EL SALVADOR: SACA AT THE HALFWAY MARK

C O N F I D E N T I A L SAN SALVADOR 000299

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/20/2017
TAGS: ES PGOV PREL
SUBJECT: EL SALVADOR: SACA AT THE HALFWAY MARK

REF: A. 2006 SAN SALVADOR 712


B. 2006 SAN SALVADOR 1166

C. 2006 SAN SALVADOR 1193

D. 2006 SAN SALVADOR 2204

E. 2006 SAN SALVADOR 2922

F. SAN SALVADOR 131

Classified By: Amb. Charles L. Glazer, Reasons 1.4 (b) and (d)


1. (C) SUMMARY: President Elias Antonio "Tony" Saca remains
one of his country's most popular political figures, and has
continued to consolidate the nation's democratic institutions
while making significant progress in facilitating sustainable
economic growth. His administration remains one of the
United States' most trusted allies in the region; El Salvador
is the only Latin American country with troops deployed to
Iraq in support of coalition forces. However, Saca has
recently witnessed a drop in his popularity ratings as
Salvadorans become increasingly concerned over the nation's
spiraling violent crime. Looking ahead to 2009 elections, it
is clear that Saca must make continued progress in both
economic growth and in fighting crime if ARENA is to retain
its present strength in executive, legislative, and municipal
government. END SUMMARY.


2. (C) Saca likely found little cheer in the results of
March municipal and Legislative Assembly elections. Although
ARENA won a plurality of 34 seats and, with the support of
the 10 votes of its center-right National Conciliation Party
(PCN) allies, can still pass routine legislation requiring
only a simply majority, the loose center-left coalition with
which it had previously negotiated measures requiring a
two-thirds supermajority basically ceased to exist. In its
place, the Farabundo Marti National Liberation Front (FMLN)
now holds 32 seats (up from 24 prior to the election),and
its orthodox-hardliner leadership is in no mood to help
facilitate the President's legislative agenda. ARENA also
lost the hotly-contested race for San Salvador's city hall,
and although it carried 147 of the nation's 262
municipalities, those mayoral victories included none of the
nation's large cities. (See reftel A.)


3. (C) During the latter half of 2006, polls began to show
that for the first time during Saca's administration, crime
had replaced the economy and employment as Salvadorans'
highest-priority concern (see reftel D). El Salvador's
homicide rate (presently circa 57/100,000 population/year)
has nearly doubled in three years, and now ranks as the
Western Hemisphere's highest. Rising levels of U.S.
deportation of Salvadoran criminal aliens has become one of
the few points of friction in what is otherwise an
exceptionally-close and cooperative bilateral relationship.


4. (C) Citizens' worries about crime have not fallen on deaf
ears at the Presidential Palace; Saca has worked hard in
pushing judicial reform and other anti-crime measures, often
in close conjunction with the Embassy. As the 2003-2006
Legislative Assembly drew to a close in late April, the
Embassy successfully lobbied ARENA to pass and fund a Witness
Protection Law (see reftel C). More recently, Saca's party
led the way with an Organized Crime Law that includes model
RICO anti-organized-crime elements provided by the Embassy;
the Law aims to attack the near-impunity with which
Salvadoran gangs operate vast extortion rings and other
criminal rackets. However, although the President's new
crime commission, which will oversee implementation of many
of these measures, includes a number of highly-regarded
figures, many lack expertise in crime and law enforcement
issues. Another of President Saca's key legislative
accomplishments was passage of a comprehensive and robust
Ethics Law, whereby an Ethics Tribunal will oversee all
public-sector employees as well as government contractors
(see reftel B). However, a July deadline to name its members
was ignored, and the tribunal is not yet up and running.


5. (C) Saca has found innovative ways to address poverty
despite the government's severely-restrained resources; his
"Solidarity Net" program pays modest direct subsidies to the
nation's very poorest families, and encourages them to keep
their children in school. Under Saca's leadership, El
Salvador became the first nation to ratify and to implement
CAFTA; early statistics regarding the agreement's effect on
trade are encouraging. El Salvador is also the first Lower
Middle Income Country to achieve a compact with the
Millennium Challenge Corporation (MCC); a $461 million
project centered on a new highway across northern El Salvador
will bring much-needed sustainable economic development to a
region heretofore isolated and economically-depressed.
Lastly, the Salvadoran economy, long mired in lackluster
growth rates and high underemployment, has shown signs of
improved growth (4.2 percent GDP) during 2006. Saca's
progress on the economic front has been outlined more fully
in reftel F.


6. (C) Bilateral military-to-military relations have
remained close through Saca's tenure. Although polls
repeatedly show that deployment of Salvadoran troops to Iraq
is unpopular with a majority of Salvadorans, an eighth
contingent of the Cuscatlan Battalion recently departed to
join coalition forces in Iraq. (Note: Although most
Salvadorans oppose deploying troops to Iraq, many subscribe
to the belief that, because of its participation in the
coalition, El Salvador receives preferential treatment from
the U.S., including the Millennium Challenge Account project
and continued extensions of Temporary Protected Status. End
note.) The Embassy expects approval of a comprehensive
Status of Forces Agreement (SOFA) in short order. The
Agreement, only the Western Hemisphere's second, will greatly
facilitate frequent U.S. military humanitarian missions and
other bilateral military exercises. A GSOMIA agreement
enabling bilateral sharing of military intelligence has
already been approved and will be signed shortly.


7. (C) While most international watchdog groups such as
Transparency International rank El Salvador as one of Latin
America's least-corrupt governments, there remains an
undercurrent of public discontent regarding perceived
inefficiency, cronyism, and even malfeasance in use of public
resources. This suspicion and dissatisfaction manifest
themselves in, among other ways, widespread tax evasion.
Persistent and credible rumors of corruption plagued Public
Works Minister David Gutierrez Miranda throughout the first
half of Saca's term; citing health issues, Gutierrez quietly
stepped down in December in conjunction with other cabinet
changes (see reftel E).


8. (C) COMMENT: Saca's greatest success has been in using
his natural charisma to bring the presidency closer to the
electorate than ever before. However, notwithstanding his
still-considerable personal popularity, daunting challenges
lie ahead for the administration. Many citizens' perception
that the country's political class is corrupt, combined with
a sense that the benefits of its free-market economy have not
extended to all classes, combine to create fatigue with ARENA
after the party's three successive administrations. Saca
must also make significant advances in addressing violent
crime before the 2009 elections, or risk ARENA's losing
everything, and the FMLN opposition is in no mood to
cooperate by approving international loans to augment
security forces. He must continue to create greater economic
opportunities for Salvadorans, who by some estimates are
departing the country at the rate of hundreds per day in
search of better economic opportunities in the United States.
Lastly, ARENA's choice of a 2009 presidential candidate will
be key to retaining the Casa Presidencial for the fourth
consecutive time since war's end. Given Saca's reported
fixation on the choice of Minister of Public Security and
Justice Rene Figueroa as ARENA's 2009 presidential candidate,
despite Figueroa's vulnerability to being blamed for the
country's crime problem, it remains unclear whether the
administration fully appreciates the dire straits in which it
might find itself on election day.
Butler