Central America aces structural challenges—some of which are long-standing, such as extreme poverty, inequality, and lack of opportunities. Some of the challenges facing the region however are recent, such as climate change, migratory flows, insecurity, democratic deterioration, and corruption. The Central American Bank for Economic Integration (CABEI) is a crucial institution for addressing these problems as it has the resources and the founding mandate not only to contribute to the development and integration of the region but also, its member states have committed to promote democracy, human rights, and freedom. However, CABEI is currently being accused about the opacity in its decision-making and the allocation of resources, as well as its inability to face the multiple challenges Central America faces.
Former officials, academics, and civil society organizations have pointed out these problems and suggest that—by complicity or omission—instead of fulfilling its mandate, CABEI actively contributes to regimes who are weakening democracy. Some have mentioned the complicity of Bank authorities in financing security structures and projects, which have been accused of violating human rights—such as specific actions in El Salvador’s Territorial Control Plan. CABEI—particularly its executive president—hides behind technicalities and the lack of updated instruments as an excuse for not fulfilling its mandate.
The region only can overcome its challenges through a comprehensive approach. It is impossible to sustainably overcome economic problems without solid democratic institutions that guarantee the rights and freedoms of citizens. There are many examples where states sacrificed democratic values to achieve economic prosperity, and the consequences for the population—including economically—were worse. For instance, it is worth remembering that after the 2009 coup, Honduras plunged into an economic crisis from which it had a hard time recovering. On the other hand, Costa Rica—which abolished its army several decades ago and has solid democratic institutions—has enjoyed stable economic performance.
CABEI has played a fundamental role in the economic development of the region, financing infrastructure projects, supporting electrical interconnection, and simplifying customs procedures across Central America. CABEI has the obligation, as it has done in the past, to focus on its founding mandates and proactively contribute to the integration and development of the region through a democratic and inclusive framework that respects human rights. For this to occur, there are a series of actions that are necessary:
First, CABEI must guarantee transparency and access to information by making its sessions and the Board of Directors’ minutes public. Likewise, the status of loans granted must be reported across the program’s lifetime—from their approval and execution through monitoring and evaluation.
Second, CABEI must refine the criteria for the allocation of resources. This should be based not only on technical factors—such as the ability to pay—but also on measurements of compliance with democratic principles, respect for human rights, inclusion, and protection of the environment in accordance with international instruments signed by member countries, the Constitutive Agreement of CABEI, and the Tegucigalpa Protocol.
Third, the Bank must establish and strengthen the specific clauses that allow it to condition or suspend resources when countries violate democratic, environmental, and human rights standards.
Fourth, the governments of member countries must guarantee that the Bank’s Board of Directors exercises an effective control role of the clauses mentioned above, thus reducing the discretion of the executive president.
These improvements must be part of a public debate and make a concerted effort to ensure that the most vulnerable communities are not left without access to financing. For example, the populations in border territories have historically been marginalized. This is clear in the municipalities surrounding the Gulf of Fonseca—located between El Salvador, Honduras, and Nicaragua—which, despite having great natural wealth, sees a large part of its inhabitants living in extreme poverty. It is also necessary to support other marginalized groups, such as migrant communities in the Darién Gap of Panama and on the southern border of the United States. It is imperative to take coordinated action—with financial support from CABEI and other institutions—to address these problems.
These recommendations do not even require the reform of CABEI’s constitutive agreement. These changes could be made at the level of the Board of Directors or the Assembly of Governors. It is about consolidating the member countries’ political will and their commitment to transparency, democracy, and human rights. The governments of these countries then have the opportunity to fulfill their commitments and guarantee the necessary reforms that ensure that CABEI adjusts its course and contributes to integration, development, the defense of democracy, respect for human rights, inclusion, and environmental protection. It is in the hands of the member countries to make this much-needed leap. Hopefully, the democratic will of the majority will prevail over the desires of those who would like to see the Bank as an autocratic tool.
Hugo Martínez was General Secretary of the Central America Integration System (2013-2014) and Minister of Foreign Affairs of El Salvador (2009-2013 and 2014-2018). He is currently working as an International Consultant in Latin America. Hugo has a degree in engineering from the University of El Salvador and a master’s degree in training engineering from the University of Toulouse in France.