US Senate
Over the past five years, slightly over 100,000 unaccompanied migrant children from Guatemala, Honduras and El Salvador have been apprehended at the US southern border. They are but a sub-set –albeit a particularly tragic one—of the approximately three million migrants from the so-called Northern Triangle of Central America that have reached US shores over the past two decades, often after a harrowing journey that could belong in the pages of Dante’s Inferno.
At the root of this exodus lies a complex brew of structural problems that besets these three small countries. In this mix, factors such as the chronic weakness of the state, the endemic corruption, the glaring economic fragility, and the collapse of public order play decisive roles and reinforce each other. These challenges are unlikely to subside any time soon and will continue to dash the hopes entertained for the region two decades ago, in the wake of the end of civil wars and the emergence of fledgling democratic institutions. More importantly for the purposes of this discussion, these problems are not easily amenable to external solutions. Foreign assistance to Central America’s Northern Triangle is useful, even necessary, but will not –irrespective of its generosity—remedy the region’s profound development imbalances and institutional shortcomings. Central Americans must accept that, just as only they could put an end to the region's civil conflicts two decades ago they must also take responsibility for building modern states, overhauling law enforcement institutions, and providing opportunities for young people.
Four factors are at the heart of migration flows from the Northern Triangle and, ultimately, at the heart of the region’s travails:
The most remarkable feature about states in the Northern Triangle is their extraordinary feebleness by almost any standard. There are many signs of this fragility, but none is more important or far reaching in its effects than the fiscal precariousness of the state in El Salvador, Honduras and, especially, Guatemala. Concerning the tax structure, the situation in the Northern Triangle, as in much of Latin America, is lamentable. At just below 16% of GDP, the average tax burden in Northern Central America is below the Latin American average and stands at less than half the average tax revenue collected by the developed countries of the OECD. The way those taxes are collected is arguably worse – well over half of that revenue is comprised of indirect taxes, i.e. taxes that are unrelated to the wealth of tax payers.
Such fiscal starvation impinges directly on the ability of the state to mitigate the impact of the unacceptably high levels of poverty and inequality that afflict these countries. Poverty affects around two thirds of Hondurans, well over one half of Guatemalans, and 30% of the population of El Salvador. In Honduras, nearly one half of the population lives in extreme deprivation, meaning that they don’t even have enough to feed themselves. Moreover, this is a region where the richest 10% of the population is between 18 (El Salvador) and 54 (Honduras) times richer than the poorest 10%. Yet, in Honduras, Guatemala and El Salvador public expenditure on education, healthcare, housing and social security hovers around or barely above $200 per capita per year. In Uruguay it is $1,600. In Finland it is almost $11,000.
This is a region where the richest 10% of the population is between 18 (El Salvador) and 54 (Honduras) times richer than the poorest 10%.
The fiscal weakness of states in the Northern Triangle has profound consequences. A society that is unable to do something about deprivation and inequality runs a significant risk of experiencing high levels of violence and a certain kind of politics, where the populist temptation becomes a permanent danger. More fundamentally, fiscally weak states have great problems creating national institutions able to exert effective control over their territory. It is hardly surprising, for instance, that Guatemala, a country that collects barely above 10% of GDP in taxes, faces a peculiarly acute challenge of organized crime. Such a paltry level of tax collection –one of the world’s lowest—means, in practice, that state institutions do not travel much beyond urban areas.
Ultimately, the inability of the state to provide adequate public goods and services –including personal safety, the most basic of all public goods—has multiple corrosive effects on democratic stability and development.
The deleterious effects of fiscal weakness are compounded in Northern Central America by the presence of widespread corruption, notably in Guatemala and Honduras. The case of “La Línea” –the ploy to siphon off custom duties which led to the recent removal from office of Guatemalan President Otto Pérez-Molina—and the embezzlement of over $335 million from Honduras’ Social Security Institute, are but recent examples of the corrupt practices that pervade states in the Northern Triangle. These practices are the result of a toxic combination of factors –the blurring of lines between public and private activities by entrenched elites, the growing penetration of organized crime in political structures, the overlapping of political elites and the media, and, above all, the dire state of judicial institutions, which inexorably leads to widespread impunity. The scale of the problem ought not to be underestimated. Relative to the size of the economy, the irregularities uncovered at Honduras’ Social Security system –equivalent to nearly 2% of the country’s GDP—dwarf the massive bribery scandal at Brazil’s Petrobras by a factor of 20.
