Brexit to Central America: Is the Central American Union Possible?

brexit EU

June 23 2016 will be a day for history books.

In a textbook case of participatory democracy, the UK stunned the world by voting to exit the European Union. What comes next is unknown; it will take time for the dust to settle and for I’s to be crossed and T’s to be dotted (or is it the other way around?), but there has been no shortage of drama since the historic vote.

One of the reasons Brexit made international headlines is because of the geopolitical weight it carries: the European Union was established to foster political and economic unity across a continent that had been at war with itself for centuries. It facilitated the flow of people in and out of countries, trade regulations, and created a common currency across the continent. UK’s vote to exit has sparked a domino effect among other national pro-exit groups which have called for referendums.

That said, the EU is a sophisticated model that has seen success.

The situation has presented a curious question around my social groups: could the same model be applied to Central America?

I said “no”. Not yet, anyway. A debate ensued.

Mistakes from the Past

Central America had a version of a “European Union” almost 200 years ago, albeit with some differences—rather than uniting nation states the same way the EU does, the Central American version aimed to unite provinces.

In 1823, following their separation from the Spanish Empire, the Central American countries—what are now Nicaragua, Honduras, Guatemala, El Salvador, Costa Rica—as well as what is now the Mexican state Chiapas, formed their own federation, The Federal Republic of Central America. Similarly to the EU, the FRCA was meant to foster regional unity through trade and a common currency; while the provinces opted to leave the Spanish Empire, they retained the use of the Spanish Real (adopting it as the FRCA Real) as the common currency throughout the region (Gudmundson and Lindo-Fuentes, p. 35).

FRCA
Provinces (and present-day countries) which made up the Federal Republic of Central America

Unfortunately, the FRCA didn’t replicate the successes of the European Union. It failed to generate economic and political unity among the six provinces.

Trade within the Republic was hard to establish—as Gudmundson and Lindo-Fuentes write, “it was said that no Central American producer or merchant was free of debts” (p. 33)—and it couldn’t establish a functioning credit system, either (Costa Rica was the only one of the provinces with some success). Moreover, although the FRCA kept the Real as its currency, the currency was scarce (bartering remained popular throughout the region). It also failed to establish a central bank (p. 35).

The provinces were so far apart on issues that the Republic eventually fell into a civil war.  Thus, the short-lived republic failed; by 1841, the FRCA had dissolved. The provinces separated and became the nation states they are today.

To underscore the failures of the FRCA, what followed after the separation was even more fighting between the countries—for instance, between 1841 and 1890, El Salvador had fought with Guatemala 5 times, Honduras 4 times, and Nicaragua once (White, p. 57, 2009).

In sum, rather than being brought together, the region was torn apart.

What about now?

The 20th Century saw Central American countries at peace with each other, minus a few hiccups here and there (such as The Soccer War of 1969, a brief battle fought between El Salvador and Honduras).

The 20th and 21st Century saw the formation of coalitions, commissions, trade agreements, and other international “buzzword” groups in Central and Latin America to address the region’s social, political, and economic problems. They mimic the many others which exist around the world, such as the EU, the European Parliament, The African Union, the Association of Southeast Asian Nations, NATO, etc.

One of the big groups Central America is involved in is the Organization of American States. Others include:

    • The Community of Latin American and Caribbean States (CELAC);
    • The Central American Integration System (SICA);
    • The United Nations Economic Commission for Latin America and the Caribbean (CEPAL);
    • The CA-4 Visa, which allows for free, unrestricted movement between Nicaragua, Honduras, El Salvador, and Guatemala (similar to the EU’s free-movement model);

And many more. But these agreements and coalitions don’t have anywhere near the reach of the EU’s legislative power.

What is stopping the Union?

Nothing is preventing the creation of a union, but I offer two reasons against a Central American Union.

First, Central American economies aren’t robust enough for a union to function. High crime rates, slow economic growths, and high debt-to-GDP ratios plague the region, which in turn worsen the economic climate (see country analyses in Focus Economics). There is also the issue of government transparency which has plagued the countries in their post-1990s liberalized economies.

EU
Central America is not ready for a EU-modeled union

Moreover, if a union was made, the strongest economies would be tasked with carrying the weight of the weaker ones. This means that Costa Rica and Panama, who are economically (and perhaps in terms of public policy) the top performers of the six countries within the isthmus of Central America, would be carrying the remaining four. This idea isn’t novel; others such as Nathaniel Parish Flannery have explored the implications of creating similar Latin American unions.

Second, and speaking to the first point, we can use history to see how past unions have failed. As I have outlined above, the original Federal Republic of Central America didn’t pan out as republicans had hoped because provinces clashed on political and economic matters. In the present day, the region is filled with a myriad of internal problems within its nation states (political accountability, gang activity, struggling economies). This is not the ideal climate for the creation of a united entity with a shared currency and sets of regulations.

Conclusion:

Brexit brings many questions which will be answered in the months—and likely years—to come. It’s new territory for political observers, so whatever is on the other side of the “leave” vote is anyone’s (educated) guess.

If there is anything to learn from Brexit, it’s that these unions/federations don’t always accomplish the goals they set out. Britain chose to leave because 52% of Britons didn’t identify with the rest of Europe. Something similar happened in the Federal Republic of Central America: with no common identity, and no political and economic foundation, unity crumbled.

Creating a “Central American Union” in the present day would see history repeat itself. The countries within the region have enough issues to take care of on their own. Amalgamating them to tackle problems in the name of “development” would only hinder what progress they have made.

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