Since US President Joe Biden dropped out of the presidential race and endorsed Harris on Sunday, she has emerged as the likely Democratic nominee. So what might US foreign policy look like if she wins the presidency? For Harris, the daughter of Jamaican and Indian immigrants, there are ample clues in her work in the Americas over the past three-and-a-half years. Her approach: Listen to a broad array of stakeholders, act, follow up, and then adjust tactics as needed. This approach can take time to implement, but it also proves adaptive to unexpected challenges.

Although the United States’ southern border was not specifically part of the portfolio handed to her, Harris’s indirect involvement—through her role in seeking to reduce migratory push factors in northern Central America—has received considerable scrutiny, especially among those who criticize the Biden administration’s approach to migration. The data at this point indicate that the Biden administration has made progress in reducing the number of migrants arriving at the US border from Guatemala, Honduras, and El Salvador to levels last seen toward the end of the Trump administration, even as increased migration from other countries has contributed to a high level of overall encounters at the border.

At the same time, more work is clearly needed to ensure that migration levels from northern Central America do not jump back up. It is imperative that the efforts undertaken as part of the ongoing “root causes” strategy carry forward no matter who wins the US election in November. This means ensuring that local organizations have the technical and financial resources to improve opportunities for job creation and human-capital development and also to combat often-endemic corruption. These and other conditions are needed not just to dampen the drive to migrate but also to create longer-term economic security that ultimately benefits the national security of the United States and partner countries.

In one example of her “listen, act, then follow up” approach, Harris traveled to Guatemala and Mexico in June 2021. A month later, she rolled out a five-pillar strategy that revolved around working with in-country partners to address the root causes of Central American migration, noting that “migration to our border is also a symptom of much larger issues” and admitting from the start that “progress will not be instantaneous.” She subsequently visited Honduras in January 2022. In March 2024, she welcomed Guatemala’s new president, Bernardo Arévalo, to the White House for more discussions. This approach suggests that Harris could govern in a manner where decisions are carefully thought out and where a multitude of factors are taken into account before acting.

In its three years, the five-pillar strategy has produced more than $5.2 billion in commitments from companies and organizations to invest in the region while supporting local development in areas of high emigration. And there are signs that migration from the region is now slowing. The number of Guatemalans encountered at the southwestern border last month (11,485) was the second-lowest since November 2020. The number of Hondurans (8,896) was the lowest over the same period. Overall, the proportion of migrants encountered at the US border who are citizens of Guatemala, Honduras, and El Salvador has dropped from 49 percent (March 2021) to 18 percent (June 2024).

Still, reflecting the shift in migrant patterns, including new or growing countries of origin, the overall number of migrant encounters by border authorities remains high (130,419 in June) as compared to the last full month of the previous administration (73,994 encounters in December 2020).

Though it has been less high-profile than her Central America work, Harris has also given substantial attention to addressing the many significant challenges facing the United States’ Caribbean neighbors. As she has explained it, doing so is a US national security priority that cannot be overlooked.

In June 2023, just over a year after virtually hosting leaders of fifteen Caribbean nations, Harris became the highest-ranking US official to visit The Bahamas, where she co-hosted the US-Caribbean Leaders Meeting. That meeting—and her overall engagement—has been focused on establishing a greater US presence in the Caribbean at a time in which it’s becoming increasingly apparent that Caribbean prosperity yields benefits for the United States too. The region’s geographic proximity also means that there is a national security imperative for the United States to be more fully engaged in a partnership with the Caribbean.

In keeping with her typical approach, Harris met with Caribbean leaders first to hear their priorities before crafting a strategy. Her priorities started with climate change and the energy transition, expanded to food security, and then extended to security and arms trafficking. At that June 2023 meeting, she announced $100 million of US assistance to address these issues, including Haiti’s ongoing humanitarian crisis. (In parallel with these efforts, the Atlantic Council organized the PACC 2030 Climate Resilient Clean Energy Summit on the sidelines of her Bahamas trip.) Still, as with her Central America portfolio, substantial progress will not happen overnight.  

Over the coming days and weeks, Harris will set about defining what her foreign policy might look like. In the course of her work as vice president with Central America and the Caribbean, at least, she has taken on tough issues that don’t lend themselves to easy, quick solutions. And she has followed through on implementation, adjusting tactics along the way as the situation on the ground evolves. As she seeks to become commander-in-chief at a time of deep global instability, she will have no shortage of complicated challenges to confront.

Jason Marczak is the vice president and senior director of the Atlantic Council’s Adrienne Arsht Latin America Center.

The post What Kamala Harris’s record in Central America and the Caribbean reveals about her foreign policy approach appeared first on Atlantic Council.

A former mayor of Mexico City, Sheinbaum has a strong foundation in addressing urban challenges, governance, and social policies. Like her predecessor, outgoing President Andrés Manuel López Obrador, Sheinbaum will likely coordinate her policies under a narrative of addressing social injustice and advocating for Mexico’s most vulnerable. But unlike her predecessor, Sheinbaum is an environmental engineer and climate scientist by training. She appears poised to place environmental issues, including climate-change mitigation and adaptation, high among her social justice concerns. This would likely include seeking to advance issues ranging from sustainable agriculture to renewable energy.

At first glance, this may sound odd. Mexico is a major oil producer—the second largest exporter in Latin America after Brazil—and Sheinbaum has all but guaranteed that she will continue funding the state-owned oil company PEMEX, which suffers from a range of inefficiencies and carries debt of more than one hundred billion dollars. However, her scientific background and previous initiatives indicate a potential for balancing economic development with environmental sustainability. For example, during her time as mayor of Mexico City, Sheinbaum spearheaded the installment of solar power panels on top of a major market. Furthermore, she campaigned for president on a promise to address, early on in her administration, the water issues affecting Mexico City. Already during her first speech since the election, and probably in an effort to differentiate herself from López Obrador, Sheinbaum spoke about an upcoming renewable energy program for Mexico. Calibrating this balance will be crucial, as will working with regional partners. After all, Mexico and its neighbor Guatemala, for instance, face similar challenges of environmental degradation and the impacts of climate change, from flooding to droughts and a lack of access to water.

Another way in which Sheinbaum could partner with her Central American neighbors is by working together to seize nearshoring opportunities. Specifically, she and her regional counterparts could promote a mechanism whereby Central American economies would be able to join the United States-Mexico-Canada Agreement (USMCA). Nearshoring, or bringing international supply chains and production closer to the US market, can provide significant economic benefits, creating jobs and fostering economic stability in Mexico and throughout Central America. Promoting economic integration through the USMCA could provide a structured framework for this cooperation. The idea has been floated for a couple of years now, first by Costa Rica in 2022. This move would enhance the competitive edge of Central American economies, which in many ways are too small to make a difference on their own but together could create economies of scale. Bringing other Central American countries into the USMCA would allow these nations to benefit from the same trade advantages enjoyed by Mexico. It could also reduce many of the economic pressures that drive migration, namely a lack of jobs and insufficient wages.

Furthermore, Sheinbaum’s administration could adopt a more humanitarian approach to migration, focusing on protecting migrant rights and providing humanitarian assistance. While López Obrador touted his tree-planting “Sembrando Vida” program, Sheinbaum could take the programs a step further. This approach aligns with her broader progressive values—she is a self-described humanist—and can enhance Mexico’s role as a regional leader in addressing the migration crisis. During the campaign, Sheinbaum repeatedly mentioned increased investments in social and youth programs in Central America, which, if designed holistically and sustainably, could effectively curb migration from Mexico’s neighbors. This is particularly important now, as US President Joe Biden prepares to roll out an executive order that would allow the United States to temporarily close its southern border if a threshold of encounters with migrants at the border is reached—reportedly, an average of five thousand crossings in a week or 2,500 in a day.

Regional security is another area in which Sheinbaum could make a big difference. Almost three dozen candidates were assassinated during the current electoral campaign, and record-breaking violence in the country is resulting in more than thirty thousand homicides each year. Improved and increased intelligence-sharing between Mexico and Central American countries can help combat organized crime and violence, which are significant push factors for migration. This is also an area in which the United States and Mexico may look to double down on their cooperation. Sheinbaum has pledged to address the rampant impunity in Mexico—less than five percent of criminal investigations are solved and many crimes go unreported. While Sheinbaum is unlikely to approach the security issue in the severe manner of President Nayib Bukele in El Salvador, she has recognized the urgency of this issue for the livelihood of millions of Mexicans.

Sheinbaum’s presidency could bring about significant positive change in Mexico and its relations with Central America. Her administration’s policies on energy and environmental sustainability, economic integration, and migration will have an important impact on the future of the region. The first female president of Mexico has the opportunity to redefine her country’s role in Central America, address the root causes of migration, and promote a more stable and prosperous region. In this new chapter for Mexico and the region, the Aztec nation could very well be a strong and stable partner for Central American nations.

María Fernanda Bozmoski is deputy director, operations and finance at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the center’s work on Mexico and Central America.

The post Three ways Mexico’s new president could transform Central America appeared first on Atlantic Council.

The numbers show an incoming administration with a strong mandate. With 58.3 to 60.7 percent of the vote, according to the National Electoral Institute’s Quick Count, Sheinbaum will enter office on October 1 even surpassing the share obtained by the current president, Andrés Manuel López Obrador, who won in 2018 with 53.2 percent of the votes. Her margin of victory over the second-place finisher could range from 29.7 to 34.1 percentage points—on track to likely surpass López Obrador’s margin (30.9 percentage points) as well. 

Beyond the surprise in outperforming even some of the most generous polls, her party, MORENA, and its allies received a mandate in Congress that also surpassed expectations. In the Chamber of Deputies, the new Congress will convene in September with the MORENA coalition holding a supermajority (at least two-thirds of the seats), and it is within striking range to do the same in the Senate. Early signs indicate that the MORENA coalition will hold a minimum of 346 seats in the 500-person lower House and could hold anywhere from 76 to 88 seats in the 128-person Senate, with 85 seats required for a supermajority.

The significance here cannot be overstated. A supermajority allows for constitutional changes—from the direct election of judges to the independence of regulatory agencies—which could not be obtained thus far by the López Obrador administration. Explicit campaign pledges can now be advanced. This means a potential acceleration of the Fourth Transformation of the Mexican state as ushered in by López Obrador, especially if the outgoing president prioritizes constitutional changes once the new Congress convenes on September 1.

As López Obrador’s hand-picked successor, Sheinbaum will certainly continue with her predecessor’s policies, but she will also be her own president. A scientist by training and a former secretary of the environment, she will bring new technical expertise and pragmatism to the presidency. That was evident in her time as head of government of Mexico City, where she developed and then continuously followed up on the implementation status of her 220-page government plan.

Expect to see several of her priorities during her term running Mexico City to carry over to her presidential administration. For example, speaking with the Atlantic Council on the sidelines of the Cities Summit of the Americas last year, Sheinbaum showed an in-depth, technical perspective on sustainability—not simply as stewardship of natural resources, but also as an issue interconnected with education, social justice, healthcare, housing, and infrastructure. 

Sheinbaum mentioned throughout her campaign the need to move forward with the energy transition, comments that reflect her background in energy engineering. There will inevitably be a role for the private sector to play in this transition, but as with her broader perspectives, the view of the Sheinbaum camp is that the government should lead the charge. The public-private partnerships that Sheinbaum moved forward during her leadership in Mexico City could be a model she brings to her new administration to advance, for example, more renewable energy projects in Mexico.

Infrastructure will also likely be a priority for the incoming administration. In her acceptance speech early Monday morning, Sheinbaum spoke about the need for new highways, trains, airports, and ports. All of these strategic projects are critical for Mexico to take advantage of the investment opportunities related to nearshoring with the United States. But given the tight government budget conditions that the new government will face, completing these projects will not be easy. Here, too, watch to see if the new administration turns to public-private partnerships to move these projects forward.

Finally, Sheinbaum will assume office in October with not only a sizable domestic mandate, but also with an opportunity to deepen Mexico’s engagement beyond its borders. López Obrador rarely traveled abroad, and Sheinbaum followed suit as head of government in Mexico City. Even though she took office in 2018, her trip to Denver for the Cities Summit of the Americas last year was rarity. But if and when she goes abroad, she will generate much interest given the potentially transformative moment she will oversee in Mexico and her place in history as Mexico’s first female president.

Jason Marczak is vice president and senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. He leads work on the economic and security impacts of greater efficiencies and reduced wait times at the US-Mexico border including presenting findings before the Mexican Congress.

Bosco Martí is a nonresident senior fellow with the Atlantic Council’s Adrienne Arsht Latin America Center and is the global director of institutional affairs and communications for Aleatica. He previously served as executive director for Mexico and the Dominican Republic at the Inter-American Development Bank.

The post Sheinbaum just won a massive mandate in Mexico. Here’s how she might use it. appeared first on Atlantic Council.

Following global trend lines, significant shifts in Latin America and the Caribbean—including presidential elections in Ecuador, Guatemala, and Argentina, unprecedented agreements with the Venezuelan government, a worsening security situation in many countries, and a pressing focus on climate change—set the stage for even more change to come in 2024.

Join the Adrienne Arsht Latin America Center as we explore top questions that may shape this upcoming year in the hemisphere.

What will the region’s newest presidents accomplish? How might Latin America’s ties with countries such as China and Russia evolve? What might be the role of the United States in an election year? Will the Caribbean see new, international attention to the specific threats faced by major climatic events?

Take our quiz to find out if you agree with what we’re predicting!

Related content

New Atlanticist Jan 10, 2024

Ecuador has declared ‘internal armed conflict’ against criminal gangs. What’s next?

By Isabel Chiriboga

Ecuadorian President Daniel Noboa has mobilized the military to fight criminal groups in his country, following two notorious criminal leaders’ escape from prison.

Civil Society Conflict

Report Nov 30, 2023

Advancing US-Colombia cooperation on drug policy and law enforcement

By Atlantic Council US-Colombia Advisory Group

Consumption and price of the drug has remained stable in the United States in recent years. However, the current trend of falling coca leaf and cocaine prices in Colombia present a natural incentive for coca growers to find alternative forms of income, which could mean a higher rate of success for alternative development programs.

Civil Society Colombia

Issue Brief Sep 26, 2023

A roadmap for the Caribbean’s energy transition

By David Goldwyn, Eugene Tiah, and Wazim Mowla

Caribbean countries are in desperate need of an energy transition. Disproportionately high electricity costs impede economic development, stress public finance budgets, and harm the competitiveness of tourism and other industries.

Americas Caribbean

The post 2024 predictions: How ten issues could shape the year in Latin America and the Caribbean appeared first on Atlantic Council.

Indeed, this is a moment that demands an unequivocal statement of bipartisan unity in support of democracy by the United States. Moments like these require the United States to reach across the ideological divide and convene a high-level bipartisan delegation. Imagine the power of, for example, two former presidents, Bill Clinton and George W. Bush, standing shoulder to shoulder with the Guatemalan people and attending Arévalo’s inauguration.

One reason to dispatch such high-level, bipartisan representatives is geopolitics. Central America is a region where leaders are increasingly looking to China for more trade, engagement, and aid. Guatemala remains one of just seven countries in Latin America and the Caribbean that has full diplomatic relations with Taiwan, which the United States must not take for granted. The United States must also remember Guatemala’s history, where the shadow of the 1954 Central Intelligence Agency-backed coup d’état still looms over the country. The inauguration, therefore, represents a chance for the United States to proactively support a nation still navigating the echoes of a complex history and politics.

Arévalo’s decisive victory in the run-off vote, which he won by a margin of 21 percent, signals a strong mandate from the Guatemalan people. His announcement that he will form the country’s first-ever gender-balanced cabinet symbolizes hope for a more inclusive future. Yet, his path to the National Palace has been fraught with challenges, led mostly by Porras, who stands accused of corruption by the United States. Traditionally, the United States sends high-ranking current officials—of the administration’s own party—to presidential inaugurations. But the extraordinary nature of Guatemala’s current political climate, the country’s strategic importance as a strong US partner in northern Central America, and its burgeoning economic potential warrant an exceptional response from the Biden administration. 

So, what exactly is the message that a bipartisan delegation of two former US presidents would send? It would signal that the United States cares more about Guatemala and the region than it ever has before and that canned photo-ops no longer meet the moment for the people of Guatemala and the more than 1.8 million Guatemalans who call the United States home. The presence of a high-level, bipartisan delegation in Central America would symbolize a united commitment to democratic values at a critical time when authoritarianism is rising in the neighborhood. While neither Clinton’s nor Bush’s records in Latin America are without controversy, their combined legacies—centered on economic ties, immigration, and foreign aid—speak directly to the region’s current needs.

A bipartisan US delegation could also reignite discussions on critical issues like migration, narcotics trafficking, climate change, and citizen insecurity—which is much-needed as the recent developments in Ecuador forebode a potential regional security meltdown. 

While Guatemala tests the resilience of its democracy, the United States faces its own test. The choice of who to send to Guatemala’s presidential inauguration, modest though it may seem, is the first part of that test. In the future, choosing to send such a high-level, bipartisan delegation would signal the United States’ dedication to democracy and international cooperation, conveying a powerful message to both domestic and international observers. At a time when the United States has been criticized for a lack of leadership in Latin America, such leadership by example is paramount. Such a delegation would showcase the United States as a united force championing democracy on the global stage, despite its internal divisions.

Maria Fernanda Bozmoski is a deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center.

The post To support Guatemala, the US should send a high-level delegation to Arévalo’s inauguration appeared first on Atlantic Council.

Strengthening democratic institutions is critical to reversing the trend of democratic decline across the region. While these democracies struggle, international partners can help. That’s because the assistance these partners are already sending has an impact on each country’s democratic health. All aid either hinders or helps democratic development, and donors should be intentional about aligning all forms of assistance to make sure that the assistance supports countries’ democratic development. Thus, the United States and other democracies that send aid to Latin America and the Caribbean have a vital role to play in the region’s future. They must make a renewed push for assistance to the region.

Recently updated indexes and projects that summarize countless social, institutional, and political metrics across countries—including the World Justice Project’s Rule of Law Index, the Human Rights Watch’s World Report 2023, and the Economist Intelligence Unit’s Democracy Index 2022—convey a clear message. The International Institute for Democracy and Electoral Assistance’s Kevin Casas-Zamora sums it up best in the organization’s 2022 Global State of Democracy Report: “Democracy is under both literal and figurative assault around the world.”

As this week’s Summit for Democracy—which the United States is co-hosting with Costa Rica, the Netherlands, South Korea, and Zambia— gets underway, these reports highlight in increasingly urgent terms the regression of democratic governance around the world, including in most of Latin America.

For example, Colombia held three broadly free and fair electoral processes last year, and the rule of law is relatively strong. Many in Bogotá and other big cities have access to judicial, health, law-enforcement, and other state institutions. However, elsewhere in the country, the situation is different: Rural municipalities do not have the resources to provide the same level of education or health care as capital cities, and basic infrastructure is lacking. Public safety is even weaker. With its unequal application of democratic norms and protections, Colombia has been labeled a “flawed democracy” by the Economist Intelligence Unit. It’s not alone: Two-thirds of countries in the region (including Brazil and Mexico) qualify as flawed democracies or “hybrid regimes.” Only three are full democracies and the remaining four of the countries scored are fully authoritarian.

Across Latin America, weak institutions perpetuate corruption, inequality, poverty, and insecurity, and they standardize illicit economies. This provides a breeding ground for populist leaders on both the left and right to turn the situation to their advantage by exacerbating political polarization and popular distrust of the government. Weak rule of law is a constant trait of fragile democracies or hybrid regimes. Populist El Salvadoran President Nayib Bukele, for example, suspended civil liberties and arrested thousands of suspected gangsters with no due process. In the presence of weak institutions, criminals and corrupt officials can buy their way out of accountability. Gangs can shake down business owners with impunity. A lack of leadership and inclusion, including political parties’ own undemocratic behavior, is also a constant regionwide.

The factors contributing to the region’s democratic decline are well-known. What is less acknowledged is how these democratic deficits undermine the quality of life for millions of citizens and how they hinder government responses to new challenges and crises. From COVID-19 to Russia’s full-scale invasion of Ukraine, shocks have already tested the region’s governments, and they were found wanting. Three threats in particular have the potential to further destabilize Latin America’s democratic progress:

• Climate change and natural disasters have already started to upend economic and social conditions. Much of southern South America has suffered from record heat waves this year, fueling record forest fires in parts of Chile. A heavy rainy season has exacerbated a major Dengue fever outbreak in eastern Bolivia and caused devastating floods in Brazil. Meanwhile, the Paraná River—a major transportation artery and irrigation source—has fallen to such a low level that shipping has struggled; and Uruguay declared a national emergency in October last year due to crop failures caused by drought. Poor environmental governance both contributes to these phenomena and hinders mitigation and adaptation efforts. Governments’ inabilities to respond effectively contribute to poverty, dislocation, and migration across the region. To strengthen their democracies, governments must be able to channel citizen demands more nimbly and mobilize resources to mitigate these environmental or climate shocks .
• Latin America and the Caribbean struggle with food insecurity and price shocks. Energy prices and inflation add to severe cost-of-living pressures for many across the region. A new report from the Pan American Health Organization shows that over 22 percent of the Latin American and Caribbean population cannot afford a healthy diet, with rates reaching over 50 percent in the Caribbean. Many governments provide subsidies for certain foodstuffs, fuel, and other critical imports, but high inflation and soaring debt payments will challenge governments’ abilities to keep this up. This can rapidly lead to popular unrest: For example, in 2019, a simple public transportation fare hike triggered massive protests in Chile. A similar increase in gas prices in Panama resulted in over a week of protests over fuel, food, and medicine, and Suriname saw protests this month after the government announced it would cut electricity and fuel subsidies.
• Most regional governments throughout Latin America and the Caribbean are also under extreme financial stress, which limits their abilities to respond to new crises. The resource boom—fueled by Chinese growth and consumption—that propelled massive social spending and slashed poverty around the region ended years ago. As budgets were tightening, COVID-19 struck the region harder than most others and forced governments to expand deficit spending as economies closed for months at a time. Several states ended the pandemic with bulging debts and lower credit ratings, meaning that they now have less flexibility when it comes to confronting the next shock. And while Latin America’s economy grew nearly 4 percent in 2022, that growth is projected to slow in 2023 as the US Federal Reserve continues to hike interest rates and the value of the dollar continues to rise, with damaging spillover effects for regional economies.

The most effective way to prepare for and mitigate against these external shocks is by strengthening democratic institutions—ensuring greater transparency, democratic participation, and government responsiveness. The United States and other democracies that help the region in dealing with these external shocks have a vital role to play in helping Latin America reverse the trend of democratic decline and prepare for coming challenges that could exacerbate democratic decay. This role extends to the diplomatic, development, and private sectors, which should support partners with best practices and resources that incentivize transparency, civic participation, free trade, and countering the influence of malign foreign actors such as China, Iran, and Russia. As US Agency for International Development Administrator Samantha Power recently wrote, “everywhere they provide assistance, democratic countries must be guided by and seek to promote democratic principles—including human rights, norms that counter corruption, and environmental and social safeguards.”

Voters have delivered major course corrections in Brazil, Colombia, and elsewhere in the past year, with newly installed leaders vowing to tackle inequality. But beyond these democratic processes, there’s more that governments will need to do to fully shore up vulnerable institutions. Investing in initiatives that strengthen civil society, political party systems, and open government will help give citizens a stake in the system, improve the function of institutions, and reduce the space for incursion by would-be autocrats.

Power has rightly called for a development strategy that “addresses the economic grievances that populists have so effectively exploited, that defangs so-called digital authoritarianism, and that reorients traditional democracy assistance to grapple with modern challenges.” As the United States and its partners convene for the Summit for Democracy, creating a vision for strengthening democracy in all US assistance to Latin America should figure among the Biden administration’s highest priorities.  

Antonio Garrastazu is the senior director for Latin America and the Caribbean at the International Republican Institute.

Casey Cagley is a resident program director at the International Republican Institute.

The post How can Latin America halt its democratic backsliding? And how can the US help? appeared first on Atlantic Council.

​​​​​What you should know

• Nicaragua: On February 9, the Ortega-Murillo regime released and expelled 222 political leaders, priests, students, and other dissidents to the United States.
• US-Brazil relations: Presidents Biden and Lula da Silva met on February 10, during which they underscored the importance of strengthening democracy, promoting respect for human rights, and addressing the climate crisis.
• Ecuador: Ecuadorians rejected all eight items on a constitutional referendum backed by President Lasso, signaling anti-incumbent sentiments and the clout of pro-Correísmo opposition political forces.

Monitoring economic headwinds and tailwinds in the region

• Argentina: Annual inflation reached 98.8 percent, while activities in the construction and manufacturing sectors continued to decline.  
• Brazil: The government met with Mexico, Germany, Colombia, Chile, the World Bank, and the Inter-American Development Bank (IDB) to explore issuing green bonds this year. 
• Belize: The government launched two new projects in cooperation with Taiwan, a business support program focused on women and micro, small, medium-sized enterprises (MSMEs), and a flood warning system for disaster prevention.  
• Colombia: 2022 GDP growth is estimated to be 7.9 percent, down from 2021’s 10.8 percent growth. In 2023, growth is expected to further decline to 1.05 percent. 
• Peru: Continuing protests and supply shortages have led several mines to suspend or reduce operations, threatening copper production.  
• Suriname: President Santokhi expressed willingness to collaborate with neighboring Guyana on oil and gas exploration and development to position the Caribbean as an energy hub. 

In focus: Inflation and infighting

As regional inflation continues, political pressures are leading to criticism of central bank policy in Brazil and Colombia. Recently-elected presidents Lula and Petro have both questioned rate hikes as a method to tackle inflation, suggesting more flexible targets and alternative policies. The governor of Colombia’s Central Bank, Leonardo Villar, expects the region to require continuing tight monetary policy, which critics argue may complicate other policy goals such as growth. Roberto Campos Neto, president of the Central Bank of Brazil, has expressed his willingness to coordinate with the Lula administration to achieve growth and control inflation. 

Despite the public clashes, central bank policy in both countries remains independent. In Brazil, a 2021 law protects central bank autonomy and is unlikely to be repealed. In Colombia, the central bank has maintained a course independent of presidential advice for two decades. 

Health + Innovation

• Colombia: President Petro presented a health reform to Congress that seeks to improve primary care, expand access to treatment, raise healthcare worker salaries, and fight corruption by eliminating private sector management of payments.
• Brazil: Nearly three years since COVID-19 claimed the life of its first victim, the country has for the first time registered zero pandemic-related deaths in a day on February 12.
• Jamaica: The Bureau of Standards launched the Jamaican Standard Specification for Telemedicine, which provides the framework through which telemedicine may be safely practiced while upholding the integrity of the medical profession.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: February 18, 2023 appeared first on Atlantic Council.

​​​​​What you should know

• PAHO: Dr. Jarbas Barbosa took office on February 1 as the health organization’s new director, pledging to work in partnership with member states to end the pandemic and ensure that the region’s health systems recover stronger than before.
• IMF: The organization raised its global growth forecast to 2.9 percent, up from its original 2.7 percent. The outlook is also better for the region’s two major economies: up 0.2 percent for Brazil, to 1.2 percent, and a half point for Mexico, to 1.7 percent.
• Migration: The 250,000 migrants that irregularly crossed into Panama through the Darien Gap in 2022 represents a record high that is nearly double the 133,000 entries recorded in 2021.

Monitoring economic headwinds and tailwinds in the region

• Mexico: The national statistics agency reported that the economy grew 0.4 percent in Q4 of 2022 compared to the previous quarter.
• Argentina: The government will leverage new gas exports to Chile, and potentially Brazil, to improve its trade balance and pay down debt.  
• Brazil: Alongside Argentina, the government is floating the development of a common currency linking the two countries to facilitate trade. 
• Colombia: The Minister of Mines and Energy Irene Velez announced at Davos that the country will no longer approve new oil and gas exploration contracts.
• Jamaica: Third-quarter GDP grew by 5.9 percent over 2022 due to a resurgent tourism sector, which has boosted hotels, restaurants, and services, among other sectors.  
• Peru: Ongoing protests and road blockades have cost the country $550 million since the ousting of President Pedro Castillo last December. 
• Transatlantic ties: German Chancellor Olaf Scholz visited Argentina, Brazil, and Chile, to discuss the EU-Mercosur trade agreement and support for Ukraine. 

In focus: Energy expansion in Trinidad and Tobago

On January 24, the United States licensed Trinidad and Tobago to develop a natural gas project off the coast of Venezuela in the Dragon field region. The project will support overall Caribbean energy security, with a requirement that some of the produced gas must be exported to Jamaica and the Dominican Republic. To comply with US sanctions, Trinidad will pay for the gas with humanitarian aid. 

Atlantic Council experts reacted immediately, emphasizing the importance of this move towards meeting Caribbean energy demand. You can read more here. 

Health + Innovation

• Haiti: As of January 17, the Ministry of Public Health and Population has reported over 24,400 suspected cholera cases.
• Education: A World Bank study shows that by 2045, nearly 5 million people across LAC would fall into poverty due to pandemic-induced learning losses.
• Brazil: The Health Ministry announced that it will roll out bivalent COVID-19 booster shots as early as February 27.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: February 6, 2023 appeared first on Atlantic Council.

The non-partisan CATF comprises twenty-nine members, all of whom serve on a volunteer basis. The CATF is co-chaired by four distinguished former policymakers, independently chosen by the Atlantic Council: Maria Antonieta del Cid de Bonilla, former President of the Bank of Guatemala and former Minister of Finance of Guatemala; Johanna Hill, former Vice Minister of Economy of El Salvador and Founding Partner at Central America Trade Consulting Group; Marlon Tábora, former President of the Central Bank of Honduras and Chief of the Economic Cabinet and former Ambassador of Honduras to the United States; and Anne Patterson, former United States Ambassador to El Salvador and former Assistant Secretary of State for International Narcotics and Law Enforcement.

“The private sector, governments, civil society, and the international community need to seize on global geopolitical and geoeconomic trends to help northern Central America leapfrog to achieve inclusive, long-term economic prosperity,” said Jason Marczak, Senior Director of the Adrienne Arsht Latin America Center. “It is imperative to accelerate the confidence of businesses looking to relocate or expand in Central America, which, in turn, will bring both local and international benefits. Increased prosperity for all in the Western Hemisphere is within arm’s reach, but all must work together toward the same goal.”

Central America continues to face a lack of sustained and inclusive economic opportunities, in part due to an apprehension from the private sector to invest on the ground.  Complementing the Partnership for Central America with an added local focus on the necessary public policy changes to incentivize investment, AALAC strives to address this challenge by bridging sectors and helping build consensus on concerted action to foster inclusive economic prosperity in the region. Together with the CATF, and with the generous financial support of DTI, AALAC will outline country-specific and regionally sensitive roadmaps to help accelerate the confidence of business in each of the three countries’ rule of law, democracy, and institutions. 

“The role of private sector is key in Central America’s efforts to fight corruption through the strengthening of the rule of law and democracy.” said Hugh Doyle DT Institute CEO. “DT Institute is proud to be part of the Central America Task Force (CATF) with Atlantic Council. Together and with the other members of CATF, we will work to recommend locally-driven solutions and open new economic opportunities in Guatemala, Honduras, and El Salvador.”

The CATF will meet again on April 11, 2023 and will focus on opportunities in El Salvador; a corresponding brief will come out in early Summer 2023. For more information on CATF, contact Maria Fernanda Bozmoski, Task Force Lead and Deputy Director for Programs, at mbozmoski@atlanticcouncil.org.

About the Adrienne Arsht Latin America Center

The Atlantic Council’s nonpartisan Adrienne Arsht Latin America Center (AALAC) broadens understanding of regional transformations while demonstrating why Latin America and the Caribbean matter for the world. The center focuses on pressing political, economic, and social issues that will define the region’s trajectory, proposing constructive, results-oriented solutions to inform public sector, business, and multilateral action based on a shared vision for a more prosperous, inclusive, and sustainable future. The Center’s Central America programming has focused on providing insights, analysis, and galvanizing bipartisan support for sustainable solutions to the Northern Triangle’s economic, rule of law, and security challenges. Past marquee work includes our 2017 Northern Triangle Security and Economic Opportunity Task Force, our 2020 Central America Economic Reactivation in a COVID-19 World report, and our 2021 work with the Northern Triangle Advisory Group. Other select lines of the Center’s programming include: U.S. policy in the Western Hemisphere; Colombia’s future; Venezuela’s multidimensional crisis; US-Mexico ties; China in the Americas; Brazil’s trajectory; Caribbean development; regional economic development and commerce; and energy transitions.

For more information, visit www.atlanticcouncil.org, follow the Adrienne Arsht Latin America Center on Facebook and on Twitter @ACLatAm.

About DT Institute

DT Institute is a funder and implementer of peace and development projects. It focuses on co-creation and co-investment, as well as measurable impact and sustainability. DT Institute works with governments and our on-the-ground partners to address pressing issues—from conflict to economic crisis—and to establish a foundation for lasting stability, peace, and prosperity. It is in the organization’s DNA to be bold: DT Institute relentlessly innovates, creates, and measures its ability to drive innovation, strengthen communities, develop the next generation of leaders, and positively impact the lives of those we serve.”

Please email inquiries to aalac@atlanticcouncil.org

The post Atlantic Council and DT Institute launch Central America Task Force to accelerate confidence of businesses in the region appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: The Supreme Court will investigate whether former President Jair Bolsonaro incited the January 8 attack on Congress and other government buildings in Brasilia.
• Peru: People—mainly from remote Andean regions—descended on the nation’s capital to protest against President Dina Boluarte in support of her predecessor and demand elections and structural change in the country.
• Trade: The value of goods exported from Latin America and the Caribbean (LAC) increased at an estimated rate of 18.8 percent in 2022, a downward trend from 27.8 percent in 2021, due to higher prices and low volumes.

Monitoring economic headwinds and tailwinds in the region

• Argentina: The government will buy back overseas bonds equivalent to over $1 billion to improve its debt profile, looking to send a positive signal to markets despite low reserves levels.
• Brazil: Vice President Alckmin said that Lula’s administration wants to remove a key tax on manufacturing and importing, the IPI, as part of a broader tax reform package. 
• Guyana: The government announced $43.4 billion in funding for a new natural gas power plant, alongside distribution infrastructure improvements, to promote business and development. 
• Multilaterals: During his inauguration, new Inter-American Development Bank (IDB) president Ilan Goldfajn announced three key priorities for the bank: social issues, climate change, and sustainable infrastructure. 
• Mexico: The 2023 North American Leaders Summit concluded with new agreements to promote sustainability, strengthen supply chains, and respond to migration. 
• Peru: The national statistics institute (INEI) said the economy expanded 1.7 percent year-on-year in November, marking a slight slowdown from the rise of 2.0 percent in October.

In focus: LAC in Davos

Latin American and Caribbean public- and private-sector leaders gathered alongside their counterparts from across the world in Davos, Switzerland, for this year’s Global Economic Forum. Colombia’s finance minister Jose Antonio Ocampo used the opportunity to push for a stronger agreement on minimum taxes for multinational companies. Brazil’s finance minister, Fernando Haddad, and environmental minister, Marina Silva, discussed Brazil’s positive economic outlook, environmental stewardship, and desire for regional integration. 

Spanish prime minister Pedro Sánchez also delivered a speech, in which he emphasized Spain’s role in building ties between Europe and Latin America, as Spain prepares to take over the Presidency of the Council of the European Union later this year. 

Health + Innovation

• Vaccines: The Canadian government will donate $33.4 million to the Pan American Health Organization (PAHO) to increase access to COVID-19 immunizations for populations across the region. This donation is in addition to a prior contribution of $40 million in 2021.
• Belize: The country will celebrate 34 years of relations with Taiwan through the construction of a new general hospital in San Pedro.
• Nutrition: A new United Nations report found that 22.5 percent—or 131.3 million people—of the region’s population cannot afford a healthy diet, citing a country’s income level, the incidence of poverty, and level of inequality as contributing factors.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 21, 2023 appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: On January 1, Luiz Inácio Lula da Silva was sworn in as president for a third term after defeating incumbent Jair Bolsonaro.
• Outlook: According to the Economic Commission for Latin America and the Caribbean (ECLAC), economic growth will continue to slow in 2023 and reach 1.3 percent.
• Venezuela: The opposition-led legislature dissolved the interim government led by Juan Guaidó. The vote signaled that members of the opposition had lost faith in Guaidó’s ability to oust Maduro. The United States will continue recognizing the 2015 National Assembly as the last remaining democratic institution in Venezuela.

Monitoring economic headwinds and tailwinds in the region

•  Brazil: In 2022, trade surplus reached a record high of $62.3 billion. Total exports also reached a 335 billion high, helped by a boost in prices in the agriculture and livestock sector.
• Argentina: The IMF disbursed a tranche of $6 billion from its $44 billion program with Argentina, citing positive indicators including falling inflation, a better trade balance, and foreign reserves. 
• Colombia: Minimum wage will increase by 16 percent this year, to $242.7 per month. President Petro said the move would boost an economy slowed by inflation. 
• Dominican Republic: The S&P upgraded the country’s credit rating from “BB-“ to “BB,” highlighting its strong recovery from the pandemic and long-term growth potential. 
• El Salvador: The government will receive a $150 million loan from the CAF development bank, designed to strengthen its education system in the wake of the pandemic.  
• Peru: The government launched a $1.6 billion plan to increase welfare and investment in regions gripped by protests following the ouster of former president Pedro Castillo. 

In focus: Nearshoring opportunities in the Americas

With the next North American Leaders Summit (NALS) set for this incoming week (January 9 and 10), nearshoring – the relocation of supply chains closer to the United States – is rising in importance.

Rising costs of and delays during shipping, coupled with the pandemic, have made businesses in the United States wary of relying on supply chains across the Pacific. As a result, some 400 companies explored reshoring to Mexico from Asia in 2022. Mexico’s manufacturing sector is now larger than it was before the pandemic, and Mexican exports to the United States have rapidly increased. Firms such as Walmart have already relocated some business to Mexico, while Tesla is planning a new factory in northern Mexico. NALS will pay particular attention to the electric vehicle production chain in North America.

Health + Innovation

• Chile: In an effort to curb the spread of the BF.7 COVID-19 subvariant, travelers coming from China are now required to show a negative PCR test.
• Haiti: Over 14,700 suspected cholera cases have been reported since December. Nine in every ten cases are from areas hit hard by food insecurity.
• PAHO: Most countries in LAC invest less than the minimum 6 percent of GDP in health and allocate less than 30 percent of the health budget to the first level of care as recommended by the regional health organization.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 7, 2022 appeared first on Atlantic Council.

1. Why did Biden expand the parole program to Cuba, Nicaragua, and Haiti?

Putting in place the tools for a more orderly asylum process at the US-Mexico border is pivotal with the surge in encounters. Today’s announcement of an expansion of the Venezuela parole program to Cubans, Nicaraguans, and Haitians will hopefully help to dissuade asylum seekers from risking their lives to make the trek north. 

In October and November 2022, more Cubans (sixty-five thousand) and Nicaraguans (fifty-five thousand) arrived at the southwest border than in fiscal years 2020 and 2021 combined. The twelve thousand Haitian arrivals in those two months amount to one fifth of their total fiscal 2022 arrivals. 

But people won’t stop leaving while they have little hope for a better life in their own countries. That is the case in Cuba (where inflation is soaring and repression escalating), Daniel Ortega’s Nicaragua (where democratic freedoms no longer exist), Nicolás Maduro’s Venezuela (with its own soaring inflation and repression), and gang-controlled Haiti. So border policies must be accompanied by new US and partner country strategies to improve livelihoods in these migrants’ countries of origin. And the United States must hold those like Ortega accountable for his actions to weaponize migration by doing things such as lifting the visa requirement for Cubans in order to more easily facilitate passage to the United States. 

