Salvadoran Foreign Agent Law Threatens Human Rights Movements

After decades of growth,¹ human rights movements have lately found themselves on the defensive. Autocrats have exploited weaknesses with surprising creativity, and their most effective measures have been rapidly adopted around the world. A new innovation emerging in El Salvador in late 2021 may portend a new fight to keep human rights advocacy alive.

It has been nearly a decade since the Russian government passed its “foreign agent law,” a measure that requires nonprofit groups that engage in political activity to register with the government if they receive money from overseas. Russia justified the bill by saying it was based on a U.S. law—a statute from the lead-up to World War II that many of us came to know only after Donald Trump’s campaign manager, Paul Manafort, was accused of being an unregistered foreign agent. Putin’s message was that this was just an ordinary, even boring regulatory measure.

But it is more than that. Initial concerns focused on the stigma of being branded a foreign agent, but the law has sharper teeth, allowing the government to fine or even ban organizations that do not accept being branded as foreign agents. For example, on December 28, 2021, the government presented its case for disbanding the storied human rights organization Memorial for failing to include the disclaimer “produced by a foreign agent” on a few of its web pages. At the end of the hearing, the court ordered the Memorial to shut down.

The sinister brilliance of the foreign agent law is twofold. First, it targets human rights NGOs’ supply lines, as it were, making it difficult to accept the funds they need to survive. In much of the world, human rights defenders rely on support from global philanthropies like the Open Society Foundations for the funding they need to operate. By the standards of Russia’s law, most would be required to register as foreign agents. Groups that take foreign money would be subject to government meddling and harassment; those that opted to do without would struggle to keep their doors open.

Second, the law accomplishes this by co-opting legitimate regulatory functions of the state to crush dissent. Setting the rules for nonprofits—along with corporations, lobbyists, and a wide range of activities that impact the public good—is something governments are supposed to do. The great innovation of Putin and the autocrats that followed him was to turn regulatory schemes into instruments of their own political dominance. By obviating the need for violence against opponents, these methods may avoid the consequences of harsher exercises of state power. They are key to creating, in the words of Hungarian semi-dictator Viktor Orbán, an “illiberal democracy,” a state where elections continue but the rights and liberties of the people are curtailed.

The world took notice when the Russian foreign agent law passed and, today, more than fifty countries have adopted laws based on the Russian example. One of the latest, introduced in November 2021 and still under debate, has an ominous twist.

Under 38-year-old President Nayib Bukele, a charismatic young politician, El Salvador has taken a sharp turn toward authoritarianism. Bukele made headlines in February 2020 when he brought armed soldiers into Congress to stand behind him as he demanded funding for the military. He has since fired prosecutors and judges in order to pack the legal system with loyalists. Bukele is the latest in a growing number of modernized dictators who adopt the tactics but not the swagger of their forebears. But his style is distinctive. In the Journal of Democracy, Salvadoran political scholar Manuel Meléndez-Sánchez writes: “Bukele relies on millennial authoritarianism, a distinctive political strategy that combines traditional populist appeals, classic authoritarian behavior, and a youthful and modern personal brand built primarily via social media.”

Bukele’s authoritarian moves have raised alarms among Salvadoran civil society and around the world. The US has expressed its concern by hitting the government in the pocketbook: in May 2021, the United States Agency for International Development announced that it would pull funding from the Salvadoran police and other national agencies, instead directing the funds to civil society groups carrying out local development projects. More recently, USAID Administrator Samantha Power said the agency would commit $300 million for direct civil society funding in Central America, and promised to increase the amount of funding bypassing national governments to 50 percent within 10 years.

All of this is in keeping with Power’s stated intention to provide aid to developing nations with a local, “bottom up” approach that prioritizes small businesses over big international contractors, and local civil society groups over national governments—“[t]o engage authentically with local partners and to move toward a more locally led development approach,” as she told the Senate Foreign Relations Committee in July 2021.

