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Fact Sheet: Promoting Prosperity, Security and Good Governance in Central America

January 29, 2015

Today, the Administration announced that the President will request an historic $1 billion as part of his Fiscal Year 2016 Budget to contribute to the evolution of an economically-integrated Central America that is fully democratic, provides greater economic opportunities to its people, promotes more accountable, transparent, and effective public institutions, and ensures the safety of its citizens.

The President's request aligns the resources necessary to help the leaders of Guatemala, El Salvador, and Honduras implement systemic reforms that address the lack of economic opportunity, the absence of strong institutions, and the extreme levels of violence that have held the region back at a time of prosperity for the rest of the Western Hemisphere.

While the United States is investing significant resources, the success of this effort will depend far more on the readiness of Central American governments to continue to demonstrate political will and undertake substantial political and economic commitments to bring about positive change in the region. We are encouraged that the Central American governments – and the Northern Triangle countries in particular – have taken concrete actions to further this objective. This includes developing their own Alliance for Prosperity Strategy – unveiled on November 14, 2014 at the Inter-American Development Bank (IDB) – that commits resources to advance strategic goals in sectors such as education, energy, tax regulation and business regulations. They have also committed to promoting government accountability and reform and strengthening border management that will also focus on migration. As agreed to at the IDB conference, Central America, Mexico, Colombia, Chile, international financial institutions, the private sector, civil society, and other international partners have committed to promote regional prosperity through a sustained, well-coordinated plan to address longstanding challenges to economic growth in the region.

U.S. funding will support a whole-of-government approach to address three overarching lines of action: 1) Promoting prosperity and regional economic integration; 2) Enhancing security; and 3) Promoting improved governance.

Prosperity and Regional Integration

The United States will provide over $400 million of the $1 billion to promote trade facilitation, promote transport and customs/border integration, promote more efficient and sustainable energy, reduce poverty, enhance workforce development, facilitate business development and help small businesses create jobs, link Central American and North American markets, and strengthen Central American regional institutions.

Examples of current and planned activities include:

• Agencies will provide the region with trade facilitation, trade capacity building, and technical support to promote efficient movement of goods across borders in a safe and secure framework, support integration of regional value chains, and strengthen competitiveness to grow trade and economic prosperity and work to improve workers' rights and conditions. The export of goods to the United States from CAFTA-DR countries increased 66.7 percent since 2005, totaling $30.1 billion in 2013.

• The United States will continue to fund technical assistance to support electricity market integration, renewable energy development, power sector solvency, and resource planning to improve Central American citizens' access to clean, affordable, and reliable electricity. These efforts will help attract private investment in clean energy infrastructure and boost overall economic competitiveness.

• Bilateral technical and financial assistance will advance economic prosperity by reducing poverty, accelerating both business and rural development, improving education and workforce development, and strengthening resilience in the region. These efforts will include support for creating business environments friendly to entrepreneurs and for job placement for at-risk youth to increase the resiliency of vulnerable communities as well as to provide alternatives to the illicit activities that contribute to insecurity and undermine effective governance.

• The United States supports improved educational access and quality for under-served populations, including rural indigenous girls and boys in hundreds of rural schools, and expanded educational and vocational training opportunities for at-risk youth.
Examples of additional complementary efforts as part of our whole-of government approach include:

o Complementing our efforts, in September 2014, the Millennium Challenge Corporation (MCC) signed a $277 million Compact with El Salvador, designed to enhance the country's competitiveness and productivity in international commerce through a set of interrelated projects in investment climate (including regulatory and institutional improvements), education, and logistical infrastructure.

o The Overseas Private Investment Corporation has significantly invested supporting development across the Northern Triangle and is standing by to provide investors and project developers with financing and risk mitigation tools to make investments in the Northern Triangle more attractive. The U.S. Trade and Development Agency, in collaboration with the U.S. Department of Energy, is also supporting the planning and development of priority energy and transportation infrastructure projects in Central America.

Enhanced Security

The United States will advance regional security efforts by providing over $300 million to improve community security, promote police reform, continue defense cooperation, and attack organized crime. Examples of ongoing and future activities include:

• Continuation of the Central America Regional Security Initiative (CARSI), providing for security projects such as model police precincts (MPPs) in Guatemala, El Salvador, and most recently, in Honduras. MPP projects, which have shown success in targeted Central American neighborhoods, provide police training, facilitate community engagement, and prioritize the crimes of most concern to Central American citizens: gang extortion, robbery, and domestic violence.

• Preventing violence through Municipal Crime Prevention Committees that identify crime "hot spots" and implement community-led plans to improve security; working with faith-based organizations to provide at-risk youth with life skills, job training, and recreation activities; supporting civic groups to reclaim gang-controlled public spaces and improve basic infrastructure, such as street lights; and providing services at domestic violence assistance centers.

• Developing investigative and prosecutorial capacity to successfully prosecute cases through assessments, training, judicial cooperation and exchanges. Agencies are working with local counterparts to advance professional responsibility policies and procedures, and enhance collaboration among all parts of the criminal justice system, including police, courts, and corrections.

• Providing assistance to build partnerships that professionalize and improve the competency, capability, and accountability of security institutions, especially in the fight against transnational organized crime. This is accomplished through activities that include professional education, tactical and operational training and exercises, human rights programs and institutional reform activities.

Improved Governance

Nearly $250 million will strengthen institutions and enable governments to more effectively address the social, economic, political, and security problems they face. These resources will allow the United States to continue partnering with Central American governments as they make necessary reforms to their own institutions, and will draw on the expertise of the U.S. agencies and other stakeholders in the hemisphere to advance the reforms necessary to ensure the long-term effectiveness and impact of U.S. assistance. Our focus is to help Central American countries improve revenue collection and public sector fiscal management, increase the role and impact of civil society on governance, strengthen the efficiency, accountability, and independence of judicial institutions, reinforce democratic institutions, and target corruption. The following are examples of U.S. cooperation to improve governance capacity:

• The United States will help national and local governments to improve management of public funds; strengthen rule-of-law institutions to better administer justice, ensure due process, and protect human rights; and to increase local resilience to issues that can contribute to migration, especially stresses on rural agriculture.

• Technical and material support to national and regional civil society networks, including traditionally excluded groups and organization, to build capacity to serve as watchdogs and advocate around public policy issues. This will include technology to increase the capacity to document corruption, build monitoring and reporting networks and improve digital security of civil society organizations and the media.

• Supporting Central American governments to create a competent civil service workforce that provides executive branch continuity and services to citizens to and help develop and modify current practices in delivering government services to reduce opportunities for corruption and to comply with international standards.

• Complementing these efforts, in December 2014, the MCC finalized a Threshold Program with Guatemala which will focus on policy and institutional reforms to improve the quality of secondary education, including technical and vocational education and training. The program is expected to also help the government to mobilize additional revenues through more efficient tax administration and public-private partnerships. In 2013, MCC and the Government of Honduras signed a $15.6 million Threshold Program Agreement designed to promote good governance practices in Honduras.

Barack Obama, Fact Sheet: Promoting Prosperity, Security and Good Governance in Central America Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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