Wednesday, February 8, 2023

El Salvador: A millennial leadership for a prosperous future

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Diplomat Magazine
DIPLOMAT MAGAZINE “For diplomats, by diplomats” Reaching out the world from the European Union First diplomatic publication based in The Netherlands. Founded by members of the diplomatic corps on June 19th, 2013. "Diplomat Magazine is inspiring diplomats, civil servants and academics to contribute to a free flow of ideas through an extremely rich diplomatic life, full of exclusive events and cultural exchanges, as well as by exposing profound ideas and political debates in our printed and online editions." Dr. Mayelinne De Lara, Publisher

A Talk with Vice President Félix Ulloa

Protagonist of enormous political changes, the new government of El Salvador is now on its way to develop the country under the leadership of its ingenious leader, President Nayib Bukele. Born in 1981, President Bukele belongs to the generation that has been named as “millennials”.

Following his election in 2019, El Salvador’s reputation has been quickly improving from that of a poor, violent and corrupt Central American nation marked by massive outflows of migrants to one of an emerging economy, as well as a new investment and tourism destination. We talked to Vice President Félix Ulloa, an experienced and wise diplomat, politician and international lawyer, during his European political tour in Sweden, France and the Netherlands. In this conversation, we discovered why the eyes of the world are now turning towards El Salvador.

Our conversation started with the historic transformations currently taking place in El Salvador in the areas of economic development, security and regional leadership.

“There are two issues that President Bukele decided to prioritise. The first one was seeking to reverse the wrong developmental model we had for so long under the previous administrations, which is at the root of migratory flows to the United States. That model did not put enough focus on El Salvador’s need to work on agricultural production, and it was premised on the idea that we would better buy – rather than produce – what we need. So we started buying vegetables from Guatemala, meat from Nicaragua, beans from Ethiopia. We abandoned the fields, as the politicians decided to turn El Salvador into a service provider country and started to sell the working force of our people to the United States.”

“What was the effect of abandoning the farms?” – the Vice-President continued. “This model caused exploitation and the development of an artificial economy, made out of flouting capitals that could come and go without any compromise to workers. People left the countryside to go to the city, to walk around avenues selling stuffs, or they decided to travel to the United States. This generated a profound poverty among the people. We had a country that expelled its own people, and it was great source of violence.”

“Now, by contrast, there is a strategic plan for developing the country’s agricultural sector. We allocated funds for USD 1,200 millions to reactivate the economy in the countryside. Among these, USD 647 millions have been allocated exclusively to renovate coffee plantations. In earlier times, El Salvador was a major coffee producer, making 4 or 5 million of quintals per year. This year we did not reach make one million. We are now getting back to our traditional production.”

Vice-President Ulloa and H.E. Ms. Carmen Maria Gallardo, Ambassador of El Salvador to the Netherlands.

Vice-President Ulloa went on to describe the new administration’s efforts to improve the security situation in the country. “From day one, the President took the decision of create the National Territorial Control Plan, a multi-phase national security strategy to combat gang violence, improve security and regain control over territories occupied by armed groups. Almost a third of the country was in the hands of gangs in 2019, we were losing our sovereignty. For example, there was an area that the government recuperated that hosted 500 houses, which criminal organisations had taken away from the people.”

“The second step of the strategy was to bring the state to the communities, building community-centered preventive strategies that create alternative opportunities for young people predisposed to criminal activity. This entailed creating educational and entrepreneurial opportunities; improving health and scholarship benefits; developing infrastructure projects such as schools, skate parks, and sports centers; increasing the public services, health, education, and sports – all this in order to bring back tranquillity to the people.”

“The completion of the first and second part of the strategy was achieved with our own monetary resources” – the Vice-President explained. “Then, at the third step, the President took two loans from the Central American Bank for Economic Integration (CABEI), one of 91 millions and a second one of 109 millions. These funds were used to fortify El Salvador’s national security forces, to better equip them with new resources and technology. The security forces were in a very bad conditions, while on the other hand gangs were very much better equipped.”

“With the Territorial Control Plan, we eliminated the control of the gangs on the territory of El Salvador. Looking at the statistics related to the levels of violence shows the effectiveness of our plan: before the plan, figures for daily deaths caused by the violence had two digits, while last August the figure was zero. In two years, we lowered that figure from an average of 19-20 daily deaths to 0-3. This is a clear indication of a radical change, almost a miracle, which changed our image and – together with other projects – allowed us to attract more foreign investments than any Central American country.”

The Vice-President went on to explain his country’s recent economic successes. “According to the projections by the Central Bank, CEPAL, the World Bank, the International Monetary Fund, our GDP is growing by 9%, as compared to our historical growth rate of only 2% – all of this despite the pandemic. Previsions were made according to which we would have a markedly negative impact in our growth, and yet we now display positive growth rates. Remittances, which are still our first source of income, increased by US 2,000 million this year – in 2021 we received US 7,000 million. The second income source, which is textiles, grew by 41%. Third comes plastics, fourth is pharmaceutical products, and fifth is sugar cane.”

“We created 66,000 new employments from January to June 2021. During the pandemic 5,000 new enterprises registered, mostly small and medium size businesses. They were supported by the government with emergency fonds to mitigate the economic impact of the pandemic. Sensitive sectors like tourism, hotels, and restaurants received loans with low interest rates of 2%, with one year of grace. Also, for the first time, not loans but donations were made to the artists (USD 50,000 to orchestras, USD 25,000 to mariachis, USD 10,000 to trios, and USD 1,000 to individual artists), coming from a US 600 million fund for the recuperation of enterprises. We are also supporting families with a food plan.”

