Oxfam Petition on El Salvador and Mining

Word on the street is that the ICSID (International Center for Settlement of Investment Disputes) tribunal hearing Pacific Rim Mining Company’s lawsuit against El Salvador will hand down a decision on the second round of preliminary objections before the end of the month. (Here is an article and a webpage with good information on the case).  Pacific Rim, a Canadian firm based out of Vancouver, filed suit against El Salvador over three years ago for not granting them the permits necessary to extract gold from their Cabañas properties. Between 2002 and 2008, Pacific Rim allegedly invested $77 million in exploring properties in Cabañas and other parts of El Salvador. When the government and people of El Salvador said the mining company could not mine, Pacific Rim sued to recover their investment, lost profits, and damages. If Pacific Rim wins, they could receive a judgment worth more than $100 million.

El Salvador responded to the lawsuit by filing two rounds of preliminary objections, asking the court to dismiss Pacific Rim’s claim on procedural grounds. The first round of objections was unsuccessful, and we should hear about the second round in the next week or so. If the Tribunal finds in favor of El Salvador, they could dismiss part or all of Pacific Rim’s case. If they find for Pacific Rim, the mining company’s suit lives to see another day.

Oxfam is currently organizing a petition asking U.S. citizens to demand that the U.S. end their support for Pacific Rim and their claim against El Salvador. The petition reads:

Act Now: Speak up for El Salvador’s Right to Decide

In El Salvador, communities are fighting for their right to decide how companies can use their lands. Many of them have made a decision: they don’t want the metal mining industry to continue to destroy the environment they live and farm in. And they’re paying the price – each day, community leaders and activists face threats of violence and death because they’re standing up to metal mining companies.

What’s making this fight even harder? Right now, Canadian mining company Pacific Rim is trying to force El Salvador to keep metal mines in business by suing El Salvador for $77 million under the US-Central America Free Trade Agreement (CAFTA). This case could not only cost El Salvador a significant portion of its GDP, but it could prevent citizens from deciding which industries develop in their country.

A win for El Salvador in this case means that El Salvador could choose to stop metal mining – for good. The US government’s support for El Salvador over Pacific Rim in this case has been crucial. That’s where you come in. Will you help us make sure the US supports El Salvador in this case?

Tell Secretary of State Clinton: Support the people of El Salvador.

Please visit the Oxfam site and sign the petition!

The petition is important because some within the US State Department associate anti-mining with being anti-development. They argue that if El Salvador passes a law that bans mining, it means the country is hostile to foreign investment. In 2009, Former Chargé d’Affairs Robert Blau wrote a cable to the U.S. Secretary of State with the Subject line: “New Environment Ministry Moves to Ban Mining, Sends “Anti-Development” Signals.” A ban on mining is not anti-development, it is respecting the wishes of the people who would be most affected by its disastrous environmental impacts.

The cable is worth a read. We recognize that Robert Blau has a pretty extreme view of U.S. foreign policy and that his view may not represent everyone within the Embassy (Blau is no longer at the Salvadoran Embassy). His view, however, exemplifies how neoliberalism affects policies in countries like El Salvador. The same people who want to gut the EPA and remove the environmental regulations that protect air, soil, and water in the U.S., also want to remove any barriers that might prevent them from pillaging resources around the world. Any efforts to protect the environment and the communities where people live are called anti-development.

The petition is important because we have to make sure the State Department understands that Salvadoran communities said no to mining because they want to protect their very limited natural resources. They are not anti-development, rather they don’t want their vision of development trumped by an international corporation that is only interested in profit. The U.S. should not support Pacific Rim and other corporations, but ought to respect the wishes of the affected communities.

Oxfam’s petition is not the only anti-mining news to report. Yesterday the MESA (Roundtable Against Metallic Mining in El Salvador) released a statement expressing their frustrations with the Salvadoran government’s inaction on mining. , the government commissioned a Strategic Evaluation of the Mining Sector to determine whether mining was feasible in El Salvador. The report was supposed to inform the Legislative Assembly and government ministries on how to manage mining, and whether they ought to pass an all out ban on mining, which is what the MESA has been advocating.