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Maria Belen Garrett Paz / Inter-American Dialogue[/caption]
This is reflected in the poor scores that Guatemala and Honduras receive in every corruption measurement available. In 2014, Guatemala and Honduras stood at the 115th and 126th places out of 175 countries in Transparency International’s Corruption Perception Index. Among Latin American countries, only Nicaragua, Paraguay and Venezuela were ranked below.
Similarly, the 2014 World Bank’s Worldwide Governance Indicators placed Guatemala and Honduras in the percentiles 28 and 23, respectively, in terms of the ability of their institutions to control corruption. Moreover, their scores on this variable have remained static (Guatemala) or deteriorated (Honduras) since 1998. According to the Latin American Public Opinion Project’s Americas Barometer 2014, 20.7% of Guatemalans and 23% of Hondurans were asked for a bribe in the previous year. It is important to note that in all these measurements El Salvador tends to score significantly better than its neighbors and closer to the Latin American norm. For instance, it occupied the 80th position in Transparency International’s 2014 ranking, trailing only Costa Rica in the Central American region.
As suggested above, the state of judicial institutions is a crucial explanatory factor in this story. In all three countries, political interference in judicial and, more broadly, overseeing institutions (such as the Attorney General, Comptroller’s Office, Ombudsman, etc.) is rife, belying in practice the spirit of the legal processes to appoint these authorities and, more generally, the notion of checks and balances. The premature removal from office of greatly respected Attorney General Claudia Paz y Paz by Guatemala’s Constitutional Court in 2014, widely seen as politically motivated; the crass dismissal of four members of Honduras’ Supreme Court by the National Congress in 2012, a direct retaliation for rulings objected to by the then Speaker of Congress and now President, Juan Orlando Hernández; and the grave political impasse between El Salvador’s National Assembly and Supreme Court over the appointment of the members of the latter in 2012, are a few examples of the very limited autonomy enjoyed by the institutions entrusted with enforcing the law and controlling the exercise of power. As the current example of Brazil and, more surprisingly, Guatemala vividly show, the presence of independent prosecutors and judges is an essential component of any effort to eradicate malfeasance and hold politicians accountable. The precarious independence of judges is surely one of the reasons why, according to Latinobarómetro 2015, a regional survey, levels of trust in the judiciary in the Northern Triangle are exceptionally low. Only 23% of Guatemalans declare having some or a lot of trust in the judiciary, a figure that falls to 22% in the case of Honduras and 16% in El Salvador, the lowest figure in Latin America.
More broadly, the endemic corruption and the chronic weakness of checks and balances that underlies it are surely two key factors that help explain why El Salvador, Honduras and Guatemala are the three countries at the bottom of Latin America when it comes to levels of support for democracy as a political system. According to Latinobarómetro 2015, only 41% of Salvadorans, 40% of Honduras and 33% of Guatemalans prefer democracy to any other government system, well below the Latin American average (56%).
That is why the recent removal from office and arrest of Guatemala’s President Otto Pérez-Molina marks a watershed in the region’s history. It offers a glimmer of hope in a region where corruption and impunity have long doomed institutions to sub-par performance. It also suggests that the convergence of an active civil society and external pressure –in this case embodied by the UN-sponsored International Commission against Impunity in Guatemala (CICIG by its Spanish acronym)—can activate long-dormant accountability mechanisms and checks on power. This is far from sufficient to clean up rotten political systems, but is a crucial step in the right direction. The struggle for democracy and development in Central America’s Northern Triangle is, above all, a fight for the rule of law, a battle for accountability and, therefore, against all forms of impunity.
The woeful state of political institutions and the chronic under provision of public goods are accurate predictors of serious economic shortcomings. For the vast majority of migrants from Northern Central America economic reasons underlie the decision to leave their countries. Despite the significant efforts made by all three countries to open up their economies, their economic structures appear unable to generate the kind of growth that could make a real dent in their high levels of poverty and social exclusion. Over the past decade, per capita income growth in Honduras (2.3% on average in 2003-12), El Salvador (1.5%) and, particularly, Guatemala (0.9%) has been mediocre at best. Given their massive distributional problems, it is hardly surprising that the majority of the population in all three countries remains mired in poverty or economic vulnerability.
