Despite headlines, Central America's real problems are '90% economic'
Guerrilla warfare is clearly upsetting the economies of Central America--but the worldwide recession and the smallness of the region's economies are even more troublesome.Skip to next paragraph
Subscribe Today to the Monitor
''Our problems are largely economic,'' says Honduran President Roberto Suazo Cordova, who took office in January.
That view is echoed by outgoing Costa Rican President Rodrigo Carazo Odio, whose nation has been particularly hard hit by economic crisis. ''Ninety percent of Central America's problems are economic,'' he comments.
Such views may perhaps sound a bit odd when headlines in the world press focus so much on the fighting in El Salvador and the escalating political debate in Nicaragua, as well as the threat of similar problems for Guatemala and Honduras. But Mr. Carazo adds:
''An unemployed person is easily the best candidate to become a guerrilla.''
And there are plenty of unemployed people among Central America's 23 million. The region's rural-based economies are suffering from low world market prices for commodities, soaring oil prices, high interest rates, and shortages of foreign credit.
Those four problems are evident in each Central American nation.
Take the commodities, for example. Bananas, coffee, and cotton are the key agricultural products of the region. Each, however, is a fickle item upon which to base economic livelihood. In good years, when world market prices are high, a small boom is felt in the capital cities of the region.
But good years come none too often. Instead, world market prices for, say, coffee have more often than not been down in the past generation. Moreover, coffee blights and other crop problems have beset production in Nicaragua, Guatemala, and El Salvador.
Add to this the fighting in Nicaragua in 1978 and 1979 and the continuing guerrilla insurgency in El Salvador and the picture becomes increasingly bleak.
Compounding this problem is the high oil-import bill facing each nation. So far, only Guatemala has found oil on its territory--and even here the quantity is small. As a result, the nations of Central America are oil importers. Their needs for petroleum products are steadily increasing as they develop limited local industry and as their people demand and expect more consumer products.
Even with the world oil glut currently depressing prices slightly, oil imports continue to use up most of the region's foreign exchange, a pattern of the past five or six years. Costa Rica's oil-import bill, for example, runs $25 million more than its export earnings.
Foreign credit has offset this deficit in most cases, but this in turn has boosted foreign debt and the high interest rates charged for these credits are a ''self-defeating situation for us,'' says Honduran President Suazo Cordova.
In addition, Latin America's two oil giants, Mexico and Venezuela, have a petroleum aid program that helps Central American countries obtain oil and gas at rates slightly lower than the world market price. The program also fuels their industrial and agricultural development. But as helpful as this is, it is not all the area needs.
Foreign aid is also limited. The United States pumped $200 million into El Salvador in 1981, almost double US aid to the other countries of the region, but most of Salvadoran aid was aimed at fighting insurgency, not in helping the Salvadoran economy.