Latin America (Only for the_ideas)

Forrest D. Colburn, Arturo Cruz S.

Journal of Democracy, Volume 25, Number 3, July 2014, pp. 149-158 (Article)

DOI: 10.1353/jod.2014.0057

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El Salvador’s BElEauguErEd dEmocracy

Forrest D. Colburn and Arturo Cruz S.

Forrest D. Colburn is a professor at the City University of New York and a visiting professor at INCAE, a graduate school of business with campuses in Costa Rica and Nicaragua. Arturo Cruz S. is a professor at INCAE and former ambassador of Nicaragua to the United States. To- gether they are the authors of Varieties of Liberalism in Central Amer- ica: Nation-states as Works in Progress (2007).

Salvadorans went to the polls on 2 February 2014 to select a new presi- dent. El salvador’s constitution prohibits consecutive presidential terms. so current president Mauricio Funes of the Farabundo Martí National Liberation Front (FMLN) was ineligible to run, leaving voters to choose among Vice-President salvador sánchez Cerén of the FMLN, former san salvador mayor Norman Quijano of the National Republican Alliance (known as Arena), and former president (2004–2009) and erstwhile Are- na standard bearer Elías Antonio “Tony” saca, who ran as the candidate of the Grand Alliance for National Unity (Unidad). sánchez Cerén won 49 percent of the vote—significantly more than Quijano’s 39 percent, but still shy of the majority needed to avoid a runoff. saca won more than 11 percent of the vote, making his voters an important bloc for the second round. In an extremely close runoff on March 9, sánchez Cerén managed to eke out a win against Quijano with 50.1 percent of the vote.1

Deputies to El salvador’s legislature, the unicameral, 84-seat Leg- islative Assembly, are chosen every three years. In the last balloting, which took place in March 2012, Arena won 33 seats; the FMLN won 31; Unidad won 11; of the remaining seats, 9 went to three smaller par- ties, and 5 seats were won by independent candidates. This represented a single-seat gain for Arena from the previous contest and a 4-seat loss for the FMLN. The next legislative elections will be held in March 2015.

Observers had expected the 2014 presidential contest to be a high- stakes election; after all, the last presidential contest, held in March 2009, resulted in a dramatic turnover with the FMLN’s first-ever win for

Journal of Democracy Volume 25, Number 3 July 2014 © 2014 National Endowment for Democracy and Johns Hopkins University Press

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the top office.2 Nonetheless, the campaign was muted. Only 54 percent of registered voters turned out for the first round—a decline from 63 percent in 2009—and fewer than four thousand of the two-million sal- vadorans living abroad (who are both eligible and encouraged to vote) bothered to cast a ballot.

In 1989, toward the end of the country’s long and bloody civil war (1979–92), Arena won the presidency, beginning a four-election streak, a remarkable feat in Latin America. In the 2009 election, however, the FMLN, a leftist coalition of guerrilla groups that had fought a bitter insur- rection with the aspiration of ushering in revolutionary change, emerged victorious, albeit with the moderate Funes as its candidate. Funes, a for- mer television journalist, had never been a guerrilla. The defeat that year of Arena candidate Rodrigo Ávila led to a great deal of hand-wringing among the party leadership, who blamed outgoing president saca for the loss. saca also had offended some Arena power holders and was ulti- mately expelled from the party in December 2009. In 2014, the FMLN fielded a true revolutionary—sánchez Cerén, a guerrilla leader who had commanded one of the FMLN’s five main factions during the civil war. The right-leaning Arena, meanwhile, was anxious, if not desperate, to re- gain its hold on the presidency and to maintain the country’s commitment to an open-market economy and close relations with the United states.

