COMMENTARY (COMM):
A day of entertainment in Arlington, Virginia. The local Latin American community get together to enjoy their own music and culture. They’re part of the global movement of poor migrant workers who leave home, travel to richer countries for work and send money home to support the impoverished families they’ve left behind. Worldwide it’s estimated that amounts to a staggering two hundred billion dollars a year. What impact can it have in the fight against poverty? To find out more, Life has travelled to the United States and El Salvador to uncover this hidden economy. There have always been economic migrants – people who swap regions, countries – even continents – to find better wages to pay for a better life.

DON TERRY, Inter-American Development Bank:
Remittances have been around for generations upon generations. But they are accelerating. People move north by the millions and money moves south by the billions.

KATIE KLINGENSMITH, US Treasury Department:
The Treasury Department and the US government is extremely interested in remittances. Until about five years ago we didn’t appreciate the magnitude of the flows and it’s still very hard to identify how many remittances are leaving the US.

MANUAL OROZCO, Inter-American Dialogue:
This is a global phenomenon. We estimate that there are about 200 billion dollars sent all over the world by some 150 million immigrants.

COMM:
One out of every ten people on the planet either sends or receives money from abroad. And unlike all other forms of financial aid that travels into developing countries, remittances go directly to poor people.

DON TERRY, Inter-American Development Bank:
It turns out that remittances to Latin America are more than all of the foreign direct investment and all the official development assistance, all the foreign aid combined. These are enormous flows going into these countries and they support tens of millions of families.

COMM:
Because of the huge sums involved, the way this money is sent from A to B is being revolutionised. Not surprisingly, the banking community is starting to show an interest. As a result, the days of smuggling dollars home may soon be over together with the expense of using transfer agents.

BOB ANNIBALE, Remittances expert, Citibank:
The cost of remitting is going down. The more that the banks have been involved the lower the fees have become because of the competition.

COMM:
The vast majority of economic migrants who come to the United States are from Latin America. More than 1 million come from El Salvador, a country hard hit by tragedy in the last 25 years. First a bitter 12-year civil war, which ended in 1992, claimed the lives of 75,000. Then came a series of natural disasters. Hurricane Mitch in 1998 followed by a number of earthquakes in 2001. Each has contributed to the country’s poverty… and sent tens of thousands in search of work abroad. As a consequence, remittances leapt from less than a billion dollars in 1994 to $2.5 billion dollars in 2004 – roughly 17.1 per cent of GDP. Today the exodus of workers still continues, and the government has created a special ministerial office for them.

MARGARITA ESCOBAR, Deputy Minister for Salvadorans Abroad:
The war generated a high volume of migration. Then there was another kind of migration during the ensuing period of peace and national reconstruction. These two scenarios have led to a quarter of the population living abroad. This has an enormous impact on the political, social and cultural life in our country.

COMM:
In rural areas like Tronalagua, up to a third of the people depend on money from abroad. Julio and Anna Cortez are among them. Each month they get $200 from their elder children in Washington. It’s made a world of difference to Julio and Anna and their remaining children.

JULIO CORTEZ:
Here’s the kitchen. Over there you have the utensils…. The telephone to call my children. Here is the living room and this is the refrigerator. In the part above where you have the ice, it’s colder. And down below, it’s less cold. Here on the entertainment centre, is the television. All of this with remittances.

COMM:
Some argue remittances are turning El Salvador into a nation of consumers… but in reality most of the money is used to pay for necessities, like food and clothing. And in Julio and Anna’s case… improvements on their house.

ANNA CORTEZ:
Before the children left, our house had a dirt floor made of clay. It wasn’t like this one. We were afraid the house was going to fall down on us but with remittances we built this house.

COMM:
Almost 6,000 kilometres away, suburban Washington, USA. This is where some of Anna and Julio’s older children came to find work and to live. They arrived here illegally. First Elmer 1998, Hector in 1999 and finally Dalila in 2001.

DALILA CORTEZ:
I suffered a lot en route. I suffered from hunger. We walked for many miles. They hid us in trailers. We were thirsty, exposed to the sun and the rain. After 28 days, I reached here.

ELMER CORTEZ:
We came for the American dream. In our countries a lot of people have this dream because of the poverty…

HECTOR CORTEZ:
Although when you get here you realise it’s more of a nightmare because of how hard you have to work every single day. We came voluntarily because we wanted to look after our families. We need to support our families.

