EL SALVADOR: ‘Prospects for Central America are very, very bright’
Although the smallest Central American country in terms of size, El Salvador looms large in the minds of most Americans, especially those living in cities like Washington which have a large Salvadoran population.
El Salvador’s ambassador to Washington, Rene A. Leon, recently sat down with DiplomaticTraffic.com to discuss the close ties between his country and the United States. In his view, El Salvador and other Central American countries are poised for significant growth, based on progress in democratization in the region, the trade and investment opportunities afforded by CAFTA (the Central America Free Trade Agreement made with the United States and being implemented now), the improvement of infrastructure, including regional projects, and the financial support offered for these and other developments by the Millennium Challenge Corporation.
He also addressed some of the problems, such as El Salvador’s reputation for gang-related crime, and the lack of real understanding of his country in the United States.
Below are his comments on these and other issues.
The results of CAFTA
CAFTA has already been a great economic success. Not only for El Salvador but for all the Central American countries which have ratified the agreement. For El Salvador, the volume of trade between January and August 05 and 06 shows remarkable results. But the most amazing part is that the benefit is the greatest for countries that weren’t expected to benefit a lot. Some congressmen had reservations about the impact of CAFTA on competition. For example, Nicaragua has seen its exports grow by 29 percent. El Salvador has seen its exports grow in the same period by 15 percent.
We attribute to CAFTA an increase of $250 million in foreign direct investment in the last 18 months. So CAFTA is a very important reality in terms of the boost provided to our exports, to our economic growth, to employment. I think this is only a beginning of an economic transformation that will occur in the Central American countries and the Dominican Republic [also a member of CAFTA] when the agreement shows its full potential. Some countries which are part of CAFTA have not ratified the agreement yet. So the results are only for countries that have ratified CAFTA and, in the case of El Salvador, for less than six months, and for other countries less than six months.
But the momentum is there. CAFTA is an important platform for development. Not only are our exports to the United States growing, but our capacity to buy from the United States is also growing, creating a healthy economic cycle for the Central American countries and the United States.
There were a lot of reservations among some congressmen about the impact of CAFTA in the agricultural sector. We have found out, in the case of El Salvador and the other Central American countries, that one of the sectors that has benefited the most is precisely the agricultural sector. There are two sectors that are driving development under CAFTA: textiles and apparel is one; agriculture and agro-industries is the other. It is exactly the results we expected when we were lobbying for the agreement to be passed.
Sectors that benefit
CAFTA has created a very positive impact in the entire economic mission we have for development and opportunities. Right now our president is visiting Japan, Taiwan and Korea, promoting investment in El Salvador, in part as a platform to do business with the United States. El Salvador is ready to attract more diversified investments, beyond textiles and agricultural products, especially in value-added products. We have been discussing with Asian investors, for example, investments in auto parts manufacturing, for distribution to the world, but certainly including the United States. We have gone into the energy sector. In value added agricultural products, we have a growing ethanol quota within CAFTA, ethanol being big in terms of oil consumption savings. This is helping create a vertical integration of the sugar industry in El Salvador.
CAFTA is also providing opportunities in creating value-added services, not only financial but also telecommunications. We are growing very fast in call centers. We are also developing clusters in pharmaceuticals and other types of light industry production, especially electronics.
The new port of La Reunion
CAFTA is being implemented when we are building the new port of La Reunion, a container port costing $198 million. It will offer the most modern and efficient port services on the Pacific coast of Central America between Mexico and Panama Canal. We plan to link this port with the Port of Cortez on the Honduras’ Caribbean coast to create a ‘dry canal’ across Central America, to move goods between the Pacific and Atlantic oceans. One of the projects we are discussing in Asia is a railway that will link the Atlantic and Pacific, via Guatemala and Honduras. A highway linking the ports has been discussed for 50 years, but is now to be built with the help of a $461 million grant from the Millennium Challenge Corporation.
The MCC grant, awarded this November, will fund construction of the highway, but also help small farmers to improve their productivity. The third use of the fund will be social, educational and health projects to promote human development, primarily in the impoverished northern part of the country, where 50 percent of the population lives below the poverty line.
