Central America Slips From Policy Agenda Into Poverty : Development: No longer a Cold War hot spot, most of the region has declined under relative U.S. neglect.

The prostitutes stalking the streets that ring the volcanic hills and craters of this gritty capital are young--very young. Some have barely reached their teens. Some say they are selling sex to feed their starving siblings. Some say they were sent to this job by their unemployed, single mothers.

“I try to help them,” says Father Xabier Gorostiaga, rector of the Jesuit University of Central America. “I tell them I can give them a scholarship to the university. But they say, ‘I already have a scholarship to the university. A scholarship, I can’t eat.’ ”

The prostitutes of Managua--like the street urchins of Tegucigalpa and the trash-dump dwellers of San Salvador--are only symptoms of an increasingly visible poverty in Central America, made worse by a decade of war, corruption, misspent American aid and, critics say, misguided U.S. policies.

“In reality, the majority of (American) aid was wasted in the military field,” Honduran government adviser Manuel Acosta Bonilla said of the billions of dollars spent in Honduras and in much of Central America. “It produced nothing. It did nothing to help development. The decade of the 1980s was one huge step backward, economically and socially. It was a lost decade.”

As Central America slips from its place of prominence on the United States’ policy agenda, the region--with notable exceptions--is also sliding deeper into poverty and social inequity. Despite substantial progress in achieving political democracy in Central America, millions of the region’s people do not have potable water, health care or enough food to ward off hunger and disease.

Countries such as Honduras and Nicaragua, by objective measures, are poorer today than they were 20 years ago, before the United States shoveled its billions of dollars into the region. Despite more than a decade of war, El Salvador, by contrast, is faring better than its neighbors, but soaring prices and unemployment pose a danger to economic stability. Even Panama, traditionally comfortable by Central American standards, faces a widening gulf between rich and poor, following an American invasion to oust a military dictator; Panamanians are struggling to cope not only with that disparity but also with a round of strikes, drug abuse and social unrest.

“Things are supposed to be better now, but where is the better?” asked Maria Luisa Tunon, a Panama City street cleaner and mother of five who recently led a strike to demand an increase in her $150-a-month pay. She echoed the lament of many of the poor and unemployed in her country, where impressive economic growth in the years since the 1989 invasion that ejected Gen. Manuel A. Noriega has failed to trickle down to the underclass.

Shrinking Economies

In contrast to the trend in much of Latin America, the economies of Nicaragua and Honduras shrank between 1985 and 1991, the World Bank reports. Nicaragua in that period was engaged in a war with U.S.-financed rebels and endured economic mismanagement by the leftist Sandinista government, so its decline is not surprising; Honduras, on the other hand, was receiving hundreds of millions of dollars from Washington and was only peripherally involved in the region’s conflicts.

El Salvador, despite its war, showed growth in its economy over the same period and today is enjoying a boom in construction and commerce. Besides U.S. financing, the Salvadoran economy receives a Gargantuan boost from Salvadorans living in Southern California and other parts of the United States who send home an estimated $700 million or more annually.

After Haiti, Nicaragua is now the poorest country in the hemisphere, followed closely by Honduras, according to World Bank and other measures. More than two-thirds of the population in Nicaragua and Honduras lives in poverty.

Isabelle Bol, a Dutch medical student, sees the poverty in the sunken-eyed children crowding the sparse beds of La Mascota Children’s Hospital in Managua, the Nicaraguan capital. Many will die of hunger that starts with diarrhea and is often compounded by pneumonia, measles or meningitis by the time the child succumbs, she says.

“Because of the malnutrition, they get infected easier,” Bol says, noting that, at best, the poor can afford occasional meals of rice and beans but nothing more. Sickness also spreads because families cannot afford the wood or other materials needed for fires to boil and sanitize water.

Many parents do not have the money to take a bus to the hospital, nor can they afford time off work, if they have a job. Saving a dying child sometimes means other children at home will go hungry, Bol says, and sometimes the choice is to allow the child to die.

“If they don’t work, they don’t eat,” she says, “and if they have children, they have to weigh which is more important, taking a child to the hospital or feeding the six or seven children at home.”

At the same hospital, where there is an acute shortage of medicine, staff and supplies, Dr. Roberto Galan says parents have resorted to stealing sheets for later resale. “The people steal about 300 sheets a week” from the hospital, he says. “It is the very crisis of the country. . . . People have to eat, they have to feed their children. They don’t have anything with which to buy food, so they steal sheets to sell them. . . . The people steal to survive.”

