Can US anti-corruption efforts promote CentAm investment?

US anti-corruption efforts in Central America are set to intensify, aiming to create investment opportunities and reduce migration.

“The rule of law does promote foreign investment but Honduras and Guatemala and El Salvador in the near future could be spiraling out of control,” analyst Noah Bullock told BNamericas.

“Foreign investment in Costa Rica is close to triple that of the countries in the northern triangle,” he said.

Washington already determined the regional aid of US$4bn will not go to politicians, although the results of recent court and legislative elections have enabled El Salvador’s Nayib Bukele and Guatemala’s Alejandro Giammattei to consolidate their authoritarian styles.

Honduras’ President Juan Orlando Hernández (pictured) appeared in the recent drug trial of Geovanny Fuentes Ramírez, who was convicted for having paid bribes to Hernández in 2013. The president’s brother, Tony Hernández is due to be sentenced on drug charges next week.

“We are interested in a [constitutional] court that is committed to the country's justice, not focused on the interests of a small group of people," US official Juan González said at a press conference in Mexico. “We can be criticized for trying to get involved in Guatemala's internal issues, but when the judicial system works in countries like Guatemala, the US benefits.”

The backdrop to Guatemala’s constitutional court election is a special investigation into political operator Gustavo Alejos. Facing at least five corruption trials, Alejos is alleged to have tried to fix judicial elections with backroom meetings with politicians, judges and private players in a sanatorium where he was receiving treatment outside prison. 

Some US politicians have started to blame the migration crisis on Central America’s leaders. On a visit to the Texas border, lawmaker Norma Torres said, “this is a crisis created by the narco governments and corrupt and failed leaders of Guatemala and El Salvador.”

Anti-corruption and accountability entities like Guatemala’s CICIG or Honduras’ MACCIH were shut in 2019 and 2020, respectively, although El Salvador’s anti-corruption commission (CICIES) still operates. 

While Guatemala recently received a US$530,000 donation to tackle corruption, CICIG spent millions. 

But the US will publish the Engel List at the end of March, named after lawmaker Eliot Engel, which singles out “corrupt and undemocratic actors from El Salvador, Guatemala and Honduras who will be denied entry to the US.”

Bullock said, “the Engel list will have an impact. I think it’s a way for the US to signal who they think are leaders in the region that do not share democratic values and principles. It’s a demarcation line between people who undermine the rule of law and democracy and those who don’t.”

Guatemala’s former foreign minister Fernando Carrera told BNamericas “that the concept with which the US government wishes to operate is that of a regional commission to support anti-corruption entities within the prosecutors' offices (in Guatemala it would be in support of the FECI).” 

Carrera added that although the Engels list will have an impact, “it won’t be anything radical.” He expects a US government body, created with an executive order, will aid regional prosecutors, sidestepping commissions and provide them more solid foundations for prosecutors.

Bullock said the US is seeking allies that share its civil values.

Both experts agreed it will take time until anti-corruption efforts yield investment opportunities, provide jobs and reduce migration. The US faces a difficult diplomatic situation given that Bukele and Giammattei have both strengthened their power base.

“CICIG and MACCIH were useful in bringing in investors, it gave a focal point to rally resources, not just financial ones but human ones too,” said Bullock. “We need years of commitment and consistency of US policy, multilaterals and other international partners to create solid and consistent strategies toward the region.”

Photo credit: Honduras government