But the border is about more than migration. It is a vital source of commerce that promotes the creation of US jobs. Our recent work shows that just a ten-minute reduction in border wait times could have a $5.4 million annual impact on the US economy and create nearly nineteen thousand jobs in Mexico. Greater commerce translates into greater security as well. Economic growth creates jobs, making it less desirable to leave home. It is absolutely achievable to have a border that is more secure and more efficiently promotes commerce. That should be the goal.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

2. What impact will this have at the border?

Biden’s visit to the border ahead of the North American Leaders Summit next week is an important step toward the amelioration of a crisis that has long afflicted the US-Mexico border. Smart border policies that streamline crossing processes not only benefit issues around migration, but also help decongest communities that are regularly choked by vehicular and pedestrian traffic.

Initiatives such as the New Migration Enforcement Process for Venezuelans have already decreased the percentage of attempted migrant crossings by nearly 90 percent. The expansion of such programs to additional groups could have similar effects, thus alleviating burdens on the health care and sanitation industries, among others.

Additionally, as border agencies utilize their resources to confront surges in pedestrian traffic, wait times for vehicles exponentially increase. Subsequent carbon emissions deteriorate the air quality around ports of entry, directly affecting the health outcomes of local communities. Further, vehicles waiting in line for miles constrict local mobility, hindering residents’ ability to travel back and forth between school, work, hospitals, and more.

It is important to keep people at the center of border policy, and initiatives that aim to enhance secure and efficient crossings should be celebrated by not only the United States and Mexico but the region as a whole.

—Ignacia Ulloa Peters is an assistant director at the Adrienne Arsht Latin America Center.

3. Will Biden’s plan work?

The Biden administration’s announcement that it will surge resources to the southwest US border and speed up processing for asylum applicants is a most welcome response to the extraordinary surge of people from troubled countries such as Cuba, Nicaragua, and Venezuela. Nothing will satisfy some critics, but those who support security, economic prosperity, values, and the US history of welcoming refugees from troubled lands should see today’s announcement as good news.

One absolute essential is the need for additional resources and personnel to make this plan work. The administration needs to send Congress an urgent supplemental budget request and to invoke some of the president’s extraordinary authorities to get additional personnel at the border to achieve the goal of making definitive, binding determinations of asylum eligibility in days, not weeks. The administration needs additional resources to (1) integrate legitimate asylees and their families to make important social and economic contributions to US society or (2) return ineligible people to a place of safety under existing laws. The administration and Congress now need to put forward the resources needed to satisfy US values, security, and prosperity. This would be historic, and it is achievable.

—Thomas Warrick is a nonresident senior fellow at the Scowcroft Center for Strategy and Security’s Forward Defense practice and a former deputy assistant secretary for counterterrorism policy at the US Department of Homeland Security.

4. What should happen next?

The American people have a right to expect secure borders. Crucial to this is a fair, orderly, and efficient process for those seeking to come and for determining who may stay. Unfortunately, the United States’ current system is utterly broken, and this is particularly true of the asylum system—weighed down by a 1.6 million-case backlog, with each case taking years to resolve. This has encouraged thousands with marginal claims to make dangerous journeys to the US border every month, expecting that the United States will not only let them in but also allow them to stay and work during the years it will take for their asylum claims to be resolved.

The measures announced today by Biden are the latest in a series of efforts aimed at gaining control over this untenable situation—establishing orderly processes for those with legitimate asylum claims; providing opportunity for those desiring to escape repressive or criminal regimes in Venezuela, Cuba, Nicaragua, or Haiti; and working with Mexico and other nations to strengthen enforcement against those choosing not to use these legal processes and, instead, trying to sneak in.  

These are excellent steps, but band-aids. Congress needs to get involved—not only to provide the resources and legal fixes needed to expedite the resolution of asylum claims and better secure the border, but also to reform the immigration system more broadly, giving lawful status to those who have been here a while, expanding lawful channels for those wanting to come, and creating more efficient mechanisms for employers to hire the workers the US economy needs. Biden and Department of Homeland Security Secretary Alejandro Mayorkas deserve great credit for muddling through with the limited tools they have, but to truly get control of the border, Congress needs to put politics aside and fix the broken system.

—Seth Stodder is a nonresident senior fellow in the Scowcroft Center’s Forward Defense practice and a former assistant US secretary of homeland security for borders, immigration, and trade policy.

The post Biden just tightened US migration policy. Can he calm the surge at the border? appeared first on Atlantic Council.

​​​​​What you should know

• Peru: President Castillo was ousted by lawmakers after he sought to dissolve Congress ahead of an impeachment vote.
• Brazil: The Economy Ministry rejected assertions by President-elect Lula’s transition team that Bolsonaro’s outgoing administration was leaving government finances “bankrupt.”
• Social outlook: A recent Economic Commission for Latin America and the Caribbean (ECLAC) report projects that by the end of 2022, LAC will have 201 million people living in poverty – an increase of 15 million compared to the pre-pandemic situation.
• ICYMI: On December 7, the Atlantic Council launched a paper on improving tax policy in LAC. Read it here.

Monitoring economic headwinds and tailwinds in the region

• Argentina: signed a new information-sharing agreement with the US designed to root out tax evasion. It could increase tax revenue for Argentina by $1 billion US.
• Barbados: concluded new funding arrangements with the IMF, $113 million US to continue its fiscal reform package and $189 million US towards its climate change response.
• Brazil: President-elect Lula announced that Fernando Haddad, former minister of education and mayor of São Paulo, would be his finance minister.
• Mexico: announced that additional consultations on the USMCA energy dispute would be held through early January, to ensure continued investment and confidence.
• Peru: was placed under a state of emergency after protests gripped the country. Political upheaval led S&P to lower the country’s economic outlook to “negative.”
• Transatlantic relations: Argentina called for reviewing the potential EU-Mercosur trade agreement, highlighting threats to local auto industry and barriers to agricultural exports.
• Uruguay: criticized Mercosur’s inaction on trade agreements with large economies, drawing criticism for its own independent negotiations with China and to join the TPP.

In focus: Guyana’s carbon credits

Guyana is the first country to issue carbon credits designed to prevent forest loss and the first under the ART’s REDD+ Environmental Excellence Standard to ensure integrity and independent verification. The Hess Corporation, which is a partner in an oil consortium led by ExxonMobil that operates in Guyana, will purchase $750 million US of these credits. This move reflects how resilient growth, balancing between the opportunities in the energy sector and protecting its valuable environment, has become a priority in light of climate change and stresses like the COVID-19 pandemic.

These credits will support Guyana’s Low Carbon Development Strategy, with 15 percent of the revenues set aside for indigenous communities. With some 18 million hectares of forest, Guyana is a major carbon sink, and has previously worked with Norway to protect this resource. The new credits reflect Guyana’s status as a “High Forest, Low Deforestation” country, another first.

Health + Innovation

• Argentina: Transport Ministry officials recommended all passengers travelling on public transportation to return to wearing face-masks amid a spike in COVID-19 cases.
• Universal Health Day: The Pan American Health Organization (PAHO) director called on the region to redouble efforts towards achieving universal health as they begin to rebuild from the pandemic.
• Mexico: The state of Nuevo Leon reintroduced the mandatory use of face masks in closed public spaces as the number of COVID-19 infections and other respiratory diseases rise.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: December 17, 2022 appeared first on Atlantic Council.

​​​​​What you should know

• Economic outlook: The head of the UN Economic Commission on Latin America and the Caribbean (ECLAC) said that the region’s stagnation is ”worse than the 1980s” due to weak investment, low productivity, and inadequate education.
• Mexico: Remittances sent from workers abroad surpassed $5.35 billion in October, beating economists’ forecast on US job strength.
• #ProactiveLAC: On Wednesday, December 7, the Atlantic Council will host a virtual conversation on LAC’s economic outlook, fiscal policy, and small and medium-sized enterprises in uncertain times. Register here.

Monitoring economic headwinds and tailwinds in the region

• Argentina: Upcoming legislation is set to encourage investment in its liquified natural gas sector, as demand, driven by the war in Ukraine, continues to grow. 
• Bolivia: The country lowered its 2023 growth forecast from 5.1 to 4.8 percent, as an ongoing strike in Santa Cruz has led to over $780 million in losses.  
• Chile: During the recent high-level dialogue with the United States covering migration and sustainable development, both parties agreed to relaunch their bilateral Science, Technology, and Innovation Council. 
• Dominican Republic: The United States will block sugar imports from Central Romana, the Caribbean nation’s largest employer, accusing it of using forced labor. 
• Ecuador: The government is considering a new financing deal with the International Monetary Fund (IMF) for 2023, as its current agreement is set to expire at the end of 2022.  
• Guyana: According to new ECLAC data, the country recorded the highest FDI growth in the Caribbean in 2021, and now accounts for half of all Caribbean FDI, thanks to its booming hydrocarbon sector.  
• Peru: Farmers and truckers set up roadblocks to protest rising gas and fertilizer prices, driven up by the war in Ukraine.  
• FDI: In a 2022 ECLAC report, Foreign Direct Investment (FDI) in Latin America and the Caribbean (LAC) rose by 40.7 percent in 2021 but fell short to achieve pre-pandemic levels.

In focus: Venezuelan thaw

Last weekend, the United States granted Chevron a six-month license to expand operations in Venezuela after the Maduro government agreed to resume talks in Mexico City with the country’s opposition. The two sides signed an agreement to use frozen Venezuelan assets for humanitarian relief as well.  

The United States has framed this policy shift as a “targeted” response to promote “concrete steps” forward by the parties meeting in Mexico City. At the same time, the energy crisis driven by Russia’s war in Ukraine has elevated Maduro’s–-and Venezuela’s –-importance in a time of rising oil demand.  

Health + Innovation

• ICYMI: On November 16, the Atlantic Council launched a report with actionable recommendations for improving immunization program outcomes and financing in the region. Read it here.
• Uruguay: Health authorities issued a recommendation that immunocompromised patients and over 50 year-olds should take their fifth dose of the COVID-19 vaccine.
• Food insecurity: An ECLAC report found that 56.5 million people in LAC are impacted by hunger.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: December 3, 2022 appeared first on Atlantic Council.

​​​​​What you should know

• Regional recovery: Of the 20 million people in Latin America who fell into pandemic-induced poverty, only 7 million have escaped it during the recovery.
• Nicaragua: The United States announced new sanctions on its mining industry in response to continued repression, targeting its largest export, gold.
• Brazil: Incumbent President Bolsonaro and former President Lula de Silva will face off in a second-round run-off election this Sunday. Join us Monday for post-election analysis.

Monitoring economic headwinds and tailwinds in the region

• Brazil: The government nominated its former central bank director, Ilan Goldfajn, for the presidency of the Inter-American Development Bank. Also nominated is Alicia Bárcena, former head of ECLAC, by Mexico.  
• Cuba: The United States granted $2 million in humanitarian assistance to assist in the country’s  recovery from Hurricane Ian last month. 
• Ecuador: The government secured joint IDB-EU funding for an energy interconnection project with Peru, estimated to save $61 million annually through reduced fossil fuel use. 
• Jamaica: The country welcomed a $300 million investment by Huawei in an effort to double down on its goal of digital transformation.
• Peru: Ongoing political instability prompted a new negative rating for its credit outlook, attributed to cabinet reshuffling and impeachment attempts against President Pedro Castillo. 
• ECLAC: This week, the Economic Commission for Latin America and the Caribbean (ECLAC) redoubled its commitment to transform development models for productive regional transformation during its thirty-ninth session.

In focus: Transatlantic ties

A recent report highlights the potential for strengthening European investment and connections with LAC, focusing on three main pillars: digital connectivity, cybersecurity, and digital rights. Emphasizing the key opportunity of Spanish leadership through Spain’s upcoming presidency of the EU, the report also explores the potential of the EU-LAC Digital Alliance planned for 2023. 

At the same time, the EU High Representative for Foreign Affairs, Josep Borrell, attended the fourth EU Investment Forum in Montevideo this week. He used the opportunity to reaffirm European commitment to a free trade agreement with Mercosur.  

Health + Innovation

• Ecuador: The latest country to drop all travel restrictions and return to pre-pandemic entry policies for foreigners.
• Brazil: Brazilians paid tribute in São Paulo to COVID-19 victims. To date, Brazil has lost 680,000 lives to the pandemic.
• Recovery: The World Bank granted Guatemala a recovery loan for healthcare and social services in the wake of the COVID-19 pandemic.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: October 30, 2022 appeared first on Atlantic Council.

The post Lipsky cited in Politico on the IMF’s concerns regarding cryptocurrency appeared first on Atlantic Council.

The post CBDC tracker cited in RTVE on how CBDCs open possibilities for the future of money appeared first on Atlantic Council.

But President-elect Xiomara Castro, who has pledged to clean up her country, won’t be the only powerful woman drawing attention that day: She’ll take office as US Vice President Kamala Harris—the White House point person for the Northern Triangle—looks on. 

Both face the daunting challenge of helping to reverse the root causes of outward migration from the region of around thirty-three million people. Jason Marczak, senior director of the Atlantic Council’s Adrienne Arsht Latin America Center, weighs in on how they plan to tackle that task—and whether they’ll succeed.

How did Castro pledge to reform Honduras, and what expectations does she face? 

Castro enters office following a campaign in which improving transparency and combating corruption were her top priorities. She has already committed to reaching out to the United Nations for help setting up an anti-corruption commission. Success here is fundamental to the country’s future, since Honduras ranks among the world’s most corrupt countries—on par with Iraq and Zimbabwe—according to Transparency International. Corruption is pervasive across government, with pandemic procurement offering further opportunities for crooked officials. The outgoing president, Juan Orlando Hernández, even faces possible extradition to the United States for drug trafficking. Hopes are high that she will make inroads, but a political feud in congress may present roadblocks for her agenda. 

What role has Honduras played in contributing to broader regional instability—and how much will Castro feel pressured to reverse those dynamics? 

The greatest threat to stability in Central America is currently in Nicaragua, just south of Honduras. There, President Daniel Ortega—who fraudulently assumed another term in office this month—is systematically dismantling democratic freedoms and civil liberties. Nicaraguans are fleeing, partly through Honduras, in hope of reaching the United States. US action beyond individual sanctions is needed to quell the crisis there and to provide additional financial and technical assistance to help ease the migration pressures on both Honduras and Costa Rica (which is south of Nicaragua). But providing economic opportunity and greater security in Honduras will also directly alleviate pressure at the US southern border: Last year, more Hondurans arrived there than from any of the three northern Central America countries. Honduras is also a stop along the migrant journey for many Haitians, Cubans, and others. 

Harris has been designated as Biden’s point person in the region. How can she leverage that role to help tackle the root causes of migration? 

This has been a priority for the Biden-Harris administration from the outset—but it’s not a short-term fix. The problems are entrenched in societies like Honduras. But US partnership has the potential to put willing countries on the right track: Harris is using her role to lead a US government-wide strategy to address economic insecurity, corruption, and criminal violence, as well as to advance efforts to improve human rights and gender-based violence. For example, her Call to Action for private-sector investment in the region, announced last May, has yielded $1.2 billion in commitments. What Harris now needs is more willing partners in the region; Castro has the opportunity to be one.

To what extent can any single country (whether Honduras or others) lead the charge in addressing the collective ills of the Northern Triangle? 

The challenges of northern Central America cannot be resolved by any one country. Each country has its own history and set of challenges—as well as an opportunity to address them. But while domestic political circumstances require a country-by-country approach, the region does share overarching challenges that require sustained, committed US support and partnership. Seismic political differences in the region mean that leaders rarely come together to talk; investment is also more attractive from a regional vantage point. In the past, the United States has found opportunities to cajole Central American countries to find common ground when otherwise not possible. But that will be an uphill battle: Besides dealing with stubborn autocrats such as El Salvador’s Nayib Bukele, Washington must also contend with an increasingly assertive China in Central America.

The post Can Honduras’ new leader spark hope for the troubled Northern Triangle? appeared first on Atlantic Council.

The year 2022 will be one of change across the Western Hemisphere. From presidential elections in Brazil and Colombia to newly elected presidents taking office in Chile and Honduras, regional leaders will be looking at new ways to rebuild economies from the COVID-19 pandemic while balancing mounting social pressures. So, what might or might not be on the horizon in 2022?

Join the Adrienne Arsht Latin America Center as we look at some of the key questions that may shape the year ahead for Latin America and the Caribbean, then take our signature annual poll and see how your opinions shape up against our predictions.

How might key presidential elections shake out? Will regional economies recover to pre-pandemic growth rates? What might be the outcome of the US-hosted Summit of the Americas, and will Caribbean voices play a larger role than in previous gatherings? Will the region expand its ties with China?

Take our ten-question poll in less than five minutes!

Question #1: Caribbean – Will Vice President Kamala Harris make her first trip to the Caribbean in 2022?

Question #2: Central America – Will the United States have confirmed ambassadors in all three northern Central American countries (currently only Guatemala) by year-end 2022?

Question #3: Chile – Will the new Chilean constitution be approved when put to a referendum?

Question #4: China and Latin America – Considering Nicaragua’s newly established China ties, will the three other Central American countries that currently recognize Taiwan—Belize, Guatemala, and Honduras—also switch recognition to China?

Question #5: Colombia – Will Colombia’s presidential election go to a second round?

Question 6: Economy – Can the region recover pre-pandemic growth rates in 2022?

Question #7: Mexico – Will Mexico remain the United States’ top trading partner throughout the next year?

Question #8: Bitcoin – Following in El Salvador’s footsteps, will support for Bitcoin tender grow in the region?

Question #9: Venezuela – Will Nicolas Maduro return to the negotiating table in Mexico City?

Question #10: Brazil – Will President Jair Bolsonaro win another term this year?

Bonus Question: Will Latin America and the Caribbean be represented in the final of the World Cup?

Our answer to question #1: YES

In 2022, the Biden-Harris administration will look for big wins and opportunities to expand its leadership in the Americas. This is achievable in the Caribbean with a high-profile visit, which would optimally be accompanied by a major policy announcement from Vice President Harris. President Joe Biden was the last vice president to visit the region, where he focused his time discussing the Caribbean Energy Security Initiative.

The stage is set for a similar visit to occur with Vice President Harris. Economic recovery is slow, vaccine hesitancy is increasing, and other actors, such as China, are playing a more active role in the Caribbean. Regional leaders often note that US attention is inconsistent, and that few high-profile US officials travel to the Caribbean. A visit and subsequent policy announcement that aids the Caribbean in its time of need would build on recent conversations between the Vice President and Prime Minister of Trinidad and Tobago Keith Rowley (virtual) and Prime Minister of Barbados Mia Mottley (in person).

Our answer to question #2: NO

Given President Nayib Bukele’s recent personal attacks against President Biden and other US government officials, including Ambassador Jean Manes and current Charge d’Affaires Brendan O’Brien, it is unlikely that the United States will confirm all ambassadors to the Northern Triangle countries. President Bukele’s attacks were a response to the Biden administration’s decision to add Osiris Luna Meza, the chief of the Salvadoran penal system and vice minister of justice and public security, and Carlos Marroquin, chairman of the Social Fabric Reconstruction Unit, to the Specially Designated Citizens and Blocked Persons List. Both Salvadoran officials are accused of having a direct relationship with gangs, including MS-13. In Honduras, however, a new administration under President-elect Xiomara Castro provides a renewed sense of cooperation between the United States and the Central American country.

Our answer to question #3: YES

Once the constitutional draft is finalized by summer 2022, the Constitutional Convention will vote to approve or reject the new legal charter. If the body rejects the new constitution, Chile will keep its current one. However, if it is approved, the group will present the document to the newly elected head of state, who, in turn, will issue a call for a national referendum in which Chileans will vote to approve or reject the new constitution. Voting will be mandatory, and the new constitution will move forward only if an absolute majority is achieved.

While 78.3 percent of voters cast their ballot in favor of a new constitution in 2020, rising polarization and inefficiencies within the Constitutional Convention have left thousands of Chileans disenchanted with the reform process. However, the desire for fundamental changes remains high. If the new legal charter is approved by Chilean voters, it will be put into effect shortly after the vote through a formal ceremony. However, if Chile votes to reject, the 1980 Constitution written under Augusto Pinochet will remain in place. With just one opportunity to get the new constitution approved, the convention will attempt to generate a moderate bill that will stimulate consensus among the political left and right.

Our answer to question #4: NO

It is unlikely that all three of Taiwan’s Central American allies will switch recognition to China in 2022. But, considerations of international benefits, domestic political agency, or both may prompt a change in at least one of the countries. Internationally, US COVID-19 vaccine donations far outstripped those of China, sending a reassuring message to Taiwanese allies in the region.

But, Chinese vaccine diplomacy—including early, well-publicized vaccine sales and shipments—and broader medical, humanitarian, and economic assistance could still prove alluring for countries in need. Despite running with a pro-China message, Honduran President-elect Xiomara Castro recently declined to switch diplomatic recognition from Taiwan to China. Absent any external shocks, Belize, Guatemala, and Honduras will likely attempt to maintain the status quo for as long as possible, favoring Taiwan while leaving the door open for closer ties with China. This delicate balancing act has served to remind larger countries not to take their allegiances for granted and will continue to do so. But, it will be increasingly tested, as seen with Nicaragua, in the critical and uncertain year ahead.

Our answer to question #5: YES

There has yet to be an election in Colombia’s history in which a president is elected in the first round. Senator Gustavo Petro, who served as mayor of Bogotá (2012–2014), leads the left-wing political party Colombia Humana, and was the runner-up in the 2018 presidential election against incumbent President Ivan Duque. With nearly 42 percent of the vote, Petro has positioned himself as the candidate with the greatest support from Colombian voters.

However, Petro currently polls at 25.4 percent, which is not enough for an absolute majority that will grant him the presidency in the first round. Petro will most likely go to a second-round vote against a center-right or center-left candidate, potentially former Mayor of Bucaramanga Rodolfo Hernández or former Governor of Antioquia Sergio Fajardo. To date, Hernández polls at 11 percent and Fajardo at 7 percent. As recommended by the Atlantic Council’s US-Colombia Task Force, co-chaired by Senators Roy Blunt and Ben Cardin, strengthening the alliance between Colombia and the United States ahead of 2022 presidential elections is paramount to safeguard Colombia’s gains in terms of development, rule of law, and democracy. Regardless of election results, the United States should continue to position itself as Colombia’s strongest ally, advancing stability and prosperity at home and abroad.

Our answer to question #6: YES

Led by its five major economies, regional gross domestic product (GDP) is on track to return to pre-pandemic levels in 2022, though per-capita income will likely not recover until 2023. Key uncertainties may alter this outlook: the extent of success in vaccination and pandemic management, stimulus trade-off between continued support and fiscal discipline, labor markets (currently experiencing slower recovery than GDP), inflation, electoral outcomes, and external conditions including evolving investor appetite and commodity prices.

The region as a whole is not expected to return to pre-pandemic growth trajectories in the coming years, signaling permanent output losses due to COVID-19. In a divergent recovery, smaller and vulnerable states, such as those in the tourism-dependent Caribbean, are experiencing an even slower return to normal. Lastly, Latin America and the Caribbean (LAC) should set an ambitious agenda beyond “recovery”—given unimpressive pre-pandemic growth rates and patterns—and, rather, seek ways to accelerate development and build forward in a more inclusive, productive, and sustainable way.

Our answer to question #7: YES

It is likely that Mexico will remain the United States’ top trading partner throughout 2022. Mexico currently holds the top position—overtaking China in February 2021—with Canada in the second spot, lagging behind by $2.9 billion in total trade. COVID-19 significantly hindered US-Mexico trade—which largely relies on land trade via trucks and railcars—due to the pandemic-induced land-border closures to “non-essential” traffic. As of November 8, 2021, however, the United States reopened its borders to non-essential traffic and booming commerce is expected along the border. Moreover, US-Mexico trade topped $545 billion through October 2021 (the most recent data available), an increase of over 24 percent from one year earlier. Given the highly integrated nature of US-Mexico trade in the automotive and energy sectors, coupled with the efforts in border cities and ports to increase capacity and efficiency, trade is likely to continue to grow between the United States and Mexico.

Our answer to question #8: YES

Bitcoin presents an attractive option for countries in Latin America and the Caribbean, yet those countries will not replicate El Salvador’s approach. The government of El Salvador claimed that adopting Bitcoin would reduce financial exclusion and high remittance fees. These issues also affect the entire region. The World Bank predicted that remittances to Latin America and the Caribbean rose 21.6 percent in 2021, costing roughly $6.9 billion in remittance fees. According to the International Monetary Fund (IMF), financial inclusion in the region falls below global averages, and is exacerbated in the Caribbean due to the de-risking of correspondent banks. The worsening effects of climate change will also likely generate support for a decentralized virtual currency, as remittances typically increase following natural disasters, alongside decreased access to financial institutions.

Despite Bitcoin’s allure, its implementation in El Salvador has been marred by technological unreliability, weak financial regulations, and high price volatility. Politicians in Paraguay, Mexico, and Panama have already introduced legislation to regulate Bitcoin’s use as legal tender, and more will follow in 2022. As support for Bitcoin rises, so will debates on its social and environmental risks. Countries across the region will chart their own paths instead of following El Salvador’s playbook.

Our answer to question #9: YES

Although, the latest round of negotiations in Mexico has been suspended since October 2021, a combination of long-term incentives will likely propel Maduro to negotiate with the Venezuelan Unitary Platform—the umbrella organization encompassing the main political opposition parties in the country. Maduro seeks access to capital, legitimacy, guarantees against prosecution, and division within factions of domestic opponents—all of which he can accomplish through negotiations.

However, these factors are not the only ones at play in determining Maduro’s negotiation participation. After the highly visible diverging strategies within the opposition during the recent regional elections—and Julio Borges’ recent resignation and call for the interim government’s dissolution—Maduro might decide to simply wait out further erosion of opposition unity, instead of engaging with it directly. The success of such a strategy, if taken, would enhance the regime’s monopoly on power.

Our answer to question #10: Too early to call.

The odds are not in his favor, but it’s too early to say. Recent polls suggest that President Bolsonaro and former President Luiz Inacio Lula da Silva will face each other in a second round of elections, repeating the 2018 Bolsonaro versus Workers’ Party (PT) duel. However, this time around, former President Lula, as the PT candidate, is leading the way in early polling. Both candidates have a strong support base, but former President Lula’s history with corruption and President Bolsonaro’s mismanagement of the pandemic and current economic hurdles also give them significantly high rejection rates.

Third-way candidates, such as President Bolsonaro’s former minister of justice, Sergio Moro—famous for leading the Car Wash Operation that put President Lula in jail—is running on an anticorruption, center-right platform. Those Brazilians who in 2018 voted for President Bolsonaro as a “vote against corruption” might be more inclined to seek other alternatives. Current high inflation and unemployment rates might also play against President Bolsonaro’s reelection. Having said that, it will likely be a close race, and there is still a long way to go until elections in October 2022.

BONUS QUESTION ANSWER: YES

Brazil and Argentina are the only Latin American counties that have already qualified for the 2022 World Cup. In the Caribbean, Jamaica seems to be the only country with a chance of qualifying. While it is impossible to know who will be in the final (RIP Paul the Octopus), Brazil and Argentina are always strong contenders.

The post Spotlight: Latin America and the Caribbean – Ten questions for 2022 appeared first on Atlantic Council.

I. Introduction

Citizens across Latin America and the Caribbean are rising up in protest. Political frustration and economic stagnation are fueling social discontent exacerbated by the continued COVID-19 pandemic and the slow health response. In Central America, restrictions on civil liberties, high rates of gender-based violence and extortion, and worsening climate change are compounding the lack of economic opportunities and pervasive corruption seen in El Salvador, Guatemala, and Honduras. In the year of its bicentennial, can northern Central America chart a new path, in partnership with the United States, to tackle the sources of social instability that are forcing migrants to seek a better life? 

In July 2021, the Joseph Biden administration released the US Strategy for Addressing the Root Causes of Migration in Central America report. Three of its five pillars call for the United States and northern Central American countries to work together to respect human rights and a free press, counter violence at the hands of criminal organizations, and combat sexual and gender-based violence.¹ To ensure a sustained and effective implementation of this strategy, especially on these three pillars, the United States will need to find new ways to work closely with northern Central American governments, domestic and international private sectors, and organized civil-society groups.

Following consultations with the Adrienne Arsht Latin America Center’s Northern Triangle Advisory Group (NTAG), this brief highlights the importance of implementing a holistic, multisector approach to mitigate gender-based violence, protect civil liberties and human rights, and build climate resilience. This brief is the third in a three-part series by the Atlantic Council’s Adrienne Arsht Latin America Center and DT Institute that provides policy recommendations for the United States and its northern Central American partners to address the root causes of migration.

II. Protecting freedom of expression and other civil liberties

Persistent Challenges

In all three countries of northern Central America (El Salvador, Guatemala, and Honduras), constraints on the freedom of the press and restrictions on civil-society organizations hamper citizens’ rights to information and are fueling widespread discontent. According to Freedom House, the global freedom scores for Guatemala (52 out of 100), Honduras (44), and El Salvador (63) place them as “partly free countries,” in stark contrast to other regional countries like Panama (83) and Costa Rica (91)—both considered “free” countries with widespread access to political rights and civil liberties.²

In Guatemala, legal experts and representatives from different sectors have expressed concern about reforms to a 2003 law to monitor civil society organizations.³ While few disagree with the law’s objective of enhancing transparency in civil society organizations that receive public funds, the ambiguity in the language of the law on purported violations and the subsequent sanctions are concerning. There is also disagreement on who should be able to monitor funding for civil society groups and their operations and activities. Currently, these responsibilities fall within the Ministry of the Interior, which is under the purview of the executive branch.⁴ The United States and the United Nations have echoed similar fears about the reformed law, which gives the government wide discretionary powers to criminalize activists and civil society in general—and even to dissolve civil society organizations that the government considers a threat to national security, but without clearly delineating what activities may be punishable. As part of her visit to Guatemala in June 2021, US Vice President Kamala Harris condemned the law and asked Guatemalan President Alejandro Giammattei to “let civil society organizations do their job without obstacles.⁵ Although some organizations and activists are currently challenging the law in front of the Constitutional Court, the Guatemalan Ministry of the Interior published the bylaws in Guatemala’s official gazette in August 2021.⁶ However, given the current challenges to the law, some aspects of it, including dismantlement of civil society organizations on the grounds of alteration of public order and the need to register with the Ministry, are on hold.⁷At the time of writing, there are no precedents or specific cases of the law being applied. 

But these concerns are not unique to Guatemala. As circumstances in the three northern countries of Central America illustrate, threats to freedom of expression are regional. In El Salvador, President Nayib Bukele has undermined press freedoms by publicly attacking independent journalists. A special legislative commission to investigate harassment against journalists presented its findings and conclusions as part of its closing report in November 2020. The commission—which no longer exists in the 2021–2024 new Legislative Assembly, where President Bukele’s party holds a two-thirds majority—determined that the executive branch is responsible for harassment and discrimination against journalists, as well as blocking critical outlets from access to public information.⁸ In one of the starkest examples of this campaign against journalists, in July 2021, President Bukele expelled Mexican journalist and editor Daniel Lizarraga of ElFaro.Net after denying his work visa and residence permit.⁹

According to the government, Lizarraga was unable to prove his credentials as a journalist.¹⁰ This majority in the legislative branch allows the administration to more expediently pass legislation that could further curb the freedom of expression and press. It can also stall on discussing draft bills, as has been the case with the proposed 2017 Law for the Protection of Journalists.¹¹ The deteriorating environment for the press in El Salvador has not gone unnoticed by the international community. According to Reporters Without Borders, El Salvador has fallen sixty-six positions in the World Press Freedom Report since 2013, now occupying eighty-second place out of 180 ranked countries. And, although neighbors Guatemala (116) and Honduras (151) rank lower, El Salvador’s drop is the largest the region.¹²

In Honduras, one of the deadliest countries in the Western Hemisphere, freedom of expression has continuously worsened since 2009, when former President Manuel Zelaya was forced to flee to Costa Rica in a coup d’état.¹³ From 2001 to 2020, eighty-five journalists have been killed in the country. Only sixteen perpetrators have been brought to court, and only five received sentences—illustrating the high level of impunity when killing journalists in the country.¹⁴ In fact, a 2021 Human Rights Watch report on Honduras lists journalists as the group most vulnerable to organized crime.¹⁵ Also, the Institute to Access Public Information (IAIP) has remained closed since March 2020, making it harder for journalists and civil society to access public information. And, in June 2020, Honduras passed a new criminal code. Human Rights Watch and Honduras’ Journalists Guild have criticized the vagueness in some provisions of the updated code, which could threaten the already-fragile freedoms of expression, association, and assembly.¹⁶ In all three countries, being a journalist or a civil-society representative is becoming increasingly difficult. 

Past and Existing Efforts

Despite the situation, a broad range of civil society groups in northern Central America continue to work to address challenges to freedom of the press and freedom of expression. In Honduras, C-Libre, the Committee for Freedom of Expression, works to denounce violations committed by the state against journalists and civil society.¹⁷ Since 2011—and in response to the 2009 coup—C-Libre has done this by creating a network of journalists (Red de Alertas y Protección a Periodistas—RAPCOS). A main goal of the network is to monitor the state of freedom of expression, document violations to said freedom, and see any investigations through to completion. RAPCOS also works to raise awareness of the ongoing threats to civil liberties at the national and international levels. Importantly, C-Libre also works to contextualize the violations within current political and social events. It has an online portal and hotline to receive and process complaints. In November 2020, civil society organizations—including C-Libre—formally brought a complaint to the Public Ministry regarding arbitrary detentions and police aggression toward journalists covering COVID-19 in Honduras.¹⁸ 

Similarly, in El Salvador, organizations like TRACODA (Transparency, Social Comptroller, and Open Data Association) defend freedom of expression through the promotion of transparency, human rights, and technology by training youth and the media on data-collection methods. TRACODA is also behind GobData—an ecosystem of tools that facilitates any citizen’s request for information from government at the national and local levels.¹⁹ With support from the United States Agency for International Development (USAID), the organization has also joined forces with FUSADES, a Salvadoran think tank, to train youth on the different functions of government institutions and how public resources are used, as well as to raise awareness about the corrosive effects of corruption in a democracy and offer training on existing civil-society-led tools to engage with citizen oversight.²⁰ Other organizations in the country, like Lab-Dat, also work on making data accessible for journalists and citizens, with the objective of enabling anyone to engage in consultations about draft bills and laws. Efforts like these are especially important at a time when the current administration in El Salvador attempts to further restrict open access to public information through changes to thirteen articles of the Law of Access to Public Information.²¹

In Guatemala, civil society has sought to innovate in its protection of freedom of press and expression. In many cases, independent media outlets and groups of journalists join forces with each other, and with human rights organizations, to form regional alliances.²² Such is the case of No-Ficcion, a collective of journalists with a national, regional, and international scope. This type of community journalism provides an additional layer of protection for journalists—especially in the unfortunate case that a member has no choice but to leave the country for safety reasons—and allows the information sharing and data processing that are crucial for in-depth investigations.²³ Ojoconmipisto also makes data accessible to all journalists. By tracking the use of public resources and closely monitoring procurement, the work of Ojoconmipisto allows journalists to undertake extensive investigations and then inform the public about the irregular use of funds or other illegal actions. In 2014, Ojoconmipisto was awarded second place in the National Journalism Award for uncovering a scheme by a mayor and his wife to funnel public funds back to their accounts by enlisting a close friend.²⁴ Importantly, Ojoconmipisto journalists are trained to understand the bylaws that regulate access to public information, improving their ability to know when agencies or institutions may be violating their rights to information.²⁵

Recommendations

Public Sector: Challenges and obstacles to the freedoms of expression and of the press frequently come directly from government at all levels. Without political will and concerted action among the government, civil society, and the private sector, journalists and civil society in northern Central America will remain exposed to continued harassment and, potentially, death. Vulnerable journalists will also be hard pressed to accurately inform the public—a task that the current COVID-19 crisis has made all the more important. In El Salvador, a robust framework to protect journalists is the bare minimum. Restarting the debate on the 2017 Law for the Protection of Journalists is imperative. The comprehensive bill addresses issues from labor rights to different types of intimidation toward journalists, and aims to establish and implement public policy, protocols, and mechanisms to protect journalists.²⁶ This could be a first step in signaling the government’s commitment to preserving freedom of the press and expression. Guatemala should consider adopting adequate prevention and protection mechanisms to avoid violence against communicators. The government has informed the Office of the Special Rapporteur for Freedom of Expression, which was created by the Inter-American Commission on Human Rights, of the creation of some protection measures provided through the Protection of Persons and Security Division of the National Civil Police—but the proposed “NGO Law” would provide the opposite. Therefore, the state should create functional mechanisms of protection with a special focus on the protection of female, indigenous, and LGBTQ+ journalists, allocating the necessary funds to achieve this purpose. Currently, there are only minimal efforts to avoid the recurrence of attacks, harassment, stigmatization, and criminalization of communicators.²⁷

In the case of Honduras, the government could allocate more financial resources toward safe houses and protection for persecuted communicators and their families that does not involve the police or the military—institutions toward which many journalists and civil-society representatives remain skeptical.²⁸ Currently, the budget that allows funding for this mechanism comes from the Tax for the Safety of the Honduran Population (or Tasa de Seguridad Poblacional).²⁹ The exact percentage is not disclosed, although it can be inferred that it is less than $500,000.³⁰ With help from civil society and the international community, activists and communications professionals could receive subsidized, or fully funded, self-protection courses. Based on similar models in Mexico and Colombia, forty-two journalists in Honduras have been issued protective measures through the 2015 Law for the Protection of Journalists, Social Communicators, Human Rights Defenders, and Operators of Justice. Some of these measures include bulletproof vests, temporary relocation, bodyguards, and alarms.³¹ However, in many cases, journalists face the burden of covering expenses for bodyguards or other protective measures. For journalists to inform and do their jobs, the government should also guarantee their integrity through programs that work to improve access to justice and to reduce impunity—particularly due to the long judicial delay and backlog of cases regarding violations against journalists.

Regional cross-cutting recommendations exist as well. For example, bolstering the Office of the Attorney General in all three countries can help to ensure real prosecution of those who commit crimes against journalists. For instance, the creation of a special unit that investigates all accusations related to freedom of expression and carries out a Witness Protection Program tailored especially for journalists could be a first step. Currently, there is no model of this in the region.

Private Sector and Civil Society: The private sector should have an interest in supporting the work of media in its country. Journalists and communications professionals can act as public watchdogs and help to uncover corruption and improve governance—which would be beneficial for a company’s bottom line. For this reason, the private sector could work on public-awareness-raising campaigns to advocate for legislation that is respectful of and strengthens civil liberties, including freedoms of expression, press, and association. The private sector could support civil society organizations that seek to create support networks for journalists, and could also join forces with civil society groups and donate protective gear for journalists.