COMM:
The El Salvador government says illegal migration is a risk that many are willing to take – but that problems continue long after they arrive.

MARGARITA ESCOBAR, Deputy Minister for Salvadorans Abroad:
If they manage to achieve this, they have other problems, such as wage levels, labour rights, social security coverage, all the problems of being undocumented that affects migrants to their core.

COMM:
Dalila and her brothers are lucky. They may have arrived illegally but they have since been granted temporary protected status – TPS – a kind of amnesty. It was introduced by the US government in 1990 to help people who can’t return home because of conflict or natural disasters. So far it’s been granted to nearly 350,000 Latin Americans. But the permit is temporary. If Dalila and her brothers can return to El Salvador, they would not be allowed back into the United States.

DALILA (on telephone):
Hola….?

ANNA:
Hola, como estas?

COMM:
A telephone call is as close as Dalila and her mother have been for four years.

DALILA:
I heard on the news that those with temporary permits might be given residency but they didn’t say when. If they do, then we can visit!

COMM:
Dalila might prefer to be in El Salvador, but there is still a shortage of jobs and there’s a big gap between rich and poor. In 1999 the richest fifth of the population held 45 per cent of the wealth – the poorest fifth, just 5.6 per cent. Remittances are making a difference to the poorest people – but there are drawbacks. The government admits that for a younger generation, “success” means going elsewhere to earn money, and that can dislocate families.

MARGARITA ESCOBAR, Deputy Minister for Salvadorans Abroad:
We can see patterns of change in the concept of success for young Salvadorians. They identify success with migration. In some cases they elect to build a dream in a different country. Another effect of migration is the disintegration of the nuclear family. This has had an enormous social impact.

ROSEMARY VARGAS-LUNDIUS, International Fund for Agricultural Development:
The negative affect is that you have communities that are divided and mothers that have to leave their children behind, fathers that leave their children, their wives, there are certain communities where you can only find the elderly and the children. I mean what kind of society will that be in the future?

ROSALIA BENITEZ:
There are times when feels a bit jealous especially when “so and so” is sent money.

COMM:
Rosalia Benitez is Julio and Anna’s neighbour – and one of the many people in the community who don’t receive money from abroad.

ROSALIA BENITEZ:
The people who don’t get remittances, they say: “He should watch his money because what if the person in the United States dies, what will they do then?”

COMM:
She and her daughters live with seven other relatives. It’s tough, sometimes there’s not enough food to go round. Even so, Rosalia is determined NOT to follow the money trail north to America.

ROSALIA BENITEZ:
Yes, I have often thought of leaving to work as a “wetback” as they say to help my family. But then I think that I would lose my daughters’ love if I left them. I could send money back into their lives, but love and education? It’s not the same.

COMM:
Coming up in part two – could countries dependent on remittances be heading for disaster?

PART TWO

COMM:
Around the world, migrant workers send billions of dollars home to their families every year. Are some countries becoming TOO dependent on this flow of money?

RODOLFO DE LA GARZA, Columbia University:
Remittances create a safety net that the state doesn’t have to deal with and the more money you send home to fee, clothe and provide medical attention for your family, the less obligation on the state and the more freedom on the state to engage in any kind of less responsible activity.

COMM:
Increasingly, migrant groups in the US have formed what they call hometown associations. Groups like this raise extra cash to send home for community projects. In 2004, they sent back more than $2 million dollars to El Salvador.

FRANCESCO CASTRO, United Salvadoran Communities:
We’ve been building churches, a Red Cross building. We’ve been driving ambulances from here. The last project we had was a reforestation project because that’s very critical in my country right now. We raise money constantly.

COMM:
Some communities get enough money so they don’t need to rely on the government to fund local projects.

MANUEL CACERES, Chinameca Development Foundation:
If you go to Chirilagua and Taltupec, those communities down there they don’t even bother to ask the government. They are self-sufficient they get so much money from the States. A lot of the kids there in 9th grade they already have a visa to immigrate.

DON TERRY, Inter-American Development Bank:
The governments themselves in these developing countries absolutely need to be doing a much better job than they have been doing over the past 25 years. I think it is important to underscore that remittances are not a substitute for sound economic policies at home and remittances are certainly not a substitute for foreign assistance.