The MESA is frustrated with the lack of transparency in completing the study and the release of its findings. They recently filed a request for information about the report under El Salvador’s relatively new Law on Access to Public Information. They also requested information about what mining companies have applied for or hold mining permits. Lina Pohl, the Vice-Minister of the Environment and Natural Resources recently said the only possible scenarios are the suspension of mining permits (so far for just exploration, no mining company currently has an exploitation permit), and not granting new ones. The MESA believes this to be insufficient and that the study fails to take on the most important issues concerning the impact that mining would have on the country. They call on the government to be more proactive in defending Salvadorans and banning mining altogether. The MESA has posted several interviews on Youtube detailing these issues. If you speak Spanish, they are worth watching.

Please sign the petition today!

Climate Change Education in the Schools: El Salvador and the U.S.

The climate change debate has made its way into U.S. classrooms, as school boards and legislators try to force teachers to present “both sides of the issue.” In El Salvador, however, schools are taking a different approach. Government officials and educators have moved way beyond questioning the reality of climate change and are implementing a curriculum that teaches the science behind the resulting extreme weather patterns and how to mitigate the associated risks.

In January, a writer for the Wall Street Journal Law Blog posted about “a new battle brewing in America’s classrooms” – climate change. As U.S. schools have begun teaching climate change to their students, state legislatures and school boards have reacted by requiring teachers to also present the other side of the debate.

In Texas and Louisiana, state boards of education now require classrooms to teach climate change denial as a valid scientific position. In Tennessee, Oklahoma, South Dakota, and Kentucky, state legislators have proposed bills that would require teachers to dedicate equal time teaching climate change and climate change skepticism.

In El Salvador, however, schools have adopted a climate change curriculum that goes beyond an academic discussion about whether or not it’s a reality. Salvadoran teachers, instead, are now tasked with the more serious task of preparing their students for future extreme weather events caused by climate change.

According to an article posted on Alertnet, the government now mandates that all public and private schools in El Salvador teach the science behind climate change as well as how students can deal with the increased risks caused the extreme weather.

In October 2011, Tropical Storm 12-E dumped 55 inches of rain on El Salvador in 10 days, causing the worst flooding in the country’s history. The storm and its aftermath were a wakeup call for many Salvadorans. Communities along the coast, especially those in the Lower Lempa region of Usulután and San Vicente, have experienced regular flooding for the past several years. Tropical Storm 12-E, however, was the first storm since Hurricane Mitch in 1998 that affected multiple regions throughout the country. In the days after the storm, government officials, including the Minister of the Environment and Natural Resources, attributed the storm to climate change and warned that because of it, these weather events are the new norm.

The Salvadoran schools system is responding by joining the effort to teach more than the science of climate change. Government officials are using the schools to teach environmental safety. According to the Alertnet article, “in math, biology, and physics, students will undertake exercises that estimate potential damage from climate-linked extreme weather, and explore how to counteract and reduce its effects.”

The article quotes a 12-year-old student who believes “the teaching approach will be well-received in the classroom, particularly as so many families in El Salvador have had first-hand struggles with the country’s recent extreme weather.”

Since Hurricane Mitch, government agencies and civil society have prepared communities to deal with extreme weather events. Since President Funes took office in June 2009, the government has strengthened the Civil Protection network, which they elevated to a government Ministry. Their success over the past few years are measurable. Hurricane Mitch, the previous high-water mark, claimed over 240 deaths. Tropical Storm 12-E produced more rain and more severe flooding, destroyed more crops, and affected many more communities, but the loss of life was limited to 34 people.

If predictions are accurate, El Salvador will see more storms like Tropical Storm 12-E, and efforts to prepare the population is a matter of life and death. In theory, there is still time to reverse or decrease the impacts of climate change over the long-term, but that would require principal polluters such as the U.S. and China to reduce their emissions of the greenhouse gases that contribute to climate change. Its hard to imagine how the U.S. will ever cut emissions voluntarily, considering that the teachers can’t even talk about climate change without interference from politicians.

Peace Corps Pulling Out of El Salvador, Guatemala, and Honduras

The Washington Post reported yesterday that the US Government is suspending training for new Peace Crops volunteers in Guatemala and El Salvador while they “reassess security concerns.” The volunteers currently in place will remain and Peace Corps officials report that they are all safe and accounted for.

