Global pressures on Central America

Whilst Central America is the stage for the case studies and examples, the theme of development is a general one which applies to other regions of the world too. Since President Truman introduced the race for development in 1949, western style development has been inextricably linked with the need for economic growth. Even now, when the predominant system of development is facing financial meltdown and the planet is facing environmental catastrophe, a majority of scholars exercise their minds in the attempt to find the most appropriate way of achieving a form of economic growth that will reduce human poverty and inequality and ensure development for all. These scholars and practitioners of development include Fukuyama, De Soto, Sachs, Sen, Easterly, Collier, and Moyo. Various thinkers of renown and critics of neoliberalism, such as Stiglitz, Shiva, Klein and Khor, have questioned this emphasis and see the pursuit of ever greater economic growth as the villain of the piece. They have had some success in academia, the liberal media and with the anti-globalisation movement, but little effect in practical and political terms on a global scale and in terms of making progress in preventing the major environmental threats facing the planet.

The development of Central America has exercised the minds of many other non-Central Americans over the last few decades, not least employees of the World Bank, IMF, various US agencies such as the US Agency for International Development (USAID), the National Endowment for Democracy (NED), the Drug Enforcement Agency (DEA), and the European Union. US agencies such as these take it as standard operating procedure that they should interfere in Central American elections and fund Central American political parties which support US positions. This is often done in contravention of international law and is always done against the spirit of free and fair elections. This distortion of the idea of democracy offers us a perverted view of development, and is yet another illustration of how development is dictated by a western, specifically US, agenda, imposed as a top-down model of development, violently if necessary.

The prevailing model of development today is that of neoliberalism or neoliberal economic development. It has been so since Ronald Reagan outlined its essence in his ‘magic of the market’ speech at the 1981 North-South Conference in Mexico. There, neoliberalism was characterised by the dominance and application of free market principles and trickle-down growth. Neoliberalism sees development as a single linear progression of economic growth and wellbeing, often portrayed as a series of steps or stages (such as Rostow’s The Stages of Economic Growth[i]) to the promised land of a developed state. There is an almost universal acceptance that there can be no ‘development’ without economic growth and no economic growth without free trade, an equation that commands near universal respect but which Gilbert Rist warns us we should question.[ii] Given that neoliberalism is the prevailing model of development, it is impossible not to associate it with the violence which characterises so many of the ‘development’ projects which are witnessed in the following chapters of this book.

Many more have joined the debate about ‘development’ since the Thatcher-Reagan axis took the direction of development along the neoliberal lines of the Washington Consensus[iii], a direction which, at a macro scale, is still largely followed today despite the recent financial crisis that it has suffered. Indeed, it is interesting to note that the IMF (which must be held at least partly responsible for leading the world into the financial crisis) has been put in charge by the G8 leaders of recovering from it, an appointment that does not bode well for the acceptance of progressive ideas and experimentation with alternatives.

It is of interest to note the results of the socialist and social democratic governments that have arisen over the last ten to fifteen years in Latin America. Before the 1980s, such movements would have been undermined, subverted and put down by the violent hegemony of national oligarchies supported by the United States. These days such tactics are much less likely to be employed, but they are still far from dead and buried as was shown by the coup d’état in Honduras in 2009 (see Chapter 9). Rather, the new left and centre-left governments have been allowed to follow their own chosen route of development with the western powers feeling relatively safe in their belief that there is only one route available and that is the route dictated by the IMF, World Bank and World Trade Organisation (WTO), namely the Washington Consensus.

There is no doubt, however, that neoliberal economic development has come to be reviled by large sectors of the population since the onset and continuation of the 2008 financial crisis. As Seumas Milne puts it:

A voracious model of capitalism forced down the throats of most of the world for the last 20 years as the only acceptable form of economic management, at a cost of ever-widening inequality and devastating environmental degradation, has now been discredited.[iv]

Milne refers to “the tide of progressive social change that has swept Latin America” as a “globally significant shift”.[v] I should like to agree that we are on the cusp of a major global shift away from the single, prevailing, imposed model of neoliberalism, but I believe that such a judgement may be a little premature. An indication of the limited options available to the recently elected and relatively progressive Third World governments is the growing rift that is forming between the social movements which have supported those new and progressive governments and the new governments themselves. This rift was shown at the Americas Social Forum held in Paraguay in August 2010. In many of the sessions the social movements condemned the progressive governments on the grounds they were continuing with an economic model based on extractive industries such as opencast mining and the monoculture of genetically modified crops like soya and sugar cane for fuel. The debates focused on the ‘commons’, such as water and biodiversity, which continue to be appropriated by multinationals, undermining the food sovereignty of the people.[vi]

Whilst the grassroots clamour for alternative development routes is still growing, there is limited evidence that governments are responding accordingly. But despite this continuity of neoliberal economic development, even those who retain their faith in neoliberal economics now recognise that it has failed to produce the development of humanity in a good number of countries – witness Collier’s book ‘The Bottom Billion’, and Moyo’s ‘Dead Aid’. As Eduardo Galeano states, “Despite its deceptive splendours, this development is a banquet to which few are invited and whose main dishes are reserved for foreign stomachs.”[vii]

[i]   Rostow, W. (1960) The Stages of Economic Growth: A Non-communist Manifesto, Cambridge: Cambridge University Press.
[ii]   Op.cit. (Rist, 2008).
[iii]   The Washington Consensus – a set of economic principles that emerged from the US government, IMF and World Bank as an international geopolitical regime.
[iv]   Seumas Milne (30 December 2009) ‘A decade of global crimes, but also crucial advances’, The Guardian, London.
[v]   Ibid.
[vi]   The Guardian (17 August 2010) ‘New rifts in Latin America, but no confrontation’, The Guardian, London,
[vii]   Eduardo Galeano (1973) Open Veins of Latin America: Five Centuries of the Pillage of a Continent, London: Monthly Review Press.