Guatemala

Washington is hoping it can force asylum seekers to stay south of the border.

Political and economic unrest in Nicaragua could stoke the flames in a region where insecurity has forced tens of thousands to flee in recent years.

In the wake of Andres Manuel Lopez Obrador’s historic victory, the markets are focused on Mexico’s economic prospects, keenly sniffing for any whiff of either pragmatic promise or populist calamity. Yet while a financial crisis is possible, Central American migration may prove the new administration’s biggest first challenge. Since 2014, hundreds of thousands of Central American men, women, and children, mostly from Guatemala, Honduras, and El Salvador, have fled their homes. Driven by violence, extortion, poverty, and a drought that has decimated subsistence farming, and pulled by family connections and the hope of safe haven, they mostly head north. This desperate exodus brought some 280,000 migrants to the southern U.S. border in 2014, driving a media storm and political reckoning. Images of young children spurred churches into action, political demonstrations across the country, and even conservative talk show host Glenn Beck to drive to the border with a truckload of teddy bears and soccer balls. Congress doled out extra money to care for more than 50,000 Central American “unaccompanied alien children,” or UACs in the Department of Homeland Security’s parlance; the Obama administration worked with the presidents of El Salvador, Guatemala, and Honduras to launch the Alliance for Prosperity, a two-year $1.4 billion dollar plan to spur better governance and economic development. In 2015 the massive migrant wave to the U.S. border diminished, and the cameras largely turned away. Yet the precipitous decline wasn’t because Central Americans stopped leaving their homes. It was because Mexico stopped letting them through. Backed by more than $150 million in U.S. funding, Mexico tightened its southern border, expanding checkpoints, boosting manpower, and using fingerprinting and facial-scanning to identify and detain crossers. The government even cracked down on the infamous La Bestia (“the beast”) freight trains that carried thousands from the southern border city of Tapachula north. That year, Mexico apprehended and deported more Central Americans than its northern neighbor. This status quo of Mexico stopping tens of thousands of families each year may soon end. On the campaign trail, Lopez Obrador promised to loosen Peña Nieto’s southern border defense, refusing to “continue the dirty work” of the United States by detaining Central American migrants who are fleeing violence. As Mexico looks to ease up on its southern border, the U.S. is strengthening enforcement. President Trump’s pullback from separating young children from their parents at the border — spurred by negative media coverage — is just a brief hiatus from an ever-hardening position toward Central American migrants and asylum seekers. The Department of Justice has rewritten the asylum guidelines, raising the credible fear bar asylum seekers must reach, and all but disqualifying those fleeing criminal and domestic violence, thereby denying most Central American claims. The administration has slashed refugee spots by more than half, and tinkered with rules to deny many their day in court. And the U.S. is threatening to impose its own version of the European Union’s Dublin Regulation, under which those seeking asylum must generally do so in their first country of arrival, thereby rendering moot the asylum claims of Central Americans crossing through Mexico. The net result: Tens, if not hundreds, of thousands of Central Americans will likely get stuck in Mexico. There, these migrants will have expansive protections — at least on paper. A 2011 legislative reform guarantees asylum seekers quick and comprehensive consideration, legal representation, and an appeal. While in Mexico they have the right to apply for access to medical care and education. In reality, these rights are at best uneven. Amnesty International found that three out of every four migrants weren’t informed of their right to seek asylum, as the law requires. Although the process has slightly improved, many asylees were detained for months, also in violation of the law. One of the problems is that Mexico’s Commission for Refugee Assistance has two offices outside of the capital; its skeletal staff was able to process fewer than 5,000 cases last year. Another is the widespread corruption and violence targeting migrants, often from the agencies and officials mandated to protect them. And Mexican society isn’t ready for the influx. Not unlike the United States, some Mexicans worry immigrants will take their jobs, depress wages, or commit crimes. Violence against these newcomers has been on the rise: In 2016 alone, the Mexican government found more than 5,000 cases of crimes against migrants, nearly 20 percent at the hands of government officials. In short, Lopez Obrador may well be caught between his promises to be more open and humane to those fleeing and the desire to no longer do president Trump’s bidding, and the huge potential costs this shift could entail for his larger domestic agenda. With Mexico’s migratory agencies and services so ill-equipped, absorbing an influx would take away resources away from his efforts to lift up Mexico’s poor. On the other hand, if Lopez Obrador allows more Central Americans to flow north, Trump could well respond by clamping down further, creating a greater burden for states in northern Mexico. Mexico has long been a sending country, with millions of its citizens living abroad, mostly in the United States. It is now increasingly a receiving nation, caught between desperation to the south and xenophobia to the north, with few tools to safely manage these inflows. Lopez Obrador’s team already faces the burden of realizing his expansive campaign promises. Resolving a migration crisis on its southern border may not have been high on its list. But part of governing, of course, is preparing for unpleasant surprises. View article originally published on Bloomberg.