During the sprint to the second round of voting, campaigning intensi- fied and the rhetoric became increasingly heated. The momentum in the first-round campaign had belonged to the FMLN, which played on wide- spread social resentment by portraying Quijano as the “general man- ager” of El salvador’s wealthy elite. But Arena dominated the second- round campaign by using the political chaos and strife in Venezuela to evoke a fear of installing a “leftist” regime in El salvador. The March 9 runoff was extremely close: With some three-million ballots cast, there was a difference of just 6,364 votes. sánchez Cerén received 50.1 per- cent of the vote, while Quijano received 49.9 percent. The second-round turnout increased to roughly 60 percent of eligible voters. These addi- tional voters, along with most saca supporters, mostly backed Arena.3

With such a minuscule margin of victory, it came as no surprise that Quijano challenged the results and demanded a recount. When the su- preme Electoral Tribune (TsE) refused to do a vote-by-vote recount— instead comparing the tally sheets from each polling station with the preliminary electronic results—Quijano called for the election to be annulled, claiming that “between 30,000 and 40,000 votes were sto- len.” 4 He also alluded to possible intervention by the armed forces.5 His supporters, meanwhile, rallied in front of the hotel where the TsE was recounting the votes. Although Quijano claimed that the TsE was biased in favor of the FMLN—and, in fact, most members of the TsE are linked to the party—domestic and international election observers, including the UN office in El salvador, called the elections transparent.

151Forrest D. Colburn and Arturo Cruz S.

The recount, released on 13 March 2014, confirmed sánchez Cerén as the victor, again by a razor-thin margin.

The runoff results suggest that El salvador still remains deeply di- vided two decades after the end of its civil war. Both within the coun- try and abroad, this division is typically cast as a polarization between Left and Right. Yet the country’s 2014 election was not one of compet- ing programs. The FMLN and its candidate won due to a number of circumscribed factors that are difficult to delineate and even harder to weigh. These include: 1) the personal popularity of incumbent president Mauricio Funes; 2) Quijano’s relative lack of charisma; 3) voter fatigue resulting from Quijano’s declaring his candidacy seventeen months be- fore the election; 4) the damage that Quijano and saca inflicted on each other during the first-round campaign, leaving sánchez Cerén largely unscathed; 5) the corruption scandal involving former president (1999– 2004) and Quijano advisor Francisco Flores of Arena, who was revealed to have accepted cash payments from Taiwan during his presidency; 6) the FMLN’s more polished campaign ads (especially for television); 7) the FMLN’s ability to funnel funds from Venezuela’s state-run oil com- pany (even though Funes had spurned a formal alliance with Venezu- ela), often through an association of FMLN mayors, for use as patron- age—for example, as subsidized credit for farmers in long-hostile rural areas and price supports for their harvests; and finally 8) the FMLN’s stoking of social resentment against the wealthy and positioning of itself as the party of the “aspirational middle class.”

These are surely not the only reasons for the FMLN’s 2014 win, but taken together they largely explain sánchez Cerén’s victory. It was hard to find any traces of the FMLN’s revolutionary ardor in the 2014 cam- paign, which instead saw the party’s battle-hardened comandante solicit- ing support with television commercials featuring singing children and promises to fund social programs by acquiring more Venezuelan “petro- dollars.” At the same time, both of the country’s two well-established political parties displayed a surprising lack of ideas for spurring economic growth in a stalled economy and halting the epidemic of violent crime that plagues El salvador.

Elusive Economic Growth

El salvador is the smallest country in continental America in land area. (It is about the size of Massachusetts or Wales.) It is the only country in Central America without a coast on the Caribbean, and it has no appreciable natural resources. El salvador has always been densely populated, even in pre-Columbian times. In 1950, it was home to 1.9 million people. By 2007, according to the country’s census, the popula- tion had grown to 7.2 million. Roughly two-million more salvadorans live abroad, overwhelmingly in the United states.

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Historically, El salvador has had a mono-export economy, and the good was always a commodity.6 In the colonial era, it was indigo for producing blue dye. With the advent of synthetic dyes, El salvador came to depend on coffee. In the early twentieth century, coffee accounted for 90 percent of the country’s export earnings. Today, salvadorans lament that all the country has is “salvadorans”—that is, labor. The country’s most important source of foreign exchange, by far, is remittances—mon- ey sent home by relatives living abroad, washing dishes in Los Angeles, cleaning offices in Maryland, and the like. El salvador receives close to Us$4 billion a year in remittances, roughly equal to 70 percent of the value of its exports. Not surprisingly, it routinely runs a trade deficit of close to $4 billion, which is “closed” by remittances. Approximately a third of all families in the country receive remittances from a relative abroad (money that is sent to mama, not to the government).