A new group of volunteers was to arrive in January 2012, but their training has been cancelled and they are being reassigned to other countries.

The BBC is reporting that the Peace Corps is completely putting out of Honduras, bringing all 158 current volunteers home in January.

According to the Peace Corps website, there are currently 122 Peace Corps volunteers in El Salvador and over 2,186 have served in El Salvador since 1962. Volunteers work in areas of community organization and economic development, rural health and sanitation, sustainable agriculture, agro-forest and environmental education, and youth development.

The reason for the withdrawal is security. The New York Times quoted Kristina Edmunson, a Peace Corps spokeswoman in Washington, who said the move stemmed from “comprehensive safety and security concerns” rather than any specific threat or incident. The Times article, stated, however, that Peace Corps Journals, an online portal for blogs by Peace Corps volunteers, has an entry referring to a volunteer who was shot in the leg during an armed robbery on a bus.

Central America has become the most violent region in the world, and Honduras, El Salvador and Guatemala have recently posted the highest murder rates in the world. Part of the reason for the uptick in violence is the increased presence of international organized criminal networks that are trafficking drugs from South American producers to North American markets.

Ambassador Aponte Coming Home?

Mari Carmen Aponte, the interim Ambassador from the US to El Salvador, may be coming home in the next few weeks as her recess appointment expires at the end of the month.

President Obama nominated Mari Carmen Aponte when he took office in 2009, but Senate Republicans blocked her confirmation over her past relationship with a Cuban-American they believe was a Cuban spy. She finally arrived in El Salvador in September 2010 when President Obama circumvented the Senate with a recess appointment, which expires at the end of the month. President Obama re-nominated Ambassador Aponte this year, and the Senate Foreign Relations Committee confirmed her nomination this week, but Republicans are again preventing the Senate from bringing her nomination to the floor for a vote.

Ambassador Carmen Aponte fueled Republican opposition in June when she published an op/ed piece in the La Prensa Grafica supporting the gay rights movement in El Salvador. Opposition to her final confirmation is led by Senator Jim DeMint (R-SC), who claims that she is “strongly promoting the homosexual lifestyle” and attempting “to impose a pro-gay agenda” on El Salvador. The article praised Salvadoran President Mauricio Funes for signing a law prohibiting anti-gay discrimination by the government, as well as the UN pledge to eliminate violence against LGBT people. She also said that all people have the responsibility to break the cycle of violence and discrimination.

According to The Hill,

The White House is blasting Senate Republicans for playing politics with President Obama’s nominated ambassador to El Salvador, saying a hold on the diplomat would severely hurt US ties in the region.

During a Senate Foreign Relations Committee Hearing this week, Sen. John Kerry (D-MA) spoke out on behalf of Ambassador Aponte, saying that she has done a“solid job in her capacity as ambassador,” and “I have not heard of or seen any substantive rationale for her not continuing in this post.”

Sen. Richard Durbin (D-IL) pointed out that since 1998, when Aponte was nominated to be ambassador to the Dominican Republic from which she withdrew herself from consideration, she has twice received top security clearances.

Ambassador Aponte also has the support of Sen. Richard Durbin (D-IL), who also serves on the Foreign Relations Committee. During a hearing last week he pointed out that since 1998, when Aponte was nominated to be ambassador to the Dominican Republic from which she withdrew herself from consideration, she has twice received top security clearances. He argues that any questions regarding her past relationships were answered during those processes, and are no longer an issue.

Barring any last minute support from Senate Republicans, Ambassador Aponte will be leaving El Salvador at the end of December and the US will be without an ambassador.

18,000 deported from U.S. to El Salvador

In the past twelve months, the United States government has deported over 400,000 immigrants  back to their countries of origin, and according to a report by El Faro, 95% of the deportees were Latin American. The number of deportees has risen by 40,000 since 2008 when almost 350,000 people were deported from the U.S.

The vast majority (286,893) of the deportees were Mexican. The country with the second most deportees is Guatemala (33,324). Honduras is third (23,822) and El Salvador is fourth (18,870). Of those deported, 55% had been charged with some crime in the U.S.

President Obama ran on a platform that included immigration reform as one of his top priorities, but we have still seen no action other than a failed attempt at passing the Dream Act. Certainly much of the inaction on reform is attributable to the Tea Party Movement and the extreme positions taken by the Republican presidential candidates, who seem to stumble over each other to take the most extreme position possible on immigration enforcement.

