EL SALVADOR

Republic of El Salvador

República de El Salvador

CAPITAL: San Salvador

FLAG: The national flag consists of a white stripe between two horizontal blue stripes. The national coat of arms is centered in the white band.

ANTHEM: Saludemos la Patria Orgullosos (Let us Proudly Hail the Fatherland).

MONETARY UNIT: The US dollar became El Salvador's currency in 2001 replacing the colón.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some old Spanish measures also are used.

HOLIDAYS: New Year's Day, 1 January; Labor Day, 1 May; Independence Day, 15 September; Columbus Day, 12 October; All Souls' Day, 2 November; First Call for Independence, 5 November; Christmas, 25 December. Movable religious holidays include Good Friday, Holy Saturday, Easter Monday, and Corpus Christi; there is a movable secular holiday, the Festival (1st week in August).

TIME: 6 am = noon GMT.

LOCATION, SIZE, AND EXTENT

El Salvador, the smallest Central American country, has an area of 21,040 sq km (8,124 sq mi), extending 270 km (168 mi) wnwese and 142 km (88 mi) n–s. Comparatively, the area occupied by El Salvador is slightly smaller than the state of Massachusetts. Bounded on the n and e by Honduras, on the s and sw by the Pacific Ocean, and on the nw by Guatemala, El Salvador has a total boundary length of 852 km (529 mi), of which 307 km (191 mi) is coastline. It is the only Central American country without a Caribbean coastline.

El Salvador's capital city, San Salvador, is located in the west central part of the country.

TOPOGRAPHY

El Salvador is a land of mountains and once-fertile upland plains. It is divided into three general topographic regions: (1) the hot, narrow Pacific coastal belt, 260 km (160 mi) long and 16–24 km (10–15 mi) wide; (2) the central plateau, at an altitude of about 610 m (2,000 ft), crossing from east to west, between two mountain ranges; and (3) the northern lowlands, formed by the wide Lempa River Valley, bounded by a high mountain range ascending to the Honduran border.

The central plateau, north of the Pacific coastal belt, is an area of valleys endowed with rich volcanic soil. This is the agricultural, industrial, and population center of the country; the capital, San Salvador (682 m/2,237 ft above sea level), is in this region. Almost surrounded by active volcanoes—Santa Ana (2,381 m/7,812 ft), San Vicente (2,173 m/7,129 ft), San Miguel (2,132 m/6,995 ft), San Salvador (1,967 m/6,453 ft), and Izalco (1,965 m/6,447 ft)—the region is a zone of recurrent earthquakes and volcanic activity; Izalco is known as the Lighthouse of the Pacific. El Salvador has several lakes, the largest being Ilopango, Güija, and Coatepeque. The Lempa, the most important of some 150 rivers, rises in Guatemala and runs south into El Salvador, eventually reaching the Pacific.

CLIMATE

Located in the tropical zone, El Salvador has two distinct seasons: the dry season, from November to April, when light rains occur, and the wet season, from May to October, when the temporales, or heavy rains, fall. The coastal plain receives the heaviest rainfall. Some interior areas are relatively dry most of the year, necessitating irrigation and a selection of crops suited for arid land cultivation. The average annual rainfall is 182 cm (72 in). Temperatures vary with altitude, from the hot coastal lowlands to the semitropical central plateau; in general, the climate is warm, with an annual average maximum of 32°c (90°f) and an average minimum of 18°c (64°f). The average temperature at San Salvador is 22°c (72°f) in January and 23°c (73°f) in July.

FLORA AND FAUNA

Indigenous trees include the mangrove, rubber, dogwood, mahogany, cedar, and walnut; pine and oak are found in the northern mountainous region. Varieties of tropical fruit, numerous medicinal plants, and balsam, a medicinal gum, grow in the country. Native fauna (greatly reduced in past decades) includes varieties of monkey, jaguar, coyote, tapir, and armadillo, along with several kinds of parrots and various migratory birds. Fish, both freshwater and saltwater, turtles, iguanas, crocodiles, and alligators abound. Both venomous and nonvenomous snakes, the latter including the boa constrictor, are common in El Salvador.

As of 2002, there were at least 135 species of mammals, 141 species of birds, and over 2,900 species of plants throughout the country.

ENVIRONMENT

Because of heavy cutting, the forest resources of El Salvador had been reduced to about 5.8% of the total area by 2000. Forty-five percent of the wood taken from the forests has been used for fuel. Peasant farmers burn the small trees and other growth on the hillsides to plant corn and beans, thus hastening the erosion of the topsoil. Seventy-five percent of the land area in El Salvador is threatened by erosion and desertification at a rate of 20 tons per hectare per year. The government enacted forestry conservation measures in 1973, but they have had little effect on the rate of deforestation. Among the environmental consequences of forest depletion, in addition to loss of soil fertility, are diminution of groundwater resources and drastic loss of native flora and fauna.

Pollution is widespread and restrictions on waste disposal, including disposal of toxic waste, are lax. By 1993, 90% of El Salvador's rivers were polluted. Safe drinking water is available to 91% of the urban population and 68% of the rural dwellers. Forty-six percent of the nation's 18 cu km of renewable water sources is used for agricultural purposes.

There is no comprehensive national law controlling environmental protection, and the legislation that is on the books is poorly enforced. The National Environmental Protection Committee, established by decree in 1974, has had little impact. In 2003, about 0.4% of the total land area was legally protected. There are two Ramsar wetland sites.

The pollution of the environment in El Salvador is a serious threat to the survival of its plants and wildlife. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 2 types of mammals, 3 species of birds, 5 types of reptiles, 8 species of amphibians, 5 species of fish, 1 species of invertebrate, and 25 species of plants. Endangered species in El Salvador included the tundra peregrine falcon, four species of turtle (green sea, hawksbill, leatherback, and olive ridley), American crocodile, ocelot, spectacled caiman, jaguar, giant anteater, and Central American tapir.

POPULATION

The population of El Salvador in 2005 was estimated by the United Nations (UN) at 6,881,000, which placed it at number 98 in population among the 193 nations of the world. In 2005, approximately 5% of the population was over 65 years of age, with another 33% of the population under 15 years of age. There were 97 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 2.0%, a rate the government viewed as too high. The projected population for the year 2025 was 9,052,000. The population density was 327 per sq km (847 per sq mi), which makes it the most densely populated country in Central America. Overpopulation is considered a major problem in El Salvador. A majority of the people live in the central plateau.

The UN estimated that 59% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 2.7% for 2000–2005. The capital city, San Salvador, had a population of 1,424,000 in that year. Other major cities and their estimated populations are Santa Ana (250,000) and San Miguel (245,428).

MIGRATION

Until the early 1980s, emigration and immigration were negligible in El Salvador, except for migration of Salvadorans seeking economic advantages in Honduras, a trend that inflamed tensions between the two nations and was an underlying cause of their 1969 war. At that time, 300,000 Salvadorans were estimated to have settled in Honduras; following the war, as many as 130,000 Salvadorans may have returned from Honduras. An estimated 550,000 people were displaced from their homes by warfare between 1979 and 1992.

While the United States granted temporary asylum to thousands of Salvadoran refugees under the administration of President Jimmy Carter (1977–81), the administration of President Ronald Reagan began returning them to El Salvador in 1981. Of the one million Salvadorans estimated to be in the United States in 1988, an estimated 550,000 had entered the country illegally, about 500,000 of them since 1979. Their remittances to their families in El Salvador were an important component of the stagnant economy, and their absence from the Salvadoran labor force kept local unemployment lower than it would otherwise have been. In 2002 worker remittances were 13.5% of GDP; in 2003 remittances amounted to $2.2 billion. Where migration from rural to urban areas was once heavy, the pattern has changed as rural migrants bypass urban centers and migrate directly to the United States and Canada. Internal migration had also shifted significantly by 2004. The population of the peri-urban area around San Salvador more than doubled, while the population of the northern third of the country remained stagnant and the southeastern portion of El Salvador's population increased by more than 20%.

In 1989, Belize, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, and Nicaragua adopted a five-year plan called CIREFCA to solve the problems of uprooted people. Between 1989 and 1994, this plan helped repatriate 30,000 Salvadorians to their homeland. Thousands more Salvadorans who decided not to go home were integrated into asylum countries. In 2000 there were 24,000 migrants living in El Salvador, including 100 refugees. By the end of 2004 only 1 person sought asylum in El Salvador, while 235 sought refuge. However, in that same year 127,941 Salvadorans applied for asylum in the United States and 415 in Canada. The net migration rate estimated for El Salvador in 2005 was -3.67 migrants per 1,000 population. The government views the migration levels as satisfactory.

ETHNIC GROUPS

The population of El Salvador is racially and culturally homogeneous, with about 90% mestizo (mixed European and Amerindian), 1% Amerindian (mainly the Pipil tribes), and 9% European.