Survival is also what drives girls and young women into prostitution, which existed throughout the Sandinista period but never thrived so openly as now.

The United Nations, which annually ranks countries by a “Human Development Index,” reports that all of Central America--with the exception of perennial oasis Costa Rica--declined in the first three years of this decade. The index charts poverty, health statistics, social conditions and other economic indicators.

In Nicaragua, for example, per capita income has fallen to $420, a fifth of the average for Latin America and the Caribbean. The death rate for children younger than 5 is considerably higher in Nicaragua, El Salvador and Honduras than the average for Latin America and the Caribbean.

U.S. Aid Curtailed

As Washington emerged from the Cold War and lost interest in Central America’s strategic position in the world, it also began to slash the money headed south. Some Central Americans, worried now whether their region can compete in the global market, look with perplexity at the past, recalling that amid war, at least the U.S. money flowed freely.

For El Salvador, two Republican administrations spent an estimated $6 billion to shore up civilian governments and build an army to wage war on Marxist guerrillas. In El Salvador’s 12 years as one of Washington’s principal client states, the money was steady, with only nominal requirements to be met.

Since the changeover this year to a Democratic Administration in Washington and the end of the civil war, El Salvador has seen its aid abruptly halted or frozen twice in just six months, as the U.S. government sought to exert pressure for a number of reasons.

Washington suspended $11 million in military aid last March in an effort to force then-Defense Minister Gen. Rene Emilio Ponce to resign. Ponce, once the darling of U.S. officials, was implicated by two U.N.-sponsored panels in the murder of six Jesuit priests and other human rights crimes, but he was resisting demands that he be removed.

And in August, the U.S. Congress placed a hold on as much as $70 million in aid to El Salvador because of the national Election Tribunal’s failure to improve its voter registration program for next spring’s presidential race.

Critics have accused the U.S.-financed tribunal, controlled by the ruling right-wing Nationalist Republican Alliance party, of making little effort to register more than 700,000 disenfranchised Salvadorans--almost 30% of the eligible electorate--because they might support the left. The deadline for registration is Nov. 20.

Honduras probably stands out as the shining example of misspent U.S. money, critics say. With the exception of a few new roads that lead to the camps formerly used by the U.S.-backed Nicaraguan Contras and to U.S. military installations, and a handful of other projects, there is little to show for the nearly $2 billion in American taxpayer money spent in Honduras during the last decade.

Much of the money, U.S. officials now concede, lined the pockets and bank accounts of the Honduran military, one of two armed forces in Central America (along with Guatemala’s) that have yet to make substantial cuts in their size, despite the end of regional conflicts. Honduran generals today all but flaunt their wealth.

“We never asked Honduras to do anything except to be a base for the Contras,” former U.S. Ambassador Cresencio Arcos said in an interview in Tegucigalpa, the Honduran capital. “They were close allies. . . . Maybe they didn’t use all the money the way we wanted, but the place stayed afloat.”

Indeed, officials of President Rafael L. Callejas’ government point proudly to the three free elections held in the last 12 years in Honduras as a sign of how U.S.-backed democracy is flourishing.

But politicians, analysts and diplomats say Honduran democracy is still very much influenced by an army built and buttressed by American dollars. The government rarely challenges the military on major issues, such as the draft (which has not been abolished) or the jurisdiction of civilian courts (which have almost never been allowed to prosecute army officials accused of serious crimes).

Ultimately, critics say, the U.S. policy put all meaningful emphasis on the military and very little on economic development.

“The United States played with a double morality,” said Victor Meza, who heads a liberal think tank in Tegucigalpa. “They said they wanted democracy, dialogue and development. But in practice, fortifying those principles was not a policy for Honduras. Honduras was not (seen as) a country but a territory for applying military strategy. . . . And that was a disastrous policy. It subtracted all credibility from U.S. policy. Honduras of the ‘90s is so different from Honduras of the ‘80s. We no longer believe in the promises of North America.”

Prominent opposition leader Olban Valladares put it this way: “In the ‘80s, Honduras was like a light airplane that wanted to take off, but its excess baggage wouldn’t let it lift off. . . . We served as nothing more than a geopolitical bridge. It was impossible for the economy to develop.”

