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Poverty and Potential in Central America

Better public institutions in Guatemala and Nicaragua would help those nations become richer. (Read this article in Spanish here.)

by
Jaime Daremblum

Bio

September 29, 2011 - 12:00 am
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Pérez Molina says he will crush organized crime with an “iron fist,” and his blunt, no-nonsense message has struck a chord with Guatemalans weary of all the violence. Critics allege that he committed human-rights abuses during the long Guatemalan civil war (which began in 1960 and did not end until 1996). Thus far, however, no hard evidence has emerged to implicate the ex-general, who considers his past military service a valuable asset to his political career. “I regard it as an advantage that the 30 years I was in the Army gave me the opportunity to know the whole country, to live inside, to be close to the problem,” Pérez Molina recently told the Christian Science Monitor. “The training, discipline, order are important attributes when you’re in government and need to make decisions.”

Of course, the only sustainable long-term solution to violent crime in Guatemala is stronger, more responsible public institutions — especially improved police forces and a better judicial system. In the World Economic Forum’s latest Global Competitiveness Index (GCI), Guatemala ranks 132nd out of 142 countries and economies for the quality of its public institutions. It ranks dead last for overall security, 129th for the business costs of terrorism, and 138th for the reliability of police services. According to Guatemalan executives, crime is easily the most problematic factor for doing business in their country, followed by corruption and inefficient government bureaucracy.

Compared with Guatemala, Nicaragua has relatively low crime rates. But it suffers from rampant corruption, and President Ortega is attempting to resurrect a Sandinista dictatorship. Indeed, he has made a mockery of the rule of law: In 2008 the Sandinistas stole municipal elections, and in 2009 they used authoritarian tactics to override term limits and allow Ortega to launch an unconstitutional reelection campaign. (The Nicaraguan constitution explicitly forbids presidents from seeking reelection.) In the 2011–12 GCI, Nicaragua places 130th for the quality of its public institutions (barely ahead of Guatemala). Transparency International has ranked it as one of the most corrupt countries in Latin America.

It is a nation where anti-Ortega journalists face increasing harassment. Consider the story of Silvia González, a writer for the newspaper El Nuevo Diario. After reporting on the strange death of former Contra fighter José Gabriel Garmendia — whose quixotic armed rebellion against the Ortega government came to an end last February, when he was shot dead by Nicaraguan security forces — and also on Sandinista corruption, González began receiving menacing phone calls from thuggish supporters of the ruling party. Terrified by their threats, she recently fled to Miami. “I am afraid that they will kill me,” she told the Associated Press. “That is why I left.”

Ortega is clearly not a true democrat, nor is he a true friend of capitalism. Yet he has adopted pragmatic economic policies in order to appease the Nicaraguan business community. The Sandinista leader has also benefited from massive Venezuelan investment and oil subsidies, thanks to his ideological comrade Hugo Chávez.

But Chávez has cancer, and Venezuela politics is highly unstable. After traveling to Managua this past March, Miami Herald columnist Andres Oppenheimer summed up the general consensus among the Nicaraguans with whom he spoke: “If Chávez fell, or Venezuela stopped sending subsidized oil, or the IMF stopped making emergency loans, or commodity prices fell, Ortega’s government would collapse.” Oppenheimer pointed to a hard truth about the country’s future: “Sooner or later, Nicaragua will have to make a national agreement to respect the rule of law, or it will never emerge from poverty and despair.”

Such an agreement would greatly boost Nicaragua’s long-term economic prospects. Likewise, better legal institutions would help Guatemala reduce gang and drug violence, which has taken a significant toll on GDP growth. But these changes will only come about if the two countries elected far-sighted political leaders committed to real democracy. Voters should remember that when they head to the polls on November 6.

Read this article in Spanish here.

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Jaime Daremblum, who served as Costa Rica’s ambassador to the United States from 1998 to 2004, is director of the Center for Latin American Studies at the Hudson Institute.
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