For countries in the Northern Triangle, the path towards a successful integration into the global economy is fraught with uncertainty. For all the opportunities that CAFTA-DR has opened up for these small economies, it is obvious than much more than free trade agreements will be needed if they are to thrive economically and significantly increase their development levels. Even CAFTA-DR has proved a mixed blessing –over the past few years, bilateral trade with the United States has grown a lot, but is consistently favorable to the United States. Unlike some of their neighbors to the South, such as Costa Rica and Panama, countries in the Northern Triangle remain stuck in a model of international insertion largely based on cheap labor, an option that has translated into a predominant role for the export of agricultural products and textiles and apparel. For instance, textiles and apparel comprise well over one half of US-bound exports in the case of El Salvador and Honduras. At the very least it is questionable that such a model will be sustainable in light of the economic emergence of China, India and even Vietnam.
At 0.3% of GDP, the resources that Costa Rica invests in research and development are far and away the highest in Central America. Yet, that percentage is less than half the figure for Latin America and the Caribbean as a whole.
If countries in the Northern Triangle are to prosper, they must tackle the truly difficult task of raising the productivity level of their labor force. This calls for a set of very difficult undertakings, including increasing education expenditures that are dismally low and inefficient. Today, almost three quarters of the workforce in the Northern Triangle still lack a complete secondary education, including almost one third that has not finished even the primary education. It also requires improving road and port infrastructure that is among the very worst in Latin America, and bringing research and development investments beyond the pitifully low levels that they have now. This is a point that deserves some emphasis. At 0.3% of GDP, the resources that Costa Rica invests in research and development are far and away the highest in Central America. Yet, that percentage is less than half the figure for Latin America and the Caribbean as a whole, and one-fifteenth the figure for Israel. The number of resident patent filings per million inhabitants in Guatemala is roughly on a par with that of Uganda or Zambia. You don’t have to be a fortune-teller to foresee the difficulties that Guatemala will have to keep pace with the 21st Century.
Also, the region must lend a hand in myriad ways to small and medium enterprises that are 97% of firms in Central America and which only rarely sell their products abroad. Ultimately, the Northern Triangle must find a way to drastically reduce the more than 60% of the labor force (over 70% in Guatemala) that currently works in informal jobs with negligible productivity.
All this demands enormous public investments of different kinds and a state that works, which of course takes the discussion back to the question of fiscal robustness. Yet, unless countries in Northern Central America undertake these reforms, integration with the world economy will only consolidate the social and economic segmentation that afflicts them today, and the region’s growing propensity to export its people.
For these countries, introducing the structural changes that are needed to enhance productivity, economic dynamism and opportunities is a tall order. It would be so even if they didn’t have in remittances an economic shortcut that allows them if not to thrive, then at least to stay afloat. But they do. Today, remittances contribute 10% of GDP in Guatemala, nearly 17% in El Salvador, and over 18% in Honduras, a proportion that hasn’t changed much over the past few years. The plain truth is that it is migrants that make the trek north that keep these economies viable. Bar a drastic tightening of migratory rules in the United States, this is unlikely to change for the foreseeable future. Sadly, given the difficulties involved in addressing structural economic weaknesses and the lack of obvious sources of sustainable growth, Northern Central America’s economic future will most likely hinge on its ability to continue exporting its young people. In the absence of a dramatic change of heart by its political and economic elite, the region will have to give up its best hope for the future in order to have any kind of future.
For all the gravity of the political and economic problems laid out in the previous paragraphs, there is little doubt that the most pressing challenge faced by the Northern Triangle and the one that truly sets the region apart concerns the extraordinarily high levels of crime. As has been said often over the past few years, the northern half of the Central American isthmus is now the most violent region in the world outside of active war zones. Homicide rates in the region are among the highest in the world, with recent figures in Honduras (87.3 murders per 100,000 people on average in 2010-13, although it came down slightly in 2013) and El Salvador (expected to approach nearly 100 per 100,000 this year) reaching unprecedented levels in Latin America and the Caribbean, if not the world. More than 120,000 Guatemalans, Hondurans and Salvadorans have died perished in the past ten years as a result of crime. Last year, Honduras alone had far more murders than the 28 member states of the European Union combined.
