El Salvador junta's focus shifts more and more from guns to butter

The focus of the government here is shifting more and more from guns to butter -- or, more specifically, to coffee, sugar, banking, and commerce. No longer is the military-civilian junta's main concern fending off armed attacks from leftist guerrillas or preventing disruption of society through left- or right-wing terrorism.

the junta is not discounting the extremists' capacity for violence, but simply by surviving for 18 months, it is providing some stability in this embattled country and is cautiously edging toward enlarging the role of the private sector in government.

Business sources say President Jose Napoleon Duarte is about to renew his offer of the minister of the economy post to a member of the business sector and that he is willing now to place businessmen in other positions above the level of deputy minister.

But if a pact of cooperation between the junta and members of the private sector develops, it will be between the strangest of bedfellows.

Indeed, earlier this month President Duarte said that "the greatest threat to the government is from the conservative businessmen, not the revolutionary forces on the left," and accused them of seeking the support of extreme rightist factions in the military to spearhead a coup.

Business deny they are seeking to overthrow the government, but they feel victimized by government policies that nationalized banks and exports of coffee, sugar, and cotton, and that began an ambitious agrarian land-redistribution program.

The private sector is simply "attempting to save the country from economic chaos arising from the political violence on one hand and foolish measures of the government on the other," says a spokesman for Alliance Productivia, a group of wealthy farmers, industrialists, and businessmen.

The factor that may bring the two camps together is El Salvador's economic situation, which can be described only as bleak. As one Western economic observer points out, "The moderate majority in both sectors realizes that if they don't accomodate each other, the government will go down."

Private negotiations between the two groups were held throughout last week, and there are signs the junta and private sector are heading toward an agreement -- albeit one to disagree.

The country -- in which the economy breaks down as 38 percent agriculture, 25 -26 percent merchandising, and 20 percent manufacturing -- has seen its gross domestic product fall 15 percent and per capita income drop 25 percent in the past three years. In 1981, losses are projected to hit 23 percent in merchandising, and 28 percent in manufacturing. Construction is projected to be off 35 percent.

Although Salvadoran businessmen criticize the government's reformist policies as a key reason for the nation's economic tailspin, several external factors over which the junta had no control also played a role. World market prices for both coffee and sugar, El Salvador's two biggest cash crops, dropped sharply. Trade with the United States, traditionally El Salvador's principal trading partner, fell due to high US interest rates. The cost of petroleum continued to rise.

The high cost of violence extracted a toll that was undeniable, though difficult, to assess. No data have been compiled on the actual cost of replacing materials lost to violence, but power plants and transportation facilities, primary targets in the left's campaign to wreak havoc on the junta's efforts to keep the country running, are not cheap. Already this year, 108 electrical towers and 12 major bridges have been destroyed, according to government figures.

The cost of the violence cannot fully be measured in colones or dollars, however. The international banking community's wells have gone nearly dry, just a year after it poured nearly $200 million into El Salvador. This has discouraged domestic and US banks from loaning money.

Import-dependent El Salvador is facing suppliers of oil and other resources who demand payment up front. Analysist estimate liquidity losses stemming from this situation at $600-$700 million.

The government has attempted to make up for the lack of private investment through investment in public projects, much like Franklin Delano Roosevelt's New Deal in the 1930s. The program lacks funds to have real impact, however. Over the Ministry of Defense.

In what, then, is the optimism of foreign economic a analysts here based?

"Marginal businesses have collapsed or left," says on businessman. "What remains is a hard-core, stubborn middle class that is going to fight for its very existence."

Observers now believe that moderate forces in the business sector will prevail. Government leaders here in the United States say that the most crucial test for the junta in the coming months will be the junta's ability to form some sort of alliance with a business sector that has grown des perate.