What is happening in El Salvador, Nicaragua and Honduras (members of the MCC club) is that conditions that are different parts of a development platform are being made to operate at the same time in a way that we have never seen before: a free trade agreement with our main trading partner; concessional funds to invest in development projects for the country, the normalization of infrastructure, and regional projects in electricity, roads and telecommunications that will create the conditions for a very, very important take off of development in the Central American countries.
This is not a dream or aspirational way of thinking; these are real projects that are happening right now and will mature in the next five years. If Central America is able to strengthen democracy; if it is able to continue on the path of reforms we have been conducting; if it is able to strengthen its institutions and its capacity building; and governments embrace freedom and democracy, the prospects for the future of Central America are very, very bright in the medium term.
The US-El Salvador human connection
This is a special connection. Some 25 percent of Salvadorans live in the United States. This creates a very strong connection between families living in both countries. El Salvador passed six million inhabitants, with 2.5 million more living in the United States. Salvadorans send back over $3 billion in remittances each year, with the figure expected to be $3.2 billion for this year, which is 16.5 percent of El Salvador’s GDP. That creates a strong tie between the two countries.
A few weeks ago we conducted the second annual presidential forum in El Salvador for expatriate Salvadorans, with 700 Salvadoran leaders from abroad, both from the United States and other countries, such as Australia. The meeting covered social, cultural and economic importance of Salvadorans living abroad, and sought to identify a common agenda between the government and the Diaspora community.
The legislative assembly in El Salvador and our government are now legislating for Salvadorans living abroad. This is a revolution in El Salvador. For example, it has been decided that Salvadorans abroad can retire with benefits in El Salvador by making contributions to the social security system in our country. There is also legislation that allows a Salvadoran living abroad to receive a loan to use in purchasing a home in El Salvador, for his family or retirement. Now, a Salvadoran can get an identity card issued by the government in El Salvador through a US-based consulate. Perhaps the most important sign of the importance of our relations with overseas Salvadorans is that we have established a branch in the Ministry of Foreign Affairs, headed by a deputy minister who sits in on cabinet meetings, just to take care of Salvadorans living abroad.
We want to be like the Jewish or Cuban or Puerto Rican communities in the United States where we are not only great in terms of numbers, but also where the Salvadoran community will some day have its own representatives [in government bodies], and some day will have the same kind of linkage that some older immigrant communities have built in this country. Already we have a Salvadoran state senator in California, and other elected officials elsewhere.
So our ambition is to have a unified, common agenda for Salvadorans living in the United States with Salvadoran leaders and organizations very closely tied to El Salvador but also having political clout in the United States. Most of them, sooner or later, will be Salvadoran Americans. We had 11 consulates five years ago, we have 16 today and expect by 2008 to have 20.
Security issues related to gangs and crime
We are doing different things at different levels [to tackle the crime and security issues]. First, we have established a high-level political dialogue, my president and President Bush, to deal with this [security] issue, because this is not only a security problem for El Salvador, but also for the United States and the Central American region. We are discussing right now about instruments to be implemented fairly soon, that can help us to deal with individuals who commit crimes in the United States and are returned to El Salvador. We are trying to find ways to close doors for criminals who are sent back to El Salvador but have not been prosecuted [in the United States] or who are such a threat to public security that we need to find ways for them to complete their sentences in El Salvador, an instrument such as a prisoner transfer program and treaty and an executive agreement with respect to deportees’ criminal records. We have been successful in getting the United States to recognize that this is a security problem for all of us and we have to close the doors for criminals to commit crimes in El Salvador once they have been deported, and then coming back illegally to the United States.
At a local level, we have also established cooperation agreements between police departments in the United States and our national civilian police. They share information, they share technology, they share experiences in how to deal with gang problems in both El Salvador and the United States.
We have also done this at the county level. For example, we have had Montgomery County (Maryland) officials come to learn how we combat gangs in El Salvador. Also to discuss how we can keep kids out of gangs [in both countries].
We keep a lot of communication at the community level, especially through churches. Churches and other NGOs have proven to be the most effective tool to convince young Salvadorans not to join gangs.
In addition, the FBI has agents working in El Salvador, and we have a task force that comes to the United States to deal with the issues of gangs.
