Civil Conflict and Economic Policy in El Salvador


The Republic of El Salvador is the smallest country in Central America with its population hardly exceeding six million people. Once being a financially stable state with properly arranged coffee export, El Salvador endured political instability in the mid-20th century. Social inequality and growing civil discontent led to the event known as the Salvadoran peasant massacre of La Matanza in January 1932 (Booth 138).

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Although the rebellion was savagely suppressed, the following decades did not bring order to the state: Salvadoran Civil War was breached in 1979 and lasted until 1992 (Booth 148). The objective of this research is to discuss the conflict’s roots and unveil the involved parties. It is evident that the country’s situation was heavily influenced by both the United Nations and the U.S. government.

La Matanza: Historical Background of Salvadoran Civil War

As was mentioned earlier, a brief peasant-led uprising in La Matanza was the result of the growing unrest within society due to the existing political and economic situation. The civil discontent began to gain pace in the 1920s as a response to regular abuses of political power and severe social inequality. The leftist rebellion occurred on January 22, 1932, and was quickly suppressed by the Salvadoran army, which had a significant edge in terms of weapons, numbers, and preparation (Booth 138).

The consequences of the rebellion were terrifying: the researchers estimate that over 30,000 civilians were exterminated by governmental forces (Booth 138). The following decades were marked by the constant interchange of military regimes. After 1948 the military elite became increasingly corrupt and powerful, as they were backed by the agrarian oligarchy. This tendency, however, could not remain ignored and further civil unrest had led to the occurrence of a new conservative coup.

Global Forces in El Salvador: Parties, Repressions, and Mortality Statistics

The arrival of a new political order has formed an environment for temporal economic growth to occur. Booth stresses that gross domestic product (GDP) grew by 2% yearly between 1962 and 1978 (140). Nevertheless, the oil shock of 1973 had left its long-lasting mark on the country’s economy and made the inflation rates increase to 12.8% on an annual scale (Booth 140). Soon enough median income within the state became the second-lowest in Central America, forcing regular citizens to live on a dollar or two per day. By the year 1978 unemployment reached 21% making the issue even more aggravated by the increase in oil prices (Booth 140). Financial wellbeing remained concentrated in the capitalist elite throughout this period.

The revolution in neighboring Nicaragua made its impact on the country’s economy, and served as the key reason for coffee prices, as well as other indexes, to fall. The rapid growth of GDP quickly turned into a 5.9% decline per capita (Booth 142). Encouraged by a renewed ideological spectrum and citizens’ support, new opposition parties have come to light. The social-democratic National Revolutionary Movement and the Christian Democratic Party were among the forces opposing the military PRUD-PCN regime.

In the same period, a leftist organization the Democratic Nationalist Union was formed. The mentioned parties later arranged a coalition called Unión Nacional Opositora (UNO), which even advanced a candidate for presidential elections in 1977 but lost due to electoral fraud (Booth 142).

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The coalition was supported by numerous labor union cooperatives, some of which became increasingly militant. While being sponsored by the Catholic Church and the U.S. Agency for International Development (USAID), these working-class organizations continued to gain in numbers and started to openly defend the rights of the poor (Booth 142). By the year 1979, there existed five guerilla organizations in EL Salvador preparing an armed challenge to PCN.

The occurrence of radical organizations was accepted by the government as a call to action. A military regime responded by the increased number of repressions: Organización Democrática Nacionalista (ORDEN) was formed from thousands of peasants. The major objective of this anti-communist union was to suppress civil organizations. The government resorted to mass murdering of organized workers and opposition members: “regular government troops in the capital massacred an estimated 200 UNO supporters among protesters of fraud in the 1977 presidential election” (Booth 143).

Death squads also referred to the political assassination of dissidents, priests, and social activists. Thus, a working-class leader Rafael Aguiñada Carranza was assassinated in public in 1974 (Booth 143). The mortality statistics show that the level of average murders rose to 1,837 people in 1977 and then rapidly to 13,353 in 1981 (Booth 144). Kidnapping, psychological torture, and harassment of prisoners were additional intimidating tactics used to suppress public disturbances. Electrical shocks, highly corrosive acids, the murder of loved ones arrived as the means to force the interrogated to cooperate.

