To promote peace and reconciliation in El Salvador.

Sets forth U.S. policy on assistance to El Salvador.

Permits funds made available for military assistance for El Salvador for FY 1992 in excess of $21,000,000 to be obligated only with the prior notification of specified congressional committees. Authorizes the transfer of such funds to the Demobilization and Transition Fund for El Salvador established under the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1991. Makes such funds available only for costs of the demobilization, retraining, relocation, and reemployment in civilian pursuits of former combatants in the conflict in El Salvador. Permits the obligation of amounts in the Fund only if the President, prior to obligation of funds, notifies: (1) specified congressional committees; and (2) the Congress that the El Salvadoran Government and representatives of the Farabundo Marti National Liberation Front (FMLN) have reached a permanent settlement of the conflict.

Prohibits any U.S. assistance to El Salvador if the head of the El Salvadoran Government is deposed by military coup or decree. Resumes such assistance only pursuant to a law enacted by the Congress. Permits the delivery of military assistance to the armed forces of El Salvador only with the prior approval of the elected president of El Salvador.