within seconds, however, I remembered that El Salvador switched from the colón to the US dollar 12 years ago, so of course there was no need, and I began thinking a little more about why El Salvador adopted the US dollar and whether it has seen any benefits from doing so in the past decade or so.

That decision was among the most important of the administration of Francisco Flores, El Salvador’s president between 1999 and 2004, and a member of the conservative Alianza Republicana Nacionalista (ARENA, National Republican Alliance).  Flores became one of the top US allies in the region at a time when Hugo Chávez was cementing his control on power in Venezuela.  Not only did he stand firmly with US president George W. Bush over regional affairs, he even deployed Salvadoran troops to Iraq in support of the US invasion.

Dollarization was controversial even at the time, but the policy goal was that it would reduce El Salvador’s interest rates and facilitate trade — this was in the era before the Central American Free Trade Agreement (CAFTA), which came into effect in 2009 among the United States, the Dominican Republic and four Central American countries.**

But the broader economic benefits haven’t materialized as fully as Flores might have hoped a decade ago — El Salvador’s GDP growth rates have lagged behind even some of its poorer Central American peers in the past 12 years:

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The entire Central American economy is tied heavily to the US economy due to massive trade and remittances from family members living and working in the United State.  That’s especially true for El Salvador, because many Salvadorans migrated during the brutal civil war during the 1980s (in the Washington, DC metro region, for example, Salvadorans represent the largest Latino nationality group, outpacing even Mexicans).  With around 6.3 million people, El Salvador has over three-fourths of the population of Honduras, but less than one-fifth of the area of Honduras.***

But it’s been essentially the sick man of Central America for some time, routinely underperforming Honduras, which is struggling under the weight of political polarization, trafficking-related violence and massive corruption.  El Salvador faces those problems as well, but it’s generally believed that those problems are at least slightly less drastic in El Salvador.

What’s clear is that while dollarization may (or may not) have worked for Panamá and Ecuador, the benefits have either been too small for El Salvador to realize or, worse — and more likely, dollarization has actively hampered the Salvadoran economy.

Salvadoran central bank president Carlos Acevedo earlier this year admitted that dollarization was ‘a sack of unfulfilled promises’:

Bank President Acevedo made his most recent statements (reported by Active Transparency) following the release of a government study on dollarization, which reached some rather negative conclusions. The report found that many key economic indicators, including exports and GDP fell, while inflation and interest rates rose. Dollarization has failed to shield the economy from downturns and instead made El Salvador more susceptible to instabilities in the U.S. economy, as witnessed during the 2009 recession. The Economista published an article yesterday reaching very much the same conclusions.

In his statements this month, Acevedo said dollarization was “badly designed, improvised and lacking consultation,” and that El Salvador’s fiscal performance with dollarization was the worst in sixty years. He also said the performance was so poor that even proponents of dollarization could not ignore its negative impacts.

Prices in San Salvador’s airport do seem to be higher than prices in Tegucigalpa’s airport, though perhaps the better comparison is to the swankier airport in San Pedro Sula.  But there’s definitely a sense among Salvadorans that consumer prices rose after 2001, though the reasons for that phenomenon remain an open question, even among economists.

Another IMF report from 2011, however, indicated that dollarization had reduced interest rates between 4% and 5%, thereby contributing to savings and boosting GDP by 0.25% to 0.5% annually.

It’s tempting to argue that El Salvador is suffering from the same fate as the eurozone — i.e., that El Salvador and the United States do not comprise an optimal currency zone), Salvadorans are ‘stuck’ with US monetary policy, which may not be appropriate for the Salvadoran economy, and there’s obviously no mechanism for fiscal transfers from the US federal government to the Salvadoran government.   Continue reading El Salvador’s experience in dollarization