On a sunny July morning in the town of Alegría, in the mountainous coffee region of Usulután, Catholic workers show a US Government-produced video titled The Hidden Enemy. Ominous music accompanies images of dead bodies, brutal beatings and migrants succumbing to the desert heat along the US southern border.

A few kilometres away, members of the Santa María II coffee co-operative meet to discuss their plight: during the past two years coffee prices were so low, they could not afford fertilizer. Yields dropped sharply and this year they skipped picking where the berries were sparse. Unpicked coffee beans are now spreading the Broca disease, which threatens to destroy next year’s already diminished crop.

For decades, coffee and migration have given the Salvadoran economy stability. One in four Salvadorans lives in the US and 82 per cent of the country’s coffee farms are in the hands of small producers and co-operatives. Today, both migration and coffee are increasingly dubious options for the 45 per cent of people living in poverty.

El Salvador during much of the 1970s and 1980s was a shrieking pressure cooker, heated by the flames of a politically excluded left, a repressive state and an economy that generated both concentrated wealth and extensive poverty.

Following the 1992 peace accords, the flames of exclusion and repression have been reduced dramatically, with the army sidelined by the accords and the leftist Farabundo Martí National Liberation Front (FMLN) represented in Congress and in town governments.

Stability has been the key promise of the conservative National Republican Alliance (ARENA), which has delivered a dollarized economy and reduced inflation, assisted by high levels of migration and a steady flow of family remittances. For more than two decades, El Salvador has been a success story in the eyes of the US Government, which in the 1980s viewed the ARENA Government as a faithful footsoldier in the global war on communism.

US President George W Bush last year called President Francisco Flores his favourite Latin American leader. You can see why. El Salvador went from having the most advanced revolutionary movement in the region to being the most stable and promising Central American market economy of the last decade. With $2,000 million in remittances pouring in each year from 2.3 million Salvadoran workers in the US, the economy had the reserves needed to assure a smooth transition three years ago from the colón to the US dollar.

However, recent global changes are challenging ARENA’s recipe and providing opportunities for the FMLN. The failure of IMF-led strategies to convert increased trade into lasting social development has provided fertile terrain for challenges to the Washington Consensus by progressive Latin American governments. The world coffee crisis has left millions of farmworkers in a critical state. The US’s slowing economy and increased efforts to contain illegal migration also threaten to clog the most important pressure-release valve in the Salvadoran economy.

The FMLN, meanwhile, in voting last March, won 31 of 84 congressional seats, becoming the most important party in the legislature, and won 72 of 262 town governments, including San Salvador and 6 of the 12 provincial capitals. The campaign for the March 2004 presidential elections has placed ARENA’s Tony Saca, a successful business leader, against the FMLN’s Shafick Handal, one of the historic leaders of the guerrilla movement. Opinion polls earlier this year placed the FMLN ahead.

El Salvador remains the best bet for progressive change in Central America. But much will depend on the FMLN’s capacity to provide viable alternatives to sweatshops, coffee and migration as solutions to the historic problems of inequality and poverty.

Matthew Creelman