III. Reducing gender-based violence

Persistent Challenges

While the homicide rates in northern Central American countries have declined since 2018, violent crime and gang violence remain serious problems.³² Gender-based violence, or “harmful acts directed at an individual based on their gender,” has reached alarming levels in northern Central America. At the beginning of 2021, a woman in Honduras was killed, on average, every thirty-six hours.³³ In Guatemala, records show one hundred and sixty femicides from January through April—an average of more than one death per day. Increased alcohol consumption and national lockdowns and restrictions during the COVID-19 pandemic have only exacerbated the problem.³⁴ 

The problem is not new, and it is pushing women away from their homes in northern Central America. A report by the Migration Policy Institute shows that women have steadily made up a growing share of migrant apprehensions in Mexico and at the US border since 2012.³⁵ More recently, the threefold increase of female apprehensions at the US border in the span of a year (2018–2019) confirms the precarious situation from which many women and girls continue to escape.³⁶ Though the issue is not new, there are few resources or safe spaces for the victims. And, the levels of impunity are discouraging: in the case of El Salvador, data from 2017 shows that only a mere six percent of victims reported abuse to authorities.³⁷ In Honduras, since the criminalization of femicide in 2013, only fifteen cases have resulted in a conviction.³⁸ Statistics for Guatemala show that fewer than three percent of perpetrators are convicted.³⁹

A pervasive and defeatist sense that reporting cases of abuse to local authorities will not make a difference exists in all three countries. Worse still, given the infiltration of local gangs in the police forces, putting forth a complaint with the police could be a woman’s final sentencing. As long as the government is unable to protect women, northern Central America’s countries will remain the epicenter for gender-based violence in the hemisphere. 

Gender-based violence also affects women’s involvement in the community and in the political sphere, burdening even those women who do not migrate. Recently, the World Bank has stated that women in northern Central America face issues of human trafficking, gang violence, and social norms that limit their involvement in decision-making processes.⁴⁰ The lack of training on gender issues within the police forces and within the courts is also a persistent challenge. In Honduras, for example, since 2008, the judiciary received one course on gender, offered by the Honduran Center for Women’s Studies.⁴¹ The vicious circle of low levels of female participation at all levels of civic life affects how and if particular issues affecting women are brought to the table. 

Yet, the problem of gender-based violence is an important and unique concern amid other sources of violence and citizen insecurity in northern Central America. Narcotrafficking, extortion, forced disappearances at the hands of the maras criminal groups, and disputes over land are some sources of conflict that continue to push Central Americans out of their countries. The Global Initiative Against Transnational Organized Crime has labeled extortion one of the main activities of criminal groups that causes displacement in northern Central America.⁴² Failure to promptly pay the “rent” or the “war tax” can result in death; people with small, informal businesses are easy targets.⁴³ In recent years, extortion has also extended to the rural areas of El Salvador, Honduras, and Guatemala, where land tenure has historically been a source of conflict.⁴⁴ As the United States and other international partners seek to support the countries in addressing these issues, they should also pay attention to rural and suburban communities. Trends in land ownership also highlight lower thresholds of legal security for women, a problem that compounds with the alarming rates of gender-based violence and unfettered femicides.⁴⁵

Past and Existing Efforts

Urgent action is needed in all three countries to address the perilous situation for women. The Center for the Rights of Women is a foundation in Honduras that addresses the issue of gender-based violence and femicide, but it remains heavily underfunded.⁴⁶ In 2016, a special investigative unit for femicides was created within the public prosecutor’s technical agency for crimes—an important effort that could join forces with other existing organizations to strengthen its scope and impact. The public prosecutor’s office is undertrained on gender-specific issues and the unit exists only in Tegucigalpa and San Pedro Sula, the two biggest cities in Honduras.⁴⁷ Within the prosecutor’s office, the National Inter-institutional Commission, which was established in 2018, follows up on investigations of violent deaths of women, but many civil-society organizations have denounced it for not publishing transparent statistics. Additionally, many reforms to the criminal code since 2018 have resulted in weakened sentences for crimes against women. While such sentences were previously thirty to forty years, convictions for femicide may now result in only twenty to thirty years in prison. Similarly, the sentence for rape has been reduced to 9–13 years, rather than the 10–15 years outlined in the previous code.⁴⁸

In 2008, the Guatemalan Congress passed the Law against Femicide and Other Forms of Violence against Women. The law was an important recognition that domestic violence is not a private matter, and also created specialized courts and a special unit within the Office of the Prosecutor.⁴⁹ While the law introduced harsh sanctions—from twenty-five to fifty years in prison, with no possibility of reduction or substitution of sentence—mechanisms to implement the law have not been very effective.⁵⁰ Some officials abuse these laws to enforce gag orders on news outlets. For example, in past years, at least two instances of female politicians have abused laws that protect victims of gender-based violence to try to silence news outlets.⁵¹ Unfortunately, since 2008, total recorded femicide cases are close to 2,500, but fewer than six hundred cases have resulted in a conviction.⁵² As is the case in other northern Central American countries, actual convictions are well below the official records for femicides, which also may be underreported. 

Civil society, the international community, and the local private sector have stepped in to address the rampant violence against women with tools and platforms available to anyone with access to the Internet. Crime Stoppers Guatemala is behind the website www.tupista.gt, which allows individuals to anonymously report instances of domestic violence, femicide, extortion, contraband, money laundering, and corruption. In recognition of Tupista’s success and effectiveness, the government and the platform entered into an official partnership in June 2021.⁵³

In El Salvador, the Special Law for a Life Free of Violence for Women of 2010 was updated in 2021 to formally include political violence against women as a category of its own.⁵⁴ With this reform, the Supreme Electoral Tribunal should consider creating a public registry of all statistics and work on programs to strengthen civic awareness of political violence against women. Also, since 2012, USAID established seven assistance centers for victims of gender-based violence to provide services ranging from medical treatment and counseling to legal representation and vocational training across the country. These assistance centers were among the first in Central America. The Salvadoran government is also tending to a highly vulnerable group of women: returned migrants.⁵⁵ Earlier this year, the government outlined a gender-focused strategy to support returned women migrants. The announcement mentions support from the Spanish Agency for International Development, and details some of the services to which women will have access: health services, legal assistance, vocational and educational trainings, and access to professional certificates. 

While country-specific efforts are important, regional efforts to address gender-based violence may also be potentially game changing. Regional organizations like Fundación Cristosal work in Guatemala, Honduras, and El Salvador with specific communities to support victims of violence by providing protection through partnerships with municipalities to build safer communities. International efforts funded by USAID and implemented by Creative Associates International have also fostered positive impact through local alliances to establish community outreach centers for youth engagement. These initiatives have proven effective at deterring at-risk youth from joining gangs via programs like Proponte Más in Honduras, Community Roots Project in Guatemala, and Altavista Felicidad y Paz in El Salvador. Following the implementation of these initiatives, the enrolment rates in schools in these high-risk areas have increased as crime rates decreased. Similarly, the United Nations High Commissioner for Refugees has started the National Mechanism for the Protection of Human Rights in Central America, with a gender-responsive protocol to facilitate a gender-specific risk analysis and identify adequate protection measures.

Recommendations

Public Sector: There are a number of ways for the governments to scale up their efforts in fighting the epidemic of gender-based violence. A first step could be to raise awareness of the available resources for women seeking help and refuge from abusers. On the flip side, governments could also more publicly advertise sentences for perpetrators of violence against women. Doing this and utilizing specific cases of abusers who are serving a sentence, would discourage potential perpetrators and instill fears, as they could also face public shaming. A recommendation put forth in the Atlantic Council’s 2017 Independent Central America Task Force Report, “Building a Better Future,” included increasing the number of women in the police force. Research and global experience—from Canada and Australia—show a number of benefits to having more women among the security forces, including more trust in the police from communities.⁵⁶ To address the root causes of gender-based violence on a larger scale, governments should consider broadening partnerships and finding synergies with civil society organizations with proven track records on delivering results for women.

Private Sector and Civil Society: Larger corporations and businesses, as part of social-responsibility programs, can help civil society and women’s organizations create mobile apps that respond to violence against women. Regional apps featuring such tools include “We Help” (in Mexico), Botón de Panico and Ni Una Menos (in Argentina), or #NiUnaMenos (in Peru). These applications help because they alert the authorities in real time and allow the victim to ask for help. In many cases, the apps trigger an alarm (through a text message) with their geo-location, and are a safe, fast, and reliable channel of communication. While reporting remains unsafe for many victims—especially given gang infiltration in security forces—a special group of trained female police could be assigned to the specific task of aiding victims in distress who make use of such apps. The Women’s Rights Office for the Mexican city of Juarez developed a similar app, No estoy Sola, that activates an alarm when the phone is shaken, because victims often don’t have time to write a message when being attacked.⁵⁷ Clearly, apps are not a long-term solution, but rather a complementary step in addressing this problem. To strengthen the overall system, civil society organizations that have launched these tools should sit down with decision-makers and provide policy advice to governments. The recently created Citizen’s Observatory for Corruption—partly funded by the US State Department—comprises several influential civil society organizations in Central America, which have begun meeting with State Department officials.⁵⁸

The United States and the International Community: If governments, through their ministries or institutes that work on women’s rights, were to convene a working group to address gender-based violence, the European Union, the United Nations, and other international partners and organizations should have a seat at the table.⁵⁹ Their expertise on gender issues and their financial and technical support could be crucial to support the countries and judicial branches working to bring accountability to the victims. 

Existing internationally supported programs to address violence in the region can also be scaled. USAID should continue funding programs and creating partnerships that create employment for women and help at-risk youth incorporate into society through counseling and trainings. Also, the European Union’s “Spotlight Initiative”—which focuses on decreasing femicide and lethal violence against women—should expand its on-the-ground resources and presence to continue working within communities to change the perception of violence against women and help authorities create and enforce legislation, while training citizens on how to denounce these issues without fear.⁶⁰ Beyond the siloed programs, there could be an argument and a renewed push for the US Congress to condition continued foreign assistance on the countries’ progress to address gender-based violence. The three countries could sign a memorandum of understanding with the appropriate US public institutions, in which they agree to deliver yearly impact reports of the strategies being implemented to combat gender-based violence. If the statistics do not improve, assistance could be gradually reduced as an incentive for delivering impact.

IV. Building climate resilience

Persistent Challenges

Climate change is an amplifier of ongoing instability in northern Central America, and increasingly a driving force of irregular migration.⁶¹ Due to extreme weather, —especially the continued increase in the intensity of seasonal rains and droughts, coupled with more destructive hurricanes, —farmers can barely harvest enough food to subsist –, let alone sell their produce. According to the Inter-American Development Bank (IDB), over the last decade, the severe drought in the region’s Dry Corridor has caused an economic impact of more than $5.7 billion for Honduras, $3.5 billion for Guatemala, and $2.2 billion for El Salvador. In Honduras alone, more than three million citizens, or 30 percent of the country’s population, will suffer from hunger and malnutrition in 2021.⁶²

Studies by the World Food Programme (WFP) and the Food and Agriculture Organization (FAO) confirm that 1.4 million people out of the 2.2 -million population in the Dry Corridor region urgently need food assistance.⁶³ Tropical hurricanes Eta and Iota, which hit the region in November 2020, devastated the lives of more than seven million people, including almost half of the Honduran population.⁶⁴ Almost a year later, many communities continue to face water and sanitation problems, uninhabitable houses, and lack of access to food. The climate-triggered disruptions have widened economic and social inequality in northern Central America, forced the internal displacement of thousands of Guatemalans, Hondurans, and Salvadorans, and are increasingly pushing citizens to risk their lives to find better opportunities in the United States.

Past and Existing Efforts

At a regional level, northern Central American countries have taken some steps, with support from regional banks and international organizations, to address the effects of climate change on the livelihoods of Central Americans and on farmers more specifically. In the short term, the WFP and FAO are “requesting $72 million from the international community to provide food assistance to more than 700,000 people in the Dry Corridor” and helping to “create and restore productive assets, diversify the subsistence farmers’ source of income, establish social protection safety nets and strengthen the farmers’ resilience in the face of future climate-related events.”⁶⁵ Over the long term,  the Central American Bank for Economic Integration’s (CABEI) Change Investment Project Preparation Fund, which has provided $4 billion to the region over the past five years, can help countries to mitigate the effects of climate disruptions, through both financial support and technical assistance for project preparation and natural-disaster and adaptation management. In Guatemala specifically, the government partnered with Taiwan’s International Cooperation and Development Fund and Columbia University in a project designed to generate climate information for citizens affected by climate disruptions, such as farmers and producers. A concerted focus on climate preparedness and early warning systems like NextGen, needs to be scaled up across the region. This forecasting system in Guatemala creates tailored regional climate predictions by identifying variables relevant to users.⁶⁶ The predictions allow small landholders to make informed decisions in terms of either relocating or adapting to abrupt and unpredictable climate effects.

At the same time, since 2015, under the Central American Sustainable Energy Strategy 2030 (EESCA, Estrategia Energética Sustentable Centroamericana 2030), the Central American Electrical Interconnection System (SIEPAC)—the interconnection system of the power grids of six Central American countries—proposed plans for transitioning to clean energy and grid modernization that, if successfully implemented, has the potential to secure more climate-resilient energy infrastructure and generate new jobs. While El Salvador is doing better off in advancing on clean-energy and modernization projects, Honduras is facing many delays, especially given its heavy reliance on fossil fuels. In a setback for the region’s ambitions for energy integration, Guatemala retired from SIEPAC in July 2021 after alleging that mismanagement of SIEPAC’s regional electric negatively impacted Guatemala’s national interests in the electric sector.⁶⁷

At a country level, Honduras, has launched a decarbonization plan to reduce emission by 2050, a proposal similar to one in Costa Rica, which that seeks to help drive the technological transformation of critical sectors, such as transportation, energy, waste, and agriculture. This initiative was supported by the European Union through its EuroClima+ program, which also provides training to small and medium-sized companies in El Salvador for certification and accreditation in energy efficiency.

Recommendations

Public Sector: Even at a time of fiscal insolvency, governments in the region should consider prioritizing strategic investments in climate-prevention efforts, as well as climate monitoring, forecasting, and risk preparedness. Agriculture is the bedrock of Central American livelihoods, which are increasingly threatened by intense and volatile weather patterns. Therefore, agricultural ministries, with support from international organizations, should ensure that small producers and farmers can recover from catastrophic climatic events, by subsidizing seeds of crops that are more resilient to droughts. Additionally, ministries should consider implementing broader conservation and water-saving measures and provide capacity building on best practices to prevent soil erosion and runoff. As stated by a Migration Policy Institute, “early policy interventions can mitigate the effects of climate extremes on food insecurity, hunger, and, ultimately, migration,” especially if local and national governments focus on understanding the nuances around the impact of climate change on the way farmers live and work.⁶⁸

To secure climate resilience, it is also imperative that indigenous groups are included in financial and technical support for small growers and climate-affected communities. As mentioned in this publication, there has been an alarming increase in selective violence toward social and environmental activists and Indigenous communities. Engagement with local communities and existing civil society organizations is essential for the success of all climate-action measures, especially to ensure that the most affected populations are able to adapt and grow in a changing climate, rather than migrating in mass numbers as a result of disruptive weather patterns and disasters.

Private Sector and Civil Society: As stated in the first policy brief of this series, The Role of the Private Sector in Catalyzing Inclusive Economic Opportunities in the Northern Triangle, published in March 2021, investment in renewable energy is the area with the most potential to yield benefits beyond climate-change mitigation.⁶⁹ Projects related to reducing emissions related to climate change, such as public-private partnerships in public sustainable-transportation projects—for instance, electric or hydrogen buses—would vastly improve conditions to reduce the impacts of climate change, while also tackling insecurity and extortion.

Paired with investments in technical education and training, investments in renewable energy could help to create higher-value jobs, reduce overdependence in agriculture and manufacturing, and catalyze economic development as more affordable and reliable energy becomes more widely accessible. In-country businesses in the agriculture industry—particularly those that export coffee, fruits, and seafood—can facilitate investment that provides farmers and small producers with climate predictability through digital forecasting technologies made available in mobile applications. This would allow the agricultural sector—one of the biggest in Central American economies—to make more informed decisions, minimize losses, maximize crop production, and improve food security. 

Additionally, civil society, together with the national and international private sector and universities – both local and international— could set up partnerships to make weather and climate data available and digestible to key decision-making stakeholders. For example, on June 2021, the United States National Oceanic and Atmospheric Administration announced a new Cooperative Institute for Severe and High-Impact Weather Research and Operations in the United States, in partnership with seventy universities and research institutions.⁷⁰ A partnership like this, in Central America, could help policymakers prepare for climate disasters.

The United States and the International Community: The United States, the European Union, and multilateral and financial institutions like the World Bank, the IDB, CABEI, and the Green Climate Fund must continue facilitating financial support for at-risk countries in northern Central America to adapt to climate impacts. The Biden administration’s Strategy to Address the Root Causes of Migration in Central America includes $310 million in urgent relief to help address the climatic factors of migration, such as hurricanes and droughts. To date, around $250 million of the total funds have been allocated, reaching more than two million people, but the strategy could benefit from adding more partners and co-financers to assure its sustainability. It is also crucial that global climate summits include buy-in from northern Central American countries suffering from the worst effects of climate change. Central America’s absence in the Leaders’ Summit on Climate hosted by the United States in April 2021 is a stark reminder of the increasing importance of raising the voice of climate-affected countries on the global stage.⁷¹ Including the perspectives of communities in northern Central America’s Dry Corridor, for example, is a value-adding measure for the negotiations at the UN Climate Change Conference of the Parties (COP 26).

The United States, specifically, should appeal to northern Central America countries to raise their ambitions and push for more significant support for these vulnerable nations to adapt to the high impacts of climate change. Achieving resilient societies is an integral part of meeting national development goals and addressing a root cause of migration. As stated by the World Bank, “concerted action on climate change mitigation and adaptation and inclusive development policies that embedding climate migration into planning will help reduce the number of climate migrants by 2030.”⁷² Actors at all levels of government and across sectors must leverage this “window of opportunity to invest in knowledge, mitigation, and adaptation and take steps now to secure resilience for all significant gains in sustaining livelihoods that help people stay in place.”⁷³

V. Conclusion

Ongoing social instability in northern Central American countries—as a result of violence and citizen insecurity, curtailment of civil liberties, and unforgiving changes in the climate—poses serious threats to the livelihoods of Guatemalans, Hondurans, and Salvadorans, with reverberations across the region and in the United States. As this publication and the previous two policy briefs in this series have shown, there is no quick or easy remedy to tackle the numerous challenges facing northern Central America. So, how can renewed US leadership help catalyze the broad and sustained multinational and multisector support to set a new direction for the region?

The Biden administration has been both strategic and intentional in prioritizing a comprehensive approach to help northern Central Americans find hope in their own countries. The release of the US Strategy for Addressing the Root Causes of Migration in Central America report was a much-needed step in what will inevitably be a long-term effort to improve the living conditions forcing migrants to search for better futures in the United States. In line with the focus and analysis of this publication, two-thirds of the report is dedicated to promoting press freedoms, countering violence and illicit activities perpetrated by organized criminal organizations, and combating gender-based violence.

With a clear vision of the desired outcome, strategic pillars, and lines of effort, the implementation of the strategy must now begin with old and new value-adding partners across sectors and geographies to build on past and existing experiences, mobilize resources for new efforts, and importantly, effectively communicate implementation requirements, expectations, and progress to US-based and in-region stakeholders.

One important next step to sustain ongoing efforts to tackle the sources of social instability, generate jobs, and combat corruption is to secure bipartisan support from the US Congress. Only by codifying a long-term effort into legislation that can lock-in financial, technical, and diplomatic commitments will the United States and northern Central America have a chance to generate long-term structural improvements so that would-be migrants have the option to remain in their communities. Galvanizing this bipartisan consensus will be the next chapter of the Adrienne Arsht Latin America Center’s Central America programming, with continued support from NTAG, which has been instrumental to informing and advancing this last brief of the three-part series in partnership with DT Institute. As well, in this next phase of work, local and regional collaboration will be critical to enacting the recommended policy changes contained in these briefs.

Acknowledgments

This issue brief is the last of three publications as part of the work of the Adrienne Arsht Latin America Center’s Northern Triangle Advisory Group (members listed below), a high-level group of policymakers, business leaders, and civil society from northern Central America that seeks to create a basis for consensus and galvanize support for strengthening the rule of law and mitigating corruption, increasing productivity, enabling sustainable economic development, and reducing conflict in Guatemala, Honduras, and El Salvador. Thank you to Jason Marczak, María Fernanda Bozmoski, and Domingo Sadurní at the Adrienne Arsht Latin America Center for leading this effort, and to the Center’s in-region consultant, Gina Kawas, for her research and writing support. This publication was produced with the generous financial support of DT Institute. Thank you to DT Institute for its insights and collaboration.

ABOUT THE AUTHORS

María Fernanda Bozmoski

María Fernanda Bozmoski is deputy director, programs at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the center’s work on Mexico, the United States-Mexico-Canada Trade Agreement (USMCA), and Central America, and contributes to projects on regional trade integration as well as disinformation in Latin America. Bozmoski has co-led the center’s Central America Task Force, managed the center’s trade portfolio, and programmed events in Asia for US policymakers. She speaks native Spanish, English, and French, fluent Italian, and near-fluent Portuguese.

María Eugenia Brizuela de Ávila

María Eugenia Brizuela de Ávila is a nonresident senior fellow at the Adrienne Arsht Latin America Center. She is the first woman to be designated minister of foreign affairs of the Republic of El Salvador, serving from 1999 to 2004 after being founder and president of Internacional de Seguro and her family business, La Auxiliadora Funeral Home. In 2004, Brizuela de Ávila served as CEO of Banco Salvadoreño, retaining her role as the bank forged a strategic alliance with Banistmo. From 2007 to 2015, she was corporate sustainability head for HSBC Latin America. She is currently involved with Inversiones Visión, her executive coaching and consulting firm. Brizuela de Ávila serves as on the board of several nonprofits, such as the University of Miami External Advisory Board on Latin America, and as non-executive director on business boards, such as Davivienda Financial Conglomerate in El Salvador and Honduras. In August 2020, she was included in Forbes’ 2020 list of the 100 Most Powerful Women in Central America and the Caribbean.

Domingo Sadurní

Domingo Sadurní is assistant director at the Adrienne Arsht Latin America Center, where he covers Venezuela and Central America. Sadurní joined the Council as an intern in February 2018, previously working at J.P. Morgan’s private bank and Banco Popular de Puerto Rico. Sadurní earned a bachelor’s degree in finance and political science from Boston College. He speaks native English and Spanish.

The post Addressing instability in Central America: Restrictions on civil liberties, violence, and climate change appeared first on Atlantic Council.

Scowcroft Center deputy director Matthew Kroenig appeared on KNX 1070 Radio to preview President Biden’s trip to Europe, where he’ll meet the Queen and Vladimir Putin; and to recap Vice President Harris’ trip to Central America and Mexico for which she received plenty of criticism from both her right and left flanks.

Staff

Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

The post Kroenig joins KNX 1070 to discuss Biden’s upcoming trip to Europe and Harris’ recent trip to Central America. appeared first on Atlantic Council.

INTRODUCTION

Public corruption and weak rule of law are arguably the most persistent and long-standing challenges for strengthening democratic institutions and sustaining inclusive economic development in the Northern Triangle. Guatemala, Honduras, and El Salvador have grappled with widespread corruption that has fueled mistrust in political and wealthy elites, eroded democratic norms, exacerbated poverty, widened social inequality, and contributed to the conditions that force migrants to leave their homes.¹

 According to the 2020 Corruption Perceptions Index from Transparency International, the Northern Triangle countries have a worse ranking than at least one hundred and three of the one hundred and eighty countries surveyed, with Honduras ranking at one hundred and fifty-seven, Guatemala at one hundred and forty-eight, and El Salvador at one hundred and four.² A confluence of internal and external forces in recent years—including the penetration of organized crime and narcotrafficking into local governance and national politics, and the fiscal measures that the COVID-19 pandemic and natural disasters have demanded—has opened new ground for corrupt practices and exacerbated old ones.

Breaking the vicious cycle of corruption in the region will require a holistic, long-term approach that brings together governments, civil society, and businesses under a common anti-corruption agenda with bold, innovative, and locally driven policy solutions. As the situation at the US southern border worsens, the Joseph R. Biden Jr. administration is devoting resources and strategic focus to addressing the drivers of migration (the previous brief in this series focused on the role of the private sector in unlocking economic growth in the Northern Triangle), placing a special emphasis on building capacities, strengthening existing cooperation with local partners, and finding new spaces for collaboration to combat corruption over the long term in Central America.³ 

This brief—the second of a three-part series by the Atlantic Council’s Adrienne Arsht Latin America Center and DT Institute—focuses on pragmatic recommendations to assist societies in Guatemala, Honduras, and El Salvador in tackling corruption and strengthening the rule of law, with a look at what has worked in the past and how to apply lessons learned. In close collaboration and through repeated consultations with the Center’s Northern Triangle Advisory Group (NTAG), this brief highlights the following themes around corruption in the region: reforming the justice and electoral systems; combatting corrupt practices in public bids, tenders, and acquisitions; and confronting illicit campaign financing. If the in-region conditions are created to address these issues holistically, coordinated actions in these areas can help to curb corruption, support institutional resilience and inclusivity, and reduce unauthorized migration. 

REFORMING THE JUDICIAL SYSTEM TO STRENGTHEN THE RULE OF LAW AND REDUCE IMPUNITY

Long-Standing Challenges

Understaffed, undertrained, and underinvested prosecutors’ offices and police forces, lack of independence in the selection of judges and court magistrates, the absence of protection for those officials, and the corrupt influence of criminal groups and narcotrafficking networks across all branches of government are among the main factors contributing to a weak rule of law, high levels of impunity, and pervasive graft in the Northern Triangle. The justice systems need reforms, capacity-building efforts, and resources that incentivize accountability and transparency over impunity and corruption. The 2014 Plan of the Alliance for the Prosperity in the Northern Triangle (A4P) provides an initial blueprint to update and expand upon for supporting national, regional, and international anti-corruption efforts, and rethinking efforts that fell short of their intended objectives. 

Past and Existing Efforts at the National, Regional, and International Levels

National Efforts: Efforts led by Northern Triangle governments have included the creation of courts and tribunals that have national jurisdiction over corruption and extortion cases. In Guatemala, this was accomplished through the establishment of the Special Prosecutor’s Unit Against Corruption Impunity (FECI), created in 2008, and the 2017 Specialized Fiscal Unit Against Corruption in Honduras. However, in a step backwards, the legislatures in Guatemala and Honduras have passed secrecy and confidentiality laws and approved reforms that interfere with the legal authorities of these entities to investigate and take legal action against government officials, deputies, and even civil society organizations accused of civil or criminal acts, or have links to organized crime. 

In El Salvador, prosecutorial power lies with the attorney general’s office, in coordination with the police. But recent legislative elections gave absolute majority to President Bukele’s New Ideas party. As in Guatemala and Honduras, the new legislative majority is likely to obstruct investigations that are currently underway, including cases related to pandemic spending. On the first day of the new legislative session in May 2021, the Salvadoran legislature took action to remove five Supreme Court judges—a worrisome trend by President Bukele and his party undermining the separation of power. 

Regional and Multilateral Efforts: In Guatemala, the emblematic 2015 “La Linea” customs fraud investigated by the United Nations (UN)-backed International Commission against Impunity (CICIG) and the attorney general directly led to the jailing of both then-President Otto Pérez Molina and then-Vice President Roxana Baldetti. In Honduras, in 2016, a case at the Honduran Social Security Institute—where an estimated $300 million in public funds were embezzled—provoked civil unrest and sparked the creation of the Organization of American States (OAS)-backed Mission against Corruption and Impunity in Honduras (MACCIH).⁴ Today, both CICIG and MACCIH have ceased operations following decisions by Guatemala’s then- President Jimmy Morales and Honduras’ President Hernández to terminate the mandates of the anti-graft entities. The decisions were widely criticized by the United States and the international community and seen as a step backwards in the fight against corruption in both countries. 

El Salvador is currently the only country in the region that maintains an OAS-approved International Commission against Corruption and Impunity, known as CICIES. While it started out with considerable public skepticism, CICIES has supported investigations against potential offenders, while maintaining a relatively low profile. At the time of writing, the future of CICIES is uncertain. Following a congressional vote on May 1, 2021, that ousted Attorney General Raúl Melara and five supreme court judges, President Bukele has appointed Rodolfo Delgado as the new attorney general. On May 3, 2021, Delgado stated his intention of revising and reconsidering the future of the commission, citing the experiences of Guatemala and Honduras as examples to avoid.⁵ 

US and International Efforts: Political and financial support from the United States and the European Union have been crucial to promoting stronger and more transparent judicial institutions in the Northern Triangle.⁶ As a result of the A4P under the Barack Obama administration, Northern Triangle countries committed to creating independent anti-corruption auditing mechanisms and developing plans to professionalize public service. Despite having gained momentum at the outset, they ultimately failed to fully deliver on these commitments due to a lack of national and international follow up, the gradual languishing of anti-corruption protests and the eventual demise of CICIG and MACCIH.⁷ Also, during this time, El Salvador presented a bill criminalizing bulk cash smuggling, an effort supported by the United States Bureau of International Narcotics and Law Enforcement, that has led to the arrest and prosecution of money laundering crimes.⁸ Since the asset forfeiture law was implemented in 2014, the Salvadoran Attorney General’s office has made great advancements in seizing and forfeiting criminal assets. From 2014 through November 2019, the attorney general’s office seized 1,141 assets valued at over $182 million. These efforts also led to the arrest of the leader of an MS-13 cell with significant reach in the United States, who has since been sentenced to prison on money laundering charges. In 2016, the Guatemalan Congress passed a law allowing “semi-freedom” through electronic monitoring as part of the transition to an innocent-until-proven-guilty judicial system – and in an effort to reduce prison overcrowding. Despite initial expectations of less-crowded jails, the law has not been effectively enforced due to longstanding practices of justice operators making excessive use of pre-trial detention.⁹ 

US and European Union (EU) efforts have also helped to organize civil-society efforts to demand more transparent and open processes that ensure the independence of the judicial branches and the selection of judges and magistrates. This civilian oversight has helped mitigate potential interference by other branches of government (particularly from members of the legislature). Lastly, US and EU embassies have played an important role in providing advice on legislation and criminal enforcement policies, and effectively vetting candidates for prosecutors and nominations for supreme court judges. Not only are these efforts important to combat corruption, but also to unlock further US funding.¹⁰ 

Recommendations and Thinking Ahead

Public Sector: Reforming the selection process for judges and magistrates is necessary but will require significant—and currently nonexistent—political will. Including nonpolitical actors (for instance, academia through law schools, bar associations, and civil-society organizations) in the nomination and selection processes would help to ensure that potential candidates’ profiles are more aligned with the qualifications required to be appointed as judges or magistrates, under conditions of equality and based on merit. Importantly, judges and prosecutors of high moral integrity are better able to resist political pressure and private interests.¹¹ In addition, reinforcing early-career training for lawyers in morals and ethics is crucial. 

Similarly, reforms to optimize the public administration system—including reforming bureaucracies, campaign-financing laws, and how courts function—across the Northern Triangle are necessary and long overdue. If done right, reformed laws would strengthen transparency in the public sector. This was a commitment included in the A4P but was discontinued, partially due to lack of oversight and monitoring from the Trump administration. Reforming civil-service laws so that careers in public administration are based on merit is necessary for rooting out nepotism and political patronage, which are the currencies of corruption.¹² Despite the obvious national differences, case studies from Organisation for Economic Co-operation and Development (OECD) countries like Costa Rica, Chile, and Uruguay offer lessons learned for similar policies that could be implemented in the Northern Triangle. Adapting best practices—such as strengthening strategic human resources management, improving multi-level governance, developing a stronger, shared identity and organizational culture across the public sector, and exploring new ways of multi-stakeholder engagement in policy-making processes—could help to limit high turnover among personnel due to political transitions and weak or politicized senior-level management.¹³

Private Sector and Civil Society: A private-sector and civil-society alliance that results in an education campaign in the media—radio, television, and newspaper ads—across the region would help to advance a national and regional anticorruption agenda. Such a campaign could empower society action by quantifying the cost of corruption and showing how much is lost in potential government services for everyday citizens.

US and International Community: Agencies like the United States Agency for International Development (USAID) and EuroJustice should continue to strengthen public prosecutors’ offices through training in best practices and capacity building that incorporates the use of innovative technologies and open data. Such efforts, coupled with hiring additional human resources to improve efficiency in indicting and convicting perpetrators (consequently reducing the backlog of cases), could go a long way. The United States should also put in place a program to support and protect Northern Triangle prosecutors and judges once they leave office. Such a program should include employment opportunities outside of those countries to protect former officials from threats posed by criminal organizations and gangs, while providing them with incentives to do their job honestly while in office. Additionally, political and technical support from US and EU embassies can help to bring together civil society to oversee and demand open procedures, which can strengthen the independence of the judicial branch. 

COMBATTING CORRUPT PRACTICES IN PUBLIC PROCUREMENT

Long-standing Challenges

Public procurement is one of “the largest government spending activities” and, as such, is highly susceptible to corruption.¹⁴ In 2019, the estimated cost of corruption in Central America was $13 billion, or around five percent of the region’s gross domestic product (GDP).¹⁵ With the COVID-19 pandemic, the number will likely be much higher as governments operate under states of emergency and many traditional processes are sidestepped.¹⁶ 

But, governments and public institutions are not the only ones under scrutiny when it comes to corruption in public procurement. Because of the inherent nature of public procurement (buying goods and supplies or building infrastructure), the private sector also has a role in pushing for increased transparency and governance and going beyond job creation.¹⁷ This can have a strong effect in the Northern Triangle, where monopolies and duopolies inhibit open-market competition.¹⁸ While some companies––national and multinational––do abide by the law, others collude with government officials on anticompetitive and illicit tactics to monopolize contracts and hamper competition.¹⁹ 

Additionally, while foreign assistance and loans include transparency clauses as part of the terms and conditions required prior to disbursing funds to recipient countries, there is no such language for national investments and funding.²⁰ The notion that others’ funds should be tied to such expectations, while there is less concern with using national funds adequately, is highly problematic. In the particular case of Guatemala, for example, all lists of territorial infrastructure plans are confidential, including the bidding process for private construction projects and the chosen bids. 

Past and Existing Efforts at the National and Regional Levels

National Efforts: To date, governments in the region have responded to crises of legitimacy superficially, mainly by increasing bureaucracy through the creation of new anti-corruption bodies that lead to duplicating functions. For instance, in Honduras, after a series of corruption accusations by the National Anticorruption Council (CNA) and the local Transparency International chapter (ASJ) regarding irregular purchases of medical products during the COVID-19 pandemic, the Juan Orlando Hernández administration created a Transparency Ministry with a mission that overlaps that of the CNA.²¹ This decision appears to be part of a strategy to promote and protect the government’s anti-corruption and anti-impunity agenda, when in fact, the work of the Transparency Ministry hinders the fight against impunity by rendering CNA’s capacities redundant and doing little to address structural issues of corruption in public procurement. The Transparency Secretary, Maria Andrea Matamoros, has criticized Transparency International’s Corruption Perception Index and defended the actions of the Honduran government.²² 

On the other hand, civil society has created apps that show that citizens are able to hold the government and other sectors accountable. For example, the Association for a More Just Society (ASJ), in partnership with the Anticorruption Legal Assistance Center (ALAC) and the Public Ministry (MP) in Honduras, launched the initiative “Say it here Honduras,” a mobile tool that provides citizens with a mechanism for reporting corruption.²³ The initiative lasted almost five years, but eventually disappeared due to lack of funding and a reduction in citizens’ corruption complaints. Similarly, in El Salvador, the Government Integrity Project (GIP), funded by USAID and implemented by Tetra Tech, was a joint government and civil society initiative aimed at improving transparency, accountability, and public-services delivery at the national and municipal levels by improving the monitoring of public resources.²⁴ But this approach had some limitations, as it did not lead to the adoption of institutional integrity as a matter of national policy. It would have had greater impact if applied as a tool to strengthen efficiency, transparency, and accountability of public organizations. One concrete action could have been to require by law that all government agencies disclose their allocated budgets on official online webpages––from payroll to funds and resources spent on executed programs, projects, and initiatives. 

Crime Stoppers is a similar program implemented in Guatemala. It is an international platform that encourages citizens to anonymously report criminal and corrupt acts in their communities through a website or phone call. This information is then transferred to local police and courts, helping to create new investigations. Crime Stoppers is funded by private donors in Guatemala, and could be replicated regionally to foster accountability while helping people lessen the fear of reporting crimes. Because these platforms can be downloaded via mobile applications, anyone with a smartphone and an Internet connection can report any act of corruption—from contraband and extortion to drug trafficking or irregularities in public works. 

Regional Efforts: Best practices from other Latin American countries, such as Colombia, Chile and Costa Rica, point to the use of new technological tools such as blockchain— which is designed to prevent data from being modified or manipulated—to facilitate digital government and promote transparency.²⁵ As identified in a previous Atlantic Council report, an effective way to reduce corruption in public bids and contracts is to digitize paperwork and implement e-government for transparency in acquisitions.²⁶ In Mexico, big data, artificial intelligence, and digital signatures like DocuSign have been used to implement digital audits of public purchases, and to effectively oversee corruption in public contracting.²⁷ 

Recommendations and Thinking Ahead

Public Sector and Civil Society: To improve transparency in public-procurement procedures, government agencies offering concessions should require bidding companies to subscribe to a memorandum of understanding (MOU), to ensure compliance with integrity provisions in the process of awarding contracts. An agreement could be chartered in which both parties commit that they will not engage in corrupt practices for the extent of the contract and agree to oversight by civil-society groups.²⁸ Publishing public-procurement information will allow civil society and other actors to play a leading role in identifying and denouncing corruption, especially if a government does not have the capacity to prosecute corrupt actors. 

Private Sector: To promote integrity in public procurement and government concessions, incentives and deterrents for the private sector should be combined to reduce corruption. There are a number of frameworks and tools available to companies for adopting strong anti-corruption policies. One of those is Transparency International’s Business Principles for Countering Bribery to effectively deal with the challenges and risks posed by bribery. The OECD has also created a set of Principles of Corporate Governance to provide guidance and suggestions to develop and implement good corporate governance and promote transparency by setting up efficient internal control and compliance mechanisms to reduce the opportunities for fraudulent practices.²⁹ 

US and international community: Technology—specifically blockchain—may help to address some of the most flagrantly expensive forms of corruption. The national Ministries of Technology can partner with multilaterals to synchronize and implement transparency mechanisms in public spending at a national level, which can then be replicated at subnational and local levels. The US Department of Commerce’s Commercial Law Development Program should continue its work of strengthening regional trade facilitation through capacity-building efforts with public and private sector to enhance transparency initiatives such as inclusive public consultations through automated processes. It could expand the scope of the program to include working with procurement agencies in the Northern Triangle to improve the transparency and effectiveness of its procurement systems and procedures, primarily in citizen security institutions. Another priority should be to improve access to government contracts for small and women-owned businesses, like they do in the Dominican Republic.³⁰ 

Beyond publishing procurement data in an open format, the next step in improving the public procurement process is to create a fully digitized and automated e-procurement portal.³¹ The case of Brazil and Paraguay, with the “electronic reverse auctions,” may be applied to the Northern Triangle countries. When specific government agencies and institutions purchase goods through reverse electronic auctions, a virtual “auction” kicks off. If a Health Ministry announces an intention of buying N95 masks and other personal protective equipment, suppliers are able to bid online for the Ministry to buy from them. This enables competition, transparency, and streamlines communication of the public bidding process.³² But there is a caveat: open data in government will only work if it can be understood and used by citizens. The secrecy and confidentiality surrounding the plans has provoked mistrust for decades and represents an important setback in public procurement transparency. 

