A Country's Rebirth.(El Salvador has become a viable nation with a future after 11 years of civil war)(Column)

The story of Isaias Sandoval Alas says a lot about what has happened in El Salvador in the 11 years since the end of a brutal civil war. The son of poor peasant farmers, Sandoval spent the 1980s roaming the lush hillsides and extinct volcanoes of Cuscatlan province as a midlevel guerrilla commander for the Cuba-backed Farabundo Marti National Liberation Front (FMLN). When a United Nations-brokered peace accord ended the fighting on the last day of 1991, he plunged into local politics. Today Sandoval, 47, is the popular, can-do mayor of Suchitoto, a colonial-era town of 26,000 that ranks as one of El Salvador's leading tourist destinations. The soft-spoken politician long ago traded in his AK-47 assault rifle for a cell phone, and he's similarly discarded the ideological jargon of yesteryear. "I don't consider myself a communist or a socialist," says the mayor. "Those names and labels only cause problems for us, and they're no longer necessary."

Against all odds, El Salvador has emerged from the ashes of civil war, death squads and peasant massacres as a viable nation with a future. The conservative Nationalist Republican Alliance (ARENA) party, which has held power since 1989, has embraced the U.S.-backed, free-market growth model. It has slashed government budgets and privatized scores of state-owned enterprises. The results have been encouraging: the Salvadoran economy grew by 4.3 percent a year on average between 1991 and 2001. Bankers and foreign investors now praise El Salvador for having one of the three best investment environments in Latin America-- along with Chile and Mexico--and $500 million in fresh foreign capital has poured into the Massachusetts-size country in just the past two years. The U.S. government, which spent hundreds of millions of dollars to prevent the Central American country from falling into the hands of the FMLN, likes to think of El Salvador as a developing-country showcase. "Sound policies have produced results," argues U.S. Trade Representative Robert Zoellick. "Many Salvadorans still struggle to overcome poverty, yet economic growth is making a real difference in their lives."

It's not easy to recognize that fact because El Salvador remains extremely poor. The realities of life for most of the country's 6.4 million residents aren't all that rosy. Nearly half the people live below the official poverty line. One of every four Salvadorans leaves the country in search of a better life. Crime is a serious problem. The government admits to a combined jobless and underemployment rate of 37 percent, and the economy has grown by only 2 percent for the past two years running--not nearly enough to keep pace with El Salvador's population growth.

All this spells political trouble for the government. While the Bush administration is quietly pushing lame-duck President Francisco Flores for the post of secretary-general at the Organization of American States in Washington, the Flores-led ARENA party is trailing in the polls and could lose its 14-year grip on power in general elections next March. A former ARENA government minister blames the economic slump on steep utility-rate hikes and other austerity policies adopted by Flores and his team of technocrats. "This government has ruled on behalf of the privileged few to the detriment of the vast majority of the population," says Arturo Zablah, a businessman --who served as Economy minister from 1989 to 1993. "The people need jobs, and they've stopped believing in the government."

The 43-year-old Flores and his ARENA comrades have gotten the message. In legislative and municipal ...