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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Weak and Failed States in 2012

The year 2012 was an eventful one for the world’s weak and failed states. What follows is a quick review of some key trends and highlights from the year that was.

In Afghanistan, the “forgotten war” continued. A long-sought political settlement with the Taliban proved elusive as NATO and the United States prepared for a full military departure in 2014. Insider attacks by Afghan government security personnel on NATO soldiers grabbed headlines, as did continued evidence of widespread corruption and dysfunction in the Afghan government. Afghan watchers are very nervous about the post-2014 era.

In 2012, Pakistan muddled along on a variety of fronts. Relations between Pakistan and the United States remained very strained, even as cooperation improved somewhat by the end of the year. Most critically, the military establishment has strengthened its position with regard to the country’s politicians. Civilian control of the military is only an aspiration at the present time, and true democracy is therefore on hold. Militant attacks on aid workers halted efforts to eradicate polio in Pakistan’s border regions.

In Syria, the ruling Assad clique fought a losing effort of regime survival. If last year was a tragic year in Syria, the year ahead may be catastrophic. The United Nations warns that this key crossroads state could produce more than one-half million refugees in 2013. Intense urban warfare in Damascus and Aleppo could lead to truly awful humanitarian conditions.

Tuareg Rebels in Mali

Mali, previously stable and democratic, suffered major setbacks in 2012. Photo credit: Magharebia (via Flickr, Creative Commons license).

In three African states, Mali, the Democratic Republic of Congo (DRC), and the Central African Republic (CAR), insurgents secured or expanded zones of open defiance. Governments lost the ability to control vast portions of territory, a key marker of state failure. The troubles in the DRC, related to the M23 rebel group, were particularly noteworthy. Rwanda and Uganda again meddled in the internal affairs of their large neighbor, as they did during Africa’s World War of the 1990s and early 2000s.

Despite gains in governance and economic development over the last decade, Nigeria continued to suffer the effects of a well-organized Islamist insurgency. Boko Haram does not seem to represent a mortal threat to the central government, but the Islamists’ activities are further straining religious coexistence in a deeply divided country.

Finally, I close this review with some hopeful developments. In Southeast Asia, the long-mismanaged Myanmar (Burma) is moving towards political openness and engagement with the rest of the world. Though sometimes ignored due to its location between China and India, Burma is an important, resource-rich state that deserves more attention. And Burma seems to be steadily moving in a positive direction, thanks in part to a more enlightened set of autocrats.

Aung San Suu Kyi

Burma’s opposition and pro-democracy leader, Aung San Suu Kyi. Photo credit: World Economic Forum (via Flickr, Creative Commons license).

In the Horn of Africa, 2012 was a relatively good year for Somalia. The Western-financed AU mission is helping the Mogadishu-based government push back militant Islamists. Al-Shabaab lost a huge amount of territory in the last year. And, whatever the reasons, maritime piracy off Somalia declined in the last 12 months.

In Latin America, a new narrative is emerging in Mexico, and perhaps all of Central America. In Latin America’s second giant, economic development and new political momentum is shifting the discourse away from drug violence, even though that violence is still stubbornly high.

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.