LANGUAGES

The official language of the country is Spanish. A few Amerindians continue to speak Nahua.

RELIGIONS

About 57.1% of the population identify themselves as Roman Catholic; San Salvador is an archbishopric. About 21.2% of the population are members of various Protestant churches, with the largest denominations being Baptists and Assemblies of God. There are also many active Protestant missions throughout the country. Approximately 2.3% of the populace are associated with other churches and religious groups, including the Church of Jesus Christ of Latter-Day Saints (Mormons), Seventh-Day Adventists, Jews, Muslims, and Amerindian tribal religionists, among others. As many as 16.8% of inhabitants have no religious affiliation whatsoever.

The constitution of 1962 guarantees religious freedom and exempts churches from property taxes. The constitution specifically recognizes the Roman Catholic Church, granting it legal status; however, it also provides that other churches may register for such status according to the Non-Profit Organizations and Foundations law. Certain Christian holidays are celebrated as public holidays.

TRANSPORTATION

As of 2002 there were 1,986 km (1,234 mi) of paved highways out of 10,029 km (6,232 mi) of roadway in El Salvador. The Pan American Highway links El Salvador with Guatemala in the northwest and Honduras in the southeast. The Cuscatlán Bridge, where the Pan American Highway crosses the Lempa River, was the main thoroughfare for travel between eastern and western El Salvador at the time of its destruction by guerrillas in January 1984. In 2003, registered passenger vehicles numbered about 67,500, and commercial vehicles numbered 98,250.

As of 2004, El Salvador's railroad mileage totaled 283 km (176 mi), down from 562 km (349 mi) in 2002, due to a lack of maintenance and general disuse. The entire rail system is narrow gauge and single track.

The country's three ports—La Unión/Cutuco, La Libertad, and Acajutla—are located on the Pacific coast. Acajutla was the only port in service and it only receives bulk goods. Finished goods arrive at Guatamalan or Honduran ports and are trucked into El Salvador. In 2002, El Salvador had no registered cargo ships. Inland waterway traffic is negligible, with only the Río Lempa partially navigable, as of 2004.

In 2004 there were an estimated 73 airports. In 2005 only four had paved runways, and there was also one heliport. El Salvador is linked with the entire Western Hemisphere, Europe, and the Far East through international air services provided by Transportes Aéreos Centroamericanos (TACA) and other transportation companies. The principal airport, El Salvador International, is near San Salvador. In 2003, about 2.966 million passengers were carried on scheduled domestic and international airline flights.

HISTORY

The Pipil Amerindians, a subgroup of the nomadic Nahuatl Amerindians, migrated from present-day Mexico to Central Americain about 3000 bc. The Pipil are believed to have organized their nation into two federated states comprised of smaller principalities in the 11th century, after the Mayan Empire that had held sway over the Nahuatl declined in the 9th century. They were an agricultural people, with a civilization comparable to the Aztecs, except that the Pipil had abolished human sacrifice. The Pipil also succeeded in building lasting urban centers that grew into current cities, such as Sonsonate and Ahuachapan. This fierce people—as well as two smaller groups, the Pocomans and the Lenca—lived in the area of present-day El Salvador met the Spanish conquistadors with significant resistance.

In 1524, Pedro de Alvarado, a Spanish conquistador sent by Hernán Cortés from Mexico, invaded El Salvador but was forced by Pipil resistance to retreat. After two additional attempts in 1525 and 1528, the Spanish eventually brought the Pipil under their control. When the conquistadors discovered the area's relative lack of precious metals, the Spanish monarch appropriated to Spanish settlers large tracts of land and the ability to collect tribute (forced payments) from the Amerindians under the terms of the encomienda system.

During the Spanish colonial period, San Salvador—founded by Alvarado—was one of six administrative regions of the captaincy general of Guatemala. This collective of Central American colonies declared their independence from Spain in 1821, but the first calls for liberation far preceded that date. At the La Merced church in San Salvador, Father José Matías Delgado cried out for independence on 5 November 1811, a day still commemorated as a national holiday in El Salvador. Following successful independence from Spain in 1821, Central America was annexed by the Mexican emperor, Agustín de Iturbide in 1822. When Iturbide was deposed a year later, the Central American states broke from Mexico to form a federation of El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica, which they named the United Provinces of Central America.

Perpetual conflict between liberals and conservatives forestalled any unification of the United Provinces of Central America into a national unit, as it crippled the legitimacy of the government and its capability to enact political, economic, and social reforms. El Salvador was particularly supportive of the liberals and the rule of liberal Honduran Francisco Morazan, as opposed to the conservative Guatemalan Rafael Carrera. Thus, when liberal forces fell to Carrera in March 1840, El Salvador declared its independence from the United Provinces of Central America shortly thereafter, in January 1841.

The republic of El Salvador was formally proclaimed on 25 January 1859. Turbulence, political instability, and frequent presidential changes characterized Salvadoran history during the second half of the 19th century. This period also saw the growth of coffee as El Salvador's leading product. The Salvadoran elite, known as the "14 families" or simply "the 14," created large coffee plantations, often on the land of displaced Indians. There followed a period of relative stability during 1900–30, but the seizure of power in 1931 by Gen. Maximiliano Hernández Martínez brought a period of constant military rule for almost 50 years. Hernández ruled for 13 years and presided over la matanza, a brutal suppression of a peasant uprising known in 1932, killing about 30,000 people. Few of the governments after Hernández tried to reduce the gap between the landowners and the landless classes, and those that did were doomed to failure.

Landless Salvadorans found land available in neighboring Honduras. During the 1960s the influx of Salvadorans increased, provoking countermeasures from the Honduran government. Tensions rose between the two nations, and on 14 July 1969, they went to war for four days. The immediate occasion of the conflict was the Central American soccer championship between the two states, in which El Salvador won on a disputed referee's call, leading US journalists to dub it the "Soccer War." A total of 3,000–4,000 people on both sides were killed. After an OAS-sponsored cease-fire, the two sides worked out a peace settlement, which was signed on 30 October 1980. A leftover border dispute was settled by the International Court of Justice (ICJ) in 1992.

In 1972, the military candidate for president was opposed by José Napoleón Duarte of the Christian Democratic Party (PDC). Duarte was denied election by fraud and sent into exile. Pressure for reform came from the armed resistance from several leftist factions. In response, the right unleashed "death squads" to intimidate and eliminate any who attempted to introduce change to the country.

By the late 1970s, the situation had erupted into civil war. The guerrillas consolidated under the Farabundo Martí National Liberation Front (FMLN), and right-wing violence escalated. The military had not distinguished itself in its response to the violence, having engaged in widespread repression against suspected rebels. In 1979, a coup brought to power a set of reformist officers, who found common cause with such civilian leaders as Duarte. The junta liberalized the political system, setting legislative elections for 1982. It also nationalized banks and the coffee export trade, while launching an ambitious and controversial land-reform program. Attacked by both left and right, the junta was unable either to suppress left-wing guerrillas or to control its own security forces, which began their own vigilante campaigns even as the angry landowners hired "death squads" to suppress opposition among peasants, students, clergy, and other groups.

In December 1980, José Napoleón Duarte of the Christian Democratic Party was installed by the junta as president. Though he was El Salvador's first civilian head of state since 1931, human rights abuses and bloodshed persisted throughout his administration. In 1980, Archbishop Romero was assassinated while celebrating mass, spurring the guerrilla's launch of their unsuccessful "final offensive," in 1981. It is estimated that at least 62,000 people died between October 1979 and April 1987, most of whom were civilian noncombatants murdered by death squads and government security forces.

The junta headed by Duarte oversaw the drafting of a new constitution, adopted on 20 December 1983 by interim president Álvaro Alfredo Magaña and a constituent assembly that had been elected in March 1982. Following the 1984 election, Duarte became the first constitutionally elected president in over 50 years, after defeating Roberto D'Aubuisson of the National Republican Alliance (ARENA). D'Aubuisson was an extreme anticommunist accused of plotting against the government and supporting the death squads.

Despite Duarte's attempts at reform, charges of corruption, the ongoing civil war, and the economic dislocation brought on by his austerity measures, all led to Duarte's defeat by Alfredo Félix Christiani Burkard in the 1989 elections. Many were concerned because Christiani's ARENA party was tied to former candidate D'Aubuisson.

Christiani allayed these fears, calling for direct dialogue between the government and the guerrillas. Despite a rocky negotiations process punctuated by military escalations, on 31 December 1991 the government and the FMLN signed the Chapultepec Accord formally ending the civil war. The accord called for reforms throughout the military, including the purge of officers linked to human rights abuses, and a reduction by 50% of the force. While the former has been a slow process, the latter goal was achieved ahead of schedule. A cease-fire took effect 1 February 1992, and held until 15 December 1992, when the FMLN officially laid down its arms.

