By GILBERTO LOPES*
The effects of the pandemic, especially in the so-called northern triangle – Honduras, El Salvador and Guatemala – will be devastating
Like skeleton without bone
In the varied and intense political scenario of the region, Central America was being forgotten, despite its growing political instability. The effects of the pandemic, especially in the so-called northern triangle – Honduras, El Salvador and Guatemala – will be devastating. The analysis is by the “Centro Tricontinental” (CETRI), an organization based in Belgium, which asked Central American experts to analyze the situation in the region. Weakened by decades of structural adjustment programs, with widespread poverty and inequality, subject to historic violence and corruption, with precarious health and education systems, the pandemic has exacerbated social problems.
In a scenario updated in April 2020, the Central American Economic Integration Secretariat estimated a drop of 6,9% in the region's Gross Domestic Product (GDP) in 2020, and 1,4% in 2021. El Salvador and Honduras, with drops of around 8%, would be the most affected countries. Costa Rica with -5%, Nicaragua with -4,5% and Guatemala with a drop of 3,5% would be the least affected. However, for Nicaragua, amid political tensions and international sanctions, it would be the third consecutive year of negative growth, with similar declines in 2018 and 2019.
The region still shows a high dependence on the flow of foreign exchange from remittances from family members. The Economic Commission for Latin America and the Caribbean (ECLAC), in a study to “Dimension the effects of COVID-19 in order to think about the resumption”, recalled that they represented almost 20% of GDP in El Salvador and Honduras, and more 10% in Guatemala and Nicaragua. In Costa Rica, they are less significant. However, if the prospects for remittances were catastrophic at the end of April – a reduction of 17% to 20% –, more recent projections, such as those of the director of the Center for Migration and Economic Stabilization, in Washington DC, Manuel Orozco, estimate that they are much smaller. The most affected countries would be Costa Rica, with a decrease of 4,7%, El Salvador, with 1,7% and Honduras, with 1,6%. On the other hand, Guatemala and Nicaragua could increase by 0,4% and 0,9%, respectively.
Guatemala
Guatemala, the region's main economy, “is in the midst of a storm that could turn into a real political hurricane”. The little existing institutionality is broken, said Gonzalo Marroquín, a journalist with a long career in the country, who also reminds us of the passage of hurricanes Eta and Iota that, in just over a fortnight, profoundly affected the country. In return, we have announced a social crisis, not forgetting Covid-19, he says. The crisis in the executive branch was accentuated on November 20, when Vice President Guillermo Castillo asked President Alejandro Giammattei that both present their resignations, for failing to fulfill their campaign promises.
The approval of the budget by the Legislative Assembly last week – “part of a sinister pact between the political class”, says Marroquín – has given rise to protests across the country. The resources were opaquely managed and intended to pay political favors and debts in relation to infrastructure, said David Casasola of the Center for National Economic Research (CIEN). Of particular concern is the increase in public debt, 41% in two years, although Guatemala's debt represents less than 30% of GDP. On Saturday, November 21, protesters set fire to Congressional offices in the capital, as demonstrations spilled over into various departments.
Honduras
In Honduras, the president of the Honduran Council of Private Companies, Juna Carlos Sikaffy, estimated last week that the economy could fall by almost 11% this year, as a result not only of the pandemic, but also of the passage of hurricanes Eta and Iota, that particularly affected this country. “Where is Honduras going?” asked the research team from the Honduras Documentation Center (CEDOH), an institution associated with the National Endowment for Democracy of the United States, in an article published last September. Honduras embraced neoliberalism with great enthusiasm under the nationalist government of President Callejas (1990-94), the report said. It forgot the already precarious public health system and allowed the private initiative to commercialize it.
“When Covid-19 came along, it was like winning the lottery for them.” The 10% or 15% commission they charged was no longer enough, but they raised it to 70%! “They started to traffic everything that was useful for the pandemic, from masks, gloves, disinfectants, respirators, oxygen, tests to detect the virus, to field hospitals,” said CEDOH. Since the July 2009 coup d'état, the country has been governed by the conservative National Party, "which seized power after Zelaya's premature departure and maintained it amid allegations of fraud, corruption and links to drug trafficking," according to according to a BBC analysis citing Jesuit Ismael Moreno, director of the Reflection, Research and Communication Team of the Society of Jesus in Honduras (ERIC).
“In the midst of a pact of impunity and a pandemic that has exacerbated the acts of corruption by those closest to Juan Orlando Hernández (the president), the fourth electoral process is announced”, which will take place in November of next year, “in the framework of the damaged institutions, inherited from the 2009 coup”, said Moreno in a recent article published in the Honduran magazine Shipping. According to the Jesuit, “Hernández acts based on the fact that he is publicly and officially recognized as a drug trafficker, and this not only means that he runs the risk of being required at any moment by the US justice system, but also that he remains in the vengeful sights of several drug trafficking leaders”. Its current and future stability, he adds, "is sustained only by its alliance with the military and its closest family and political circle."
El Salvador
On February 28th, legislative elections will be held in El Salvador. The expectation – recorded in almost all polls – is that “New Ideas”, President Nayib Bukele's new party, will obtain a comfortable majority. In a chamber of 84 deputies, the simple majority is 43, but it is not ruled out that the president will win a qualified majority of 56. In February of last year, he won the elections with 53% of the votes, with almost 50% of abstentions. But he did not have a political party of his own and was without support in the Legislative Assembly. Now he has one, with which he intends to control her. With a qualified majority, he will be able to suspend constitutional guarantees, elect Supreme Court justices or the Attorney General, and contract debts with multilateral organizations. Bukele seems more and more indestructible, said journalist Roberto Valencia in an article in Washington Post last 22th of July.