I am pleased to share the latest report in the Corruption Brief series from the Civil Society, Markets, and Democracy program at the Council on Foreign Relations. In this report, I focus on the case of the International Commission Against Impunity in Guatemala (better known by its Spanish acronym CICIG). In partnership with its Guatemalan counterparts, CICIG has successfully prosecuted senior government officials and achieved important reforms of the legal system. CICIG can be a model for other countries facing the challenge of deep-seated corruption and impunity, but donors must pay attention to ensuring that future CICIG-like bodies are politically independent, adequately funded, and assigned top priority within donors’ broader foreign policy and aid objectives. You can read the report here. 

A wave of corruption scandals has roiled Latin America in recent years, from Chile’s campaign finance affairs, through Mexico’s Casa Blanca revelations. Most recently, the information divulged in the December Odebrecht settlement has sent a shudder of fear across regional politics after the Brazilian construction firm admitted to paying nearly $800 million in bribes in twelve countries. The tide of corruption revelations has contributed to massive protests, slumping incumbent polls, and political uncertainty throughout the region. Obviously, the scandals of recent years differ greatly from each other. The Odebrecht scandal was driven by a Brazilian context very distinct from the Guatemalan environment that led to President Pérez Molina’s downfall, or from the Mexican and Chilean cases. Empirical evidence about corruption trends in the region is also quite mixed, with polls showing contradictory findings about the direction of public experiences with corruption victimization and public perceptions of corruption more broadly. For all these differences, there is a common silver lining to the region-wide wave of scandal. As a perceptive study released this week by the Inter-American Dialogue argues, the region has seen declining public tolerance of corruption and a rising normative edifice that makes it easier to tackle abuses. On the public side, authors Kevin Casas-Zamora and Miguel Carter catalogue a variety of factors that are changing the accountability equation. Citizens are angry: three-quarters of the population in Latin America view their society as unjust, and fewer than two in five express satisfaction with their democracies. An economic downturn has driven down incumbents’ average approval ratings across the region. Meanwhile, citizens are not only more motivated to mobilize, they are better able to do so: the revelations come against a backdrop of improving information transparency, changing access to public information through the widespread adoption of social media, and growth of a politically active middle class. Simultaneously, a “new normative edifice” of international agreements and standards, alongside improved national laws and policies, has given teeth to previously weak anticorruption bodies (see figure below). Laws have been introduced or rewritten in ways that constrain money laundering, reduce campaign finance violations, increase fiscal transparency, and facilitate prosecution. The investigative capacities of police and prosecutors have increased. New bodies, such as governmental auditing agencies and civil society anticorruption organizations, have been created in many countries over the past two decades. Anticorruption measures adopted by Latin American countries, 1990-2015 Source: Kevin Casas-Zamora and Miguel Carter, “Beyond the Scandals: The Changing Context of Corruption in Latin America,” Inter-American Dialogue, February 2017. The authors are quick to remind us that there is a big gap between laws on the books and “their effective implementation and enforcement.” But the cautiously optimistic conclusion I draw from their analysis is that the pincer movement of greater public mobilization for effective accountability, on the one hand, and institutional changes, on the other, is having tangible effects in fighting longstanding patterns of impunity for corruption across countries as diverse as Brazil, Chile, Guatemala, Honduras, Mexico, and Panama. This two-pronged process may continue to cause political instability for the foreseeable future. And the list of reforms that are still needed is enormous, from structural changes, such as addressing the economic and political disparities that diminish the equality of citizens before the law, to more “technical fixes” such as improving judicial performance and enhancing political finance oversight. But overall, the trend is a largely positive one, with declining public and institutional tolerance fueling corruption revelations. These in turn often generate the political pressure for legal and institutional reforms that have the potential to create less corrupt and more accountable political systems. Whether one agrees with this hopeful conclusion or not, the report is well worth a read, marshalling substantial cross-national evidence on the evolution of corruption and accountability processes across the region.

