Experimenting on Good Governance in Latin America

GUATEMALA CITY: Across a swath of Latin America a quiet experiment is taking shape. If successful, it could change the landscape of the poor, malnourished and conflict-ravaged region.

The experiment concerns the recently signed Association Agreement between six Central American and the 27 European Union countries. Although influence in Central America has historically come from the United States, this new region-to-region association could prove to be a model of integration and development to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

But deep skepticism remains among people who have suffered for generations.

Central America comprises an isthmus flanked by the Pacific and Atlantic oceans. It stretches from the Mexican-Guatemalan border in the north to the Panama-Columbian border in the south. The population is just over 40 million.

For decades, Central America has had a vision of closer integration, which has faltered through internal conflict, much of it fueled by the Cold War–sponsored conflict.

Since the 1990s, however, there has been relative stability, and now the region is looking for a roadmap on how to move forward.

In this latest development, the blueprint is coming not from Central America's traditional mentor, the United States, still regarded as a contentious presence between the left and right ideologies that dominate the region's politics.

Instead, Central America has reached out to the fragmented European Union, seen as more experienced in dealing with the integration of diverse cultures and the ending of war.

Both Europe and Central America began their modern-day attempts at integration as far back as 1951. Central America signed the San Salvador Treaty that created the Organization of Central American States. Six democracies in post-war Europe formed the European Coal and Steel Community which led to the present-day 27-member European Union. 

Since then Europe has faced enormous obstacles – the latest being its economic crisis. But it has constantly rejuvenated its institutions with the overarching aim of ensuring peace and security for its citizens.

Central America’s institutions remain weak, its democracies fragile, its people poor and polarized. The most populous country, Guatemala, with 15 million people, has a higher murder rate than the whole of the European Union – 16 killings a day. Its child-malnutrition rate is the fourth worst in the world.

The Association Agreement is designed to end these problems and help propel these societies to a new stage.

It comprises three elements of trade, region to region cooperation and political dialogue. 

Trade will be opened up substantively. Both will have greater access to each other’s markets which for Central America means getting paid the higher European Union price for some products such as sugar, coffee and fruit. 

The EU estimates that tariff reductions will save Central America exporters US$250 million a year on agricultural and fruit products and $20 million on industrial and fish exports. EU producers will save $140 million in non-agricultural goods alone.

The cooperation element will attempt to forge common ground on issues like climate change, natural disasters and the judiciary. The section on political dialogue deals mainly with creating good governance and implementing the rule-of-law.

These interwoven elements make the Association Agreement a landmark document, directly linking trade and market access to the building of modern democratic institutions.

Should problems arise over, say, abusive labor, corruption or rigged court cases, then Central America must engage with the European Union on resolving them. If it fails or refuses, the agreement could be suspended.

The EU has set up a monitoring and reporting system within Central America and will make an annual report to the European Parliament, itself a newly-empowered institution since the 2009 Lisbon Treaty.

Implementation of the Association Agreement could unfold on several levels.

First, Central America must now answer questions it once swept under the carpet. These include long working hours, low wages, trade-union rights and child labor, where there are half a million children working in Guatemala alone. Faster improvement in working conditions will make it easier to win increased trade quotas.

Second, the region as whole will be accountable. If one country or industry fails, the others are responsible for bringing it back into line. Regional institutions such as the Court of Justice, the Bank of Economic Integration, and the Sugar Producers Association already exist, but this will help strengthen them.

Third, it gives a powerful weapon to economic and democratic reformers to take on vested interests determined to maintain the status quo. Among the poor, there remains widespread resentment that power lies with a handful of very rich families or the military, both of which have a reputation for operating outside of democratic accountability.

“Our entire decision-making democratic apparatus needs to be consolidated and not be a haphazard thing,” says Jose Orive, executive director of the Central American Sugar Association. “We are hoping that the impetus of this agreement will be a big part of that.”

Trade unionists are highly skeptical. They argue that similar agreements in the past – particularly the 2005 Central America Free Trade Agreement, CAFTA, with the US – have failed to protect workers. The activists outline how previous agreements instead have lined the pockets of multinationals and government officials and, far from improving human rights, have lowered wages, pitted worker against worker and pushed rural populations into poverty.

Guatemala remains one of the most dangerous countries in the world for trade unionists. More than 60 have been killed since 1967. Six died last year, according to the Washington-based Solidarity Center, including one shot while carrying his son in his arms.

Trade Union offices are burnt and ransacked. Child exploitation is carried out openly during the harvests. Thousands of cane cutters and other laborers work in conditions that contravene basic International Labor Organization requirements.

None of this will change overnight.

But the agreement does underline an understanding that reaches decades back to the European Coal and Steel Community – that trade, regulated by strong institutions designed to ensure a fair sharing of wealth, is the real long-term creator of peace and stability.

British Prime Minister David Cameron has recently described this argument as the “golden thread” of development, which draws in issues such as stable government, lack of corruption, human rights, the rule of law and transparent information.

In the coming years, this view is expected to prevail against previous formulas such as military intervention that has failed to stabilize Iraq or massive aid handouts that have left large parts of the developing world dependent, poor and insecure.

But first, it has to be seen to work.

EU Ambassador to Guatemala Stella Zervoudaki is convinced it will and says she now makes a point of inviting reports of abuses from trade-union officials.

But if, say, two years from now, child workers in Guatemala continue to openly harvest sugar cane and if the death toll of trade unionists keeps rising while commodity exports make billions of dollars for their producers, then fragile trust will erode and an opportunity that has been so many years in the making, will be lost.