According to the online journal Infowars, immigration enforcement has been a cash cow for private prisons. There are 2 million immigrants in private prisons in the United States. The government pays these prisons $45-130 per day for their detention.

Though the political climate is not favorable to immigration reform, our politicians need to at least keep trying and we have to keep this issue on the front on the front page of the papers.

Sonia Sotomayor Visits El Salvador

Yesterday, August 15th, Associate Justice of the Supreme Court, Sonia Sotomayor arrived in El Salvador for a week-long visit. Justice Sotomayor is visiting her close friend, Mari Carmen Aponte who is the U.S. Ambassador to El Salvador. During her stay, Justice Sotomayor will meet with Magistrates on the Salvadoran Supreme Court, as well as law students in San Salvador. She also plans to meet with students from Supérate, an youth program that seeks to improve opportunities for youth to develop their professional lives.

 

Justice Sotomayor and Ambassador Aponte, both Latinas with very successful legal careers, serve together on the board of the Puerto Rican Legal Defense Fund. The two have been so close that Justice Sotomayor swore in Aponte as Ambassador in 2010.

 

The visit comes less than a month after the resolution of the constitutional crisis that began on June 3rd when the Legislative Assembly and Executive branches tried to impede on the judicial independence of El Salvador’s Constitutional Court. This seems less of an official visit in response to that crisis, than two old friends getting together.

Sotomayor and Aponte in El Salvador

The Cost of Free Trade: 5 Years into DR-CAFTA

The Dominican Republic-Central American Free Trade Agreement (or DR-CAFTA) went into effect March 1, 2006. After 5 years, it is time to evaluate what kind of results this agreement has produced. Like any other free trade agreement, the logic behind CAFTA was that liberalized trade leads to a net welfare gain for both countries. Furthermore, because the seven countries involved in the agreement (US, Dominican Republic, Honduras, El Salvador, Costa Rica, Guatemala, and Nicaragua) have different resources, technologies, and preferences, there are gains to be made from trade. By pursuing each other’s comparative advantage, as David Ricardo first argued, each country may specialize in that which it is relatively better at producing. This is a powerful theory, but as economics often shows, theory cannot always be reconciled with reality; many of these models make specific assumptions that do not always match the real world. Specifically in the case of CAFTA, it appears as though the Central American countries have suffered several negative consequences of this free trade agreement. The results of the agreement that weren’t clearly negative are ambiguous at best.

 

The removal of tariffs lowers the costs of trade between these countries and their main trading partner–the US. That being said, because tariffs have been removed, the governments of the Central American countries have less government revenue flowing in. While the US hardly had any tariffs on imported goods from Central American countries, the Central American nations had high tariffs on US goods in order to raise revenue for their governments. Before DR-CAFTA came into effect, about 80% of all US goods were not duty free, and the removal of the tariffs caused the governments to lose a substantial amount of revenue.

 

Additionally, because the US subsidizes its agricultural products, it has hurt the average farmers in these Central American countries. Since most Central American farmers cannot compete with the massive, more efficient farms in the US that are subsidized by the government, many of these Central American farmers find themselves out of business.  This forces them to instead try to find work in the multi-national corporations’ factories. More individuals in the cities seeking jobs in the so-called “maquilas” means that the supply of labor rises while the number of maquilas stays the same. This leads to an excess supply of Salvadorans seeking jobs in these factories. Thus, factory owners may lower their salaries because there is so much competition for work.

 

Many theorists would assert that one of the largest benefits of trade is that after lifting barriers to trade, the countries involved in the agreement will be able to consume more, leaving them all better off. In reality however, the results are neither negative nor positive, but rather unclear. Data shows that over the course of the last five years and until 2010, exports and imports in El Salvador have steadily increased. One, however, cannot say for certain that this is a direct result of DR-CAFTA. More than that, while Salvadoran exports and imports may have increased, it does not necessarily mean that El Salvador is physically producing and exporting more goods. Export and import data are calculated by value, and therefore one must factor prices into the equation. It is possible that El Salvador produced just as much last year as it did five years ago. However, because prices have risen, the value of its exports has also risen even though El Salvador is not better off in real terms. There is some evidence that suggests that increases in price levels over time account for some of the rise in exports. According to the data, El Salvador has experienced inflation since 2005. Because of the difficulty of directly attributing rises in exports and imports to DR-CAFTA the actual effect of the agreement on trade is ambiguous.

