Central America’s “Alliance for Prosperity” Plan: Shock Doctrine for the Child Refugee Crisis?

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The Americas Blog/CEPR

Central America’s “Alliance for Prosperity” Plan: Shock Doctrine for the Child Refugee Crisis?

Is the new "Alliance for Prosperity" plan just shock doctrine for the child refugee crisis?  (Photo: Tim Brown/flickr/cc)

On November 14, the presidents of El Salvador, Guatemala and Honduras – the three countries that comprise Central America’s Northern Triangle – presented their “Alliance for Prosperity” plan [PDF] at an event at the Inter-American Development Bank (IADB). The plan was originally made public in September, and Honduran President Juan Orlando Hernández presented it to U.N. Secretary General Ban Ki-moon at the U.N. General Assembly. But the Washington event was the real “coming out” party for the proposal, as it appears key funding will emanate from the IADB, the U.S. government and other Washington-based sources.

Ostensibly a response to the root causes of migration that led to this summer’s child refugee “crisis,” the plan appears to be nothing less than a blueprint for a major economic and social transformation of the region, including large-scale reforms in education, policing, energy, finances and legal and justice systems, and requiring sizeable investments in areas such as infrastructure, job creation and crime reduction. To say the plan is ambitious is an under-statement.

The leaders of the three countries telegraphed the rough concept for the plan during their July visit to D.C. in which they called for a “Plan Colombia” for Central America. It is notable that two major proponents of Plan Colombia’s creation during the Clinton administration – Vice President (then Senator) Biden and IADB President Luis Moreno (then with the U.S. Mission in Colombia) – spoke at the IADB event.

Biden’s remarks on November 14 suggest a reversal from his earlier response to the presidents, in which he said that the U.S. would not invest in a “Plan Colombia” for Central America because “Central American governments aren’t even close to being prepared to make some of the decisions that the Colombians made, because they are hard.” As a Senator, Biden had pushed for support for the Colombian military to be a key part of Plan Colombia, saying that the military “have never been accused themselves of doing human rights abuses.” (In the wake of the “false positives” scandal, in which the Colombian military was caught killing civilians and dressing them like FARC, Biden’s comments seem especially shocking, but the Colombian military’s human rights record was already scandalous at the time.)

But on November 14, Biden struck a different tone, explicitly referencing Plan Colombia and saying that today the Colombian people “enjoy significant security and growth.” Moreno also referenced Plan Colombia in his opening remarks, and other speakers returned to the theme of Colombia’s “success” and how Central America could replicate it, event attendees noted.

Hernández went further, saying that Mexico, like Colombia, used to be in a difficult situation but that they had turned it around. Mexico’s “successes” are often exaggerated in Washington and in the U.S. media, but this must have seemed a bit much even to some in the audience, considering recent events.

Guatemalan president Otto Pérez Molina remarked, “The crisis has become a huge opportunity.”

This may be more honest, for while the plan describes numerous social ills that undoubtedly are holding back the Northern Triangle countries and that push people to leave – poverty, crime, violence, poor education and others – it is unclear how much that the plan envisions will help to eliminate these problems or whether, in some areas at least, it might make them worse. Instead, the plan brings to mind various past cases of crises exploited for economic gain, as Naomi Klein detailed in her landmark book, The Shock Doctrine.

The plan notes that “more than half of the population of our countries still lives in poverty,” and that “20% of the wealthiest segment of population accounts for more than half of overall national income.” It also describes challenges posed by insufficient tax revenue:

We need to improve infrastructure and address social needs, but our fiscal space is limited. Although we recently implemented tax reforms along with measures to improve management of public finances, these steps have not yielded the results that were expected. Fiscal revenues have remained between 10 and 14% of GDP, below the average in Latin America.

So what measures does the plan propose in order to tackle these problems? Considering, for example, that poverty and inequality have increased since the ruling National Party administrations have been in power in Honduras, does this mean that the Honduran government is about to change course and implement a raft of different policies? Will it significantly increase taxes on Miguel Facussé and the other richest people in the country?

If so, there is no mention of it. Instead, the plan talks vaguely of

…improving tax revenues and their management through an overhaul of our tax systems and how they are administered. We will strengthen the systems, processes and the professionalization of human resources in our tax and customs administrations, with the goal of making them perform better.

