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January 2001



El Salvador is located in Central America, between Guatemala, Honduras, and the North Pacific Ocean. El Salvador's population numbers about 6.2 million; almost 90% of its inhabitants are of mixed Indian and Spanish extraction. The country's people are largely Roman Catholic -- though Protestant groups are growing -- and Spanish is the language spoken by virtually all inhabitants. The capital city, San Salvador has about 1.7 million people; an estimated 42% of El Salvador's population live in rural areas.

Before the Spanish conquest, the area that is now El Salvador was made up of two large Indian states and several principalities. The indigenous inhabitants were the Pipils, a tribe of nomadic Nahua people long established in Central Mexico. Remains of Nahua culture are still found at ruins such as Tazumal (near Chalchuapa), San Andres (northeast of Armenia), and Joya De Ceren (north of Colon). The first Spanish attempt to subjugate this area failed in 1524, when Pedro de Alvarado was forced to retreat by Pipil warriors. In 1525, he returned and succeeded in bringing the district under control of the Captaincy General of Guatemala, which retained its authority until 1821. In 1821, El Salvador and the other Central American provinces declared their independence from Spain.

The Salvadoran economy benefits from a commitment to free markets and careful fiscal management. The impact of the civil war on El Salvador's economy was devastating; from 1979-90, losses from damage to infrastructure and means of production due to guerrilla

sabotage as well as from reduced export earnings totaled about $2.2 billion. Since 1992 improved investor confidence has led to increased private investment. Rich soil, moderate climate, and a hard-working and enterprising labor pool comprise El Salvador's greatest assets.

U.S. State Department Background Notes, 8/2000