Introduction

Until the late 1970s, the Central American economies were growing, although only the growth rates of Costa Rica and Panama surpassed the average annual GDP per capita of the world. In hindsight, this record, for all its limitations, was a golden age on the isthmus as it was for much of the world. Since 1990, most Central American countries have fallen farther behind, with Nicaragua failing to recover the ground it lost since the late 1970s. The inability of dictators to reform imposed painful costs on most Central Americans.

Ill-timed external shocks compounded the effects of war. As states battled insurgents, the sudden drop in the terms of trade in 1979, along with the rise in interest rates on foreign loans, led to a contraction of economic activity. Both external shocks were central components of a generalized economic crisis highlighting the weaknesses of a growth model that relied on exporting agricultural commodities, ones whose prices were volatile and whose benefits concentrated among landowners, as I showed in Chapter 1.

Although many of them were waging war, Central American policy makers had little choice but to stabilize their economies. They devalued currencies , renegotiated foreign debts , and balanced state budgets, which reduced incomes and worsened recessions. Like their South America counterparts, Central American states opted to shrink their role in the economy as they stabilized (Kingstone, 2011 ). By the end of the decade, policy makers in both countries – even Costa Rica, the country with the region’s largest state and most successful economy – had returned to the libertarian doctrines of the past, ones associated with decidedly mixed results for economic growth and development.

Introduction

Military governments no longer rule the isthmus. Citizens elect presidents, legislators, and municipal councilmen in each country of the region. This perhaps is the single most important conquest of the civil wars of the 1970s and 1980s. It was a hopeful outcome, and not only because overthrowing dictatorship was a central goal of so many who died in the region’s violent conflicts.

Have elections made a difference? There are good reasons to believe that they should. Parties offer different platforms in exchange for votes, and the party or parties that win elections then convert these preferences into laws. This is the virtuous circle of accountability that democratization should unleash. In the context of underdeveloped societies with legions of poor voters, competitive elections should increase redistribution and social spending. Democracy, in other words, should placate the majority and promote the common good.

The goal of this chapter is to explain why this question cannot be easily answered in the affirmative. Although elections have met minimal standards of openness and fairness, clashes between presidents and other branches of government have tainted the quality of the region’s democratic institutions. They have led to conl icts in which executives sometimes have prevailed and other times have been exiled. So, even while democracy remains consolidated in Costa Rica and has become stronger in Panama and El Salvador, it has fused with some blatantly autocratic elements in the other republics of the isthmus. A blemished political record bodes poorly for the functioning of democratic institutions, effects that I document and explain in this chapter.

Introduction

Civil war raged in Central America throughout the 1980s and into the 1990s. It led to the killing of at least 300,000 people, the vast majority of whom were civilians. It produced between 1.8 million and 2.8 million refugees. War also devastated the economies of El Salvador, Guatemala, and Nicaragua. It was not until the first decade of the twenty-first century, as we will see in Chapter 4, that GDP per capita rates regained prewar levels.

These were surprising outcomes because civil wars rarely happen. There was less than a 2 percent probability that a country, in any given year, experienced an ongoing attempt to overthrow the government (and in which at least 1,000 soldiers and insurgents lost their lives) between 1945 and 2000 (Fearon and Laitin, 2003; Sambanis, 2004). Revolutions – or rebellions that toppled governments and tried to transform their societies – are rarer still. Since the French Revolution of 1789, there have been only seventeen social revolutions, a number that increases by half if we include the “velvet” revolutions of Eastern Europe after the fall of the Berlin Wall (Goodwin, 2001: 4).

The same methods suggest that civil war was a lot more common in Central America. Sixteen percent of the country-years in Central America involved violent conflict between governments and insurgents – eight times more than in the rest of the world. What made civil war so much more likely on the isthmus? One popular response to this question, especially common during the 1970s and 1980s, is that poverty and underdevelopment made conflict “inevitable,” to cite the title of one diplomatic historian’s account of these years (LaFeber, 1983). It is very much this account that quantitative, cross- national studies champion. Another reply emphasizes political dynamics, one that suggests that the closed nature of most political systems left the deployment of violence a viable (unfortunately) option to end tyranny in Central America.

Introduction

Civil war engulfed Central America in the 1980s. A peace agreement was not signed in El Salvador until late 1992, although the fighting between the government and the FMLN had dissipated to an inconclusive war by the late 1980s. The civil war in Guatemala did not end until 1996, although its military had defeated the insurgents, at a great loss of life, by the mid-1980s. No sooner had Nicaraguans overthrown the Somoza dictatorship than the Sandinistas became embroiled in another civil war, one that pitted them against an irregular army organized by former members of the Somoza’s National Guard (the Contras) and supported by the Reagan administration.

The 1980s were the decade of civil war not only on the isthmus, but also throughout the world. At the start of this decade, less than 15 percent of the world’s countries witnessed insurgents contesting governments in bloody conflicts. By the end of this decade, civil war had started or continued in more than 20 percent of all countries (Fearon and Laitin, 2003). The equivalent figure for Central America was high: Three of the seven countries, or more than 40 percent of them, were engulfed in bloody civil wars.