The other two “legs” of El salvador’s economy are also tied to labor. First are the maquillas (assembly plants, usually foreign-owned), which produce all sorts of goods for export. The maquillas take advantage of the country’s abundant and cheap labor to make an array of eclectic prod- ucts, ranging from articles of clothing to small cardboard boxes for jewelry stores to car parts. And second is “nostalgia tourism,” or return visits from salvadorans living abroad, often to attend the funeral of an elderly parent.7

The structure of El salvador’s economy, and in particular its role in the international economy, have thwarted its growth. After more than a decade of conflict, the signing of peace accords in January 1992 led to an economic rebound, with average annual growth rates of 6.8 percent between 1992 and 1995.8 In 1996, however, the economy grew only 1.7 percent, initiating a period of economic weakness that has persisted. During the Flores administration, annual growth was only 2.1 percent. Under the saca administration (2004–2009), there was an initial period of healthy growth, reaching almost 4 percent annually. In 2008, how- ever, the economy grew only 1.3 percent, and with the recession in the United states, it contracted by 3.1 percent in 2009.

By the time Funes took office in June 2009, El salvador’s economy was in recession. When his five-year term ends in June 2014, the cumu- lative average growth rate for his tenure is expected to be no more than 2 percent. Indeed, between 2008 and 2012, El salvador recorded the lowest level of economic growth in all of Latin America. The El salva- doran Foundation for Economic and social Development (FUsADEs) calculates that seven in ten salvadorans are unable to find employment in the formal sector of the economy.9 While the percentage of salva- dorans living in poverty has decreased since 1990, it remains high at an estimated 47.5 percent—roughly half the population.

In 2003, FUsADEs commissioned a study of El salvador’s economy led by noted Chilean economist sebastián Edwards.10 The study con- cluded that investment, both public and private, was too low. A sec-

153Forrest D. Colburn and Arturo Cruz S.

ond, equally ambitious study, carried out two years later by Ricardo Hausmann, Dani Rodrik, and Andrés Velasco, reached the same ver- dict.11 These findings are, at least at first sight, puzzling. El salvador’s economy has been well-managed by government officials; the country has only moderate fiscal deficits, a generally small but reasonably com- petent public sector, and enough domestic capital to enable local banks to make loans in other Central American countries. In 2001, El salvador had the lowest commercial interest rate in all of Latin America (6.2 percent, below even Chile’s rate of 7 percent). The country’s two domi- nant political parties, Arena and the FMLN, have long been considered serious and orderly institutions. The Hausmann study concluded that the investment problem was due to the absence of viable opportunities within the country.

Resource Curse?

Much has been made of the so-called resource curse that afflicts countries rich in natural resources such as oil: They fail to experience economic growth because their resource wealth weakens incentives to innovate and diversify. some worry that the value of El salvador’s productive activities such as agriculture has declined due to the steady flow of hefty remittances. The acreage under cultivation in El salvador has decreased—so much so that forests are returning—yet the country spends scarce foreign exchange on food imports. still, it is hard to iden- tify which productive activities El salvador could pursue that cannot be done more efficiently elsewhere. For example, the country used to have a healthy set of textile-manufacturing firms, but they have been fight- ing a losing battle against competition from China. El salvador lacks the kind of natural resources found in Chile and other parts of south America that can be used to generate exports with at least some added value. In short, it seems that having no natural resources also may be a kind of curse.

In some sense, El salvador is an impoverished bedroom community of Los Angeles. For some salvadorans, their country is a comfortable place to reside because it is familiar and has affordable amenities; for others, it is just the place where they were born and have always lived. Either way, salvadorans make their money elsewhere, by working in Los Angeles or in other U.s. locales. Moreover, in the last couple of decades, El salvador’s most prominent national firms—the airline Transportes Aereos del Continente Americano (TACA), the banks, the cement plants, and the brewery—have been sold to foreign interests. The salvadoran owners purportedly agreed to sell simply because they were offered “a good price.” Just where the proceeds from these sales have been invested is difficult to ascertain, but it is widely believed that most of the capital has been invested abroad, including in U.s. bonds and equities. To be

154 Journal of Democracy

sure, there remain business interests in El salvador, including in sugar, coffee, shopping centers, housing development, insurance, and real es- tate.12 still, the country has a dependent economy, one with an oversized commercial sector attending to the “consumption” of goods and services made possible by earnings, meager as they may be, from outside the country. There is an old Colombian saying that the best minister of fi- nance is a good coffee harvest. The parallel salvadoran quip would have to be that the best minister of finance is a robust U.s. economy.