 

The effects of DR-CAFTA remain unclear when analyzing Chapter 10 of the agreement, which eliminates barriers to investment. According to the chapter, investments are very strongly protected.  This protection is provided by the most-favored nation provision (in which the countries agree to accord one another with the same favorable terms that would be offered in treaties with any other nation) the “fair and equitable treatment” clause (which refers to a country agreeing to treat foreign investors the same as domestic ones), and the “full protection and security” clause (which refers to a country’s agreement to protect one other’s investors by providing them with security).  Because of these provisions, multi-national corporations can securely conduct their business in signatory nations and employ their citizens.  Although this is positive for El Salvador and the rest of Central America, the nature of the jobs these corporations often provide is unsanitary, unsafe, and low-paying. Thus, the citizens of Central America are not necessarily better off, especially since the multi-national corporations often do not reinvest their profits within the region but instead send it back to their home country. Due to the lack of economic development from the international investors, workers do not necessarily stand to gain.

 

For all of these reasons, DR-CAFTA has no clear and significant benefits to El Salvador and the other Central American members of the agreement. Salvadorans and other Central Americans need development, and because DR-CAFTA seems to facilitate it through spurring investment, but impede it through working conditions, among other things, this trade agreement is neither a sufficient nor an ideal solution to development.  DR-CAFTA, along with its effects like poor working conditions, low salaries, US subsidized exports, etc, will continue to remain an issue of concern until further investigation and/or reforms can be completed.

Salvadoran-Americans an Increasingly Important Latino Group in the U.S.

The Contra Costa Times (San Jose, California) reported on May 26^th of this year that, according to U.S. Census Bureau data, Salvadoran-Americans now make up the fourth-largest Latino group in United States and 3.3 percent of the domestic Latino population. More than 1.6 million Salvadorans live in the United States as of the 2010 Census, two thirds of which are foreign-born. In another significant demographic shift, the current Salvadoran population came to the United States after 1990, which would likely mean that most of them migrated after the end of the Salvadoran Civil War (1992). Salvadorans have overtaken Dominicans as the fourth-largest Latino group in the U.S. and are not far behind Cuban-Americans, whose population is only .2 million higher. Perhaps unsurprisingly, Mexican-Americans remain by a wide margin the largest Latino group residing in the United States at 31.8 million, totaling roughly 63 percent of country’s Latino population.

Metropolitan Demography

While the Census Bureau has yet to release population data by city or county, recent surveys show the San Francisco Bay Area, Washington, DC, and Boston as the major hubs for Salvadoran-American communities. In a survey conducted by the Pew Hispanic Center, 8 percent of the Latino population in the Bay Area cites El Salvador as their country of origin, a percentage only behind those of the DC and Boston metropolitan areas. According to the survey, the regional placement of Salvadoran communities has slightly more than one-third (35%) of Salvadoran-Americans residing in California, while one-in-seven (15%) reside in Texas.

Quality of Life Indicators

The Pew study of the Salvadoran-American population also compiled statistics on education, income and healthcare. As concerns education, many Salvadorans still do not maintain a working knowledge of English. Less than half are proficient in English (45%) and 55% of Salvadorans aged 5 and older report not speaking English “very well”, compared with just 37% across all Hispanic groups in the U.S. The survey notes that Salvadorans generally have lower levels of education than the broader Hispanic population, 53% of Salvadorans 25 and older report not having received a high school diploma, contrasting with the 39% reported by the larger Hispanic population surveyed. Despite the comparatively poor education statistics, Salvadoran poverty rates at 19% come in lower than the overall Hispanic poverty rate of 23%. Fertility rates among Salvadoran-American women were also higher than both the domestic average of 35% among U.S. women and 40% among other Hispanic women. Salvadorans are acutely affected by a lack of health insurance when compared with the rate of uninsured Hispanics (31%) and the overall U.S. population (14%). Four-in-ten (41%) of Salvadoran-Americans do not have health insurance.