The 1980s were also the start of what Samuel Huntington ( 1991 ) called the “Third Wave ” of democratization. At the start of this decade, autocracies existed in most countries. By the end of the 1980s, however, there were more democracies than dictatorships. By the mid-1990s, the majority of political systems allowed all adults at least eighteen years old to cast ballots in regularly scheduled and competitive elections and, to one extent or another, respected the civil rights of the citizenry (Lehoucq, 2011 ).

Introduction

The six economies of Central America, sandwiched between Mexico and South America (Hall and Pérez-Brignoli, 2003), are prototypical of the smaller economies of the developing world. Each depends on the export of agricultural commodities, which generates the foreign exchange necessary for development. The price of coffee and bananas, the region’s dominant exports during the twentieth century, remained subject to the whims of international supply and demand, because both crops are grown throughout the tropics (Bates, 1997). This production feature, which made these economies price-takers in global markets, had profound effects on Central American societies, ones that would shape relations between landlords and peasants, the nature of their states, and their economic and social well-being.

Inequality in land distribution, coupled with demands of the international market for coffee and bananas, led to a predictable social structure. The spectacular returns of export agriculture enriched landowners, coffee processors, and banana producers. Most of the population, which remained predominately rural until the 1970s, either grew crops for domestic consumption or worked for wages on large estates. For many observers, dictatorship was inevitable in Central America, for only military despots could ensure the conditions needed for the docile labor force required to plant and harvest coffee and pick bananas.

On the eve of U.S. participation in World War I (1917–8), Dana Munro, an economics graduate student from the University of Pennsylvania traveled, not infrequently by horseback, in Central America. Munro would write The Five Republics of Central America (Munro, 1918) and, even later, refashion many of the letters he sent his parents as a traveler’s account (Munro, 1983). Both are remarkable, not only for their vivid descriptions of political life in countries dominated by dictatorship, but also for the thesis that political instability contributed to underdevelopment – an argument unfortunately forgotten in subsequent decades, when scholarship assumed that the region’s model of economic development made autocracy inevitable.

More than sixty years later, I found myself traveling in the region, although mostly by airplane, bus, and car. Like the young Munro, I too went to Central America in search of answers to basic questions about the nature of political instability. Like my predecessor, I landed in a region very much the target of U.S. foreign policy makers. Although Munro analyzed the consequences of the U.S. decision to prop up a conservative regime in Nicaragua between 1913 and 1933 (that would involve deploying marines), I observed the impact of U.S. foreign policy, based on fighting communists, six decades later. As in Munro’s youth, U.S. policy toward the region in the 1980s was controversial and the staple of the daily news.

When I started graduate school in 1984, interest in Central America was at a post–World War II high. A region whose politics and economics generated little interest had become, by the late 1970s, an area making daily international headlines. A civil conflict in Nicaragua ended with the overthrow of President (and dictator) Anastasio Somoza in 1979. In neighboring El Salvador and Guatemala, left-wing guerrillas fought military regimes backed by the United States. A conservative administration in Washington led by Ronald Reagan interpreted these events as part of a Soviet and Cuban conspiracy to gain control of the isthmus, one that it chose to battle in what became the cold war’s last decade.

More than three decades later, these events seem both distant and surreal. Interest in Central America has evaporated. It seems odd, perhaps even bizarre in retrospect, that both the left and the right spilled so much blood about the horrors or benefits of political change and social revolution. I wonder how many of these protagonists would agree with former Nicaraguan Vice-President Sergio Ramírez (1985–90) that the Sandinistas should have reached a compromise with the Reagan administration to end the bloodshed (Kinzer, 2001b). The U.S. decision, one spearheaded by the Barack Obama administration, to support or at least not oppose the Arab Spring (2011–present) reminds us how the Cold War put us on the wrong side of political change in so much of the Third World. I also wonder what participants and observers from the 1980s would say if we could transport them to the present, one that has seen an eviscerated Sandinista movement led by an aging Daniel Ortega be reelected president in 2006, in part by colluding with his erstwhile opponents, and obtaining supreme court backing to run for consecutive reelection to the presidency in 2012, which he won by a landslide, with 62.5 percent of the vote.

During the period when the US was officially neutral there was substantial criticism of British trade practices in South America from a variety of sources both within the Roosevelt administration and in the US political and corporate establishment. The recurring theme of this criticism was that Britain was following policies ostensibly aimed at advancing the Allied war effort that in fact harmed US commercial interests in South America, while advancing Britain's own. This criticism took a number of forms, each relating to the policies applied by Britain towards South America. British censorship in the western hemisphere; measures of economic warfare, such as blacklisting; and Britain's export policy towards the region, particularly following the advent of the Lend-Lease bill: these were all policies that elicited criticism from within the US.

These criticisms were not without foundation. It was always a long-term aim of the British government to retain commercial footholds in the region, and the distinction between attaining this goal and pursuing policies of more immediate concern in the region was not always clearly defined. But while on one level the criticisms of Britain in South America were a legitimate response to British connivance to sustain its own interests in the region, various groups within the US inflated these criticisms to advance their own agendas. The US business community sought to defend its long-term interests in South America, and saw criticism of Britain in the region as an opportunity to reduce their major competitor's standing.