The high cost of violence in Central America

Violence in Central America cost approximately $6.5 billion in 2006 - equivalent to 7.7% of the Gross Domestic Product (GDP) - according to the results obtained by a study called "The economic costs of violence in Central America " (Los costos económicos de la violencia en Centroamérica), conducted by the National Council for Public Security (CNSP) of the office of the President of El Salvador.

One important factor involved in this calculation is the rate of homicides in the region- 36.6 per 100 000 inhabitants-data which results in naming Central America the most violent sub-region of the continent. The rate of violence in all of Latin America is 24.8 per 100 000 inhabitants.

Carlos Acevedo, a consultant in charge of CNSP´s investigation, explained in the document that these indicators of the magnitude of the problem are useful for “decision makers involved in policy making to address the various manifestations of violence.”

The results of the report, while clearly alarming, may in fact underestimate the problematic reality. Arturo Matute, the international consultant in socio-economic issues and professor of Anthropology and Development at the London School of Economics, argues that CNSP´s study, and similarly a study conducted by  United Nations Program for Development (UNDP) called “The economic cost of violence in Guatemala” (El costo económico de la violencia en Guatemala), acknowledged the existence of technical limitations.

Matute added that in the case of Guatemala, the data was formulated using conservative accounting criteria and therefore, "it is possible that a more accurate calculation of the economic costs imposed by the violence in Guatemala each year is double that which was presented in the study."

Nuanced data

 
Of course, Central America is not a homogeneous region in terms of violence and indicators vary dramatically from one country to another. In absolute terms, according to CNSP´s study, the cost of violence in higher in Guatemala ($2.291 billion) and El Salvador ($2.010 billion) than in Costa Rica ($791 million) and Nicaragua ($529 million).

"In relative terms, the situation changes depending on the size of the economy. At one extreme is El Salvador, where violence imposes a cost close to 11% of GDP, at the other extreme, Costa Rica, with 3.6% of the GDP. In Honduras and Nicaragua, the cost of violence is equivalent to 9.6% and 10% of their GDPs, respectively. In Guatemala, the relative weight of the cost of violence is lower (7.7% of GDP) even though it is the country with the highest costs in absolute terms,” according to the CNSP study. Similarly, the part of UNDP´s study focused on Guatemala estimates that in 2005, 2.3867 billion was spend on violence, or 7.3% of the GDP.

CNSP´s report also demonstrates that it is not always the poorest countries that are the most violent, and vice versa. While it is true that the scarcity of job opportunities for youth, lack of basic social conditions, low levels of schooling and family breakdown are factors that generate violence, these themselves do not generate a climate of criminality. In Central America, according to the report, the safest countries are the richest (Costa Rica) and the poorest (Nicaragua).

According to the report, this is because "the greatest expressions of violence are not necessarily concentrated in the poorest areas of Central America, but in those contexts where various economic, political and social issues are perversely combined. The evidence suggests that, rather than poverty, growing income inequalities and opportunities, together with other social, cultural and psychological factors, are the most powerful producers of violence."

The origins of the problem

Matute agrees with this but considers it a highly complex phenomenon that disallows one to draw simple conclusions or make generalizations. "The etiology of violence is more complex in Central America. In the case of Guatemala, we believe that violence is more related to the operation of criminal gangs engaged in drug trafficking, extortion, kidnapping, trafficking, among other illicit activities, than to the issue of levels of poverty. Criminal networks were established during the internal armed conflict (1960 - 1996) and strengthened by increased activity of international drug trafficking networks in the country. This difficult situation is complicated by the lack of socio-economic opportunities in a context of high inequality and poverty. The State has not had enough strength to effectively address these dimensions of the problem at the preventive or reactive level," he explains.

According to Matute, wars in Central America significantly impacted the organization of societies. In the case of Guatemala, campaigns that repressed social organizations destroyed the nation’s social fabric.

 
Additionally, the explosion of gangs known as “maras” has worsened the outlook for the region, especially in Honduras and El Salvador. According to the government agency USAID, in 2006, the number of members of these gangs in Central America could have reached over 300 000. The CNSP study indicated that Honduras has the highest rate of gang members: 500 per 100 000 inhabitants.

To gauge the impact of violence on the regional economy, it serves to reflect on UNDP´s report, which states that in Guatemala the cost of violence in 2005 was double the damage caused by Hurricane Stan and double the budget allocated to the Ministries of Health, Agriculture and Education that same year.

What can be done?

 
For Matute, the main obstacles that face reducing the region’s violent epidemic are “The persistent weakness of the States to enforce the law, the weak capacity of civil society to organize effectively, and - a risk which has already been transformed into a threat - international organized crime operating in networks of narcotics trafficking."

According to the Guatemalan deputy Unionist Mariano Rayo, the region is unprotected in terms of security and above all, it is increasingly exposed to the influence of a drug trafficking network that has shifted from Mexico and Colombia to Central American countries. However, in his view, governments in the region are beginning to wake up and form security strategies. "The problem is the scarcity of resources in our countries," he warns.

 
In line with Rayo´s claim, last week the president of Guatemala, Alvaro Colom, summoned the heads of the nation’s legislative bloc and the general secretaries of the political parties and called for prioritization of the security agenda. "In 2009, we will make an effort to allocate more financial resources to the national police, the army and the public prosecutor," he exclaimed.

Translated by Nathaniel Wolfson

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