It is very difficult for us to understand that the gang problem has its roots here, with gang members returning to El Salvador to create mirror organizations there. In order to solve the problem, we have to put as much emphasis on solving the problem in El Salvador as in the United States. Some of the gang bosses live in the US and control gang activities in El Salvador by remote control.
The other problem is an image problem. Some people associate gang activities with El Salvador. A lot of the bad news is covered in the press, but a lot of the good news, such as bilateral cooperation and government-to-government discussions about prevention plans, etc, is not reported.
Legal status of Salvadorans in the US
The vast majority of Salvadorans living in the United States are hardworking people who are well-integrated into society. One gang member caught doing something wrong can stereotype the entire community. We have to be aware of the impact this image can have on the country, specifically affecting investment, an area where we need to concentrate most of our efforts.
The vast majority of Salvadorans living in the US have some sort of immigration relief. Either they have legal residency or they are Salvadoran-Americans, or they have employee protection status called TPS, or they have a working permit. Undocumented Salvadorans in the United States are 15 percent of the total at most. This is not the main cause of concern between our two governments. The issue of crime and deportees is a much bigger problem.
In the long term, managing the flow of immigrants can only be dealt with effectively by creating economic opportunity in El Salvador.
Biography of Rene Antonio León Rodríguez
Ambassador León has served in the academic, private and government sectors. He has become a leader in trade and investment issues and a staunch spokesman and advocate for the Salvadoran Community in the United States.
Ambassador León was educated in both El Salvador and the United States. He received a bachelor's degree from the Central American University "José Simeón Cañas" (UCA, for its initials in Spanish) in San Salvador and he was later awarded a Fulbright scholarship for study at the University of Illinois in Champaign-Urbana, where he received a master's degree in economics.
He was a professor of economics at the "José Simeón Cañas" University (UCA) in 1985-1986. In addition, he taught economics at the "Dr. José Matías Delgado" University from 1990 to 1992 and was a professor in the Master of Business Administration (MBA) program at the UCA in 1994-1995.
From 1989 to 1991, he held the post of Technical Manager at the Salvadoran Chamber of Commerce and Industry. During that same period, he also worked as advisor to the National Association for the Private Enterprise (ANEP, for its initials in Spanish) and to the Coffee Processors and Exporters Association of El Salvador (ABECAFE, for its initials in Spanish).
He joined the Ministry of Economy in 1992 as Director of International Trade Negotiations and Economic Integration. In this position, he was responsible for multilateral trade and economic negotiations in GATT. His responsibilities also included bilateral and regional negotiations with El Salvador's principal trade partners and the countries that belong to the Central American Common Market.
In 1994, he became Vice Minister of Economy responsible for Trade Policy, International Trade Negotiations and Investment Promotion in El Salvador. As Vice Minister of Economy he represented El Salvador in various ministry negotiations and meetings held within the framework of the World Trade Organization (WTO). During his tenure as Vice Minister, he led the Working Group on Market Access for the Free Trade Area of the Americas (FTAA) negotiations. In addition, he actively participated in the design and execution of El Salvador's National Competitiveness Program as government representative in several study and work missions to Asian countries. In the area of investment promotion, he represented El Salvador worldwide in several forums, conferences, and seminars.
In 1997, he was appointed Ambassador of El Salvador to the Government of the United States of America. In this position, he is responsible for representing El Salvador before all branches of the United States government as well as maintaining effective relations with the large Salvadoran Community in the United States. His responsibility extends to virtually the entire range of governmental issues relevant to the relationship between the United States and El Salvador.
Ambassador León's timely and effective leadership in negotiations carried out with the U.S. Congress, the Administration and the private sector contributed to the approval of the "U.S.-Caribbean Basin Trade Association Law." This legislation enhances the trade benefits granted to Salvadoran products that are exported to the United States under the Caribbean Basin Initiative (CBI). Ambassador León, a firm believer in free trade, has dedicated exceptional time as the representative of El Salvador in Washington, D.C., to promoting negotiations for a Free Trade Agreement between Central America and the United States. Today, these negotiations have become a reality.