COMM:
None of this is denied by the Salvadoran government. But in reality, the country has few development options and increasingly the government is trying to bring the flow of remittances into the mainstream economy.

MARGARITA ESCOBAR, Deputy Minister for Salvadorans Abroad:
We have published a book containing all public policies addressed to Salvadorans living abroad who would like to invest in their country. We offer technological assistance, procedures to set up a business, projects that may be of interest to Salvadorans.

COMM:
The government is also working with international development organizations to encourage those who receive remittances to use the money more productively. With assistance from one UN agency, Julio and Anna have invested some money back into their farm.

CARLOS LOPEZ, IFAD Rural Development Project:
We give them an opportunity to invest in their farms in ways that make them more profitable, reducing illness among animals by using vaccines, better feed for example. The same is true for crops - having money to buy improved seeds and better quality supplies diminishes risk and increases success.

COMM:
Julio and Ana used to grow maize and beans, but just for their own consumption. Now they also grow fruit trees and rear more animals, all which earn them a profit of $200 a month.

JULIO CORTEZ:
I have more income because I work the land. I don’t live solely from remittances.

COMM:
Having opportunities to invest their remittances has helped pull the Cortez family further from poverty. But what about the rest of the community… is there a way to spread the benefits? One answer may be to change how remittances are sent. The old methods were well known and dangerous. “Mules” or money smugglers would regularly carry thousands of dollars across the borders – and still do. Money transfer agents are a much more secure route. But smuggling and transfers are still expensive.

DON TERRY, Inter-American Development Bank:
When we started looking at this five years ago, the cost of sending money was often 15 to 20 per cent of the total remittance. Economists would call that inefficient, but the real word would be outrageous.

COMM:
Now with the scent of serious money, some banks are getting involved. And that could lead to a reduction in costs, as well as a change in how remittances are transferred.

KATIE KLINGENSMITH, US Treasury Department:
In the US we have seen banks increasingly become interested in this market. It’s partly because they understand that many immigrants in this country stay and become bank customers. Remittances are often called a loss leader. They might be offering five, ten dollar, free remittance service. It’s not free to for a bank to offer a remittance service but they use it as a way to get immigrants in through the door.

COMM:
Banks may call it “relationship building”. But to poor people who receive remittances, banking can give them a new financial possibilities. For example, they could get credit to start a business.

DR MANUEL OROZCO, Inter-American Dialogue:
One of the causes of poverty is the lack of access to wealth generation. You don’t generate wealth just through employment but through asset building. And you build assets through financing, through credit.

COMM:
The Cortez family manage to save between $10 and $20 dollars a month. If they – and people like them – put those savings into a banks and credit unions rather than under their mattresses, it’s estimated it would add another 250 million dollars to the country’s economy. And that means more money for banks to loan to others.

ROSEMARY VARGAS-LUNDIUS, IFAD:
Even families that aren’t receiving remittances benefit because they will have a financial institution nearby that can provide them with services which they didn’t have access to before.

COMM:
A good example is Rosalia, Julio and Anna’s neighbour. Still determined not to leave her children and migrate north, she’s recently been able to obtain a small loan from a local credit union – money that would not have been available to her ten years ago. Now she’s invested in rabbit farming.

ROSALIA BENITEZ:
I love it and up to now, I’m very content. With the money we buy eggs, cheese, cream, cooking oil, some noodles and sometimes I take the girls on an outing.

COMM:
Indeed, aiding the flow of money to poor rural areas and to people like Rosalia, may be the most important effect in the current transformation of the remittance market. In Washington, this woman is sending money to her family in El Salvador through a company specially set up to connect to micro finance institutions, small banks and credit unions, in remote areas, where the broader economic impact of remittances could be the most beneficial. But such changes are slow in coming, and in the meantime families will continue to make sacrifices as a means of survival.

INTERVIEWER:
When did you last see your children?

ANNA CORTEZ:
One was seven years ago, the other four years ago, two were four and one was three and the last was two years ago.

DALILA CORTEZ:
It’s been hard on our parents but I know that our help makes them feel better. They know we are doing well here because we talk to them every week and send them money and they know we are OK.

COMM:
Being apart is hard, but the opportunity to earn better wages is why the Cortez children – and many like them – head for America. But as remittances increase, and with better ways of harnessing that wealth, perhaps one day the real opportunities will be found in El Salvador. Until then, the exodus of workers is bound to continue.

END

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