But in a region where US interference has long rankled rulers and their people, the move may be seen as ham-fisted—taking aid money to support opponents of a duly-elected government brings to mind the ways in which our country funded proxy wars that killed hundreds of thousands of Salvadorans and left a bloody trail in Nicaragua and Guatemala, as well. More recently, in 2019 the Trump Administration slashed hundreds of millions of dollars in aid to the region in the hopes that by increasing financial pain it could pressure countries to take harsher measures to prevent their people from fleeing to the U.S.

With this history as a pretext, and perhaps stinging at this new reduction in aid funding, Bukele’s government struck back. On November 9, 2021, the government introduced a bill to require domestic nonprofits or social enterprises (solely commercial enterprises are exempted) to register as foreign agents if they “respond to the interests of, or are directly or indirectly funded by, a foreigner.”

“That the Legislative Assembly is even considering such a restrictive bill sends a chilling message to human rights groups and organizations fighting against impunity and corruption,” says Ricardo González Bernal, the Fund for Global Human Rights’ Program Director for Latin America. The Fund supports grassroots human rights defenders and independent journalism in El Salvador, across Central America, and throughout the world.

The bill is vague in its definitions and severe in its punishments: with exemptions for certain types of work conducted by a “good faith organization,” the law imposes penalties of up to $250,000 and five years in prison for failure to register as a foreign agent. Enforcing compliance is the responsibility of banks, which may take preemptive measures to freeze accounts of NGO clients to mitigate the risks they face, potentially throwing civil society into chaos.

The bill is another in a long line of bills based on the Russian law, but it is different in one important respect. What makes Bukele’s version novel is that it imposes a 40 percent tax on any revenue obtained by registered foreign agents from overseas sources.

“When the bill first came out,” says Jocelyn Nieva, Senior Legal Advisor for Latin America and the Caribbean at the International Center for Not-for-Profit Law, “we gathered ICNL’s experts working on the US, Latin America, Asia, and elsewhere. We have never seen something like this. The 40% tax is a grave infringement of the freedom of association, which includes the right to receive funding from a legitimate source.” Nieva goes on to say:

Often governments accomplish aims by merely presenting a draft law. Just the legislation can be enough to dissuade foreign funders. The best example is Venezuela, which has had a draft international cooperation law ready to be enacted since 2006. Every couple of years the government will pull it out of the drawer and debate it. This is enough to concern civil society, concern international donors, and divert attention from the NGOs mission and goals to this legislative threat. El Salvador doesn’t necessarily have to pass the law to have an impact. It is already having an impact.

Bukele is not strictly the first to tax nonprofits when they oppose government policy; that distinction may go to Hungary, which passed a revision to the tax code in 2018 that imposes a 25 percent tax on NGOs that “aid or promote illegal immigration.”² In 2015, Syrian refugees began transiting through Hungary, and Viktor Orbán saw political opportunity in a harsh anti-immigrant stance, attacking migrants and especially the human rights groups that defended them. The government was explicit about its intent with the 2018 law, telling The Guardian, “We want to use tax policy to step up against organising migration.”

But the Salvadoran law specifically homes in on donations and seems intended to have a chilling effect on donors whose support is vital to Bukele’s civil society opposition. A recent amendment to the law will create a fund, administered by the government, for public works projects. The prospect of giving 40 percent of every dollar to unspecified ends, with no say in how the money is used, to support a government that regards their intended grantees as enemies—for many donors, all this may be a bridge too far. If that is the case, the Salvadoran foreign agent law may be significantly more effective in shuttering human rights movements than its predecessors.

News of the law brought swift condemnation from the international community. Notably, days after the bill was introduced, the German embassy cancelled a call for proposals to make grants for development projects in the country, saying that “a decision will be made on next steps” once they have seen the final draft.

With domestic and international pressure on, it is unclear what provisions will remain when the bill is passed, or whether it will be passed at all. But whether it becomes law in the end may not be that important. Given the rapid spread of the original Russian law, it seems likely that the Salvadoran version will be copied by other autocratic governments as well.