Central America 12/03/12

Biden visits Honduras amid drug decriminalization debate; Central America fills sugar void left by Mexico; Nicaragua and Costa Rica shake hands on border dispute.

Biden visits Honduras amid drug decriminalization debate

US Vice President Joe Biden arrived Tuesday on the Honduran capital of Tegucigalpa to talk security, organized crime and drug policy with Central American leaders, after travelling to Mexico on Monday to discuss similar issues with President Felipe Calderón.

The meeting was attended by presidents Otto Pérez Molina, Guatemala; Daniel Ortega, Nicaragua; Porfírio Lobo, Honduras; Laura Chinchilla, Costa Rica; Mauricio Funes, El Salvador; Ricardo Martinelli, Panama; and Foreign Minister of the Dominican Republic Carlos Morales Troncoso.

High on the table were the region’s recent calls – most notably by Guatemala – for debating the legalization of illicit drugs in order to reduce  ‘alarming and unprecedented’ (UN report) levels of drug violence which have been plaguing the area, as Mexican drug cartels expand their influence.

These unprecedented levels of drug related violence seem to match drug trafficking figures highlighted in the US Department of State’s 2012 International Narcotics Control Strategy Report (INCSR) released Wednesday.

The report held that ‘approximately 95 percent of the cocaine leaving South America for the United States moves through the Mexico and Central America corridor,’ while 80 per cent of the latter ‘stops first in a Central American country before onward shipment to Mexico’.

15 per cent of all the cocaine bound for the US was estimated to transit through Guatemala, while ‘79 per cent of all cocaine smuggling flights departing South America first land in Honduras’.

Nicaragua was also highlighted as a ‘major drug transshipment point […] for drug trafficking organizations (DTOs) to move drugs, weapons and cash, and establish clandestine labs and warehouse facilities’ where  ‘crack cocaine, methamphetamines and marijuana’ are produced.

In September 2011, El Salvador was deemed a ‘major transit country’ in the US President’s report to congress on Major Illicit Drug Producing and Drug Transit Countries.

At the meeting, Biden recognized that ‘mano dura’ (hardline) policies on drug trafficking have been ineffective, as increasing control in a given area simply leads to cartel migration and escalation of violence elsewhere:

‘We did such a good job in shutting down the Caribbean and [with] Plan Colombia that it was like squeezing a water balloon. It came up through Central America and up through Mexico.’

However, the US statesman maintained that while legalization ‘is worth discussing, […] there’s no possibility that the Obama-Biden administration will change its [drug] policy’.

He slided into conservative and timeworn arguments highlighting health issues deriving from cocaine consumption; abuse of substances by underage users; as well as the possibility of increased consumption as a consequence of legalization.

This bitter ‘No’ to a US shift on drug policy might have sweetened by the pledge to deliver US$107m in aid to Central America next year to combat soaring violence and organized crime in the region.

Biden proposed a tougher stance on money laundering as an alternative to taking down drug leaders.

‘You can go out and decapitate an organization, and it’s like the hydra-headed monster, it’ll grow another head. But you go and follow the money and the monster withers,’ he said.

Commenting on this far from groundbreaking US-Central American conference, The Economist wrote: ‘Not especially surprising stuff’.

Central America fills sugar void left by Mexico

The countries that drive the engine of Central America’s rising sugar industry are set to fill a void in production left by the world’s sixth largest producer Mexico, market analysis firm Price Futures Group told the Wall Street Journal on Monday.

‘The [Central American nations] have increased production significantly, and […] what that increase will do is offset what the Mexicans have lost,’ said PFG Chicago vice president Jack Scoville, after highlighting ‘talk[s] of a near term shortage due to the slow pace of the Mexican harvest’ in a softs market commentary.

Guatemala remains the region’s top grower and is expected to reach at least 2.34 million tons of sugar by the end of 2011/2012, a 12 per cent increase against the previous season.

Coming in second is El Salvador, expected to reach as much as 625,000 metric tons this season, up from 564,000 in mid 2010/2011.

Representing 10 per cent of Mexico’s sugar imports, Nicaragua is poised to reach an output of 607,800 metric tons, 11 per cent up from last season’s 550,000.

The news from PFG comes less than two months after ‘the most severe’ drought in Mexico ‘devastated cropland in nearly half of the country,’ the New York Times reported at the time.

Access to potable water was highly affected in 19 out of 31 states and 7 per cent of Mexico’s agricultural land endured ‘total loss’.

While 99 per cent of Mexican sugar exports are bound for the US and accounted for more than half of the country’s sugar imports last year (1.5 million tons in 2011), the president of the country’s Sugar and Alcohol Chamber of Commerce Juan Cortina Gallardo told Bloomberg this figure could drop to 800,000 metric tons (40 per cent decrease) in 2012.

With ‘talk of less production in Brazil [the world’s top sugar producer] again later next year due to the poor weather in the south and lower prices,’ Central America’s stepping up to the plate is expected to stabilize sugar near term futures prices and prevent markets from falling into further uncertainty.

The regional rise in production will also be key for Mexico, in dire need of sugar imports, mainly from Guatemala, to meet its domestic demand after the severe drought.

Nicaragua and Costa Rica shake hands on border dispute

Also this week, following a ruling in March 2011 by the International Court of Justice (ICJ), Nicaragua and Costa Rica signaled their intent to increase communication and cooperation along the highly disputed San Juan River border area.

The ICJ ordered Costa Rica and Nicaragua to ‘prevent the development of criminal activity in the disputed territory’ and that ‘police or security forces [must] cooperate with each other in a spirit of good neighborliness, in particular to combat any criminal activity which may develop in the disputed territory’ (p.4).

As a result, Costa Rica’s Vice Minister of Public Security Walter Navarro and the General Director of the Nicaraguan National Police Aminta Granera held a meeting Thursday at the Hotel San José Palacio.

‘We are sure that it will be a very helpful working meeting,’ said Navarro, while Granera maintained the occasion would ‘strengthen communication and cooperation between the two countries’.