The Roots of Central America’s Exodus

I want to start by expressing my gratitude to the DACOR Bacon House Foundation for their very kind invitation to speak at this conference. It is an honor for me to be here.

I have been asked to speak a little bit about Central America. I’m glad for that, not just for the obvious reason that I hail from the region, but also because it is a sign that Washington is paying attention again to Central America. There are many reasons for that, the most important of which is migration, the subject of this conference.

Indeed, over the past six years, 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:

First, the weakness of the state. States in the Northern Triangle are very feeble. At just below 16 percent of the gross domestic product (GDP), the region’s average tax burden is among the lowest in the world. Such fiscal starvation impinges on the ability of the state to mitigate the impact of the very high levels of poverty and inequality that afflict these countries. Also, fiscally weak states have great problems exerting effective control over their territory.

Second, corruption. The effects of fiscal weakness are compounded by endemic corruption, notably in Guatemala and Honduras. The case of “La Línea” – the ploy to siphon off custom duties which led to the removal of Guatemalan President Otto Pérez-Molina from office in 2015 – and the embezzlement of over $300 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 fraud uncovered at Honduras’ Social Security system dwarves the massive bribery scandal at Brazil’s Petrobras by a factor of 20. The state of judicial institutions is a critical factor in explaining these levels of corruption. In all three countries, political interference in judicial and overseeing institutions is rife. The struggle for democracy and development in the Northern Triangle is, above all, a fight for the rule of law, for accountability and against all forms of impunity.

Third, economic vulnerability. For the majority of migrants from Northern Central America, economic reasons underlie the decision to leave their countries. Despite the efforts made by these countries to open up their economies, they appear unable to generate the kind of growth that could make a real dent in their poverty levels. Over the past decade, per capita income growth in all three countries has been mediocre at best. Given their distributional problems, it is unsurprising that the majority of the population remains mired in poverty or economic vulnerability. Today, remittances contribute 10 percent of GDP in Guatemala, nearly 17 percent in El Salvador, and over 18 percent in Honduras. The truth is that it is remittances from migrants that keep these economies afloat.

Fourth, crime and violence. The most pressing challenge faced by the Northern Triangle concerns high levels of crime. Last year, El Salvador and Honduras, each of them alone, had more homicides than the 28 member states of the European Union combined. Violence levels in Northern Central America cannot be understood but in terms of the pervasive presence of organized crime, particularly drug trafficking.

All these pathologies are not just complex but deeply intertwined. None of this can be corrected by foreign assistance alone. Yet, none of this will be corrected without foreign 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:

First, generously fund the Alliance for Prosperity in the Northern Triangle. The Alliance for Prosperity, whose funding was recently approved by the US Congress, to the tune of $750 million per year, 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.

Second, support the UN-sponsored International Commission against Impunity (CICIG) in Guatemala and expand it. 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 nine 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 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.

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).

Third, help small and medium enterprises (SMEs) take advantage of CAFTA-DR. 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.

Fourth, incentivize research and technology transfer in renewable energies. 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 Brookings-sponsored 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 a step to help Central America develop one of the few sectors in which it has real long-term economic potential.

Five, insist on structural reforms. 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 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.

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 in Honduras, 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.

Thank you.