Shortly after the inauguration of Alejandro Giammattei as the new Guatemalan President, he met with President Nayib Bukele of El Salvador and offered a deal of potentially great benefit to El Salvador: namely a port on the Atlantic coast of Guatemala. Lucy Goodman translated and summarised articles about the deal from La Prensa Gráfica (by Melissa Pacheco, 28.01.20) and El Economista (29.01.20), and Martin Mowforth added various commentaries on these for The Violence of Development website.

March 2020

Key words: El Salvador – Guatemala integration; Atlantic port; security cooperation; domestic flights.

El Salvador and Guatemala plan to eliminate the border initially for the passage of persons and later for freight. They have also re-defined flights between the two countries as ‘domestic flights’.

(Melissa Pacheco) The presidents share the announcements between themselves about the removal of the border for the transit of people and goods.

The Guatemalan president offered a concession to create a public-private partnership as the means to enable completion of a Salvadoran port on the Atlantic coast. Land from the Santo Tomás de Castilla National Port Company (Empornac) will be ceded to El Salvador for this purpose. The area to be ceded is known as El Arenal (or The Quicksand) and currently serves as a depot for containers. Last year (2019) Empornac carried out technical studies to determine the feasibility of constructing a pier to accommodate dredgers and cruise ships there.

“We have offered El Salvador something unprecedented in the history of Central American integration and today I want to announce it publicly because we’re going to explore, as soon as possible, the possibility of El Salvador having a port in the Guatemalan Atlantic. We will deliver this Project as a public-private partnership so that El Salvador can develop it. It is an offer that we have made to El Salvador, we consider it to be the right thing to do,” Giammattei announced at a press conference that took place at the Presidential House.

He added that he had spoken with the authorities of SICA (Sistema de la Integración Centroamericana / Central American Integration System) in order to receive the support of the institution in the implementation of the project. He also announced that he made a firm pledge to officially de-categorise flights between Guatemala and El Salvador to ‘domestic’. This comes as part of the initiatives to improve integration in the region.

The Guatemalan Minister of Economics, Antonio Malouf, confirmed that a legal-technical analysis for ceding the land of Empornac will be carried out.

“Basically, it would be our entry to the Atlantic. Our goods will have the power to go from the Atlantic and enter from the Atlantic. I believe what we’re doing is making a real union that is going to spread to other countries in Central America that will want to unite and do similar,” declared the Salvadoran President.

Apart from the possible construction of the Salvadoran port on the Guatemalan coast and the re-categorisation of flights, the leaders announced that in one month they hope to have removed the border for the passage of people and within three or four months the barriers for goods between the two countries.

“We have to sign papers where we can eliminate the customs on goods respecting that goods entering El Salvador and destined for Guatemala have already paid taxes in El Salvador and do not have to pay them in Guatemala and those that have entered Guatemala destined for El Salvador do not have to pay them in El Salvador. We believe it will take us about three months,” the Guatemalan president declared to the media.

The elimination of the borders for the passage of people also requires the implementation of a bi-national arrangement on security. “If someone passes from Guatemala to El Salvador evading an arrest warrant, they will not be evading anything because we are going to have the same approaches in both countries,” Bukele stated.

Giammattei referred to their intention to apply similar security sanctions, one of which was to standardise the criminal codes in both countries. In the language he used to explain this part of the agreement, Giammattei betrayed his profoundly hateful and hardline understanding of crime in society. “Standardising the penalties, the sanctions, the punishments, so that when they spray ‘Baygon’ here the cockroaches do not go there because they think that there they will find it easier, and when they spray ‘Baygon’ the cockroaches won’t come here, as the law will be the same for the two countries,” said the new president

Moreover, he said that they had been monitoring Bukele’s Territorial Control Plan (PCT), the main commitment of the Salvadoran Government to improve security conditions, and he (Giammattei) did not rule out implementing some of the same sanctions in Guatemala.

