U.S. Strategy In the Caribbean

The Caribbean Basin Initiative (CBI) is an economic strategy designed to help U.S. multinational corporations get a leg up on their European and Japanese competitors by securing a slice of economic turf under American hegemony. That is the view of Roger Burbach, director of the Center for the Study of the Americas in Berkeley, California and associate of the North American Congress on Latin America (NACLA). Burbach, a long-time observer of U.S.-Central American relations, and co-author of Agribusiness in the Americas, recently returned from a visit to Nicaragua, El Salvador and Honduras, where he was gathering information for a forthcoming book on the politics of intervention in Central America. He was interviewed last month in Eugene, Oregon by Multinational Monitor correspondent Glen Gibbons.

"One of the reasons why the Caribbean Basin Initiative is favorable to U.S. multinationals is that the arrangements set up under CBI are bilateral," says Roger Burbach. "The U.S. goes to each country and works out a special trade agreement. There's nothing regional about it. Even the Central American Common Market had pretences of stimulating the regional interlinkages of economies. This is not true in the Caribbean Basin Initiative. If the CBI were passed, it would operate to pull the region apart and tie it into the U.S. economy. It's like a hand: the U.S. is the palm and each country is a finger."

The Initiative comes at a time when some multinational corporations are pulling out of the region or curtailing their operations due to the spreading worldwide recession and political instability in several Central American nations. In Burbach's words, the Caribbean is an area "of limited stakes for multinationals," which have only three percent of their total foreign investment there. "Very little foreign investment has taken place in the region for the last three or four years," he says.

Burbach cites the recent pullout of Castle and Cooke from Nicaragua, where its banana operations had become increasingly unattractive in the face of declining world markets. The company has also curtailed new investment in neighboring Honduras, which boasts a much more extensive Castle and Cooke commitment in agribusiness-related property, research and processing facilities. In Guatemala, a failing market, labor disputes and the deteriorating political situation combined to bring closure of the massive INCO nickel mines in northern districts last year. Meanwhile, El Salvador has seen some multinationals - particularly food-processing plants and electronic assembly operations like Texas Instruments - abandon the free-trade zones there.

Burbach recalls a conversation with a Salvadoran vice-minister of foreign affairs who was in charge of some of the economic planning in the early 1970s. "El Salvador embarked on a very conscious strategy of trying to make itself a center for run-away shops in Central America. The Salvadoran bourgeoisie has always been extremely aware of the trends in the world market and knows how to play those. They were the first ones to try and get on top of this thing, form partnerships with foreign capital to exploit the local labor force. That boom probably would have continued except for the international market, somewhat, but more importantly, by 1979, the situation with the growing civil war."

According to Burbach, however, companies that produce for internal markets rather than export have tended to continue their operations, whether owned by national or multinational interests. "The manufacturing enterprises, most of which grew up in the Central American Common Market in the 1960s and 1970s, continue," Burbach says. "They have the investment already, the money's there, and they have no reason to shut down unless they start losing money. Nicaragua, for instance, has set prices to ensure that these companies can make some limited profits and, so, will continue their operations."

The region's potential - based on nearby markets, natural resources and low-cost labor - continues to draw the attention of U.S. corporations. "The importance that U.S. capital attributes to the Caribbean Basin Initiative has been somewhat underestimated," says Burbach. "If stability were achieved within the region in three or four years, there could be a significant boom in U.S. investment, given CBI's special incentives." Among the groups pushing for passage of the legislation is Caribbean-Central American Action (CCAA), a business group based in Miami that has a sizable office in Washington, D.C. Burbach characterizes CCAA as "a blend of Southern capital and some fairly prestigious, big multinationals associated with Eastern capital."

While passage of the CBI bill may pose more of a problem in the new Congress, where House Democratic ranks were augmented by 26 new members after last November's election, Burbach anticipates its eventual approval. "One of the reasons that even liberal Democrats didn't get upset about CBI is the legislation was portrayed by the Administration as an economic program. It's not a question of military intervention; it's a proposal to bring more investment to the region."

While domestic political forces may fail to curb this latest manifestation of American economic hegemony, a concerted attempt to frame alternative economic and social strategies for the region has arisen. A group of academic and progressive political figures have established the Institute for Social and Economic Studies and an umbrella group, La Coordinadora de Investigaciones Economica y Social (CRIES). With its office in Managua, the organization held an organizing meeting last June and a second major gathering in February.

"Throughout the history of the Caribbean Basin, the models for economic development have been imposed from the outside," says Burbach. "The countries in the region have never been permitted to develop their own plans. CRIES' strategy is to bring together the best progressive minds in the region - some of whom have been studying economic, social and political issues for decades - to forge a new alternative, one that makes sense for the countries of the region and meets the needs of the majority of the population."

CRIES' address is Apartado Postal No. C-16, Managua, Nicaragua.