The case for a new MCC compact with El Salvador
By Francisco Altschul* We are on the brink of closing a successful chapter in the strong and productive relationship between El Salvador and the United States. In October 2012, we will celebrate the completion of the Millennium Challenge Corporation´s (MCC) first compact in El Salvador. Between 2007 and 2012, the MCC invested nearly $460 million in the northern part of El Salvador to help reduce poverty, reaching more than 900,000 people.
I would like to thank the people and the government of the United States for their generosity. Over the past five years, the MCC compact improved people´s lives by stimulating economic development. In particular, the investment focused on small-business development, access to markets, education, transportation infrastructure and improved access to potable water and electricity.
A $278 million investment built a 138-mile highway across an isolated and marginalized northern area. Now that it is connected to the rest of the country, the area has been able to attract $57 million in new private investment. More than 17,000 people have been trained in business and entrepreneurship and more than 30,000 students have benefited from improved schools.
Rogelio Castaneda, a cattle farmer, is an example of how the compact can change lives through technical assistance and technology. Instead of milking cows by hand, he now uses machines, and has seen his business improve as a result. In order to build on the progress to date, El Salvador is applying for a second MCC compact to spark economic growth along the southern coast.
This area has great potential for prosperity, as it is already home to strategic assets and resources — fertile land, an international airport, two ports, beaches — and has access to the ocean. Nonetheless, it is currently one of the poorest parts of the country due to lack of strategic investment. Since there are few opportunities, many people emigrate to the United States to support themselves and their families. This proposal has been developed through consulting with diverse stakeholders: business owners, civil society organizations, Salvadoran-Americans and foreign investors.
The government of El Salvador would commit to matching the MCC´s resources to leverage positive impact. Since 2009, we have been doing our part by increasing our fiscal revenues from 13 to 16 percent of the GDP. We plan to improve ports and airports, increase access to and quality of drinking water, electricity and education, and attract foreign investors in tourism and communications.
Investing in the southern coastal region would positively affect the economy of the entire country. President Obama visited El Salvador in 2011 and confirmed the strong alliance between the nations when he announced that it would be the only Latin American country selected to join the Partnership for Growth initiative and work together with the United States to identify and address barriers to economic growth.
A new MCC compact would tackle barriers like poverty and lack of competitiveness, which are also the goals of Partnership for Growth. El Salvador wants to remain a strategic partner of the United States working toward a new compact that benefits both countries.
With a new compact, El Salvador would have the opportunity to reduce poverty and immigration flows in the southern coastal area. The United States would be able to export technology and products to the region and strengthen the cultural, social and political ties that unite us. Since the Peace Accords that ended the civil war in 1992, El Salvador is proud to be a successful example of democratic transition.
Part of that success was due to the important role the United States played in brokering peace. Now that our countries have other common opportunities and challenges, a new compact from the Millennium Challenge Corporation can become an instrument for us to jointly fight poverty and promote our common vision and values.
*Francisco Altschul has been the Ambassador of the Republic of El Salvador in the United States since 2010. This article was published in The Hill newspaper.