ARENA was returned to power again when Calderón Sol won the presidential runoff election in 1994. Calderón's ambitious economic liberalization plan, his cutting tariffs, his privatizing of banks and pensions, and his attracting foreign investment resulted in healthy economic growth of 4–5% a year. Yet underemployment and low wages were persistent and were accompanied by an upswing in violent crime—from marauding bands robbing agricultural workers to organized gang activity preying on urban dwellers. Even the 1996 12-point government plan, which included investment in infrastructure and social services, couldn't convince the electorate to maintain its support of ARENA in the March 1997 parliamentary and local elections. FMLN significantly increased its share of seats in the legislature, as well as in local elections.

The ruling ARENA party managed to retain control of the presidency in the 1999 elections, with Francisco Flores winning 51.4% of the vote. In the March 2000 parliamentary election, however, FMLN became the strongest party in the Assembly, with more seats than ARENA. The FMLN maintained these seats in the March 2003 elections, but ARENA maintained its hold on the presidency when Elias Antonio Saca won the March 2004 presidential election. Despite a public outcry, Saca upheld amnesty laws protecting former officials, like himself, from prosecution for involvement in death-squad murders during the civil war.

Though the peace agreement officially ended the civil war in 1992, the country was still trying to grapple with justice in the region as of 2006. El Salvador has not been able to cope fully with the effects of the civil war; this process has been further hindered by a series of natural disasters that contributed to the socio-political and economic instability.

Hurricane Mitch struck in 1998, and a number of earthquakes occurred in 2001, leaving at least 1,200 people dead and more than one million others homeless. The financial toll, furthermore, was in the billions. In October 2005, the Ilamatepec (Santa Ana) volcano erupted, forcing thousands of people from their homes only days before Hurricane Stan hit, with its consequent flooding and deadly landslides.

GOVERNMENT

The constitution adopted on 20 November 1983 defines El Salvador as a republic. The constitution vests executive power in the president, who is to be elected by direct popular vote for a term of five years. The president, who must be native-born, over 30 years of age, the offspring of native-born parents, and a layperson, is not eligible for immediate reelection. The president is commander-in-chief of the armed forces, enforces the laws, formulates an annual budget, draws up international treaties and conventions (which must be ratified by the National Assembly), appoints diplomatic and consular officials, and supervises the police. Every two years, the National Assembly elects three substitutes (designados), who can, in order of designation, assume the presidency when the president and vice president are not available.

Legislative power is exercised by a unicameral National Assembly composed of 84 deputies apportioned among the various departments according to population. Deputies are elected for a three-year term and must be at least 25 years of age. The Assembly levies taxes, contracts loans and arranges for their payment, regulates the money supply, approves the executive budget, ratifies treaties and conventions, declares war, and suspends or reestablishes constitutional guarantees in national emergencies. The deputies, the president's ministers, and the Supreme Court all may propose legislation. The Assembly approves legislation and is technically empowered to override a presidential veto by a two-thirds vote.

Universal male and female suffrage (over the age of 18) was inaugurated in 1950. However, voting in El Salvador has been a source of controversy. During the 1980s, the government made voting compulsory, while the guerrillas insisted the citizens should not collaborate with the system. Thus, the Salvadorans were confronted with a dilemma: vote, and face the wrath of the guerrillas, or refuse to vote, and immediately become suspected of leftist sympathy. At times, voting was not secret. Current practices include a more confidential and voluntary system.

POLITICAL PARTIES

The leading party of the right in El Salvador is the National Republican Alliance (Alianza Republicana Nacionalista—ARENA), organized in 1982 by Roberto D'Aubuisson. ARENA controlled the National Assembly until 1985, and its next leader, Alfredo Christiani, was elected to the presidency in 1989. Five years later, ARENA candidate Armando Calderón Sol became president. In the March 1997 parliamentary elections, ARENA's representation was reduced from 42 seats in the 84-member legislature to 28. In 1999, ARENA recovered and won the presidency again with 51.4% of the vote, but a year later its support fell to 36% in the National Assembly elections of March 2000. In March 2003, ARENA plummeted even further with 28% of the vote. However, in 2004, ARENA scored a victory when Elias Antonio Saca Gonzalez captured 57.7% of the vote, securing the fourth consecutive ARENA presidential win and extending his term for five years, until 2009. During the campaign, Saca stated his desire to work with other parties to tackle the violent street gangs, known as maras, and to make government more transparent. As one of the most pro-US governments in the hemisphere, Saca worked to promote economic ties with the United States through CAFTA and other similar free trade arrangements.

The Chapultepec Accords introduced a new force into El Salvador's electoral system: the Farabundo Martí National Liberation Front (Frente Farabundo Martí de Liberación Nacional—FMLN). Named for an insurgent leader of the 1930s, the FMLN was originally a paramilitary group in armed rebellion against the government. As part of the 1992 accords, the FMLN is now a legal party after having ceased its military operations. The FMLN-backed candidate, Ruben Zamora, was the runner-up in the 1994 presidential election, winning 24% of the vote. In the March 1997 legislative elections, the FMLN made significant gains, nearly doubling its representation in the Legislative Assembly, from 14 to 27 seats, and winning municipal elections in half the departmental capitals. In the March 2000 elections, the FMLN won 31 seats, shy of a majority but more than any other political party. In 2003, the FMLN increased its share of the vote to 34%, but did not win any additional seats in parliament. Expectations ran high that FMLN might secure the presidency in the 2004 elections, but its candidate, Schafik Handa, secured just 35.6% of the vote, more than 20% less than Saca.

The moderate Christian Democratic Party (Partido Demócrata Cristiano—PDC) was formed in 1960. For three decades, it was associated with its leader and founder, José Napoleón Duarte. Damaged by many splits over the years, and suffering after Duarte's unsuccessful presidency (1984–1989), the centrist PDC lost strength among the electorate. In the March 2000 National Assembly elections, it obtained 7.2% of the votes and 6 seats in the 84-member Assembly. In 2003, its share of the vote fell to 7.3% and it lost one seat. The National Conciliation Party (PCN), which was founded by the military in 1961, obtained 8.8% of the votes in the 2000 election and secured 13 seats, enough to give a majority to either ARENA or the FMLN. In 2003, it increased its vote to 13% and it secured 16 seats. Because of its ability to break the tie between the FMLN and ARENA, the PCN has gained an important negotiating role in Salvadorian politics.

In March 2003, the Centro Democrático Unido (United Democratic Centre, social-democratic) secured five seats in the National Assembly. The PDC and UDC's mutually endorsed presidential candidate, Hector Silva, secured only 3.9% of the vote in the March 2004 elections.

LOCAL GOVERNMENT

El Salvador is divided into 14 departments (departamentos), including Ahuachapan, Cabanas, Chalatenango, Cuscatlan, La Libertad, La Paz, La Union, Morazan, San Miguel, San Salvador, Santa Ana, San Vicente, Sonsonate, and Usulutan. Each departamento has its own governor and alternate governor appointed by the executive power through the corresponding ministry. The country's 262 municipalities (cities, towns, and villages) are administered by mayors and municipal councils elected by popular vote. Traditionally independent in their local functions, municipalities may be limited in their activities by the departmental governor.

JUDICIAL SYSTEM

The court system includes justices of the peace, courts of the first instance, intermediate level appellate courts, and the Supreme Court (Corte Suprema) made up of 13 justices selected by the National Assembly. With the exception of justices of the peace, judges are appointed to renewable three-year terms. An 11-member National Council of the Judiciary, appointed by the National Assembly, is an independent body charged with screening judicial candidates for nomination.

According to the constitution, the Supreme Court is the court of last appeal; it passes on writs of habeas corpus, constitutionality of the laws, jurisdiction and administration of lower courts, and appointment of justices below the appellate level. There are also special courts, appointed by the National Assembly, and military tribunals, selected by the Supreme Court. The 1995 legislation provides for oral trials and establishes family and juvenile courts. The 1996 criminal procedure code replaces a criminal system based on civil law with one in which oral argument is the norm.

Under the constitution, defendants have the right to a presumption of innocence, to representation by legal counsel, to be present in court, and to confront witnesses.

Foreign and international judicial systems also mattered to the future of justice in El Salvador. El Salvador accepts compulsory jurisdiction of the International Court of Justice with reservations. In 2002, US courts held two former Salvadoran army generals on trial for civil war atrocities and ordered them to pay the victims. Additionally, in March 2005, an OAS humans rights court reopened an investigation into one of the worst massacres of the civil war—the 1981 massacre in El Mozote.

