Central America Regional Program

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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Central America Regional Program Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 34     Over half of Central America's population lives in rural areas, and two-thirds survive on less than $2 per day. THE DEVELOPMENT CHALLENGE: The Central American region is consists of seven countries: Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama, with a population of 37 million growing at a rate of 2.6% annually. In addition to the challenge of addressing poverty and improving the living conditions of its people, Central America remains ill-equipped to confront the globalization of trade and labor markets, the frequent natural disasters that befall them, the cross-border spread of HIV/AIDS and other infectious diseases, and continuing deforestation and environmental degradation. These challenges are compounded by new and ongoing threats to the region's stability, including transnational crime and drug-trafficking, corruption, poor governance, and periodic border tensions which persist despite growing regional integration. In March 2001 at the Regional Consultative Group meeting, Central American leaders, the United States and other donors identified challenges and opportunities for regional integration. Alongside commitment to reinforce disaster preparedness, the Central American countries presented a regional strategy for economic integration, infrastructure modernization, trade competitiveness, environmental management, and social development. The regional plan for economic growth emphasizes freer trade, increased competitiveness, and cooperation with Mexico to build on its experience in the North American Free Trade Agreement (NAFTA) and a recent free trade agreement between Guatemala, Honduras and El Salvador. Central American and Mexican representatives have endorsed trade and development initiatives in eight sectors for joint investments of $2 billion under Mexico's Puebla-Panama Plan (PPP). The PPP, the U.S. partnership with Central America under the Alliance for Sustainable Development (ALIDES), and the Central America-USA Agreement (CONCAUSA) offer opportunities to increase trade and improve environmental management, while advancing wider Central America-Mexico cooperation toward these common objectives. In June 2001, the USG and Central America formally extended CONCAUSA to address sustainable development, biodiversity, environmental policy, and energy, and to integrate disaster mitigation and global climate change as new areas of cooperation. U.S. interests in the stability and growth of Central America as a major regional trading partner are considerable. Regional economic integration advances the U.S. foreign policy objective of establishing the Free Trade Area of the Americas (FTAA) by 2005 and President Bush's announced objective of a Free Trade Agreement (FTA) with Central America. The increased economic prosperity promoted by the FTAA and FTA should further other U.S. Government (USG) interests in the region, such as stemming the tide of illegal immigration from the region into the United States, and lessening incentives for involvement in narcotics trafficking. USAID's Central America program supports Mexico-Central America coordination and collaboration under the USG's recently announced initiative, the Partnership for Prosperity (PfP), particularly in the areas of poverty reduction, disaster mitigation, expanded trade, environmental protection, and agricultural diversification. The Regional Program directly advances U.S. foreign policy and development objectives at a pivotal point in relations as we promote closer cooperation and freer trade with Central America and Mexico. THE USAID PROGRAM: FY 2002 Estimate: $12.892 million FY 2003 Request: $26.927 million The Program Data Sheets provided below cover the four objectives for which USAID is requesting funds. These programs will: 1) promote open trade and investment policies, support regional economic integration, trade and competitiveness, and improve the functioning of regional labor markets and protection of labor rights; 2) improve protected area management in the Meso-American Biological Corridor, expand markets for environmentally sound products and services, and promote local capacity and private sector participation in natural resource management; 3) strengthen Central American organizations to deliver HIV/AIDS services and information; and 4) support development of credit quality standards for local governments, increase their access to capital markets, and promote private sector participation in local services and infrastructure. The first three of these programs are ongoing efforts that build on the first phases of the regional trade and investment, environmental, and HIV-AIDS programs and USAID's extensive experience in each area. The municipal finance activity, a new program, begins in FY 2003. These programs are managed by USAID's regional Central America and Program (G/CAP) located in Guatemala whose regional programs will soon include Mexico. Areas for expanded cooperation under the PfP initiative build on key U.S. interests identified above. FY 2003 PfP funds will allow G-CAP's regional program, in close coordination with USAID/Mexico, to initiate additional activities in the areas of accelerated trade facilitation and regional economic competitiveness and activities to mitigate disasters and environmental degradation. This initiative is also taking place in other Central American countries and through LAC Regional mechanisms. Additional details are provided in Program Data Sheets. ONGOING PROGRAMS FOR WHICH NO NEW FY 2002 OR FY 2003 FUNDING IS REQUESTED: On December 31, 2001, USAID completed two-year assistance provided in the wake of Hurricane Mitch. The following summarizes this and other terminating regional programs: Number: Title: Last Notified: Planned Completion: 596-001 Regional Trade and Investment Phase I FY 2002 CN #369 FY 2002 596-002 Regional Environment (PROARCA) Phase I FY 2002 CBJ, p. 579 FY 2002 596-003 Regional HIV/AIDS Program Phase I FY 2002 CBJ, p. 584 FY 2001 596-004 Regional Disaster Mitigation FY 2002 CBJ, p. 589 FY 2002 OTHER PROGRAM ELEMENTS: USAID activities in Central America managed outside G-CAP include: the USAID and UNAIDS-supported HIV-AIDS activity for mobile populations; the Program for Educational Reform in the Americas (PREAL), which provides small grants to educational organizations in at least four Central American countries; human rights projects with the Inter-American Institute for Human Rights and other groups; rule of law projects to strengthen national police institutions with the International Criminal Investigation Training and Assistance Program (ICITAP); the Decentralization and Democratic Local Governance project, which assists local authorities and the Central American Federation of Municipalities (FEMICA) in four countries; sustainable forestry projects implemented by the World Wildlife Fund; and Parks in Peril, implemented by The Nature Conservancy, which partners with local NGOs to improve protection of national parks and biodiversity in at least two Central American countries. OTHER DONORS: Donor coordination at the regional level is very active in all sectors. The March 2001 Regional Consultative Group meeting allowed donors to meet with Central American leaders and review plans for disaster mitigation, regional integration and modernization. Other major donors providing support on a regional basis to Central America are the United Nations agencies, the Pan-American Health Organization, Canada, the European Union, the Nordic countries, and the Inter-American Development Bank. Spain has pledged to join the Central American Bank for Economic Integration as the first nonregional member, and will contribute to its financial and institutional strengthening in coming years. Program Data Sheets 596-005  Increased Central American Competitiveness in Global Markets 596-006  Improved Environmental Management in the Mesoamerican Biological Corridor 596-007  Strengthened Municipal Finance Systems for Local Governments in Central America 596-008  Enhanced Central America Capacity to Respond to HIV/AIDS Crisis - Phase II

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