Captured Peace. Christine J. Wade

a majority in the Legislative Assembly.

      The Duarte government embarked on a program of reforms to undercut the popular support for the FMLN in an effort to stem the effect of the war on the economy.¹⁰⁰ Such reforms included wage increases for public-sector employees, a minimum wage for urban workers, and increased access to credit and price controls.¹⁰¹ Many of Duarte’s policies were made possible by the influx of economic and military assistance from the United States after his election. But these policies were increasingly at odds with the new economic prescription being encouraged by the United States: liberal economic reforms, including devaluation, privatization, and trade liberalization. Duarte resisted, believing that such policies would be unpopular and would generate support for the FMLN. But his policies had become unsustainable. In 1985, 50 percent of the national budget was dedicated to the war.¹⁰² Rising inflation, capital flight, and an expanding budget deficit required action. Inflation increased from 11.7 percent in 1984 to 31.9 percent in 1986.¹⁰³ In 1986 the Salvadoran government was forced to launch a new stabilization policy, which included a 100 percent nominal devaluation of the Salvadoran colón.¹⁰⁴

      While the austerity measures weren’t popular with the traditional elites, they were well received by the Salvadoran Foundation for Economic and Social Development (FUSADES). FUSADES was created with funding from the United States Agency for International Development (USAID) in 1983 in response to Duarte’s hesitance at Washington’s new economic direction.¹⁰⁵ The Salvadoran think tank, which was designed to promote the Reagan administration’s commitment to neoliberal reform in the country, served as a key instrument for the elites in advancing their economic policies. The positions and policies of FUSADES closely mirrored the sentiments of the elites espoused during the late nineteenth century: unfettered economic liberalism. That said, there was also the recognition of the need to break from export agriculture in the increasingly globalized economy. This aspect was clearly at odds with some of the agricultural elites and came to symbolize a growing rupture within elites—the traditional agrarian elites versus the emerging agro-industrialists.¹⁰⁶ Not surprisingly, the key founders of FUSADES were also members of the Association of Coffee Processors and Exporters (ABECAFE), founded in 1961 to represent the interests of coffee processors and exporters (as distinct from the growers). From 1984 to 1992, USAID contributed $100 million to FUSADES alone.¹⁰⁷ Recognizing that the United States would never support ARENA with D’Aubuisson as the head of the party, he was replaced by Alfredo “Fredy” Cristiani in 1985. Cristiani, a wealthy coffee grower, businessman, former president of ABECAFE, and member of the board of directors of FUSADES, represented a new, more moderate (and electable) right. By 1988, ARENA was the dominant electoral force in Salvadoran politics. Aided by allegations of egregious corruption by the Duarte administration, ARENA won thirty-one seats in the Assembly and 178 mayoralties (including all departmental capitals) in the 1988 elections. Together with the PCN, which won seven seats and four mayoralties, ARENA controlled the assembly. By the late 1980s, ARENA no longer represented the interests of the landed oligarchy to the extent that it had earlier in the decade.¹⁰⁸ It was becoming a powerful extension of the new right, and it was willing to sacrifice former allies to achieve its vision for El Salvador’s future.

       The Rocky Road to Peace

      By 1989 there was a significant shift in both the domestic and international context. The beginning of the collapse of the Soviet Union and the discrediting of communist ideology together with the election of George H. W. Bush as president, in 1988, resulted in a change in U.S. foreign policy in the region. Latin American insurgencies were not solely in the context of an international communist threat, but rather as domestic issues. The decline of the Soviet Union also had an impact on the FMLN’s willingness to seek a negotiated settlement to the war.¹⁰⁹ In 1989, FMLN commander Joaquín Villalobos wrote an article in Foreign Policy detailing the FMLN’s ideological position and preference for democracy.¹¹⁰ The regional commitment made to peace and democracy by the Central American presidents in the Esquipulas I and II peace accords, in 1986–87, as well as changing dynamics in Cuba and Nicaragua, also created an environment conducive to a negotiated settlement.¹¹¹ These changes, combined with ARENA’s seeming transformation from extremist to pragmatic also helped pave the way for a political settlement to the war.