What This Means

Despite extensive efforts by both the U.S. Census Bureau and the Pew Hispanic Center, the numbers are not thought to be a totally comprehensive representation of all the Salvadorans or Central Americans who live in the United Sates. Both groups reported a higher than average percentage living illegally in the U.S., making them harder to count and harder to account for. What the studies do show however, is an increasingly large and culturally important Salvadoran contingent here in the United States. This large group of Salvadorans will likely have their greatest effect to date on their home country in the 2014 presidential elections. In the years prior to 2009 (the beginning of the Mauricio Funes Presidency), the government refused to allow absentee voting for the approximately one-third of its population living abroad. With the addition of absentee voting, it will be interesting to see how the politics play out, the Census Bureau and Pew Center data reflect that the United States will again have a pronounced effect on the outcome of Salvadoran elections.

Ten Years Later- The Impact of Dollarization in El Salvador

Some economists argue that pursuing a dollarization strategy helps developing countries grow their economies through the stabilization of inflation and increases in investment. Other economists discourage a dollarization strategy because it causes these economically small countries to relinquish control over their own monetary policy. This past January marked the tenth anniversary of El Salvador’s adoption of the US dollar as its currency, and its worth assessing the “dollarized” currency regime to determine how successful its been.

Colones, the Salvadoran currency that was replaced by the US dollar in 2001

Adopting the US dollar as a nation’s official currency can be successful, such as in Ecuador. In the case of El Salvador however, dollarization does not seem to have improved economic development.  El Salvador’s economic growth since adopting the dollar as the official currency in 2001 has not been any higher than it was during the years leading up to dollarization. In fact, El Salvador saw higher growth rates in the years prior to its adoption of the dollar. It is difficult to directly attribute the country’s failure to obtain a higher growth rate solely to dollarization, but it most likely did play a role.

As it did in Ecuador, dollarization has helped many economies stabilize their high rates of inflation. El Salvador, however never faced hyperinflation and therefore did not reap any of the stabilizing benefits. Another argument favoring dollarization is that it lowers interest rates and stimulates investment. In the case of El Salvador however, investments did not flow into the country as much as expected due to instability caused by high crime rates and violence. If investors believe their money and capital is not secure, they will go elsewhere where labor costs are low (not denominated in dollars) and where violence and crime is less of a threat.

Under the dollarization regime, El Salvador has no control over its own monetary policy. By adopting the US dollar as its official currency, El Salvador has ceded its authority over money supply and interest rates to the Federal Reserve. It is highly unlikely that the Fed will consider El Salvador’s needs when determining interest rates. Therefore, the Salvadorian government has to depend on taxes and spending to stimulate the economy since it no longer has control over money supply and interest rates. This has caused El Salvador to run higher deficits through the last decade since the government was forced to raise expenditures to stimulate the economy as opposed to decreasing interest rates to spur consumption and investment.

The poorest Salvadorians are the most affected by dollarization. When the dollar was adopted, all businesses needed to change their prices and translate them into dollars. This led to a phenomenon known as “rounding up”. Because the colon-dollar exchange rate was not an exact value, but a fraction, the shift to the dollar caused businesses to change from colon to dollar by rounding up to the nearest dime, quarter or dollar. This left the poorest Salvadorians worse off because while prices rose, wages did not, leaving everyone with a lower real income. However, since the poorest Salvadorans have very low incomes, a fraction of a dollar comprises a larger part of their income than the average Salvadoran.

The effects of dollarization on trade have been somewhat ambiguous. Whereas it was able to compete against other developing countries when it had the colon, El Salvador’s exports have slowed because countries like China are trading with their own undervalued currencies while El Salvador trades with the dollar. Thus, El Salvador’s exports are relatively more expensive than Chinese exports. Use of the dollar, however, has helped trade with some countries by reducing transaction costs. Since so many of its goods are traded with the US, trade in El Salvador has benefitted. Thus, whether the net effect on trade has been positive or negative remains unclear.

Dollarization has provided some benefits. For instance, El Salvador has not faced hyperinflation like some of its Latin American counterparts have. Keeping inflation low is important because it allows banks to lend more, putting more money into the economy.  Additionally, having the dollar as their official currency has limited the chance of any sort of speculative attacks, which means that El Salvador is much less likely to face a Balance of Payments Crisis like Mexico or Argentina did.