CONFRONTING ILLICIT CAMPAIGN FINANCING: IMPROVING ELECTORAL LAWS

Long-Standing Challenges

Weak political-finance systems, unforced electoral legislation, lack of political will for reforms, and deficient auditing and oversight bodies to investigate, monitor, or sanction the misuse of resources, have long affected campaign-finance transparency. Illegal financing of campaigns is an endemic problem in Central America. It has led to the perpetuation of a corrupt political class, and for decades, led to the region’s ranking as the worst of eleven components evaluated in the Political Election Integrity Index (PEI).³³ The continuous penetration of organized crime into politics has aggravated the problem, particularly at the local level. Collusions between local politicians and criminal networks, mainly drug cartels, introduce dirty money into electoral politics, which is very difficult to trace. 

Past and Existing Efforts at the National Level 

Guatemala: In 2016, the Guatemalan Congress approved reforms to the Electoral and Political Parties Law (LEPP).³⁴ The reforms established mechanisms for the control and oversight of political organizations; prohibited anonymous contributions; set limits on campaign spending; and imposed a more robust system of sanctions, including the creation of a Specialized Unit for the Control and Oversight of Political Party Finances within the Supreme Electoral Tribunal. As a result, US courts convicted former Guatemalan presidential candidate Mario Estrada, and other officials (at least one former mayor and some congressional candidates) after discovering their political campaigns had been infiltrated by drug-trafficking money. Although a positive step forward, the centralized structure of this unit has limited the possibilities of monitoring campaign expenditures, particularly at the local level. 

El Salvador: Although the enactment of the Political Parties Law of El Salvador in 2013 included the regulation of private donations, candidates are not obligated to report contributions. Auditing is discretionary to the parties, and there is no oversight body or unit to investigate, monitor, or sanction the misuse of resources, which reduces the transparency of political campaigns. This lack of oversight makes it easier for candidates to amass wealth and political power by illicit means. US agencies can help local electoral bodies with technical assistance to in reforming these laws to foster greater accountability. 

Honduras: In Honduras, the Clean Politics Law (Ley de Financiamiento, Transparencia y Fiscalización de Partidos Políticos y Candidatos) was passed in 2016 as a result of MACCIH’s collaboration with the TSE and Congress. The law seeks to enforce greater controls and transparency for political financing. It represents an important step forward, as it establishes a new financing and oversight regime, sets limits on campaign spending, limits private donations, and prohibits anonymous contributions. In addition, the Financing, Transparency and Oversight Unit was created to sanction illegal financing—including the dissolution of political parties that do not comply with the regulations. 

Although the Clean Politics Law filled an important gap in political financing in Honduras by strengthening the legal and institutional framework to oversee the income and expenditures of parties and candidates, the Clean Politics Unit that oversees compliance with the law is drastically underfunded and understaffed. Therefore, illicit financing continues, as many candidates and public officials—including President Hernández and the attorney general—have been accused of drug trafficking and face criminal charges. The DEA and US prosecutors have uncovered conspiracies between corrupt politicians, police, and military personnel, and some of the most powerful drug kingpins in the world, including President Hernandez’s brother, who was sentenced to life in a US prison. These actions send a powerful message of zero tolerance to Honduran political and business elites involved in organized crime and narco-activity. 

Recommendations and Thinking Ahead 

Public Sector and Civil Society: Independent civil-society groups should review electoral laws in the three countries to identify gaps and loopholes, mainly with the implementation of clear and rigorous sanctions; this would help to ensure consistency and enforcement. All political parties must be required to submit financial reports through an open website created and supervised by political finance oversight agencies in each country. Local civil society organizations could partner with USAID to finance this online portal and provide workshops to train political parties, campaign donors, and independent media on how to use it effectively. Providing public access to information about political financing makes it easier to monitor and analyze the origin of funds. The financing and designation of the unit that regulates electoral finance should be independent—and not under the control of those who are chosen through the electoral processes they are overseeing. 

Private Sector: Electoral laws in each country should require that private entities disclose all donations and contributions to both individual candidates and political parties. The laws should impose penalties for donors that do not comply with the legal campaign spending ceilings. Active civil-society participation is required to push for campaign-financing reforms. The Biden administration should provide additional financial and technical resources for capacity-building efforts that support civil-society organizations’ oversight of electoral process. 

US and international community: USAID, along with cooperation agencies from European countries, should join efforts with diplomatic missions in the Northern Triangle to promote increased transparency in electoral legislation. Electoral laws should be reformed to provide for an autonomous regulatory body that has sufficient funding and a mandate to sanction illicit financing in national and municipal politics, including, for instance, in the case of El Salvador, oversight of financial support received from the Salvadoran diaspora. As well, a mobilized, empowered, trained, and continuously involved civil society and independent media will be important factors in pushing for electoral reform to be part of the political agenda. Developing a campaign—endorsed by the United States, the European Union, and embassies in the three countries—with specific messages targeting different audiences would spark higher public interest and demands that parties enact legislative changes. 

CONCLUSION

There is no one answer for ending the multifaceted corruption that plagues the Northern Triangle. This brief puts forward ideas to help guide US engagement and support with the region, chief among them reforming the judicial system, combatting corrupt practices in public procurement, and confronting illicit campaign financing. These proposals are a result of consultations with the Atlantic Council’s Northern Triangle Advisory Group, a group of thirty public, business, and civil society leaders that focus on generating support for innovative policy solutions to some of the most pressing challenges in the Northern Triangle, which are similarly many of the root causes of migration in the region. 

For change to occur, implementation of judicial and campaign-financing reforms will require political will from all sectors of society, and sustainable mechanisms for oversight and tracking via comprehensive metrics. The international community must show a zero-tolerance approach to corruption and augment local capacities to enforce sanctions. As well, it is vital to set a precedent by penalizing dishonest public and private leaders—especially those with links to organized crime and drug trafficking—through the US Departments of Justice and Treasury.³⁵ 

Pressure from US members of Congress on democratic promotion, the separation of powers, and the independence of the judiciary in the Northern Triangle should be maintained to foster reforms and to pass legislation to sanction corrupt officials (i.e., Leahy and Magnitsky Laws and Engel List). The Biden-Harris administration should create a task force with officials from the US Departments of Justice and State to help local prosecutors fight corruption in the Northern Triangle.³⁶ This initiative would help judicial institutions to move forward on specific corruption cases and investigations that have been intentionally delayed. 

The Biden-Harris administration has shown determination in becoming a reliable partner to ensure that all the lost progress regarding corruption and impunity in Central America is regained—and that it sticks. The recently launched Western Hemisphere Drug Policy Commission Report recognizes significant advances in the fight against corruption but emphasizes the need for a more timely strategy.³⁷ Such a strategy should include mechanisms through which results are measured, accountability is exercised, and misuse of foreign aid is punished. The road ahead is not an easy one but inroads to fight corruption will yield significant benefits across society. 

ACKNOWLEDGEMENTS

This issue brief is the second of three publications as part of the work of the Adrienne Arsht Latin America Center’s Northern Triangle Advisory Group (members listed below), a high-level group of policymakers, business leaders, and civil society from the Northern Triangle that seek to create a basis for consensus and galvanize support for strengthening the rule of law and mitigating corruption, increasing productivity and enabling sustainable economic development, and reducing conflict in Guatemala, Honduras, and El Salvador. Thank you to Jason Marczak, María Fernanda Bozmoski, Domingo Sadurní, and Eva Lardizábal at the Adrienne Arsht Latin America Center for leading this effort and to the Center’s in-region consultant Gina Kawas for her research and writing support. This publication was produced with the generous financial support of DT Institute. Thank you to DT Institute for their insights and collaboration. 

ABOUT THE AUTHORS

María Fernanda Bozmoski is deputy director, programs at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Mexico, USMCA, and Central America, and contributes to projects on regional trade integration as well as disinformation in Latin America. Bozmoski has co-led the Center’s Central America Task Force, managed the Center’s trade portfolio, and programmed events in Asia for US policymakers. She speaks native Spanish, English, and French, fluent Italian, and near fluent Portuguese. 

Carlos Hernández is president of the Board of Directors of the Association for a Fairer Society (ASJ) and of Transparency International in Honduras, where he has helped with designing public policies. He also serves as president of the Transformemos Honduras coalition and is on the Board of Directors of both the Alliance for Peace and Justice and the Federation of Non-Governmental Organizations for the Development of Honduras (FOPRIDEH)—all organizations with considerable success in advocacy and social oversight on issues of peace, citizen security, and transparency. In Honduras, Hernández is an opinion leader on issues related to public policy, corruption, transparency, democracy, and development. He has also spoken at international conferences on security, transparency, and development. In recent years, Hernández has worked on reforming the Honduran security, justice, education, health, and democratic system, while also strengthening the transparency of the State. 

Roberto Rubio is executive director at Fundación Nacional para el Desarrollo (FUNDE), a think tank based in El Salvador. He is also coordinator for Transparency International’s chapter in El Salvador. Rubio is founding member of Fundación Democracia, Transparencia y Justicia (DTJ), a non-profit organization focused on building citizenship and promoting dialogue among people with diverse ideologies. From 1997 to 2009, he was a member of El Salvador’s National Commission for Development. He has been a columnist for “La Prensa Gráfica” since 1997. Rubio has a doctor’s degree in development studies from the Catholic University at Louvain-la-Neuve, Belgium and doctor’s degree in economics from the Complutense University in Madrid, Spain. He has a bachelor’s degree in economics from the Central American University “José Simeón Cañas” (UCA) in El Salvador. 

Domingo Sadurní is assistant director at the Adrienne Arsht Latin America Center, where he covers Venezuela and Central America. Sadurní joined the Council as an intern in February 2018, previously working at J.P. Morgan’s private bank and Banco Popular de Puerto Rico. Sadurní earned a bachelor’s degree in finance and political science from Boston College. He speaks native English and Spanish.

The Adrienne Arsht Latin America Center broadens understanding of regional transformations through high-impact work that shapes the conversation among policymakers, the business community, and civil society. The Center focuses on Latin America’s strategic role in a global context with a priority on pressing political, economic, and social issues that will define the trajectory of the region now and in the years ahead. The Center’s Central America programming has focused on providing insights, analysis, and galvanizing bipartisan support for sustainable solutions to the Northern Triangle’s economic, rule of law, and security challenges. Past marquee work includes our 2017 Northern Triangle Security and Economic Opportunity Task Force, our 2020 Central America Economic Reactivation in a COVID-19 World report, and our ongoing 2021 work with the Northern Triangle Advisory Group. Other select lines of the Center’s programming include: Venezuela’s crisis; Mexico-US and global ties; China in Latin America; Colombia’s future; a changing Brazil; Caribbean development; commercial patterns shifts; energy resources; and disinformation. Jason Marczak serves as Center Director. 

DT Institute is a funder and implementer of peace and development projects. It focuses on co-creation and co-investment, as well as measurable impact and sustainability. DT Institute works with governments and our on-the-ground partners to address pressing issues—from conflict to economic crisis— and to establish a foundation for lasting stability, peace, and prosperity. It is in the organization’s DNA to be bold: DT Institute relentlessly innovates, creates, and measures its ability to drive innovation, strengthen communities, develop the next generation of leaders, and positively impact the lives of those we serve.

The Adrienne Arsht Latin America Center broadens understanding of regional transformations through high-impact work that shapes the conversation among policymakers, the business community, and civil society. The Center focuses on Latin America’s strategic role in a global context with a priority on pressing political, economic, and social issues that will define the trajectory of the region now and in the years ahead. Select lines of programming include: Venezuela’s crisis; Mexico-US and global ties; China in Latin America; Colombia’s future; a changing Brazil; Central America’s trajectory; Caribbean development; commercial patterns shifts; energy resources; and disinformation.

The post Combatting corruption in the Northern Triangle: Prioritizing a whole-of-society approach appeared first on Atlantic Council.

The Leaders Summit brought together forty world leaders, including seven from Latin America and the Caribbean, representing Antigua and Barbuda, Argentina, Brazil, Chile, Colombia, Jamaica, and Mexico. The Americas are a crucial player in coordinated efforts to tackle global climate change, so we asked experts from the Atlantic Council and elsewhere to lay out what’s next.

What were some of the most ambitious commitments made by Latin America and the Caribbean in mitigating climate change? Are they aligned with the expectation put out by the Biden administration and COP26? How will the international community contribute to these regional efforts? 

Jorge Gastelumendi is the global policy director at the Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center. He is also a COP26 high level climate champions co-lead for the Race to Resilience.

Putting nature-based solutions at the core of the efforts to fight climate change was the most outstanding, though not surprising, feature of commitments advanced by Latin American and Caribbean representatives—from Brazil’s president, Jair Bolsonaro, indicating the country’s commitment to end illegal deforestation in the Amazon by 2030, to Mexico’s president, Andrés Manuel López Obrador, committing to implement one of the largest reforestation programs in the world. Peru went even farther by committing that 50 out of the 150 actions in its climate plan will be nature-based solutions in sectors such as water management, land use, and forests. The main obstacles to materialize these commitments is the lack of implementation capacity in the region and the lack of financial resources from both public and private actors, particularly the financial sector. The international community, with the leadership of the United States, is critical in helping overcome these two obstacles. Colombia, for example, highlighted exploring innovative financial mechanisms, such as debt-for-adaptation swaps, which could avoid deforestation in the Amazon (a priority of Brazil, Colombia, and Peru) and protect the oceans (a priority for Chile).

President Bolsonaro, in his speech, raised the need for the right to development of current and future generations, also mentioning the Amazonian Paradox. What is the Amazonian Paradox and in what ways can a collaborative approach with the international community, the private sector, civil society, and indigenous communities help address it?  

Rodrigo Lima is a lawyer with expertise in international trade, non-tariff barriers and sustainable development. He is the director of Agroicone, a Brazilian sustainable agribusiness organization.

The Amazonian Paradox emerges from the immense contradiction between the assets and potentials from a mega-biodiverse forest that covers almost five million square kilometers over nine countries, and the social realities and inequalities among its more than twenty-three million inhabitants. The possibility to provide effective value to the forest, generate profits from its services, promote its sustainable use, and allow its population to thrive from the economic benefits and environmental services reflects the challenge of the Amazonian Paradox.

It is reasonable to compare the Amazon to a puzzle that needs time and effort to be assembled. The Amazon is home to 329 indigenous lands, covering almost one million square kilometers—local communities, family farmers, medium and large farmers. About 640,000 square kilometers are non-designated public lands, which should be designated as national parks, private areas, indigenous land, or for other uses.

To organize the territory and create policies to enable a low carbon economy, while considering different actors and interests, depends on federal and state governments. But it also relies on cooperation from multiple sources. In this regard, climate finance can play a critical role not just in promoting Reducing Emissions from Deforestation and forest Degradation (REDD+) projects, but more broadly in creating and sustaining a flourishing nature-based economy.

The completed puzzle relies on fostering a thriving economy based on natural resources, tourism, sustainable agriculture, forest management, and conservation activities. Bioeconomy opens a huge possibility to build upon this challenge, connecting extractivist producers to processing facilities and the market, generating social co-benefits from REDD+ projects, harnessing sustainable agriculture production based on innovation and good practices, and generating cosmetics and medicines, among other activities that could transform the Amazonian Paradox into the Thriving Amazonia.

International cooperation, as discussed at the Leaders Summit on Climate and other forums, has a fundamental role to play to support assembling this puzzle. The Amazon cannot be seen as a pure protection area; it must enable and promote social, economic, and environmental benefits for its population while it generates environmental goods to all society.

President López Obrador, in mentioning Mexico’s reforestation program, suggested its expansion to the South of Mexico and into Central America, generating jobs. He also suggested temporary work-permits and residency in the United States for those committed to this program, as a mechanism to address the migration crisis. How could the climate crisis be a greater challenge to the current border crisis? In what ways could addressing climate issues also be an opportunity to solve migration?

Maria Fernanda Bozmoski is the deputy director for programs at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Mexico and Central America.

Hurricane season in Central America is right around the corner, and back-to-back natural disasters may bring the region to the breaking point. The number of migrants will likely increase in anticipation of hurricane season, as well as in the aftermath. While migration from the dry corridor—which stretches from Guatemala to Costa Rica—is likely, hurricanes also greatly affect the Caribbean coast. The Central American Integration System (SICA) estimates that up to eight hurricanes may form in the region this year. Four of the eight may be intense, according to the organization.

Climate change is both a long-term push factor for migration and an accelerant. The United Nations estimates more than 7.3 million people were directly impacted by hurricanes in 2020, and there are more than 8 million starving people in Honduras, Guatemala, and El Salvador—up from 2.2 million in 2018. While the nearly four-fold increase in starvation is not all a result of the climate crisis, the destruction of crops and villages is a factor in this increase. In fact, experts find that climate change is a major factor explaining in the current surge in hunger.

The consequences of climate change are being felt now by current generations and the Caribbean nations are particularly impacted. Like other heads of state, the leaders of Antigua and Barbuda, and Jamaica reinforced the need for support and collaboration on addressing climate change. How could the international community support Caribbean nations in adapting to the existing and upcoming consequences of the rise in global temperatures?

Vicki Assevero is a former senior fellow for the Adrienne Arsht Latin America Center’s Caribbean Initiative.

The international community can support Caribbean nations and other small island developing states (SIDS) by acknowledging the World Meteorological Association’s 2020 Report that sea level rise has doubled, and hurricanes have intensified, so the imperative to finance climate adaptation is urgent. Prime ministers Gaston Browne of Antigua and Barbuda, and Andrew Holness of Jamaica urged acceleration of the pace of implementation of existing accords. This would mean not only funding the financing mechanisms foreseen in the original Paris Climate Accord but also those outlined in the Warsaw Mechanism and the Samoa Pathway. More importantly, multilateral institutions must continue to mobilize capital for greater investments in renewable energy and green technologies. The Caribbean SIDS are also urging new metrics in the form of a multi-dimensional vulnerability index that would facilitate access to concessional financing. 

Commitments on energy transition and renewable energy were popular among leaders at the summit. In terms of transitioning to cleaner energy, how close is Latin America and the Caribbean to reaching that goal and significantly reducing its greenhouse gas emissions? What key steps could be taken to accelerate an energy transition in the Americas?

Randolph Bell is the director of the Atlantic Council’s Global Energy Center, and Reed Blakemore is the deputy director of the Atlantic Council’s Global Energy Center.

Though the reaffirmation and raised ambitions for climate action last week from across Latin America and the Caribbean were encouraging, regional progress to meeting climate goals has thus far been inconsistent. That said, growing electricity demand and the cloudy forecast for hydropower (long the prevailing baseload electricity source in the region) presents an important opportunity for countries to take significant steps to transform their energy mix and kickstart their climate goals. Accelerating the introduction of a mix of variable renewables, low-carbon natural gas resources, and in some cases nuclear energy, will offer alternatives to bioenergy, diesel, and coal in order to fulfill new electricity demand while also replacing potential declines in hydropower output. Additional efforts to decarbonize the transportation sector will also further electrify the region and support reduced emissions. Taken together, this makes investment into accompanying grid infrastructure as well as digitalization and energy efficiency important next steps in maximizing the emissions-reducing potential of regional electrification and energy transition.

Valentina Sader, is assistant director and Brazil lead at the Adrienne Arsht Latin America Center.

AfricaSource Apr 23, 2021

Climate change will not be fixed without Africa

By Rama Yade

When Congolese President Félix Tshisekedi spoke at the virtual Leaders Summit on Climate this week, he had the force of the continent behind him. And his message was that developed countries must do more. As the summit comes to a close, the world still has so much to learn from Africa about how to tackle the climate crisis—if the world would only listen.

Africa Climate Change & Climate Action

Fast Thinking Apr 13, 2021

FAST THINKING: Why economic development is key to addressing the migration crisis at the US border

By Atlantic Council

On this episode of Fast Thinking, Atlantic Council experts Rebecca Scheurer and Jason Marczak dive into the root causes of mass emigration from Guatemala, Honduras, and El Salvador, and offer recommendations for long-term solutions to the underlying push factors that drive people from their homes—including crime, gang violence, corruption, and climate change.

Migration Northern Triangle

New Atlanticist Apr 25, 2021

Climate diplomacy can help turn action into results: UAE minister

By Larry Luxner

Al Jaber, the United Arab Emirates’ minister of industry and advanced technology, reflected on the connection between climate partnerships and economic results.

Climate Change & Climate Action Energy & Environment

The post Raising ambitions: How Latin America and the Caribbean is tackling the climate crisis appeared first on Atlantic Council.

Undeterred by four years of harsh border enforcement under the Trump administration, the cyclical northward movement of migrants and asylum-seekers to the US border has returned. As the crisis has grown, US Vice President Kamala Harris has been tasked with addressing it. In contrast to past periods of large-scale immigration to the United States, however, it is less the promise of opportunity that is pulling immigrants to America’s southern border and more the certainty of hardship at home that is pushing them there.

On this episode of Fast Thinking, Atlantic Council experts Rebecca Scheurer and Jason Marczak dive into the root causes of mass emigration from Guatemala, Honduras, and El Salvador, and offer recommendations for long-term solutions to the underlying push factors that drive people from their homes—including crime, gang violence, corruption, and climate change.

Staff

Jason Marczak

Vice President and Senior Director

Adrienne Arsht Latin America Center

Americas Caribbean

Fellow

Rebecca Scheurer

Nonresident Senior Fellow

Adrienne Arsht – Rockefeller Foundation Resilience Center

English French

Issue Brief Mar 31, 2021

The role of the private sector in catalyzing inclusive economic opportunities in the Northern Triangle

By María Fernanda Bozmoski and Domingo Sadurní

As in every democratic country in the world, the private sector in Central America’s Northern Triangle (Guatemala, Honduras, and El Salvador) has a central role in generating employment, driving economic growth, and spurring innovation. But in a region plagued by one of the highest levels of economic informality, weak government institutions, and pervasive corruption, private enterprises—both decades-old industry behemoths and newer startups—can have a more positive influence in steering the Northern Triangle toward inclusive and sustainable economic development.

Americas Entrepreneurship

New Atlanticist Mar 30, 2021

How the US can help Colombia surmount dual crises

By Larry Luxner

On the eve of the two-hundredth anniversary of diplomatic ties between the United States and Colombia, there is “good momentum to strengthen the bilateral relationship,” says Colombian President Iván Duque.

Colombia Coronavirus

The post FAST THINKING: Why economic development is key to addressing the migration crisis at the US border appeared first on Atlantic Council.

As we approach one year since the first COVID-19 case in Latin America and the Caribbean, we look ahead at what might or might not be on the horizon for the region over the next year.

Join us as we look at some of the key questions that may shape the region, then take our informal poll and see how your opinions shape up against our analysis.

Will the region see mass vaccinations? How will regional economies fare? What might be on the agenda for the US relationship with Brazil and Mexico? US President Joe Biden’s administration has entered office with a full inbox: how will developing trends in the region affect the new administration’s agenda?

Here are the eleven questions that the Adrienne Arsht Latin America Center is answering to map the rest of the year.

Question #1: COVID – Will Latin America and the Caribbean achieve widespread vaccination in 2021?

Question #2: Economy – Will regional economies outpace growth forecasts in 2021?

Question #3: Central America – Given the extent of damage from the 2020 hurricanes in Central America, will the region see more climate migrants?

Question #4: Mexico – Will joint security challenges top the list of priorities in the US-Mexico relationship under Biden?

Question #5: Stability – Latin America has faced sporadic, but massive, waves of protests and national strikes prior to and during the pandemic. Will 2021 be a year of even greater social unrest?

Question #6: Venezuela-EU – Will the European Union (EU) resume conversations with Nicolás Maduro’s regime to monitor Venezuela’s regional elections in 2021?

Chapter #7: Brazil – Will the Biden administration and that of Brazilian President Jair Bolsonaro find ways to cooperate on a climate agenda?

Question #8: Colombia – Will the United States and Colombia reform the underlying premises of their anti-narcotics policies?

Question #9: China and the Caribbean – Will the five Caribbean nations and two Central American countries that still recognize Taiwan shift to recognizing the People’s Republic of China (PRC)?

Question #10: Caribbean – Will the Caribbean Community and Common Market (CARICOM) achieve its goal of a Caribbean Single Market and Economy (CSME) in 2021?

BONUS QUESTION: In the 2016 Summer Olympics in Rio de Janeiro, Brazil (#13), Jamaica (#22), and Cuba (#23) were the only Latin American and Caribbean countries to finish in the top twenty-five in the medal count. Assuming the Olympics are held, will more countries from the region finish in the top twenty-five this summer?

OUR ANSWER TO QUESTION #1: NO

The first case of COVID-19 in Latin America and the Caribbean was reported in Brazil on February 26, 2020. Since then, the region has reported nearly 17.5 million cases and more than 550,000 COVID-19-related deaths, accounting for one third of global deaths. Countries have actively worked to secure vaccines through bilateral and multilateral arrangements, including agreements with Pfizer, Moderna, AstraZeneca, Russia’s Sputnik V, and China’s CoronaVac. Nevertheless, widespread vaccination requires not only adequate planning for vaccine acquisition, but efficient and equitable distribution. Recent incidents in Germany and the United States show that even more resourceful countries are experiencing hiccups in massive vaccine rollouts, such as logistical challenges (especially the required temperature-controlled supply chain), personnel shortages, and vaccine hesitancy. Latin American and Caribbean nations may face these hurdles at a greater scale, due to resource and capacity constraints.

As of January 19, 2021, eleven Latin American and Caribbean countries have authorized emergency use of COVID-19 vaccines: Argentina, Brazil, Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Mexico, Panama, and Venezuela.  On December 24, 2020, Mexico, Chile, and Costa Rica became the first countries in Latin America to begin mass vaccination. Despite moving quicker than most others in the region, Mexico aims to inoculate only 75 percent of its population by March 2022. For most countries in Latin America and the Caribbean, definitive delivery and mass vaccination timeframes remain unclear, and could be delayed over time.

Some low-income countries in the region may be able to vaccinate, at most, 20 percent of their populations in 2021, a figure considerably lower than the 65-percent theoretical threshold for herd immunity. Of added concern, the COVAX initiative—a key global initiative launched to secure vaccine doses for poor countries—currently faces a $4.9-billion funding gap. This could potentially complicate the initiative’s goal of helping inoculate 20 percent of each low-income country’s population against COVID-19 by the end of 2021. With stark disparities in vaccine access across and within countries, widespread vaccination is a distant prospect for Latin America and the Caribbean in 2021.

OUR ANSWER TO QUESTION #2: YES

In July 2020, a month after Latin America and the Caribbean became the global epicenter of the coronavirus pandemic, Alicia Bárcena, head of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), cautioned that the region should brace for a “lost decade.” By the end of 2020, the economic contraction in Latin America reached 7.7 percent—its steepest contraction ever, albeit 1.4 percent less than ECLAC’s earlier forecast. Can the region rebound in 2021 and exceed current growth forecasts?

After experiencing its worst economic crisis ever in 2020, the regional economy is expected to grow 3.7 percent in 2021. But, it’s also possible that the region can outpace this forecast, if it can manage a strategic balancing of expanded fiscal support for social-protection programs and small businesses, investment in job-generating productive sectors, and structural reforms to tackle long-standing challenges in the rule of law, equality, productivity, and climate. To accelerate economic reactivation, the region must leverage international investment and cooperation from global institutions such as the World Bank and the International Monetary Fund (IMF), as well as from regional organizations such as the Inter-American Development Bank. The private sector, at the national and international levels, must also play a central role in revamping growth, but will require strong incentives from local governments and risk-mitigated business climates.

Eyes will be on Brazil, Mexico, and Argentina (the region’s three largest economies) as well as Peru, which has had one of the best developing-world growth rates in the past decade, to recover from their 2020 economic downturns. In comparison to these four countries, Chile and Colombia suffered less devastating declines and could be positioned for stable growth over the year, but the migration crisis in Venezuela will continue to pose a heavy burden on neighboring countries’ already-strained public resources.

OUR ANSWER TO QUESTION #3: YES

This year will almost certainly see a surge in Central American migrants and refugees trekking north to the US southern border, due to a unique confluence of the devastation caused by Hurricanes Eta and Iota, as well as the myriad effects of the coronavirus pandemic and other long-standing migration pressures. Days before Biden’s inauguration, a caravan of more than nine thousand Hondurans created international headlines. The caravan was fueled, in part, by the promise of a revamped immigration policy in the United States.

The back-to-back hurricanes—which made landfall in Central America less than two weeks apart—wreaked havoc across Nicaragua and the Northern Triangle (Guatemala, Honduras, and El Salvador), affecting more than five million people and forcing at least 350,000 Hondurans and Guatemalans into emergency shelters. With hundreds of thousands of Central Americans internally displaced, shelters lacking basic services and sanitation quickly became new ground for rapid coronavirus infection. The destruction to essential infrastructure—such as bridges, roads, buildings—and entire communities was a heavy blow to a region that saw a 6.5-percent economic decline in 2020.

Food insecurity in Nicaragua, Guatemala, and Honduras is expected to rise significantly, due to the destruction of large swaths of agricultural lands, livestock, and infrastructure. In a region with long-standing pre-pandemic challenges around rule of law, insecurity, and economic opportunity, the most likely outcome from these push forces is a novel wave of “new” climate refugees seeking better livelihoods in the United States.

In 1998, Hurricane Mitch, the second-deadliest Atlantic hurricane, caused a massive surge in Central American migration to the United States. If history is any indication of the future, Hurricanes Eta and Iota—Category 4 and 5, respectively—can trigger a similar scenario in 2021.

OUR ANSWER TO QUESTION #4: NO

Security cooperation will be an important, though complicated, part of the US-Mexico relationship. In the days leading up to Biden’s inauguration, Mexican President Andrés Manuel López Obrador’s (AMLO) administration decided to stop investigations into former Mexican Secretary of National Defense General Salvador Cienfuegos—who was arrested in Los Angeles at the end of last year, and then sent for prosecution to Mexico. AMLO then released more than seven hundred pages of confidential evidence and intelligence, prompting an unusual rebuke by the US Department of Justice. The General Cienfuegos saga is just the latest example of a strained US-Mexico security relationship.

The Mexican Congress passed a new law in December 2020 that limits and deters the work of foreign enforcement agents in Mexico. Under the law, all communications—at all levels—with foreign enforcement agents will need to be reported, meetings with foreign agents must be approved in advance, and senior federal officials will need to be present at said meetings. Failure to do any of the above may result in expulsion of foreign agents. The law has prompted serious concerns that international cooperation with Mexico on the security front will be henceforth paralyzed. Most of the intelligence on criminal groups and illicit activities comes the United States.

AMLO has sought to double down on addressing the root socioeconomic causes of crime, and has moved away from the drug-kingpin strategy of past administrations. These actions also reflect a desire to move away from a “war” with cartels and other powerful criminal organizations in Mexico. But, security cooperation goes beyond reduction of homicides and combating drug trafficking—a stable security climate is a requisite for business and commerce to thrive. The Biden administration will have to navigate this complex scenario in Mexico.

OUR ANSWER TO QUESTION #5: YES

Protests in Bolivia, Chile, Colombia, Ecuador, Peru, and Haiti that began in 2019 were expected to continue into 2020, but extended lockdowns to control the spread of the pandemic led to the suspension of protests in the first half of 2020. Despite the lockdowns and the inherent risk of public gatherings, citizens gathered in large numbers last fall in Argentina, Chile, Colombia, Costa Rica, Guatemala, and Peru for reasons ranging from a rejection of government austerity plans to calls for racial equality, better social and economic protections, increased transparency, and free elections.

As vaccines become available and social activities resume, protests will most likely resume in 2021 as citizens will air new grievances. The pandemic has increased inequality in the region, pushing an additional forty-five million people below the poverty line. As governments struggle to fund social-protection programs, discontent with ruling governments will rise. Costa Rica will likely see protests as President Carlos Alvarado Quesada’s administration resumes negotiations with the IMF to secure a much-needed loan. In 2020, the Costa Rican government quickly retracted proposed tax measures after protestors blocked major roads. Colombia may also continue to see protests as long as marginalized groups, including Colombia’s indigenous and Afro-Caribbean groups, feel the government has failed to address their demands.

Finally, as Nicaragua heads toward an election in November in which the opposition will be unable to run, protestors against Nicaraguan President Daniel Ortega’s regime should be expected to return to the streets. Protests may also gain momentum in Chile, Ecuador, Honduras, and Peru, as they also head toward elections.

OUR ANSWER TO QUESTION #6: YES

The EU will continue to promote a democratic transition in Venezuela. In September 2020, a European mission was sent to Venezuela in a failed attempt to promote minimum democratic conditions ahead of legislative elections. High Representative of the EU for Foreign Affairs and Security Policy Josep Borrell, who announced the EU’s rejection of Venezuelan election results, asked Maduro to “chart a path towards national reconciliation.” Borrell also reiterated the EU’s commitment to supporting Venezuela’s transition to democracy.

In 2021, municipal and regional elections are set to occur according to the Venezuelan Constitution. This will open a new opportunity for the EU and a multilateral coalition to continue engaging in close dialogue with the Maduro regime, the opposition, academia, non-governmental organizations, and other civil organizations to seek to promote conditions that allow for the participation of all political parties in a competitive electoral process. However, conversations aside, the Maduro regime is unlikely to see any upside in allowing elections that are transparent or fair.

OUR ANSWER TO QUESTION #7: MAYBE

In past years, the synergy between the United States and Brazil has led to the signing of the Alcântara Technological Safeguards Agreement, advancing scientific and technological cooperation; support from the United States for Brazil to join the Organisation for Economic Co-operation and Development (OECD); and, at the end of 2020, the signing of a protocol to facilitate trade and investment between the two largest economies in the Western Hemisphere. Despite some diverging views at the presidential level, stronger bilateral relations between Brazil and the United States are mutually beneficial, and opportunities could still exist for advancing on a common agenda.

Brazil has been criticized for recurrent fires in the Amazon rainforest and Pantanal wetlands, environmental disasters such as the Brumadinho dam collapse, and high levels of deforestation, heightening pressures on the Brazilian government to take action to protect its environment.

For Bolsonaro, the economy and structural reforms are top priorities. The government has pursued trade agreements with the EU, South Korea, and Canada, as well as the United States. However, with increasing pressure from the EU, and now the United States, failing to advocate for strong democratic principles and a concrete plan for sustainable development can isolate Brazil in the global arena, undermining possibilities for cooperation with the United States and other countries. To advance on the trade and investment fronts, which are priorities for the Bolsonaro administration, Brazil will need to double down on its efforts to reconstruct its image and role abroad, particularly regarding the climate agenda.

OUR ANSWER TO QUESTION #8: YES

In December 2020, the Congressional Western Hemisphere Drug Policy Commission (WHDPC) unveiled a bipartisan report recommending that the United States rethink many of its historical anti-narcotics policies. The report found that while Colombia has made remarkable progress in strengthening state authority in marginalized areas, the United States’ $11.6-billion Plan Colombia was unsuccessful in meaningfully curbing coca cultivation. Despite having significantly increased manual eradication efforts in Colombia, coca cultivation and cocaine production remain high; it is unlikely the current strategy will allow the United States and Colombia to reach their joint objective of decreasing coca cultivation and cocaine production to half of 2017 levels. As discussed in the report “The Untapped Potential of the US-Colombia Partnership,’’ the United States and Colombia must take measures to reduce coca cultivation and also target other stages of the drug market, including cocaine production, trafficking, and consumption.

Entering office with a profound understanding of the Americas and a track record of advancing policies fundamental to the region’s prosperity, Biden will prioritize strengthening the United States’ ties to the region—particularly the US-Colombia partnership, which he has referred to as the keystone of US foreign policy in the region. In light of the WHDPC report, the new administration has new thinking on how to reorient the US counter-narcotics policy in Colombia away from mass eradication and toward a more holistic approach, placing renewed emphasis on providing physical and economic security to rural Colombians and demobilized rebels. There is also new momentum for the United States to develop a whole-of-government strategy to counter transnational criminal organizations (TCOs) and the international drug trade, per the report’s recommendations.

OUR ANSWER TO QUESTION #9: NO

It is unlikely that all five Caribbean countries that currently recognize Taiwan—Belize, Haiti, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines—will instead recognize the PRC in 2021. However, the Dominican Republic’s switch to establish diplomatic ties with the PRC in 2018 puts significant pressure on Haiti, with whom it shares the island of Hispaniola. In its overtures to Haiti, the PRC recognizes the country’s extreme poverty and holds out a promise of building the kind of capacity that allowed China to lift 850 million of its citizens out of extreme poverty, but only if Haiti recognizes the “One-China” policy. The other Caribbean countries have long, and sometimes ethno-cultural, histories with Taiwan, which has been a loyal and generous partner. Nevertheless, the geopolitics playing out between Washington and Beijing will put pressure on these small island nations to choose—not necessarily in their own developmental interests, but in the interest of alignment with one great power.

For Guatemala, Honduras, and Nicaragua—the three Central American countries that still recognize Taiwan—pressing domestic issues around the pandemic, natural disasters, citizen and food insecurity, and the economic downturn will prevail over the diplomatic issue of recognition. In addition, the new administration in the United States will move away from a bilateral and mostly stick approach to the isthmus, and toward a more regional and balanced carrot-and-stick approach, in which the question of China can be a powerful bargaining chip. A ramping up of conditionality on foreign aid and support to the region from the United States can be highly persuasive, and can discourage Central American leaders from switching sides.

Caribbean and Central American recognition of China versus Taiwan also hinges on the intensity of Chinese outreach efforts. This, in turn, is often dictated by the state of play in cross-strait relations between China and Taiwan. Since 2016, Taiwan under Tsai Ing-wen’s leadership—in alignment with former US President Donald Trump’s administration—has shifted to a more explicitly competitive stance vis-à-vis Beijing. As cross-strait relations soured, both sides became more aggressive in maintaining or courting new diplomatic allies (e.g., the Dominican Republic, El Salvador, and Panama). In this context, China will likely continue its soft-power diplomacy in the region. The PRC’s staunch verbal support for multilateralism also has the potential to tilt more Caribbean countries toward its orbit. However, much of this could change in the next four years, contingent upon new dynamics in the US-China-Taiwan triangle, as well as Biden’s promised return to global, non-transactional cooperation and a renewed focus on the Americas.

OUR ANSWER TO QUESTION #10: NO

Although the CARICOM has operationalized the single market, the prospect of a single economy remains unlikely. A little history will help. CARIFTA was formed in 1965, shortly after anglophone Caribbean countries achieved independence. CARIFTA removed tariffs and other non-tariff barriers to regional trade. CARICOM was formed in 1973 to implement the Treaty of Chaguaramas, which replaced the free-trade area with a single market. The intended free movement of people, goods, and capital is still not a reality because there is not a “regional body with powers and accountability that can help transform community decisions to binding laws in individual jurisdictions is a key impediment,” according to a 2020 report from the IMF.

In 1989, the CARICOM heads decided that further economic integration was required in an era of globalization. The Treaty of Chaguaramas was revised in 2001 to accelerate the implementation of the CSME, which started in 2006. The 2008 global financial crisis further delayed what former Managing Director of the London-based Caribbean Council David Jessop called “a process plagued by rhetoric and inaction.”

COVID-19, however, may have done what neither of the two best-known analyses of the Caribbean’s challenges, the Golding Report and the Ramphal Commission, could: show the fragmented Caribbean nations the real benefits of integrated, unified coordination when faced with externalities. As she relinquished the CARICOM chair In June 2020, Barbadian Prime Minister Mia Mottley praised the regional architecture for its sterling performance in organizing and supporting the region during the pandemic.

Current Chairman of CARICOM and Prime Minister of Trinidad and Tobago Keith Rowley called for 2021 to be “the year of CARICOM,” and challenged the region to live up to its promise: “Let this be the year that we make CARICOM work for us and construct the resilient society that will provide a safe, prosperous and viable community for all of us.” He boldly called for the CSME to become the principal framework for recovery. Despite the real obstacle of establishing a single currency and its attendant institutions, CSME got a shot of energy from the COVID-19 crisis.

