Tuesday, December 8, 2009

The Reality of El Salvador, Part 2: Economics and Violence in El Salvador

In August 2009, SHARE El Salvador Director, Marina Peña, gave a talk to Cretin-Derham High School about the National Reality of El Salvador. This talk has been split into three parts: The History of El Salvador, Economics and Violence in El Salvador and Agriculture in El Salvador. This is the second part of the talk.

Part 2: The Economy and Violence in El Salvador

They say in our country that 10 percent of the population has 90 percent of the wealth and 10 percent of the wealth is distributed among 90 percent of the population. This is what provokes the majority of the problems that we have in our country like delinquency and violence. Its what provokes the social struggles. Just a few minutes before I entered this room, the police were chasing a thief down the street, which is a common sight in our country. This is not just chance, its a product of a long history of social problems that have not been resolved. In the last 20 years under the ARENA government, this inequality has become worse. But apart from this, we have problems with the entity with whom we do the majority of our business and that is the United States. The economy of El Salvador is in crisis right now in large part due to the poor administration of the ARENA government of the past twenty years. But also, in part because of the economic crisis that is affecting the United States and that now affects the entire world. But it affects us a little more directly for three reasons. First because the majority of production in El Salvador is sold to the United States. 80 percent of the products that El Salvador export is from the United States. Of course if the United States isn't buying as much as it did before, we won't sell as much, and this affects our economy. The principal product that the United States buys is textiles, but also some traditional Salvador products because we have two and a half million people from our country living in the United States.

Now we come to the second aspect, those two and a half million Salvadorans send back 3 billion dollars annually in remittances to their families in El Salvador. And those 3 billion dollars that immigrants send to their families, balances our the commercial spending here in El Salvador. The commercial balance is what a country looks to obtain in its trading policies. You want to balance out what you export and import and you look to sell more than you buy so that you gain money. All countries in the world have this economic index to rate their economy. Well here in El Salvador we always have a deficit in our economy because we always buy more than we sell. In El Salvador, the only way that we have achieved an equilibrium is from the remittances that Salvadorans in the states send back to their family here. But many Salvadorans in the United States work in constructions, one of the sectors most affected by the crisis. And the effect of that is that the remittances have lowered in the last two years. So our economy is slowly sinking because we are selling less to the United States and we are receiving less in remittances.

The third economic problem that we have is that we are dollarized, which means we use the US dollar. So we don't have a monetary policy because we don't have our own currency. This limits the government from making certain policies that would allow for an equilibrium in our economy that we might have if we weren't dollarized. This also makes us more vulnerable to the depreciation of the dollar on world scales, like when the dollar loses value. The result is that our economy is in deceleration, which means that the level of growth in El Salvador is negative 2%. This of course, aggravates our social problems that are already in a grave situation here in our country. For example there is more unemployment, the health care system is in crisis, there is not enough medicine, hospitals or medical staff to deal with the crisis. On top of all of this comes H1N1 which affects the poorest sectors of the country. So it becomes a vicious cycle, there are no jobs, so there is no money and people get sick and there are not adequate hospitals, and it just continues. And of course it makes other problems worse such as violence and crime.

Our country suffers from an epidemic of violence. We currently have a level of violence that we had while we were at war. We have an average of 11 deaths a day in our country. I've heard of some places in the States where there are about five violent deaths a year and in our country we have 11 violent deaths a day, the majority of whom are young men, but also young women. This problem has made us the most violent country in all of Latin America and one of the ten most dangerous countries in the world. You all should know also that violence can become business, in our country there are people interested in violence continuing. Here there are many big businesses that run security companies, and they basically have their own armies in our country. For example a private security business can have around 5,000 people who are armed, for these businesses its good for them that there is violence. If this country were to become peaceful, there would be no use for the security businesses. You all have probably noticed because it is very different from the States here, that every business has an armed man standing outside the door. And all the neighborhoods are surrounded by armed men. Everyone one of us who live in this country can pay for our guard. I pay twelve dollars a month for guard in the neighborhood where I live. Thats how the world works here, someone is making money of the violence. Therefore, it is in their interest that violence continues. During the ARENA government, violence was basically promoted. Now they are making an effort to make policies that promote violence prevention. But of course we won't see the results of the policies immediately, rather in coming years.

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