A wave of corruption scandals has roiled Latin America in recent years, from Chile’s campaign finance affairs, through Mexico’s Casa Blanca revelations. Most recently, the information divulged in the December Odebrecht settlement has sent a shudder of fear across regional politics after the Brazilian construction firm admitted to paying nearly $800 million in bribes in twelve countries. The tide of corruption revelations has contributed to massive protests, slumping incumbent polls, and political uncertainty throughout the region. Obviously, the scandals of recent years differ greatly from each other. The Odebrecht scandal was driven by a Brazilian context very distinct from the Guatemalan environment that led to President Pérez Molina’s downfall, or from the Mexican and Chilean cases. Empirical evidence about corruption trends in the region is also quite mixed, with polls showing contradictory findings about the direction of public experiences with corruption victimization and public perceptions of corruption more broadly. For all these differences, there is a common silver lining to the region wide wave of scandal. As a perceptive study released this week by the Inter-American Dialogue argues, the region has seen declining public tolerance of corruption and a rising normative edifice that makes it easier to tackle abuses. On the public side, authors Kevin Casas-Zamora and Miguel Carter catalogue a variety of factors that are changing the accountability equation. Citizens are angry: three-quarters of the population in Latin America view their society as unjust, and fewer than two in five express satisfaction with their democracies. An economic downturn has driven down incumbents’ average approval ratings across the region. Meanwhile, citizens are not only more motivated to mobilize, they are better able to do so: the revelations come against a backdrop of improving information transparency, changing access to public information through the widespread adoption of social media, and growth of a politically active middle class. Simultaneously, a “new normative edifice” of international agreements and standards, alongside improved national laws and policies, has given teeth to previously weak anticorruption bodies (see figure below). Laws have been introduced or rewritten in ways that constrain money laundering, reduce campaign finance violations, increase fiscal transparency, and facilitate prosecution. The investigative capacities of police and prosecutors have increased. New bodies, such as governmental auditing agencies and civil society anticorruption organizations, have been created in many countries over the past two decades. Anticorruption measures adopted by Latin American countries, 1990-2015                           Source: Kevin Casas-Zamora and Miguel Carter, “Beyond the Scandals: The Changing Context of Corruption in Latin America,” Inter-American Dialogue, February 2017.   The authors are quick to remind us that there is a big gap between laws on the books and “their effective implementation and enforcement.” But the cautiously optimistic conclusion I draw from their analysis is that the pincer movement of greater public mobilization for effective accountability, on the one hand, and institutional changes, on the other, is having tangible effects in fighting longstanding patterns of impunity for corruption across countries as diverse as Brazil, Chile, Guatemala, Honduras, Mexico, and Panama. This two-pronged process may continue to cause political instability for the foreseeable future. And the list of reforms that are still needed is enormous, from structural changes, such as addressing the economic and political disparities that diminish the equality of citizens before the law, to more “technical fixes” such as improving judicial performance and enhancing political finance oversight. But overall, the trend is a largely positive one, with declining public and institutional tolerance fueling corruption revelations. These in turn often generate the political pressure for legal and institutional reforms that have the potential to create less corrupt and more accountable political systems. Whether one agrees with this hopeful conclusion or not, the report is well worth a read, marshalling substantial cross-national evidence on the evolution of corruption and accountability processes across the region.