ARMED FORCES

In 2005, there were a total of 15,500 active personnel in El Salvador's armed forces, supported by 9,900 reservists. Military numbers had been reduced as prescribed by the peace accord ending the country's civil war. There were 13,850 members in the Army, 700 in the Navy, and an Air Force estimated at 950 personnel. The Army's primary equipment included 10 reconnaissance vehicles, 51 armored personnel carriers and over 600 artillery pieces. The Navy's major units consisted of 38 patrol/coastal vessels. The Air Force had 21 combat capable aircraft, including 5 fighter ground attack aircraft. Paramilitary forces consisted of the National Civilian Police, which numbered over 12,000. In 2005, the defense budget totaled $106 million.

INTERNATIONAL COOPERATION

El Salvador is a founding member of the United Nations, having joined on 24 October 1945; it is part of the ECLAC and several specialized agencies, such as the FAO, IAEA, IFAD, IFC, ILO, IMF, UNESCO, UNIDO, WHO, and the World Bank. El Salvador is one of five members of the Central American Bank for Economic Integration (BCIE) and the Central American Common Market (CACM). It is also a member of the WTO, the Latin American Economic System (LAES), G-77, the Río Group, the Association of Caribbean States (ACS), and the OAS. The country has observer status in the Latin American Integration Association (LAIA). In 2004, El Salvador, the United States, Costa Rica, Guatemala, Honduras, Nicaragua, and the Dominican Republic signed the US–Central America Free Trade Agreement (CAFTA). The agreement must be ratified by all participating countries before it enters into force.

The country is a signatory of the 1947 Río Treaty, an inter-American security agreement. In environmental cooperation, El Salvador is part of the Basel Convention, the Convention on Biological Diversity, Ramsar, CITES, the Kyoto Protocol, the Montréal Protocol, the Nuclear Test Ban Treaty, and the UN Conventions on Climate Change, and Desertification. El Salvador is also signatory to the Central American-US Joint Declaration (CONCAUSA).

ECONOMY

Traditionally, the Salvadoran economy depended on a single agricultural export commodity. Shortly after independence, this product was indigo. When the market for indigo declined (due to replacement with artificial dyes), El Salvador moved to the cultivation and export of coffee in the mid-1800s. Earnings from coffee spurred cultivation of cotton and sugar, and later financed light manufacturing. The Central American Common Market (CACM) provided a previously absent market for the light manufactures and thus prompted that industry's growth throughout the 1960s. Coffee and sugar remained two of the four principal exports in 2005.

By the 1970s, El Salvador was the most industrialized nation in Central America, although the breakdown of CACM and a dozen years of civil war eroded that position. The change in GDP growth over the years from 1965–1978 and 1979–1982 illustrate the effects of civil conflict and disruption of coffee, sugar, and cotton production during the 1980s. From 1965–1978, GDP growth averaged about 4.3% annually. However, from 1979 to 1982, it declined by 23%. From 1983–1986, growth recovered modestly at an average annual rate of 1.5%.

The economy largely recovered from the civil strife of the 1980s. Agriculture (mostly coffee) is the foundation of El Salvador's economy, providing about two-thirds of the nation's exports and employing nearly one-third of its labor force. El Salvador enjoys one of the lowest levels of indebtedness in the region, with the bulk of foreign financing provided on a concessional basis.

The Crisitani administration, which came into power in 1989, began a comprehensive economic reform plan oriented toward a free market economy. A market-based currency exchange rate was adopted. Price controls were eliminated, as were the sugar, coffee, and cotton marketing monopolies. The nationalized banking system was largely privatized beginning in 1989. However, due to increased credit availability and public services prices, inflation doubled to around 20% in 1992.

Bolstered by peace, El Salvador's economy experienced brisk growth, with yearly GDP growth averaging 6.5% from 1990 to 1995. Inflation remained a problem, however, falling to 12% in 1993 and 8.9% in 1994, but rising to 11.4% in 1995. The latter increase was due in part to an increase in the VAT rate and one-off increases in charges for telephone, electricity, and water services. Unlike most of the Latin American economies, El Salvador was largely unaffected by the "Tequila Effect" following the Mexican peso devaluation in 1995 because of the government's solid macro-economic management and the economy's low external debt.

In 1996 economic growth slowed to 2.1% as the government sought to rein in inflation, which, through tight monetary and fiscal policies, achieved a then-record low for El Salvador of 7.4% for the year. Higher interest rates resulting in very expensive borrowing costs and pessimistic expectations combined to drive down domestic investment. Yet this did not hold back growth. In 1997, GDP growth rose to 4%, and inflation dipped to the low level of 2% where it stayed through 2000. The growth rate gravitated around that level, with a rate of 3.4% in 1998 and 4.9% in 1999. In 1999, inflation remained at 2%.

In 2000, however, the growth rate was reduced to 2% by the destructive impact of Hurricane Mitch. Inflation rose to 4.3%. Growth was further dampened (1.4%) in 2001 due to two earthquakes, as well as the US recession, global slowdown, and reduced investment activity following the 11 September 2001 terrorist attacks. Inflation declined to 3% in 2001. According to the Economist Intelligence Unit, real GDP growth in El Salvador averaged 1.9% from 2000 to 2004, and inflation averaged 2.9%.

By 2005, El Salvador had become one of the strongest economies in Central America, with a steady growth in GDP, an environment of macroeconomic stability, falling inflation rates, and increased exports from involvement in several free trade arrangements.

The Economist Intelligence Unit projected that GDP growth would remain positive (at approximately 2.5%) in 2006 due to increased consumption, investment and exports due to the launching of the Dominican Republic-Central American Free-Trade Agreement (DR-CAFTA). Inflation was projected to average 4.7%, accompanied by a worsening current-account deficit.

Despite these advances, GDP per capita was only half that of Brazil, Argentina, and Chile. A historic inequality in income distribution plagued the country wherein 45% of the income accrued by the richest fifth of the population and 5.6% by the poorest. In 2003, 36.1% of the population lived below the poverty line. Further, though the dollarization in 2001 made for some increased trade and investment opportunities, it also created an increase in prices without increases in wages, which eroded individuals' purchasing power (GDP per capital was $4,900 in 2004). Natural disaster struck El Salvador once again at the end of 2005, as Tropical Storm Stan acted as another weight on the economy.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 El Salvador's gross domestic product (GDP) was estimated at $33.9 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $5,100. The annual growth rate of GDP was estimated at 2%. The average inflation rate in 2005 was 4.7%. It was estimated that agriculture accounted for 9.8% of GDP, industry 30.3%, and services 60%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $2.122 billion or about $325 per capita and accounted for approximately 14.2% of GDP. Foreign aid receipts amounted to $192 million or about $29 per capita and accounted for approximately 1.3% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in El Salvador totaled $13.31 billion or about $2,037 per capita based on a GDP of $14.9 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 4.5%. It was estimated that in 2003 about 36.1% of the population had incomes below the poverty line.

LABOR

The civilian labor force was estimated at 2.81 million in 2005. As of 2003, agriculture accounted for 17.1% of the workforce, with 65.8% in services, and 17.1% in industry. Although unemployment in 2005 was estimated at 6.5%, much of the nation's workforce is underemployed.

Although workers have the right to organize a union without gaining prior authorization, the government and the courts continued to deny union applications for legal standing through the excessive use of formalities, effectively blocking union formation. Collective bargaining is limited to private sector employees and to those public employees in autonomous government agencies, such as the port authority and utilities. Technically, only private sector workers may strike, nevertheless, many public sector workers carry out strikes that are treated as legitimate. However, unions wishing to call a strike must meet a number of conditions if that strike is to be considered legal. These include: the collective bargaining agreement has to have expired; attempts at resolving differences must first go through a process of direct negotiations, mediation, and arbitration; and at least 51% of the affected workers must support the strike, including those who are not represented by the union. According to the Ministry of Labor, as of end 2005, only 9.1% of El Salvador's workforce were unionized.

The workweek is set at a maximum of 44 hours and six days. Bonus pay is required for overtime, and all full-time employees are required to get a weekly, paid eight-hour day of rest. Minimum pay rates are set by executive decree, and are based on recommendations from a committee made up of labor, business and government representatives. As of 2005, minimum daily wage rates were $5.28 for service employees, $5.16 for industrial workers, and $5.04 for workers in the maquila plants. Those rates were set in 2003. Although the law prohibits employment for those under age 14, child labor remains a problem. Minors between the ages of 14 and 16 years are limited to six hours per day, with a maximum normal workweek at 34 hours. Workers in hazardous occupations must be at least 18 years of age.

AGRICULTURE

Arable land in 2003 consisted of 910,000 hectares (2,249,000 acres) planted with annual and permanent crops. Irrigation covered 4.9% of this area in 2003, half of it in the Sonsonate and Sensunapan region. In 2003, agriculture represented 9.8% of GDP and 17.1% of employment.

