VZCZCXYZ0007
PP RUEHWEB

DE RUEHSN #0708/01 2092039
ZNY SSSSS ZZH
P 282039Z JUL 09
FM AMEMBASSY SAN SALVADOR
TO RUEHC/SECSTATE WASHDC PRIORITY 1438
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUMIAAA/USCINCSO MIAMI FL PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

S E C R E T SAN SALVADOR 000708 

NOFORN 
SIPDIS 

E.O. 12958: DECL: 07/21/2019 
TAGS: PGOV PREL ES
SUBJECT: EARLY IMPRESSIONS OF FUNES GOVERNMENT 

REF: SAN SALVADOR 653 

Classified By: Charge d'Affaires, for reasons 1.4 (b) and (d) 

¶1. (C) Summary: Some eight weeks into the Funes 
Administration, we are beginning to see more clearly the 
trends and factions inside the GOES. President Mauricio 
Funes' non-FMLN campaign support group, the Friends of 
Mauricio, is largely in control of the economic apparatus of 
El Salvador. Similarly, Defense is in the hands of a 
formerly-retired, recently-promoted military officer and 
Friend of Mauricio, Brigadier General David Munguia Payes. 
FMLN hard-liners are at the helm of the security and 
intelligence apparatus. Foreign policy is in the hands of a 
loyal FMLN member, but has thus far been characterized by 
pragmatism and outreach to the U.S. Assistance programs 
broadly mirror the rest of the relationship, with most 
programs moving forward successfully but some police and 
security programs under review. The Funes GOES has made 
poverty eradication its highest priority. End Summary. 

-------- 
The Good 
-------- 

¶2. (C) The Funes Administration inherited two serious 
economic problems. First, the Salvadoran economy likely 
entered recession in late 2008, driven by falling remittances 
and declining exports because of the U.S. recession. Second, 
the government was effectively broke ) and in many cases 
behind on its bills ) because of declining tax revenues and 
the Saca Administration’s lavish, election-year subsidies. 
So far, the government has chosen to seek new funding from 
the World Bank, Inter-American Development Bank, and 
International Monetary Fund, rather than from sources like 
Venezuela. The government's "Anti-Crisis Plan" likewise 
appears to consist primarily of increased funding for 
existing social programs. These programs, however, will 
likely do little to boost the economy, where recovery 
ultimately depends on the recovery in the U.S. 

¶3. (C) Since June 1, Salvadoran foreign policy has also been 
characterized by pragmatism. Foreign Minister Hugo Martinez 
stepped into the chair at the OAS General Assembly in San 
Pedro Sula just hours after assuming his new role; he 
impressed both the U.S. delegation and Salvadoran observers 
with his performance. Since then, the main foreign policy 
issue faced by the GOES has been Honduras. In the hours 
after President Zelaya's expulsion to Costa Rica, both 
Martinez and Funes reached out to the Embassy and to 
Washington to coordinate what has been a reasonable, 
responsible approach to the crisis on their northern border. 
On Funes' first day in office he recognized Cuba, but 
balanced this by meeting Secretary Clinton and the USDEL to 
his inauguration. FMLN hardliners, particularly Vice 
President Sanchez Ceren, would prefer an ALBA-esque foreign 
policy and carry out a parallel FMLN agenda, but they are not 
permitted to wreck relations with traditional partners. 
Ambassadorial appointments are being made in a deliberate, 
unhurried fashion, and have not raised concerns; indeed, 
keeping former FM Francisco Lainez in place at the OAS sent 
an early signal of continuity. 

¶4. (C) On foreign assistance, USAID reports good cooperation 
across the board, save for some difficulties in public 
security. (More on that below.) The GOES has voiced strong 
support for continuing USAID programs and has indicated it is 
in agreement with USAID's strategic goals for El Salvador. 
The Funes Administration has elevated to Vice Minister the 
MFA position responsible for coordinating foreign assistance 
programs and has called for the formulation of a global 
cooperation strategy. The GOES is actively leveraging 
international donors to address its near-term anti-crisis 
plan. In charge of both economic policy and donor 
coordination is Alex Segovia, the President's Chief of 
Cabinet. Segovia, a kind of super-minister, is the most 
pragmatic and least ideological figure in the GOES. 

¶5. (C) The GOES just reaffirmed its continued interest in 
USAID's programs for improved tax collection, health sector 
reform and a diagnostic of the education system. MCC's rate 
of implementation continues to gain speed, in large degree 
because of the efforts of local partner FOMILENIO's Director, 
Jose Angel Quiroz. We successfully pushed back against a 
move by Funes to replace Quiroz in the early days of his 
government, arguing that another disruption in FOMILENIO 
management would set back MCC's program by months, if not 
more. It was Segovia, in his role as FOMILENIO Board 
Chairman, who convinced Funes to leave Quiros in place. The 
new GOES has shown great interest in the MCC indicators; 
Segovia just wrote a warm letter to MCC CEO Rodney Bent 
recommitting the GOES to the indicators and all other MCC 
criteria. 