Because the Salvadoran Community living in the United States is one of the main priorities for El Salvador, Ambassador León also dedicates a great part of his efforts to the immigration issue. During 1997, he made contacts with U.S. Congress and the Administration that contributed to the approval of the "Nicaraguan Adjustment and Central American Relief Act" (NACARA), which came into effect in 1999. NACARA grants permanent immigration status to eligible Salvadorans who meet its requirements. Ambassador León maintains a close and active relationship with the U.S. Administration and Congress in order to achieve rulings and procedures that facilitate and expedite the application of NACARA to Salvadorans. Since June 1999, he has led the Embassy's program to disseminate information about NACARA rights and responsibilities to the Salvadoran Community in the United States.
Currently, Ambassador León is in close contact with Congress and the Administration, as well as coalitions of allies and friends on the immigration issue, in order to advocate for NACARA parity that would provide Salvadorans the opportunity to enjoy the same benefits granted to other immigrants from the same region. He also is active in support of the initiative for the Central American Security Act (CASA) and related initiatives.
Early in 2001, the Government of El Salvador, through Ambassador León, concentrated its efforts in the U.S. Congress and the Administration on seeking a Temporary Protective Status (TPS) for Salvadorans in the U.S. at the time the earthquakes hit El Salvador in January and February 2001. As a result, President George W. Bush's Administration designated El Salvador as a TPS beneficiary country for a period of 18 months, which would enable Salvadoran citizens in the United States to maintain stability in their immigration status and contribute to the reconstruction of El Salvador through working in the United States to earn income that they could send home. This status was planned to continue until September 9, 2002. During 2002, Ambassador León concentrated his efforts on obtaining an extension of the TPS, in order to enable hundreds of thousands of eligible Salvadoran citizens to continue to contribute to the reconstruction of El Salvador, which is estimated to last through the year 2005. On March 9, 2002, Attorney General John Ashcroft announced the extension of the TPS period until September 9, 2003. Since the extension was announced, Ambassador León has led extensive activities in the Embassy's Information Dissemination Program for TPS re-registration in order to inform the Salvadoran community of the deadlines and benefits established for TPS.
In search of new foreign investment for El Salvador and in the promotion of Salvadoran corporations abroad and especially in the United States, Ambassador León dedicates considerable time and effort to making new contacts and establishing business opportunities involving El Salvador, including particularly opportunities for small and medium-sized enterprises. Ambassador León participates in trade missions to and from El Salvador related to "nostalgic products" addressed to the large Salvadoran community living in the United States.
Ambassador León participates as a lecturer in economic integration and development, international trade negotiations and preferential trade structures, monetary integration, family remittances, and immigration issues, among others. He participates in seminars and conferences organized by governments, universities, international organizations, think tanks, chambers of commerce, and non-governmental organizations. In addition, he participates as guest professor on trade and economic topics in the Trade Policy Courses for government officials of the Americas, organized each summer by the prestigious Georgetown University and the Organization of American States (OAS) in Washington, D.C.
During his service as ambassador, Ambassador León has received numerous awards from organizations in El Salvador and from Salvadoran-American associations in the United States. The recognition he has achieved includes the "Ambassador Award" of the Greater Washington Ibero-American Chamber of Commerce in Washington, D.C., which he received in 2000. The American Chamber of Commerce of El Salvador conferred upon him its highest award, the "Eagle Award," in 2000. Also in 2000, the Salvadoran Legislative Assembly unanimously recognized him as the "Most Meritorious Ambassador of El Salvador"; he is the only person to have been honored with this title. In 2001, he received the Keys of the City of Las Vegas, Nevada, as well as special recognition from the 14th District of Los Angeles, California. During 2002, he was honored by the Salvadoran Foundation of Las Vegas, Nevada; by the Conventions Bureau of El Salvador; by the Legislative Assembly of El Salvador for his participation in the International Forum "Migration Perspectives of Salvadorans in the U.S.A. for the XXI Century"; by The Arlandria (Virginia) Health Center for Women & Children; and by La Curacao of Los Angeles, California. He also received the "Excellence Award" from the Magazine OKAY LA in Los Angeles, California, and special recognition from the Nicaraguan American Chamber of Commerce of California as "Ambassador of the Central American Community."
Ambassador León is the father of two teen-age boys.