Murder rates are merely the most visible consequence of the problem. The proportion of households that have been victims of crime in the course of the past year is greater than one third in every country in the Northern Triangle. To this we have to add several other manifestations of violence whose magnitude we can only guess. Different estimates place well above 50,000 the number of members of youth gangs –known as maras— in all three countries. These gangs have a significant incidence in the region’s violence levels, as well as a growing participation in supporting organized crime.
Indeed, violence levels in Northern Central America –notably in Guatemala and Honduras, less so in El Salvador-- cannot be understood but in terms of the pervasive presence of organized crime in the region, particularly drug trafficking. Close to 90% of the cocaine destined for the U.S. transits through the Central America and Mexico corridor. It is not coincidental that Central America exhibits the highest murder rates in the world.
The consequences of this tragedy are multifold, and go beyond the obvious human cost. There are economic implications, which become clear when we think that more than half the murder casualties in Central America are young men between 15 and 29 years old, at the peak of their productive and reproductive lives. The World Bank’s recent estimation of the direct and indirect cost of violence in Central America put it at nearly 8% of the region’s GDP.
Yet, it is the political consequences that I want to emphasize here. The perception that state authorities are unable to protect the citizen’s most fundamental rights is visibly damaging the support for democratic institutions in Central America and becoming a breeding ground for authoritarian attitudes. According to a 2008 study by José Miguel Cruz, a scholar at Florida International University, 53% of the population in Guatemala, El Salvador and Honduras was willing to support a coup d’etat if it helped to solve insecurity problems, a reaction that no other social problem elicited. The Central American population –as frightened as it is eager for public order—is heeding carefully and often rewarding at the ballot box populist rhetoric that offers the “iron fist” and a cavalier attitude towards the rule of law to solve the problem.
A second crucial political consequence is the weakening of the state and its legal powers. As is the case in certain regions of Mexico, in some places in Northern Central America that have been overrun by organized crime, it is debatable whether the state still enjoys the monopoly over legitimate coercion.
The consequences of the weakening of the state’s writ are several. One of them is the growing tendency amongst the citizenry in these countries to defect from the public instruments to protect security, whose activation is considered useless or even counterproductive. This defection can take different shapes that range from the reluctance of the population to report crime, to the proliferation of private security firms, and the acceptance of lynching as a valid method to fight crime. Last but not least, many citizens of the Northern Triangle are defecting by leaving their country.
The Central American population –as frightened as it is eager for public order—is heeding carefully and often rewarding at the ballot box populist rhetoric that offers the “iron fist” and a cavalier attitude towards the rule of law.
For all the tough talk about “iron fisted” solutions, a sustainable reduction of crime levels in the Northern Central America requires far more than the use of coercion. It demands a comprehensive policy combination that gives priority to reforming notoriously corrupt and inefficient police forces, introducing modern technology and information systems to sustain policy decisions, strengthening social ties and the organization of communities, and, above all, investing a lot more in education, health, housing and opportunities for the youth. Such is the road traveled by successful experiences in Latin American cities like Bogota and São Paulo, which have managed to slash violence levels in the past two decades. With 80 murders per 100,000 people, Bogota was one of the world’s most dangerous cities in 1994; in 2014, with 17, it was one of the safest capitals in the Western Hemisphere. Balancing “zero tolerance” for crime with “zero tolerance” for social exclusion offers a way forward even in dire circumstances.
As is plain to see, the pathologies that hold back the Northern Triangle of Central America and drive many of its citizens to leave their countries are not just complex but deeply intertwined.
