A Country's Rebirth

The story of Isaias Sandoval Alas says a lot about what has happened in El Salvador in the 11 years since the end of a brutal civil war. The son of poor peasant farmers, Sandoval spent the 1980s roaming the lush hillsides and extinct volcanoes of Cuscatlan province as a midlevel guerrilla commander for the Cuba-backed Farabundo Marti National Liberation Front (FMLN). When a United Nations-brokered peace accord ended the fighting on the last day of 1991, he plunged into local politics. Today Sandoval, 47, is the popular, can-do mayor of Suchitoto, a colonial-era town of 26,000 that ranks as one of El Salvador's leading tourist destinations. The soft-spoken politician long ago traded in his AK-47 assault rifle for a cell phone, and he's similarly discarded the ideological jargon of yesteryear. "I don't consider myself a communist or a socialist," says the mayor. "Those names and labels only cause problems for us, and they're no longer necessary."

Against all odds, El Salvador has emerged from the ashes of civil war, death squads and peasant massacres as a viable nation with a future. The conservative Nationalist Republican Alliance (ARENA) party, which has held power since 1989, has embraced the U.S.-backed, free-market growth model. It has slashed government budgets and privatized scores of state-owned enterprises. The results have been encouraging: the Salvadoran economy grew by 4.3 percent a year on average between 1991 and 2001. Bankers and foreign investors now praise El Salvador for having one of the three best investment environments in Latin America--along with Chile and Mexico--and $500 million in fresh foreign capital has poured into the Massachusetts-size country in just the past two years. The U.S. government, which spent hundreds of millions of dollars to prevent the Central American country from falling into the hands of the FMLN, likes to think of El Salvador as a developing-country showcase. "Sound policies have produced results," argues U.S. Trade Representative Robert Zoellick. "Many Salvadorans still struggle to overcome poverty, yet economic growth is making a real difference in their lives."

It's not easy to recognize that fact because El Salvador remains extremely poor. The realities of life for most of the country's 6.4 million residents aren't all that rosy. Nearly half the people live below the official poverty line. One of every four Salvadorans leaves the country in search of a better life. Crime is a serious problem. The government admits to a combined jobless and underemployment rate of 37 percent, and the economy has grown by only 2 percent for the past two years running--not nearly enough to keep pace with El Salvador's population growth.

All this spells political trouble for the government. While the Bush administration is quietly pushing lame-duck President Francisco Flores for the post of secretary-general at the Organization of American States in Washington, the Flores-led ARENA party is trailing in the polls and could lose its 14-year grip on power in general elections next March. A former ARENA government minister blames the economic slump on steep utility-rate hikes and other austerity policies adopted by Flores and his team of technocrats. "This government has ruled on behalf of the privileged few to the detriment of the vast majority of the population," says Arturo Zablah, a businessman --who served as Economy minister from 1989 to 1993. "The people need jobs, and they've stopped believing in the government."

The 43-year-old Flores and his ARENA comrades have gotten the message. In legislative and municipal elections held earlier this year, the unabashedly leftist FMLN swept most of El Salvador's major cities and overtook ARENA in the congressional voting, winning for the first time ever a plurality of the 84 seats at stake. A nine-month-long strike by doctors over the government's proposal to partly privatize the public health-care system punctured ARENA's aura of invincibility, and Flores's own vice president has publicly criticized his policies.

U.S. officials are now sounding the alarm over the consequences awaiting the country if voters back the FMLN's likely candidate in the 2004 presidential election, Communist Party leader Schafik Handal. "The FMLN carries a lot of significant baggage," said U.S. State Department official Dan Fisk at a conference on Central America last month. "We have to ask ourselves about its commitment to democracy in El Salvador."

In fact, though, the FMLN's popularity may be a testament to the strength of El Salvador's political system. Although the country remains polarized between ARENA conservatives and leftist ex-guerrillas, the political environment is relatively stable. Political violence is a thing of the past in a land that, not long ago, ranked among the world's worst killing fields. An estimated 75,000 people died in the 12-year civil war, and a peaceful settlement became feasible only once the FMLN rebels and the U.S.-backed armed forces had fought each other to a military stalemate. Foreign businessmen don't seem too concerned about a possible FMLN victory in next year's voting. "The FMLN hasn't stated clearly its political goals and how they may impact the economy," says Mark Rampolla, general manager of a milk-carton-manufacturing plant mainly owned by the giant U.S. forest-products company International Paper. "But the things that worry me don't concern the safety of our investments, and the country has done an impressive job to permit the FMLN to integrate as a mainstream party."

Both parties know they need to create jobs. The Flores government hopes to do so in two ways--by attracting more foreign investment and by signing a Central America Free Trade Treaty with the United States that will give Salvadoran exports greater access to the world's biggest market. Negotiations on that pact began in January and are supposed to conclude early next year. Government officials expect the economy to show higher growth in 2003 and stoutly defend the current administration's pro-business, neoliberal approach. "People have expectations, and it's totally reasonable for them to expect to be better off tomorrow than they are today," notes Economy Minister Miguel Lacayo. "But I deal with facts, and the fact is our democracy and economic model are working, and Salvadorans are better off today than they were eight years ago."

No place better demonstrates El Salvador's transformation than Suchitoto. During the war, regular bombing raids by the Salvadoran Air Force forced most of Suchitoto's residents to flee. Today, however, the former ghost town is a city reborn, and much of the credit goes to Sandoval. During his tenure, dirt streets have been paved, most houses now have electricity and running water, and property deeds have been issued to scores of landless farmers. "Many people in the [central] government have viewed our work favorably," says Sandoval, now in his ninth year as mayor. "In many instances they cite [Suchitoto] as an example worth emulating." The same could be said about El Salvador as a whole. The once bloody, dispirited country is now focused squarely--optimistically, even--on its future.