Micro-extortion by gangs is costing El Salvador millions of dollars a year, $10 at a time

Waiting for the day to begin.
Waiting for the day to begin.
Image: Reuters/Henry Romero
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SAN SALVADOR — At 6:30am, Katie had already been working for hours, clapping dough between her hands with clouds of flour as white cheese oozed from the pupusas, thick corn tortillas stuffed with a savory filling, that cover her street-corner grill.

The plancha is her most prized possession, gifted from a friend after her small business outgrew the griddle first rented to her by a micro-lending organization. She sells about 100 of El Salvador’s trademark nosh per day. At less than 50 cents per pupusa, she earns roughly $140 a month. She hopes to afford putting her kids through private school, in part to protect them, but mostly to give them better opportunities—maybe even to get them out of El Salvador.

Once the morning rush settled, I quietly asked her the inevitable question in a country where an estimated 60,000 gang members hold considerable sway over El Salvador’s 6.5 million citizens: Have the pandillas, the gangs, given you trouble? With the gangs extorting roughly 70% of Salvadoran businesses, merely talking about their business structure puts a pupusera like Katie at risk in the murder capital of the world.

No one bothers me, she said, explaining her corner isn’t controlled by the MS-13 gang, or its chief rival, the 18th Street gang. But when I asked about her kids’ father, she pointed up the block. They shot him there, she said. Her husband wasn’t in a gang, but they decided he was trespassing on their turf.

With gangs present in 94% of municipalities in El Salvador, extorting 70% of all businesses, violence ultimately costs the economy $4 billion annually, according to a report from the Central Reserve Bank—some 15% of GDP, $5, $10, and $20 at a time. Between 2013 and 2015, the Salvadoran National Police received a fractional 7,506 reports of extortion and got only 424 convictions. The extortion’s intimacy is inescapable, leaving many victims little choice but to flee, often to the United States, or be killed.

The gangs do control the street corner in the business district where Emely manages a new Chinese fast food restaurant, selling inauthentic but delicious chow mein and fried rice for $2.50 a plate. MS-13 controls one side of the street, and its rival the other, a red line nobody can see but everyone knows.

Just after the small eatery opened, an MS-13 lookout came to set the terms of the business’s “protection.” Emely, heart pounding, negotiated a one-month grace period. She then begged the weekly renta down from $20 to $10, but only because the gang members saw she wasn’t selling much.

With her restaurant making even less than the $10-per-week rent, Emely told me the business would go under in less than a year—faster if the other gang came for its cut first.

“To negotiate with them you have to show no fear, to stand your ground,” she said, but, in reality, “You’re afraid every day. Every day, people die.”

Importantly, those seeking to paint all Central Americans as “bad hombres” and gang members ignore the fact that those are often the people from whom immigrants are seeking refuge.

In December, in a migrant shelter 460 miles north of San Salvador, Jose explained why his family had to leave El Salvador and chose to apply for asylum there, in Mexico. On a brief break from his painting job, he stroked his wife’s hair as she held their youngest, a wriggly and shoeless 2-year-old.

Jose had already escaped the gang violence once, migrating illegally to Miami, but fearing for his family, he came back. With small savings, he started a food truck selling hamburgers and tacos. But MS-13 soon returned, demanding an impossible share of $25 a week. One threatened to kidnap his eldest daughter, now 10. When they moved to another neighborhood, the rival gang threatened them. After getting special permission to leave, the family of five had mostly walked to Mexico.

The dark irony is that the gangs that rule El Salvador’s food trucks and street-corner cantinas are themselves small businesses, relying almost entirely on extortion to eke out tiny profit margins.

According to an investigation by El Faro and The New York Times, MS-13, the largest Salvadoran gang, dabbles in sales of drugs, guns and sex. But it survives—barely—on micro-extortion, yielding annual revenue of $31.2 million. If MS-13 divided those earnings among its 40,000 members, each gang member would earn $65 a month—half the minimum wage of an agricultural day laborer.

The ranks of MS-13 and 18th Street are indeed filled with brutal individuals who dismember, rape, and force recruitment with violence. This carnage is all the more cold-blooded given the dollar-store stakes.

Recent killings in the United States have sparked fears of MS-13’s resurgence after refugees from El Salvador’s civil war first formed the gang in Los Angeles in the 1980s. Luckily for the US, fears of street gangs overrunning America are mostly unfounded—not that it has stopped the Trump administration’s aggressive rhetoric. Trump has compared MS-13 to al Qaeda, the terrorist group behind the 9/11 attacks, a gross exaggeration concerning to foreign policy experts. But the gangs are a national security threat—to El Salvador.

All of which makes the White House’s Central American strategy as baffling as it is misguided. Trump officials headed to Miami this week for the “Conference on Prosperity and Security in Central America,” promising to improve the “business climate” and foreign investment. Yet they came armed with a proposal to slash aid.

In line with Trump’s “pony up” diplomacy, aid to El Salvador and Honduras would fall nearly a third from its 2016 levels. Despite nearly $200 million cut from last year’s regional assistance, it’s “still a substantial sum of money,” insisted State Department official John Creamer. Another official said the conference would prod the private sector and other countries into making up the shortfall, to “get a greater and bigger bang for [Americans’] buck.”

But until Trump can distinguish between “bad hombres,” the small businesses that are crucial to Central America’s stability will continue to starve—one $10 pay-off at a time.

“We all need an opportunity for change,” Emely, the Chinese food vendor, said she would tell Trump. She’d considered moving North, but never illegally. Maybe Canada or China, she said, but not now.

“I wish I could leave,” she said. “But I have to work.”

Pseudonyms have been used throughout this piece for protection. Reporting for this story was supported by the International Women’s Media Foundation as part of its Adelante Latin America Reporting Initiative.

Correction 6/22/17: This piece has been updated and the headline changed to clarify the wide range of interconnecting gang strategies that contribute to El Salvador’s loss of GDP.