Today, Honduras has the highest rate of AIDS in Latin America, according to the Pan American Health Organization, and the disease is spread as much by poverty and ignorance as by promiscuous sex.

With about 18% of Central America’s population, Honduras accounts for 60% of the isthmus’ AIDS cases. Cholera and tuberculosis are spreading among the poor, and famine was blamed for the deaths of dozens of Lenca Indians this summer in Honduras’ remote Yamaranguila region.

In Nicaragua, more than 3 1/2 years after the U.S.-approved conservative coalition headed by Violeta Barrios de Chamorro defeated Sandinista Daniel Ortega in presidential elections, Managua’s return to democracy has not translated into prosperity for the people.

Chamorro was able to control runaway inflation and has made significant payments to international lending institutions. The economy grew a negligible 0.5% last year, after years of decline. Sixty percent of the population is unemployed or underemployed, a condition that is feeding the appearance of rearmed gangs roaming the Nicaraguan countryside.

Nicaragua needs $800 million a year to live, according to the country’s leading business organization, but only produces $200 million a year. The difference is made up by foreign donations, and in that area Nicaragua is suffering. Desperately needed U.S. aid has been cut off or suspended twice in three years by U.S. Congress members protesting continued Sandinista influence in the Chamorro government.

Feeling of Betrayal

Nicaraguan government officials speak of feeling abandoned and betrayed by the U.S. policy-makers who so enthusiastically championed Chamorro when she defeated Ortega.

“Nicaragua was left impoverished and destroyed by 10 years of war and economic blockade, and today the resources that we have for our reconstruction are scarce and insufficient,” said Antonio Lacayo, Chamorro’s chief of staff, son-in-law and the real authority in the government. “I hope to God we can emerge from our crisis with the firm, firm support of the international community, and not the vacillating support that we unfortunately have received from the United States.”

Complaining of continued control by the Sandinista Front of the military, police and judiciary, the United States, acting at the behest of Sen. Jesse Helms (R-N.C.), froze $100 million in aid to Nicaragua last year. The money was eventually released, but the Senate voted again in July to suspend $98 million.

Among the issues Helms and his colleagues cite are alleged connections between Sandinista officials and international terrorists, Nicaraguan properties confiscated from U.S. citizens during the Sandinista government and the failure to investigate and clarify several killings in which Sandinistas have been implicated.

Chamorro maintains that her decision to allow the Sandinista Front, still the largest single party in Nicaragua, to continue in key security posts was necessary to heal the country after war.

Lacayo and others complain that cutting off the aid sends the sort of political signal that prevents reconciliation by encouraging the right and the left to harden already intransigent positions. More violence and instability is ultimately the result, they argue--posing a threat to regional and American security.

“When the country most important to Nicaragua--important because of its proximity, its history, the war, and a country that is among the biggest contributors to our reconstruction and democratization--when that country cuts its aid, the message is that it no longer supports this government,” Lacayo said. “The aid cutoff produced here a dramatic setback in the process of reconciliation and a significant increase in the political polarization that later became reflected in violence.”

One of Chamorro’s other principal aides was more blunt: “I cannot understand why a country I admire . . . is treating us this way,” he said. “Why Democrats, your Christopher Dodds and your Ted Kennedys, who were so friendly to the Sandinistas, are now punishing (Chamorro). . . . The United States had better realize that if they lose Nicaragua, they lose Central America. This will be Lebanon.”

Legacy of Dependency

If Nicaraguans routinely look to the United States to solve, or blame for, their problems, nowhere is the legacy of dependency more deep-rooted than in Panama.

For most of the 1980s, U.S. officials offered unwavering support to strongman Noriega, despite his well-known connections to drug traffickers and his heavy-handed disregard for political democracy. Certain goals--Noriega’s ability to spy on the Sandinistas, and the need for friendly relations with the country that was home to a vital canal and the center of U.S. military operations south of the border--outweighed other considerations.

Then the George Bush Administration decided that it was time to get rid of Noriega. He was removed in a violent invasion that killed hundreds of people and raised hopes that a more honest, democratic rule of law would ensue.

Instead, Panamanians today complain that the U.S.-installed government of President Guillermo Endara is rife with corruption, tolerant of money-launderers and smugglers and insensitive to the poor. The general malaise has even led to severe doubts among the majority of Panamanians that they will be able to efficiently manage the Panama Canal, which reverts to Panamanian control in seven years.

