A Step in the Right Direction? Trump’s “Aid” to Central America
Although the Trump administration pays little attention to the Americas outside of U.S. concerns with the “Troika of Tyranny,” the administration is taking a stance against immigration from the region into the United States and at combatting Chinese influence in the region. On December 18, 2018, President Trump announced a $5.8 billion aid package to Central America with the stated objective of stemming immigration from the Northern Triangle (Honduras, Guatemala, and El Salvador). This marks an important and positive shift in the Trump administration’s stated objective of cutting aid to the region and intends to encourage domestic development, thus eliminating the need for people to flee their homes. Although Trump announced his intent to reverse this policy only ten days later, the type of aid that the administration intended to provide to the Northern Triangle provides insight into the strategy and thinking of the administration.
President Trump’s announced aid package is not as generous as the administration claims and falls short of what is required to fulfill the administration’s limited objectives in the region or promote sustainable development in the region. A large portion of the aid—$750 million–was already allocated to the Northern Triangle through the Alliance of Prosperity. Although not without its faults, reports show that the Alliance for Prosperity has helped generate change in the region by combating crime, creating businesses, and increasing education. A further $3.5 billion of Trump’s announced “aid” comes in the form of loans, courtesy of the U.S. Overseas Private Investment Corporation (OPIC). These loans may encourage U.S. companies to invest in the region, but these types of loans will not generate the long-term sustainable growth that loans to the local private sector or general foreign aid could yield. While OPIC loans can create jobs in the region, much of the real need in Central America is in public sector reform and the provision of public services. Rather than creating meaningful change in the region, OPIC loans will benefit U.S. companies more than addressing the needs of Central American nations: large infusions of aid into the public sector to limit corruption, introduce police reform, enhance the education system, and address humanitarian issues.
The U.S. provision of OPIC loans is also deeply problematic given the administration’s position towards China’s role in the region. The United States widely condemns China’s use of “debt diplomacy” across the world, particularly within Africa and Latin America. However, these loans are not enough for the United States to compete with growing Chinese influence in the region. In fact, China provided more than $400 billion in foreign aid, government-sponsored investment activity, and loans to Latin America between 2000 and 2014. Trump’s harsh rhetoric towards migrants and Central American nations further provides openings for China to bolster its foothold in the region, particularly when Trump’s threats of cutting aid are in sharp contrast to China’s offers of aid to the region. The administration’s use of loans to private companies in the region to promote American business interests mirrors Chinese claims about their use of “foreign aid” and may help U.S. companies more than it promotes development in the recipient countries. In order for loans to have a meaningful impact on the development process, they should seek to promote recipient country business and innovation rather than support U.S. domestic political constituencies. This weakens the moral authority of the United States when it condemns Chinese actions, does little to promote sustainable development in Central America, and is not enough to combat growing Chinese influence in the region. Rather than paying lip-service to the problems with Chinese aid, the United States should use its foreign aid and loans to promote meaning sustainable development in Central America.
Central America is in turmoil and the Trump administration’s reversal on foreign aid cuts may be too little, too late. The administration should strive to bolster development in Central America, both because it is the right thing to do and to achieve its own objectives in limiting migration. Instead of a policy that would limit gang violence, encourage accountability in the judiciary, and promote economic growth, the Trump administration created an aid package with the intention of keeping immigrants at home but without sufficient funding even for this task. The package’s OPIC loans likely won’t promote the public sector in Central America or provide substantial opportunities for Central American companies. Moreover, the Trump administration’s current policy weakens the U.S. position in condemning similar Chinese policies, makes the United States appear as an unreliable partner to Central America, and highlights Trump’s “America First” mentality while doing little to create the policy change that the administration desires – creating a stable, secure, and prosperous Central America from which immigrants are less likely to flee. The United States should provide a sizeable and meaningful aid package to the Northern Triangle.
Editors Note: Adam co-wrote this piece with Wazim Mowla, a graduate student in History at Florida International University. His research interests include Guyanese public and foreign policy, U.S.-Latin American relations, addressing immigration crises, and identity politics. You can connect with Wazim on Twitter @WMowla or via LinkedIn.