Why One Billion Dollars in Central American Business Commitments Isn’t Adding Up
In the beach city of La Libertad, El Salvador, a new farmer’s market was inaugurated to much fanfare and celebration amongst locals and dignitaries.
Surrounding the new outdoor market, the local scene is a mixture of humanity, traffic, construction cones, maintenance vehicles and fisherman eagerly marketing their catch of the day. La Libertad hugs tightly to the coast; the topography immediately begins to rise from the Pacific tectonic plates that make this Pacific ring of fire outlier, a very active seismic zone. With developable, shovel-ready land at a premium, infrastructure development is hardly a new concept.
New Capital Projects At La Libertad, El Salvador
For the past thirty years, much of the development that stretched from the capital city of San Salvador out to the beaches remained dry, scrub brush with the occasional roadside vendor selling fresh coconut juice for one dollar. With the quick swipe of a machete, the top of the coconut would be spliced open and the organic, refreshing flavor that awaits one is quickly put to shame when compared to the all-organic, yet-in-the-can, marketed by corporations. One doesn’t know what they’re missing until they realize it.
A short forty-five minute drive south of the Capital lies the newly renovated San Salvador airport. San Salvador airport was transplanted from the downtown Ilopango International Airport to midway between the El Salvadoran Pacific coast and the capital city, opening in 1980. Over the years, economic growth was minimal emerged from the scrub much as a coconut seed would after a fresh Summer rain.
El Salvador is a compact country; I prefer the word compact over the less desirable semantics of small, simply because in the outline of the border and all that it encompasses, something is brewing and it isn’t coffee beans or fresh coconuts. There is an economic movement afoot that embraces commerce and much of it is being overlooked by American, multi-national corporations at both the private and governmental sector, regardless of which administration currently holds office.
In my video episodes, I talk extensively about how American corporations could help significantly reduce migratory patterns northward by simply pivoting away from countries in the Far East and utilizing economic free trade zones sprouting up in the Northern Triangle countries of Guatemala, El Salvador and Honduras. These three countries are a part of Central America, yet traditionally have been given the short end of the stick in any number of metrics. Increasingly, people from points around the world are using the Pan-American highway as a migrant highway of sorts to resettle into the United States of America. Traditionally, it was limited to some nationals from Mexico, the Northern Triangle countries and Cuba. Although still a sizable segment these days, nationals from Syria, Turkey and elsewhere are transiting through this route as well.
Meanwhile, other countries, including Israel, Turkey, Russia and China are making significant headways capturing the investment potential that Guatemala, El Salvador and to a lesser degree, Honduras are offering. Through designated economic opportunity zones, several are at or near port facilities that are becoming significantly enhanced.
In December 2021, as part of her responsibilities, the American Vice-President Kamala Harris, working under the direction of President Biden was tasked with getting to the root of migration and the underlying causes. With multiple commissions, exploratory discussions on crime, illegal corruption, etc., I can probably summarize the findings to two words:
Jobs. Crime.
Not since the great Irish potato famine that lasted for a decade in the mid-1800s, has the United States seen such a massive amount of in-flow migration. Evidence supports that groups are traversing across both the Atlantic and Pacific; once arriving to the shores of Central America, they join migrant caravans heading north. In other words, instead of placing blame on the countries of Central America, one would be cautious to note that migrant patterns include international transients crossing from the Atlantic and then journeying northward.
Rarely does a week go by that the American border patrol detains citizens from African and European countries. Not too long ago, a massive influx exceeding 1,500 Turkish nationals made their way over from the Eurasian boundary line through the Mediterranean, across the Atlantic and entered via the Puerto Barrio, Guatemala region. That’s in addition to those coming from Senegal, Ghana and of course countries in South America, not to mention Ukrainian refugees who did not make the initial cut for acceptance.
If the United States is the land of opportunity, there appears to be the illusion of those opportunities. The rise of the American Oligarch has paved the way for profits to migrate to the very top, much to the demise of the middle and lower-class Americans.
Suppose off the coast of California was a landmass comparable to the American state of Texas. This landmass was very expensive to live, but relatively safe compared to elsewhere around the continental United States. This landmass was also very unusual, in that the minimum wage was roughly seven times that of minimum wage states of California, Washington and Oregon.
Assuming a minimum wage of around 16-18 dollars in those three states, (2021) that translates to a factor over one hundred dollars an hour for this fictional and financially exuberant landmass off the coast of California. If there weren’t any jobs near where I lived on the continental part of the United States, would I be tempted to cross in such a perilous way, with the hope that I could reach that land mass that offered a very significant hourly wage?
Probably.