El salvador’s economic vulnerability is heightened by its dependence on oil imports, especially because oil prices are so volatile. In 2000, El salvador spent $520 million on imported oil.13 In 2005, that figure rose to $943 million, and in 2010, it reached $1.4 billion. By 2012, the sum was a staggering $2.2 billion. A rise in energy prices is all the more problematic because successive salvadoran administrations (under both Arena and the FMLN) have subsidized natural gas (which is widely used for cooking), electricity, and public transportation. It is politically im- possible to eliminate—or even to reduce—these subsidies, and their cost is in large measure beyond government control.

Social Aspirations and Frustrations

El salvador’s feeble economic growth is a source of constant frustra- tion among its people. The county’s GNP per capita is roughly twice that of Nicaragua, Central America’s poorest country, but a mere 40 percent of Costa Rica’s. Although this is a level sufficient to put many salvadorans on the cusp of a modest middle-class life, on the cusp is where they are likely to remain. Even for those who do make it into the middle class, their newfound prosperity is always precarious. Minor events such as wrecking one’s car can be enough to knock someone right back into the lower class.

Between 2010 and 2012, the average growth rate of El salvador’s economy was only 1.4 percent. If the growth rate were to remain con- stant at this level, it would take the country 87.5 years to double the per capita size of its economy.14 During the same two-year period, the growth rate of Nicaragua’s economy was 4.4 percent. If it stayed at this level, Nicaragua’s per capita economy would double in 24 years. Pana- ma’s economy has been the most dynamic in the region, with an average growth rate of 9.7 percent between 2010 and 2012. If that country’s economy continued to expand at this impressive rate, it would double in a little more than 9 years. By regional standards, El salvador has performed poorly. Indeed, the country’s economic stagnation has put it, as some in san salvador quip, “on the verge of a nervous breakdown.”

In addition to bedeviling economic constraints, El salvador suffers from horrifying levels of crime. The country’s per capita murder rate is one of the highest in the world, second only to that of neighboring Hon-

155Forrest D. Colburn and Arturo Cruz S.

duras.15 Other kinds of crime—ranging from domestic violence to assault and extortion and everything in between—are also rampant, and much of El salvador’s violent crime is tied to gangs (maras). Even everyday activ- ities such as riding a public bus can be dangerous. There are heartbreaking stories of salvadorans who return from years of labor abroad only to be forced off the road outside of san salvador’s airport and robbed of ev- erything, including the gifts that they brought home for family members. High crime rates also take a toll on the economy. For businesses, ensuring security is a paramount concern and entails additional costs. Moreover, it is common knowledge that in san salvador a vast majority of all com- mercial enterprises make protection payments to racketeers.

How El salvador came to be so violent in the last two or three decades remains unclear. some suggest that the origins of the crime problem are in the civil war, but neighboring Nicaragua, which also experienced civil war, is not ridden with gangs and crime. By contrast, Honduras had no civil war but has become even more violent than El salvador. Others believe poverty to be the main driver of crimi- nality in El salvador, yet Nicaragua is both poorer and safer. High crime rates reflect, above all, the unchecked proliferation of gangs, whose roughly 60,000 members present an enormous challenge to the country’s 20,000 police officers.16 The judicial system, which is un- derstaffed and underfunded, is similarly overwhelmed.

The government’s ongoing failure to stem the violence continues to vex the population. successive administrations have failed to design and implement effective crime-fighting policies. After an exceptionally high number of murders in 2011 and early 2012, the homicide rate began to fall in March 2012. It turns out that the drop in murders was almost certainly the result of a government-brokered agreement between the principal gangs in the country, Barrio 18 and Mara salvatrucha, to end retaliatory killings. Circumstantial evidence suggests that not only did public of- ficials meet with gang representatives, but gang leaders and their family members received payoffs from public funds to “cement” the deal. Presi- dent Funes claimed credit for the reduction in homicides while denying having negotiated with gang leaders. The truce seems tenuous in any case, as late 2013 saw a new surge in murders and “disappearances”—a euphemism for murdering someone and then hiding the corpse.

