Western Hemisphere Intelligence Brief

Issue 225: August 10, 2015

El Salvador: A Country in Crisis
End of the Good Times

 

El Salvador

El Salvador is in the grips of a security and governability crisis. … In recent days, Salvadoran gangs — known as maras — engineered a crippling bus strike that has severely damaged the country’s economy and raised serious questions about the government’s capacity to control the maras’ increasing aggression. … Gangs ordered the country’s bus drivers to stop service, affecting some 1.3 million passengers, about 20 percent of the country’s population. … Nine drivers who defied the order were reportedly murdered. … Business groups estimated losses from the bus shutdown at $20 million per day. … The country’s security crisis has caused the homicide rate rise to levels not seen since the 1980s armed insurgency. … In seven months, homicides have increased 50 percent compared to last year; it is estimated that 23 murders take place on a daily basis, making this Central American country one of the most violent in the world. … Compounding this insecurity is a crisis of governability. … For several months, President Salvador Sánchez Cerén, 71, has been battling unidentified health problems and traveling frequently to Cuba for treatment. … During his absences, the ailing president turns over decision-making to a junta comprised of the Secretary General of the ruling Farabundo Martí National Liberation Front (FMLN) Medardo Gonzalez Trejo; the president of the National Assembly, Lorena Peña; and José Luis Merino, a hard-line ideologue with operational ties to the Revolutionary Armed Forces of Colombia (FARC) and the chavistas in Venezuela. … El Salvador’s economy is suffering from the instability and violence. … The country has the lowest growth rate in Central America, at just 2 percent, and receives the lowest level of foreign direct investment in the region.

     

  • The gangs made no overt demands during the bus strike, leading many to view it as a power play to establish its position of strength and force the Salvadoran government into another truce. In 2012, the FMLN entered into negotiations with gang leaders ostensibly to reduce the number of murders caused by gang turf wars. That effort failed, as media reports suggested there was no decrease in the violence; Salvadorans also reacted negatively to the revelation that the government enlisted the gangs’ support for the FMLN’s electoral campaign. Since then, the government has steadfastly refused to negotiate, even as the balance of power continues to shift in the maras’ favor. The gangs’ ability to sow chaos nationwide compounds its pervasive influence at the neighborhood level, exerting pressure among small businesses, in the informal economy, and in schools. This problem is partly of El Salvador’s own making: the ill-advised truce empowered the gangs beyond the government’s capacity to respond. The U.S. Congress is in the process of authorizing assistance through the Alliance for Prosperity to help El Salvador, Honduras and Guatemala to fight the root causes of violence and poverty. However, corruption-ridden governments have yet to inspire confidence within their nations, particularly with the economic elites and political class, in order to implement an effective response. None of these countries should face their respective crises alone, but without clear local commitments to transparency, accountability, and the rule of law, any outside assistance will do little to improve the situation.

 

Ecuador

Two months after massive street protests rocked major Ecuadorean cities, the government of populist Rafael Correa is facing another domestic scandal over allegations that Ecuadorean security services were ordered to spy on the government’s political opponents, journalists, and advocacy groups. … In one case, leaked documents suggest that the security agency SENAIN was gathering personal information on environmental activists opposed to oil exploration in Ecuador’s Yasuni national park. … Other documents suggest that SENAIN sent agents to infiltrate political events held by opposition groups. … These revelations appear to verify longstanding complaints from Correa’s political opponents claiming to be hacked and monitored by the government. … A number of human rights advocacy groups have criticized Correa in the past for failing to respect civil liberties in Ecuador. … In July, Human Rights Watch reported that “prosecutors and judges in Ecuador have used charges of ‘terrorism’ and ‘sabotage’ in the criminal code against anti-government protesters.” … The July protests were sparked by a proposal by Correa to raise inheritance and capital gains taxes, but they soon expanded to complaints about a slowing economy and Correa’s interest in a constitutional reform to allow indefinite reelection. … Although Correa still maintains substantial popular support, indicators are pointing to rough seas ahead. … Dropping oil prices and an appreciating U.S. dollar (the economy is dollar-based) have led many economists to predict either no growth or a contraction this year and next. … Ecuador is OPEC’s smallest member and depends heavily on oil and mining. … The price of Ecuadorean crude oil has fallen from $91 per barrel in January 2014 to about $45 last month. The oil sector accounts for about one-quarter of total government revenue and about one half of the country’s exports. … Last week, the country also suffered another setback in its long-running dispute with Chevron, when a U.S. federal appeals court upheld a $96 million judgment against Ecuador.

     

  • To date, the Correa government has avoided the levels of economic chaos being experienced by another populist government in Venezuela, also heavily dependent on the oil sector. However, Ecuador’s recent growth has been driven by high oil prices (in addition to Chinese loans) and significant public spending, which amounted to some 44 percent of GDP in 2013. Those numbers will necessarily contract in the foreseeable future, and managing the fiscal squeeze amid growing political unrest will sorely test Correa’s political skills. For now, the Ecuadorean opposition remains divided, but incidents such as the recent spying revelations could galvanize the opposition into a more organized and cohesive movement. High oil prices and big spending allowed Correa to skirt the consequences of his efforts to consolidate power at the expense of Congress and the courts and to bully the media into self-censorship for fear of reprisal. It is uncertain that budget cuts and diversification of the economy to reduce its dependence on oil will provide him room to maneuver politically. Correa has survived eight years in power in a country that saw his previous three predecessors fail to serve out their terms. The next two years will demonstrate whether his luck has run out.

 

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