The CEO of El Salvador

In the United States, one often hears the following rejoinder from a certain brand of center-right politician: “government should be run like a business.” Typically this just means that elected officials should be more hawk-eyed in the quest to cut waste and make government run more efficiently. It could also betray a fundamental misunderstanding of what government is and how to make it accomplish its legitimate purposes, but that’s a column for another time. 

In El Salvador, a country with a slightly more continental political culture than the US, President Nayib Bukele seems to have actually found a way to put this idea to practical use. In his administration, he has fused business-like efficiency with a capable and charismatic understanding of how to wield state power. Abroad, he is mostly known as the first head of state to make bitcoin a form of legal tender: a step which drew acclaim or criticism depending largely upon how much exposure a given commentator had to the cryptocurrency. He is also roundly disdained by legions of NGOs, who claim that he has either concentrated too much power around himself or that he is somehow basking in corruption. There is, of course, immense precedent for graft and the unlawful exercise of power in El Salvador. But before one writes off Mr. Bukele as yet another tin-pot dictator (he has, mockingly, referred to himself as, “dictator,” in his Twitter bio on more than one occasion), it would be wise to consider him with a smidge of humility. 

In 2017, Mr. Bukele founded a populist party, Nuevas Ideas (NI), to try to take the Salvadoran government in a new direction. El Salvador has an ugly history of being plagued by violence and a challenging political situation. The dozen-year Salvadoran Civil War, which ended in 1992, claimed tens of thousands of lives and the nation’s gang war (between MS-13, Barrio 18, and state security forces) has continued to claim many thousands since. The left-wing FMLN (of which Mr. Bukele was a member until the party expelled him from its ranks in 2017) and right-wing ARENA both came out of the civil war period, forming the two main poles of El Salvador’s party system for about three decades. Mr. Bukele broke through the two main parties when he won an outright majority in the 2019 presidential election, and his new party followed up with an even more decisive victory in the 2021 legislative elections. 

With the opposition of El Salvador’s established left and right out of the way, and with the occasional persuasion of government security forces, President Bukele has been able to usher his agenda through at a rapid pace. He has deployed troops to the streets to combat gang violence, and homicides have declined precipitously (though it is true that this problem has been on the decline since the prior administration launched a large-scale crackdown in 2015). He instituted one of the strictest COVID-19 pandemic lockdowns in the Americas for nearly three months, providing for some government assistance to the neediest citizens during this time. Further, he has rearranged the constitutional order of El Salvador such that he faces a more favorable judiciary than when he entered office and he will be able to seek re-election in 2024 (he would have been limited to one term under prior legal precedent). The rule of law may not be his strong suit, but Mr. Bukele does deliver results: in two years as chief executive, he has yet to fall below 80% public approval. 

The most notable of President Bukele’s policies has been the adoption of bitcoin as an officially recognized currency. El Salvador’s economy is highly dependent on remittances from the US, which is largely why the US dollar was made the country’s sole legal tender in 2001. The adoption of bitcoin, in addition to the strong signal it sends to potential worldwide investors, builds on the existing state of affairs and presents the country with tremendous opportunities moving forward. There will be the option for unbanked citizens to access remitted funds more quickly with their cell phones. This is important because the majority of Salvadorans do not have bank accounts and thus cannot reap the benefits, such as the accumulation of interest on savings, that come with well-developed financial services. There are also new opportunities for El Salvador to tap into the human and investment capital of foreign firms and traders with interests in cryptocurrencies. And if bitcoin continues its general trend of price appreciation, regardless of whether or not it achieves the grandiose political goals set for it by certain maximalists, the Salvadoran government will, in the future, find itself the bearer of a brilliant investment. 

Mr. Bukele’s tenure as President could, it may be supposed, turn toward disaster at any minute. Certainly, if one accepts the conventional wisdom offered by international watchdogs and armchair technocrats, this is exactly what should happen. However, his populist experiment seems to be born of a genuine desire to live up to the name of the party he founded and give new ideas a try. With innovation, like bitcoin, a degree of risk is inherent. Mr. Bukele is a man whose whole life, until his own presidency, has taken place in the context of FMLN and ARENA’s competition to see who could engage in more graft and get away with it. So, El Salvador’s current President decided to take some chances on behalf of his people, who seem to hold him in high regard as of the time of this writing. Was the old two-party system genuinely producing better outcomes for the average Salvadoran or was it simply more predictable from within the four walls of a DC think tank? Time alone will tell. 


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