For two years, caravans of Central American migrants have been seeking opportunities in the United States. Even Trump has imposed conditions on Mexico and Guatemala in order to stop this flow. With around 6,8 million inhabitants, a quarter of El Salvador's population – 1,6 million people – has migrated. Almost all for the United States. “Why are Salvadorans fleeing?” asked Bernard Duterme in an article published by CETRI last March. They are the same reasons why Guatemalans and Hondurans flee: rampant crime, gangs or maras, responsible for the deaths of around 150.000 people between 2006 and 2016, which made the region one of the most dangerous in the world. Violence is fueled by the failed development model, Duterme said. Shipments exceed the country's exports. Last July, two researchers from the University of El Salvador – Gilma Lizama and Lorena Dueñas – published a study on poverty. According to their estimates, it would affect between 31% and 39,5% of the Salvadoran population by the end of the year, depending on the impact of Covid 19.
Nicaragua
In Nicaragua, GDP will fall for the third consecutive year. It is estimated to be around 4,5% this year, after falling 3,9% last year, and 4% in 2018, amid the social and political crisis that has affected the country for more than two years. The forecasts were worse before. In May, The Economist, predicted a 6,5% drop, with unemployment rising to as high as 9%. But the biggest challenge facing the country is political. Since the April 2018 protests, the government has intensified repression with around 300 deaths, 115 arrested and media outlets closed or confiscated. The next general elections will be held in Nicaragua on November 7, 2021, with the opposition trying to unify their forces to defeat Sandinismo at the polls. But the political struggle also takes place on the international stage, where the opposition has the support of the Trump administration and the European Union.
In October, the OAS General Assembly passed a resolution entitled “Restoration of Democratic Institutions and Respect for Human Rights in Nicaragua through Free and Fair Elections”. Promoted by a coalition of some of the most conservative governments in the region – Canada, Chile, Colombia, United States, Paraguay and Venezuela (represented by a delegate of Juan Guaidó) – the resolution obtained 20 favorable votes from 34 countries present. Mexico and Argentina, among others, abstained. The resolution calls for seven reforms of the Nicaraguan electoral system by May of next year. That is, six months before the elections. In mid-October, the Nicaraguan parliament approved a law that regulates foreign agents, which seeks to control foreign funding of the most diverse types of civil organizations, against which both the United States and the European Union have expressed their views.
In the European Parliament, 609 deputies (out of 694) condemned this measure and approved a resolution calling for the extension of sanctions to the country's authorities and institutions, "taking special care not to harm the people of Nicaragua". Despite all the sanctions already applied, “which affected the regime's economy and despite the fact that the national economy ends 2020 with three consecutive years of recession, the regime has enough reserves to respond to pre-election clientelism and even to present some improvements economic conditions throughout the uncertain election year of 2021”, estimated the magazine Shipping. According to the agency Standard and Poor's (S&P), the scenario for 2021 in Nicaragua “is one of macroeconomic stability and slight economic growth (0,5%), in a context of political instability”.
Costa Rica
In Costa Rica, the pandemic has served as a backdrop for the struggle for public resources and for the discussion of who should contribute more to finance the expenses that caring for Covid-19 requires. A debate that takes place amid the growth of public debt that business sectors want to face, reducing spending and selling state-owned companies. In this scenario, the country went through strikes, street demonstrations and road closures until the government decided to convene a mega “sectoral dialogue”, which ended last Saturday. The agreements would reduce the primary deficit by 3,16% of GDP, read the headline on the front page of the newspaper The Republic, which expresses business interests.
For the economist Leiner Vargas, however, “there is no serious technical study in the agreements that justifies the direct or indirect effect of such measures”. They build happy numbers without looking at the consequences of proposed changes. I have never seen in the country a more irresponsible and incompetent level of management of public affairs”. For three weeks, representatives of the most diverse sectors met. The president of the republic attended all plenary sessions, recalled sociologist Ciska Raventós, who participated as a representative of a women's group. “It has been a very rushed process, there was no time to improve the proposals and think about them together. There was no system for trying to reach agreements. It was all too rushed, too exhausting.”
Neoliberal economist Gerardo Corrales lamented that the business sector was not willing to enter into a public confrontation with unions to demand a “Public Employment Law” that would unify wages in the sector and eliminate collective agreements. He also criticized the cuts in public spending, which, in his opinion, are not enough to tackle the fiscal situation. “I think that our great achievement at this dialogue table was to prevent trade union and social groups from managing to approve the introduction of taxes on free zones, universal income and taxes on wealth”, he added.
The concern of the business sector, said economist Daniel Vartanian, is to try to avoid a bigger deficit at the expense of anything: social spending, public employment, school salaries or asset sales, and thus avoid the temptation of the executive to tax the income of groups businesses or exempt sectors, such as free zones. Now, the debate will be transferred to Congress, where the government will have to present the bills it deems relevant and where the conservative sectors, allies of the government, have a large majority.
*Gilberto Lopes is a journalist, PhD in Society and Cultural Studies from the Universidad de Costa Rica (UCR).
