Envío Digital
Central American University - UCA  
  Number 93 | Abril 1989



EEC Applauds Central American Initiative

Envío team

While the US government has enforced an economic embargo against Nicaragua since 1985, the European Economic Community (EEC) has continued to give aid both to Nicaragua and to the other countries of the Central America region. In February three important events occurred that place the EEC in a crucial role for the continued economic development of all of Central America: the release of the Sanford Commission report, the meeting of the five Central American Presidents in El Salvador, and the fifth annual EEC meeting with the five Central American countries and the four Contadora countries in Honduras.

Out of these meetings, the EEC has emerged with new potential and new responsibility for participating in the economic development of Central America. Between 1984 and 1987, the EEC gave between $40 and $80 million annually in regional aid. In 1988 that aid increased to $122 million, and is expected to go up again in 1989. The $122 million is far below US economic aid to its favored countries in Central America, but the gap is steadily closing. Nicaragua has consistently received more than its proportional share of EEC aid, an average of 30% of all funding.

Sanford Commission Report recommends regional approach

The Sanford Commission, made up of over 45 leaders from Central America, the US, Europe and Japan, released its report on the eve of the fourth meeting of the Central American presidents (see "In Brief" in the March envío). The report addressed development needs in the Central American region and gave specific proposals to resolve both immediate and long-term problems. Approaching the problems regionally rather than on a country-by-country basis both recognizes Nicaragua as equal to the other countries, and allows for the development of more comprehensive policies. The integration of Central American, Latin American, European, US and Japanese leaders, all with equal participation in the final outcome, represented a new approach to the region. The methodology of 47 world leaders spending more than a year in investigation and analysis stands in sharp contrast to that used to produce the Kissinger report in 1985, when a cursory tour through Central America by US politicians led to a shallow and paternalistic interpretation of the regional situation.

According to the report's introduction, the priorities of the Commission are reducing poverty and taking advantage of the productive capacity of the human resources. The solution, a two-pronged approach, addresses the immediate needs of those people most at risk—refugees, children, and pregnant and nursing women—as well as developing long-term solutions to economic issues. "The Commission does not ask for enormous amounts of money, but rather a long-term promise to endorse the strategy through commerce, assistance, and credit, based on the progress realized toward the objectives of peace and democracy established in Esquipulas II."

The short-term solutions include a guarantee of at least $2.5 million annually for three years to relocate refugees and to give food aid to the most needy. However, the report recognizes that "To eradicate the extreme poverty the adoption of short-term measures will not be enough, in spite of the fact that resources are made available. Rather it will be necessary to address the problem in the framework of medium and long-term economic development." The long-term solutions include promoting exports, regional integration, development of human resources and encouraging a secure food supply.

While charging the Central American nations with continuing to work towards fulfilling the Esquipulas II peace accords, the Sanford Commission report also clearly spells out a proposal for international aid and assistance, to come primarily from Europe, Japan and other Latin American countries. Among the recommendations to the international community are:
* full support for the consolidation of peace and democracy according to Esquipulas II, and an end to foreign military aid;
* loans, financial assistance and diplomatic initiatives to encourage the fulfillment of Esquipulas II;
* not to refuse proportional financial assistance and commercial access to countries based on political criteria other than the accords;
* financial aid for reactivating the Central American Common Market and creating other regional institutions;
* a call for the United States to maintain its current level of assistance and to increase its cooperation with multilateral assistance organizations;
* the opening of European, Japanese, and other markets to Central American exports;
* renegotiation of the foreign debt of Costa Rica and Nicaragua.

In dollar terms, the report calls for an increase of foreign aid from $1.5 billion to $2 billion annually. In addition to non-monetary support such as lifting trade barriers, it calls for a qualitative change in the way the aid is distributed. Rather than emphasizing direct material assistance such as food aid, (EEC aid has been nearly 50% direct assistance over the last years), long-term development will be favored.