Among the FMLN’s revolutionary goals for which sánchez Cerén fought for years as a comandante was to reduce El salvador’s dependence on the United states, the imperialist behemoth. One of the many ironies of the leftist insurrections in Central America is that they had the opposite effect, as so many from the isthmus fled to the United states in search of safety and employment. Other trends have weakened the ability of the state to control—or even to identify—capital. Land, whether planted with coffee or sugarcane, is of decidedly less importance today. The issue of land reform is now all but irrelevant. Just where are the “commanding

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heights” of the economy in El salvador? What can an elected president who is a self-proclaimed “progressive” do to change the country’s course?

Funes, the first FMLN candidate to be elected president, did not at- tempt to transform El salvador’s economy. His administration did not devise a new strategy for how the small country could participate in the international economy; it failed to identify new products and services that could generate needed foreign exchange; nor did it create any ap- preciable shift in the balance between the public and private sectors. Funes chose not to join the late Venezuelan president Hugo Chávez’s regional initiative, the Bolivarian Alliance for the Peoples of Our Amer- icas (ALBA), which might have led to the kind of financial assistance that has made such a difference in Nicaragua. Funes did, however, de- velop his own populist social programs, including providing a glass of milk a day to children and free school uniforms, shoes, and supplies. The country’s debt has grown under Funes: In 2008, it was 40 percent of GNP; as his administration comes to a close, it is 56 percent.17 This debt—and the need to “service” it—will be inherited by his successor.

During the 2014 campaign, sánchez Cerén promised that as president he would have El salvador join ALBA, thus positioning the country to receive greater financial assistance from Venezuela. At the time, this seemed to be his lone proposal for stimulating El salvador’s staid econ- omy. It is a risky plan considering that Venezuela’s own economy is fragile and its political regime is under pressure from a determined op- position. Moreover, many salvadorans are leery of anything that seems to be “extremist,” and Venezuela’s regime gives them pause. sánchez Cerén’s failure thus far to produce any concrete proposals for boost- ing the economy other than to ask for more foreign aid from an oil- rich neighbor is even greater cause for concern. Yet perhaps sánchez Cerén’s lack of ideas is more a reflection of the severity of El salvador’s economic situation than of inadequate policy expertise.

As president, sánchez Cerén will also have to negotiate with the 84 members of the Legislative Assembly. The legislature has a good deal of say in the spending of resources, and the votes of 56 legislators are required for loan approvals. Funes managed to cobble together a leg- islative majority by winning the support of small parties to add to the FMLN bloc. He was able to so do in part because of his high public- approval rating and also because of his relatively moderate stance on important issues. still, the legislature is a contentious institution in El salvador, and the relationship between the FMLN and Arena has been long marked by hostility and distrust. And now the FMLN is led by a president, sánchez Cerén, who is seen as “polarizing.”

Legislative elections will be held in March 2015. Arena will certainly strive to win enough seats in the legislature to check sánchez Cerén. Re- gardless of the electoral outcome, however, sánchez Cerén can expect formidable—and constant—scrutiny and criticism from the Legislative

157Forrest D. Colburn and Arturo Cruz S.

Assembly. Arena will fiercely resist any attempt by the president and the FMLN to steer the country leftward, because such a move in that direction could unnerve the business community and risk making the fragile economy even more delicate. Finally, the desired salvation from ALBA might be out of reach: Venezuela’s economy is under enormous strain, and it is hard to imagine that it is in a position to dole out more foreign assistance. In short, a left turn in El salvador would come with considerable costs and most likely only meager benefits.