¶6. (C) Military-to-military cooperation continues at a tempo 
similar to that before Funes took office. The USNS Comfort 
recently spent 11 days anchored offshore and saw more than 
19,000 Salvadoran patients. We have three other Medical 
Readiness Training Exercises scheduled for 2009 and a full 
slate of DOD/SA-funded training for members of the Salvadoran 
Armed Forces (ESAF). Additionally, the MOD has requested USG 
support to conduct a National Security Strategy (NSS) 
workshop with the intent to get Cabinet level and Assembly 
personnel involved in the GOES process to develop their own 
NSS. Appointment of retired Colonel Munguia Payes as 
Minister of Defense, as well as mid-ranked active duty 
colonels to most key command positions, has created 
discomfort in ESAF ranks. However, the Minister of Defense 
is an institutionalist and is focused on maintaining the 
ESAF's apolitical professionalism. The Minister and the ESAF 
are loyal supporters of the president, and eager to continue 
longstanding mil-to-mil relationships with the U.S. 

------- 
The Bad 
------- 

¶7. (S) Salvadorans across the spectrum link Manuel Melgar, 
now Minister of Public Security and Justice, to the 1985 Zona 
Rosa attack which killed four off-duty U.S. Embassy Marine 
Security Guards and other Americans and Salvadorans. 
Melgar's nomination appears to have been based less on his 
public security credentials than on the hard-line FMLN's 
insistence that they control public security. This was their 
"pound of flesh" in exchange for "Friends of Mauricio" 
controlling the economy. Melgar's presence as Minister has 
resulted in a distancing from the USG, a far cry from the 
close relationship we enjoyed with his predecessor. Law 
enforcement cooperation has not been frozen, but full 
implementation of the Merida Initiative is now contingent 
upon guidance from Washington regarding how best to work 
around Melgar. Just as disappointing is the cynical message 
it sends to a high-crime society like El Salvador when the 
President names as Minister of Public Security an individual 
with blood on his hands. 

------------ 
And the Ugly 
------------ 

¶8. (C) Traditional feuds between the Salvadoran right and 
left and modern feuds between Funes and the FMLN are playing 
out in other contexts. Over two weeks after the legal 
deadline (June 30) to appoint five new magistrates to the 
Supreme Court, the Salvadoran Legislative Assembly remained 
deadlocked as the governing FMLN and ARENA-led opposition 
coalition could not reach agreement on a list of names. 
(Note: Supreme Court appointments require a 2/3 
supermajority, thus demanding ARENA and the FMLN support any 
nominee. End note.) Naming a new Attorney General (which 
also requires a 2/3 Assembly vote) became linked to the 
Supreme Court selections and the entire process ground to a 
halt. The Supreme Court was made whole July 16 when a deal 
was struck between Funes, the FMLN, and opposition on a slate 
of nominees. Public and private negotiations continue over 
the new Attorney General. 

¶9. (S/NF) El Salvador's intelligence service (OIE) in the 
hands of orthodox FMLN member Eduardo Linares could become 
ugly, depending upon how much leeway Funes allows him to 
accept advice, training, money, and personnel from Cuba or 
Venezuela. To date Linares has behaved cautiously, first 
seeking to get his arms around his own organization, which, 
to be fair, had previously considered the FMLN as its primary 
target. 

------------------------------------- 
Pursuing U.S. Interests Going Forward 
------------------------------------- 

¶10. (C) Eight weeks on, we are roughly where we expected to 
be. We have enjoyed excellent cooperation in most areas with 
the GOES, but lost some ground in other areas, especially law 
enforcement. Given the inconsistent performance of 
Salvadoran law enforcement in good times, it has been hard to 
discern a difference in performance, or crime statistics, 
since June 1. Our assistance priorities, and continued trade 
relationship, seems closely aligned with the Funes 
Administration's own goals. Foreign policy priorities will 
sometimes diverge, although our problems are likely to be 
less with the official GOES policies than with the FMLN's own 
parallel policies. The Embassy's approach with the Funes 
Administration will continue to be engagement across the 
board, even with Public Security, up to and including the 
Deputy Minister. Our objective is to strengthen the 
institutions of Salvadoran democracy, regardless of who is in 
power. Civil society, media, and the business sector take a 
parallel and complementary approach. ARENA did not disappear 
June 1 and its reorganization and regrouping is proceeding. 
It promises to remain a significant opposition during the 
entire five years of the Funes Administration. 
BLAU