The penetration of organized crime, one of the most serious challenges of the region, provides a vivid example of the toxic interaction between these factors. The vulnerability of the countries in the Northern half of Central America to the ravages of organized crime is not simply the result of an accident of geography, of the peculiar misfortune of living equidistant from some of the largest drug producing countries as well as the single largest drug-consuming nation. Unfortunate as that may be, these countries are vulnerable to organized crime primarily because their fiscally anemic states are, in some cases, unable to exert effective control over their territory, thus creating an environment for crime syndicates to operate untrammeled. They are vulnerable, also, because their public institutions –starved of resources and debilitated by endemic corruption—are incapable of making the investments required to enhance the dynamism of the economy, prepare their countries for the 21st Century and, above all, enlarge the opportunities of young people to live a long, healthy and productive life. They are unable, that is, to prevent one of the calamities that lie at the core of the region’s travails – that 25% of young people that are neither studying nor working, that have no stake in their societies, and that find it difficult to resist the pull of gangs and other criminal organizations. Moreover, these three Central American nations are vulnerable to organized crime because their law enforcement institutions have all but collapsed under the weight of venality and political interference and display a long history of turning a blind eye to the abuses of the powerful. These institutions are attractive to organized crime because they have long been instruments not of justice but of impunity. It is thus impossible to deal successfully with organized crime –or with the causes of large-scale migration, for that matter—unless all these issues are tackled in an integral, genuine, and sustained way.
Solving the predicament of the Northern Triangle requires that truly structural steps are taken, such as creating modern, progressive and robust tax systems; introducing real checks and balances; ending widespread impunity; and abandoning a patrimonial conception of the state, which blurs the lines between public and private interests. Needless to say, the impulse to do all this must come from within the countries, mainly from within political and economic elites that historically have fallen woefully short of their responsibilities. None of this can be corrected by international assistance alone. Yet, given the magnitude of the challenges, none of this can be corrected without international assistance.
The United States, in particular, can and should play an important role in supporting the necessary changes. For Washington paying more attention to the Northern Triangle of Central America is not a favor or an act of charity. In the case of a region that is showing disturbing signs of instability, that is a stone’s throw away from the United States and that has already sent three million of its people to the shores of this country it could only be considered enlightened self-interest.
The following are some of the ways in which the United States could play a limited but meaningful role in helping the nations of the Northern Triangle help themselves:
The Alliance for Prosperity, whose funding is currently under the consideration of the US Congress, is a valuable and well-conceived program that is worthy of support. Above all, it is a sign that the United States cares about its neighbors and is actively trying to shape the future of a relationship –with Central America—that is doomed to be part of US policy debates, as has happened time and again over the past 150 years. The Alliance’s strategic lines (stimulating the productive sector, developing opportunities for people, improving public safety and justice, and strengthening institutions) embody the long-term and integral approach that is essential in order to bring about structural change in Northern Central America and, hopefully, contain migratory flows to the United States. It would be a significant loss, not just to Central America, but also to US taxpayers, if as a result of bureaucratic or political tussles in Washington, the program sheds its holistic conception and winds up as yet another narrow counter narcotics effort. As mentioned above, development problems in the Northern Triangle are complex and mutually reinforcing. It is highly unlikely that any effort designed to tackle any one of them will have any impact if it fails to set in motion changes in other policy areas.
Helping rebuild law enforcement institutions in the Northern Triangle should be one the priorities of the Alliance. While, it ought to be acknowledged that rebuilding them is a generational endeavor, which only the countries themselves can undertake, assistance from the United States, as well as from Mexico, Colombia and other regional partners, can nonetheless play an important role. International assistance in this field can only hope to bring about visible changes if it focuses on a few urgent institutional programs that may exert a catalytic effect on the transformation of the image and efficacy of law enforcement bodies in the region. Particularly urgent tasks on which US assistance could have an impact include:
The US government played no small part in the creation of CICIG in 2006. Even before its crucial role in the investigation that led to the resignation of President Pérez-Molina in Guatemala, the Commission had proved a valuable resource to carry out complex investigations that, almost certainly, were beyond the capabilities of Guatemala’s law enforcement bodies. After eight years, the Commission can point to real successes in solving high-profile criminal cases, much as its efforts have on occasion been undermined by rulings by the local judiciary. Whatever criticism may be directed against CICIG, it remains a carefully vetted unit in a country in which the penetration of law enforcement institutions by crime syndicates is a serious problem. Despite the obvious displeasure of former President Pérez-Molina, CICIG’s mandate was recently extended until September 2017. The international community’s continued support –financial as much as political—for CICIG is vital not just for Guatemala, but also for the whole region. The experience of CICIG provides an obvious blueprint for similar bodies that could and perhaps should be adopted in other countries of the Northern Triangle, notably Honduras.
