ECONOMY: No Transparency, No Aid for Central America, Donors Warn

By Thelma Mejía Reprint | | Print |

Thelma Mejia

STOCKHOLM, May 25 1999 (IPS) - Donors meeting in the Swedish capital conditioned their aid to hurricane-ravaged Central America Tuesday on a minimum level of transparency, participation by civil society and the decentralised management of funds.

The gathering of the ‘Consultative Group for the Reconstruction and Transformation of Central America’, sponsored by the Inter- American Development Bank (IDB) and the Swedish government, began Tuesday to discuss support for the reconstruction of the four countries hit by hurricane Mitch.

Mitch, considered the worst Atlantic storm in perhaps 200 years, killed more than 10,000 people and left millions homeless in late October and early November last year. The two hardest-hit countries, Honduras and Nicaragua, suffered losses equivalent to 77 and 44 percent of their 1997 gross domestic products respectively.

Guatemala and El Salvador were affected by the storm, although to a lesser degree. Donors are also considering aid for Costa Rica, which accepted thousands of refugees in the wake of the hurricane.

Central America hopes to obtain some six billion dollars in aid. But donors and creditors warned in Stockholm that reconstruction was not only a question of building bridges and roads, but also of guarantees of equity and sustainability for 38 million inhabitants.

The region is facing a historic opportunity to give a new impulse to its integration process, which has come to a virtual standstill, in such a way as to enable insertion into today’s globalised world of free trade, they added.

IDB president Enrique Iglesias, Swedish Prime Minister Goran Person, and the secretary-generals of the United Nations, Kofi Annan, and the Organisation of American States (OAS), Cesar Gaviria, inaugurated the four-day conference in Stockholm Tuesday.

Speaking in the name of the donors were European Commission Vice-President Manuel Marin and Heidi Mari Wleczorek-Zeul, with Germany’s Ministry of International Cooperation. Germany currently holds the rotating presidency of the European Union.

The clarity of the speeches by the donors, who demanded transparent management of aid funds, contrasted with the vague addresses delivered by the representatives of the Central American governments, especially those of presidents Arnoldo Aleman of Nicaragua and Carlos Flores of Honduras.

Aleman and Flores are the only presidents taking part in this week’s gathering. The rest of the Central American countries are represented by their vice-presidents.

The two presidents once more recalled the tragedy of hurricane Mitch, and referred to the financial aid urgently needed by their countries. But they failed to mention their governments’ commitment to reconstructing the region based on the principles of transformation, effectiveness and efficiency, according to observers.

Aleman, nevertheless, expressed his support for the mechanisms of transparency and oversight demanded by donors, and proposed the creation of an independent regional mechanism to analyse, monitor and oversee management of the funds agreed in Stockholm.

Flores, meanwhile, repeated a large chunk of the same speech he delivered five months ago in Washington, at the IDB-organised conference that led to the scheduling of this week’s meeting.

Through Iglesias, the IDB pledged more than three billion dollars over the next four years for Central America, which was hit by “the worst natural tragedy” seen in recent times.

“The priority is quick recovery and reconstruction from the devastation caused by hurricane Mitch,” said Iglesias. He stressed, however, that the urgent nature of the matter must not shunt aside criteria for good governance.

Conservation of the environment and poverty alleviation must take priority among the reforms undertaken, he added, with his gaze fixed squarely on the Central American leaders.

Iglesias also urged the governments to get involved in a more in-depth process of regional integration by focusing their attention on existing hurdles to intra-regional trade and joining forces to negotiate greater access to global markets.

Person said that although the nations of Central America now had democratically-elected governments, the challenges of poverty and environmental degradation had become even more pressing.

The prime minister said Sweden would cooperate with Central America’s reconstruction and transformation, not only as a question of an emergency commitment, but in the long-term as well, based on openness, transparency, democracy and participation by civil society.

He added that the governments in the region must strengthen democracy and promote effective decentralisation and greater transparency – which he described as the basic building blocks of real development.

Annan said hurricane Mitch should be regarded as a historic opportunity for building a better, more sustainable and balanced future.

We must support this “silent transformation” undertaken by the countries of Central America, particularly Honduras and Nicaragua, which have stoically indicated their determination to get on despite the tragedy, he emphasised.

Marin said Europe was prepared to generously increase its aid to the region, but only under clear conditions of transparency and decentralisation.

“If there is something that must be made clear, it is that post-Mitch reconstruction should be viewed as transforming, rather than repeating the errors of the past,” he underscored. “The European Union sees Central America’s reconstruction as going beyond the merely technical. We see it as an opportunity for strengthening the state of law.”

The EU official said his bloc foresaw a four-year plan to accompany the transformation process and support small and medium companies, health and education, as well as active participation by civil society in putting forth proposals, decision-making and launching initiatives.

More than 400 delegates of governments and donor nations, representatives of international lending institutions and non- governmental organisations, and reporters and activists are taking part in this week’s meeting.