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Kamala Harris taps private sector agreements to bring investment to Central America.

US Vice-President Kamala Harris flew into Guatemala on 13 June to deliver the message that the US wants to promote private sector investment in Central America in a bid to tackle irregular migration from the region, through Mexico, to the US.

A prominent Mexican businessman outlined the geopolitical dynamics, “The migration crisis is not new, and given the explosive autumn elections in Honduras and the special case of Nicaragua, which threaten to create new waves of migration, the White House is in a hurry to stop that threat. Hence Biden’s desperation and “his kind invitation to invest” to various corporations. Also, it wasn’t well received that Harris only landed in Guatemala, why not San Salvador, why not Tegucigalpa?”

“The migration crisis is not new, and given the explosive autumn elections in Honduras and the special case of Nicaragua, which threaten to create new waves of migration, the White House is in a hurry to stop that threat.”

Business executive, Mexico

During the visit, Harris announced a partnership between the region and 12 companies including Microsoft, Mastercard and Nestlé to support the Biden administration’s “inclusive economic development” initiative. The partnerships will include the development of telecommunications networks, the expansion of agribusiness trade and the promotion of financial inclusion. The State Department will also provide assistance to regional governments to remove investment bottlenecks and promote further partnerships.

Central American development experts see the US initiative as a starting point to improve living conditions in the region. However, larger amounts of foreign investment will be needed before immigration levels start to decrease, not least in local infrastructure. A regional economist commented, “The first investment should go to logistics infrastructure, there are roads in the region that should be covered in 4 hours but take 10 hours due to local conditions. Airports have improved but our ports are in desperate need of upgrading.”

Others were sceptical about the companies involved, “In the case of Microsoft, how can it have any impact when in many places there is an electrification deficit? The region needs to get the basics first, before it can bring the fireworks. Investment should be targeted towards small and medium-sized companies, that is where most of the employees are, what is the use of having investment from companies like Nestlé if they won’t recruit locally? Nestlé has been in the region for decades, what has changed?”

Another concern for regional businessmen is the risk that US investment comes at the expense of local companies. A Guatemalan executive explained, “Central America depends on the outside world, the region is not industrialised and is far from having a competitive agribusiness sector. These partnerships will just increase our dependence on others without improving our local capabilities. The list of companies is impressive, and will get headlines, but what will they actually deliver? Only time will tell.”

“These partnerships will just increase our dependence on others without improving our local capabilities.”

Agribusiness executive, Guatemala

An agribusiness owner in the region shared his concerns, “The authorities are under pressure to improve the economic situation but the region needs to work together to solve its problems, starting with an agreement for productive investment, rather than humanitarian aid. The region is ripe for natural disasters and aid is helpful but what we need is better civil protection policies, better escape and rescue plans and better quality construction. Only the Japanese are helping with this.”

“The reception has been lukewarm, people are saying ‘more of the same’. All the aid and investments are positive, but the US must remember that the Europeans, Chinese and Japanese are also investing in the region.”

Central American political analyst

This is an appropriate reminder that the US is no longer the only source of investment for Central America, according to a local political analyst, “The reception has been lukewarm, people are saying ‘more of the same’. All the aid and investments are positive, but the US must remember that the Europeans, Chinese and Japanese are also investing in the region. US politicians have been absent from the region for decades, especially since Clinton, and others have now come to fill that gap. If Harris is bringing the private sector, she is de facto acknowledging that there will be no funds from the US government.”

 

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