Handbook of Central American Governance

Diego Sánchez-Ancochea, Salvador Martí i Puig, Diego Sanchez-Ancochea

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9781857436747
• eBook ISBN: 9781135102357
• Topic: Politics & International Relations
• Subtopic: Political Process
• Index: Politics & International Relations

Central America constitutes a fascinating case study of the challenges, opportunities and characteristics of the process of transformation in today's global economy. Comprised of a politically diverse range of societies, this region has long been of interest to students of economic development and political change.

The Handbook of Central American Governance aims to describe and explain the manifold processes that are taking place in Central America that are altering patterns of social, political and economic governance, with particular focus on the impact of globalization and democratization. Containing sections on topics such as state and democracy, key political and social actors, inequality and social policy and international relations, in addition to in-depth studies on five key countries (Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala), this text is composed of contributions from some of the leading scholars in the field.

No other single volume studies the current characteristics of the region from a political, economic and social perspective or reviews recent research in such detail. As such, this handbook is of value to academics, students and researchers as well as to policy-makers and those with an interest in governance and political processes.

1

Introduction

Central America’s triple transition and the persistent power of the elite

Salvador Martí i Puig and Diego Sánchez-Ancochea¹

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Introduction

More than a quarter of a century ago, following bloody wars that resulted in thousands of deaths and displaced people, El Salvador, Guatemala and Nicaragua signed the first agreements that brought peace back to Central America. The process of pacification facilitated two additional transitions: from authoritarianism to democracy and from a state-centred model of development rooted in agriculture to a neo-liberal one based on non-traditional exports and remittances. The way in which formal politics was organized changed dramatically and, with the exception of a failed coup attempt in Guatemala during the 1990s and a successful one in Honduras in 2009, elections have taken place regularly. At the same time, the region’s economy has changed: Central America is now more urban, more service-oriented and more diversified in its export basket. What has been the ultimate impact of this triple transition from war to peace, from dictatorship to democracy and from state-led to market-led development? Have the region’s power relations changed significantly? Do the gains over last three decades outweigh the losses?

These are important analytical and policy questions and are especially interesting at a time when the region has recovered some of its allure after its absence from global conversations following the peace accords signed during the mid-1990s. Honduras’s institutional breakdown, the return to power of the Sandinistas in Nicaragua and the victory of the former guerrillas in the presidential elections in El Salvador all contributed to a renewed attention to Central America’s problems, challenges and opportunities. At the global level, the region has become a place of interaction between drugs-traffickers, youth gangs and weak states and a much coveted reserve of ecological wealth and natural resources. It also constitutes a good comparative arena to evaluate the prospects for development in middle-income, post-conflict societies—a point clearly made in Lehoucq’s (2012) account of Central America’s recent development.

This Handbook explores these manifold processes and considers their consequences for governance and development. Contributors discuss how the simultaneous processes of globalization and democratization have changed the ways in which these countries operate, creating new opportunities and constraints for the consolidation of more equitable, participatory and prosperous societies. Each of the chapters reviews the recent literature from a multidisciplinary perspective, concentrating on the experiences of Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala, but also making occasional references to Panama and Belize. In discussing the Central American experience, the Handbook highlights both the region’s unity and its diversity (Dunkerley 1988), exploring a general model but also pointing out country differences.²

In this chapter, we discuss the political, social and economic changes of the last two decades and evaluate their impact on equitable development and democratic consolidation. In so doing, we make two arguments that reflect the region’s contradictory path. First, the simultaneous processes of democratization and economic liberalization have created some political space for contestation, some economic opportunities for new groups and some room for equity-enhancing policies. Second, however, the quality of democracy and the level of development are still low and new problems such as organized crime and a brain drain have emerged. The region’s problems ultimately have much to do with the perpetuation of an elitedominated socio-political system that still concentrates wealth and political influence in a small number of people and also with the inability of the state to secure the rule of law and provide services for all.