BONUS QUESTION ANSWER

Assume the Olympics occur this summer. Several factors contribute to a country’s medal-count prospects—population size, the promotion of women in sports, national investment in sports, etc. While no single factor explains a country’s success or failure, decisions and investments made by Latin American nations over the past four years could be an indication of a strong Olympic showing.

Brazil has made the strategic decision not to prioritize one sport, and has instead sought to be in the competition for as many Olympic slots as possible, securing one hundred and eighty so far. Cuba, in comparison, has focused on boxing and baseball to achieve its Olympic medal goals. Mexico’s Olympic team is also looking promising, with a fairly gender-balanced team (forty-nine men and thirty-seven women). AMLO also announced a financial stimulus for athletes who participated in the 2019 Pan American Games and are now preparing for Tokyo 2020+1 amid the COVID-19 pandemic. Jamaica is also investing in its Olympic athletes, despite the economic constraints of the pandemic, providing $40 million in funding for its athletes’ preparation and qualification.

With all eyes hopefully on the Summer Olympics, the authors predict that countries that provided the most comprehensive support to their athletes during the pandemic will come out on top in the upcoming games. 

The post Spotlight: 10 Questions for Latin America and the Caribbean appeared first on Atlantic Council.

Firstly, the coronavirus pandemic continues to affect the country, despite early and strict national lockdowns. By mid-June 2020, just a few months into the pandemic, the number of people facing hunger in Guatemala had doubled. As of this month, over 120,000 cases have been confirmed, the highest of the three northern Central American countries. The high degree of informality and the structure of the workforce in Central America renders telework unfeasible in many cases, forcing citizens to choose between their livelihoods and the risk of contagion. In fact, over 70 percent of the workforce in Guatemala is informal, and many depend on the holiday season for the bulk of their yearly income.

Second, in the midst of the pandemic, three quarters of the Guatemalan Congress approved a now-scrapped 2021 budget that sought to cut health and education spending while increasing the meal stipends for congressional representatives and prioritizing mega infrastructure plans that involve the Ministry for Communications, Infrastructure, and Housing (Comunicaciones, Infraestructura y Vivienda), long-known for a string of high-profile corruption cases. In reaction to this, citizens took to the streets to denounce the budget and the systemic corruption that continues to weaken the rule of law, security, and social programs. The budget approval also came as most of the country was focused on the damage from hurricanes Eta and Iota, historically two of the strongest storms to hit Central America.

Subscribe to The future is here: A guide to the post-COVID world

Sign up for a weekly roundup of top expert insights and international news about how coronavirus is reshaping international affairs.

A recent International Monetary Fund visit to Guatemala concluded that although the country’s contraction of about 2 to 3 percent in 2020 is lower than the regional and global averages, there will be lasting economic and social ramifications of the pandemic. Already, the Economic Commission for Latin America and Caribbean finds that foreign direct investment (FDI) to Latin America contracted by half in 2020 as a consequence of the pandemic. The drying up of FDI will do little to improve the increasing levels of unemployment in Guatemala, and will likely force citizens to leave their country. Increased migration—from Guatemala but also from other Central American countries and Mexico—will be a challenge for the incoming Biden-Harris administration and the international community. Migration to the United States is already picking up when compared to pre-pandemic levels, and the aftermath of the storms will continue to push more people north. Already, the Guatemalan government has put in an official request for temporary protected status (TPS) for Guatemalan citizens in the United States, as the destruction of the storms has ravaged entire villages. 

As the Guatemalan Congress prepares to receive and review a new budget proposal for 2021, with inputs from numerous civil-sector representatives, the government will have to work across industries, parties, and sectors to unite a divided and discontent country. At the same time, the Biden-Harris administration will have to play an important role in supporting citizens’ demands to fight corruption, create job opportunities, and continue to strengthen the US-Guatemala relationship. A prosperous Guatemala, committed to the fight against corruption, has important ramifications for the entire hemisphere.

Maria Fernanda Bozmoski is associate director at the Adrienne Arsht Latin America Center of the Atlantic Council.

Further reading:

New Atlanticist Nov 25, 2020

What a Biden presidency means for US-Colombia relations

By Camila Hernandez and Daniel Payares-Montoya

On repeated occasions, President-elect Biden has characterized Colombia as the “keystone” of US foreign policy toward Latin America and the Caribbean, maintaining that, if elected president, restoring the alliance between the United States and Colombia will be among his top foreign policy priorities.

Colombia Corruption

New Atlanticist Nov 10, 2020

¡Basta Ya! How pandemic-related corruption calls for a new social contract in Panama

By Cristina Guevara

In order for Panama to emerge from the pandemic with inclusive and sustainable growth, the country needs a new social contract that combats corruption and provides equal opportunities for everyone.

Corruption Latin America

New Atlanticist Nov 5, 2020

Bolivia emerges from its electoral turbulence

By Gabriella Cova

As Arce prepares to begin his term on November 8, he must consider Bolivia’s priorities and relationships in the region in order to secure prosperity for the nation and a continued commitment to upholding democracy.

Elections Latin America

The post A budget roils a nation. What’s happening in Guatemala? appeared first on Atlantic Council.

Laura Chinchilla, former president of the Republic of Costa Rica and member of Adrienne Arsht Latin America Center’s Advisory Council, provided keynote remarks that emphasized the chronic problems facing Central America including high poverty rates, violence, migration to the United States, and a disenchantment with democracy. Former President Chinchilla stated that economic reactivation must be designed with a medium-to-long-term perspective to effectively tackle structural challenges, build on existing strengths, and place young people at the center of Central America’s future. Her keynote served as a call to action for turning this crisis into an “opportunity for past and present generations of Central Americans.”

Following the keynote remarks, María Fernanda Bozmoski, associate director of the Adrienne Arsht Latin America Center, moderated the panel discussion on unlocking economic growth in Central America, the role of public-private partnerships, and prospects of regional integration. Former Minister María Eugenia Brizuela de Ávila, non-resident senior fellow at the Adrienne Arsht Latin America Center, highlighted Central America’s unique economic ties, due to trade agreements with the United States and the European Union, and how this poses an opportunity “for allies to promote cooperation, democratic values, and rule of law” in collaboration with the private sector. Likewise, Andrew Herscowitz, chief development officer at the US International Development Finance Corporation (DFC), spoke to the need for investing in small and medium enterprises in Central America, and mentioned the DFC’s commitment to investing $1 billion in Guatemala and Honduras, as well as the need to strengthen financial sectors through job creation in innovative areas, such as financial technology. 

Salvador Paiz, president of Fundación Sergio Andrade Paiz (FUNSEPA), mentioned that regional integration in Central America has been mostly occurring through the private sector – with some exceptions such as the Guatemala-El Salvador-Honduras customs union – due to lack of coordinated political will and investment from governments in the region. Mr. Paiz believes that there is a need to deliver momentum behind integration which requires agreeing and communicating the benefits of seizing low-hanging fruits, like digitalizing customs offices and integrating them into a common systems platforms (such as the US-Mexico FAST program), committing to concrete deliverables, and guaranteeing government accountability. Bringing Nicaragua to focus, Enrique Bolaños, rector of INCAE Business School, described the country’s short-to-medium-term outlook in light of the pandemic, economic mismanagement, migration, and erosion of democracy that Nicaragua faces today. Mr. Bolaños explained that after two years of political crisis, the outlook is grim, especially since economic forecasts place Nicaragua as the only country in the world that will have a negative GDP in 2021. For him, “economic improvement and the well-being of Nicaraguans depend on the resolution of this political crisis.

The post Central America economic reactivation: Finding opportunities in a COVID-19 world appeared first on Atlantic Council.

Contributing authors: Enrique Bolaños and Salvador Paiz

Foreword

As the coronavirus pandemic rages on, countries around the world face an unprecedented test: concurrent public health and economic crises coupled with the resulting political and social reverberations. In Central America, the collective test of survival is no different—at least on its surface. But, as a region plagued by weak institutions, migration, violence, and lack of economic opportunities, Central America has to not only meet this unprecedented moment, but leapfrog beyond it.

COVID-19 is shining a spotlight on historic challenges and inequalities now accentuated by pandemic fallout. But, can the policy response to this public health and economic emergency also accelerate long-needed transformations in Central America? It must. Actions taken by countries today in response to COVID-19 will set the national development trajectory for perhaps the next decade. Bold, new actions and public-private cooperation can help to avoid another “lost decade.”¹

Consider two pre-pandemic variables in Central America: a highly favorable demographic trend that will continue to churn out a large and young labor force in the next decade, and advances toward greater regional economic integration. When the pandemic hit, a third external variable came into the mix: in an ever-disrupted global economy, companies in China are seeking to relocate supply chains closer to the US market. As free-trade partners of the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama have a unique opportunity to capture production and prominent roles in reconfigured global supply chains.

That is only possible through swift action to strengthen historically weak public institutions—long a roadblock to inclusive growth. Also, the rule of law must become the norm, not the exception. A 2017 Adrienne Arsht Latin America Center binational and bipartisan task force outlined a policy blueprint as to how Guatemala, Honduras, and El Salvador—in partnership with the United States—could improve the rule of law, provide sustainable economic opportunities, and address insecurity. While many task-force policy recommendations have been implemented, a renewed push is urgently needed to revisit other policy prescriptions that have yet to be addressed, but are fundamental for long-term recovery.

Since its founding, the Adrienne Arsht Latin America Center has advanced a different narrative on Central America—a narrative that does not see its entrenched problems as intractable. Rather, the Center promotes sustained, long-term, and multidimensional thinking that counts on the buy-in and collaboration of both the public and private sectors to help set a new direction for the region. This is not easy, but is necessary to set the region on a more prosperous path.

For all its ills, this publication argues that COVID-19, if addressed correctly, could be the catalyst to inspire long-needed policy reforms. The following pages highlight specific opportunities for Central America’s economic recovery at a time of increasing global uncertainty. Once travel opens up again, the Center looks forward to working hand in hand with Central American friends to advance the ideas presented in this paper; until then, it will work virtually to turn ideas into action.

Jason Marczak

Director, Adrienne Arsht Latin America Center

Atlantic Council

Introduction

When the coronavirus pandemic began to rattle developed nations in the West, experts warned it was only a matter of time before the virus reached emerging economies. By mid-September 2020, Latin America and the Caribbean—a region that accounts for only eight percent of the world’s population— reported more than a third of global COVID-19 deaths.² As Latin American countries begin to ease lockdown restrictions—even as the number of new infections continues to rise in some countries—a grim outlook remains for public health, fiscal solvency, and economic growth and stability. In 2020, the combination of a stalled informal economy, a drop in tourism, capital flight, and climate disruptions will cause the region’s largest-ever economic contraction, according to the International Monetary Fund (IMF).³ More worrisome, the United Nations World Food Program estimates that “severe food insecurity” in the region will quadruple, from 3.4 million to 13.7 million, during 2020.⁴ Perhaps one of the few silver linings is that remittance flows, after falling drastically in April, have since increased compared to 2019 despite the economic crisis.⁵ If Latin America is to successfully recover from this unprecedented crisis, leaders from across all sectors must work together to rethink how to shape a sustainable recovery that weaves short-term solutions with long-term strategies. Central America is uniquely positioned to be an integral part of a robust and sustainable recovery.

With a combined population of forty-nine million, Central America reported an average of 8,202 coronavirus cases per million residents in August 2020, compared to the global average of 3,500.⁶ As seen across Latin America, Central American countries—with the notorious exception of Nicaragua—have implemented a combination of measures to respond to the pandemic, including lockdowns and curfews, additional funding and equipment for public health services, direct payments to individuals and families, and stimulus packages for small and medium-sized businesses, all with varying degrees of success.⁷ While the risk of a second wave of infections is still high as the region begins partial or full reopenings of economic activity (with a patchwork of health protocols implemented in different countries), leaders are faced with a challenge that can very well determine the prosperity of their nations: how to sustain reactivation of their economies in a COVID-19 world, especially given the preexisting institutional vulnerabilities that have hindered inclusive growth for too long?

Amid a global crisis forcing countries and private enterprise to recalibrate how they do business and how they cooperate on issues of common interest, this unprecedented moment calls for national and regional action on how Costa Rica, El Salvador, Guatemala, Honduras, and Panama can seize existing opportunities and find new ones to generate economic reactivation while addressing citizens’ pressing health issues. The Adrienne Arsht Latin America Center of the Atlantic Council has identified three key areas of opportunity: a demographic bonus of a large working-age population; nearshoring of multinational firms to Central America; and a renewed push for regional economic integration. At the same time, a concerted effort to improve the rule of law in these countries and reduce corruption is imperative. The direct payoffs of properly executing on these opportunities include inclusive economic growth, foreign investment, job creation, and an overall improved rule of law and governance. Migration pressures and security concerns would also be ameliorated as living conditions improve over time, offering would-be cross-border migrants a better future in their own countries.

Central America must act now to pursue these opportunities and set forth an economic reactivation plan in a COVID-19 world. What policies should governments in Central America enact to create and effectively communicate the incentives to attract nearshoring opportunities? How can the public and private sectors work together to train and empower low-income youth in Central America? How has the pandemic triggered new momentum for regional integration? What is the role of the international community and partners of Central America in promoting the conditions to bolster economic growth and investment?

The Adrienne Arsht Latin America Center of the Atlantic Council has identified three key areas of opportunity: a demographic bonus of a large working-age population; nearshoring of multinational firms to Central America; and a renewed push for regional economic integration.

The Isthmian Ocelots: Mapping Central America’s Opportunities for Reactivation in a COVID-19 World

At a glance, the economic outlook does not bode well for Central America. The IMF anticipates a 3.5-percent average contraction for the region in 2020, albeit less than the projected drop for Latin America and Caribbean, which includes tourism-driven economies and larger countries such as Brazil, Mexico, and Peru that have been particularly hard hit by the coronavirus. The national recovery plans deployed by Central American countries to respond to the immediate and short-term effects of the pandemic, while necessary to mitigate unprecedented health and economic crises, are also demanding increasingly high levels of public expenditure. This poses a threat to fiscal stability, and could weaken the governments’ ability to address rising poverty and inequality. For the informal sector—which employs around 70 percent of the workforce in Central America—the impact is already catastrophic, as public resources are very limited for those outside of the formal economy. The pandemic has also produced external shocks as prices of commodities—the principal exports of Central America—have plunged. As Central American economies are net importers of refined petroleum, the low prices of oil are one of a handful of factors helping them stay afloat.

There are opportunities in the wreckage, though owing less to the nature of the crisis than the political capital for strong response. The severity of this moment should unite Central American leaders from all sectors to develop strategies that seize opportunities for growth, diversification, and integration that have been put aside due to lack of political will or long-term vision, and new ones arising from pandemic-induced global shifts.

Central America: A New Hub for Global Supply Chains?

The US-China trade war has forced companies with China-based supply chains to consider the risks of tariffs, and their effects on imports and exports, against the low costs of Chinese manufacturing. In 2020, the pandemic further accelerated momentum for US companies seeking to diversify their supply chains and potentially relocate closer to the US market to hedge against future global disruptions. According to a recent report analyzing trends in global manufacturing, a significant amount of US firms are moving their supply chains to other low-cost Asian countries or away from Asia entirely, with Mexico becoming a top destination in Latin America as businesses and investors seek the predictability and investment security granted in the recently ratified United States-Mexico-Canada Agreement (USMCA).⁸

As the Americas become an increasingly attractive alternative, Central America has an opportunity to position itself as the region of choice for nearshoring and foreign investment that can ramp up job creation in the formal sector, while offering companies supply-chain resilience at a competitive cost. To do so, Central America must strategically leverage existing trade relations as well as a large—and growing—young working-age population. Importantly, to become a global supply-chain hub and attract the capital inflow that requires, Central America must significantly improve the rule of law—possibly the largest deterrent for foreign investment in the region.

Central America has an opportunity to position itself as the region of choice for nearshoring and foreign investment that can ramp up job creation in the formal sector, while offering companies supply-chain resilience at a competitive cost.

The most salient value proposition for Central America to become a new center for global supply chains is its unique economic ties to two of the world’s largest economies. Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica—along with the Dominican Republic—are among the few countries in the world that are parties to regional trade agreements with both the United States and the European Union. Under the Central America-Dominican Republic (CAFTA-DR) free-trade agreement and the Association Agreement with the European Union (which also includes Panama), total two-way trade in 2019 was $59 billion and $14 billion, respectively.⁹ Both trade deals have helped to advance economic growth and create new jobs in Central America, while providing the United States and the European Union with a key export market and an opportunity to promote—though not without significant challenges—regional economic integration, cooperation on democratic values, and the rule of law.¹⁰

For US firms and other multinational corporations with operations in Central America’s signatory countries, the regional trade agreements (as well as Panama’s free-trade agreement with the United States) offer a well-established blueprint—unlike any other in the region—for exporting goods and services to two of the world’s largest consumer markets. The labor, customs, and rules-of-origin provisions provide the security and stability that firms are seeking, especially at a time of increasing global uncertainty. Specifically, nearshoring firms in the businesses of textiles, agriculture (foodstuffs), and electronics—the main exports under the agreements—have ample opportunity to expand and increase the volume of goods in these sectors using established transportation routes and logistics. Exports to the US market can benefit from even greater supply-chain resilience derived from advantages in strategic geographical proximity to the North American trading bloc. As well, services such as call centers can leverage young bilingual speakers, who will continue to grow in numbers as part of the region’s demographic window that closes around 2033 (see section on Central America’s demographic dividend).

While competitive wages, a young working-age population, and preferential trade access are strong magnets for nearshoring to Central America, they alone will not be enough to successfully attract and sustain the investment needed to fully capitalize on this opportunity. According to the World Bank’s Doing Business 2020 Rankings, Central American economies lag well behind their global peers in the following areas: starting a business, enforcing contracts, dealing with construction permits, registering property, getting electricity, protecting minority investors, and paying taxes.¹¹

Policymakers across the region must be intentional about fostering a more business-friendly climate for multinational firms. Reducing red tape as well as modernizing and decentralizing key government processes to ensure efficiency and accountability are relatively low-cost (both politically and financially) first steps with a high potential upside. Properly enforcing public contracting laws—a longstanding challenge in Central America and across Latin America—will be critical, especially at a time of increased fiscal and monetary challenges due to the pandemic. But, if Central America is to lock in foreign investment over the long term, leaders from across the public and private sectors must come together to implement integral and viable solutions to address deep-seated impediments for growth, including economic informality, politicization of justice, violent crime, and insecurity, and—in the particular case of Nicaragua—political instability and widespread social repression.

Costa Rica in Focus

The restructuring of value chains through nearshoring offers a distinct opportunity for Costa Rica. Companies are looking for certainty in today’s context. Shortening the supply chains is an option, but that alone does not necessarily improve resilience.¹² Instead, diversification of supply-chain location and suppliers can provide the best results. Costa Rica has a long-standing track record of a highly qualified and healthy workforce. According to the World Economic Forum, Costa Rica ranks as the top country in Latin America in human capital; the top country in innovation efficiency; the number-two country in the region in the Global Innovation Index (after Chile); and the top-ranked country in Latin America in university-industry collaboration in research and development (R&D).¹³ Costa Rica recently became a member of the Organisation for Economic Co-operation and Development (OECD)—the first one in Central America—which will mean more competitive laws and practices, better education policies, and improved governance.

Costa Rica’s free-trade-zone regimes—which currently include a total of seven manufacturing parks and twenty-five service parks—offer 100-percent tax exemption (with no expiration) on custom duties for imports and exports; interest income; withholding tax on royalties, fees, and dividends; sales tax on local purchases of goods and services; and stamp duty. For all sectors outside the greater metropolitan area, the benefits expand to a complete income-tax exemption for the first twelve-year period, followed by a 50-percent income-tax exemption for the subsequent six years.¹⁴

Transportation infrastructure and costs, as well as the country’s fiscal situation, are obstacles that companies looking to relocate will have to face. The 2018 World Economic Forum ranks Costa Rica’s road quality and infrastructure as second to last.¹⁵ The poor quality of Costa Rica’s road network also results in significant losses for companies, sometimes up to 12 percent of the value of exported goods.¹⁶ In 2020, Costa Rica will invest 1 percent of its gross domestic product (GDP) in transportation infrastructure; the investment should be at least three times that in order to help the country’s competitiveness.¹⁷ In addition to the high costs of transportation and low investments in infrastructure, Costa Rica’s long-term fiscal health is worrisome. The fiscal deficit for 2019 reached 7 percent of the country’s GDP, the highest in almost forty years. The precariousness of the situation has not gone unnoticed by Fitch and Standard & Poors, which have downgraded the country rating to B with a negative outlook, while Moody’s has downgraded its rating to B2 with negative outlook for 2020.¹⁸ The result: despite Costa Rica’s many advantages, heightened country risk may keep investors away.

Central America’s Demographic Bonus

For Central American countries, the second half of the twentieth century was marked by internal conflicts, natural disasters, and start-and-stop attempts to scale their economies by moving toward greater regional integration. During this time, countries relied mostly on agricultural and primary exports. But, important shifts in demographic patterns that have translated to visible economic and social progress in other industrialized countries and regions are now occurring in a non-armed conflict in Central America—where the working-age population, and therefore the workforce, grows more rapidly than the older and younger populations. The “economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population is larger than the non-working-age share of the population” is what the United Nations Population Fund has defined as the demographic dividend. An Atlantic Council report, Latin America and the Caribbean 2030: Future Scenarios, found that “the dependency ratio in Central America will peak in 2033.¹⁹ Other forecasts place the average year for Central America to reach this milestone around 2042, and the United Nations (UN) predicts the population pyramid in Central America will flatten by 2050.²⁰ With domestic product growing at a 3.5-percent average rate, Central America has experienced the strongest growth in Latin America for the past decade.²¹

On the other hand, the socioeconomic progress from the last few years—in large part, derived from the increased productivity that normally accompanies the demographic bonus—is at risk of evaporating as Central America grapples with the pandemic and economies are paralyzed over sanitary concerns. However, compared to its Latin American peers, Central America has both a distinct demographic opportunity and threat (varying by country), which it must address by putting people to work in the formal labor markets. Failure to employ and occupy a large young workforce can be a security and welfare risk, as young men and women may turn to illicit activities to create a livelihood, and will not contribute to the state’s coffers, which depend on tax revenue and social-security collections to support retirees and public services.

Seizing the Demographic Window

The rest of Latin America, for the most part, has already seen the demographic window of opportunity come and go, and the trend will not be reversed anytime soon. The fertility-rate average, meaning “the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age,” in Latin America is 2.05, below the replacement rate of 2.1 and the 2020 global fertility rate of 2.4.²² For 2035, the estimate is that Latin America’s fertility rate will drop to 1.81.²³ Fertility rates are an important and telling data point for the demographic bonus described in the previous section. As fertility rates decline, the first part of the pyramid to shrink is the base, which translates into fewer young dependents for a nation to support.²⁴ The middle section of the pyramid, comprising working-age citizens, budges out as this section of the population grows as a result of a country’s past fertility rates, as does the tip of the pyramid, although at a slower pace.

The current population forecasts and trends bode well for Central America’s future, but a robust young workforce does not necessarily translate into economic growth. If unoccupied, working-age men and women can turn to criminal activities and pose a security risk for the region and hemisphere. Likewise, if countries fail to think and invest in a long-term strategy with a focus on increasing productivity, they may end up with an aged and burdened population.

The experience of East Asia, including Japan, South Korea, Taiwan and Singapore, is considered one of the first and most successful examples of a region exploiting the demographic bonus, and offers best practices for how to capitalize on the demographic bonus. For example, at the beginning of the twenty-first century, the aforementioned countries focused on creating high-value jobs in “the service and manufacturing sectors of the economy.”²⁵ Central American countries, for the most part, have been incapable of keeping job creation and opportunities at pace with the growing workforce numbers. In 2017, the annual labor-force increase in Guatemala, El Salvador, and Honduras surpassed 350,000 people, with only 34,500 jobs created in the formal economy, and more than 290,000 in the informal economy.²⁶

Likewise, in the East Asian “tiger economies,” of Hong Kong, Singapore, South Korea and Taiwan which underwent rapid industrialization and maintained high growth rates of more than seven percent a year starting in the 1960s, reforms were introduced to attract women to the labor market.²⁷ These high-income economies took advantage of the growing taxpayer base and declining number of young dependents to invest in education, without having to increase taxes.²⁸

Migration

Economies need young workers to grow. As populations grow older, the state relies on each working-age person to pay taxes to cover social services for a growing number of older citizens, and to guarantee a functioning state and public services. Europe, for example, would be in trouble and the social welfare overburdened if the region was unable to attract immigrants. Currently, the European Union’s average fertility rate is 1.59, well below the global replacement rate of 2.1.²⁹ For the past decade, immigrants have accounted for more than 70 percent of Europe’s increase in workforce. In the United States, according to Census Bureau projections, immigrants are poised to “overtake natural increase (the excess of births over deaths) as the primary driver of population growth for the country” by 2030, though this is primarily due to the low birth rates from the US-born population and not necessarily because of increased immigration levels.³⁰ Already today, immigrants are responsible for more than 47 percent of the increase in workforce.³¹ A study by the OECD finds that “in most countries, except in those with a large share of older migrants, migrants contribute more in taxes and social contributions than they receive in individual benefits.”³² For this reason, seizing Central America’s demographic bonus and successfully employing its native young workforce at home, or within the region, is crucial.

In 2017, more than 4.4 million Central Americans emigrated, representing almost 10 percent of the region’s total population.³³ Currently, the working-age population in Central America (between twenty and thirty-nine years old) is among the most likely to emigrate—primarily to the United States.³⁴

Nicaraguans, however, mostly migrate to neighboring Costa Rica and are important contributors to their southern neighbor’s GDP. While they make up around 9 percent of Costa Rica’s total population, Nicaraguans contribute more than 11 percent of their southern neighbor’s GDP. These emigration patterns—driven by different factors in each of the countries, but mostly due to citizen insecurity, violence, and lack of economic opportunities—are preventing Central America from making the most of its demographic bonus. In addition, recent studies suggest that migration can be “self-reinforcing.”³⁵ In other words, as citizens leave and settle in a new country, they may encourage friends and family to migrate as well. This is especially true with the power and reach of social media today.³⁶ While the brain drain has proven detrimental to Central American countries, the remittances sent back home help offset some of the economic losses from a smaller workforce. Remittances sometimes make up one fifth of Central America’s individual economies.³⁷ Although remittances dropped sharply as a result of the COVID-19 pandemic in the first half of 2020—especially in April, when much of the United States, the main destination of Central American immigrants, was closed down—a recent analysis by the Pew Research Center shows that remittances are slowing picking up again, though they will probably not reach 2019’s record levels.³⁸

Guatemala in Focus

More than half of the population in Guatemala is in the productive age category, but almost six in ten people live in poverty. This is, in part, because of the high rate of informality, where more than 70 percent of the population that is active in the economy is in the informal sector, as street vendors or in domestic or non-remunerated labor, which hardly contribute to the country’s productivity.³⁹ For comparison, the Latin American average for labor informality is 53 percent.⁴⁰ The 2.8-percent official unemployment rate is low compared even to developed economies such as Spain (14-percent unemployment), but the real concern lies in the size of the country’s informal economy.⁴¹ Urgent reforms in Guatemala will translate into a transition into formal economic activities that will employ young men and women for the jobs of tomorrow—including in digital—and will pay dividends down the road. Currently, in Guatemala, the service sector represents the largest share of GDP (62.1 percent) and employs more than half of the formal working population in key sectors including tourism, customer-service (call centers), financial-services, banks, and retail. The table below shows the breakdown of economic activity by sector in Guatemala in 2019. As a matter of comparison, while almost one quarter of the country’s GDP is generated by the industrial sector, the number jumps to 40 percent for the United States.⁴²

The demographic window of opportunity for catalyzing economic growth and development will not remain open indefinitely—and, as discussed in this paper, is not enough to alleviate the impending economic recession and difficulties of the coming years, or to guarantee economic growth and development.

Now is the time for Central American nations to invest in policies, new sectors, and industries that will reduce educational and economic disparities, help train citizens for productive work in the changing economic landscape, create jobs for the growing labor force, attract women to the labor market, and prepare countries to care for an elderly population. Estimates from the Inter-America Development Bank show that an improvement in emerging human capital in the region could translate into a 33-percent increase in GDP per capita with respect to a base scenario, an especially important investment in a difficult COVID-era.⁴³

The Case of Nicaragua

By: Enrique Bolaños

The coronavirus pandemic in Nicaragua is amplifying an already-strained economy due to the political instability experienced in recent years. The United Nations Economic Commission for Latin America and the Caribbean estimates a GDP contraction of 8.3 percent in 2020, after it contracted by 4 and 3.9 percent in the previous two years.⁴⁴ The pandemic is aggravating existing tensions generated by the country’s traditional institutional and competitiveness challenges.

Nicaragua’s lag in development is largely explained by the historical instability of its democratic system. After more than forty years of the Somoza family dictatorship, the 1979 Sandinista revolution promised new hope. But, a decade of economic mismanagement from the Sandinista government caused the country’s GDP per capita to regress to the same level as twenty-five years earlier. Following three democratic governments from 1990 to 2006, the Sandinistas came back to power in 2007. Since then, democratic institutions and the rule of law have eroded, and Nicaragua is now considered an authoritarian regime. Meanwhile, the economic structure has remained relatively stagnant during this period, characterized by low levels of competitiveness and concentration on a few exports of primary products and apparel manufacturers, with little value added.

An economic recovery in the face of COVID-19 requires short- and medium-term interventions and, once the emergency is over, structural changes for sustainable development. The immediate priorities must be to protect employment and avoid company closures. In the short term, this involves strengthening the liquidity of companies and helping them prepare to operate under a “new normal,” in which there is no coronavirus vaccine widely available for the next twelve to eighteen months. Fiscal support and policies aimed at increasing financing for the productive sector, especially for small and medium-sized enterprises (SMEs), is crucial, as is technical support for companies to implement special operating protocols that guarantee the safety of workers and clients. Finally, adoption of basic digital capabilities into the operating model of companies is essential to recover lost sales and improve efficiency.

In the medium term, Nicaragua needs to stimulate engines of growth. Public investment and agri-food exports seem to be the most promising ones. The government should activate an investment plan in infrastructure that can catalyze productivity. First, it should focus on border crossings and better customs processes to facilitate trade. Second, it should invest in broadband infrastructure to improve access, cost, and quality of Internet connectivity. Third, it should prioritize investment in technology to streamline and digitize specific processes aimed at minimizing red tape. At the same time, the country should implement a development plan for the agri-food sector that encourages export growth and adoption of new technologies for precision agriculture.

In the long term, in addition to strengthening the democratic system, generating prosperity requires a transformation of the economic structure. This transformation must diversify the existing basket of exports and evolve toward activities with higher value added. The country must take advantage of the changes in globalization patterns in the post-COVID-19 era, its geographical position, and its preferential access to the main markets in the United States, Europe, and Asia. It is essential to implement programs in strategic sectors that allow for enhancing competitiveness and sophistication in production models, seeking synergies with world-class players. Policies and investments are also required to develop the human and physical capital to support this transformation.

A Renewed Push for Central American Economic Integration

The pandemic and its devastating economic effects have also given advocates of Central American integration a renewed opportunity for a project as old as the region’s independence. Despite clear benefits for economic growth and regional prosperity, integration has been stalled due to lack of coordinated political alignment and long-standing technical and practical hurdles. The unprecedented and unforgiving shock of COVID-19 can restart a serious, comprehensive, and strategic public debate on Central American economic integration, in spite of existing schisms among the countries.

The unprecedented and unforgiving shock of COVID-19 can restart a serious, comprehensive, and strategic public debate on Central American economic integration, in spite of existing schisms among the countries.

Central America integration has been talked about over the past sixty years. In 1960, Guatemala, Honduras, El Salvador, and Nicaragua (and later Costa Rica) signed a UN-backed agreement aimed at creating an EU-style single market. Following ratification of the General Treaty of Central American Economic Integration (GTCAEI), Central America saw its intraregional trade increase by seven times, and saw significant advances in industrialization and manufacturing.⁴⁵ But, the integration project saw a twenty-year hiatus due to the armed conflicts across the region. Integration discussions were picked up again during the early 1990s under the Tegucigalpa Protocol, which established the institutional framework—the Central America Integration System (SICA)—to carry forward integration based on a vision of “peace, democracy, and development.”⁴⁶ In 1993, under the Guatemala Protocol, parties to the 1960 GTACEI “committed themselves to achieve, on a voluntary, gradual, progressive and complementary way, the Economic Union of Central America.”⁴⁷ Since then, major wins toward Central American economic integration include a semi-completed customs union (Guatemala, Honduras, and El Salvador currently have one), a common external tariff, and some advances in the free movement of people, capital, and services.⁴⁸ Unfortunately, short-term vision and rivalries between Central American political leaders have not supported GTCAEI’s full implementation.

Full economic integration in Central America can better position the region for sustained economic growth and competitiveness in a global economy adapting to disruptions from the coronavirus pandemic. The region’s second-largest trading partner—after the United States—is Central America itself. Intraregional trade between Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica accounts for 27 percent of total exports and 13 percent of total imports. With a combined population of forty-five million producing $400 billion in GDP—ranking fourth in Latin America and nineteenth in the world, respectively—an integrated Central America can more efficiently allocate economic resources and investment, access new intraregional markets, boost foreign trade, improve commercial agreements and enter new ones with increased bargaining power, increase market diversification, attract foreign direct investment, and build supply-chain resilience. Economic integration is also an opportunity—especially at a time when countries in the region face the same external shocks, from global health and trade to climate change and geopolitics—to deepen political, security, social, cultural, and environmental ties. While advances on these fronts have been made through SICA, the coronavirus pandemic has alerted the region to the importance of forging stronger relations on public health, good governance, and economic resilience.⁴⁹

SICA and other regional forums at the presidential, ministerial, and central-bank levels have facilitated important integration discussions and helped to set the agenda for alignment and coordination on specific integration issues. But actual adoption and implementation remains a challenge. An integrated Central America will have increasead absorptive capacity to withstand the unprecedented global disruptions and unparalleled uncertainty in trade and supply chains. Can the coronavirus pandemic provide renewed momentum to advance the implementation of regional economic integration? Political leaders must put their differences aside, prioritize the integration agenda, and take collective action toward implementation. This means taking specific steps at the regional and country levels to advance implementation in policy, fiscal, and monetary coordination; tax harmonization; adoption of common standards and regulations; and financial sector integration. At the country level, leaders should prioritize investment in cross-border infrastructure for secure and reliable transportation and energy connectivity, with financial and technical assistance from regional and international banks, such as the Central American Bank for Economic Integration (CABEI) and the World Bank.

Central America Customs Union: A Requisite for Success?

By: Salvador Paiz

Individually, Central American countries are relatively small markets. In the past, as companies saturated a market in their respective industries, they looked to domestic diversification as a source for growth. The main competency was being able to thrive despite the nuances of their home country. Nevertheless, roughly forty years ago, companies began to expand differently: relying less on diversification, but growing the core business throughout Central America, where the size of the addressable market is more attractive, roughly equivalent to Chile in terms of GDP or Colombia in terms of population.

The private sector has been a longtime champion for Central American integration. Governments, on the other hand, have lacked leadership and vision for this ambitious project. Of course, there are a few initiatives that foster regionalization, such as the Secretariat for Central American Economic Integration (SIECA), which are important, but are also insufficient. What policy actions can Central American governments introduce in the short term to accelerate regional integration?

Customs offices in Central America are notoriously slow, and there is a lack of coordination between them. Digitalization of customs offices, including their integration into a common systems platform, would significantly speed up the transportation process and reduce waiting times at borders. Customs offices should have a list of “known shippers” and receive digital cargo documents ahead of time, akin to the US-Mexico Free and Secure Trade (FAST) Card program, “a commercial clearance program for known low-risk shipments entering the United States from Canada and Mexico.”⁵⁰ This would allow for contactless and uninterrupted flow through the borders, while enhancing traceability and collection of duties.

Companies have to pay, at each national border, taxes for services, transit, import duties, and value-added taxes—and they have to pay differently in each country. Of course, the optimal result would be achieved with a customs union in which goods can move freely and be exempt from heterogenous duties. At a minimum, a unified value-added tax code would reduce the complexities and economic distortions of having different rates and exempt goods. Lastly, there should be no retention of income tax or double taxation for services provided to other companies, or even among subsidiaries of the same company within a region.

Another idea is to centralize sanitary licenses and trademark registrations. Authorities should be able to create and centralize one—and only one—process when it comes to these types of records. A “single window” to register in all countries of Central America at the same time would be a great incentive for companies to relocate to the isthmus.

The size of Central America should, in theory, make it an attractive market. The lack of uniformity and consistency in conducting cross-border trade and business leads to multi-step bureaucracies that hinder economic integration, and therefore, diminish the prospects for economic development. If the countries of Central America act as one, they could finally become a market that offers the economies of scale that can lead to new market opportunities, job creation, and enhanced regional competitiveness.

Fostering the Minimum Conditions for Growth: Recommendations for Governments, the Private Sector, and the International Community

The pandemic has forced countries to look inward as they scramble to strike the right balance between saving lives and saving the economy. In Central America, countries have a unique opportunity to also look beyond their borders for dialogue and cooperation, especially on how to unite in the face of external forces impacting the entire region. Central American nations can take the following concrete steps—on a national and regional level—to embark on a united path toward recovery and growth.

Governments

• Convene multisectoral task forces to propose policy actions for kickstarting economic recovery. Central American countries must unite around the national cause of economic reactivation. This means convening multisectoral task forces—from current and past administrations, private-sector leaders, multilateral representatives, and other sectors—to jointly discuss how to best kickstart economic reactivation in their countries. National task forces should then filter into cross-border discussions on regional issues. Key agenda items could include lifting investment restrictions to effectively attract supply chains and potential new businesses, offering special visas for foreign nationals working remotely to incentivize and support tourism, enacting legislation to combat corruption in procurement and public contracting with innovative digital technologies and processes, and informing on best practices from economic-recovery strategies in other countries outside of the region. These task forces should also propose specific actions for longer term and sustained economic recovery such as bridging some of the political and policy gaps around implementation of regional economic integration.
• Tackle long-standing barriers to business investment to encourage nearshoring. Governments in the region should improve governance, increase transparency and public accountability, and promote business-friendly environments. If Central America is to have economic growth, especially in a post-pandemic world, it must continue the long-term work toward building public trust, respecting the rule of law, transparency, and strengthening institutions. The independence of the judiciary—a particular challenge in Guatemala—must be protected to ensure trust in the judicial system. At a time when emergency powers provide ground for executive overreach and loosened regulations and supervision around procurement, anti-corruption missions—especially those in Guatemala, El Salvador, and Honduras—must show they are serious about tackling graft. Federal prosecutors and judges require additional capacity building and technical assistance to effectively conduct and process corruption investigations. Reducing red tape and streamlining key bureaucratic processes related to business and investment—with the help of digital technologies—must also be at the top of the agenda. Tax and regulatory reform must be aimed at reducing informality, which accounts for more than 60 percent of the Latin American workforce and is a major impediment for sustained, inclusive growth.
• Invest in developing the human capital needed for a changing global economy. Governments should prioritize investment in workforce training and capacity building for jobs in the manufacturing and services sectors, in accordance with global demand, especially those tied to nearshoring opportunities. In the short term, governments must partner with the private sector and civil society, with the specific resources and know-how to maximize the impact and scale of workforce training and foster entrepreneurship and innovation. In the medium to long term, governments should promote and invest in education and vocational programs tailored to developing the knowledge and skills that meet the demands of the labor market and prepare workers for the jobs of the future. Developing human capital and increasing productivity in Central America are the most important variables for taking full advantage of the demographic dividend over the next decade.