Indeed, the option of expanding CICIG beyond the Guatemalan borders and turning it into a regional body, covering all three countries of Northern Central America, should be considered. Besides economies of scale, such a step could offer a solution to the thorny coordination issues that mar regional efforts against organized crime and diminish the effectiveness of the considerable flows of international assistance that support anti-crime efforts in Central America ($1.7 billion for the whole of Central America since 2003, according to research done by the Inter American Development Bank and the Washington Office for Latin America).
The model of CICIG offers a superior alternative to the plan, currently under consideration, to create an OAS-sponsored Mission of Support against Corruption and Impunity in Honduras (MACCIH by its acronym in Spanish). While not devoid of merits, the latter plan substitutes an elaborate set of functions to advise law enforcement institutions in Honduras for the robust investigation and prosecuting powers that have proved so crucial to CICIG’s success in Guatemala. This is a glaring flaw. Nonetheless, if the political will to establish a CICIG-like body in Honduras proves impossible to secure, then the current proposal should be given the benefit of the doubt and its implementation ought to be carefully monitored by the international community.
SMEs are the great engines for the creation of employment in Central America. Yet, they seldom have access to international markets. Helping them make the most of the opportunities opened by free trade with the United States would be a major transformation on many levels. The funds to support such a program could be disbursed over several years and conditioned on Central American governments raising a matching sum from domestic sources. This exercise in co-responsibility should indeed become a general principle informing US-Central America relations.
The development of renewable energies offers the promise of fruitful collaboration between the United States and Central America. At the very least, as advocated by the Partnership for the Americas Commission a few years ago, the US government—perhaps in partnership with other governments in the hemisphere—should establish a Renewable Energy Laboratory of the Americas in the isthmus, with the objective of promoting hemispheric cooperation on developing and transferring solar, wind, geothermal and cellulosic-biomass technologies. That would be an important step to help Central America develop one of the few sectors in which it has real long-term economic potential.
There are clear limits to what even a generous and soundly conceived program of foreign assistance can achieve in Northern Central America. The lion’s share of the task of transforming Guatemala, Honduras and El Salvador must be borne by the citizens and, above all, the elites of these countries. It is a legitimate question whether the US Government will find in the current political elites in the Northern Triangle the suitable partners to make the effort of assisting the region worthwhile. There are no easy answers to that question. The case of President Pérez-Molina in Guatemala and the unprecedented popular mobilization against corruption in Honduras suggest that some of the best partners are to be found in the region’s increasingly assertive civil societies. One can also point to brave, isolated reformers that are willing to defy impossible odds to bring about institutional change. The examples of Guatemala’s former Attorney General Claudia Paz y Paz, police reformer Hellen Mack, and the prosecutors and judges that recently stood up to Otto Pérez-Molina come to mind. Also worth mentioning is the experience of the members of the Constitutional Court in El Salvador, which over the past few years have shown their willingness to assert their political independence and reform the Salvadoran political system. Identifying those champions of reform is difficult but possible. In any case, it is essential if external efforts to help these countries are to have any chance to succeed.
The lion’s share of the task of transforming Guatemala, Honduras and El Salvador must be borne by the citizens and, above all, the elites of these countries.
I will submit that when it comes to political partners in the region, the US Government can gauge their seriousness according to two basic criteria: first, their readiness to push for robust and progressive tax systems; and, second, their sincerity about introducing checks and balances and promoting judicial independence, without which any effort against corruption and impunity is doomed to failure. Hence, attempts to pack the Supreme Court or to introduce indefinite reelection, for instance, ought to be taken for what they are – preludes to the corruption, power abuse and impunity that have sadly been the historical norm in much of Central America. This behavior is simply inimical to any real effort to establish the rule of law in the countries of the isthmus.
Introducing progressive tax reform and real checks and balances on executive power are the crux of the matter in the Northern Triangle. If the United States is serious about helping Guatemala, Honduras and El Salvador, it should not be shy about demanding those structural changes.
Central America needs the generous help of the United States, but it must do its share of the task if it is to have a future, one in which its young people hopefully will choose to build their lives in their own country.
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Honduras is in the midst of a security crisis, with alarming levels of official corruption and the world’s highest homicide rate.
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Reforms are deeply necessary in Guatemala but the path forward is neither easy nor simple.
The following is a sample of RIO’s bi-monthly data release related to money services businesses (MSBs) and the Honduran remittance market.
