A flood of ideas to build Central America anew


The rivers of Central America were still running high with the waters of hurricane Mitch last month when the Managua newspaper La Tribuna ran this six-column, front-page headline: "A historic opportunity."

The opportunity is to use the global focus on one of the century's worst natural disasters to turn one of the world's poorest regions into a new and different Central America. The idea is being fostered by a wide range of strong voices - from Central American presidents to foreign officials, economists, and development analysts.

Mitch-damaged countries are to meet with donor countries and international aid organizations in Washington Dec. 10-11. Agenda: to map out a strategy for long-term progress instead of simply building roads and housing.

Sen. Bob Graham calls for NAFTA-like freer trade to help Central Americans help themselves.

One example of the thinking Mitch is churning up: Sen.. Bob Graham of Florida is calling for a "Central American and Caribbean Relief Act" that would extend to the region eased trade provisions similar to the North American Free Trade Agreement (NAFTA). The act proposes micro-credits to encourage restoration and creation of small businesses; and a disaster management agency within the Organization of American States to improve disaster prevention and mitigation in the region.

"The severity of this tragedy opens the way for the United States to play a substantial role in the reconstruction of Central America," says Senator Graham. A "long history of heavy US involvement" in the region makes US participation and even leadership in an aid program "appropriate and imperative," he says.

A clearer picture of how much aid Central America can count on should come out of the Washington meeting. Already some experts in the region peg reconstruction at $20 billion, with forgiving of international debt one of the principal demands of affected countries. Nicaragua's external debt tops $6 billion - servicing it requires almost 40 percent of the country's budget - while that of Honduras tops $4 billion.

The trick will be not just achieving substantial relief from the international debt, observers say, but also making sure the savings on servicing the debt are channeled in the right areas: education, small-farmer development, land-use planning and enforcement.

"For this to be not just a reconstruction but a transformation, which is what our Central American governments are calling for, we will have to have the participation of all sectors of society," says Eduardo Montealegre Rivas, Nicaragua's foreign minister. "If we recognize that one key to development is involvement of all contributing actors - private business, NGOs [nongovernmental organizations], government, the churches - then we have to work to make them all part of this effort."

Nicaragua last week set up a six-commission reconstruction organization, with one of the commissions focused on promoting broad grass-roots involvement. Indicating the importance he gives this issue, Mr. Montealegre - a banker and businessman by training - chose to chair that commission.

Perhaps the biggest "opportunity" political analyst Rodolfo Delgado sees is how Mitch has focused international attention on the impact of international financial assistance programs on a poor region like Central America.

"This disaster opened the curtain on our weaknesses for the whole world to see," says the director of Managua's Nicaraguan Studies Institute. "It exposed our poverty, the marginalization of so many, the haphazard development, but it also revealed the role that international [monetary] institutions have played in a worsening of these problems."

The economic structural adjustment programs Central American countries have followed under the guidance of the International Monetary Fund have opened the door to new investment and reduced inflation, Mr. Delgado says. But they have also exacerbated income gaps and levels of extreme poverty, he adds, while some World Bank development projects have also been counterproductive. "The window of opportunity is open, with the international focus and visits by world leaders in the aftermath of Mitch, for a rethinking of some of these policies," he says.

THE very concept of development in a region of high risk to natural disaster has to be rethought, says Alan Lavell, an expert in social aspects of disaster at the Latin American Faculty of Social Sciences in Costa Rica. "The extensive damage from Mitch has already led to a wider realization that natural disasters are a development problem," says Mr. Lavell.

Since Central America is such a high-risk zone - to earthquakes, hurricanes, even volcanos - the region's rebuilding should be a laboratory for different development priorities, he says. The devastating effects of deforestation must be reversed, for example, and the tendency for quick, "temporary" road, bridge, and housing replacements to become permanent has to be stopped.

Another trick to a successful reconstruction of Central America, some observers say, will be putting what should be substantial international aid to good use while maintaining the idea that the rebuilding is something Central Americans must largely accomplish for themselves.

As one Honduran businessman noted in a conversation with a foreign visitor in Tegucigalpa, "We certainly need all the international help that's coming in. But I've also seen a new self-help, entrepreneurial spirit growing here over the past few years, and I'm afraid the [handout] mentality will come creeping back."

That is why Senator Graham says the NAFTA-like freer-trade provision of his relief act is the most important - though probably also the most controversial. Opening US markets a bit wider would allow Central Americans to help themselves, while boosting over the long run the US interest in stronger export markets.

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