Central America’s traditional exclusionary model

Prior to the 1980s Central American countries were agriculture-based economies where a landowning elite held power either directly or through a coalition with the military. According to Bulmer-Thomas (1983: 270), ‘agrarian interests (the traditional oligarchy) exercise[d] preponderant influence over political affairs’. From the late 19th century the Central American economic model was driven by a few primary exports such as coffee and, to a lesser extent, bananas. The concentration of land in a few hands gradually intensified and coffee production progressively crowded out non-export agriculture. At the same time, a system of ‘coerced rural labor’ (Baloyra-Herp 1983: 298) was developed to secure sufficient workers for export-directed agriculture. Since primary production was highly profitable—thanks in part to low wages and low taxes—and did not require skilled labour, there were no real incentives to expand education and other social services. To make matters worse, agricultural production was based on latifundiums, which ‘made independent peasant political organization difficult if not impossible’ (Huber 2005: 14).

The system also created limited incentives for the development of democratic institutions. According to Fabrice Lehoucq (see Chapter 8), between 1900 and 1980 Central America (including Panama) had non-democratic regimes for 72% of the time and semi-democracies for a further 22% of the time. Governments were both despotic and reactionary: they refused to organize elections in order to select legislators and the executive and responded almost exclusively to the interests of agro-exporters (Martí i Puig 2004). The role of the USA and emerging transnational corporations such as United Fruit did not help either: they usually supported undemocratic regimes that protected their interests and contributed to the consolidation of the exclusionary economic model.

There were significant country differences within this general model. In Costa Rica the land was better distributed than in the rest of Central America, which contributed to the early consolidation of democracy. Nevertheless, the elite was still powerful thanks to its control of the banks and coffee-processing and distribution (Paige 1998). In El Salvador, where land was particularly scarce, the state focused on securing elite access to the best land. In Guatemala, public policy paid more attention to the commodification of labour, with different laws tying indigenous peoples to landowning production (Chapter 2 in this volume).

The 1929 Wall Street Crash and subsequent Great Depression called into question the basis of the traditional economic model and its excessive dependence on primary exports. It also opened a window of opportunity to develop more democratic institutions—a window that, unfortunately, closed rapidly. After the Second World War, Central America followed larger Latin American countries in promoting manufacturing expansion through import substitution. Domestic industrialization, together with high commodity prices and export diversification into new agricultural products, contributed to a rapid economic expansion in all Central American countries. Between 1959 and 1979 the region grew at an average of 5% per year (Bulmer-Thomas 1987). The middle class expanded particularly rapidly in Costa Rica—thanks to a dual process of market and social incorporation (Martínez Franzoni and Sánchez-Ancochea 2013)—but it also became increasingly important in the other Central American countries.

However, Central America’s development model contained significant social, economic and political contradictions and failed to improve welfare for much of the population. Economically, the development model was disarticulated and hybrid (Bulmer-Thomas 1987). As Schneider explains in Chapter 2, agricultural production for the domestic market was discouraged; the manufacturing sector was constrained by the small size of the regional market; and the region’s dependence on imported inputs, technology and capital goods increased over time.

Socially, Central America failed to create sufficient urban jobs to absorb effectively the growing supply of workers arriving from rural areas. Informality grew in all countries but Costa Rica and wage growth failed to keep up with the growing price of many consumption products. Greater demand for skilled labour led to the expansion of primary education and social security in all countries, but social programmes concentrated in the urban sector and workers’ rights were never protected. As a result, inequality increased sharply and traditional channels of family solidarity gradually dissolved.

Politically, the expansion of import substitution industrialization did not modify the traditional pattern of state-society relations. The landowning elite remained influential and succeeded in preventing tax increases, while manufacturing producers benefited from monopolistic positions and became the local agents of transnational corporations (TNCs).

Economic modernization was thus accompanied neither by a sustained improvement in the living standards of a majority of the population nor by a more liberal and democratic environment. The expansion of elite-controlled agro-exports reduced the amount of land available for traditional agriculture, harming the economic opportunities of many rural families. Migration to urban areas accelerated, pressuring urban infrastructure and the limited social services available. At the same time, the growing concentration of people in the main cities reduced the spatial distance between social classes and created new unsatisfied political demands.

