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The New Zealand government announced the opening of diplomatic relations with El Salvador in October 2001. The New Zealand Ambassador in Mexico City is cross accredited to San Salvador. The first New Zealand Honorary Consul to San Salvador, Mr Antonio Cabrales, was appointed in August 2003. Mr Cabrales is a former Minister of Agriculture and is President of the influential FUSADES think tank. The El Salvadorean Embassy in Seoul is accredited to New Zealand. The El Salvadorean Honorary Consul in Auckland is Mr Tom Weal.
Dairy trade has dominated the bilateral economic relationship between New Zealand and El Salvador. Nearly all of New Zealand's NZ$21,102,128 of exports during the year ending December 2006 were in the dairy sector, mostly milk powder. There is a history of links with Massey University in the dairy sector. More recently, El Salvador has been importing live cattle from NZ.
Following a review of New Zealand’s Official Development Assistance to Latin America, the New Zealand Government recently approved a new strategy to guide its Latin America Development Programme (LADP) until 2009. The LADP is managed by the New Zealand Agency for International Development (NZAID) based in Wellington. LADP focuses on three sub regions, one of which is Central America (El Salvador, Guatemala, Honduras and Nicaragua) where it has a thematic focus on sustainable rural livelihoods. NZ made a contribution to the international relief effort in El Salvador following Tropical Storm Stan.
In addition to the LADP, NZAID assistance is given to El Salvador via two mechanisms, both managed from the Embassy in Mexico City. The first mechanism is the provision of up to two scholarships per year to Salvadorean postgraduate students to study in New Zealand. In addition, a modest Head of Mission Fund is available to assist small non-government organisation and community group development projects in El Salvador.
Mr Goff met the then Foreign Minister of El Salvador, Maria, Eugenia Brizuela de Avila, at the first Latin America - East Asia Cooperation Forum (FEALAC) Ministerial Meeting in Santiago, Chile, during March 2001. FEALAC is a regional initiative including 30 countries from both regions whose objective is to strengthen political, economic, and general relations amongst its members.
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El Salvador is a member of the United Nations and of the World Trade Organisation.
Official Name - Republic of El Salvador
Land Area - 20,720 sq. km
Population - 6.9 million (2005)
Capital City - San Salvador
Religion - Roman Catholic
Language - Spanish
Currency - US dollar
Political system - Democratic. Universal adult suffrage
National government - Council of Ministers appointed by President
National legislature - Unicameral Legislative Assembly; 64 local and 20 nationally elected deputies (elected every 3 years)
Last election - President, March 2004; Legislative and Municipal March 2006
Next election due - President, Legislative and Municipal, March 2009
Head of State - President Elías Antonio Saca González
Head of Government - President Elías Antonio Saca González
Main political parties - Alianza Republicana Nacionalista (ARENA);
Frente Farabundo Martí para la Liberación Nacional (FMLN)
GDP US$ 17.1 billion
GDP breakdown - Goods 38.5%; Services 61.5%
GDP per capita US$ 4,035
Real GDP growth 2.8% (estimate)
Exports fob US$ 3,432 million
Imports fob US$ 6439.6 million
Main exports - maquila (assembly of imported inputs for re export) 50%;
Non-traditional goods 41%;
Coffee 4.7%
Current account - US$ 786.4 million
Consumer Price Inflation 4.7%
Gross external debt US$ 7.7 billion (estimate)
Source: Economic Intelligence Unit (2005)
NZ Exports (FOB) NZ$ 21,102,128 (year ended December 2006)
Main Exports - Milk and Cream (83%);
Whey and products (7%);
Paper and paperboard (4%)
NZ Imports (CIF) - NZ$ 676,890 (year ended December 2006)
Main Imports - Beer (19%);
Suits (18%);
T-shirts (15%)top of page
The recent history of El Salvador has been dominated by the civil war of the 1980s and subsequent attempts to restore order and address human rights violations. All Presidential elections held since the end of the war (1994, 1999 and 2004) have resulted in victory for the right-leaning Alianza Republicana Nacionalista (ARENA).
On 1 January 2001, El Salvador adopted the US dollar as a legal currency. This has lowered interest rates, but locked in a relatively high cost structure. The economy is struggling, in part owing to earthquakes and drought.
Pre-colonial influences in Cuscatlán, the area that became El Salvador, included the Maya and Aztec civilisations. The Spanish arrived in 1524 and administered the territory as part of Guatemala for nearly 300 years. On gaining independence in 1820 El Salvador joined the Central American Federation, which lasted until 1838.
In the 1850s El Salvador began large-scale production of coffee, the product that was to dominate its political and economic life for more than a century. Coffee cultivation took place on extensive plantations requiring a large seasonal labour force. Tension over land issues led to a peasant uprising in 1932 which was defeated by the military. Thousands of peasants were killed. The event, known as “the massacre”, initiated a long period of cooperation between the military and large landowners, and was followed by a series of coups.