“Also very controversial was a decision from the President to decree a salary increase of 20%. Traditional economists were reluctant regarding this measure, arguing that it would created inflation and unemployment, and that small businesses would not have the capacity to increase salaries. The government subsidised the 20% salary increase with money from our Central Bank for the first year, until businesses will reach a normalisation of production. President Bukele also allowed USD 100 millions to the Council of the Micro, Small & Medium Enterprises as credit to the informal business. More than 60% of our commercial activity is informal, not regulated, like people selling on streets. We are now formalising these enterprises through the provision of this credit.”

Diplomats of El Salvador in The Hague with Vice-President Ulloa and Ambassador Gallardo.

“The diaspora is also coming back to the country to instal their own businesses. This is mostly because of two reasons: the reactivation of the economy, and the return of security in the country. The government is supporting the diaspora to return with tutorials, financing, and everything they may need to be successful, including technical support, center of trainings for entrepreneurs, and 25 mobile units that go into the cities and remote areas in the country, each unit having space for 25 students. The instruction I received from the President is to make these programs last for the future.”

Vice-President Ulloa also provided an update on the revision of El Salvador’s legal structures, as well as on its efforts to promote regional integration. “We have also worked on a new constitution, which is now being reformulated. We are now revising the Protocol of Tegucigalpa, all the laws that need to be adapted to our times. This year we are celebrating 200 years of independence and the 30th anniversary of SICA (Sistema de la Integración Centroamericana), which was signed in 1991 originally by 5 countries, and then joined by Panama, Belize, and the Dominican Republic. These 8 states together represent the 4th economy of Latin America, second only to the economies of Brazil, Argentina, and Mexico. In terms of territory, SICA counts 580 million square kilometres. We are in the middle of a crisis, but we will go ahead. We have the same language, religion, and race, we can be stronger together and we will be so.”

Ulloa is also in charge of leading the El Salvadorian side on the El Salvador: A millennial leadership for a prosperous future proposed by the UN Economic Commission for Latin America (ECLAC). The Plan is a trinational treaty focused on improving the living conditions of border communities in Guatemala, Honduras, El Salvador and the South-East of Mexico, which includes eight border states of Mexico. This Comprehensive Development Plan is a development process consisting of environmental and territorial management in the region to promote development, security, migration governance, environmental protection, and energy security, as well as to address the structural causes of irregular migration. It involves 20 UN agencies, funds and programs operating in Latin America.

“This area is part of the former Maya region. This provides us with a unique cultural patrimony which has come under threat due to the violence generated by gangs. Cooperation started with USD 60 million donated by Mexico to develop small agri-projects, such as Young Making its Future from Honduras and Young Start Business from El Salvador. Each country presented its own projects to benefit from the general fund, and now donors are joining to increase the fund itself. By adding Colombia and Mexico and new programs, we are now seeking to overlook a Mesoamerican mechanism of almost 400 million habitants, with the goal to develop the entire region – because what affect one of us, also affects the others.”

Vice-President Ulloa continued by praising his President’s vision in regard to the introduction of cryptocurrencies in El Salvador’s economy. “Being only 39 years old, our President is the first president born during the digital era, a millennial, and people need to accelerate to catch up with him and his vision. For instance, he decided to start using a cryptocurrency as a regular currency in El Salvador. In this regard, the first question was: ‘how do we motivate the people to start doing business with this currency?’ President Bukele’s idea was to give USD 30 Big Coin money to each citizen, and people started to use it immediately. Now we have 3 millions of cryptocurrency accounts and you can go to the supermarket, to the gas station, to the pharmacy, to any business and pay with Big Coins and even get a 10% discount. The government framed the transactions through laws, and it is now mandatory for all commerce activities to accept the cryptocurrency. People can also change it to USD money. This is giving a new push to the economy. Now remittances are also in Big Coins, thus avoiding commission fees. Before, Salvadorians used to pay USD 400 million only in remittances commissions. Following our lead, other countries are now looking to introduce the cryptocurrency in their economy as we did. In December, we will meet in El Salvador with investors and businesspeople for consultations about the implementation of our cryptocurrency strategy.

All these successes, Vice-President Ulloa explained, were achieved despite major difficulties arising from both the country’s political scenario and external factors. “When we entered the government in 2019, we had an opposition-controlled legislature, and therefore it was difficult to implement any measure because of opposition from the congress. This year, in 2021, there was a huge change in the congress, because the people generated that change. We have asked our population to start looking at the government’s performance from now on. Previous years were marred by constant fights to get any policy approved, and the COVID-19 pandemic made everything more difficult. But true leaders have the capacity to grow during crises – and this was the case for our President, whose popularity grew enormously. In our region, we are the country that best managed the pandemic, as said by the World Health Organization. We have the biggest hospital in Latin America only dedicated to COVID-19, with more than 1,000 intensive care units. Up to now we are using different vaccines, including Johnson & Johnson, AstraZeneca, Sinovac and Pfizer – almost all except Sputnik.”

Our discussion with Vice-President Ulloa also touched on El Salvador’s major potential as a tourist destination. “El Salvador just hosted the 2021 ISA World Surfing Games, and it instantly became the new global surf destination. Fifty-two countries and 450 athletes participated in the competition, which saw Team France crowned with a golden medal. More important than anything for us, however, was that judges and participants found out that El Salvador is the only country that can host a surf tournament running non-stop from sunrise to sunset. The reason is that in most surf beaches the reflex of the sun on the water prevents judges from seeing manoeuvres from 12:00 to 16:00, thus limiting the competition time. This is not the case in our country. We have been awarded this privilege by mother nature. Now that the World Travel Agents Association Alliance said that the country is a safe country and a privileged surfing destination, we are climbing upwards in the international scene as a top place for surfers” – Vice-President Ulloa said with enthusiasm.

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