      In early 1989 the FMLN offered to lay down their weapons and participate in the presidential elections provided that the government postpone the elections for six months, and other criteria, to ensure safeguards for its participation. While the FMLN ultimately did not participate in the elections, the Democratic Convergence (CD), a coalition of center-left parties affiliated with the FDR, did. Guillermo Ungo, who returned from exile along with Rubén Zamora in 1987, was the CD’s presidential candidate. The elections confirmed ARENA’s new political dominance and the PDC’s precipitous decline. ARENA candidate Alfredo Cristiani won by a comfortable margin in the first round of voting with 54 percent of the vote; PDC candidate Fidel Chávez Mena won 36 percent.¹¹² Cristiani assumed the presidency in June, pledging economic recovery and peace talks. Cristiani’s plans for economic recovery were largely based on the recommendations of FUSADES. The plan sought a strict adherence to the neoliberal model through the implementation of structural-adjustment policies, including the privatization of the financial sector and other state-owned entities, significant reduction in tariffs, and other policies designed to favor foreign investment.

      The war was incompatible with Cristiani’s vision for the Salvadoran economy, as was ARENA’s increasingly uneasy alliance with the military. As Wood demonstrates, changes to the Salvadoran economy during the war had a profound impact on elite interests. The decline of the agro-export sector was altering the orientation of the Salvadoran economy, and many elites were changing in response to the fluctuations in the economy. The war had resulted in the diversification of their economic holdings, which made the repressive apparatus long used to maintain their interests unnecessary. Additionally, the growing electoral power of ARENA convinced many elites that their interests could be preserved through electoral politics.¹¹³ This is not to say that the far right had been vanquished by Cristiani, merely displaced by the face of moderation.¹¹⁴ While Cristiani proceeded with peace talks in September 1989, the military (which opposed the talks) sought to flex its muscle through a series of bombings the following month against allies of the FMLN, including FENASTRAS headquarters and the home of FDR leader Rubén Zamora, causing the FMLN to abruptly terminate them. On November 11, 1989, the FMLN staged its first offensive in the capital city, eventually occupying areas of elite neighborhoods to the shock of many residents. Indeed, the offensive took the Salvadoran government and army by total surprise.¹¹⁵ Both entities had spent years minimizing the size, effectiveness, and popular support of the guerrillas. Now it was overwhelmingly clear that the FMLN was not the poorly coordinated, rogue band of rebels the military had made them out to be. While the primary objective of the offensive (the overthrow of the government) failed, it succeeded in exposing the failure of U.S. and Salvadoran intelligence, the incompetence of the Salvadoran army, and the exposure of the failure of nine years of U.S. policy.¹¹⁶ But it was the military’s response to the offensive that would ultimately bring about the end of the war.

      In the early morning hours of November 16, 1989, members of the U.S.-trained Atlacatl Battalion, the same one responsible for the El Mozote and other massacres, entered the grounds of the Universidad Centroamericana, “José Simeón Cañas” (UCA), and murdered six Jesuit priests, their housekeeper, and her daughter.¹¹⁷ There were numerous attempts to deflect responsibility and conceal the military’s role in the crime. Soldiers attempted to frame the FMLN by scrawling FMLN propaganda at the scene, indicating that the Jesuits had been considered traitors by the organization. But a more insidious institutional cover-up by the High Command of the armed forces followed. Botched investigations—including the destruction and withholding of evidence, perjured testimony, and the refusal to testify—impeded the judicial process.¹¹⁸ The murders captured world attention and drew heightened scrutiny to the Salvadoran military and the inability of the new Cristiani government to control it. The murders clearly demonstrated that vast amounts of aid had failed to reform the military, which had operated with impunity throughout the war. The U.S. government, in turn, withheld $42.5 million in military aid promised to El Salvador, signaling its unwillingness to tolerate continuing egregious