Class Differences and Country’s Economic Situation

The decades of the military regime have divided the country into two opposing groups, with peasants and working-class belonging to one and military elite supported by agricultural oligarchy referred to the other. The examples described in the previous part demonstrate that regular country citizens were forced to live in severe poverty. People received the second-lowest wages in Central America; the salaries were not enough to provide families with essential goods, such as food and clothes. The prices, however, often reached the level of developed countries, which made the vast majority of products inaccessible for consumers.

The given social inequality arrived as the major stimulus for civilians to express protests. Due to the fact that wealth was primarily concentrated in the hands of coffee magnates and military officers, peasants were often forced to abandon their lands and search for other sources of income (Booth 138). The given tendency contributed to the faster decrease of GDP and further destabilization of the economic situation. The fall of coffee prices seriously undermined the country’s export, which allowed massive underemployment to occur.

Left-Wing Parties: Strategies, Methods, and the Sources of Finance

One of the major representatives of the leftist movement of the 1970s was the Revolutionary Democratic Front, which was formed from the ‘remnants’ of popular civil organizations. The studies indicate that up to the year 1988 left-wing parties were excluded from the electoral process, which made their leaders desperately look for effective measures of opposing the government (Booth 151). With armor beneath their suits, Ruben Zamora Rivas and Guillermo Manuel Ungo Revelo (the leaders of the front) made a number of public appearances on Salvadoran television.

They also participated in radio interviews to draw the public’s attention to the existing issues and deliver the key message to the audience. The group, however, denounced any form of violence and use of arms to resolve the political situation within the country. The given position was, in fact, rejected by the other leftist party named the Farabundo Marti National Liberation Front, which stood for the use of force. The measures they referred to were often classified as extremism and terrorism.

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One of the tactics that Frente Farabundo Marti de Liberacion Nacional (FMLN) utilized was a kidnapping and further advancement of their demands. It is notable that the leaders of the Revolutionary Democratic Front entirely disapproved of taking president Duarte’s daughter as a hostage in 1985 (Booth 144). They also denounced the murdering of thirteen people by FMLN the same year, six of which were U.S. citizens.

One needs to stress out that the kidnapping of wealthy people for ransom was the major source of finances for guerillas. These funds were used to obtain arms and mobilize hundreds of civilians. The provided examples demonstrate that the two fronts chose opposite strategies in fighting the regime, and it made the situation even more intense. The signs of aversion between the groups were felt since practically the arrival of both to the political stage. FMLN continued to advocate for terrorism as an effective political instrument, while the representatives of FDR, by all means, stood against the escalation of the conflict.

The Influence of the United States and UN

The majority of researchers call the Salvadoran conflict a bloody, dirty, and brutal war, which took the lives of thousands of civilians. Booth admits that “observers attribute at least 80 percent of the country’s 70,000 deaths between 1979 and 1992 to the military, the police, and ORDEN” (150). One may confidently state that both the United States and UN had their influence on the events’ development and alignment of forces in El Salvador. However, each faction was guided by the principles that opposed the other party’s interest. Thus, the influence of the USA was viewed by many as overall negative.

In the 1980s, the USA was pouring billions of dollars to aid the small country in resolving the civil conflict. Yet, the money they allocated was not meant for the revolutionary front; it was delivered to the government. Although Ronald Reagan and his cabinet pressured El Salvador’s military forces to curtail deaths, they were worried about the spread of communism on a global scale (Booth 150). A notable fact about this financial aid is that the state received more resources than any other country in the globe, except for Israel and Egypt.

Sponsored by Reagan’s administration, police and ORDEN took an even more rigorous position towards the suppression of the rebellion. The echoes of war are still heard in El Salvador: forensic experts continue to dig up the bodies of women and children murdered in December 1981 in El Mozote. Historians call it one of the most severe massacres in Central America’s history: above 1,200 people were killed in operation (Booth 150). The war forced thousands of civilians to flee to the USA. However, in the 1990s Clinton announced Salvadorans’ protected status expired, and all refugees were sent back.

Regarding the United Nation’s influence on the situation in El Salvador, UN representatives and secretary-general Javier Perez de Cuellar were directly involved in mediating the peace process for several years. They were monitoring the progress up to the signing of the peace agreement on December 31, 1991, which changed Salvadoran politics and established democracy (Booth 152). Under the supervision of the UN, the government reduced the size of military forces and took steps to reform military education. In addition, the United Nations insisted on disbanding the previous police and introducing a new National Civil Police. All in all, the UN seriously contributed to establishing peace in the state.