The most important and perhaps disappointing part is that some economists believe a shift away from the dollar is not possible. Economists cite Gresham’s Law as the reason for this. In this context, Gresham’s Law argues that re-introducing the colon or another currency into the system would not work because Salvadorians would not trust it. The way this scenario would play out is: the government would try to introduce a new Salvadoran currency and it would ask its citizens to keep their dollars and instead use this new currency for all transactions. The problem is, without trust, that new currency will have no value. Because the dollar is much more trusted as a stable currency, Salvadorans would resist this change in currency and continue to make their transactions in dollars.

Dollarization is not for all countries. For this policy to be truly successful, hyperinflation must be a real concern and investment must be contingent on interest rates and not other factors such as violence. El Salvador has benefitted in some ways by dollarization, however in the long run, there seems to have been more costs than benefits.

OAS Meeting is the Latest Regional Effort to Combat Organized Crime in Central America

The Organization of American States is currently holding its 41st General Assembly in San Salvador, the theme of which is “Citizen Security in the Americas.” The agenda includes discussions on combating organized crime.  These discussions will include consideration of a draft proposal for fighting transnational crime, drawn up by El Salvador.  The Secretary General Miguel Insulza said that he expects “concrete results, because [they] are not going to confront the topic of transnational organized crime in [Latin America] with declarations alone.” This meeting will set the perimeters for an action plan that will be finalized for the November meeting in the Dominican Republic.

The OAS General Assembly in San Salvador

The OAS is not the only group to discuss the growing lack of citizen security and the problem of organized crime.  A recent meeting in Managua, Nicaragua of the presidents of El Salvador, Guatemala, Honduras, Nicaragua and Panama produced a new level of regional ownership of Central American organized crime.  The presidents met to affirm their commitments to collaboration in the fight against drug trafficking and trans-national crime.  Additionally, they recognized each nation’s respective weakness in the face of increasingly well-organized and -funded criminal syndicates.  Unfortunately, no specific actions were planned, but the budding cooperation between the countries is a positive step towards promoting greater security.

The United States Has pledged support and acknowledged that citizen security in the region is a “shared responsibility,” through the Central American Regional Security Initiative (CARSI). The State Department describes CARSO as an initiative to achieve five goals in Central America: 1) Create safe streets for the citizens of the region; 2) Disrupt the movement of criminals and contraband within and between the nations of Central America; 3) Support the development of strong, capable and accountable Central American governments; 4) Re-establish effective state presence and security in communities at risk; and 5) Foster enhanced levels of security and rule of law coordination and cooperation between the nations of the region.

Focusing on counternarcotics efforts (drug trafficking is at the center of organized crime), the U.S. spent $260 million on the CARSI initiative alone during 2008-2010 and President Obama pledged another $200 million during his meetings with Funes in March 2011.  Beyond financial support, several U.S. agencies are on the ground in El Salvador, including the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Agency (DEA), and USAID, all of which are partnering with Salvadoran ministries to fight organized crime.  The DEA, through their Drug Flow Attack Strategy, aim to intercept drug trafficking.  DEA agents recently played an instrumental role in a gun trafficking bust and confiscated 28 tons of ethyl phenyl acetate, a chemical used to make crystal meth.  The U.S. Military works in the region to combat drugs as well, coordinating their activities from the Soto Cano Air Base in Honduras.

In April of 2011, Panama inaugurated the Central American Integration System’s Operative Center for Regional Security (COSR-SICA), intended to be a cooperative center for the coordinated fight against organized crime.  It’s a network through which Central American agencies can share information and technology on drug trafficking, organized crime, human smuggling, gang activity, and other security threats.  It will also receive logistical support from a similar information-sharing center in Key West, Florida, where 31 U.S. agencies operate.  Each Central American nation will be sending experts to work in the Center to organize the coordinated efforts for citizen security.

The recent creation of cooperative bodies to ensure citizen security in Central America, and the increased focus on the issue by existing organizations is an indication of the growing threat that organized crime poses to individual security.  The highest levels of government are finally talking about organized crime, and that is a good first step.  But it will be important for the citizens of each of these countries to continue applying pressure so that the discussions grow into concrete actions.