Coffee, El Salvador's major crop (30% of total agricultural output), is grown principally in the west and northwest at elevations of 460 to 1,520 m (1,500 to 5,000 ft). Primarily as a result of the civil war, coffee production declined in the 1980s. In June 1993, the Ministry of Economy certified the first shipment of organic coffee; the agrarian reform cooperative that produced the coffee had not used chemicals or pesticides for over four years. Production in 2004 amounted to 83,000 tons (down from 156,000 tons in 1990). Exports of coffee in 2004 amounted 80,744 tons, valued at to $123.4 million. The coffee industry is a major employer in El Salvador, generating about 82,000 jobs.

Sugar production fell between 1979 and 1981 but later recovered; cane production in 2004 was 5.3 million tons, and the sugar industry contributed $37.6 million to the country's foreign exchange earnings in 2004. Sugar is the most important agricultural product after coffee, and is grown mostly by independent producers. Investment has increased, as has the area under cultivation (in contrast to the other two major export crops). The world price has, however, been in decline for several years, and this decline has cut export earnings; the government secured a $30.4 million loan from Venezuela to divert some production to gasohol.

Traditional grains grown in El Salvador include white corn, sorghum, rice, and edible beans. These crops make up the fundamental diet for most Salvadorans and are produced on virtually all small farms. Production amounts in 2004 included corn, 648,000 tons; sorghum, 148,000 tons; rice, 26,500 tons; and beans, 72,000 tons. An additional 441,660 tons of corn were imported in 2004 to meet local demand.

Land that was originally planted for cotton is now being used for sugarcane, pasture, and nontraditional crops. El Salvador has steadily shifted agricultural exports towards nontraditional items such as jalapeño peppers, marigold flowers, okra, and pineapples. Traditional coffee areas are also being absorbed by urbanization projects.

ANIMAL HUSBANDRY

Cattle and hogs are the predominant livestock in El Salvador. Cattle are of the "criollo" type and are used for production of both meat and milk. The dairy sector continued to suffer from inefficient production methods, poor animal genetic quality, and diseases. There are over 100 slaughterhouses operating illegally and without sanitary control. The government has planned to rebuild the livestock sector through financial and technological assistance.

The poultry industry is one of El Salvador's most organized and efficient agri-businesses, divided into smaller family farms and large commercial operations. The poultry industry directly generates roughly 6,000 jobs (60% of which are in rural areas), with an additional 20,000 secondary jobs. Commercial production accounts for 80% of poultry meat and about 75% of egg production.

In 2005 there were 1,259,000 head of cattle. The hog population rose from 390,000 in 1950 to 560,000 in 1979 but then declined to 188,000 in 2005. Other livestock included 96,000 horses, 24,000 mules, 10,800 goats, and 13,209,000 chickens. In 2005, milk production was 412,602 tons. A total of 63,649 tons of eggs were produced during the same year.

FISHING

The fishing industry, which centers on shrimp, has undergone significant development since it first gained commercial importance in 1957. The best coastal fishing grounds are off the southeastern sector. Scaled fish include freshwater robalo, sea bass, mullet, mackerel, swordfish, and redmouth; a tuna industry has been operating since 1963. Total fish production was 36,541 tons in 2003, including 1,131 tons from aquaculture.

FORESTRY

Forests and woodlands covered 121,000 hectares (299,000 acres) in 2000, representing only 6% of the total land area. Virgin forests once covered 90% of El Salvador. Almost all of the lumber used in building and in other Salvadoran industries must be imported, mainly coming from neighboring Guatemala, Honduras, and Nicaragua. Roundwood production in 2003 was 4.5 million cu m (170 million cu ft). Forest products include dye woods and lumber, such as mahogany, walnut, and cedar, for furniture and cabinet work. El Salvador is the world's main source of balsam, a medicinal gum; between Acajutla and La Libertad in the southwest is the so-called Balsam Coast, which supports a species of balsam tree unique to El Salvador. Imports of forest products in 2003 exceeded exports by $148.3 million.

MINING

El Salvador, 90% of which is of volcanic origin geologically, is less well endowed with mineral resources than other Central American country. Mineral production contributed less than 1% to the GDP. The country has produced gold and silver in the past. As of 2003, there had been no recorded production of gold or silver since 2000. Recent activity has been limited to exploration, including at El Dorado, whose indicated resources were estimated at 25,536 kg of gold and 164,849 kg of silver. A 1,050 m diamond drill program on the Aldea Zapote project was completed in 2001. Industrial minerals, especially limestone mined for domestic cement plants, were the primary commodities of the industry. Marine salt output rose in 2003 totaling 31,366 metric tons, down from 31,552 metric tons in 2002. Gypsum output in 2003 was estimated at 5,600 metric tons, unchanged from 1999 through 2002. Copper, lead, zinc, and sands containing titanium and ilmenite were also found in El Salvador.

ENERGY AND POWER

El Salvador has no known exploitable reserves of fossil fuels. Thus, it must rely upon imports to meet its fossil fuel needs. However, El Salvador is the largest producer of geothermal generated energy in Central America, with two geothermal facilities, the 95 MW Ahuachapan and the 66 MW Berlin facilities, in operation as of October 2005. According to government statistics, in 2003, geothermal sources produced 0.97 billion kWh of electricity, or about 21.9% of the total amount of the electricity generated. In that same year, thermal and hydropower sources accounted for 37.5% and 33.1%, respectively of all power generated. In 2004, a total of 4.158 billion kWh of electricity was produced, with consumption at 4.45 billion kWh. Imports and exports of electricity in that year totaled 473 million kWh and 91 million kWh, respectively. In 2002, electric power generating capacity stood at 1.133 million kW.

Although El Salvador has no known reserves of oil, it is one of only three countries in Central America to operate a refinery. Located at Acajutla on the Pacific coast, the facility has a capacity of 22,000 barrels per day, according to the Oil and Gas Journal. In 2002, refinery output totaled 18,840 barrels per day. Oil product consumption for that year came to 39,010 barrels per day, with total petroleum imports at 45,710 barrels per day.

INDUSTRY

The leading industrial region is the department of San Salvador. Other industrial centers are La Libertad, Santa Ana, San Miguel, Usulutan, and San Vicente. The industrial sector has been oriented largely to the domestic and Central American markets, though this is changing in light of recent free trade arrangements. There are coffee-processing plants, sugar mills, bakeries, plants making petroleum products, vegetable oils, fats, confectioneries, dairy products, tobacco, soap, candles, matches, shoes, furniture, light metals, cement, and organic fertilizers.

Manufacturing got a foothold in the economy in the 1950s and further grew as the CACM opened up regional markets in the 1960s. Large-scale industry was then introduced, relying mostly on imports of crude materials. In 1963, an oil refinery at Acajutla began processing Venezuelan crude oil; most of the output is consumed locally (in 2002, production capacity was 22,000 barrels per day). During the early 1970s, the greatest increase in value of manufacturing occurred in chemicals and textiles. Civil war during the 1980s hurt industrial production, with an average annual decline of 6% between 1977 and 1987.

Following the attainment of civil peace in the 1990s, the Salvadoran economy boomed. This growth was sustained by the recovery of the agricultural sector, and expansion of the construction and manufacturing sectors. Boosted by the rapid growth and development of its maquila (offshore assembly for re-export) zones, the economy became the most industrialized and best-performing in the Central American region. Maquila exports, as the primary export, are more important to El Salvador's economy than local manufactures. However, reliance on maquilas may prove to be a short-term growth prospect as lower production costs in China and Asia attract maquilas elsewhere. Where growth rates in the 1990s were around 45%, they fell to an average of 7% in 2000–04, and a 3% drop is expected for 2005. In May 2005, the garment-producer Charles Products transferred operations from El Salvador to Sri Lanka to take advantage of cheaper production costs that would make its products more competitive with those produced in China.

Growing at a rate of 4.5% in 2000, the manufacturing sector as a whole was one of the largest contributors to GDP, and, along with construction (which accounted for 4% of the GDP in 2004), led the economy in past years. Though growth in the sector slowed to 2.3% and 0.7% in 2003 and 2004 respectively, it still remained an important motor for economic growth from 2000–04. By 2004, manufactures accounted for 27% of El Salvador's total output.

Despite the growth in manufactures, the same basic problems persisted from decade to decade: the low purchasing power of the local population and the diffi cult financial and political situation of other Central American countries on which El Salvador depends for export markets. Nevertheless, El Salvador received substantial amounts of foreign direct investments in the industrial sector in 2001.

SCIENCE AND TECHNOLOGY

El Salvador has research institutes devoted to the study of seismology and geology, meteorology and hydrology, agriculture (including the Salvadoran Institute for the Study of Coffee), and medicine. The principal learned society in the country is the El Salvador Academy, headquartered in San Salvador. In the same city are museums devoted to natural history and zoology. Nine colleges and universities offer degrees in basic and applied sciences. In 1987–97, science and engineering students accounted for 59% of college and university enrollments.

