VZCZCXYZ0000
RR RUEHWEB

DE RUEHSN #0247/01 0592218
ZNR UUUUU ZZH
R 282218Z FEB 08
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 9107
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS SAN SALVADOR 000247 
 
SIPDIS 
 
STATE FOR WHA/CEN, H DRICH 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EAIR MARR PREL ES
SUBJECT: SCENESETTER: VISIT OF CODEL COSTELLO 
 
¶1. Embassy San Salvador welcomes you and your delegation 
to El Salvador.  El Salvador is one of our strongest allies in the 
Western Hemisphere, and is a bedrock of economic and political 
stability in the region.  Your visits to the Aeroman aircraft 
maintenance facility will highlight an expanding high-technology 
company now majority-owned by U.S. investors.  You arrive as El 
Salvador is already focused on preparing for 2009 legislative and 
presidential elections.  The ruling ARENA party has accelerated the 
process of selecting its presidential candidate after the main 
opposition FMLN party chose a popular television journalist in 
November 2007.  El Salvador's economy achieved strong GDP growth 
rate over 4 percent during the past two years as the government has 
continued to implement positive, free market-based economic reforms. 
 Improving public security is the highest priority for the U.S. 
Mission as crime is an important political issue and economic 
constraint.  The Merida Initiative and Cooperative Security Location 
are important elements of our cooperation on security and 
antinarcotics. 
 
POLITICAL SNAPSHOT 
------------------ 
 
¶2.  As one of our closest allies, El Salvador is the only country in 
the Western Hemisphere with forces currently deployed in Iraq.  The 
ruling ARENA party has held the Presidency since 1988 and leads a 
coalition with a narrow majority in the Legislative Assembly.  El 
Salvador will hold legislative and municipal elections in January 
2009 and Presidential elections in March 2009. 
 
¶3.  Similar to the United States, El Salvador's election campaign 
season has been accelerated and is already underway.  The opposition 
FMLN nominated telegenic journalist Mauricio Funes (formerly not 
associated with any party) as its presidential candidate, with old 
guard FMLN stalwart Salvador Sanchez Ceren as his running mate. 
While many question which part of the FMLN (the new face or the old 
guard) will actually control policies should the FMLN win the 
election, few doubt that the FMLN will be a formidable opponent in 
the 2009 elections.  The FMLN's selection of Funes has forced ARENA 
to accelerate its own candidate selection with the naming of 
pre-candidates in January of 2008 and selection of a final candidate 
by mid-March.  On February 26, ARENA announced three finalists: 
current Vice President Ana Vilma de Escobar, former Presidential 
Legal Advisor Luis Mario Rodriguez and former National Police Chief 
Rodrigo Avila. 
 
PUBLIC SECURITY AND THE MERIDA INITIATIVE 
----------------------------------------- 
 
¶4.  Rising levels of violent crime are an important economic 
constraint and may have a major impact on the 2009 elections. 
Violent street gangs are a serious problem and random, violent crime 
is endemic throughout the country. The U.S. is working closely with 
the Salvadoran government to develop the capacity of public security 
services and advise the government on police, legal and criminal 
procedure reforms. 
 
¶5.  The Merida Initiative can play an important role in reinforce 
security cooperation and reduce the threat of transnational crime. 
The Initiative aims to strengthen state institutions in the region, 
as well as break the power and impunity of criminal organizations in 
the region that aggressively intimidate these institutions, threaten 
governments' abilities to maintain public security and expand the 
rule of law, and pose a hazard to the safety and security of the 
United States.  Funds are divided among three "pillars" of 
activities:  Counternarcotics, Counterterrorism, and Border 
Security; Public Security and Law Enforcement; and Institution 
Building and Rule of Law.  The Central America portion of the 
Initiative seeks to directly respond to needs identified by the 
Central American governments. 
 
ECONOMIC OVERVIEW 
----------------- 
 
¶6.  El Salvador's stable economy, the result of a broad reform 
agenda implemented by successive ARENA governments, has earned El 
Salvador an investment-grade debt rating from Moody's, and provides 
a measure of economic predictability.  The Salvadoran economy grew 
by over 4 percent for the past two years after growing only 2 
percent from 1999-2005.  The United States is El Salvador's largest 
trading partner: we import $2,006 million worth of Salvadoran goods 
(57.1 percent of their total exports) and export $3,086 million of 
goods to El Salvador (40.5 percent of their total imports).  El 
Salvador was the first Central American country to ratify and 
implement CAFTA-DR and has led the region in promoting regional 
integration.  Remittances, primarily from the U.S., have grown to 
account for about 17% of GDP in 2007 (about $3.5 billion). 
 
US ASSISTANCE 
------------- 
 
¶7.  The United States provides assistance through USAID and the 
Millenium Challenge Corporation (MCC) to promote sustainable 
economic growth and reduce poverty.  USAID manages bilateral and 
regional programs to promote economic growth, strengthen democratic 
institutions, improve social services and support the enforcement of 
environmental and labor standards under CAFTA-DR.  A Millennium 
Challenge Corporation (MCC) compact approved in 2006 and in force 
since September 2007 is investing $461 million over five years that 
seeks to stimulate economic growth and reduce poverty in the 
country's northern region through strategic investments in 
education, public services, enterprise development, and 
transportation infrastructure. 
 
AEROMAN MAINTENANCE FACILITY 
---------------------------- 
 
¶8.  The Aeroman maintenance facility employs over 1,200 engineers, 
technicians and support staff to provide airframe heavy maintenance 
services on Airbus and Boeing aircraft for TACA, Jet Blue and US 
Airways. The company is negotiating with Southwest Airways and has 
begun an expansion project to double its maintenance capacity from 4 
to 8 maintenance lines by 2010.  Aeroman became a majority 
U.S.-owned firm in 2007 after two U.S.-based private equity firms, 
Sageview capital and KKR, acquired a 70% stake in Aeroman's main 
parent company, ACTS.  ACTS purchased an 80% stake in Aeroman in 
2006 while the original owner, TACA, retained a 20% stake. 
 
COOPERATIVE SECURITY LOCATION 
----------------------------- 
 
¶9.  The Cooperative Security Location (CSL, formerly Forward 
Operating Location - FOL) provides aerial counter-narcotic support 
from the Salvadoran air base at the International Airport of 
Comalapa, El Salvador.  The CSL maintains 21 permanent US Navy staff 
and 32 civilian contractors to support 110-140 temporarily deployed 
USN and USCG personnel operating 3-6 maritime patrol aircraft (MPA) 
for aerial counter-narcotics activities. CSL also hosts a rotating 
monthly detachment of one Canadian CP-140 MPA with 20-22 personnel. 
Information gathered during monitoring flights is shared with 
regional allies who then decide whether their own law enforcement 
officials should intercept suspect vessels and airplanes. 
 
 
Glazer