The same holds true for those with minimal education, minimal skills and literally nothing to lose, including their lives. In El Salvador as elsewhere in the Northern Triangle, it is common for people to feel blessed if they’re making the equivalent of two to three dollars an hour.
I too, would be salivating at the prospects of making over one hundred dollars an hour, even if only for a few years, send remittance and ideally, return home a few years later to be with husband/wife, children and/or family.
Where the United States lacks with a very porous Southern and Northern border, it more than makes up with an electronic firewall. The best that undocumented migrants can secure is an Individual Taxpayer Identification Number (ITIN). This ITIN allows individuals (assuming they make the journey safely) to find work and pay taxes, regardless of their immigration status, but not access services afforded to American citizens, such as tax refund checks, social security, etc. Added to the litany of tax codes and societal norms, there is also the hidden, black-market, cash-only economy that at times, works well for documented and undocumented citizens here in the United States.
In December 2021, Vice President Harris announced American commitments totaling over one billion dollars and upwards closer to four billion; what exactly that includes remains opaque and nebulous, at best. However, it is a starting point. One only needs to reference the El Salvadoran Civil War (1979-1992) to see during the Reagan administration, in excess of one billion USD (adjusted for today’s dollars) were funneled via military applications/weaponry and logistical support during the civil war.
Propped with US support to aid an El Salvadoran military in which, by some estimates, over 75% of those participating were child soldiers under the age of eighteen, today those same, former soldiers are now in their fifties.
This historical, post-civil war recovery also reverberates across all segments of the El Salvadoran economy and social fabric. Gangs, firmly entrenched impoverished lives and destitution are the norms for many along with femicide and murders; scenes not necessarily evident to the average tourist.
Given those circumstances, why would one want to remain in El Salvador or the other Northern Triangle countries?
Kudos are to be offered to President Bukele, riding a populist wave of support to fundamentally change the direction and thus far, for better or worse, he is blazing a new path forward, one in which the El Salvadoran civil war scars are still evident.
With the instrumentation of the bitcoin currency being adopted (2021), along with the U.S. Dollar thirty years earlier (1992), even if the bitcoin currency flops, it still bodes well for marketing El Salvador as a tourist destination with an emerging manufacturing complex. Fresh off the heels of the Covid pandemic, Bukele opened the country, accepting well-heeled and funded, international travelers without a need to prove vaccination or covid status.
By one estimate, since the bitcoin law was implemented, tourism is up a whopping thirty percent in 2021 alone. Does this bode well for the future of El Salvador? Depends on how the transactional nature of the bitcoin currency fares. If it does well, then the potential for infrastructure can be developed, something that should have started after the Salvadoran (and multiple Central American countries) civil war had ended.
At the end of World War Two, The Marshall Plan ushered in the equivalence of over 135 billion dollars towards the rebuilding of Europe. Progress and economical measurement took decades to arrive where most NATO European countries are economically solvent today. Dr. Harris’ announcement of one billion plus dollars commitment on the part of private industry, federal level international monetary aid and non-government organizations (NGO’s) future grant-funding mechanisms includes worthy endeavors. Will it suffice? Let’s expand on that perspective.
In the coastal town of La Libertad, the El Salvadoran city has signed multiple memorandums of under-standing with the Peoples Republic of China to develop several facilities that will contribute to the regional economy. Starting with the beachside city of La Libertad is the development of both, an outdoor Public Market Plaza and a pier. When completed, a gleaming new port and marina facility will support local vendors. In addition, a pier worthy of Santa Monica (California) jutting into the warm waters of the Pacific Ocean will have tourist oriented activities, including roller-coasters, amusement rides and a place for the growing middle-class to splurge. I suspect as tourism grows and cruise ship traffic returns, this pier will replace the one 25 miles to the Northwest in the town of Acajutla.
Less than a 90-minute drive, in the capital of San Salvador lies additional evidence of an emerging and strong relationship between El Salvador and the Peoples Republic of China (PRC). A massive 50,000 seat stadium as well as a new, national library have broken ground. Peripheral developments will include roadwork, pedestrian walkways and of course, shovel-ready building sites for future commercial development. That and smaller projects total around five hundred million dollars and provided as grant from the PRC.
If the people of El Salvador and the Northern Triangle countries wish to chart a fundamentally radical approach to their future, that is certainly their prerogative. By being enticed with significant infrastructure projects, there’s no reason why El Salvador cannot forge commerce and trade agreements with other countries. The hope is the contractual language is earnest and in the interest of both parties/countries. It’s what lurks behind those contracts that may be cause for concern.
The fine print remains opaque, much like the financial future of many countries in Central America. What was done in the past doesn’t work well and a new sense of direction is emerging. If these countries can secure safety, continue to reduce violent crime and enter into effective trade agreements, then their future is exceptionally bright.