In 1998, (the latest year for which the following data was available) research and development (R&D) expenditures totaled $21.280 million, or 0.08% of GDP. Of that total, 51.9% came from the government, followed by foreign sources at 23.4%, higher education at 13.2%, private nonprofit institutions at 10.4%, and business at 1.2%. In 1998, El Salvador had 33 researchers per million people actively engaged in R&D. In 2002, high technology exports were valued at $44 million, accounting for 6% of manufactured exports.

DOMESTIC TRADE

San Salvador is the chief commercial and marketing center. However, following the end of the civil war, thousands of Salvadorans returned from the United States and made San Miguel and Santa Ana two of the most industrialized cities in Central America.

Food is generally produced in small, scattered plots in the vicinity of urban areas and taken to market by traders (mostly women), either on their heads or by pack animals. Residents of remote rural areas usually consume most of what they produce exchanging the remainder for other commodities. In urban areas, the business units are mainly small shops, while in rural regions, individual traders conduct their business at town marketplaces, where agricultural produce, meats, fruit, handicrafts, ceramics, and flowers are sold.

A 10% value added tax was established in 1992 and raised to 13% in 1995. This tax made up 52.3% of the governments total tax revenues in 2004.

The central bank estimated that nearly $150 million per month, over $1.9 billion per year (2001 est.) is added to the economy through remittances of expatriates, primarily those living in the United States. Such remittances reached a record high of $2.5 billion in 2004 and accounted for 17.1% of GDP.

The usual business hours in the major cities are from 8 am to noon and from 2 to 6 pm on weekdays and from 8 am to noon on Saturday. Banking hours are from 9 to 11:30 am and from 2:30 to 4 pm on weekdays, with a half day on Saturday.

FOREIGN TRADE

While coffee remains one of the four main exports, it has gone from making up one-half of the country's exports in 1988 to 3.8% in 2004. Maquilas and nontraditional goods comprised, respectively, 55.3% and 39.8% of the $3.249 billion in exports in 2004. Sugar, shrimp, textiles, chemicals, and electricity comprised a portion of the remaining exports. The United States, Guatemala, and

Honduras absorbed, respectively, 65.5%, 11.8%, and 6.3% of El Salvador's exports in 2004.

El Salvador imports raw materials, consumer goods, capital goods, fuels, foodstuffs, petroleum, and electricity. In 2004, imports totaled $5.968 billion. Imports emanated from the United States (46.3%), Guatemala (8.1%), and Mexico (6%).

One of the El Salvador's greatest weaknesses remained its trade deficit. In 2000, the value of imports was almost three times that of exports. In 2004, the current account balance was -$880.5 million. The deficit is sustained in part by huge inflows of remittances from Salvadoran workers in the United States, estimated at 2.5 billion, 16% of the 2004 GDP.

El Salvador has sought to shrink its trade deficit and increase exports, especially of manufactured and nontraditional products, by creating new export industries through free trade zones. Fifteen of these zones already exist in El Salvador. Maquila industries have thus far been the largest beneficiaries, and have employed approximately 90,000. The Caribbean Basin Trade Partnership Act allows these goods to be sold duty-free in the United States.

Additionally, El Salvador has negotiated agreements to reduce trade and investment barriers through CAFTA. It has increased its exports to those countries with which it already has signed agreements—Mexico, Chile, the Dominican Republic, and Panama. Along with the other five Central American states, El Salvador is pushing for a customs union and the harmonization of customs duties.

BALANCE OF PAYMENTS

El Salvador's positive trade balances in the late 1970s changed into deficits after 1980. The main reasons for this development were declines in cotton, sugar, and coffee export earnings, civil war, and the virtual collapse of the CACM market. The US Central Intelligence Agency (CIA) reported that in 2004 El Salvador's exports were $3.249 billion while imports totaled $5.968 billion, resulting

sin a trade deficit of $880.5 million. Though the deficit was down from figures reported in 2001, it still remained uncomfortably high.

Capital inflow, principally in the form of remittances, transfers, donations, and credits from the United States, has helped cover the deficit. The government in 2000 expected remittances to grow at a rate of 5–6% from 2000 to 2002–04. However, with a low tax base and national savings, the economy can become vulnerable to fluctuations in such flows.

Though nontraditional and maquila exports were expected to grow by more than 15% each, maquila exports declined due to more competitive production conditions in China and other regions. This engendered, in part, projections that the current-account deficit would worsen in 2005–06.

BANKING AND SECURITIES

The Central Reserve Bank of El Salvador, established in 1934, was nationalized in 1961. It is the sole bank of issue and the fiscal agent for the government. The entire banking system was nationalized in March 1980, but was later privatized. By 1989, the financial system was practically broke; destroyed by mismanagement and political conflict. In 1991, as part of economic reforms, the government privatized six commercial banks and seven savings and loan institutions. In 1994, the government created the Banco Multisectorial de Inversiones (BMI) to promote private sector development. The Banking Law was modified in 1995 to encourage foreign banks to enter the country. There were 12 commercial banks in 2002. The International Monetary Fund reports that in 2000, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.1 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $6.1 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 6.93%.

A stock exchange was established in San Salvador in 1993, with five government issues of long-term bonds. In the first 12 months of activity, stock market transactions were nearly $100 million; the rate of growth in 1993–95 was rapid, and by the end of 1995 transactions reached an estimated $2.4 billion. The market trades almost exclusively in government bonds and short-term commercial paper, but private companies put shares on the market in the late 1990s.

INSURANCE

By 2000, El Salvador had at least 19 insurance companies in operation. The 1995 Insurance Law provided national treatment for foreign insurance firms. In 2003, there was $350 million worth of direct premiums written, with nonlife premiums accounting for $246 million. The country's top insurer in that same year was SISA Vida, with written premiums (life and nonlife) of $44.4 million.

PUBLIC FINANCE

Most public revenues come from taxes, fees, and fines. Municipal taxes and fees are subject to approval by the Ministry of the Interior. Until the early 1980s, government fiscal operations had generally shown surpluses; these enabled the government to sustain a growing volume of capital expenditures, resulting in a higher

government share in total investments. Improved tax collection in 1998 resulted in approximately 56% of government revenues being attributed to the VAT. The use of the colón was phased out and the Central Bank was dissolved in 2003.

The US Central Intelligence Agency (CIA) estimated that in 2005 El Salvador's central government took in revenues of approximately $2.8 billion and had expenditures of $3.1 billion. Revenues minus expenditures totaled approximately -$28.8 billion. Public debt in 2005 amounted to 45.8% of GDP. Total external debt was $8.273 billion.

The International Monetary Fund (IMF) reported that in 2003, the most recent year for which it had data, central government revenues in millions of colones were 2,312.8 and expenditures were 2,688.7. The value of revenues in millions of US dollars was $264 and expenditures $289, based on a market exchange rate for 2003 of 8.750 as reported by the IMF. Government outlays by function were as follows: general public services, 17.6%; defense, 3.4%; public order and safety, 11.4%; economic affairs, 10.2%; environmental protection, 0.2%; housing and community amenities, 7.9%; health, 13.3%; recreation, culture, and religion, 1.2%; education, 15.0%; and social protection, 14.2%.

TAXATION

Residents of El Salvador, whether citizens or not, are subject to progressive taxation on both domestic and foreign income ranging from 10–30%. Amounts received from insurance policies, interest on savings accounts, gifts, and inheritances are tax exempt. Taxes on corporate income are levied at 25% for amounts over the first $75,000, which are exempt. Dividends are not taxable. The main indirect tax is the value-added tax (VAT) introduced in September 1992 at a standard rate of 10%. In 2003, the standard VAT rate was 13%. Excise taxes are assessed on alcoholic beverages and tobacco products. A 3% real estate transfer tax is imposed when the real estate involved has a market value above $250,000. There are no local taxes.

CUSTOMS AND DUTIES

According to the Heritage Foundation in 2000, El Salvador had the most open trade environment in Central America. El Salvador completed a tariff reduction program in 1999 and as a result has tariffs of 0% on capital goods, 0–5% on raw materials, 5–10% on intermediate goods, and up to 15% on final products. Some items, such as textiles, agricultural products, and vehicles receive higher tariffs of up to 40%.

FOREIGN INVESTMENT

The Salvadoran government has fostered foreign investment since the 1988 Foreign Investment and Promotion Law came into force. Incentives included unrestricted remittance and reinvestment of profits and, for firms located in the free zones, the government offers up to a 20-year income tax holiday and duty-free importation of materials needed for production.

The inflow of foreign direct investment (FDI) spiked in 1998 to over $1 billion (up from only $59 million in 1997), but then averaged about $219 million a year 1999 to 2001. Contrary to the global trend, and due primarily to the international relief effort following the earthquake of January 2001, FDI inflow increased to El Salvador in 2001 and in 2002 rose to an estimated $277.8 million, $10 million above the year before. Major foreign investors included Coastal Technologies (power generation), Kimberly Clark (paper products), Texaco (fuel storage and distribution), Esso and Shell (petroleum refining), Bayer (pharmaceuticals), Sara Lee (clothing assembly), Xerox (sales), AIG (insurance), and British American Tobacco. El Salvador received approximately $250 million in direct investments in 1999, the majority from the United States.