Private Sector and Civil Society

• Invest in new workforce and on-the-job training programs that align with business demands. The Central American private sector must be a crucial player in rapidly developing human capital before the relatively narrow demographic window closes in 2033. Private-sector leaders have the capability to implement long-term strategies—as opposed to short-term government-led efforts—focused on workforce development, education for the jobs of tomorrow, and vocational and technical programs with real-life skill trainings (education-to-employment programs). The public sector must help these private-sector leaders in facilitating these opportunities, engaging in public-private partnerships, and removing red tape for private-sector-led capacity-building efforts. Support and buy-in from civil society groups is key here, especially in longer-term education in science, technology, engineering, and math (STEM). Civil society buy-in can help to ensure that education and capacity building efforts are gender and racially inclusive.
• Partner with governments on anti-corruption efforts. Weak rule of law continues to be a major impediment for investment in Central America. The private sector can be a crucial partner in helping to decentralize, modernize, and digitalize key procurement and public contracting processes that are most vulnerable to graft. A private sector that can drive growth and is committed to transparency and accountability is an important sign for foreign investors seeking business opportunities in Central America, especially now with multinational firms exploring supply-chain relocation.

International Community

• Provide financial and technical assistance amid pandemic response. As with other countries hard hit by the pandemic, Central American countries have seen weakened fiscal positions and strained public resources. Multilateral development banks and international financial institutions must play a critical role in providing necessary finaning to Central American economies. For example, the IMF can provide financial assistance, and support for debt restructuring processes. The World Bank (WB) and the Inter-American Development Bank (IDB) should expand their technical and financial support in various areas of the public and private sectors. This assistance will be necessary to keep Central American economies afloat and must be complemented by local economic recovery strategies by local leaders, but both external and internal plans must be tied to assurances in strengthening the rule of law.
• Enhance intraregional connectivity to attract investment and drive integration. To attract foreign investment and encourage regional integration and sustainable economic growth, the international community can be a key ally and help governments determine infrastructure and energy investments to enhance intraregional connectivity as well as transregional connectivity—for example, in northern Guatemala along Mexico’s southern border. Political leadership at the national level must support regional financial institutions such as the IDB and Development Bank of Latin America—with strategic advice and support from international organizations such as the World Bank—to deploy the required capital and the technical capabilities to lead infrastructure investments. CABEI must also be a key player in financing infrastructure and energy projects to improve regional economic integration. Fast and secure transportation routes and cheap, reliable energy are top requirements for foreign investment and economic integration.
• Deepen and expand foreign investment partnerships in Central America. The United States, as Central America’s most important trade and investment partner, must target investments aimed at generating new employment opportunities and supporting sectors crucial for inclusive economic growth and regional integration. Local leaders from the public and private sectors must provide buy-in and support for local and foreign investment efforts in infrastructure and energy projects accompanied by strategic investments to reduce insecurity and strengthen the rule of law, with clear benchmarks and metrics for measuring impact. These metrics must be effectively communicated to ensure full transparency and long-term support. Bilateral agencies must also play a critical role, such as the U.S. government’s development finance institution, the Development Finance Corporation (DFC). Beyond the United States, any international investment to Central America must further the rule of law, create job opportunities for local communities, and provide viable terms and conditions for loan repayments.

Central America’s much-needed reforms are not only relevant in today’s pandemic-shocked world, but also necessary for the region to effectively seize unique opportunities for long-term, sustained growth. The urgency of the moment and the magnitude of the multi-dimensional crisis from COVID-19 punctuates the need for Central America to address historic challenges and traditionally weak institutions from all angles and sectors—public, private, civil society, and the multilateral and international community. For Central America to emerge like a phoenix from its ashes, concerted action must happen now.

The post Central America Economic Reactivation in a COVID-19 World: Finding Sustainable Opportunities in Uncertain Times appeared first on Atlantic Council.

President Alejandro Giammattei: Reactivating Guatemala’s economy post COVID-19

Speaker:
President Alejandro Giammattei,
President of Guatemala

Introductions by:
Jason Marczak,
Director, Adrienne Arsht Latin America Center
Atlantic Council

Ana Palacio
Board Member, Atlantic Council;
Founder, Palacios y Asociados;
Former Minister of Foreign Affairs (2002-2004), Spain

Time: 11:00 a.m. EDT
Date: Thursday, May 21, 2020

Transcript by Isabel Kennon

JASON MARCZAK: Good morning, I am Jason Marczak, director of the Adrienne Arsht Latin America Center. First, quickly in English, if you would like translation and you are using the Zoom platform, please download the Interprefy app. The other option is to listen to this conversation on YouTube. Now I will be speaking in Spanish. Welcome to the third episode of our new series, Leaders of the Americas. The purpose of this initiative is to convene the top leaders throughout Latin America so we can discuss the most salient topics of the region. Today, we are joined by President of Guatemala Alejandro Giammattei. Mr. President, welcome. Mr. Giammattei is joined by Minister Brolo, and Ambassador Quiñones. This series began a month and a half ago, with the president of Colombia, Ivan Duque, who was followed by the Venezuelan interim president, Juan Guaidó. President Giammattei, today we will be talking about your COVID-19 response and your plan to reactivate the economy. Mr. President, we applaud you and your work during this important time. I would now like to give the floor to Ana Palacio, Atlantic Council board member and former minister of foreign affairs for Spain.

ANA PALACIO: Thank you very much Jason, I’d like to say that this is a special honor to welcome Dr. Alejandro Giammattei, President of the Republic of Guatemala, because I had the honor of meeting him and having an extremely interesting conversation when he was just starting his administration back in January. It seems such a long time ago, although it is only a few months ago. From this meeting, I recognized the president’s commitment to Guatemala and his strategic vision. Dr. Giammattei — I am going to call you Dr. Giammattei — President Giammattei brings large expertise because he is a physician, he is a doctor, and this conveys both safety and security. He also has important local experience – he has been a director of the Guatemalan penitentiary system and he has also worked in the private sector.  There is no way of driving in this situation without a public-private partnership, so we have high quality leader in a key region. I would like to share an anecdote if I may. After having that conversation with the president Giammattei, I thought it was so interesting that I stopped on my way back to Spain in Washington to meet Jason Marczak and María Fernanda Perez from the Atlantic Council, and we had a conversation. I told them that there is an extremely interesting individual leading Guatemala, and that I was particularly impressed by his clear language and his infectious energy, as well as his great realistic ambition. This is not a common trait in rulers. It is a great pleasure to be here. I give the floor back to Jason Marczak. I know that we will have an extremely interesting conversation. Thank you very much.

MR. MARCZAK: Thank you Ana. Mr. President, you began your presidency with a plan to reactivate the economy and to fight corruption, among other priorities. However, two months in, Guatemala saw the first case of coronavirus that impacted different economic sectors. Guatemala has over 2200 confirmed coronavirus cases and you have been adamant as a physician about the importance of protecting Guatemalan lives. The first question is: which factors have been the key factors in establishing the national quarantine and other coronavirus fighting mechanisms, including the nationwide lockdown over the past weekend?

PRESIDENT GIAMMATTEI: Thank you very much. First Ana Palacio, thank you. Thank you very much for sharing the story about how we met. It was not you was impressed after that meeting; I was also impressed.

It was Day 49 into my administration when the first case of coronavirus appeared. At only 49 days, the administration was barely settled, and the first case appeared. Ana just said that I am full of energy, but I feel that little remains now. Throughout the 128 days we have been in office, 49 without coronavirus, we managed to recover and to revitalize certain economic areas. Criminality has diminished, extortions have gone down, and we have begun fighting corruption in certain sectors. There has been major impact through those efforts, and we were working on that when the coronavirus appeared. 

The first measure was taken on February 3^rd – not on March 3rd – when the WHO declared that seven countries in the Americas had confirmed cases. We saw what was happening in China and Korea, and we asked the airlines to stop flying. We did not want any cases in Guatemala. Nonetheless, the first case appeared on March 3^rd. Although by then, we had already started with our three-phase protocol. Phase 1 aimed for prevention. The protocols were initially only focused on two phases – prevention and mitigation – but we added an intermediate phase and we called it containment. So, it was not only preventing the entrance of the virus, which we were already doing, but we also wanted to contain it. We knew that we were going to get hit hard because our healthcare system had been fully neglected for 40 to 50 years. We had only 0.6 beds per 1000 inhabitants. We had a very low number of respirators, most of which did not work, and we knew that the acute phase of the disease requires respiratory assistance. As of today, we have rebuilt four hospitals. We are working on the 5th hospital, and we are also analyzing how to start building the 6th hospital. So, we are providing coverage for most of the population.

Other countries were telling patients, “you just tested positive, go back home,” and when they went back home they infected everybody else in the household. We did not do that. We did it the other way around. We knew that we had few hospitals and that the containment phase had to be aggressive. So, everyone that tested positive for coronavirus, we sent them to the hospital. However, the Social Security system of Guatemala did not abide by our protocol. They sent everybody back home, and that is why the disease has increased over the last weeks. Right now, it is compulsory for all institutions that whenever there is a positive case they should go to a hospital. Why? Because that way we will reduce contact. When you tell patients to go back home and isolate themselves, perhaps its feasible to do that in the first world countries where everybody has their own room, but in Guatemala 60-70% of the population lives in poverty with only one or two rooms for the whole family. So, you cannot self-isolate at home. We have opened the second hotel with health care services, in order to avoid infected people going back home. We are establishing a conservative protocol, but will release around 80 to 100 coronavirus patients in the days to come. We took a while to release our patients because we want to be sure they are really cured and will not relapse or contaminate anyone else. Some countries are seeing 40% reinfection rates. Our lethality rate is below 2%. Yesterday in the Parque de la Industria hospital, where we have great intensive care units with 48 beds, there are only 8 patients. None of them are at risk of death, but they did require assisted ventilation. We managed this crisis with treatments. Five weeks ago, we started giving anticoagulants to patients. Although patients may be asymptomatic or have light symptoms, if they test positive we are giving them not only paracetamol or acetaminophens, but we will also give them 100 grams of aspirin on a daily basis to prevent contamination. There are thrombus that go into the lungs and micro-thrombi generate the problems that end up with patient spots.

MR. MARCZAK: Thank you, thank you very much Mr. President. I believe the lessons we can learn from Guatemala and the steps you have taken are significant. We could share this information with other countries because you have a dedicated plan. I would like to ask you about the reactivation of the economy in the month of March. In terms of economic reactivation can you share your plan to balance the recovery and reactivation of the economy while the public crisis continues, remittances from the United States have lowered due to the virus, and the Guatemalan budget is altogether reduced? I would like you to share your plans and to share your vision for the future around changes in the supply chain. What can you tell us about the Guatemalan economy’s reactivation? 

PRESIDENT GIAMMATTEI: We have already established reopening protocols for all different sectors. From the spiritual aspects, the churches, to soccer. I would like to emphasize the fact that all protocols are different because you cannot have the same protocol for trade as for construction. And within industry itself, there are distinct classifications. We are ready to disclose our protocols because if I ever go to a shopping mall, I need to clearly understand both my rights and obligations inside that mall. The retail sector also must be acquainted with their rights and obligations. You know, Jason, I must emphasize that we will have to get used to this disease. It is like the Monaco F1 Race – in Formula One you need two things: how to step on the gas and how to step on the break. Why am I setting up this analogy with the disease? If we open a given activity, and the disease spikes, we need a protocol to address that specific spike and to try to flatten the curve. It is unlikely that cases will not go up, because if you open public transportation of course we will have more cases. So, we need to open the economy up with protocols, with restrictions, with a detailed plan. We need to know if the disease is peaking, so we can step on the gas to reactivate the economy. We must close the country in clusters — shut down a neighborhood, a municipality, a state, or province, in phase without closing the rest of the country. But in order to do that, first the population must be aware of the risks. A few months ago, nobody in the country believed the severity of the disease. Guatemala is one of the few countries where masks are obligatory. Korea was a model as one of the first countries in the world where masks became mandatory. Everybody followed it after that, and the WHO established that masks were mandatory. Then, everybody who had thought that I was exaggerating realized that I was right. For the next two or three years, everyone must get used to wearing a mask. 

Additionally, we need to give wings to the private sector. The first thing we will reopening in Guatemala is the construction sector. When? Perhaps in a week or two. Why? Because within the broad range of economic activities, the construction sector most easily enables social isolation, with one individual over there working on the books and you have somebody else working on the wires. There are no groups of people all together. There is social isolation inside the construction sector. We sent a bill to Congress to approve our request for a one-billion-dollar loan to rebuild the economy. Part of that will be construction of government buildings. We the government have to rent most of the facilities we use, and that is one of the most corrupt businesses in the country. So, we just filed for this loan because we want to buy the facilities. If we do that, we are generating 300,000 or 350,000 new employment opportunities, thus reducing rental expenditures and increasing production.

MR. MARCZAK: Mr. President, I have two more questions. I would like to clearly understand your plans to fight corruption so I would like you to share your administrations plan to fight corruption. Later, I have a final question about the United States.

PRESIDENT GIAMMATTEI: The government’s technological capacity is increased because we need technology to reduce opportunities for discretion. We have given 6 billion in quetzals to 2 million families. We are giving them 1500 quetzals to these families to pay for electricity, water, other necessities. There is also a subsidy for energy consumption. We are not selecting these families, as the subsidy applies to those who consume less than 200 kWh. For those without electricity, about 9% of the population, they are receiving a food directly at home. People in these programs can take their utilities bill and their personal ID and make a withdrawal from an ATM or the bank. It is not a partisan affair – we are addressing everybody. Everybody is part of this program. There’s full coverage. This is something no one has ever done. We have created social programs to assist the most vulnerable populations without human intervention, therefore reducing public officials’ ability for discretion. That is significantly reducing corruption. We are also increasing inclusivity, by implementing these programs in small villages and small towns. We do not want human beings involved so we are creating automated systems. In some occasions that is how you must act.

MR. MARCZAK: Mr. President, I have another question about the United States. The United States is a major Guatemalan ally and I have two questions. Number 1: what role may the United States play amidst the crisis? Number 2: many migrants have been deported back to Guatemala from the US, and some of them have tested positive. So, could you speak about the role of the United States, and the future of migratory cooperation?

PRESIDENT GIAMMATTEI: Allies? The United States? That is not true. I believe that Guatemala is an ally to the United States, but I do not believe that the United States is an ally to Guatemala because they do not treat us as such. We have seen how the United States has assisted other countries, with respirators, for instance, and we have not even gotten a single peso. We are allies today with the United States, but I do not think it is reciprocal. I do not think that it is a two-way road. We do not appreciate how we have been treated. We have had serious issues with deported individuals. I’m not going to delve into the details because I believe that it would be anti-diplomatic if we shared the details right now, but I can say adamantly that we have not been treated with goodness by the United States. It is a crisis. We do understand that the United States wants to have less people in their nation, but why are they only sending the infected patients? Because we now have to treat a disease that was not created here, kand our hospitals, which are limited, are now having to deal with these patients. We do not have enough room for quarantine patients, so if there were 75 deportees, just three who are positive fully disseminates the disease. We have such a large number of patients in our hospitals right now, and we have not even received one single mask from the United States – except the ones the deportees carry with them when they come back. We do consider ourselves and we behave as allies to the United States, but we would like reciprocity. There are problems but you are sending them with a disease, so let us share that part of the problem. We would also like to tighten our relationship with the United States because there are protocols. The CDC delegates in Guatemala drafted the protocols with the US and there has been full compliance on our side but not on the other side.

MR. MARCZAK: Thank you very much, Mr. President, for that question. I have a question from Edgar Villanueva from the US Guatemala Business Council. The question is, if you can share, has the Guatemalan government already started plans to attract further US investment to Guatemala? If the answer to that question is yes, how can you guarantee stability to foreign investment at the time being?

PRESIDENT GIAMMATTEI: Thank you very much Jason. There is a one stop shop for imports and exports to reduce red tape and to facilitate trade. It is a one stop shop, and everything is handled there. We already started construction on the refurbishing plans of the San Jose airport. It is the first cargo airport in the region, and in addition to having a military base, it will hold a duty-free area and a space to process merchandise for the port. It will be both a one stop shop and an airport at the same place. This will give us a competitive advantage. Additional efforts are required, that is why we are in communication with the United States, because we would like to have US customs delegates in Guatemala to clear exports, passing sanitary controls and safety controls, as they leave the country. I think it would enable commerce. It would indeed be a novelty, and we will be able to draw further American investment. We are currently exploring the southern coastline where we hope reactivate the Champerico port. We want the Champerico port reactivated with a multi-node development in the southern coast of Guatemala, where we can have airports, trains, duty free areas, all in one to further boost investment. We believe that Guatemala is inviting US companies. They left to china and we want them back because it is cheaper here, and closer. We are proposing to work jointly with the United States to construct a gas line from the Atlantic to the Pacific. This will avoid the necessity for ships to travel 28 days through the Magellan Straight. It would be great to work alongside the United States. In addition, we encourage collaboration not only with Guatemala, but with Central America. Central America is an extremely important region, with over 15 million people. We have a canal, we could also have a gas line, and there is lots of opportunity for collaboration here. If there was true integration, if we really became one solid economic bloc, that would attract investment, facilitate transit and taxes just like the European Union. If we collaborate borders and customs and inspections, we would be able to further exploit natural resources and the marvelous labor force available in Central America. We are very close to the United States, only two hours and twenty minutes away from Miami.

MR. MARCZAK: I look forward to when I can return to Guatemala, it is only a two-hour flight. Thank you, sir, for your time on behalf of the Atlantic Council. Thank you to our founder Adrienne Arsht, who has been part of this very important discussion, and because of whom we are here today. Mr. President, allow me to convey our solidarity from the Adrienne Arsht Latin America Center. We feel that economic prosperity is crucial in Guatemala, and in all Central America, and you definitely continue having our support. Once again thank you very much Mr. President for your time. We shall continue being in touch.

The post President Alejandro Giammattei: Reactivating Guatemala’s economy post COVID-19 appeared first on Atlantic Council.

With 17.5 million people, Guatemala is by far Central America’s largest nation. Yet as the COVID-19 pandemic and a worsening migrant crisis ravage his country, President Alejandro Giammattei said that the paucity of aid from Washington shows that “US doesn’t respect us.”

The newly elected leader spoke May 21 via Zoom with Jason Marczak, director of the Atlantic Council’s Adrienne Arsht Latin America Center.

“Guatemala is an ally of the United States, but I don’t believe the US is an ally to Guatemala, because they don’t treat us like one,” he said. “We’ve seen how they’ve assisted other countries with ventilators, and we haven’t even gotten a dime from them—not even one single mask from the United States. We don’t feel appreciated.”

Giammattei, sixty-four, is a former doctor and national prison administrator who suffers from multiple sclerosis. He replaced Jimmy Morales as president on January 14 after winning the second round of the 2019 presidential election, with nearly 58 percent of the vote.

During the campaign, Giammattei promised he’d renegotiate a controversial immigration deal that Morales, his predecessor, had concluded with Washington. Under that “safe third country” arrangement, migrants from neighboring Honduras and El Salvador hoping to win political asylum in the United States must first apply for asylum in Guatemala.

Giammattei said his government continues to have “serious issues” with the Trump administration’s deportation of migrants to Guatemala—many of them sick with COVID-19. “Our hospitals have limited capacity, but now we have to treat these patients infected with a disease that didn’t originate here,” he said. “This creates such a burden for us.”

As of May 21, Guatemala had reported 2,265 cases of COVID-19 and forty-five deaths—fewer than Honduras but more than either El Salvador, Costa Rica, or Nicaragua.

“We were forty-nine days into my administration when the first case of coronavirus appeared. We have now been in office 128 days, and we’ve managed to revitalize certain economic activities,” he said. “We’ve also been able to fight corruption, and that has had a major impact on crime.”

Giammattei said his government took its first coronavirus-related action on February 3 by barring the entry of people coming from China and taking extra sanitation measures at all ports of entry—exactly one month before the first case even appeared in Guatemala.

“Our protocols were focused on protection and mitigation, but we added an intermediate phase: containment. We knew that we’d get hit hard because our healthcare system had been fully neglected for forty or fifty years,” he said.

With only 0.6 hospital beds per 1,000 inhabitants and only a handful of working ventilators, according to the World Health Organization (WHO), Guatemala was clearly not in a position to confront a major pandemic, Giammattei said.

“So far, we’ve rebuilt four hospitals, we’re working on the fifth, and we’re analyzing the construction of a sixth hospital,” he said. “Other countries were telling patients who tested positive to go back home—where they then infected everyone else in their household. We did it the other way around. All positive patients were sent to the hospital.”

Even so, some government agencies did not follow that protocol and told COVID-19 patients to return to their homes, causing a spike in recent weeks.

“In the First World, everybody has their own room, but in Guatemala, 60 to 70 percent of the population lives in poverty and houses usually have only one or two rooms for the whole family, so you cannot demand social isolation at home,” he said.

Giammattei said his government is establishing a “fairly conservative protocol” with regard to releasing coronavirus patients from government hospitals. That’s because “we don’t want to see these patients released without being sure that they’re absolutely cured,” he said.

The president said Guatemala may reactivate the construction sector within the next week or two. It has also plans on enacting massive stimulus programs to rebuild the economy and has already authorized direct payments of six billion quetzales (roughly $780 million) to two million families that would cover roughly ten million Guatemalans, as well as subsidies for energy consumption that will benefit 90 percent of the population.

Giammattei also hopes to lure US manufacturing investment through the refurbishment of major airports, the construction of a gas pipeline, and other infrastructure projects.

“These companies left to China and we want them back,” he said, calling for greater regional economic integration. “If we and our neighbors really became one solid economic bloc just like the EU, by removing borders and customs inspections, we’d be able to further exploit our natural resources and the marvelous labor we have in Central America, only two hours and twenty minutes by air from Miami.”

But first, COVID-19 will have to be defeated—and that must take precedence, he said.

“A few months ago, nobody in the country actually believed the severity of the disease. But Guatemala was one of the first countries in the world to require masks,” Giammattei said. “Later on, the WHO established that masks were mandatory. Then everybody who thought I was exaggerating realized I was right.”

Even so, he warned, Guatemalans will have to accept the idea of wearing face coverings in public—possibly for the next two or three years.

“We will have to get used to the disease,” he said. “If we open a given activity, such as public transportation, of course we’ll have more cases—so we need a protocol to address that spike.  Once we see that the disease has peaked, we’ll need to step on the gas to reactivate the economy. That’s why the reopening has to be in phases.”

Larry Luxner is a Tel Aviv-based freelance journalist and photographer who covers the Middle East, Eurasia, Africa and Latin America. Follow him on Twitter @LLuxner.

Further reading:

New Atlanticist May 7, 2020

Nicaragua’s response to COVID-19 endangers not only its own people, but also its neighbors

By Maria Fernanda Perez Arguello and Isabel Kennon

Nicaragua’s reckless response to COVID-19 puts an already fragile Central America at risk and should worry the international community. In the fight against this global pandemic, Nicaragua and Costa Rica provide a clear example of how one country’s flawed response to the virus can drastically impact its neighboring countries

Coronavirus Democratic Transitions

New Atlanticist Apr 28, 2020

Guaidó’s National Emergency Government can prevent a humanitarian catastrophe in Venezuela

By Cristina Guevara

Guaidó’s national emergency government presents a viable solution to tackle the coronavirus pandemic, Venezuela’s humanitarian crisis, and the dictatorship that has decimated the country.

Coronavirus Corruption

Atlantic Council Strategy Paper Series Jul 7, 2020

Latin America vulnerable to commodity cycle

By Mathew Burrows, Peter Engelke

Weak health care systems, tight state budgets and dense, low-income cities—plus an over-reliance on commodities in many countries—create potential hotspots across Latin America and open the possibility of a new front in the battle for influence between the US and China.

Coronavirus Latin America

The post Guatemalan president criticizes US over lack of COVID-19 assistance appeared first on Atlantic Council.

As governments in North America, Europe, Asia, and around the world continue to combat the spread of the novel coronavirus (COVID-19), Latin American leaders are stepping up their efforts as cases are beginning to be documented in their countries. Although the number of cases across the region remains mostly lower than the epicenters in Europe and the United States, “we are not letting our guard down,” El Salvador’s Minister of Foreign Affairs Alexandra Hill Tinoco said on March 23. “No one can guarantee us that it is not going to hit us,” she explained, so every Latin American government is taking the threat seriously.

According to Fernando Llorca Castro, Costa Rica’s ambassador to the United States, most governments throughout the region have been preparing for outbreaks since the first news of the virus in China emerged in January. Costa Rica immediately began bringing “institutions from different sectors to the table” to discuss preparations by early January, he explained. Chilean Ambassador to the United States Alfonso Silva Navarro reported that his government set up a committee for coordination in January, while Hill Tinoco added that El Salvador “activated an enlarged health cabinet” at the same time. El Salvador also went as far as to suspend all flights from China and entry to travelers coming from China shortly after the World Health Organization declared an emergency on January 30.

As the virus spread into the region by mid-March, governments began taking escalating steps to limit its spread, despite low initial numbers. Colombia has already enacted a three-week quarantine for the entire country, the country’s ambassador to the United States Francisco Santos Calderón, explained, although documenting less than four hundred cases and three deaths so far. Santos Calderón added that “anybody seventy or older is going to be quarantined until May 30.” In Chile, over 80 percent of the cases are in the capital of Santiago, Silva Navarro reported, and in response the government has restricted internal movement to other areas of the country in order to limit the spread of the virus.

To help prepare for a potential explosion of cases, Silva Navarro said the Chilean government has already increased hospital bed capacity in the country from 37,000 to 42,000 beds, including the opening of five new hospitals. The government is also working on deploying a hospital ship to “move around the country” with spare bed capacity and a purchase of “4,000 ventilators by the end of the week. Costa Rica has just over 130 cases as of March 23, but the government has already begun construction on a specific hospital “to face only patients from [the] coronavirus,” while also “trying to keep all the [necessary] equipment and healthcare providers available to face this,” Llorca Castro said.

Regional policymakers are also focused on minimizing the potential economic effects of the outbreak and the quarantine measures. Hill Tonoco said that El Salvador has suspended electric, internet, and phone bills for three months, frozen monthly rental payments, mortgages, and loan payments for three months, and expanded unemployment protections. Similar protection measures have been launched in Colombia, Santos Calderón said, paid for by shifting money from the national oil company and the pensions systems, due to a preexisting tight government budget.

Despite the needed controls to help slow the spread of the curve, Llorca Castro maintained that regional governments “have been trying to keep the borders open” in order to sustain critical trade between countries. “Our borders are not closed,” Hill Tonoco added, “it is business as usual.” This does not mean that incoming goods and vendors are flowing full freely as normal but “the truck driver has to wear a mask,” and unnecessary passengers will not be permitted, she said, noting that border checks will ensure that goods continue to travel while restricting the contact individuals have with the general population.

Santos Calderón specifically warned about the challenge neighboring Venezuela, which has been enduring an economic and societal collapse under the regime of Nicolas Maduro for the last few years, will bring to Colombia’s efforts to slow the virus. “If something really critical is going to happen with this crisis it is going to come from Venezuela,” he explained, as poor nourishment and lack of any organized healthcare system makes the population there extraordinarily susceptible to the disease. Colombia’s healthcare system is already under strain from the millions of Venezuelans who have fled the Maduro regime and Santos Calderón fears that the refugee population will balloon as “if you are facing death and a lack of a health system, you will want to move to Colombia [for treatment].”

Santos Calderón conceded that the outbreak has created “a new challenge and [has prompted] a new way of governing during this period,” as cities, the private sector, and different government agencies all try to coordinate an effective response. “Nobody was prepared for what is happening,” he explained, but governments are taking every precaution that they can. “The life of one human being is worth every sacrifice,” Hill Tonoco said, adding that governments around the region “have done everything that is in our hands” to meet this crisis head-on.

David A. Wemer is associate director, editorial at the Atlantic Council. Follow him on Twitter @DavidAWemer.

Further reading:

New Atlanticist Mar 18, 2020

How the coronavirus will impact Panama’s economy

By Cristina Guevara

Panama’s economy—currently precarious and stagnant—depends on infrastructure megaprojects, international trade, and financial services, making it especially vulnerable to external changes like coronavirus.

Coronavirus International Markets

Inflection Points Mar 21, 2020

How the U.S. can avoid COVID-19’s geopolitical perils

By Frederick Kempe

We’re only in the opening scenes of this epic COVID-19 drama, which will continue without intermission. The Chinese rebound could prove to be a welcome twist in the plot. Imagine the far-happier ending, however, if the United States and its global allies manage to join forces globally even as they isolate socially.

China Coronavirus

New Atlanticist Mar 19, 2020

Ambassadors call for global cooperation to meet coronavirus challenge

By David A. Wemer

While societies around the world struggle to contain the spread of the novel coronavirus (COVID-19), political leaders must continue to collaborate on solutions to mitigate the public health and economic effects of the virus.

Coronavirus East Asia

The post What Latin American countries are doing to confront coronavirus appeared first on Atlantic Council.

In the past, food and citizen insecurity, combined with a lack of economic opportunities, have pushed out many Guatemalans. In 2018, nearly one third of apprehended migrants at the US border were Guatemalans, and most of the apprehended family units came from Guatemala. The effects of climate change—mostly manifested through droughts and crop failure—add another challenge for improving Guatemala’s economic trajectory. From day one, Giammattei will have to forge alliances in Congress. With only seventeen of one hundred and sixty seats, Giammattei’s VAMOS party controls only a little over 10 percent of Congress. 

This Spotlight asks:

what are the top four issues President-elect Giammattei might prioritize in his first one hundred days in office?

Boosting economic growth and creating job opportunities

At the center of President-elect Giammattei’s campaign is the promise to usher in a new era of economic growth and job creation. With 59 percent of its population living in poverty, Guatemala’s lack of economic opportunities has forced millions to seek better futures elsewhere. But, the high numbers of migrants have given renewed momentum for Giammattei to double down on boosting the economy with a multi-pronged plan that includes domestic-focused policies, foreign investment, and regional collaboration.

Coming from the private sector, Giammattei’s economic slogan is to rely on the “market as much as possible and the on State as much as needed,” according to his government platform Plan Nacional de Innovación y Desarrollo (PLANID). He intends to apply this neoliberal approach to four sectors that he hopes will drive economic growth, investment, and employment: exports, infrastructure, MSMEs (micro, small, and medium enterprises), and tourism.

It will be crucial for Guatemala to tackle its institutional and security challenges in tandem with any new economic plans.

Giammattei sees immense opportunity for Guatemala to expand exports and cross-border economic collaboration with Mexico. Guatemalan exports to Mexico totaled $509 million in 2017, while exports to the United States totaled $4.2 billion. In a recent forum with the Mexico-Guatemala Chamber of Commerce and Industry (CAMEX), Giammattei outlined a series of prospective projects in the border region, in cooperation with Mexican President Andrés Manuel López Obrador. Some of these projects include: building a cross-border “Maya Train”; creating a free-trade zone around the Guatemala-Mexico border; deregulating aerial and ground transport to reduce costs around movement of people; promoting public-private partnerships; and facilitating commerce.

Another key project with Mexico is to create a “regional binational development bank,” which would be part of a broader strategy for Guatemala to benefit more from its geographical position bordering the North American trade bloc, while taking a leadership role in strengthening intraregional trade in Central America. A major focus of the bank would be the northern departments of Huehuetenango and San Marcos, the points of departure for the vast majority of Guatemalan migrants trekking north.

On tourism, Giammattei proposed handing over the management of the Mundo Maya airport to the Flores municipality in Petén. The goal of this concession, which emulates the situation of the privately run Punta Cana airport in the Dominican Republic, is to promote a competitive airport that attracts airlines and tourists to Guatemala’s Mayan heritage and biosphere.

Per PLANID, underpinning Giammattei’s economic plan is a promise to improve educational quality, attract private-sector investment, and promote entrepreneurship by loosening regulations and streamlining processes for starting a business. With the proper conditions in place, Giammattei aims to reach $5 billion annually in foreign direct investment.

In his first one hundred days in office, it will be crucial for Guatemala to tackle its institutional and security challenges in tandem with any new economic plans. Addressing structural issues around corruption, crime, poor infrastructure, and inefficient government bureaucracy will take as much political will and investment as the Giammattei administration can muster. An important measure of Giammattei’s economic policies will be his ability to reduce irregular migration by creating employment opportunities that provide a viable reason for Guatemalans to stay in their country. To achieve the “free market economy with social justice” that he seeks, President-elect Giammattei must boost inclusive economic development by investing not only in key industries, but also in human capital and workforce training, as a way to empower underprivileged Guatemalans and sustain growth over the long term.

Combating corruption without the CICIG

As former director of the Guatemalan prison system (2006-2008), President-elect Giammattei is no stranger to Guatemala’s law-and-justice sphere. Giammattei recognizes that high levels of corruption have eroded citizens’ trust in the political class. Likewise, he acknowledges Guatemala’s poor performance in international rule-of-law, governance, and perception-of-corruption indexes directly affects business, investment, and citizen security in his country.

Guatemala’s contemporary fight against corruption dates back to 2006, when President Oscar Berger and the United Nations “finalized terms for the International Commission Against Impunity in Guatemala (Comisión Internacional contra la Impunidad en Guatemala–CICIG).” The CICIG began working in 2007 and, three years later, President-elect Giammattei was at the center of the commission’s first major case. The case revolved around extrajudicial executions at El Pavón prison while he was its director; Giammattei was acquitted at trial. Twelve years later, in September 2019, President Jimmy Morales allowed CICIG’s mandate to expire, despite strong citizen support for the commission—in 2019, more than 70 percent of citizens had a favorable view of the body. Like outgoing President Morales, Giammattei is a vocal opponent of the CICIG, but acknowledges that Guatemala needs help from allies (namely the United States and Israel) to fight corruption.

The Giammattei administration will be the first in 13 years to enact security and justice reforms without the CICIG

Will he be able to tackle corruption and impunity without appearing to politicize the justice system?

Giammattei has promised to create a special commission linked to the executive branch. The government will finance the commission with up to $10,000 per year obtained from restructuring of existing institutions. The remaining expenses, the government hopes, will come from international organizations and other countries. 

Giammattei is also betting on using technology to improve governance and citizens’ access to information. A first step will be to make government transactions available online, in an attempt to increase the state’s transparency and accountability. For the private sector, high levels of corruption in procurement are a barrier to investment. The key lies in undertaking structural reforms that “improve efficiencies while preserving transparency.”

Balancing priorities in US-Guatemala ties and China’s increasing role in the Northern Triangle

President-elect Giammattei’s foreign policies will be highly anticipated by the international community. Per PLANID, US-Guatemala relations are of utmost priority because of the impact of remittances—which are closely linked to migration—on his country. Integration of the Central American region—which Giammattei recently discussed in a visit to Israel—and building relationships with key global economic players are also top foreign policy priorities.

An expected early step from Giammattei is to renegotiate the US-Guatemala migration deal, which he believes is not “right for the country”—a feeling 80 percent of Guatemalans share.

US-Guatemala ties are strong, but not perfect. Migration is at the heart of the US-Guatemala bond. In this respect, an expected early step from Giammattei is to renegotiate the US-Guatemala migration deal, which he believes is not “right for the country”—a feeling 80 percent of Guatemalans share. Giammattei will also request expansion of temporary protected status (TPS) in the United States to Guatemalans, so they can work without fear and send remittances home. Remittances, which US President Donald Trump threatened to tax if Guatemala did not enter into a migration agreement, added up to 12.1 percent of Guatemala’s gross domestic product (GDP) in 2018, mostly from Guatemalans in the United States. Per PLANID, the incoming administration plans to create a jobs program with micro, small, and medium enterprises (MSMEs) to reintegrate deported Guatemalans into society and reduce the chance that they will try to migrate again. To further strengthen ties with the US, Giammattei intends to open more embassies and consulates. Doing so will also allow Guatemala to prioritize the human rights and fair treatment of Guatemalan migrants in the United States. 

Another affair to watch during Giammattei’s first one hundred days: China. While keeping diplomatic ties with Taiwan, Giammmattei will reinforce and strengthen commercial ties with China. He will take office just a month after China announced major projects and investment in neighboring El Salvador. It is yet to be determined how this will affect Guatemala’s ties with China, Taiwan, and the United States. 

Finally, Giammattei will actively engage with his neighbors and work toward an ambitious intraregional economic bloc, which would include free transit of merchandise and people in Central America. An annual investment fair to showcase Central America is an objective. Similar to MERCOSUR, the Central American trade bloc will strive to negotiate trade deals as one, with the goal of negotiating better results and opportunities for Central America.

Reducing insecurity for an investment-ready Guatemala

Violence and insecurity have seen a downward trend in Guatemala. In 2018, the country had a homicide rate of 22.4 per one hundred thousand inhabitants, the lowest since the end of the civil war in 1996. While still a high number globally, it is the lowest among Northern Triangle countries, and lower than rates in Colombia, Brazil, and Mexico. However, Guatemala still ranks among thirteen countries with the worst criminality indexes in the world and has an impunity rate averaging 94 percent since 2008. With the termination of the CICIG, tackling the country’s top public-safety concerns will require additional resources, technical expertise, and a set of comprehensive policies.

Despite his controversial two-year stint heading Guatemala’s prisons, President-elect Giammattei nevertheless touted his security credentials during the campaign to position himself as the candidate better equipped to combat crime in Guatemala. His ten-month arrest—and the following acquittal—were especially important in shaping his views on prison and justice reform. He has suggested reforms to pre-trial detention, such as house arrest and more use of fetters for tracking detainees. He also identifies overcrowded and dangerous prisons as perpetuating the vicious cycle of crime, and proposes organizing prisoners by the level of risk they carry.

Guatemala an impunity rate averaging 94% since 2008

And ranks among thirteen countries with the worst criminality indexes in the world.

Giammettei’s policy proposals on citizen and national security provide less insight into specific steps his administration will take, but point to the broader vision of his campaign: that fostering a business-friendly climate will lead to a more prosperous Guatemala. According to PLANID, the strategic objective of his security plan is to “improve the country’s governability for a coexistence in harmony and peace that allows for investment and employment.” This is why he has made it a priority to combat extortion, which has increased by 55 percent in five years (2013-2018). Extortion payments made by victims—in many cases, owners of small businesses—account for 2 percent of the country’s GDP. 

Other proposals in this plan, which include a mix of crime control and prevention, are: increasing state presence and control in rural territories, to both protect private property and preserve indigenous lands; devising new conflict-resolution mechanisms and long-term prevention programs for at-risk youth; strengthening penal and justice institutions (Organismo Judicial, Ministerio Público, Defensa Pública Penal, INACIF, Sistema Penitenciario); and restructuring, modernizing, and professionalizing security forces. While Giammettei has expressed doubts in the past about the effectiveness of police militarization, it is yet unclear how he will reorganize the distribution and responsibilities of the police (Policía Nacional Civil) versus the armed forces (Fuerzas Armadas).

Notably, drug trafficking—a major issue for Guatemala, which is a key geographic transit point hosting hidden landing strips scattered across dense forests—is not mentioned by name in his security proposals. PLANID instead states the president-elect’s intention to work with regional partners to tackle this transnational issue, given that Guatemala is “not the cause of the problem, but simply a route of the problem.”

When Giammattei assumes office in January, his administration will be the first in thirteen years to enact security and justice reforms without the CICIG. He will need to strike a delicate balance between preventive programs that tackle the root of security issues in Guatemala, while implementing short-term policies that enhance governability in gang-ridden areas and rural territories. In his attempt to create the investment climate that comes with a more secure society, Giammattei will need to be careful not to resort to mano dura policies that have been proven counterproductive across the region.

