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Price of Free Trade: Famine
22 March 2002
Central America is in the grip of famine, and if President Bush mentions it when he visits El Salvador on Sunday, he will likely suggest that free trade is the solution.
Yet Bush's proposed Central American Free Trade Agreement is hardly going to remedy the worsening disaster in rural Guatemala, El Salvador, Honduras and Nicaragua. Unregulated markets are a large part of the reason why 700,000 Central Americans face starvation and nearly 1million more suffer serious food shortages.
Hardest hit are coffee plantation workers and maize farmers. Coffee prices have spiraled downward since the 1989 collapse of the International Coffee Agreement, which assigned countries production quotas. In the past few years, prices plummeted further with a surge in exports from Vietnam and Indonesia, where the World Bank encouraged expansion of coffee acreage. With the market glutted, many coffee farmers did not bother to harvest this year. The result has been evictions from plantation housing, increased migration to teeming slums and severe hunger among unemployed coffee workers.
Maize farmers too have been feeling the free-market squeeze. Since 1992, Central America has had intra-regional free trade in grains and almost no tariff protection against low-cost imports. Forced to compete with highly subsidized U.S. farmers, many Central American farmers have abandoned food production, gone bankrupt and lost their land.
Some of Central America's most conservative figures--Guatemalan President Alfonso Portillo and Nicaraguan Cardinal Miguel Obando y Bravo--acknowledge that the intensity and suddenness of the food emergency make it a famine, worse than the hunger characteristic of the region.
Famine is always rooted in economic policies and political decisions, as Amartya Sen, the 1998 Nobel Prize winner in economics, has long maintained. Sen also points out that famines do not occur in democracies, where contested elections and vigorous journalistic oversight force policymakers to try to prevent occurrences that might threaten constituents or allow opponents to make political hay.
U.S. policymakers should ask, then, what the widening famine says about Central American democracy, for which Washington spent billions of dollars and waged three proxy wars during the 1980s.
Apparently, the gap between rulers and ruled in the four affected countries is so large that policymakers feel little pressure to address the crisis. No wonder polls show that a mere 35% of Hondurans, 24% of Nicaraguans, 21% of Salvadorans and 16% of Guatemalans say they are "satisfied" with how democracy functions in their countries.
Right now, tens of thousands of Central Americans are heading north. In contrast to the 1980s and early 1990s, most are not escaping war and repression. Many are abandoning farms that failed because of globalized trade and the dumping of U.S. grain. Others are fleeing liberalized interest rates so high that they have no hope of ever starting a small business. Still others are trying to escape life in the free trade zones, where factory owners enjoy huge public subsidies and workers face immense obstacles in organizing for a living wage.
Central American land could produce decent living standards for small farmers if they could obtain small-scale irrigation systems, better access to land, secure title to property, low-cost credit and shelter from unfair competition and the ravages of global market forces.
These measures would give even the poorest of the poor a stake in their societies, but they would require elites to take popular needs seriously. Public sectors eviscerated by privatization and budget cuts can't address the inequalities that globalization generates.
Rural Central Americans are already reeling after a decade or more of free-market reforms. President Bush's trade proposals could be the knockout blow.