The Honduran president is accused of stealing money from government coffers and accepting bribes from drug traffickers. The Guatemalan leader is known to have made government contracts with friends of the family. El Salvador’s president shut down the country’s internationally-funded anti-corruption agency and extended politicians’ immunity from prosecution.
“Eradicating” corruption in Central America is key to restoring hope and opportunity to the region and persuading its citizens to stay at home, the Biden administration said. Yet to make a real difference, we must not only confront the symptoms, but also the political and economic systems that are forcing hundreds of thousands of people to leave their countries of origin. This thorny task involves confronting the ostensible partners of the United States, the governments of the region, who are more of a problem than a solution.
From constant small bribes to massive public fraud, corruption runs deep in Central America. None of the Northern Triangle countries of El Salvador, Guatemala or Honduras make it into the top 100 of Transparency International’s Corruption Perceptions Index. Corruption in these countries takes a heavy economic toll: the region loses $ 13 billion, or more than 5% of gross domestic product, each year.
Like their leaders, the economic elites of Central America are not inclined to clean up. Government favor has made many people very rich, and the tax burden is low and easily dodged: Tax revenues in the three Northern Triangle countries are lower than the 2019 average of 22.9% of GDP in Latin America. and in the Caribbean; in this regard, Guatemala has the lowest tax revenue in the region, a meager 13.1%. Instead of taxes, migration-fueled remittances, which reach around 20% of GDP in El Salvador and Honduras, meet many basic needs.
So what can the US government do? For starters, he can make sure that his foreign aid doesn’t fall into the wrong hands. We know what works. A wide range of economic development, violence prevention and youth-focused programs have shown promise in changing the daily realities on the ground and the calculations of potential migrants. But the money must go to people and communities at risk, not the bank accounts of greedy politicians. Where possible, US funds should go directly to NGOs, civil society groups, and parts of the private sector who will use them transparently.
Second, the United States must step up its efforts to dismantle corrupt systems on its own. This means funding international anti-corruption investigative bodies that have been proven to bring real change, and which governments in the Northern Triangle have repeatedly sought to undermine. The United States should help create much-needed watchdogs – requiring, for example, that governments or organizations hire technical advisers and hold inspectors general accountable in departments that receive US money.
The reach of American law is long. It’s time to use it in Central America, leveraging national legal tools and courts to ensure justice is done. Much of Central America’s ill-gotten gains pass through the American financial system or are enjoyed on American soil as criminals take vacations, buy homes, or educate their children. They shouldn’t find such a port here. Their visas should be canceled and they should be sanctioned. The promulgation of lists of Northern Triangle officials suspected of corruption – the so-called “Engel lists”, named after their legislative sponsor, former Congressman Eliot Engel – should be stepped up and exploited for diplomatic pressure. The US Treasury Department’s Financial Crimes Enforcement Network, FinCen, is expected to put its tracking expertise to work for Central American illicit networks. The Department of Justice should use its jurisdiction through the Foreign Corrupt Practices Act, the Kleptocracy Asset Recovery Initiative, and other tools to build and prosecute cases.
Certainly, past American interventions in Central America have had a dark side. And some in Congress have questioned whether this administration’s plans would end up wasting more taxpayer dollars. Yet these enhanced actions will not be on the side of repressive governments and corrupt elites. Instead, they have the potential to harness the economic and legal might of the United States to support the millions of citizens who want their homeland to be freer, fairer, and more prosperous. Their desire for change is so strong that tens of thousands of people have taken to the streets repeatedly, despite the dangers of speaking out. The United States must intervene forcefully on the right side of history. The added benefit? Fewer Central Americans will feel compelled to make the perilous journey north.
(Shannon O’Neil is a senior fellow for Latin American studies at the Council on Foreign Relations in New York.)