“Panama is a country where people have learned to be dependent,” Panamanian sociologist Raul Leis said. “They’re dependent on the government or on the gringos. And sometimes they turn to the gringos first. They have no faith in themselves . . . no self-esteem. This is the result of the dictatorship, of bad governments, of paternalism and of the invasion.”

Panama is still prosperous by Central American standards, but two-fifths of the population lives in poverty, according to the Roman Catholic Church. The government puts unemployment at 16%--twice the historical rate--while private business groups and the church say the real figure is closer to 24%. Labor unrest has erupted in recent months in strikes by teachers, telephone operators and sanitation workers.

Critics fault U.S. policy for its narrow focus--ousting Noriega was the goal, with little thought to what would follow.

U.S. officials, for example, apparently knew of Endara’s ties to banks and businesses run by drug traffickers but did not consider the impact that would have on Endara’s subsequent credibility as president.

“They (the Americans) took Ali Baba and left the 40 thieves--and they keep working with the 40 thieves,” said Miguel Antonio Bernal, a Panamanian law and political science professor. “The Americans have not known how to catch up with the times and modernize their relationship with Panama. U.S. policy follows the old mechanism of fixing things by giving money. Instead of giving money and continuing to support the authoritarian structure, why not develop a policy that allows the dismantling of the true causes of the conflict?”

Opinion polls show Panamanians generally disaffected with the political class, a troubling sentiment given the fact that Panama’s first post-Noriega presidential elections will be held next May. If the elections were held today, polls show, the winner would be Ruben Blades, a mercurial salsa singer who lived most of the last 20 years not in Panama or Central America, but in the United States.

A Region on the Skids

Millions of Central Americans do not have access to life’s most basic needs: medical care, potable water or food. A snapshot of life in the region:

AMID A CRUSHING POVERTY RATE . . . (Percentage of those living in poverty)

1977-87 1990-91 El Salvador 1.4 million 1.4 million (27%) Honduras 1.8 million 2.4 million (46%) Nicaragua 0.7 million 0.8 million (20%) Costa Rica na 0.6 million (28%) Panama 0.6 million 0.6 million (26%) Guatemala na 6.8 million (71%)

*

. . . EVEN WATER IS A LUXURY (Percentage of population without access to potable drinking water)

1985-87 1990-91 El Salvador 48% 58% Honduras 50% 50% Nicaragua 51% 50% Costa Rica 9% 7% Panama 17% 16% Guatemala 62% 40%

*

TROUBLED ECONOMIES . . . (Per capita gross national product, in U.S. dollars)

1985 1991 El Salvador $820 $1,080 Honduras $720 $580 Nicaragua $770 $460 Costa Rica $1,300 $1,850 Panama $2,100 $2,130 Guatemala $1,250 $930

*

. . . SHOW LITTLE ROOM FOR OPTIMISM . . . (Annual growth rate of earnings per employee)

1980-89 1990-91 El Salvador 2.4% -9.4 % Honduras na 1.5% Nicaragua na -10.0% Costa Rica na na Panama 0.2% 2.1% Guatemala -3.2% -1.9%

*

. . . AND NATIONS RANK LOW ON QUALITY OF LIFE (Where they place on the Human Development Index, a measure of poverty and other social and economic indicators. First place is best, last is worst.)

1991 1993 (out of 160 countries) (out of 173 countries) El Salvador 94 110 Honduras 100 116 Nicaragua 85 111 Costa Rica 40 42 Panama 54 68 Guatemala 103 113 For comparison’s sake Japan 1 1 United States 7 6 Mexico 45 53

*

HEALTH CARE SHORTCOMINGS ARE EVIDENT . . . (number of babies who die per 1,000 live births)

1988 1992 El Salvador 58 50 Honduras 68 62 Nicaragua 61 58 Costa Rica 18 15 Panama 23 22 Guatemala 58 51 For comparison’s sake Mexico 46 37 United States 10 9

*

. . . WHILE SOME STILL SPLURGE ON MILITARY (Military expenditures as percentage of gross domestic product) El Salvador: 2.9% Honduras: 6.9% Nicaragua: 28.3% Costa Rica: 0.5% Panama: 2.5% Guatemala: 1.2% For comparison Mexico: 0.4% United States: 5.6% na means not available

Sources: World Bank, United Nations Development Program, Economic Commission of Latin America