Conclusion

President-elect Giammattei will face a challenging road ahead in terms of driving economic growth, rooting out corruption, reducing insecurity, and strengthening Guatemala’s relations with its regional neighbors and the world. His first one hundred days will be vital in providing clarity of direction for these policy priorities. How inclusive will his economic growth be? With the CICIG gone, will he be able to tackle corruption and impunity without appearing to politicize the justice system? If the Giammattei administration is open to negotiate and compromise with the opposition-dominated Congress and effectively leverages regional political alignment with Mexico and Northern Triangle neighbors, the path forward for Guatemala could exceed expectations for millions of Guatemalans who deserve a better future in their own country.

The post Spotlight: Alejandro Giammattei’s first 100 days appeared first on Atlantic Council.

Improved transport infrastructure is crucial for several reasons. First, better-quality roads connect isolated populations and markets, which spurs increased trade. Roads can also have positive spillover effects on governance and access to public services such as security. On the flip side, limited access to the outside world hampers individual citizen’s ability to overcome poverty. The IDB reports that in Guatemala, the areas with higher rates of poverty rates have lower road density, reducing access to public services, like health, education, and justice. In addition, as communities improve their connectivity, they may be closer to watchdog organizations and the media, making them less vulnerable to abuses by governmental and non-governmental actors. 

Transport infrastructure development in Southern Mexico and Guatemala can boost local economic development and reduce migration by creating local economic opportunities for citizens. A number of studies on citizens leaving Central America’s Northern Triangle cite a combination of lack of economic opportunities, rampant insecurity, and family reunification as driving factors of migration. 

New infrastructure projects will inject much-needed investment during a time of low economic growth—especially important in Mexico, where the economy is predicted to grow between 0.2 and 0.9 percent in 2019. Infrastructure investment in Mexico is currently lower than the Latin American and Organization for Economic Co-operation and Development (OECD) averages. 

An incoming president in Guatemala in January 2020 is the perfect opportunity to strengthen existing bonds and build common development policies. Following an initial meeting between Mexican President Andrés Manuel Lopéz Obrador and President-elect Alejandro Giammattei in September 2019, both leaders must lay the foundations for continued and increased cooperation and attract international support for transport infrastructure development. It will be important to create medium- and long-term development and cooperation mechanisms that extend beyond the Mexican government’s Comprehensive Development Plan for Central America. 

AMLO’s administration has prioritized development in Southern Mexico to mitigate the migration crisis. However, infrastructure development policies must be based on technical studies that determine gaps, feasibility, costs, and implementation time. In Southern Mexico states like Chiapas and Oaxaca, where more than 70 percent of the population lives under the poverty line, transport infrastructure is particularly necessary.  And the situation is not much different in Guatemala. An estimated 59 percent of Guatemalans live below the poverty line. In the Western Highlands region of Guatemala, three out of four people live under the poverty line. Sporadic collaboration and improvised projects will fail to address connectivity issues and regional development and will prevent citizens from migrating north in search of a more prosperous future.

In addition, the two presidents must also continue to mitigate mounting pressure from the United States with regards to migration enforcement by attracting foreign aid and seeking long-term solutions with the US government to mitigate unauthorized migration. Collaboration with multinational organizations like the World Bank and the Inter-American Development Bank would be central to develop transport infrastructure projects and boost development. By cooperating to improve the connectivity of isolated markets and communities, both countries can jointly address the migration crisis. 

Addressing the factors that are pushing Central Americans northward—violence and public insecurity, corruption and impunity, and lack of economic opportunities, to name a few—must be done in a holistic, multinational, and multi-faceted fashion, as outlined in a 2017 Atlantic Council Northern Triangle Security and Economic Opportunity Task Force report. Developing a sound strategy to improve transport infrastructure in Southern Mexico and Guatemala, would be a first step towards a more prosperous region. 

María Fernanda Pérez Arguello is an associate director with the Atlantic Council’s Adrienne Arsht Latin America Center, where she focuses on Central America, Mexico, the USMCA, and anti-corruption efforts.

Pablo Reynoso Brito is a program assistant with the Atlantic Council’s Adrienne Arsht Latin America Center, where he focuses on Mexico.

The post Transport infrastructure in southern Mexico and Guatemala: A step toward development appeared first on Atlantic Council.

The youngest president in Latin America, President Nayib Bukele has been an early symbol of hope and optimism for El Salvador, the region, and the United States as it seeks to stem irregular migration to its southern border. As he continues to settle into office, what policies from his proposed Plan Cuscatlán should his administration prioritize? From combatting corruption and cracking down on organized crime and insecurity, to creating economic opportunities and attracting foreign investment, how will the Bukele administration balance delivering on short-term needs along with long-term structural reforms?

A new Spotlight by María Eugenia Brizuela de Ávila, former minister of foreign affairs of El Salvador and nonresident senior fellow with the Atlantic Council’s Adrienne Arsht Latin America Center, and Domingo Sadurní, program assistant with the Atlantic Council’s Adrienne Arsht Latin America Center, explores the challenges and opportunities in four policy priorities of the Bukele administration during his first six months in office.

The post Spotlight: President Bukele’s first six months appeared first on Atlantic Council.

On May 30, US President Donald J. Trump threatened to impose a 5 percent tariff on all Mexican goods by June 10 unless the Mexican government did more to help prevent migrants from reaching the US border. He further warned that this tariff would be increased by five percentage points each month until satisfactory progress was made. On June 7, Trump announced that a deal had been struck with the Mexican government that saw the tariff threat dropped, although it could be reinstated if the there is a “problem.”

US Sen. Ron Johnson (R-WI) told the Atlantic Council that he “understand[s] [the president’s] frustration. But I don’t necessarily understand the administration’s worldview when it comes to the trade wars and tariffs.”

Johnson argued that the current number of migrants reaching the United States’ southern border and attempting to cross illegally “is an out-of-control situation… [and] is exactly what President Trump was trying to and has been trying to solve. But the president has not been getting much help from Mexico and he certainly has been getting no help from the United States Congress whatsoever.”

The Mexican government has reportedly promised to deploy its national guard to the Guatemalan border, arrest more migrants in Mexico, and handle more busloads of asylum applicants who have been turned away from the United States. “The Mexicans have been asked for a while to do a better job with their border with Guatemala,” US Sen. Tom Carper (D-DE) explained but added that he thought “they have been responsive to do that.”

While both Carper and Johnson sympathized with the problem facing the Trump administration, they criticized the heavy toll tariffs—or even the threat of tariffs—place on US consumers and producers. “Tariffs are a tax paid by consumers on the country imposing them and increases our cost of consumption,” Johnson explained.

“Businesses want certainty,” Carper added, but the continued specter of potential tariffs means that “right now they don’t have it and they need it.”

In addition to hurting US consumers and businesses, both senators argued that hurting the Mexican economy would actually be counterproductive to controlling immigration. Johnson explained that the large number of economic migrants from Mexico seen a decade ago has largely stopped because “Mexico has a vibrant economy… It is in America’s best interest that Mexico’s economy is strong.” Carper agreed, saying “people have found that they have good economic opportunity to stay right where they are.”

Rather than tariff threats on Mexico, Carper said more focus needs to be placed on the conditions within Honduras, Guatemala, and El Salvador, where most of the migrants are fleeing economic plight, drought, crime, and violence. Carper lamented the situations in Guatemala and Honduras, specifically. “In Honduras, we don’t even have an ambassador,” he said, while presidential elections in Guatemala on June 16 feature “no good candidates” and a former anti-corruption attorney general, Thelma Aldana, has been prevented from returning to the country to campaign.

In March, the Trump administration announced that it was cutting off all direct assistance to El Salvador, Honduras, and Guatemala—the so-called Northern Triangle countries. “We’re not paying them anymore because they haven’t done a thing for us,” Trump told journalists at the time.

The State Department said in a statement: “At the secretary’s instruction, we are carrying out the president’s direction and ending FY 2017 and FY 2018 foreign assistance programs for the Northern Triangle. We will be engaging Congress as part of this process.”

Carper suggested the United States and Mexico put more resources toward thwarting the “coyotes”—organized crime members who illicitly offer transportation and assistance to migrants in exchange for money. Most of these “coyotes” have been empowered over the years by “our insatiable demand for drugs,” Johnson explained. To curb the ability of violent organized crime to both cause and profit from this illegal migration, the United States needs “a long-term effort” involving regional partners such as Mexico and tangible legislation from the US Congress, he argued.

The Trump administration’s threat against Mexico is just the latest use of tariffs to attempt to leverage better trade deals or concessions from third countries. In early 2018, the United States placed tariffs on aluminum and steel on Canada and Mexico in order to pressure them into negotiations to revise the North American Free Trade Agreement, which resulted in a revised version known as the United States-Mexico-Canada Trade Agreement currently awaiting ratification. The United States has also placed tariffs on the European Union and China in order to achieve more favorable trade outcomes.

“I understand using tariffs as leverage to get a better deal,” Johnson said, but he stressed that tariffs could force US-based producers “to move their manufacturing for international customers overseas. We are starting to see that at least contemplated.”

Jaime Castaneda, senior vice president for policy strategy and international trade at the National Milk Producers Federation, explained that in the dairy industry “just the threat of not having [open trade with] Mexico certainly had a repercussion in producers’ prices and producers’ income.”

Beth Hughes, senior director for international affairs with the International Dairy Foods Association, agreed pointing out that tariffs on goods coming from Mexico could not just increase prices for consumers, but also for producers as “most of what [the dairy industry] import[s] from Mexico are ingredients” that go into US-made dairy products.

This interconnection between the US and Mexican economies is also present in the automotive industry, which has been particularly hurt by the aluminum and steel tariffs. Warning about the effect should the Trump administration return to its threat of tariffs on all Mexican goods, Jeff Beck, director of federal government affairs for the Auto Alliance, said that “a five percentage point tariff would be absolutely devastating for the automotive supply chain. Auto parts actually go across the border several times in many cases before they actually get put into a completed vehicle. The impact of these tariffs would actually be multiplied for the auto industry.”

Maria Zieba, director of international affairs at the National Pork Producers Council, reported that the tariffs placed on US pork in retaliation for the 2018 tariffs caused a “$1.5 billion loss just last year alone” for the US pork industry. “We have been bearing the brunt of the retaliatory tit-for-tat between the two countries,” she added.

“The economic fates of the United States, Canada, and Mexico are intertwined,” Jason Marczak, director of the Atlantic Council’s Adrienne Arsht Latin America Center, explained. He further warned that “by making products from Mexico more expensive and less competitive, we open the door for products from other countries outside North America—China, for example.”

Johnson said that the uncertainty around the tariffs needs to end and that he “can’t wait for this administration to wrap up these trade deals” around the world so that businesses can stop worrying about new tariffs. He argued that it was “well past time that Congress start returning and retaining [its] constitutional authority” on tariffs that has been given to the executive branch since the 1930s.

“We averted an unprecedented economic crisis with our number one trading partner,” Marczak said, but the threat of tariffs still looms and could cause much more pain for US consumers and producers if the administration turns to them again to improve its negotiating position.

David A. Wemer is assistant director, editorial, at the Atlantic Council. Follow him on Twitter @DavidAWemer.

The post US senators warn against tariffs on Mexico appeared first on Atlantic Council.

If imposed, these US tariffs would have major near-term economic and political costs for the United States and Mexico. Over the longer term, they could cause serious damage to a bilateral relationship that has progressively become more important since the establishment of the North American Free Trade Agreement (NAFTA) in 1994.

There is plenty of responsibility to share for the immigration challenges being faced today on the US-Mexico border.

Central American governments’ inability to provide for the basic needs and safety of many of their citizens, fueling the migration, has deep-rooted causes that will take years to solve. Mexico and the United States have agreed in principle on the value of encouraging economic development and job creation in southern Mexico and Central America as part of a longer term response, but they have not yet taken concrete steps in that direction, and the United States recently cut aid to Central America, despite the dire needs.  Mexico has offered development proposals, which it hopes the United States will support.

However, the Mexican government has not had sufficient resources to properly manage the increased flow of migrants, nor has it applied a consistent policy on how to treat and care for them. Mexican authorities are struggling to effectively balance their commitment to respect migrants’ human rights with their declared policy of not interfering in the affairs of other countries, in this case the United States as so many undocumented persons can move across the US-Mexico border in an unregulated way. Mexico’s immigration and refugee agencies are severely understaffed, under-resourced, and overwhelmed by the increased numbers of Central Americans heading north.

The United States is reportedly sending border agents to help Guatemala strengthen that country’s border and migration services, because it is a key location to manage migrant movements northward. Washington and Mexico City, however, have not hammered out an agreement on managing the near-term challenges of so many Central Americans trying to get to the United States, nor have they agreed on ways to help strengthen Mexico’s capacity and resource needs.

Acting US Homeland Security Secretary Kevin McAleenan has said that the United States seeks tighter security on Mexico’s border with Guatemala, a crackdown on migrant smugglers in Mexico, and an agreement whereby asylum seekers would be required to seek refuge in Mexico: areas where Mexico would need additional capacity/resources and to alter some policies.

Ironically, public statements by leaders may have generated larger migrant numbers.  When Mexico’s new president, AMLO, sent messages indicating he would welcome and treat migrants well, they came in larger numbers than Mexico could handle, and when Trump threatened to close the border, Central American migrants apparently heard that they had better move quickly to the United States before that option was taken away.

It is important to note that serious gaps in US capacity to manage and process migrants, including the dire shortage of officials to adjudicate asylum claims, have contributed significantly to the “emergency” by seriously slowing the United States’ ability to handle migrants asking to be granted asylum under US law and thus also to develop potential options for having migrants wait in Mexico.

New US tariffs, however, would multiply the suffering on both sides of the border. US consumers and producers would effectively pay billions of dollars more for goods because of the tariffs.  Since the United States makes and trades so much with Mexico, a 5 percent tariff could equal a $17 billion tax for US businesses and consumers, according to the US Chamber of Commerce. That amount could grow to $86 billion with the threatened 25 percent tariff, the Chamber estimates.

Oxford Economics estimates that a sustained 25 percent US tariff on Mexican imports could cut 0.7 percentage point from US economic growth and push Mexico into recession. The costs would be widespread across US states and sectors of the economy.

New US tariffs would also make ratification of the new North American trade agreement, the United States-Mexico-Canada Agreement (USMCA), much more complicated. Many thousands of businesses and twelve million US workers whose jobs are supported by trade with Canada and Mexico could benefit if a modern trade agreement were approved. In addition, already suffering US farmers could be particularly hurt if Mexico retaliates with duties of its own once the US tariffs go into effect.

Mexican officials say they are working hard to meet the migrant influx and cite increasing detentions, returns, and granting of asylum in recent months, but add that Mexico’s capacities are severely overloaded by the sheer numbers, as are US capacities at the border. They say they will look for options with US officials to improve the situation in the near term and urge that steps be taken to address the dramatic situation in Central America that has caused these massive migrant flows.

US-Mexico talks this week can help both countries avoid a costly detour from the joint effort to build North American prosperity and partnership over the past thirty years. Ministers can begin to improve the bilateral and regional approach to immigration issues, which by its nature will require a multiyear effort with substantial investments.  But we should not expect miracles overnight.

By initiating and sustaining a process to craft, develop, and implement solutions, the United States and Mexico can seriously address this expanding human emergency in a way that provides good answers in the near and long term via effective bilateral and regional strategies.

If this process bears fruit, it can also serve as a foundation for addressing other tough, related issues, such as cross-border crime and drug smuggling.

This kind of sustained diplomatic engagement is the most effective way to find solutions and to avoid long-term damage to the vital relationship with our southern neighbor.

Earl Anthony Wayne is a nonresident senior fellow with the Atlantic Council’s Global Business and Economics program and co-chair of the Advisory Board of the Mexico Institute at the Woodrow Wilson International Center for Scholars. He is a former US ambassador to Mexico and US assistant secretary of state for economic and business affairs.

The post Immigration and tariffs: In support of the ongoing US-Mexico border diplomacy appeared first on Atlantic Council.

There is one thing these people do have: fear.

Earlier this summer, the American Civil Liberties Union filed a suit against then US Attorney General Jeff Sessions for unlawfully elevating the credible fear threshold for asylum requests and eliminating most claims on the basis of gender- and cartel-driven violence. The lawsuit emphasizes an often-overlooked reality: there is a direct correlation between gender-based violence and forced migration.

Sexual and gender-based violence is a primary factor forcing women and girls to migrate from the three Northern Triangle countries: Honduras, El Salvador, and Guatemala. A 2017 study on migration from these countries conducted by the University of Washington found that the increase of violence between 2011 and 2016 coincided with a doubling of total respondents listing “fleeing violence” as their main reason for migration.

To effectively address migration from the Northern Triangle, states must better understand this relationship and invest in long-term solutions. These solutions should be aimed at strengthening institutional capacity, fostering a culture of equality and accountability, and increasing access to educational and legal resources.

Femicide—the targeted killing of a woman, particularly by a man, due to her gender—plagues much of Latin America and the Caribbean. A report published by Small Arms Survey in 2016 found that fourteen of the twenty-five countries with the highest rates of femicide in the world are in that region.

Femicide in Northern Triangle countries particularly stands out for its severity. According to the United Nations, Honduras –which is about the size of Ohio – has the highest femicide rate in the world. Most cases are never investigated. Despite these countries’ comparatively small population (just 5 percent of the region’s total population), together, the three countries rank third in terms of the largest total number of femicides, with 1,804 deaths in 2016 alone. The Northern Triangle countries rank ahead of Brazil, the world’s fifth-largest country, and currently the fifth highest ranking in the world for total number of femicides.

Although these figures are frequently attributed to general or domestic violence and organized crime, femicide is perpetuated by deep-rooted social and systematic factors: a widespread machismo culture that favors men over women; low degrees of institutional capacity due to corruption; and high degrees of impunity—an exemption from punishment and the failure for perpetrators to be brought to justice.

Low degrees of women’s well-being and the persistence of violence within the region will continue to cause regional destabilization and fuel forced migration. According to the Women Peace and Security Index, El Salvador, Guatemala, and Honduras are second-tier performers in terms of women’s well-being, placing 77^th, 102^nd, and 83^rd among 152 countries, respectively. Negative indicators of social well-being, including high degrees of impunity, perceived insecurity, and low degrees of institutional capacity in the Northern Triangle, reduce the viability of justice measures and leave particularly vulnerable portions of the population—women, children, and the LGBTQI community—with few options for protection beyond migration.

Experiences of violence within the region differ by gender. Although men are more likely to experience violence in the context of armed conflict or organized crime, women are more likely to experience physical domestic violence or sexual violence, according to the Pan American Health Organization. Gangs and drug cartels map onto this scheme of gendered forms of violence, often relying on the use of sexual and gender-based violence to maintain fear and control. Consequently, when controlling for gender, women in the study were more likely to cite “fleeing violence” than male responders.

According to current projections, femicide in Latin America is on the rise, increasing from one death every thirty hours in 2016 to one death every eighteen hours in 2017. More needs to be done by both regional and international actors to counter this growing trend and to protect women’s rights.

Some states have begun to implement measures to do so. For example, Guatemala’s former attorney general, Thelma Aldana, oversaw the creation of the Special Prosecutor’s Office for Femicide, a specialized court designed to increase the efficacy of investigations and prosecutions. Additionally, some states have worked with the United Nations to adopt the Latin American Model Protocol, a set of procedures designed for use by investigators and prosecutors in the region to ensure the totality of investigations.

The success of such programs, however, is dependent on the use of an intersectional framework that includes diverse voices from all segments of society and ensures equal access to resources. It is vital that regional actors identify all vulnerable portions of society, especially indigenous groups, and bring these groups into the conversation. Using this information, states can better allocate educational and legal resources to ensure equal access to protection.

For international actors, the crisis requires a combination of recognition, increased understanding, and accountability. Combatting femicide requires a commitment from the international community to not only aid victims of human rights abuses, but also to serve as an accountability measure. In doing so, the international community can help states strengthen institutional capacity through the provision of resources, expertise, and support.

Existing evidence demonstrates that gender equality and inclusion help build more prosperous and peaceful states. For this reason, long-term commitments are necessary from both regional and international actors. Any policy that overlooks this relationship is complicit in perpetuating femicide, hindering development, and destabilizing the region.

Maria Fernanda Perez Arguello is an associate director with the Atlantic Council’s Adrienne Arsht Latin America Center, where she focuses on, among other things, Central America. Follow her on Twitter @mfperezcr.

Bryce Couch is a former intern with the Atlantic Council’s Adrienne Arsht Latin America Center. 

The post Violence against women driving migration from the Northern Triangle appeared first on Atlantic Council.

Bolton’s speech in a critical swing state for both the US Senate and the US House of Representatives just six days before the midterm elections can be seen as an attempt to shore up Republican Party support among the politically powerful Cuban-American community in southern Florida.

Cuba, Nicaragua, and Venezuela have taken part in “the same oppressive behavior of unjust imprisonment, torture, and murder,” according to Bolton. This “triangle of terror,” Bolton argued, “is the cause of immense human suffering, the impetus of enormous regional instability, and the genesis of a sordid cradle of communism in the Western Hemisphere,” he added.

“John Bolton made it clear today where the administration is headed on Venezuela, Cuba, and Nicaragua,” Jason Marczak, director of the Atlantic Council’s Adrienne Arsht Latin America Center, said.

“His forceful stance is no surprise,” said Marczak. “The US government has increasingly sought to ramp up pressure on all three countries. Bolton has long favored a stronger position.”

While scathing in his criticism of Cuba, Nicaragua, and Venezuela, Bolton welcomed the election on October 28 of far-right candidate Jair Bolsonaro as Brazil’s next president. Bolton described Bolsonaro as a “like-minded” partner. Bolsonaro has a history of making incendiary remarks about women, minorities, and gays. The president-elect has also promised to get tough on crime and corruption.

Cuba

Bolton’s harshest rhetoric was reserved for the regime in Havana, which he accused of silencing “dissidents and suppressing every kind of freedom know to man.” Bolton promised that the Trump administration would “not glamourize Marxist guerillas to promote a delusion of our own glory. Our concern is with sanctions not selfies.”

Many of Bolton’s comments were highly critical of the Obama administration, which in December 2014 restored full diplomatic relations with Cuba and opened an embassy in Havana for the first time since the Cold War. “Members of this administration will never take a picture in front of an image of Che Guevara like Barack Obama did,” Bolton said in reference to Obama’s trip to Havana in March 2016.

Last June, Trump—a longtime critic of Obama’s rapprochement with Havana—announced that he was “cancelling the last administration’s completely one-sided deal with Cuba.” Despite these words, the embassy remained open and only restrictions on American travel to Cuba were reimplemented.

Bolton explained that “the United States is enforcing US law to maintain sanctions until among other things, all political prisoners are freed, freedom of assembly and expression are respected, all political parties are legalized, and free and internationally supervised elections are scheduled.”

Bolton also assured the audience that the administration has “scaled back our embassy personnel in Cuba,” and amid reports of potential microwave strikes on US Embassy personnel in Havana, that the United States “will not allow our diplomats to be targeted with impunity.”

Venezuela

Bolton also took aim at Venezuelan President Nicolás Maduro for “using the same oppressive tactics that have been employed in Cuba for decades.”

Maduro has presided over an economic and societal collapse in the country, which has worsened in the last two years. Bolton stated that “more than two million desperate Venezuelans have fled Maduro’s oppressive rule since 2015.”

Hundreds of thousands of protesters flooded the country’s streets throughout 2017, clashing with soldiers and police officers throughout the summer months. At least 125 people died, and thousands were injured in these clashes. On July 31, 2017, the US Treasury Department froze Maduro’s assets in retaliation for his attempt to replace the opposition-led National Assembly with an illegitimate National Constituent Assembly.

An Atlantic Council poll in April 2018 found that 81 percent of Venezuelans believe the country is an humanitarian crisis and 77 percent disapproved of Maduro’s job performance. In May 2018, Maduro won re-election in a landslide amid widespread allegations of fraud.

Bolton stated that the “United States will not tolerate Maduro’s undermining of democratic institutions and ruthless violence against innocent civilians.” He detailed existing sanctions the Trump administration has placed on more than seventy Venezuelan individuals and entities, including Maduro, and announced that Trump has just signed a new executive order targeting Venezuela’s gold trade.

Marczak welcomed the new sanctions as “in Venezuela, illicit flows of money that benefit the Maduro regime to the detriment of the Venezuelan people must be stopped.” Marczak added that pressure must continue so that there can be a restoration of “democracy, human rights, and the conditions so that millions of Venezuelans are no longer forced to flee.”

Nicaragua

Bolton also condemned the Nicaraguan government for its “violence and repression against its citizens and opposition members.”

The US government slapped sanctions on three Nicaraguan officials in July for their role in violence against protesters in the Latin American nation. Nicaraguans have been protesting the decision by President Daniel Ortega’s government to change social security and other internal repression measures. A United Nations human rights delegation was kicked out of the country on August 30 after it released a report criticizing the Ortega government for human rights abuses against demonstrators.

The United States has been in vocal opposition to Ortega’s government since the former Cold War leader returned to power in 2007. Ortega has been openly supportive of both Iran and neighbor Venezuela.

“Ortega and his allies have completely eroded democratic institutions, stifled free speech and impose a policy of jail, exile, or death for political opponents,” Bolton said, adding that “free, fair, and early elections must be held in Nicaragua and democracy must be restored to the Nicaraguan people.”

Bolton’s comments make it “very clear that these sanctions were just the beginning,” María Fernanda Pérez Arguello, an associate director in the Adrienne Arsht Latin America Center, said. With his speech, she argued, “John Bolton and the administration are sending clear signals that they are committed to helping the Nicaraguan people restore their long-lost democracy.”

David A. Wemer is assistant director, editorial at the Atlantic Council. Follow him on Twitter @DavidAWemer.

The post John Bolton takes Latin American ‘troika of tyranny’ to task appeared first on Atlantic Council.

On October 12, a group of less than 200 people organized in San Pedro Sula, in northern Honduras, to begin a treacherous journey toward the United States. By October 24, the caravan had grown to nearly 7,000 people—the largest the region has ever seen—and had reached forty-five miles into southern Mexico.

Escaping inhospitable conditions in their home countries, men, women, and children hope to find a safer, better future in the United States. But in the United States, President Donald J. Trump has other plans.

Less than two weeks before the November 6 midterm elections, Trump has honed in on the Central American caravan. On Twitter, he has threatened to cut aid to the region, close the US border, and deploy the military. Adding to the noise around the issue, he made unsubstantiated claims that the caravan consisted of Middle Easterners and MS-13 gang members.

In May 2017, the Atlantic Council’s Adrienne Arsht Latin America Center sought to move the needle toward increased US engagement with the Northern Triangle in an effort to build a better future for Guatemalans, Salvadorans, and Hondurans. The Northern Triangle Security and Economic Opportunity Task Force mobilized US policymakers and in-country leaders to push toward cooperation around the top issues for long-term regional prosperity: sustainable economic development, rule of law, and security.

Today, the Northern Triangle Task Force is a reminder that the future of the United States is tied to the stability and prosperity of Guatemala, El Salvador, and Honduras. Its findings should continue to serve as a blueprint for a multiyear, bipartisan, on-the-ground approach that would strengthen US national security by way of stabilizing and strengthening these three countries.

Here are the key recommendations from the report, for both the United States and the Northern Triangle:

I. Building Sustainable Economic Development

United States:

• • Support the infrastructure fund coordinated by the Inter-American Development Bank (IDB) and promote an oversight committee composed of multilateral institutions, civil society, and the private sector.
  • Focus assistance on migrant-sending communities and intermediary cities.
  • Increase information-sharing to help put in place an effective system to help reintegrate returned Northern Triangle residents.

Northern Triangle:

• • Prioritize improving secondary and tertiary roads in key economic development zones and focus funding on strategic sectors for economic growth.
  • Promote more effective job reinsertion programs for former gang members.
  • Reduce informality with a sector-specific strategy that includes stricter penalties for business tax evasion.

II. Strengthening the Rule of Law
United States:

• • Continue supporting the work of the International Commission Against Impunity in Guatemala (CICIG) and ensuring the success of the Organization of American States’ Mission to Support the Fight Against Corruption and Impunity in Honduras (MACCIH) and El Salvador’s anti-impunity unit.
  • Continue to tie key foreign assistance to jointly-agreed benchmarks for progress and impact.
  • Offer increased technical assistance to banking and regulatory agencies, the private sector, and multilaterals.
  • Direct existing funds toward understaffed fiscalías (attorney generals).

Northern Triangle:

• • Increase transparency in the election of secondary public officials.
  • Create incentives to digitize financial transactions and reduce reliance on cash.
  • Implement an accelerated roadmap to comply with international anti-money laundering standards.

III. Improving Security

United States:

• • Strengthen and promote properly implemented community policing initiatives.
  • Ramp up financial and technical support to reform the prison system.
  • Work with Northern Triangle authorities to identify, monitor, and constrict illicit corridors.

Northern Triangle:

• • Improve police accountability through: greater independent reporting and denouncing of police abuses; and new internal and external controls in the police force.
  • Implement comprehensive criminal prison reform, focused on rehabilitation.
  • Target high-risk neighborhoods for increased social and educational programs.

Follow the Adrienne Arsht Latin America Center on Twitter @ACLatAm.

The post Here’s how to address the Central American migrant challenge appeared first on Atlantic Council.

In an October 25 tweet, US President Donald J. Trump wrote that he is “bringing out the military for this National Emergency. They will be stopped!”

Trump has earlier warned this “caravan” of migrants not to enter the United States. In a tweet on October 22, he claimed that “criminals and unknown Middle Easterners are mixed in.”

The president also threatened to cut off, or substantially reduce, aid provided to the countries of the Northern Triangle—Guatemala, El Salvador, and Honduras—which are the chief source of these migrants.

In the past, Trump has said that he would deploy US troops to the border with Mexico to stop the flow of unauthorized migrants into the United States. While for some years now the number of Mexicans leaving the United States has exceeded the number coming here, there has been a steady uptick in the flow of Central American migrants north.

On May 4, 2017, John Kelly, White House chief of staff who at the time was serving as secretary of homeland security, said at the Atlantic Council that he had told Trump that in his view, the job of securing the United States’ southwest border “begins 1,500 miles south.”

A report from the Northern Triangle Security and Economic Opportunity Task Force of the Atlantic Council’s Adrienne Arsht Latin America Center offers proposals on how the United States and the three Northern Triangle countries can jointly address long-standing regional challenges. Its recommendations are focused in the areas of rule of law, security, and sustainable economic development.

Jason Marczak, director of the Atlantic Council’s Adrienne Arsht Latin America Center, brings us up to speed on the crisis in an interview with the New Atlanticist’s Ashish Kumar Sen. Here are excerpts from the interview.

Q: Why are so many people fleeing the Northern Triangle?

Marczak: People are fleeing the Northern Triangle, Honduras specifically, because the conditions there give them no other alternative but to leave. Most people, if given a choice, would rather stay with their families, communities, or hometowns. But a combination of violence and economic desperation in these communities leaves them with little alternative but to leave.

Q: What is the situation in Honduras?

Marczak: Honduras is one of the most dangerous countries in the world. The homicide rate in Honduras has decreased in the last couple of years, but the situation remains incredibly difficult. There are communities that are off limits to the state and are essentially run by gangs.

At the same time, the Honduran economy continues to suffer as it has for several years.

It is this combination of economic as well as security conditions that is the key primary determinant of the Honduran people’s decision to come north.

This type of mass migration from Central America is something we have really seen escalate in the last ten years. It’s due to a lack of improvement of conditions in the countries themselves.

Q: Why are the migrants traveling in caravans?

Marczak: The reason they are leaving in caravans is because the journey is very dangerous. Criminal elements and gangs consistently target migrants that head north. Traveling in large groups is a tactic to protect people from those who prey on migrants.

Q: Is there a criminal element to these caravans?

Marczak: It’s difficult to say who is in the caravan. But, based on previous migration flows, the people who are leaving and coming north are people who are forced to flee because they fear for their lives if they stay. Some, of course, come for economic reasons.

Q: What are the trends as far as the number of migrants coming north?

Marczak: The crisis of unauthorized migrants heading toward the United States really became an issue of US national conscience about four years ago when we had tens of thousands of unaccompanied migrant children coming to the United States. The images of young children clutching teddy bears arriving at the US border was really something that awoke the national conscience.

We have seen increases in unauthorized migration from Central America over the last decade, but it is really over the last five years that the issue has risen to one of national attention.

Q: What is the United States doing to address this challenge?

Marczak: The United States has put together a whole Central America plan and has increased its funding for the region beginning with $750 million in fiscal year 2016. The United States has allocated over $2 billion in the last three years to improve conditions in the region so people don’t have to leave.

It is important to take into account that the underlying conditions that are forcing people to leave have been endemic in these countries for decades. Fixing them will take a committed, multi-pronged, multiyear strategy.

Follow Jason Marczak on Twitter @jmarczak.

Ashish Kumar Sen is deputy director of communications, editorial, at the Atlantic Council. Follow him on Twitter @AshishSen.

The post Why is a caravan of Central American migrants fleeing to the United States? appeared first on Atlantic Council.

Addressing push factors is key to stemming flow of unauthorized migrants, says Atlantic Council’s Jason Marczak

US President Donald J. Trump on April 3 announced that he would deploy US troops to the border with Mexico to stop the flow of unauthorized migrants into the United States. The comment followed a series of tweets in which the president warned about the “caravans” of migrants that are headed through Mexico to the United States.

On April 3, Trump tweeted:

On April 1, he tweeted:

And, then this:

People from Central America’s Northern Triangle—Honduras, El Salvador, and Guatemala—make up the vast majority of migrants crossing into the United States from Mexico.

On May 4, 2017, John Kelly, White House chief of staff who at the time was serving as secretary of homeland security, said at the Atlantic Council that he had told Trump that in his view, the job of securing the United States’ southwest border “begins 1,500 miles south.”

Kelly spoke at the launch of a report from the Northern Triangle Security and Economic Opportunity Task Force of the Atlantic Council’s Adrienne Arsht Latin America Center. The report offers proposals on how the United States and the three Northern Triangle countries can jointly address long-standing regional challenges. Its recommendations are focused in the areas of rule of law, security, and sustainable economic development.

Jason Marczak, director of the Adrienne Arsht Latin America Center, discussed the factors in the Northern Triangle that are driving migration and the challenges governments, including that of the United States, face in stemming this flow.

Here are excerpts from our interview.

Q: President Trump has warned that “caravans” of migrants are headed toward the United States. What are current migration trends from the Northern Triangle?

Marczak: The conditions in the Northern Triangle, specifically in Honduras, have worsened. The uncertainty around the re-election of Honduran President Juan Orlando Hernández has led to an increase in rule of law challenges that has aggravated an already difficult situation.

What is critical in Honduras, El Salvador, and Guatemala is reducing violence and promoting economic opportunity. It is a vicious cycle. There is a lack of investment because of the violence and insecurity, and so there are fewer jobs. This has perpetuated the push factors that are causing people to leave Honduras as well as El Salvador and Guatemala.

Q: What should be done to address these push factors?

Marczak: The key to preventing unauthorized migration from Central America is to improve the conditions in the countries themselves.

You need a strong border, but at the same time the border should be the last chance to prevent unauthorized people from entering the United States. Unless the impetus to leave the country changes it doesn’t matter how strong a border the United States has when people are without hope, opportunity, worried about survival, fleeing violence—domestic as well as gang violence. Conditions can be so bad in certain communities of the Northern Triangle that it doesn’t matter how tough the journey north is, if you’re living a life of such despair you are going to migrate.

Q; What is the United States currently doing to help the Northern Triangle countries deal with this problem?

Marczak: The real key for US strategy is to think about how we work with countries of the Northern Triangle to mitigate the push factors.

The United States has been incredibly engaged in Central America for quite some time. That level of engagement was ramped up with the Plan of the Alliance for Prosperity formed by the three Northern Triangle countries in September of 2014 right after the large influx of unauthorized unaccompanied children.

Congress has since continued to provide robust funding, which comes with a number of conditions.

Q: President Trump has threatened to cut off funding to Honduras over the migrant issue. Does the Honduran government have the capacity to stem the flow of migrants on its own?

Marczak: The state is not strong enough that it can close its borders. It doesn’t have the control of its territory to be able to prevent people from leaving. We are talking about a relatively weak state with few resources that are stretched incredibly thin.

What the government does have the capacity to do is to improve the investment climate so that Honduras can attract the necessary foreign investment that is critical for creating jobs; it does have the ability to reform its security apparatus, which it is in the process of doing through a major purge of the police.

The government has the opportunity to make Honduras a better place for doing business. The three countries of the Northern Triangle should work together to position the region as an investment destination. That requires unifying procedures that would create a Northern Triangle investment platform.

Q: Has the unwelcoming environment in the United States toward migrants coming from the south had any impact on the flow of migrants?

Marczak: The number of people coming across the southern border has been decreasing for quite some time. There has been for a number of years now a net zero migration at the border because you have as many people leaving as coming in.

The real way to solve unauthorized migration to the United States is by having a clear exit and entry system. Most people who are in this country without authorization have overstayed their visas. The United States does not have a robust exit system, so it is very difficult to track who has overstayed their visa.

President Trump is focusing on Central Americans, but the issue that should be of greater concern to the United States are the increasing refugee and migrant flows out of Venezuela. At present levels, by the end of 2018, three million people could potentially have left Venezuela. They are going to Colombia, Brazil, and beyond. This is incredibly destabilizing for the region. Some of these people are being coaxed into illegal activity—whether it is prostitution to survive or being recruited by criminal gangs. It is a crisis that will impact US security interests in a way that is much more profound than the Central Americans.

Q: What is Mexico doing to check the flow of migrants from the Northern Triangle into the United States?

Marczak: In 2014, Mexico began its southern border program which provides a three-tier level of prevention of unauthorized migrants from coming into Mexican territory. Mexico has made incredible progress in preventing unauthorized flows and in working to try to secure its border with Guatemala. The Mexican government has clamped down on the La Bestia, the train that migrants would ride on to go north through Mexico.

But let’s be honest: the border is far from secure. Unauthorized migrants that want to head north into Mexico know how to bypass the checkpoints set up by the Mexican government.

Mexican authorities used to see Central America as not their problem. That has changed. They now recognize that unauthorized migrants traveling through Mexican territory are a problem for Mexico because of the criminal networks that target these people.

Q: How are Trump’s comments on unauthorized migrants playing politically in Mexico where presidential elections will be held in July?

Marczak: Andrés Manuel López Obrador, the presidential candidate who is leading by double digits in most polls, has tapped into the widespread sentiment among many Mexicans about the fact that the government doesn’t work for the people, corruption, but also the anti-US, and especially anti-Trump sentiment. This is why he launched his campaign a few days ago on the US-Mexico border with a line that under his leadership Mexico will not be the piñata of any foreign government.

President Trump’s unfavorable tweets about Mexico serve to further propel the candidacy of López Obrador. He is seen by many as the candidate who is best positioned to be a vocal critic of Trump and has expressed numerous times that he will stand firm in protecting Mexican interests.

Follow Jason Marczak on Twitter @jmarczak.

Ashish Kumar Sen is deputy director of communications, editorial, at the Atlantic Council. Follow him on Twitter @AshishSen.

The post Halting the ‘Caravans’ appeared first on Atlantic Council.

The post Celia Joins El Salvador to Discuss Trump’s Immigration Policy appeared first on Atlantic Council.

