Central American Elites Are Evolving But Cling to Power

From left to right: Manuel Torres, Ricardo Barrientos, Hugo Noé Pino, Aaron Schneider and Elizabeth Oglesby participating in the project seminar in Costa Rica

From left to right: Manuel Torres, Ricardo Barrientos, Hugo Noé Pino, Aaron Schneider and Elizabeth Oglesby participating in the project seminar in Costa Rica

The sources of Central American elites’ wealth are evolving, as are their fundamental interests and the ways they wield political power.  Land‑intensive production – the focus of decades of insightful scholarship – continues to prevail in Guatemala and Honduras, but the economically powerful now maintain their position through a growing array of service-sector activities and by capturing rents from public coffers.  Changes in their economic foundations are but one of several transformative processes that swept the region beginning during the 1980s, making the past three decades a period of fundamental rupture with the past.

  • Civil wars in El Salvador, Guatemala and Nicaragua during the 1980s transformed the economies in all three countries and had spillover effects in Costa Rica and Honduras.  Most striking is the case of El Salvador, where elites abandoned the countryside upon which they had depended from time immemorial, never to return.
  • Structural adjustment programs, implemented throughout the region during the 1990s, changed the role of the state in Central American economies and thus the ways in which the public sector intersected with the elites’ wealth-accumulation strategies.  Hasty and corruption-ridden privatizations, in particular of energy and telecommunications and of an array of public services, created a reformist façade but gave private-sector groups a piñata that helped to ensure uninterrupted enrichment.
  • During that same decade, transitions to electoral democracy contributed to elite reliance – albeit with some important exceptions – on political parties, campaign strategies and legislative lobbying to protect their interests.  Ties to military and death squad enforcers are no longer the principal vehicles for the enforcement of elite imperatives, though Honduras today is increasingly reminiscent of the worst times in Guatemala and El Salvador.

Central America’s elites have yet to offer the region a vision of reform that will enable the isthmus to overcome misery, exploitation and predatory rule.  While dominant groups have embarked on aggressive state-building strategies, experts question whether these are producing the virtuous dynamics that advance the general welfare of the population and ensure effective governance. 

Scholars from across Central America have reached these conclusions through research and seminars under a multi-year AU program on Central American elites and power.  To foster better understanding of the shifting landscape in the region, and thus to illuminate plausible paths toward more equitable distribution of power and resources, the Ford Foundation is supporting this effort, undertaken in partnership with more than two dozen researchers from institutions throughout the isthmus and the United States.  The project was the focus of a recent workshop at FLACSO Costa Rica, and several publications will result over the course of 2013 and 2014.  Click here for more information.

Fiscal Policies Worsen Security Crisis in Central America

From left to right: Aaron Schneider, Maynor Cabrera and Hugo Noe Pino at the June 5 event on Central American fiscal policy.

Economists are warning that Central America – unlike some South American countries and Mexico – has still not rebounded from the 2007 global economic crisis, and that current fiscal policies dim prospects for improvement.  After making progress reducing poverty prior to 2007, the subregion has been stymied by static tax policies, insufficient investment in physical infrastructure, corruption, and natural disasters induced by climate change.  This is the assessment of Hugo Noe Pino, Ricardo Barrientos and Maynor Cabrera, economists from the Central American Institute on Fiscal Studies (ICEFI), and Aaron Schneider, Professor of Tulane University, who presented their work at a CLALS-sponsored seminar at the Woodrow Wilson Center on June 5.

The specialists’ research indicated that political resistance to fiscal reform is strong and comes from both new and traditional political and economic interests.  Elites have not found common ground with the middle and lower class in most of Central America – a key element of Costa Rica’s success prior to the financial crisis.  Absent an enduring fiscal pact, countries in the region are likely to remain plagued by persistently slow growth and unusually skewed income distribution.

Violence and security dominate Washington’s agenda on Central America, but this focus largely misses the underlying dynamic between economic decline and crime throughout the subregion.  Elites favor policies that discourage effective state‑building – including investment in security forces paid well enough that they are less vulnerable to corruption – and that exacerbate social inequalities.  Political fragmentation and low citizen confidence in government institutions have dire consequences for national security, and countries get caught in the Catch‑22 of being unable to attract investment from abroad and encourage development from within as long as fiscal policies fail to promote an educated, healthy and skilled workforce.

CLALS currently has a program investigating how traditional, renewed and emerging elites shape the political and economic landscape of Central America.  For more information click here.  And click here for a video of the ICEFI presentation and discussion at the Woodrow Wilson Center.