Columns / Politics

USAID, Bitcoin and the Long Fight over El Salvador’s Sovereignty

Wednesday, June 30, 2021
Daniel Alvarenga

The U.S. Agency for International Development, or USAID, has been having a moment in El Salvador. They made headlines chastising the administration of President Nayib Bukele and announcing they would divert aid destined for the country’s national police to civil society organizations. The move was seen as retribution for what many describe as El Salvador’s democratic backsliding under President Nayib Bukele, who recently ousted five Supreme Court judges and has effectively placed all branches of Salvadoran government under his party, Nuevas Ideas.

Much of the opposition to President Bukele has stood behind USAID, and frankly so have many Democratic politicians in the United States who have taken a vocal stance against Bukele, despite their less-than-stellar track records in the region. A number of human rights organizations, as well as Salvadorans on the ground, think Bukele’s grab for absolute power, despite his sustained popularity, should be curbed. The United States and its aid distribution is perhaps one of few entities that can put checks on the Salvadoran government. In fact, U.S. aid has, for decades, exerted considerable influence on the country.

USAID was established in 1961 by U.S. president John F. Kennedy through an executive order that consolidated various foreign assistance organizations under the new umbrella agency. The goal sounds noble — to promote social and economic development, often in the global south. USAID frames itself as a benevolent branch of soft power, especially in contrast to the more aggressive military interventions across the globe.

One of USAID’s main pillars when it comes to its mission in El Salvador is the promotion of “economic prosperity.” The agency pours money into job creation, entrepreneurial programs, and facilitating international private sector investment. It shapes what is considered economic development for the country.

El Salvador’s hope for economic prosperity made international headlines when Bukele announced the country would adopt the cryptocurrency Bitcoin as official legal tender. It’s an endeavor that the World Bank said it would not assist with, and that the IMF has voiced skepticism but not yet ruled decisively on. Many experts fear it could cause volatilities in the already fragile Salvadoran economy, as well as potentially turn the country into a hotbed for money laundering. But Bukele is selling Bitcoin as a way for El Salvador to take its economy back, one shaped by U.S. intervention. Bukele isn’t an anti-imperialist, but he finds a way to co-opt such sentiments for his personal Make El Salvador Great Again policies.

To understand how we got here, we have to go back to the 1980s. One of the biggest marks USAID left on El Salvador is the co-founding of FUSADES (the Salvadoran Foundation for Economic and Social Development) in 1983 in the midst of the civil war. FUSADES is a right-wing think tank that heavily collaborated with the far-right ARENA (Nationalist Republican Alliance) party during the war and in the subsequent two decades. 

During the war years (1980–1992), the United States, independently from USAID funds, funded the right-wing death squad government at the tune of more than a million dollars a day — something the United States has rarely acknowledged and never apologized for. The U.S. intervention in the war laid a foundation for today’s gangs, mass migrations, and impunity for heinous crimes. It’s also led to a deep dependency on USAID by civil society organizations since the war years; many of these civil society groups aren’t in any position to deny funds.

In the post-war era, El Salvador privatized the public bank, as well as the telecommunications and energy sectors. Then, in 2001, El Salvador completely adopted the U.S. dollar, handing the country’s financial reins over to the federal reserve in Washington, D.C. A few years later, in 2005, the country was integrated into the Central American Free Trade Agreement (CAFTA) with the United States. Further interlinking the two economies were the millions of Salvadorans who migrated to the United States due to economic hardship and violence. 

The United States and its aid has considerably shaped the economy at the expense of El Salvador’s sovereignty. The primary goal of the United States is to protect those financial investments, especially in a world where its hegemony is slipping and yet Central America remains in its chokehold. History tells us that human rights for the Salvadoran people is quite secondary to this goal, and we should take that into account when cheerleading the very well-deserved opposition to Nayib Bukele’s power grabs.

The person currently holding the purse strings to El Salvador’s future is Samantha Powers, recently named head of USAID. Many applauded her early decision to reroute funds from the Bukele administration to civil society organizations in an attempt to promote transparency, combat corruption, and monitor human rights. However, Salvadorans need to take a close look at the track record for the person who wields so much influence over the country.

Samantha Powers made her name reporting on genocide during the Balkan wars. In 2009, she went on to serve as an aide to the Obama administration and was one of the strongest voices pushing for military intervention in Libya that deposed Gaddafi. That intervention plunged Libya into years of civil war — an experience millions of Salvadorans can relate to. Even as the opposition champions her, Salvadorans should pump the brakes and consider the consequences of ongoing financial intervention. 

When I was born, El Salvador proudly displayed the image of conquistador Christopher Columbus on its money, known as colones. From the time I was a pre-teen up until today, Salvadorans carry various American slave owners like Hamilton and Washington in their billfolds. And now they’re being instructed to put their future in the hands of a digital currency, despite the fact that only one out of every ten Salvadorans in rural areas has internet access. 

FUSADES today has come out in clear opposition to Nayib Bukele’s plan to adopt Bitcoin. The Bitcoin policy, despite international attention and enthusiasm by laser-eyed Bitcoin bros, has caused mass confusion in El Salvador regarding its implementation. It’s an incredibly volatile currency that could wreak havoc and uncertainty.  We also have to acknowledge how USAID is part of the reason El Salvador finds itself at this juncture to begin with.

The promise of a shiny new currency isn’t new to us, nor has it done anything to make El Salvador any more economically viable for its peoples — the proof is in the mass migration from an ever unliveable country. The burden of potential inflation, increase in the country’s debt, and money lost through unstable conversions will have the hardest impact on El Salvador’s most vulnerable. We cannot expect USAID to save us from these economic perils, especially when they are in large part responsible for our lack of self-determination to begin with.

Daniel Alvarenga, a Salvadoran-American journalist based in Washington, D.C., is a reporter for Telemundo’s English-language newshow Radar 2020. He formerly worked as a producer for AJ+, a digital channel by Al Jazeera. He regularly reports on politics, social movements, and climate justice in Central America and the U.S. He’s the son of refugees who fled the civil war in El Salvador in the 1980s.
Daniel Alvarenga, a Salvadoran-American journalist based in Washington, D.C., is a reporter for Telemundo’s English-language newshow Radar 2020. He formerly worked as a producer for AJ+, a digital channel by Al Jazeera. He regularly reports on politics, social movements, and climate justice in Central America and the U.S. He’s the son of refugees who fled the civil war in El Salvador in the 1980s.

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