The report, released on the eve of the presidents' summit, strongly endorses the Esquipulas peace process. Its vision of regional economic planning rests on an assumption that political dialogue is the means to resolve both internal and regional conflicts. In fact, Senator Terry Sanford (D-NC), for whom the commission is named, originally proposed its formation after the signing of Esquipulas II in August 1987, when, in the peace accord itself, the five presidents called on the international community to participate in the peace process.

The breakthrough that the Sanford Commission represents, its recognition of Esquipulas, comes with a caution. While the commission and the EEC, as well as other international bodies, publicly recognize Nicaragua's freedom to choose its own system without being penalized by the withholding of international aid, the commission did not confront some of the principal structural injustices that have created the Central American economic crisis. For example, the commission did not deal with land reform, nor did it confront the foreign debt head on. So while the report creates a framework out of which to develop economic programs and policies, it skirted many controversial topics.

EEC responds positively to presidential summit

The five Central American Presidents, in part encouraged by the commission's stamp of approval for their dialogue, made major gains during their two-day talks in El Salvador on February 13-14. After the signing of the accords, the EEC issued a statement expressing its "great satisfaction" with the peace process. "The Central American countries are taking initiative, taking advantage of the space created by the change in the US administration," Miguel Angel Mazarambroz, Spanish ambassador to Nicaragua, told envío. "We [the EEC] want to support their autonomy." Spain currently heads the 12-country EEC.

Both the release of the Sanford Commission report and the progress made at the presidential summit in turn influenced the meeting on February 27-28 of the EEC in Honduras. The fifth annual meeting was attended by the EEC, Central American representatives as well as the four Contadora countries (Colombia, Mexico, Panama and Venezuela). At the meeting, the Central American countries presented their proposal for 1989 funding.

According to Mazarambroz, the principal theme addressed in Honduras was the revival of the Central American Bank of Economic Integration. The bank, to be funded by individual member countries of the EEC, will serve to encourage trade within Central America. "Clearly," Mazarambroz told envío, "if trade increases throughout Central America, with more economic opportunities and a renewed Central American economy, everyone will gain far more than they would gain with direct donations." The EEC approved the Central American proposal for start-up funds for the bank of $180 million, and Spain and Italy have already pledged an undisclosed amount for the fund. Individual EEC countries will provide the capital, and the EEC itself will contribute the necessary infrastructure, both logistical and material.

Within the proposal for renewal of the bank is a project to train Central Americans, helping to address the scarcity of human resources in the region. In addition, Mazarambroz noted that each donating country will have a representative on the bank's board of directors, so that decisions will be made jointly by the five Central American countries and the donating countries.

The EEC is increasing its support of Central American regional development not only economically, but also politically. Public statements in support of the peace process help to legitimize Central American goals internationally and indirectly pressure the United States to respect Central American initiatives. In early March the Spanish foreign minister, representing the EEC, met with US Secretary of State James Baker. Among the topics of discussion was Central America. The foreign minister expressed the EEC's satisfaction with the current peace process and its hope that the new administration would be more flexible in its relations with Nicaragua in order to allow negotiation and dialogue to prevail over military solutions.

Esquipulas as Central American framework

The Sanford Commission report, the presidential summit and the EEC meeting have opened a new space in Central American regional politics. The new emphasis on the regional nature of Central America's problems and the continued attempts by the Central American Presidents to autonomously address and resolve their issues has given the EEC and all international bodies a clear framework in which to participate in Central American politics and economic development. The five presidents created the framework of Esquipulas II, the Sanford Commission based its recommendations for long-term economic development on that context, and the EEC has accepted political dialogue within Esquipulas II as the basis for their regional policies.

This acceptance of Esquipulas II as the regional framework isolates the United States. As a result of February's presidential summit, the regional peace accord now includes a clear mandate to design a plan for the dismantling and resettling of contra troops in Honduras. A mid-March meeting of Central American officials at the UN gave initial approval to a monitoring force of 100 people along the Nicaraguan-Honduran border, putting up further obstacles to US policy. If the EEC tries to fund the demobilization and resettlement of the contras and the United States insists on giving aid for their maintenance, the EEC will be challenged to stand behind its statements. Its diplomatic response will be another important test of the degree to which the Central American countries dare look beyond the United States for funding and support.

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