Costa Rica was the only exception to this negative pattern of economic development (see Chapter 22 in this volume). During the period 1950–80, it benefited from a gradual expansion of social programmes together with a more equitable economic structure than the rest of Central America. Co-operatives were actively promoted and public institutions grew rapidly and generated a great number of jobs for the middle classes. Costa Rica’s more positive development outcomes were partly the result of more favourable initial conditions: since colonial times land had become better distributed than in neighbouring countries and the elite had become less extractive. However, the emergence of a new elite of middle-class professionals and medium-sized capitalists following the 1948 Civil War was even more important. In contrast to traditional elites in the other Central American countries, this new group which gathered around the Partido Liberacion Naciónal (PLN—National Liberation Party) used the state to expand economic opportunities for the middle class and to manage social conflict successfully (Martínez Franzoni and Sánchez-Ancochea 2013).

Insurgencies, counter-insurgencies and the costs of the Civil Wars

Growing social discontent against Central America’s unequal development model together with changes in the international political environment and a deteriorating economic outlook contributed to the emergence of guerrilla insurgents in Nicaragua, El Salvador and Guatemala during the 1960s. These left-wing revolutionary movements gradually expanded their social base and succeeded in destroying (Nicaragua) or at least threatening (Guatemala and, in particular, El Salvador) the old regimes.

As Chapter 14 in this volume explains, the Cuban Revolution played a significant role in transforming the symbolic vision of the Latin American left, just as previous uprisings such as the 1932 rebellion in El Salvador or Sandino’s guerrilla movement in Nicaragua had done. Attracted by the rebels’ victory and by Che Guevara’s call to arms, middle-class students, with working-class and peasants support, created new guerrillas. In the early 1960s the Frente Sandinista para la Liberacion Nacional (FSLN—Sandinista Front for National Liberation) was founded in Nicaragua and several groups appeared in Guatemala. In El Salvador, the guerrilla movement emerged in the early 1970s from splits within both the Communist Party and the Christian Democrats.³

Initially, these revolutionary groups played a minor role in domestic politics and they failed effectively to confront the powerful repressive machine of the authoritarian regimes. However, during the 1970s they gained increasing prominence in El Salvador, Guatemala and Nicaragua for several reasons. First, deteriorating economic conditions precipitated growing social discontent; high oil prices and stagnant real wages affected the urban middle class almost as much as workers in rural areas. Nevertheless, the economic basis of the conflicts should not be exaggerated: as Torres-Rivas (1998) shows, the growing levels of poverty contributed to the intensification of the revolutions, but did not initiate them (see also Lehoucq 2012). Second, and probably more importantly, the moderate left could not advance its push for democratiza-tion—in large part due to the inttransigence of the military regimes—and gradually accepted the views and strategies of the rebels. In political contexts dominated by brutal and intransigent military regimes, a growing number of middle-class students and intellectuals radicalized and either joined the guerrilla movements or at least supported them.

Although the guerrillas were already active during the 1970s, the war as such began in the 1980s. The civil wars had significant economic, political and social consequences of varying kinds in the five Central American countries. In Nicaragua the attacks of a counter-revolutionary coalition—the Contras—funded by the USA and concentrated in the rural areas ofthe Nicaraguan interior created an almost permanent state of national emergency. The Contra aggressions and government responses shaped political dynamics in the country, curtailed political debate and prevented the emergence of constructive opposition to the revolutionary government. In El Salvador, the war also shaped social and political life: after a (failed) offensive against the military government by the guerrilla Frente Farabundo Martí para la Liberación Nacional (FMLN— Farabundo Martí National Liberation Front) in January 1981, a war of attrition began. The FMLN controlled around one-third of the country and was even active in San Salvador, while the Government controlled the remainder. In Guatemala the response of the army and the oligarchy to the insurgent threat was particularly brutal and targeted indigenous peoples in different parts of the country. Honduras became a military base for the USA and for different counter-insurgent groups, and the Costa Rican Government, while nominally neutral and democratic, also supported the Contras.

The USA played a central role in the Central American conflicts (see Chapter 18 in this volume). The Reagan Administration adopted an interventionist approach to the regi...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Editors and contributors
• Prologue: Central America: modernizing backwardness
• 1 Introduction: Central America's triple transition and the persistent power of the elite
• Part I Development and income (re)distribution
• Part II Democratization and the state
• Part III Key political and social actors
• Part IV International relations
• Part V Country experiences
• Index