The post Marczak Joins the Chicago Council on Global Affairs to Discuss the Temporary Protected Status appeared first on Atlantic Council.

While Trump reportedly vacillated until the last hour about whether to end the program that provided protection to these young people—the Deferred Action for Childhood Arrivals (DACA) program—immigration hawks ultimately prevailed.

There is uncertainty about the immediate impact on DACA-eligible children—known as Dreamers—of the decision to unravel the program former US President Barack Obama put in place by executive order in 2012. Trump has effectively deferred to the US Congress to revamp the nation’s immigration laws and protection for DACA recipients over the next six months.

Beyond the domestic impact of ending DACA—a program that was viewed favorably by both Republican and Democratic members of Congress—the foreign policy implications of Trump’s decision are significant.

Ending DACA exposes a fundamental flaw in the administration’s strategy towards Central America—the failure to recognize that domestic immigration policies and foreign policy strategies go hand in hand. According the Migration Policy Institute, there are more than 200,000 DACA-eligible migrants from the three countries of Central America’s Northern Triangle —El Salvador, Honduras, and Guatemala.

In June, US Vice President Mike Pence travelled to Miami for a summit with the presidents of El Salvador, Guatemala, and Honduras. In his speech, Pence reaffirmed the US commitment to help the three countries bolster economic development, root out corruption, and combat organized crime as part of a broader strategy to improve prosperity and security in the region. “We’re in this together,” Pence emphasized.

Policy decisions made by the Trump administration, however, indicate otherwise. The White House’s foreign assistance budget proposal for the Northern Triangle cuts aid to El Salvador by 40 percent, and by a third for both Guatemala and Honduras. While the administration’s hardline stance on immigration has in fact served as a deterrent to those intending to come to the United States, reducing economic development and security assistance to the region would arguably increase migration from the three countries to the US. A strategy that prioritizes deportations over solving the root causes spurring migration will inevitably be insufficient.

In addition, the US Department of Homeland Security in August ended the Central America Minors (CAM) program, to which more than 13,000 minors fleeing violence had applied. The administration has not yet made a decision on whether to extend Temporary Protection Status (TPS)—a program protecting Central American migrants since the turn of the century—to the 195,000 and 41,000 citizens of El Salvador and Honduras, respectively, who are currently covered by the program. This increases uncertainty among Northern Triangle migrants currently living in the United States.

Ending DACA further complicates an already difficult institutional situation for the Northern Triangle. Given the three countries’ limited reintegration capacity, a combination of the above mentioned factors,—exacerbated by the large amount of potential DACA-eligible returning migrants—would overwhelm local authorities, undermining their ability to provide proper social and economic assistance to returned migrants. Such disenfranchisement of returned migrants has, in the past, provided fertile ground for gangs such as MS-13 and Barrio 18 to recruit prospective members.

However, the return of DACA-eligible migrants has an additional layer of complexity that is unique to the program. Most of the youths eligible for the program and vulnerable to deportation if the program is effectively rescinded identify as American as they have lived in the United States for most of their lives. English is their preferred language; their Spanish tends to be limited or nonexistent. Reports indicate that they do not feel at home in their countries of birth.

Should they be deported, the same reports demonstrate that those who grew up in the United States, protected by DACA, are willing to risk embarking on a dangerous future trip back to the United States in order to reunite with their friends and family. While the administration’s immigration stance may have served as a deterrent to Central Americans considering migrating north, it does not seem that that will be the case for Dreamers who consider the United States their home.

If the Trump administration pledges to support economic development and improved security in Central America, but simultaneously pushes draconian immigration policies that overburden local institutions, it is simply shooting itself in the foot. The ball may now be in Congress’ court, but Trump should understand that his decision to rescind DACA will ultimately undermine his administration’s foreign policy and his goal of securing US borders.

Juan Felipe Celia is a program assistant in the Atlantic Council’s Adrienne Arsht Latin America Center. You can follow him on Twitter @jfcelia.

The post Rescinding DACA Undermines Trump’s Central America Policy appeared first on Atlantic Council.

Guatemala’s Constitutional Court has blocked the expulsion order, which was condemned by the international community, on the grounds that Morales did not have the authority to expel Velásquez.  Morales is expected to accept the court’s decision. However, with the attempted expulsion Morales has jeopardized Guatemala’s advances against corruption and inched the country closer to a political crisis.

With the court’s intervention, Guatemala averted a constitutional crisis, but the damage is already done to Morales’ credibility and political standing. He chose to wage an ill-advised fight to expel an internationally respected anti-corruption commissioner, just two years after former Guatemalan President Otto Pérez Molina was removed on corruption charges.

Besides pushing for ambitious constitutional reforms, CICIG is recognized for spurring the ouster of Pérez Molina in 2015. CICIG and the attorney general’s office led by Thelma Aldana unveiled a massive tax fraud scheme led by Pérez Molina and his vice president, Roxana Baldetti. This revelation led Guatemalans out into the streets by the thousands, ushering in a new era of civil engagement. This is why the Atlantic Council’s Northern Triangle Task Force recently recommended that  Guatemala, the United States, and the international community strengthen and adequately support CICIG going forward. Had Morales succeeded in his attempt to expel Velásquez it would have accomplished the opposite aim, significantly undermining the rule of law.  

Its ability to mobilize civil society has made CICIG one of Guatemala’s most respected institutions. An Atlantic Council poll commissioned by CID-Gallup in August 2016 showed that 81 percent of Guatemalans approved of CICIG’s work on combatting impunity and corruption. On the other hand, only 30 percent of Guatemalans had a favorable view of Morales.

While Velásquez will remain in his post, Morales has significantly damaged his credibility, both domestically and internationally. Already hundreds of Guatemalans have taken to the streets calling for his resignation. By attempting to undermine the rule of law and the fight against corruption, Morales—a former comedian elected as president of Guatemala in 2015 amid the deep discontent of citizens towards the political establishment—betrayed his campaign slogan of ni ladrón, ni corrupto (“Neither a thief nor corrupt”). This ideal was the main reason he was elected.  Moreover, in the aftermath of Morales’ decision, three members of his cabinet, including Foreign Minister Raúl Morales, either resigned or were removed by the president.  

There is also international outcry. Members of the US Congress; UN Secretary General Antonio Guterres; the US Department of State; and the embassies of the United States, Germany, Canada, Spain, France, Italy, the United Kingdom, Sweden, Switzerland, and the European Union in Guatemala denounced Morales’ decision and reaffirmed their unequivocal support of Velásquez.

Why, then, make such a polemic and unpopular decision? CICIG and the Public Ministry are investigating several political parties—including Morales’ National Convergence Front (FCN)—on suspicions of accepting illicit funds during the 2015 presidential election. According to Aldana and Velásquez, nearly $1 million in anonymous contributions to the Morales presidential campaign went unreported. As they announced the investigation, Aldana and Velásquez also requested that Morales’ presidential immunity be stripped, since Morales was both FCN’s secretary general and finance head at the time.

While Morales indicated that his targeting of the commission was based on allegations that Velásquez unduly pressured members of Congress to vote in favor of proposed constitutional reforms, the alleged interactions occurred four months ago, whereas the investigation into his campaign finances was announced last week. The timing thus raises serious doubts about his motives for attempting to expel Velásquez. The relationship between Morales and CICIG had already soured following the prosecution and subsequent arrest of his son and brother earlier this year on corruption charges.

Internationally, US assistance to Guatemala—already facing deep uncertainties—may suffer as a result of Morales’ widely condemned attempt to dismiss Velásquez. Champions for the region in the US Congress—which provides more than half of CICIG’s $13 million annual budget—have repeatedly praised  Velásquez’s work as commissioner. US Representatives Ed Royce (R-CA) and Eliot Engel (D-NY), chairman and ranking member of the House Foreign Affairs Committee, respectively, condemned Morales’ decision, with Engel adding that they will review US assistance to Guatemala.

Considering US interactions with Guatemala as part of a bloc with El Salvador and Honduras—which together comprise Central America’s Northern Triangle—Morales’ decision may have negative implications for all three countries. In the current political climate in Latin America, when many countries are takings steps to eradicate corruption at the highest levels, attempting to remove Velásquez was nothing short of reckless.

Juan Felipe Celia is a program assistant in the Atlantic Council’s Adrienne Arsht Latin America Center. You can follow him on Twitter @jfcelia.

The post Guatemala Averts Political Crisis, But Damage is Done for Jimmy Morales appeared first on Atlantic Council.

The post Marczak Quoted by the New Delhi Times on Challenges in the Northern Triangle appeared first on Atlantic Council.

The post Marczak Joins Voice of America to Discuss Approaches to Engagement with Central America appeared first on Atlantic Council.

The post Brizuela de Ávila Joins NPR to Discuss Fighting Central America’s Drug Cartels appeared first on Atlantic Council.

US Secretary of Homeland Security John Kelly says improvement in conditions will reduce unauthorized migration

US Secretary of Homeland Security John Kelly has some advice for people thinking of crossing over illegally into the United States: don’t bother coming.

“The message is, ‘If you get here—if you pay the traffickers you will probably get here—you will be turned around within our laws relatively quickly and returned. It is not worth wasting your money,’” Kelly said at the Atlantic Council on May 4.

People from Central America’s Northern Triangle—Honduras, El Salvador, and Guatemala—make up the vast majority of migrants crossing into the United States from Mexico.

Kelly credited deportations, US government appeals to civil society in Central America, and an improvement in economic opportunities in those countries, in combination with cooperation between the US and Mexican governments, for the reduction by 70 percent in the flow of unauthorized migrants into the United States. It is worth noting that a Pew Research Center study found that over the past few years more Mexicans are actually leaving than coming to the United States.

The vast majority of Central American migrants who come to the United States do not leave their homes willingly; some are fleeing gang violence fueled by the drug trade and most are seeking better economic opportunities for their families. Human traffickers exploit the migrants by extorting large sums of money.

Once in the United States, the migrants are “victimized,” forced to work in slave-labor-type conditions, and underpaid; some are drawn into lives of crime, Kelly said.

Kelly delivered the keynote address at the launch of a report from the Northern Triangle Security and Economic Opportunity Task Force of the Atlantic Council’s Adrienne Arsht Latin America Center. The report offers proposals on how the United States and the three Northern Triangle countries can jointly address long-standing regional challenges. The report is the result of a year-long effort. The recommendations are focused in the areas of rule of law, security, and sustainable economic development.

US President Donald Trump has taken a tough stand on unauthorized immigration. Kelly said the Trump administration is implementing immigration laws “humanely and with dignity.”

“We are not doing anything different than the Obama administration did except we’re enforcing laws across the spectrum,” he said. If members of the US Congress do not like the laws they should change them, he added.

Kelly said he has told Trump that in his view, the job of securing the United States’ southwest border “begins 1,500 miles south.” The United States, the secretary said, has unbelievably good partners in Latin America, such as Colombia, to help stem the illegal flow of people and drugs.

“If we can improve the conditions—the lot of life of Hondurans, Guatemalans, Central Americans—we can do an awful lot to protect the southwest border,” Kelly said.

On the campaign trail, Trump described Mexican migrants as rapists and vowed to build a wall on the southern border to prevent unauthorized immigrants from getting into the United States. Kelly said the migrants coming across the southern border are “good people as a group,” but noted that, due to lack of opportunity, many of the young men get drafted into criminal gangs, such as MS-13, while a lot of women join the sex trade.

Meanwhile, the high demand in the United States for hard drugs—heroin, methamphetamine, and cocaine—has contributed significantly to the flow of drugs. Kelly said the United States has done very little to reduce this demand.

Following Kelly’s remarks, Jason Marczak, director of the Arsht Center’s Latin America Economic Growth Initiative, moderated a panel discussion featuring Laura Chinchilla, a
former president of Costa Rica; John Negroponte, a former US deputy secretary of state; Maria Eugenia Brizuela, a former foreign minister of El Salvador; and Eduardo Stein, a
former vice president of Guatemala. All four are members of the Northern Triangle Security and Economic Opportunity Task Force; Negroponte, Brizuela, and Stein are co-chairs.

Negroponte said that as a result of Central America’s proximity to the United States, the migratory patterns from this region have a direct impact on this country. Chinchilla said Central America is important for more reasons than just its nearness to the United States.

The United States has a “very important moral obligation” toward the Northern Triangle on the issue of drug trafficking, she said. “Most of the problems we have today are explained by the amazing amount of illegal drugs that comes to the United States,” she said, noting the linkages between the drug trade and the high levels of crime in Central America.

Furthermore, she said without adequate US engagement, a deterioration in the security situation in Central America would contribute to a flood of migrants and this will pose serious national security challenges to the United States.

Two years ago, the US Congress deepened cooperation with Guatemala, El Salvador, and Honduras by approving $750 million in aid through the Alliance for Prosperity Plan. The US Senate on May 4 was voting on an omnibus spending bill that includes $655 million for Central America.

“What we want to do is to help resolve the root causes [of migration] in that part of the world and then integrate it better economically with ourselves and other parts of North America,” said Negroponte.

Countries in the Northern Triangle have had mixed results in their efforts at betterment.

In El Salvador, for example, the tiny nation that was wracked by civil war from 1980-1992 is now ruled by former guerillas from the Farabundo Marti National Liberation Front (FMLN). “It just goes to prove how we have consolidated in a peaceful transition of governments,” said Brizuela, while noting that democracy is still weak in her country.

Corruption is a significant challenge facing the region.

Guatemala has had high-profile success in tackling corruption. In September of 2015, Guatemalan President Otto Pérez Molina was forced to resign in the face of corruption allegations. Such an outcome would have been impossible without the support of the Comisión Internacional contra la Impunidad en Guatemala (CICIG), the UN-backed panel that has been helping strengthen judicial institutions in Guatemala.

Stein acknowledged CICIG’s support, noting that as a result of solid corruption cases more than one hundred former public officials are in prison in Guatemala awaiting trial. 

On the flip side, Stein pointed to a backlog of three million corruption cases in El Salvador, Honduras, and Guatemala where the accused have languished in prison for many years without trial. This situation, he said, “is a master’s degree in crime,” while adding that the prison system in these countries desperately requires structural reforms.

Brizuela said there is a need to strengthen institutions and create economic opportunities to address such challenges.

Stein said a key concern voiced in Central America is the same as the one he hears repeatedly in the halls of the US Congress—“that the money is well-oriented and well-spent, and that there are accountability and transparency mechanisms that respond not only to the donors, but to the people of our countries.”

“Part of what we are hoping for… is a better understanding amongst the three governments and the rest of the region,” he added.

Marczak said the Atlantic Council task force’s recommendations are focused on improving prosperity in the region through shared responsibility, but acknowledged positive momentum in the region as a result of local leaders stepping up and investing much of their own money in solutions.  For example, 80 percent of the funding for the Alliance for Prosperity comes from the countries in the region.

Addressing the root causes of instability in Central America should be a priority for the United States, said Marczak.

“What happens in San Pedro Sula, Honduras, impacts Americans in Abilene, Texas,” he said. “If we take more concrete, decisive actions now the prospects can be bright; if we don’t, it can get much worse.”

Ashish Kumar Sen is deputy director of communications at the Atlantic Council. You can follow him on Twitter @AshishSen.

The post To Secure the United States’ Southern Border, Look to Central America appeared first on Atlantic Council.

Accountability in the region creates space for safer investments

Odebrecht was once synonymous with Latin America’s most ambitious public works projects. Today, those who hear the name think only of the web of malfeasance that has engulfed the region and continues to extend beyond the continent. But, as negative as these new revelations may seem, there is light at the end of the tunnel, and opportunities along the way. The pragmatic efforts of police and judicial actors show that some countries in the region are ready to face impunity head on. If Latin America can continue down the road to accountability, US investors could be the first to benefit.

What started as a money laundering investigation in Brazil in 2014, the case of Odebrecht, Brazil’s largest construction company, has today developed into the deepest corruption scandal Latin America has seen, with top leaders implicated. Just this week, major newspapers reported the Brazilian Supreme Court has authorized investigations into more than one hundred Brazilian politicians. In December, Odebrecht pleaded guilty in a US court to paying nearly $800 million in bribes to win business in more than ten countries, dating back to the early 2000s. The company was subsequently slapped with a record fine of $3.5 billion by the Brazilian, US, and Swiss judiciaries in December. It seems the times are changing.

In a nearly unprecedented domino effect, the scandal has extended to over a dozen countries in the region. In Peru, former President Alejandro Toledo is being sought for bribery and money laundering after allegedly pocketing $20 million from the Brazilian company. In Colombia, President Juan Manuel Santos’ campaign is accused of receiving Odebrecht funds, and former deputy transport minister, Gabriel García, has admitted to taking $6.5 million in bribes. In one way or another, Odebrecht bribes have surfaced from Mexico to Angola.

But, this scandal also generates opportunity. Exposure on this scale could not have happened without the strong judicial mechanisms being implemented in Brazil and in much of the region. Judges from Brazil to Guatemala have sunk their teeth and refused to let go, arresting and charging major political figures and holding the most elite of perpetrators accountable. In Brazil, Marcelo Odebrecht, the CEO of Odebrecht, was sentenced to nineteen years in prison, and Eduardo Cunha, the former speaker of Brazil’s lower house of Congress, was found guilty of corruption and money laundering and received a fifteen-year jail sentence.

Empowered, civil society has emerged to push for visibility and to fight impunity. The Odebrecht scandal, it seems, has shed light on an overarching changing social and political consciousness in Brazil and in Latin America, one that refuses to sweep these crimes under the rug. It could be argued the massive scandal signifies the growing pains of a region on its path to reform.

What does this mean for the United States? As outlined in the newest Adrienne Arsht Latin America Center publication, Beyond the Headlines: A Strategy for US Engagement with Latin America in the Trump Era, engagement with Latin America provides a wealth of opportunities for the United States. As the new US administration considers ways to ensure national security and prosperity, expanding US private-sector investments in the region and boosting US support for anti-impunity efforts in Latin America are strategic paths forward. For US stakeholders, the aftereffect of prosecutions in Brazil and other Latin American countries is likely to signify a decrease in corruption, making the environment less risky for foreign direct investment in the long run. Present uncertainties aside, corruption investigations are sure to level the investment playing field and stabilize the processes for project procurement and contracting in Brazil, if not in most countries under scrutiny.

Corruption scandals are nothing new in Latin America, but Odebrecht’s fallout is a turning point for the region, as countries have proven increasingly willing and capable of effective justice and reform.

Roberta Braga is a program assistant in the Atlantic Council’s Adrienne Arsht Latin America Center. You can follow her on Twitter @RobertaSBraga

The post The End of Corruption Culture in Latin America? appeared first on Atlantic Council.

The post Marczak Quoted by CNHI on Security in Guatemala appeared first on Atlantic Council.

Last month, the U.S. approved a $750 million aid package for Guatemala and neighboring Honduras and El Salvador to help them tackle poverty, gang violence and government reform.

“This will give Washington significant sway in putting in place new procedures to increase transparency and accountability,” said Jason Marczak, deputy director of the Atlantic Council, a U.S. policy center.

Read the full article here.

The post Marczak on Guatemala’s New President appeared first on Atlantic Council.

Morales won twice the number of votes than his opponent, former First Lady Sandra Torres, in a runoff election on Oct. 25. He will take office on Jan. 14, 2016.

Morales campaigned on a promise to fight corruption after former President Otto Pérez Molina resigned and was arrested on graft charges in September.

Peter Schechter, Director of the Atlantic Council’s Adrienne Arsht Latin American Center, and Jason Marczak, the Center’s Deputy Director, discussed the Morales’ election and the challenges that lie ahead for the new President in an interview with the New Atlanticist’s Ashish Kumar Sen. Here are excerpts from our interview.

Q: Why did Jimmy Morales win this election by such a landslide?

Schechter: Jimmy Morales symbolized the deep rifts in Guatemala and the accelerating changes that have come to that country. People voted Jimmy as an anti-establishment vote; people voted Jimmy as a message against the politicians that have controlled Guatemala; people voted Jimmy to send a message to the elites.

The question now is how with that level of victory and with that level of heightened expectations does Jimmy Morales govern in a way that he will not end up being a massive disappointment? His party includes a number of the very elite that he claims to be fighting against. So very radical change is not going to be possible because he will bump up against his own constituencies. A country like Guatemala, with such weak institutions and massive social needs, is a very difficult place to run.

Marczak: The Guatemalan people are fed up with the political elite in their country. The resignation and imprisonment of former President Pérez Molina over the summer after months and months of demonstrations in the streets against corruption in his administration has given the Guatemalan people a sense of a new voice that they have never had before.

The Guatemalan people have always felt that the political and business elite are above the law and the resignation of the President showed that the people’s voice can actually bring about change. And the people want more change. They voted for Jimmy Morales because he is an outsider candidate, a former comedian who has never held political office, has little political connections, because they wanted somebody who is a complete break from the establishment. The question is, how can Jimmy Morales really be a complete break from the establishment once he becomes President?

Q: No party has a majority in Congress. Will that complicate Morales’ ability to deliver change and fight corruption as he has promised?

Schechter: The fact that there is no majority points to yet another one of the emergency hand brakes that elites can still pull to slow real change, particularly change in the administration of justice and changes to reduce impunity. The administration is going to have to negotiate with Congress to pass any laws. While he certainly has the benefit of a massive bully pulpit as the overwhelmingly elected new President, I think every American understands the enormous immobilism that exists in Congresses and legislatures throughout the world… because it exists in our own.

Marczak: Jimmy Morales is going to have challenges for a variety of reasons. One is going to be working with Congress across political lines, especially given the fact that he doesn’t have political experience. He is also going to face a challenge in being able to deliver on his campaign promises or being able to articulate a clear vision for Guatemala once he is President.

His campaign platform was somewhat vague on specific details of what his presidency would look like, but it did include certain promises such as giving a smartphone to every child that clearly Guatemala doesn’t have the resources to deliver. Once he becomes President, he is going to have to manage the expectations that people have of him—expectations that he created as a candidate as well as expectations that he didn’t create but that the people inherently have by electing an outsider: expectations that this government will be much more responsive to the people’s everyday needs and desires, and expectations of a complete break from the past. He is also going to have to ensure that the trial of Pérez Molina and other officials from his government doesn’t bring any type of uncertainty to the already-fragile institutions of Guatemala.

Q: What are some low-hanging fruit when it comes to change that he can quickly deliver?

Schechter: There are clearly some things that he can do to promote political reform, to make politicians far more accountable, and to increase the ability of certain judicial offices in Guatemala to be able to have speedier anti-corruption investigations. What happened in Guatemala with the previous President could not have been possible without Guatemala having outsourced a good part of its judicial system to the United Nations in order to be able to prosecute the case against former President. I am sure that the new President is going to get a lot of international cooperation to create institutions that would allow Guatemala to be able to do this on its own.

Marczak: The critical thing for him to announce are additional mechanisms to be able to further support the Guatemalan judiciary. The UN-backed CICIG (Comisión Internacional contra la Impunidad en Guatemala) has obviously been instrumental in getting to the bottom of the corruption scandal, but there are additional measures that need to be taken across the government to prevent such types of corruption from happening in the future. If he can announce additional mechanisms that his administration will take to prevent this type of corruption in  the future that will be welcomed by the Guatemalan people.

With respect to the United States, the US Congress is currently debating funds for the Plan of the Alliance of Prosperity in the Northern Triangle—a plan between Guatemala, El Salvador, and Honduras—to be able to improve security through supporting socioeconomic deliverables as well as crime fighting on the streets. Jimmy Morales is going to have to come to Washington very quickly in his presidency to meet with members of Congress and the administration and convince them that Guatemala under his presidency will be a worthwhile partner in the Plan of the Alliance of Prosperity and that now more than ever is the right time for Congress to double down on its commitment to the Northern Triangle. This landmark effort between the three countries is one that must be given its chance to succeed.

Ashish Kumar Sen is a staff writer at the Atlantic Council.

The post Guatemala’s New President Faces His Biggest Challenge: Governing appeared first on Atlantic Council.

Read the full article here.

The post Munoz on Guatemala’s Upcoming Presidential Election appeared first on Atlantic Council.

Atlantic Council analysts predict period of uncertainty after President’s surprise resignation

Guatemalan President Otto Pérez Molina’s surprise resignation on September 3 in the face of corruption allegations will likely plunge the Central American nation into a period of further political as well as economic uncertainty with direct implications for US national security, said the Atlantic Council’s Jason Marczak.

Pérez Molina resigned a day after the Guatemalan Congress stripped him of his immunity from prosecution. Hours later he was sent to jail to await the conclusion of hearings into accusations that he had masterminded a scheme to defraud Guatemala’s customs service of millions of dollars. Pérez Molina has denied the allegations.

People from Central America’s Northern Triangle—Honduras, El Salvador, and Guatemala—make up the majority of migrants crossing into the United States from Mexico.

“Political instability and economic challenges push migrants to look for opportunities outside the country, so the stability of Guatemala is directly tied to US national security,” said Marczak,Deputy Director of the Adrienne Arsht Latin America Center at the Atlantic Council.

Instability in Guatemala could also put at risk millions of dollars that the Northern Triangle countries are seeking from the United States.

“The House [of Representatives] is looking for any excuse to deny the appropriations request from [President Barack Obama], or to change the terms so that it is strictly security focused and not focused on the other pillars” of the Plan of the Alliance for Prosperity of the Northern Triangle, said Marczak.

Pérez Molina’s resignation comes ahead of national elections planned for September 6.

His resignation avoids an institutional showdown, said Carmen Munoz, a Program Assistant in the Latin America Center.

“Pérez Molina simply ran out of options. He could have stayed on in power, but it would have been very ugly,” she said.

Jason Marczak and Carmen Munoz spoke in an interview with the New Atlanticist’s Ashish Kumar Sen. Here are excerpts from our interview.

Q: What is the significance of Guatemalan President Otto Pérez Molina’s resignation?

Marczak: President Pérez Molina’s resignation is a victory for the tens of thousands of Guatemalan people who have been protesting in the streets for months against the endemic corruption in the Pérez Molina administration.

It comes after his Vice President [Roxana Baldetti] resigned in the spring and is now detained; and it comes after half of his Cabinet resigned last week when it came to light that the President was the de facto ringleader of a scheme that had robbed the Guatemalan treasury of $130 million a year.

The President’s resignation is an important milestone for Guatemala because the Guatemalan people have long felt disenfranchised from their government and have long believed that they are ruled by a corrupt elite that is beyond the reach of the judicial system. So the resignation marks a victory not only for the people, but also for the rule of law.

It is also a victory that would not have been possible without the help of CICIG (Comisión Internacional contra la Impunidad en Guatemala), the UN-backed commission that has been working since the civil war to help strengthen the judicial institutions in the country.

Q: What impact is Pérez Molina’s resignation likely to have on the presidential elections that take place this Sunday, and on the prospects of other candidates, particularly Manuel Baldizón who has been seen as part of the same corrupt political system?

Munoz: Baldizón is also facing corruption allegations. His poll ratings have been declining. Meanwhile, the ratings of the perceived outsider, Jimmy Morales, have been going up.

Some academics and civil society groups are calling for the elections to be postponed. Guatemala is still a fragile democracy and [the President’s resignation] is a destabilizing event, but it is not yet known what impact it will have on the elections. 

Marczak: The elections should proceed on Sunday. What these events have shown is the importance of the rule of law and adhering to the basic tenets of democracy. Changing the election date would be a step backward.

Baldizón has been largely discredited. The other major candidate, Sandra Torres, a former first lady, is put in the category of the ruling class that has long dominated Guatemala. This gives an unprecedented opportunity for an outsider candidate, who, in Sunday’s vote, will be Jimmy Morales.

There will be a runoff on October 25. We are in for a few very difficult months in Guatemala, but they will be less difficult than had Pérez Molina stayed on in power.

His decision to resign was a bold decision. There was no reason he had to resign. He had lost his immunity, but Congress didn’t strip him of his presidential powers. In many ways this was a surprise move and done in the best interests of the country—though surprising that he would do anything in the country’s best interests.

Munoz: The move prevented an institutional showdown because the Attorney General [Thelma Aldana] was calling for his arrest and Pérez Molina simply ran out of options. He could have stayed on in power, but it would have been very ugly.

Q: Will Pérez Molina’s resignation undermine his Vice President, Alejandro Maldonado, who is expected to govern until the new president is sworn in on January 14?

Marczak: The Vice President is basically a caretaker for the next few months. He is essentially powerless. His role is going to be to do whatever he can to ensure political and social and economic stability.

This will be important because Guatemala is heavily dependent on foreign investment. Foreign investors are going to be thinking twice about their current and new investments in light of the instability. Pérez Molina’s resignation provides a little bit more stability than there would have been otherwise, but next few months will be difficult for the Guatemalan economy.

This has direct reverberations for the United States. The majority of unauthorized migrants who cross the US-Mexican border are no longer Mexicans, they are from the Northern Triangle—Guatemala, Honduras, and El Salvador. Political instability and economic challenges push migrants to look for opportunities outside the country. So the stability of Guatemala is directly tied to US national security, as well as that of Mexico, which is a transient country for these migrants.

Munoz: It also has huge implications for Guatemala in terms of funding from the United States. Currently a lot of people [in the US Congress] are calling for money not to be sent to Guatemala given the high level of corruption and political instability.

Marczak: I wouldn’t be surprised if the Salvadorans and the Hondurans played a back-channel role in suggesting Pérez Molina resign to provide greater stability. These three countries are jointly seeking $1 billion for the Plan of the Alliance for Prosperity of the Northern Triangle. Political instability and economic questions in any of the three countries will put at risk any money flowing from the United States to the Northern Triangle.

The House [of Representatives] is looking for any excuse to deny the appropriations request from President Obama, or to change the terms so that it is strictly security focused and not focused on the other pillars of the alliance.

Q: Will the developments in Guatemala have regional implications—in Brazil, for example, where President Dilma Rousseff’s government is facing large protests over corruption allegations?

Munoz: It will not so much encourage more protests, but, especially in Central America, it will lead to calls for UN-backed organizations like CICIG to root out corruption.

Marczak: It will have direct implications for the Northern Triangle. There are corruption investigations ongoing in Honduras as well. The resignation of Pérez Molina is a sign to the Honduran people that loud voices against corruption can actually bring about change. This is a clear indication of the potential of the voice of the people, so we can expect to see mounting calls from Hondurans for greater transparency in Honduras.

Munoz: Percentage wise, there is a smaller percentage of the population protesting in Guatemala compared to Brazil, but what you see in Guatemala is the combination of large-scale protests matched with vigorous legal prosecution. What pushed Pérez Molina to resign was a lack of legal options.

Marczak: In Brazil, people protest on the streets, but there is no reason for President Rousseff to resign if she has not been tied to the corruption allegations. Without any type of legal basis for resignation it doesn’t matter how many people are out on the streets protesting, you can’t throw her out of office just for a lack of popularity.

Ashish Kumar Sen is a staff writer at the Atlantic Council.

The post Instability in Guatemala Has National Security Implications for the United States appeared first on Atlantic Council.

The initiative, dubbed the Alliance for Prosperity and included in President Obama’s proposed budget, represents almost three times more funding than what the region typically gets in aid from the United States. It’s an investment worth making. “Compared to what we give globally, to less strategically important places given the fact that migration issues come from these countries, it’s a fantastic step forward,” notes Jason Marczak, a Latin America expert at the Atlantic Council. The plan takes a comprehensive approach and focuses on development assistance with three major objectives: to provide greater economic opportunities to Central Americans, to strengthen public institutions and governance in the region, and to ensure the safety of its citizens.

Read the full article here.

The post Marczak on the Alliance for Prosperity appeared first on Atlantic Council.

Chinese President Xi Jinping arrived in Caracas last week with a new $4 billion gift for a country desperately looking to external financing to keep its economy afloat. The catch? Venezuelan President Nicolás Maduro reportedly must send China an additional 100,000 barrels per day (bpd) of oil in addition to the more than 500,000 bpd of crude it is already providing to China.

With Venezuela’s production in decline, this latest announcement calls into question the long-term viability of Venezuela’s Petrocaribe oil alliance and the energy future for the Caribbean and Central American states that depend on it. The United States must act to proactively prevent a crisis off our shores. Vice President Biden has taken initial steps to lead this effort, but more must be done.

For nearly ten years, some of the United States’ closest neighbors have used Petrocaribe – Venezuela’s financially attractive energy alliance and Chávez’s brainchild – to procure flexible credit terms to purchase crude oil and petroleum products. But Venezuela’s economic situation is dire, putting the benefits of the oil alliance at risk. Central American and Caribbean states will have little recourse if credit dries up, and the alliance’s government ministers, business leaders, and consumer advocates privately fret about how continued dependence on Venezuela for energy supplies might come back to pull the rug from under their economies.

Read the full article here.

The post Schechter and Marczak: US Action Needed to Prevent Regional Energy Crisis appeared first on Atlantic Council.

There are two main arguments for the building of the Nicaragua canal. The first one is inscribed in the context of international trade. From 1980 to 2009, the global number of civilian ships increased by 74% in capacity terms, according to the World Oceanic Review. Today, the United Nations claims that 80% of global trade volume is carried by sea, which accounts for 70% of global trade value. With increases in capacity and value of maritime shipment, vessels are becoming larger and ports all over the world are expanding in order to accommodate those new and larger ships. This trend resulted in expansion projects for the Panama Canal, projected to end in 2015. While Panama celebrates the canal’s 100^th anniversary, controversy erupted over the cost of the expansion, which calls for an unanticipated $1.6 billion USD. Even once the Panama Canal is expanded, it will still be too small to carry some of the supersized ships. The Nicaragua Canal, on the other hand, would be wide and deep enough to accommodate all types of vessel. Because of this, the Nicaraguan government and HKND group claim their canal will not rival, but instead complement the Panama Canal, which might be true for the largest ships; however, the two Canals will undoubtedly be competitors for smaller ships.

The benefits for international trade will be immediate. The Nicaraguan Canal will reduce travel time for the largest ships which currently cannot utilize the Panama Canal, and the opening of another mid-continental passage will decrease congestion in the Panama Canal, increasing global efficiency.

The Nicaraguan government also touts a national argument. According to them, the new Canal will bring 50,000 jobs during its 10-year long construction, and 200,000 for its management once it is up and running. The Sandinista government and HKND are hopeful it will double Nicaragua’s GDP within 6 years, and bring 400,000 people out of poverty by 2018.

Why not? There are serious ramifications for a project of this enormity.

Even though the project might double Nicaragua’s GDP in the long run, HKND and the Nicaraguan government unveiled that the upfront costs amount to $40 billion, which is roughly four times the country’s GDP. In comparison, the Panama Canal has annual revenues of $2 billion according to The Economist, which are projected to go up to $4 billion by 2025. Thus, even if Nicaragua were to capture the entire market of the Panama Canal—a total impossibility—its revenues would not be enough to justify such upfront costs, given that it would only assume majority ownership of the canal after 50 years.

Further, the Nicaraguan government is giving up sovereignty over its land and waterways to a foreign company, which is also in charge of projects such as establishing a free trade zone, ports, and other development projects. The company hails from a country with high stakes in global trade, and a growing presence in Latin America. China’s maritime trade experienced the highest growth of any country over the past twenty years. Nicaragua will be waiting a long time to feel any real benefit, if it even reaches such a point.

President Ortega has not addressed the issue of the quality of the jobs that will be created by the canal. Although it will be a great source of employment for the population, if he wants the canal to have a positive, lasting impact on the Nicaraguan economy he will need to establish a team of skilled Nicaraguan workers to prevent foreigners from taking over the highest paying jobs related to Canal management. According to Mr. Coronel, the head of the Transoceanic Grand Canal Authority of Nicaragua, there is already a team of 300-400 foreign professionals, including Chinese and British trade experts, engineers, and technicians, working on the project.

In addition, HKND has been evasive about the environmental impact of the enterprise. They claim that a two-year environmental impact study will be conducted. However, some of the biggest environmental concerns focus on the path of the canal that goes through Lake Nicaragua, which is the greatest freshwater lake in Central America and an important source of water and wildlife. The lake already suffers from pollution, but it is hard to imagine that the route could be changed to prevent passing through the lake. In this case, there will need to have environmental measures put in place – making the canal into an even more expensive enterprise.

There are strong arguments for building the Nicaraguan Canal: nevertheless, the financial burden and the issues of sovereignty — and skilled employment in particular– make the enterprise seem more a folly than a reasonable solution to poverty in Nicaragua. 

Constance Delannoy is a summer intern with the Adrienne Arsht Latin America Center

The post A Nicaraguan Canal: Too Many Downfalls appeared first on Atlantic Council.

Less than three months after being declared El Salvador’s new president, Salvador Sánchez Cerén accepted the presidential sash of a deeply polarized nation on June 1. The wounds of a divided campaign had yet to heal as half the nation celebrated President Sánchez Cerén’s inauguration and the other half cautiously watched his inaugural address.

The festive inauguration ceremony – marked by singing, chants, and flag waving in support of the ruling Farabundo Martí National Liberation Front (FMLN) political party – had the feel of a victory party. Attendee enthusiasm, in sharp contrast to the event’s more staid protocol, bubbled over with excitement for the new president, but also praise for his predecessor, Mauricio Funes, the television journalist turned president.

Read the full article here.

The post Marczak: The US Should Extend a Hand to El Salvador’s New President appeared first on Atlantic Council.

Less than three months after being declared El Salvador’s new president, Salvador Sánchez Cerén accepted the presidential sash of a deeply polarized nation on June 1. The wounds of a divided campaign had yet to heal as half the nation celebrated President Sánchez Cerén’s inauguration and the other half cautiously watched his inaugural address.

The festive inauguration ceremony – marked by singing, chants, and flag waving in support of the ruling Farabundo Martí National Liberation Front (FMLN) political party – had the feel of a victory party. Attendee enthusiasm, in sharp contrast to the event’s more staid protocol, bubbled over with excitement for the new president, but also praise for his predecessor, Mauricio Funes, the television journalist turned president.

Salvadorans of all walks of life traveled to the packed amphitheater in downtown San Salvador along with some of the nearly 2 million who reside in the United States. Beyond individuals, groups such as the Washington D.C.-based Salvadoran Business Civic Committee (COCIES), a group of Salvadoran business leaders committed to advancing U.S.-El Salvador policy, organized delegations of policy influencers to attend the inauguration and discuss the government’s plans for the next five years.

One challenge will be balancing the relationship with the United States and Latin American countries less friendly to U.S. interests. Fear in some U.S. policy circles is that the new Salvadoran government is further to the left than its predecessor, with the potential of impeding a strong bilateral relationship marked by U.S. assistance in the form of the Partnership for Growth economic plan and a Millennium Challenge Corporation compact.

Read the full op-ed here.

The post Marczak: US Should Extend a Hand to El Salvador’s New President appeared first on Atlantic Council.

… With the elections now over, and with the transition teams of President-elect Sánchez Cerén and President Mauricio Funes-both from the FMLN-already meeting, the question now is what steps can be taken to advance economic growth and improve security in this deeply divided country.

The role of the United States is critical. The nearly 2 million Salvadorans living in the United States send home remittances that account for approximately 17 percent of GDP. This nearly $4 billion in annual remittances should be more effectively channeled to ensure that families are favoring long-term investments over short-term priorities.  The United States also has a deep interest in helping to create formal labor market jobs so that youth are not forced to join a gang or embark on the treacherous journey north in search of opportunity.

Appropriate investments in joint efforts that are already working should be a priority. It is time to move forward with the second, five-year Millennium Challenge Corporation compact that would provide $277 million to boost productivity in internationally traded goods and services. 

Read the full article here.

The post Marczak: US Should Reinforce Its Commitment To El Salvador appeared first on Atlantic Council.