32 years of economic and political information and analysis on the region

EL SALVADOR

Creating the Common Health Fund
Before the close of 2004, despite failing to secure agreements over a National General Budget, deputies approved the Special Law for the Creation of a Common Health Fund (FOSALUD) to provide better health services for those on a low income. This will be funded through new taxes on specific consumer products. While the main opposition party, the Farabundo Martí National Liberation Front (FMLN) claims that FOSALUD falls short of aspirations, it concedes that the project could provide the first step towards an improved healthcare system for the country.

Recruiting for Iraq
To date, private security companies from the United States have contracted over a hundred Salvadorans, men and women, for high-risk jobs in Iraq. The Salvadoran government has no way of monitoring the contracting and analysts have shown concern over the lack of transparency regarding the situation. Analysts say the companies, mostly contracted by the US government, are exploiting El Salvador's vulnerable labor market. In a further twist on the country's links with Iraq, Newsweek magazine reported that the Pentagon is discussing the use of counterinsurgency tactics implemented during US intervention in El Salvador's conflict, in Iraq.

GUATEMALA

Sugar sours trade talks with Chile
In a 24 hour visit to Guatemala on January 5 by Chilean foreign minister Ignacio Walker, the two countries set the stage to increase commercial relations, which up till now have kept a low profile. Despite differences in interests - notably when it comes to sugar - both countries expressed their suport for a bilateral protocol aimed at reinvigorating Free Trade Agreement talks, which were initiated between Central America and Chile in 1998. However, the consensus in the local sugar industry and manufacturing world is that talks will not advance if sugar is not included within the Agreement. Guatemalan president Óscar Berger will return the visit on May 23 of this year as a sign of good intent in the trade talks, which, it is hoped, will further enrich relations between the countries with treaties over food products, air links, mining-environment aid and intelligence and diplomacy.

Mining conflict claims first life
The opposition movement against open cut mining, prevalent in various parts of the country since the start of 2004, has claimed its first victim. Following a clash between protesters and State security forces on January 11, a campesino died of a gunshot wound. The use of repressive force has provoked doubts as to the interests underlying the government's action, carried out under the banner of guaranteeing a "State of Law".

2005 forecast: A busy year for Legislature
With the government starting its second year in power, a change in the Executive Board has detracted from criticisms that the Legislature has thus far been largely unproductive. Indeed, the majority of draft proposals from the political benches for 2005 remained on the drawing board from last year. Meanwhile, various civil society organizations have been drawing up their own agenda for the coming months. However, some remain skeptical as to the deputies' real motives following recent experiences in which political parties formed alliances to defend the interests of particular economic sectors, rather than those of society.

REGION

Big supermarkets _ problem or challenge for small farmers?
At the end of 2004, the New York Times published an article outlining how the rapid expansion of giant supermarket chains in Latin America effectively constituted a revolution in the retail market for food. According to the International Network for Research on Farming Systems (RIMISP), this revolution has brought about structural changes to the market in which relations between producers and consumers have been radically transformed. Although some analysts fear that these changes will result in bankruptcy for most small Central American farmers, a team of US academics is exploring ways in which this outcome might be avoided by helping these farmers to adapt to the new rules of the game.

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21 January 2005