Over 300 US companies have a commercial presence or financial investment in El Salvador. Such opportunities came about through the US-supported privatization of the electrical and telecommunications markets.

PROESA, the national agency promoting foreign investment in El Salvador, has been boosted by the Multilateral Investment Guarantee Agency (MIGA). The guarantees that MIGA makes of Salvadoran manufacturing and financial sectors helps those sectors attract further investment.

ECONOMIC DEVELOPMENT

Prior to 1950, the government, with moderate success, followed a policy of stimulating national economic development indirectly by building roads, developing power facilities, establishing credit facilities, and extending tariff protection to some industries. The prosperity and advantageous international position of Salvadoran coffee masked the long-term need for further diversification.

During the 1950s, it became apparent that El Salvador's primary problems were the growing population and lack of uncultivated arable land. The government therefore embarked on a program to encourage intensification of agriculture and expansion of small industry. The National Council for Economic Planning and Coordination (CONAPLAN), established in 1962, drafted a comprehensive five year plan (1965–69) embodying general objectives proclaimed by the government in line with the aims of the US-inspired Alliance for Progress. The objectives included an increase of the GNP; decrease in illiteracy; expansion of education, health, and housing programs; extension of social security benefits to areas not yet covered; and implementation of an integrated program of agrarian reform. The stimulus for the development program was to be provided by a small group of wealthy Salvadorans, with a minimum of government participation.

In early 1973, CONAPLAN drafted a development plan for 1973–77, concentrating on production, labor, and social welfare. The basic objectives of the plan were improvement in income distribution, employment, health, nutrition, housing, and education; stimulation of the agricultural, industrial, and construction sectors; acceleration of regional development; and export diversification. The plan called for adoption of a government-sponsored investment and financing program, institutional and financial reforms, and policies to stimulate private investment.

The economic reforms adopted in 1980 included a land redistribution program and nationalization of the banking system. After the civil war was over, the country received substantial influx of economic aid and private remittances. As part of the economic reform program, initiated in 1989 by newly elected President Christiani, the country's economy recuperated at a fair pace. After the signing of the Chapultepec Peace Accords in January 1992, El Salvador boosted business confidence and stimulated private investment.

In January 1986, a comprehensive stabilization program was announced. Among its most important measures were unification of the exchange rate at C5=$1 (a 50% devaluation), raising of fuel prices and public transportation fares, imposition of price controls on consumer staples (food, medical supplies, and clothing), tariff hikes on nonessential imports, and a rise in commercial interest rates. Because of the continuing costs from the civil war, and also from a drought the program fell short of its objectives. Approximately $2.2 billion were lost to infrastructure damage and foregone production opportunities from 1979–90 due to the civil war. However, since attacks ended and the peace accords were signed in 1992, investor confidence improved and foreign direct investment (FDI) increased.

In 1990, the International Monetary Fund (IMF) approved a standby agreement, which was followed by another one in January 1992 and another one in May 1993. The World Bank extended a $75 million structural adjustment loan in 1991, and the Inter-American Development Bank provided additional sectoral adjustment financing. Aided by the government's economic reforms and the IMF and World Bank supported macroeconomic programs, the country's economy continued to prosper. The rising influx of private remittances, official transfer, and the return of local capital boosted domestic demand as well as construction activity, especially in transportation infrastructure and other public projects. The industrial sector also benefited from this upturn.

El Salvador's external debt decreased sharply in 1993, chiefly as a result of an agreement under which the United States forgave about $461 million of official debt. Debt still stood at around $2.4 billion in 1999, despite US forgiveness. In 1998, significant aid came from the World Bank for agricultural reform ($40 million) and structural adjustment ($52.5); from the Central American Bank for Economic Development ($20 million) for road repair; and from the Inter-American Development Bank ($60 million) for poverty alleviation. Total non-US government aid reached $600 million in 1998.

In 2001, El Salvador's external debt stood at $4.9 billion. A damaging hurricane, earthquakes, and a decline in world coffee prices in the late 1990s and early 2000s slowed economic growth. The country adopted the US dollar as legal tender in 2001 upon approval of the "Monetary Integration." Colónes were no longer printed, and the Central Bank was dissolved in 2003. This meant that the government could no longer use monetary policy and had to focus attention on maintaining a disciplined fiscal policy. The government broadened the income tax base, by introducing a new tax code, and implemented new banking reform legislation. El Salvador still faced the diffi cult challenge of reducing poverty, in part by investing in infrastructure and social programs.

In 2004, El Salvador ratified the US-Central American Free Trade Agreement (CAFTA) that it had signed the previous year. It was the first Central American country to do so. El Salvador worked to encourage foreign investment, modernize tax systems and fiscal policies, and to pursue liberalization policies in an effort o open new export markets and balance its trade deficits. Once in place, CAFTA was expected to increase GDP of the signatories by 0.6% annually.

It was projected that the Salvadoran government would implement further tax reforms to raise fiscal revenue after the 2006 elections, to be implemented prior to the legislative elections in 2009.

SOCIAL DEVELOPMENT

A mandatory private social insurance program replaced the government-sponsored program. Employees and employers each must contribute 7% of payroll for social insurance, and there is also a private insurance scheme. Old age, disability and survivorship is covered. Maternity and sickness benefits are provided by a social insurance program that is funded by employee and employer contributions, as well as a subsidy from the government. Maternity benefits are equal to 75% of wages for up to 12 weeks. Work injury insurance covers those in industry, commerce and public service; casual workers, domestic workers, and teachers are not covered.

Women have the same legal rights as men, but in practice they face discrimination in employment, salaries, education, and access to credit. Men often receive priority in hiring, and there have been reports of pregnancy tests for female job applicants. Domestic violence against women is pervasive. The incidence of child abandonment and abuse and the use of child labor appear to be on the increase. The government was working with the United Nation's Children's Fund to improve the welfare of children.

Human rights violations include use of excessive force and extrajudicial killings by police. New criminal and sentencing codes decreased violations of due process. Lengthy pretrial detentions are common, and prison conditions remain harsh. Very few Salvadorians claim indigenous status; most have been assimilated into the general population. Indigenous groups live in poor rural areas. Most lack titles to their land and therefore lack the collateral necessary to access credit from a bank.

HEALTH

Health standards have improved considerably since 1930. Average life expectancy in 2005 was 71.22 years. The infant mortality rate, 139.4 per 1,000 live births in 1930 to 1934, declined to 25.10 by 2005. The crude death rate, 23 per 1,000 in 1930 to 1934, dropped to an estimated 6.1 as of 2002. The fertility rate has dropped from 5.3 in 1980 to 3.1 in 2000. Malnutrition persisted in an estimated 23% of children under five as of 2000. However, immunization rates for children up to one year old were quite high in 1997: tuberculosis, 93%; diphtheria, pertussis, and tetanus, 97%; polio, 96%; and measles, 97%. The contraceptive prevalence for women was 60% as of 2000.

As of 2004, El Salvador had 127 physicians, 184 nurses, 56 dentists, and 31 pharmacists per 100,000 people. The Ministry of Public Health and Social Welfare coordinates mobile health brigades, professional medical delegations, field offices, clinics, laboratories, and dispensaries. UNICEF, the US Institute of Inter-American Affairs, the Rockefeller Foundation, and other foreign organizations assisted health campaigns. Health care expenditure was estimated at 7.2% of GDP.

The principal causes of death remain gastroenteritis, influenza, malaria, measles, pneumonia, and bronchitis, caused or complicated by malnutrition, bad sanitation, and poor housing. Major causes of death were noted as communicable diseases and maternal/perinatal cause, noncommunicable diseases, and injuries. In 2000, 74% of the population had access to safe drinking water and 83% had adequate sanitation. In 1999, there were 67 cases of tuberculosis per 100,000 people. There were 1,416 new cases of AIDS reported in 1996 and 2,798 cases of malaria in 1994. The HIV/AIDS prevalence was 0.70 per 100 adults in 2003. As of 2004, there were approximately 29,000 people living with HIV/AIDS in the country. There were an estimated 2,200 deaths from AIDS in 2003.

Much of the progress since the 1930s was undermined by the country's civil war, which overtaxed health care facilities while, in real terms, expenditures on health care declined. The National Medical School was shut down in 1980.

HOUSING

Inadequate housing, most critically felt in cities and towns, is endemic throughout El Salvador. A 2005 report from Habitat for Humanity indicated a housing deficit of 630,000 homes. Housing problems have been exacerbated by the civil war, which has created hundreds of thousands of refugees. Earthquakes in 2001 damaged nearly 335,000 homes, about 25% of the total housing stock. In 2002, there were about 1,491,588 dwellings in the country. About 90% were single-family, detached homes.