The Monarch and the Administrator

Presidents in democracies have two roles: They are symbols of the nation and its people, and they are administrators of the state. The first role is akin to that of a monarch—to represent the “richness” of the nation. In the nation-states of Latin America, with their legacies of co- lonialism, including stark class divisions that frequently and uncomfort- ably overlap with race, the people increasingly desire their heads of state to represent the poor majority and their aspirations to join the middle class. Public-opinion polls routinely show that Funes enjoys widespread public approval despite El salvador’s lackluster economy. His social programs are popular; by providing assistance to school children, for ex- ample, he has succeeded in convincing citizens that he cares about them. Funes’s wife, Vanda Pignato de Funes, is also popular due to her work on behalf of women. Funes does a good job of representing the idealized social values of the majority of salvadorans. He also personifies, if only vaguely, the pervasive antipathy toward the country’s economic and so- cial elite. Revealingly, Funes has remarked on more than one occasion that what he most enjoys about being president is that the country’s mil- lionaires have to address him as “Mr. President.”

A Mexican adage says that the truth about presidents—above all, about how corrupt they are—emerges only after they leave office. The discov- ery that former president Francisco Flores had accepted cash payments from the Taiwanese government, made worse by his clumsy admission of guilt, not only damaged the Quijano campaign and the status of Arena, but also underscored the people’s desire for honesty and dignity in their head of state. “Poor we may be, but at least we can be decent” is the sentiment of many salvadorans. sánchez Cerén will surely find it easier to fulfill the symbolic role of president than to manage the state. salvadorans expect good performance from their elected officials, and such expectations can be dimmed or reshaped only to a certain extent. As Juan Linz simply but elegantly argued, regime performance shapes legitimacy.18 sánchez Cerén’s ability to perform—as is often the case in small, poor democra- cies such as El salvador—will be constrained by many factors, some of them daunting, and effective leadership will be essential. Much is at stake, including the future of El salvador’s fragile democracy.

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NOTEs

1. Election data is from the supreme Electoral Tribune (TsE), www.tse.gov.sv, “Elec- ciones Presidenciales 2014.”

2. Forrest D. Colburn, “The Turnover in El salvador,” Journal of Democracy 20 (July 2009): 143–52.

3. H.T., “El salvador’s Election: An Extraordinary Result,” Economist.com, Amer- ica’s View blog, 13 March 2014, www.economist.com/blogs/americasview/2014/03/el- salvadors-election-0.

4. “salvadorean Presidential Candidate Demands Fresh Polls,” BBC.com, 12 March 2014.

5. Tim Muth, “El salvador: Leftist FMLN Party Wins Presidential Election in Tight Recount,” Christian Science Monitor.com, 13 March 2014.

6. For a review of the economic history of El salvador, see Alastair White, El Salvador (New York: Praeger, 1973): 19–159.

7. We are grateful to our colleague at INCAE, Francisco de Paula Gutiérrez, former president of the Central Bank of Costa Rica, for his observations on the economy of El salvador.

8. Data on the economy are from the International Monetary Fund (IMF), “El salvador 2013: Article IV Consultation,” IMF Country Report No. 13/132, IMF, Washington, D.C., 2013.

9. salvadoran Foundation for Economic and social Development (FUsADEs), In- forme de coyuntura económico, IV trimestre de 2013 (san salvador: FUsADEs, 2013).

10. sebastián Edwards, Desaceleración del crecimiento económico en El Salvador: Un análisis exploratorio (san salvador: FUsADEs, 2003).

11. Ricardo Hausmann, Dani Rodrik, and Andrés Velasco, “Brainstorming on Growth,” Kennedy school Lunch Group on International Economic Policy, Harvard Uni- versity, 2005.

12. “Top 100 Centroamericanas,” EKA (December 2013–January 2014): 40–42.

13. Data is from Dirección de Política Económica y Fiscal, Estadísticas básicas sobre las finanzas públicas al 2012 (san salvador: Ministry of Finance, 2013).

14. Figures are taken from Table 5 of Arturo J. Cruz-sequeira, La reforma política en Centroamérica: ¿Está en riesgo la institucionalidad democrática? (san salvador: FUsADEs, 2013), 18.

15. These gruesome statistics are calculated annually by the World Health Organiza- tion (WHO).

16. Informal communication with journalist Laffite Fernández, san salvador, 2 May 2014

17. Data comes from “Funes entregará un país endeudado, pero con mejoras sociales,” La Nación (Costa Rica), 30 January 2014.

18. Juan J. Linz, The Breakdown of Democratic Regimes: Crisis, Breakdown, and Reequilibration (Baltimore: Johns Hopkins University Press, 1978).