Peace Agreement and the First Democratic Elections

The arrival of civilian democracy in 1992 brought significant changes to the political and economic life of the country. PNC (the ruling party) agreed to recruit staff from both FMLN and governmental ranks, as well as to demobilize a greater part of military forces. In their turn, FMLN responded by the demobilization of troops too and expressed their willingness to engage in elections. The agreement signed in December 1991 paved the way for the first truly democratic elections to take place in 1994 (Booth 152). The elected president Calderón Sol intensified reforms within the state, with the emphasis being made on privatizing energy sectors and lowering tariffs. This policy he chose brought the country a decade of economic growth.

Dollarization and Its Effect on the State’s Economy

The devastation produced by the earthquake of 2001 made a disastrous impact on El Salvador’s economy. While facing another economic collapse, the government was forced to withdraw the colón (the nation’s traditional currency) from use and opt for the circulation of the U.S. dollar, as a more stable currency. In January 2001, the policy of dollarization was officially given the green light (Booth 154).

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The researchers admit that this decision was, to a greater extent, prompted by financial sectors and large entrepreneurs who tried to defend their interests by all means (Booth 154). Although economists assured that dollarization would diminish inflation, the following years showed that it hurt the poor and increased inequality. Moreover, the policy affected a bilateral trade agreement between the USA and five Central American countries signed in August 2004.

The CAFTA-DR trade agreement was the key document allowing El Salvador to export and import goods from the USA and neighboring countries. The analysts estimate that dollarization decreased the volume of imports from these countries by nearly 24% and made the state’s dependence on remittances rise to $2.5 billion yearly (Booth 155). In addition, it reduced exports by around 45% thus, proving that the economists’ initial forecasts were completely erroneous (Booth 155).

Although El Salvador found reliable partners to establish mutually beneficial trade relationships with, the market outlet was reduced due to the occurrence of dollarization. One may relate it to the fact that a significant share in the country’s trade flows belonged to the United States, which limited El Salvador’s global market integration.

The Decision of the Supreme Court

Shortly after the peace agreement was signed, the Legislative Assembly adopted a general amnesty law stating that no legal recourse will be made for the war crimes. Many historians called that decision a violation of human rights and total disrespect for the victims of the military regime and their families. The law prevented the prosecution of all crimes and automatically granted freedom to mass murderers, including those responsible for the El Mozote operation.

When the debates about the law being unconstitutional reached the Supreme Court in 2004, president Saca ordered the government to intensify crime prevention measures: 11,000 gang members were arrested during the year (Booth 156). The crime rate, however, had soon reached such a level that implementing a chosen policy turned into a mission impossible for the president’s administration.

The following years were marked by the attempts to obtain justice in the question of war crimes. In June 2011 the Legislative Assembly passed Decree 743, which required all members of the Supreme Court to declare the original law of 1993 unconstitutional and appointed judges to conduct an investigation (Booth 160). The Constitutional Court, however, overruled those appointments the same way it did in 2006.

Again, the issue was placed on hold for five additional years until the Salvadoran Supreme Court finally announced its verdict on July 13, 2016: the law of 1993 was declared unconstitutional. Both politicians and historians call this event a major victory for all who have suffered from the military regime. The courts now have to investigate who prepared and executed orders that had led to the mass murdering of civilians. Many experts are skeptical about these cases being solved since the judicial system is corrupt. Nevertheless, the vast majority believe that the country has finally taken the right course and the guilty will soon be punished.


Salvadoran Civil War is known to take the lives of above 70,000 people. During the conflict, both the government forces and the opposition resorted to the methods and strategies that many would treat as extremely violent and radical. It is known that none of the sides refused to fall back upon kidnapping, assassination, or torturing tactics. Left-wing rebels used kidnapping as the source of finance to arm their troops and thus, oppose the government forces more aggressively.

The researchers indicate that the long-anticipated peace did not bring order or economic stability to the region: poverty and increased crime rates once again struck the country. Nevertheless, the verdict announced by the Supreme Court on July 13, 2016, served as the beacon of hope for those who witnessed the horrors of war.

Work Cited

Booth, John A. Understanding Central America: Global Forces, Rebellion, and Change. Routledge, 2018.

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StudyCorgi. "Civil Conflict and Economic Policy in El Salvador." June 18, 2021.


StudyCorgi. 2021. "Civil Conflict and Economic Policy in El Salvador." June 18, 2021.


StudyCorgi. (2021) 'Civil Conflict and Economic Policy in El Salvador'. 18 June.

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