More than half of all urban dwellings have earthen floors and adobe walls and many have straw roofs. Concrete and adobe are preferred building materials. In 2000, only about 74% of households had access to improved water sources and 83% had access to improved sanitation systems.

The government has received financial assistance from international and foreign organizations, such as USAID and the Inter-American Development Bank, for projects focused on repair and reconstruction of damaged housing, as well as new housing development. The Salvadorian Foundation for Development and Basic Housing (FUNDASAL), which was established in 1968, continued to work on projects to improve the living conditions of low-income and poverty stricken residents. FUNDASAL has sponsored over 200 improvement projects and built over 25,000 homes.

EDUCATION

Primary education is free and compulsory through elementary school, and the public school system is government controlled. Enforcement of primary-school attendance is diffi cult, however, and truancy is high in rural areas. Primary education lasts for nine years, followed by three years of secondary education, with student choosing either a general studies or technical/vocational track. In 2000, an institutional reform process for education was initiated under a Basic Education Modernization Project, and the government was seeking international funding support for improvements in the quality and coverage of secondary education. The academic year runs from February to December. The primary language of instruction is Spanish.

In 2001, about 46% of children between the ages of four and six were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 90% of age-eligible students. The same year, secondary school enrollment was about 49% of age-eligible students. It is estimated that about 88.6% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 28:1 in 1995.

Twelve private and three public universities offer higher education. The University of El Salvador in San Salvador, authorized in 1841 and with enrollments averaging 30,000, was a base for antigovernment agitation during the 1970s. The university was stormed and ransacked by government troops on 26 June 1980; at least 50 students and the rector were killed; the university did not reopen for several years. In 2003, about 17% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 79.7%, with 82.4% for men and 77.1% for women.

As of 2003, public expenditure on education was estimated at 2.9% of GDP, or 20% of total government expenditures.

LIBRARIES AND MUSEUMS

The National Library in San Salvador is the largest in the country, with 150,000 volumes. The library at the University of El Salvador has 34,000 volumes. The Central American University José Simeón Cañas in San Salvador has 150,000 volumes. In addition, there are three governmental libraries attached to the ministries of Education, Economics, and Foreign Affairs and a few small private and college libraries. The Ministry of Education maintains a mobile library with a total of 25,000 volumes.

The David J. Guzmán National Museum in San Salvador, founded in 1883, is a general museum housing historical documents and pre-Columbian artifacts. The Natural History Museum of El Salvador was founded in 1976. The National Zoological Park in San Salvador, established in 1961, maintains a natural science museum. The Anthropological Museum of El Salvador and the Museum of Word and Image are also in San Salvador.

MEDIA

Ownership of domestic telephone and telegraph services has been transferred from the government to a semiautonomous agency. In 2003, there were an estimated 116 mainline telephones for every 1,000 people; about 38,200 people were on a waiting list for telephone service installation. The same year, there were approximately 176 mobile phones in use for every 1,000 people.

As of 2001 there were 150 licensed radio stations and at least 11 commercial television stations, including the government-owned Radio Nacional. Radios in use increased from 398,000 in 1968 to about 2.75 million in 1995. In 2003, there were an estimated 481 radios and 233 television sets for every 1,000 people. The same year, there were 25.2 personal computers for every 1,000 people and 84 of every 1,000 people had access to the Internet. There were 35 secure Internet servers in the country in 2004.

The principal newspapers are published in San Salvador. They are, with 2004 circulations, El Diario de Hoy, 115,000; La Prensa Gráfica, 112,800; El Mundo, 58,000 (in 2002); and Co Latino, 15,000.

The constitution of El Salvador provides for freedom of expression, including that of speech and press, and the government is said to respect these rights in practice. Print and broadcast journalists are said to freely and regularly criticize the government without censure.

ORGANIZATIONS

Of prime importance is the Salvadoran Coffee Association, founded in 1930 to promote coffee production, distribution, and consumption; to improve quality; and to provide information and advice to growers. Its membership includes all native and foreign coffee growers in El Salvador, and it receives financial support from the government export tax on coffee. Other prominent management organizations include the National Coffee Institute, Chamber of Commerce and Industry, Salvadoran Association of Industrialists, Cattle Raisers' Association, El Salvador Sugar Cooperative, National Sugar Institute, Salvadoran Cotton Growers' Cooperative, and National Federation of Small Salvadoran Enterprises. In the early 1970s, the Salvadoran Communal Union was formed to improve peasant farming methods and to campaign for agrarian reform. In 1986, the union claimed 100,000 members.

There are youth organizations affiliated with religious institutions and political movements, as well as student unions at major universities. Scouting and Girl Guide programs are also active. There are several sports associations promoting amateur competitions in a variety of pastimes, such as tennis, badminton, tae kwon do, squash, and baseball. The country also has an active program of the Special Olympics.

Volunteer service organizations, such as the Lions Clubs and Kiwanis International, are also present. There are national chapters of the Red Cross, Habitat for Humanity, the Society of St. Vincent de Paul, and Caritas.

TOURISM, TRAVEL, AND RECREATION

El Salvador's best-known natural wonder is Izalco, an active volcano often referred to as the Lighthouse of the Pacific because its smoke and flames are a guide to ships. Noteworthy are the cathedrals and churches of San Salvador, Santa Ana, and Sonsonate; the parks, gardens, and architecture of San Miguel; and the colonial atmosphere of San Vicente. Archaeological ruins of pre-Columbian origin are found in many parts of the country. Among the most striking are those at Tazumal, near Santa Ana, which include large pyramids and buildings with ancient carvings and inscriptions; there are more than 100 pyramid sites in El Salvador, many still unexcavated. The Pacific coast contains excellent beaches, and there is large-game fishing in the Gulf of Fonseca and in the ocean. Football (soccer) is the national sport. A valid passport is required for entry into El Salvador as well as a visa or a tourist card.

In 2003, there were 857,378 foreign visitors. The 4,578 hotel rooms with 9,156 beds had an occupancy rate of 51%. Visitors stayed an average of five nights. Tourism receipts totaled us $514 million.

In 2005, the US Department of State estimated the cost of staying in San Salvador at us$191 per day. Outside the capital, daily expenses were an estimated us$91.

FAMOUS SALVADORANS

The national hero of El Salvador is Father José Matías Delgado (1768–1833), who raised the first call for independence. A renowned political leader was Manuel José Arce (1786–1847), who fought against the Mexican empire of Iturbide and was the first president of the United Provinces of Central America. Gerardo Barrios Espinosa (1809–65) was a liberal president during the 19th century.

Prominent Salvadoran literary figures of the 19th century were Juan José Cañas (1826–1912), a poet and diplomat and the author of the Salvadoran national anthem, and Francisco E. Galindo (1850–1900), a poet and dramatist.

Writers of note in the 20th century included Alberto Masferrer (1865–1932), an essayist and poet; poet Roque Dalton (1935–1975); Juan Ramón Uriarte (1875–1927), an essayist and educator; and Salvador Salazar Arrué (1899–1975). Juan Francisco Cisneros (1823–78) was a nationally recognized painter.

Key figures in Salvadoran politics of the 1970s and 1980s were José Napoleón Duarte (1926–90) and Roberto D'Aubuisson Arrieta (1943–92). The assassinated Roman Catholic Archbishop Oscar Arnulfo Romero y Galdames (1917–80) was well known as a defender of human rights.

DEPENDENCIES

El Salvador has no territories or colonies.

BIBLIOGRAPHY

Boland, Roy. Culture and Customs of El Salvador. Westport, Conn.: Greenwood Press, 2001.

Byrne, Hugh. El Salvador's Civil War: A Study of Revolution. Boulder, Colo.: Lynne Rienner Publishers, 1996.

Calvert, Peter. A Political and Economic Dictionary of Latin America. Philadelphia: Routledge/Taylor and Francis, 2004.

Gomez, Mayra. Human Rights in Cuba, El Salvador, and Nicaragua: A Sociological Perspective on Human Rights Abuse. New York: Routledge, 2003.

Health in the Americas, 2002 edition. Washington, D.C.: Pan American Health Organization, Pan American Sanitary Bureau, Regional Office of the World Health Organization, 2002.

Johnstone, Ian. Rights and Reconciliation: UN Strategies in El Salvador. Boulder, Colo.: Lynne Reinner Publishers, 1995.

Peterson, Anna, Manuel Vásquez, and Philip Williams (eds.). Christianity, Social Change, and Globalization in the Americas. New Brunswick, N.J.: Rutgers University Press, 2001.

Studemeister, Margarita S. (ed.). El Salvador: Implementation of the Peace Accords. Washington, D.C.: U.S. Institute of Peace, 2001.