VZCZCXRO4582
RR RUEHLMC
DE RUEHSN #0566/01 1702053
ZNR UUUUU ZZH
R 192053Z JUN 09
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC 1256
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUMIAAA/USCINCSO MIAMI FL

UNCLAS SECTION 01 OF 02 SAN SALVADOR 000566 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON PGOV EINV KCRN ES
SUBJECT: EL SALVADOR'S ANTI-CRISIS PLAN 
 
REFTEL: A. SAN SALVADOR 494 
        ¶B. SAN SALVADOR 513 
 
¶1. (SBU) SUMMARY.  On June 18, the Funes Administration announced 
its $587.5 million "Anti-Crisis" plan intended to ameliorate the 
effects of the international financial crisis on El Salvador.  The 
plan's economic and social components include creating a "temporary 
worker" program, providing fertilizer and seeds to small and medium 
farmers, constructing low-income housing, and expanding the former 
welfare ("Red Solidaria") anti-poverty program to urban areas.  On 
the security front, the plan calls for 1,000 new police officers and 
expanded police presence in the six highest crime municipalities. 
The government claims to have funding for 60 percent of the plan 
already secured.  On initial review, the economic and social 
components are a mix of campaign promises, undefined public works 
projects, and increased social spending.  Few proposals involve the 
private sector, however, and details are too vague to determine how 
much of a stimulus effect they may have.  While the security 
component includes use of military troops, lack of basic police 
training and equipment will be limiting factors in the near term. 
End Summary. 
 
¶2. (U) President Mauricio Funes announced on June 18 details of a 
$587.5 million "Anti-Crisis" plan that he had promised in his 
inaugural address (reftel A).  A reprogrammed $253.3 million in 
existing World Bank and Inter-American Development Bank loans 
(reftel B), $29.6 million in international donations, and $74.8 
million in government funds will cover 60 percent of the plan.  The 
Government of El Salvador (GOES) is still seeking assistance from 
international financial institutions and friendly governments to 
cover the remaining 40 percent. 
 
¶3. (U) TEMPORARY EMPLOYMENT: The plan calls for prioritizing labor 
intensive public works projects to "create 100,000 temporary jobs." 
Technical Secretary to the President Alex Segovia stated that 
details on the specific projects would be forthcoming.  The 
state-owned Multi-Sector Investment Bank (BMI) will be used to 
support other state-owned banks and provide guarantees for loans to 
productive sectors. 
 
¶4. (U) AGRICULTURAL SUPPLIES: The GOES will import fertilizers and 
seeds to be distributed at cost to small and medium farmers in 160 
municipalities.  The program will assist 450,000 farmers in 2009 and 
600,000 in 2010.  Press reports speculate that this is connected to 
an offer from Venezuela to provide urea. 
 
¶5. (U) HOUSING: The GOES will support construction of 25,000 
low-income houses and assist poor rural communities through a "floor 
and roof" program. 
 
¶6. (U) SOCIAL PROGRAMS: The plan includes various new and enhanced 
social programs including: 
 
-  Establishing Comunidades Urbanas Solidarias, an urban program 
similar to the cash-transfer anti-poverty program Red Solidaria (now 
called Comunidades Rurales Solidarias), and expanding the existing 
rural program. 
 
- Creating a universal basic pension for 42,000 people over age 70 
who do not have insurance and live in the 100 poorest 
municipalities. 
 
- Expanding an existing school food program to 500,000 additional 
students and providing free uniforms, shoes, and school supplies to 
1.4 million students. 
 
- Providing health and nutrition services in the 131 municipalities 
with the highest levels of malnutrition. 
 
- Extend Social Security health service benefits for 6 months for 
10,500 unemployed workers. 
 
- Creating a Social Economic Council to establish a permanent 
dialogue between business and workers' social movements. 
 
¶7. (U) SECURITY: The security portion of the plan will focus on 
increasing police presence and operations in the six municipalities 
with the highest crime rates (San Salvador, Santa Ana, San Miguel, 
Colon, Soyapango, and Apopa).  Proposals include: 
 
- Using the Salvadoran military to support the police across the 
country. 
 
- Hiring and training 1,000 new police officers. 
 
- Implementing a "School Protection Plan" targeting high-crime 
 
SAN SALVAD 00000566  002 OF 002 
 
 
schools and educational institutes. 
 
- Converting municipalities to "gun-free" zones and prohibiting 
firearms in the highest crime areas. 
 
- Providing additional resources to specialized units (e.g., the 
anti-extortion unit). 
 
¶8. (SBU) COMMENT/STIMULUS: The plan's economic and social proposals 
are a mixture of pre-crisis campaign promises (e.g., providing 
fertilizer and seeds to farmers, most of whom are already receiving 
fertilizer and seeds), as-yet undefined infrastructure projects, and 
increased social spending.  Few proposals involve the private 
sector, however, and details are too vague to determine how much of 
a stimulus effect they may have. 
 
¶9. (SBU) COMMENT/SECURITY: Funes' proposal to focus existing police 
resources on areas most beset by violence is a common sense 
approach.   Unfortunately, given the PNC's lack of basic equipment, 
to include transportation, communications, and even firearms and 
ammunition, the Funes administration's "surge" against violent 
street crime will likely not accomplish much in the immediate 
future.   PNC forces sent to the field will likely arrive there 
unequipped, and not properly trained to confront organized street 
gang violence.  Involvement of the armed forces could possibly 
address some of the PNC's transportation shortcomings, but will not 
address other glaring operational deficiencies.  Throwing additional 
resources at specialized units, such as the anti-gang, 
anti-extortion, and anti-organized crime divisions, is similar to 
the Saca administration's long-standing public security strategy, 
the alleged inefficiency of which served as a central plank of 
Funes' presidential campaign. 
 
Blau