Honduras: Sliding Toward State Failure

The Economist magazine recently introduced a pair of articles on Central America as follows: “In the first of two reports on the threat of rampant violence to Central America’s small republics, we look at the risk of Honduras becoming a failed state.” It is premature to declare Honduras a failed state, but the magazine is right to warn about the gathering storm clouds in this corner of Middle America.

If physical insecurity is the foremost quality of a failed state, as argued by Robert Rotberg, Honduras is most definitely a failing state. Gang and drug-related violence is pushing Honduras in a very negative direction, despite some recent economic growth. The article in The Economist provides the terrible details about the country’s world-leading murder rate. For comparison, South Africa – a very violent society – now has a murder rate that is less than one-fifth that of Honduras, and declining.

Hondurans would be right to cast some blame for their plight on the United States and Mexico for external pressures related to illicit drug flows. Even so, it is very telling that the neighboring states of Guatemala and El Salvador are both seeing gains in physical security, as is Mexico.

Sadly, despite the country’s democratic trappings, the rule of law is breaking down in Honduras. The Economist article echoes a section from the 2012 Human Rights Watch annual report: “Violence and threats against journalists, human rights defenders, political activists, and transgender people continued [in 2011]. Those responsible for these abuses are rarely held to account.” Beyond these particular groups, ordinary citizens – and especially young adult males – are routinely the victims of crimes that are never investigated or prosecuted.

At some point, investors will no longer tolerate the lawlessness, and they will leave for other markets. Honduras simply does not have enough economic leverage to keep that capital within its borders.

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Mexico’s Geopolitical Resurgence

For many in the United States and elsewhere, Mexico is most closely associated with poverty, illegal immigration, and drug violence. True, those are all ongoing realities for Latin America’s second giant. Foreign investors, though, are mostly focusing on one word, opportunity.

The Economist magazine recently published a special report on Mexico, to coincide with the presidential inauguration of PRI leader Enrique Pena Nieto on December 1st. The report is truly eye-opening for those who only see America’s southern neighbor as a violence-wracked state on the verge of state failure. In fact, Mexico is moving in a positive direction, propelled by recent strong economic growth and a political system that is maturing.

Skyline of Mexico City

Skyline of Mexico City. Photo credit: rutlo, via Flickr (Creative Commons license).

As Shannon O’Niel wrote in 2009 in Foreign Affairs, the surge in drug violence during the presidency of Felipe Calderon (2006-2012) was a sign of better governance in Mexico. For too long, the one-party system of the Institutional Revolutionary Party (PRI) colluded with the drug cartels. When new federal leadership pushed back against this corruption, the cartels lashed out at the central government. Fortunately, drug-related violence has begun to abate somewhat. The bigger political story, though, is the consolidation of democracy in Mexico, which is further confirmed by the PRI’s return to power.

Though Mexico has registered under-appreciated gains in the political sphere, the country’s impressive economic resurgence seems to have particularly impressive forward momentum. Here the key development is a revitalization of Mexican manufacturing. After some struggles in the decade of the 2000s, the newest OECD member in the NAFTA region is returning impressive industrial growth. Here are a few of the key factors:

  • Free trade deals with 44 other states, which is the largest total for any country in the world.
  • Mexico’s proximity to the United States market, which affords quick and low-cost access to American consumers.
  • An average manufacturing wage rate ($2.10 per hour in 2011) that is now comparable to China’s rate ($1.60 per hour). (In 2000, these rates were $1.50 per hour in Mexico and $0.30 per hour in East Asia’s biggest tiger. Sources: HSBC, The Economist.)
  • The relative dependability and productivity of Mexican workers.
  • Higher energy prices, which reinforce Mexico’s position relative to Asia’s emerging markets, due to higher transportation costs from Asia to North America.

Mexico’s geopolitical resurgence is supported by other economic strengths. International tourism arrivals have remained strong, despite the drug violence. The country is still a significant energy producer. And Mexico’s agricultural sector continues to show signs of dynamism.

Mexico is rising. Arguably the clearest indication of this is the confidence that international investors are placing in the country. World leaders like Siemens, LG, Nissan, and Ford are voting with their dollars, euros, and yen. The Pentagon’s 2009 warning about Mexico becoming a failed state is not coming true.

Colombia’s Recovery

The seeds of instability in Colombia were sown over a very long period. And, contrary to some contemporary polemics, the United States is not uniquely responsible for Colombia’s violent recent past. The good news, though, is that the Andean state is re-emerging from a long, difficult period of violence and instability.

As elsewhere in Latin American, colonial master Spain left behind a stark legacy of socio-economic inequality along ethnic lines. By the 1960s, conditions were ripe in Colombia for class-based armed conflict. It was during this decade that leftist groups like the FARC took up arms against the Colombian state.

The Revolutionary Armed Forces of Colombia (FARC) is no longer primarily motivated by Marxist ideology. Long ago, they morphed into a narco-trafficking organization engaged in a type of “new war” described by Mary Kaldor. In 1998, the FARC was granted a huge safe haven by the government of Andres Pastrana Arango. In exchange for control of a territory the size of Switzerland, the rebels were expected to negotiate in good faith to end their part of Colombia turmoil.

Since 2002, a change in national leadership and a hard line on the rebels has led to a brighter future for Colombia. Though the FARC and other non-state armed groups still disrupt commerce and security in parts of the state, this pivotal state is seeing new foreign investment, the return of tourists, and better foreign press coverage. (Some friends of mine recently stopped in Colombia on a Caribbean cruise. They took a day trip onshore and had a great experience.)

This excerpt from a BBC profile of Colombia captures a sense of the progress:

[The Colombian government] says major advances have been made in security, demobilisation of illegal armed groups, drug eradication and economic development, and that by early 2012 only 6% of the country was under potential threat from terrorist groups or organised criminal bands.

While it is no longer accurate to call Colombia a failed state (or a critically weak state), its recovery is not yet complete. Even so, NGOs like the International Crisis Group now see positive momentum for a comprehensive peace. Later this month, the FARC and the government of Juan Manuel Santos are set to begin peace talks in Oslo, Norway. Once again, we are reminded that State failure is not a permanent condition.

*** Did you like what you read here? You might be interested in the new book by this blog’s author, Failed States: Realities, Risks, and Responses.