The most recent coup, by a group of junior officers in 1979, brought El Salvador to the world’s attention when the resulting government promised significant reforms. When these did not eventuate, five guerrilla groups united to form the Farabundo Martí National Liberation Front (FMLN). In March 1980, Archbishop Oscar Romero was assassinated while saying mass in the chapel of the San Salvador Divine Providence Cancer Hospital. His murder helped ignite a civil war that was to last 12 years. Many people died in combat, in addition to some 40,000 civilians killed largely by right wing death squads. As many as 300,000 citizens fled the country. The war continued until a stalemate in 1989. During this time, the right wing ARENA, founded with the support of wealthy landowners, began to gain support. Various UN-sponsored initiatives on peace building and human rights issues finally led to the signing of a peace accord in January 1992.
In the 1994 presidential, legislative and municipal elections, the FMLN was recognised as a legitimate political party and allowed to participate. Since then FMLN has steadily increased its representation in the Legislative Assembly and in the municipalities. In the 1997 mid-term election, the FMLN ended Arena’s outright legislative majority; in 2000 it became the largest party in Congress; and in March 2003 it maintained its status despite a series of internal disputes. Although ARENA’s presence in Congress has declined in the same period, it has retained the presidency since 1995.
In January 2001 a 7.6 magnitude earthquake caused widespread damage and killed more than 1,000 people. One month later an earthquake of 6.6 magnitude, with an epicentre closer to population centres, killed about 300 people. Some 1.2m Salvadoreans, roughly one-sixth of the country’s population, are estimated to have been left homeless. Government reconstruction costs through 2005 are projects at US$1.3 billion. However, taking into account lost productivity and expense to individuals of relacing lost property, the total cost of the earthquakes will prove much greater.
Through the post-war period, organised and common crime have risen. While the murder rate has dropped from a high of 140 per 100,000 inhabitants in the mid-1990s to about 60 in 2002, highway robberies, kidnappings for ransom, armed assaults and general violence has continued to increase. The problem has been made worse by an increase in homelessness in the wake of the earthquakes in early 2001 and by an increase in maras (violent street gangs), formed by disaffected, unemployed youths. Police officials estimate that these gangs have as many as 30,000 members. top of page
Antonio Saca, of ARENA, who took office as El Salvador’s president in mid 2004 is committed to a reform agenda in four main areas (public health, education, fiscal administration and electoral procedures) during his five year term in office.
ARENA was confirmed as the largest party in the legislative elections held in March 2006. This reversed a trend whereby ARENA had lost ground in the legislature to the opposition FMLN. The FMLN emerged as the second largest party however neither party has the majority, with ARENA controlling 34 of the 84 seats, only two more than FMLN. ARENA will therefore have to continue to build alliances with other parties to implement its policy agenda. However on legislation requiring a two-thirds majority, such as passing constitutional reforms, approving foreign loans and appointing members of the Supreme Court, the government will need the support of the FMLN.
Since assuming office in mid-2004 Mr Saca has galvanised cross-party support for reforms to the criminal justice systems and set up a multiparty discussion forum to analyse other aspects of his reform agenda, which has helped smooth the passage of legislation. He managed to ensure that El Salvador was the first country to ratify the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) with the US (which entered into force in March 2006)..top of page
In the past 30 years El Salvador’s economy has been transformed from an agricultural economy, centred on coffee production, to a largely services-based economy focusing on commerce and financial activities. In 2001 agriculture accounted for 12% of GDP and services 60% of GDP (compared with 19% of 54%, respectively, in 1985). In the past ten years manufacturing has also grown impressively, thanks mainly to the development of the maquila industry, which is now the country’s largest goods export earner. However, El Salvador’s largest source of foreign exchange – and a main driver of the economy – is workers’ remittances. The boom in remittances from Salvadoreans working abroad in the last 20 years is the result of the external migration patterns, established during the war years. This increase in remittance inflows has combined with a rise in rural to urban migration – the result of a shift in employment from traditional agriculture to industrial and services sectors – to produce a large urban informal sector.
Mr Saca is committed to free trade, the promotion for foreign investment in important industries such as maquila (offshore assembly for re-export) and the maintenance of a tax regime that promotes corporate investment. His social policies include an overhaul of the education and healthcare sectors.
GDP growth is expected to improve driven by higher domestic and foreign investment and exports on the back of the DR-CAFTA. The country’s main challenges remain in setting the public finances on a sustainable footing and promoting social policies by focusing on improving tax collection and targeting subsidies for the poor better.top of page
El Salvador remains one of the US’s staunchest allies in the region. It is the only country in the region with troops remaining in Iraq, with a eighth contingent committed in January 2007. Mr Saca has received support from Washington on trade and the temporary migratory status of thousands of illegal Salvadoreans in the US. Mr Saca is seeking US support to fight the maras, some of which are led by deportees from the US. The entry into force of the DR-CAFTA with the US in 2006 has boosted trade opportunities and strengthen regional ties.
Relations with Central America remain strong. The trade integration of El Salvador, Guatemala, Honduras and Nicaragua is expected to increase. The Central American customs union is expected to come into effect in the next year, but it is likely that coffee and sugar will remain excluded from the deal. Regional relationships will benefit from cooperation in other areas, such as combating rising gang crime.
The visit of Mr Goff to San Salvador in January 2002 was the first official bilateral visit in either direction.
The Safetravel website provides a travel advisory for travellers to El Salvador [external link].
