Statement of Senator Patrick Leahy On A Second Millennium Challenge Compact for El Salvador

Mr. President, earlier today the Board of Directors of the Millennium Challenge Corporation voted to approve a second MCC compact for El Salvador.  This was expected, and it begins the last phase of discussions between the United States and El Salvador on the compact which, if finally agreed to and funded, could result in investments totaling $277 million dollars from the United States and $85 million from El Salvador.

The compact has three main components, described by the MCC as partnering with the private sector to enhance the country’s investment climate; strengthening the country’s future workforce by teaching the skills demanded by the labor market; and reducing transportation and logistics costs by expanding a highway in the coastal region and improving the border crossing into Honduras.  I agree that these investments would have a positive impact on the lives of the Salvadoran people.

However, I am also aware that some Salvadoran civil society organizations have concerns about the potential impact of MCC-financed development on the environment and the livelihoods of coastal communities.   If the compact is funded these organizations should be consulted on the design of the details of the compact in a transparent and inclusive process particularly relating to environmental and regulatory issues, and on the ongoing monitoring of compliance.

When the law to establish the MCC was written a decade ago it was not intended to be just another foreign aid program.  I remember, because I was involved in writing the law.  Rather, it was designed to reward countries whose governments are taking effective steps to address key issues of governance, particularly combating corruption, strengthening the rule of law, and supporting equitable economic growth. 

I supported the first compact for El Salvador, although during the design phase I raised concerns about the high level of violent crime and corruption in that country and encouraged the MCC and the Government of El Salvador to consider using a portion of the funds to strengthen the judiciary and the rule of law.  Regrettably, that was not done. 

While El Salvador can point to some success compared to its neighbors Honduras and Guatemala, it remains a country of weak democratic institutions where the independence of the judiciary has been attacked, corruption is widespread, and transnational criminal organizations have flourished.  Money laundering is a multi-billion dollar scourge in El Salvador and other Central American countries, and impunity is the norm.  The national police is discredited, infiltrated by organized crime and distrusted by the public. 

I have urged the MCC, the Department of State, and the Government of El Salvador during the preliminary discussions and prior to a decision to release the funds for a second compact in which the Congress will have a say, to address a number of issues which I and others here and in El Salvador believe is necessary for the rule of law and economic growth in that country.  

First is to significantly strengthen the capacity of the Attorney General’s office and the police to combat money laundering, which is a growing problem and is driving legitimate businesses out of business.  President Funes recently announced the creation of a special police unit for this purpose and I commend him for doing so, but it remains to be seen whether such a unit receives the necessary resources to be effective, and is not corrupted by the very criminals it is responsible for investigating and bringing to justice.  

Second is to respect the independence of the Constitutional Oversight Court of the Supreme Court, or the Sala de lo constitucional as it is known in Spanish, which is the chamber of the Supreme Court that rules on constitutional issues.  For the first time since the Peace Accords El Salvador has an independent judicial body of magistrates who are widely recognized for being honest, who do not show fear or favor, and who have consistently ruled in an independent manner.  Because their rulings have at times gone against the interests of the FMLN governing party and at other times against the interests of the opposition ARENA party, there have been efforts to replace them with individuals who can be manipulated. 

Third is the concern I have raised about some public officials in positions of authority who have promoted individuals within the police and security forces who have no business being in public office because of their involvement in illegal activities. 

An MCC compact is widely regarded as providing a kind of stamp of approval by the United States, indicating that the government of the compact country has demonstrated a commitment to integrity, to good governance and respect for the rule of law, and to addressing the needs of its people.  This should be doubly so for a second compact.  If organized crime is operating with impunity, if corruption is pervasive including within the police, and if there are people in public office who abuse their authority to the detriment of democratic institutions, that is not consistent with the intent or purpose of the MCC. 

The first round of El Salvador’s next presidential election is scheduled for February 2014, and I have no doubt that the Funes Government wants that stamp of approval as the election approaches.  I appreciate that MCC CEO Yohannes, U.S. Ambassador Aponte, and other State Department officials have echoed some of the concerns I have raised.  Today’s decision by the MCC Board is an important step, but it is not the final step.  I urge the Government of El Salvador to act decisively to address those concerns.

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