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THE PRISM


December 1998
January 1999

Stories Columns

What's really behind the ongoing disaster:
Destructive Economics at Work in Central America

by Mark Cook

Ironically, Honduras and Nicaragua are two of the less populated countries in Central America, but the peasantry has been driven up the hillsides and into other marginal land with fragile ecology by banana companies like Chiquita (formerly United Fruit) and Dole and other transnationals, or export-oriented landowners.

In the 1950s and 1960s the National Guard of the Somoza dictatorship kicked Nicaraguan peasants off the land in western Nicaragua to hand it over to the Somoza family and friends for cotton cultivation. This was praised as "development" by the US government and semi-official media in those years.

In Honduras, many peasants were forced into non-industrial cities like Tegucigalpa where they built shacks along the hillsides for lack of any alternative.

Central Americans do not have an adequate flood control infrastructure; they cannot afford it because they are saddled with a loan and interest racket overseen by the International Monetary Fund (IMF), which for years has, at the US government's behest, insisted on cuts in social and infrastructural spending.

The World Bank itself has stated that Central American governments need to make a social investment (health, education, potable water) of $120 per person per year in order to have any development at all. When the Alemán government came to office in 1996, the investment in Nicaragua had already been cut, at the insistence of the World Bank's sister organization the IMF, to just under $60 per person per year, less than half the minimum required. It is now estimated that social investment has shrunk to $32 per person per year.

Residents of the region lack decent housing and cannot afford any because they do not receive adequate pay for their labor on banana and coffee plantations or in maquiladora textile factories.

Central Americans who work on the plantations of Dole and Chiquita Banana are forced to buy what little they can afford at company stores, where the combination of miserable wages and overpriced goods drives them deeper and deeper into debt.

In reality, however, all of Central America is working in bondage to a company store: never paid enough for its labor or its produce, forced into a debt racket where the population works harder and harder for less and less money and the debt grows larger and larger every day.

The US policy of "lowering expectations in the region" could surprise only those, within Nicaragua and without, who still believed what they did during the years of the Sandinista government: that the US authorities want to make Nicaragua a subsidized "capitalist showcase" in the style of West Berlin, Taiwan or South Korea during the Cold War, or, worse, that "free market" economics would make Nicaragua, and Eastern Europe, economic success stories, something transnational capitalist planners have shown no interest in doing for the rest of Latin America. It has by now dawned on most Central Americans—and Eastern Europeans who opted for the "free market" promise—that transnational capitalist investors do not want to improve the economic conditions of those countries, that they want to keep wages, living standards and environmental safeguards low, as they have in Mexico, to conserve the friendly business climate.

There is an alternative to the destructive economic policies of the empire: a debt moratorium and an indexation of commodity prices. These were the demands of the Non-Aligned Movement for years, although news of these demands was absent from US media coverage of Non-Aligned Summits.

An indexation of commodity prices would be like Cost-of-Living Allowances, or wage indexation that existed for many years in Brazil. If the price of a number of industrial products, such as tractors and trucks, rises by a certain amount, the price of commodities like cotton, coffee and bananas would rise by a commensurate amount. In other words, workers would be paid a high enough price for their product that they would be able to feed their families.


Mark Cook, a free-lance journalist based in New York, covered the empire's Hot War on the poor in Central America during the 1980s.

 

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