Central America was the first sub-region in the Americas, and in fact one of the first regions globally, to jump on the integration bandwagon. Why, then, has it not been as successful as other regions—Europe or Asia, for example—in building a strong network of regional institutions?
Let’s start by taking a look at the history of Central American Integration. Driven by a new climate of solidarity in the post-World War II era, some of the region’s brightest minds initiated cooperation in the field of higher education as early as the 1940s, and went on to create the Organization of Central American States (ODECA) in 1951. ODECA was short-lived, but it was overshadowed by the successful creation of the Central American Common Market (CACM) in 1960. While Europe was also making fast progress at the time, it is fair to say that Central Americans were pioneers in building intergovernmental alliances and mechanisms for cooperation and joint problem-solving.
With the CACM, the region quickly adopted a model of regional integration as a means to promote industrialization, pushed forward by the UN’s Economic Commission on Latin America and the Caribbean (ECLAC). The common market did not only become the backbone of Central America’s integration—it also helped local companies raise their control over industrial production to around 70% by 1970, with key sectors including food and beverage, household goods, shoes, textiles, and some agricultural machinery and cement. As a result, intra-regional trade grew from a negligible 6.8% to a robust 26% between 1960 and 1968.
Initial success can be partially explained by the relative independence of Central American institutions. The General Treaty on Central American Economic Integration established the Secretariat (SIECA), a regional development bank (CABEI), while technical institutions including ECLAC and the Central American Institute of Research and Industrial Technology (ICAITI) offered crucial support. SIECA concentrated the day-to-day tasks and functions needed to ensure the continued operation of the regional market, CABEI channeled resources into the region to promote the development of industry, and ICAITI conducted basic R&D tasks. Key to delivering results, however, was the alignment of each of these institutions’ objectives with internal policies—Ministries of the Economy led the entire process.
In times of crisis, however, the regional institutions have not been able to maintain their strength. Member states often derail consensus to impose their agendas, escape accountability, or delay processes that could move faster. Some member states actively try to weaken institutions and sabotage ongoing programs and projects, despite regime changes and the rotation of the regional public servants in charge. Many see regional policy as an extension of national policy, not as an independent, yet complementary, endeavor.
The region has faced the ousting of presidents, heavily contested elections, natural disasters, and the dismembering of corruption cartels embedded within the government. However, most member states have respected the technical nature of the Council of Ministers of Economic Integration, allowing the integration process to continue, albeit slowly.
Lessons for the future
I have been directly involved in the process of economic integration in Central America for over seven years, first as a civil servant at the Ministry of the Economy of El Salvador, and more recently as executive director of SIECA.
Serving under Panamanian Secretary-General Carmen Vergara (2013 – 2017), the focus of our work at SIECA was to raise institutional capacity by limiting the discretionary powers of the office of the Secretary-General, bolstering the available human capital, establishing transparent policies and processes, and renewing participation in key trade policy discussions, such as in the World Trade Organization and World Economic Forum. Some of these policies have since been reversed.
During our tenure, as before, our work was constrained by countries’ national priorities, which all too often sacrifice common commitments, some of which are part of international agreements. As the work of SIECA exclusively depends on the political will of the members of the Council of Ministers of Economic Integration, the process ebbs and flows irregularly.
In 2014, for example, a member state asked SIECA to prepare rules of procedure to ensure Article 44 of the Protocol to General Treaty of Economic Integration would become operational (the article mandates SIECA to oversee the correct application of the legal instruments of economic integration). The implementation of Article 44 would effectively allow SIECA to point out when a member state is not in compliance with its obligations under the General Treaty and its Protocol. However, when the rules of procedure were presented to the Council of Ministers, the requesting member state said it needed more time to analyze the proposal and broke consensus. Four years later, the member state is still looking into the matter and has no official position.
I see no path forward for Central America in which integration does not play a central role. If Central America is serious about the importance of regional integration as a tool for development, it must redesign its institutions; in the case of SIECA, its Member States must allow it to do what its founding treaties establish, even if this means allowing the Secretariat to scrutinize some of its members’ policies.
Economic integration cannot move forward if the system can be held hostage by a specific member. But to prevent that, it is important to both streamline the decision-making process and establish a system of checks and balances. Without accountability, it is no surprise national agendas continue to impose themselves over the common good of the region.