The Organised Crime and Corruption Reporting Project (OCCRP) is a global network of investigative journalists specialising in crime and corruption. It publishes its reports in English and Russian and its website is at: https://www.occrp.org  On 31^st October the OCCRP released a report on The Central American Bank for Economic Integration (CABEI). The full report can be found at: https://www.occrp.org/en/the-dictators-bank/the-dictators-bank-how-central-americas-main-development-bank-enabled-corruption-and-authoritarianism , but a summary of the key points and the report’s introduction are given here for The Violence of Development website. OCCRP credits are given as follows.

Credit: James O’Brien/OCCRP

by Eli Moskowitz (OCCRP), Jonny Wrate (OCCRP), Madeline Fixler (Columbia Journalism Investigations), Bill Barreto (No Ficción), Ernesto Rivera (Lado B), Daniel Valencia (Redacción Regional), Andrew Little (Columbia Journalism Investigations), and Mariana Castro (Columbia Journalism Investigations). Data by Romina Colman (OCCRP). Research by Angus Peacock (OCCRP)

31 October 2023

The Central American Bank for Economic Integration was created (in 2006) to give the region more control over its own development, but a new investigation by OCCRP and partners raises questions about the bank’s lending practices.

Key Findings

• CABEI has funded major infrastructure projects that have later been engulfed in scandal, where its loans were used to pay bribes, or seen as an easy source of cash by alleged conspirators.
• Internal audits obtained by reporters show the bank has ignored red flags when investing in projects, including lending money for hydroelectric dams even after violent crackdowns on protesters.
• In recent years the bank has begun giving out policy-based loans, a few-strings-attached type of financing that critics say is easily misused.
• In El Salvador, reporters found $200 million of one CABEI loan designed to support small businesses through the pandemic was diverted to fund the country’s ill-fated plan to make Bitcoin a national currency.
• CABEI has faced criticism for lending billions of dollars to Central America’s authoritarian governments, providing an important source of funding for the region’s authoritarian leaders as they committed widespread human rights abuses.
• Late in 2021, nine of CABEI’s directors wrote a letter warning of the bank’s worsening financial situation and raising transparency concerns. Financial statements show these indicators have declined since then.

In mid-November, the Central American Bank for Economic Integration (CABEI) will appoint a new executive president for the next five years. Whoever takes the helm of the region’s main investment bank does so at a key moment in its history.

While only a small player compared to global institutions like the World Bank, CABEI plays a vital role in channeling billions of dollars into its five founding states: Nicaragua, El Salvador, Honduras, Guatemala, and Costa Rica. The bank says it accounts for close to half the development finance in Central America, one of the poorest parts of the Western hemisphere.

CABEI played a critical role during the COVID-19 pandemic, when the bank gave over a billion dollars in loans and grants to keep its founders afloat. With all of these states’ sovereign bonds rated as “junk,” CABEI has become a lifeline to international financial markets — and a key source of funding for the region’s authoritarian leaders.

“It doesn’t matter what the politics are as long as poor people are getting services,” the bank’s outgoing president, Dante Mossi, said at an event in Washington, D.C., this year, as he faced criticism for providing funding to Nicaraguan dictator Daniel Ortega.

“The bank is not a political model,” Mossi told the assembled crowd.

Others disagree.

CABEI has been criticized for giving billions of dollars to Central America’s authoritarian regimes — led by Ortega, President Nayib Bukele in El Salvador, and the former president of Honduras, Juan Orlando Hernández. Now an investigation by OCCRP and partners can show the bank has funded projects that led to environmental destruction, and others where loans were diverted for corrupt practices or used to fund the pet projects of dictators.

Reporters spent more than a year investigating CABEI, combining open-source data with official investigations, leaked documents, and interviews with current and former bank employees. To get a clearer picture of the bank’s track record, reporters also compiled a database of more than 500 approved operations from the past quarter century. Together, they show how CABEI’s failures have enabled waste and corruption in one of the most unequal regions on Earth.