Donors Plan Central America's 'Transformation' (fwd)

[Robert Weissman <rob@essential.org>]

Title: ECONOMY: Donors Plan Central America's 'Transformation'

By Abid Aslam

WASHINGTON, May 24 (IPS) - Donors and creditors are holding talks
this week on Central America's 'reconstruction and transformation'
following the devastation of Hurricane Mitch.

More than 9,000 people were killed and millions were rendered
homeless when the storm struck last October. Entire crops were
wiped out and towns remain without basic services such as water
and electricity. Roads, bridges and ports were destroyed, bringing
commerce to a standstill throughout the region.

The 'Consultative Group for the Reconstruction and
Transformation of Central America' meets in Sweden Tuesday through
Friday. The Washington-based Inter-American Development Bank (IDB)
assembled the group here last December and is leading this week's
sessions.

Donors and creditors aim ''to foster sweeping reforms in the
region to rebuild its economies, strengthen its democracies and
overcome its legacies of poverty and inequality'' in Honduras,
Nicaragua, Guatemala and El Salvador, according to an IDB
statement.

They also are considering aid for Costa Rica, which opened its
borders to thousands of refugees after the hurricane.

In December, the group pledged some 6.2 billion dollars in
humanitarian aid, moratoria on old debt repayments, and new loans.

That is roughly what it would take to restore the countries to
their condition before Mitch struck, according to Miguel Martinez,
the IDB's regional manager.

''If you had an obsolete water-treatment plant before Mitch,
this would be enough to let you replace it with another equally
obsolete one,'' Martinez says. ''What is actually needed is much
higher.''

This week's negotiations are being held behind closed doors as
international and Central American non-governmental organisations
(NGOs) seek to open the 'transformation' process to broader
participation.

That is a daunting task. ''Donors are open to local groups'
input on local priorities and projects but no one's really
interested in letting them set national development priorities,''
says Geoff Thale of the non-governmental Washington Office on
Latin America.

As a result, demands for progressive reforms in land ownership,
domestic credit, and wage policy likely will be given short
shrift, officials and observers warn.

Rather, negotiations are being based on national reconstruction
plans drawn up by each government, says Martinez.

''A number of donors consider the plans too general and short
on substance in the key areas of transparency, participation and
environmental sustainability,'' says Thale.

''Many citizens' groups get to meet with their governments and
say what they think but it all goes down a black hole,'' he adds.
''Donors have heard complaints about this and should call for very
specific mechanisms to ensure that reconstruction plans are
transparent and based on partnership with civil society.''

The Nicaraguan government withheld its plans from the public
until early this month, when it was ready to submit them to donors
and creditors. Honduran groups did not see their government's
proposals until officials at the IDB handed them a copy during
talks here last month.

Although that has donors worried, ''they're going to pump in
more money than Central America has seen in years and more than
they're likely to see in years,'' says Thale. ''Governments and
civil society alike will be stretched'' to manage the influx of
funds and expectations.

While donors are pushing for more grassroots participation,
they have made it clear that there will be no change in the
official vision of development as a means to integrate the
countries into global markets in goods, services, and finance.

''We want to prepare the countries of Central America for the
competitive global economy of the 21st century,'' chief U.S.
delegate and Undersecretary of State Stuart Eizenstat declared at
the consultative group's December meeting.

The US Senate last week approved almost one billion dollars in
relief and reconstruction assistance but the administration of
President Bill Clinton has not been able to offer the region
trading privileges equal to those enjoyed by Mexico under the
North American Free Trade Agreement (NAFTA).

'NAFTA parity' has been a key demand of Central American
leaders and ''needs more attention,'' says IDB President Enrique
Iglesias. ''These countries need special treatment.''

Also high on the agenda are reforestation programmes and other
environmental measures to reduce the countries' vulnerability to
natural disasters, says Robert Kaplan, regional environmental
chief at the IDB.

All of which will cost money. Officials at the International
Monetary Fund (IMF) say they are taking into account the
hurricane's devastating effects in setting public-spending and
other macroeconomic targets with affected governments - but add
that fiscal and monetary discipline must be maintained.

Maximum flexibility will be needed if the countries are to meet
increased social needs and, in the longer run, improve health,
education, unemployment and other 'social safety net' programmes,
says Lionel Nicol, the IDB's chief of social programmes for
Central America. (END/IPS/aa/99)

Origin: ROMAWAS/ECONOMY/
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