Elsewhere, the plan describes the “creation of special economic zones” as one route toward prosperity:

With the goal of encouraging development in the most underdeveloped areas, we propose the creation of special economic zones that will grant preferential treatment to new investment. We expect that the companies that establish themselves in those zones will generate high quality jobs, while the State will provide the infrastructure and public services needed to stimulate economic activity.

While the plan itself does not make explicit mention of the Employment and Economic Development Zones (ZEDEs) being planned in Honduras, the reference to such “special zones” calls them to mind. Boosting trade, in part through such zones, appears to be a major component of the strategy, yet some of the plan’s assertions in this regard seem at odds with its vows to “boost quality control systems (livestock and crop health and safety, food safety and product traceability) so goods can reach market unencumbered.” The plan states:

…we are convinced that there is room to deepen our existing trade agreements and facilitate the achievement of the Plan’s goals. For instance, we could use the certification of goods that are produced in the prioritized regions or value chains and grant them temporary advantages and access to the United State market. Preferential treatment via quotas and more flexible rules of origin could also be established for exporting certified goods to the United States.

Yet the largest market for the Northern Triangle’s goods, the U.S., has long promoted a trade policy in which health and safety standards (not to mention labor and environmental protections) – are harmonized downwards. “Boosting quality control systems” has not been part of the trade schemes that the plan references either; tougher quality control for products is seen instead as a barrier to freer trade.

Similarly, when the plan talks of “improving labor market conditions,” it seems more likely that this means “improvements” that will benefit employers (known as increased “labor market flexibility” in economic-speak), not workers. The plan makes no reference to greater bargaining power for workers, higher wages or increased benefits, let alone labor unions – all of which would indeed help to reduce inequality and poverty. Meanwhile, repeated, illegal violations of workers’ rights in Honduras led the AFL-CIO to file a complaint with the U.S. government in 2012, urging that it take action under the U.S.-Central America Free Trade Agreement. (For its part, the U.S. government has yet to act on the complaint – despite being mandated to do so within 6 months.) Dozens of trade unionists have been murdered in Honduras since the coup, and last year Guatemala surpassed Colombia for the distinction of being “the most dangerous country in the world to be a trade unionist,” according to the International Trade Union Confederation [PDF].

The plan’s concepts for police and judicial reform seem at odds with the current realities of rampant corruption, impunity and death squad activity. Over 100 members of the U.S. Congress have urged restrictions on U.S. support for the Honduran police and military over human rights concerns, and the Leahy Law is supposed to ensure that such funds do not go to known rights abusers. The Alliance for Prosperity Plan could bypass this and channel huge sums to corrupt Honduran and Guatemalan security forces.

Tourism and agribusiness are other focuses of the plan, and both sectors from which U.S. companies could potentially make big profits. Both are also related to areas of intense violence and state-backed oppression in Honduras, as wealthy businessmen attempt to push off or defraud campesinos and Garifuna communities (in the Bajo Aguán, Zacate Grande, the Northern coast and elsewhere) from their land in order to make way for development projects.

From all these major components, it seems that private businesses – and especially foreign businesses -- have much to gain from the “Alliance for Prosperity,” especially with “the State …provid[ing] the infrastructure and public services”; the Obama administration contributing hundreds of millions in aid to the region; the IADB supporting the plan; and USAID backing a high level executive team comprised of delegates from the three governments -- all from which foreign investors can benefit. The IADB event was geared at private businesses, as Vice President Biden made clear when said there were “important people here,” with “none more important than those in the private sector.” Jodi Bond, Vice President of the Americas for the U.S. Chamber of Commerce – one of the most powerful business lobbies in Washington - moderated the second panel.

“The feeling that I had walking out of that room was that it was really an event for buy-in,” Natalia Escruceria of the organization Just Associates, who attended the event, said.

Whether or not private investors buy into the plan, the Northern Triangle’s deep problems of violence, crime, weak institutions, corruption, poverty and inequality are not likely to go away any time soon considering the governments’ proposed solutions.

Dan Beeton

Dan Beeton is International Communications Director at the Center for Economic and Policy Research in Washington, D.C.

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