Caribbean & Central America - July 2022

From 6-10 June leaders from a selection of Latin American countries travelled to Los Angeles to take part in the Summit of the Americas (SoA) to hear about US President Joe Biden’s vision for relations with the region, but for Central America the results left much to be desired.

Things got off to a poor start as the event, which was ostensibly a chance for the US to reassert its influence in a region which has seen increasing Chinese involvement, was boycotted by the presidents of El Salvador, Guatemala and Honduras, Nayib Bukele, Alejandro Giammattei, and Xiomara Castro, respectively. In addition, Nicaragua’s President Daniel Ortega wasn’t invited, and Mexico’s President Andrés Manuel López Obrador also declined to attend the Summit in solidarity. This further undermined the legitimacy of the SoA in discussing policy towards Central America given Mexico’s role in implementing US policy towards the region.

Prior to the event, some had been expecting an announcement on substantial funding for infrastructure and economic development in Latin America, but they were left disappointed. Instead, on 7 June, US Vice President Kamala Harris announced US$1.9bn in private investment from 10 companies for El Salvador, Guatemala, and Honduras. These commitments include US$700m destined to develop mobile networks in Guatemala, Honduras, and El Salvador by telecommunications firm Millicom; a US$270m pledge from financial services company Visa to develop digital payments; and plans by apparel firm Gap to increase its sourcing in Central America by approximately US$50m per year for a total growth commitment of US$150m by 2025 which could create up to 5,000 jobs. This was as part of the ‘Call to Action’ first made by Harris in May 2021 in order to garner financial support for the Biden administration’s overarching strategy for addressing the roots and causes of migration in Central America. Harris previously announced pledges for private sector investment with a value of US$1.2bn, involving companies such as PepsiCo, Microsoft, Nespresso, and MasterCard. This means aggregate commitments now amount to a total of more than US$3.2bn.

On the same day, Harris also announced the launch of the Central American Service Corps (CASC), a US$50m initiative which will provide paid opportunities for young adults to help tackle issues such as food insecurity, violence, and the impact of climate change. By investing in the region’s young people in this manner, the initiative hopes to reduce their need to migrate in the short-term, while also tackling deep rooted issues in the longer term. Both the Call to Action and the CASC will work in close coordination with the US Agency for International Development (USAID).

The agency also announced a commitment of up to US$4.1m to support social and economic integration of migrants in countries including Costa Rica and Panama; up to US$95m in funding for smallholder farmers in countries including Guatemala and Honduras; and up to US$6.5m for violence-prevention interventions and justice, legal, and recovery services to benefit women, youth, Indigenous, and LGBT people in Guatemala.

A further commitment of up to US$2.7m has been earmarked for projects aimed at survivors of gender-based violence in Honduras, while US$42m will be given to the Voices Initiative, which aims to “protect, defend, and promote civic space in Central America”.

A mixture of private investment and piecemeal funding for small social projects falls far short of what some in the region were hoping for. Loftier initiatives have been floated, but details are thin on the ground. One example is the “Americas Partnership for Economic Prosperity,” which pledges to deepen economic cooperation with the entire Western Hemisphere and reinvigorate regional economic institutions such as the Inter-American Development Bank, according to a White House statement. Negotiations are predicted to start in early autumn.

While US politicians pay lip service to the idea that Central America is a priority region for Washington, their actions tell a different story. Policymakers’ attention has been diverted by Russia’s invasion of Ukraine, but that cannot be used as an excuse for years of US neglect of the isthmus. With that in mind it should come as no surprise that leaders in the region are increasingly turning to China, and the SoA did little to show that this trend will be reversed