Central America’s Northern Triangle is one of the most violent regions in the world. Last year’s murder rate of roughly 54 per 100,000 inhabitants surpasses Iraq’s civilian death toll. El Salvador alone registered 103 homicides per 100,000—making it the deadliest peacetime country. While victims are often young men, women and children die too. Kids face a murder rate of 27 per 100,000 in El Salvador—making the country as dangerous for elementary and middle schoolers as it is for an adult in the toughest neighborhoods of Detroit or New Orleans. Its neighbors Honduras and Guatemala are also among not just Latin America’s but the world’s most dangerous nations. This violence is one of the main factors driving massive migration. In 2014, U.S. border patrol detained a record 239,000 Central Americans on the southern border. In 2015, this figure fell, in large part because Mexico stopped those leaving—sending back some 150,000 migrants caught along its border with Guatemala. In the last three plus years over 136,000 unaccompanied minors and 140,000 more family members have come north—enough to populate Cincinnati. Tens of thousands are fleeing to neighboring countries—Mexico, Panama, Nicaragua, Costa Rica, and Belize have all seen asylum applications skyrocket. Less than five months into 2016, 56,000 new unaccompanied minors and others are already in U.S. custody, suggesting another record surge in the making. The challenges facing Central America won’t diminish soon, meaning migration flows to the United States and elsewhere won’t end. Proposed solutions—strengthening public prosecutors, training police, cleaning up prisons, building community centers, and developing alternative jobs programs —will only make a difference in the medium to longer term. And though the U.S. Congress has approved $750 million for programs to reduce violence and boost economic development, those taking a historical perspective know this isn’t the first time the United States and others have tried to buttress these fragile nations, with few results. Yet what might be different this time comes from these societies themselves. Even as many justifiably flee, other Central Americans (notably not many of their elites, at least yet) are raising their voices against the poverty, inequality, corruption, and violence. Investigative journalists, armed with freedom of information acts, digital paper trails (such as the Panama papers), and other tools within these budding democracies have uncovered deep-seated corruption—including powerful Guatemalan politicians using their office for personal gain, and the expansive ties between Honduran elites and organized crime. Local prosecutors and judges too have stepped up to make sure justice is done, even if it involves the powerful. In Guatemala, the attorney general—working closely with the International Commission Against Impunity in Guatemala (CICIG)—brought down the former president and vice president for running a customs fraud scheme. El Salvador’s Supreme Court is going after two former presidents for graft. And citizen protests have grown. In Guatemala, the peaceful demonstrations by tens of thousands led to the resignation of President Otto Pérez Molina. In Honduras, citizen outrage over $200 million missing from the social security system forced the government to accept a new Mission Against Corruption and Impunity in Honduras, modeled after CICIG, to investigate that and other alleged wrongdoings. Ongoing protests following the assassination of environmental and indigenous activist Berta Cáceres are forcing the government to investigate. These steps, while fledgling, could matter for these nations’ future. Their successes or failures will also likely matter in shaping future decisions to exit—through migration—or to stay and raise one’s voice, for change at home.

This is a guest blog post by Dr. Richard Messick, an anticorruption specialist. It is based on a CFR roundtable discussion on March 24 hosted by Matthew M. Taylor, adjunct senior fellow for Latin America Studies. One of the most promising developments in U.S. foreign relations is the all-out war on corruption being waged across Latin America. From “Operation Car Wash” in Brazil to investigations of presidential wrongdoing in Bolivia, El Salvador, Honduras, Guatemala, and Panama, across the region independent, tenacious prosecutors and investigators are out to end the massive theft of state resources that for so long has hobbled political development and throttled economic growth. The United States should be cheering for these corruption warriors, for we have much to gain if they succeed. Less corruption translates into more stable, reliable political allies; it means faster, more equitable growth and that means shared prosperity and less northward migration. Finally, less corruption in government will offer U.S. firms new opportunities. Think what the end of corruption in Brazilian public works would mean for U.S. engineering and construction companies. But given the stakes in Latin America’s corruption war, the United States should be doing more than cheering from the sidelines. It should be doing everything it can—without infringing the sovereignty or sensibilities of Latin American neighbors—to see its corruption warriors succeed. Here are five things to start with: Fund the U.S. Department of Justice’s Office of International Affairs (OIA) budget request. If a Latin American investigator learns an official he or she is investigating has a bank account in the United States, the investigator can ask the OIA to obtain the account’s records to see if corrupt money is being parked there. But the office had at latest count more than 11,000 requests pending and was receiving 3,000 plus new ones each year. Unless the investigator gets lucky and the request finds its way to the top of the pile, he or she will be long retired, and the suspect long dead, before the OIA responds. For years the U.S. Department of Justice (DOJ) has asked Congress, without success, for funds to hire more staff to speed requests. This year it requested $10 million to add 97 positions, 54 attorneys, and 43 paralegals and support staff. Isn’t it time Congress said yes to this modest request? Name a single focal point to help Latin American law enforcement agencies. When looking to the United States for assistance, Latin Americans face a bewildering number of agencies, bureaus, and offices: the Federal Bureau of Investigation (FBI), the Drug Enforcement Agency (DEA), U.S. Immigration and Customs Enforcement (ICE), the U.S. Secret Service, the Financial Crimes Enforcement Network (FinCEN), the 92 U.S. Attorney’s offices, and these are just at the federal level. There are hundreds, if not thousands, at the state and local level. It takes experienced U.S. law enforcement officers years to figure out where to go for information. Why not make it easy for Latin Americans who don’t have years to decipher the complex and bewildering U.S. system? Create one office, staffed with personnel fluent in Spanish and Portuguese from across the federal and state governments who can serve as a “one-stop shop” for Latin American police, prosecutors, and judges needing information from their U.S. counterparts. Create an interagency task force to work with Latin American counterparts to target corrupt Latin American officials. Whenever a corrupt Latin American official uses the proceeds of a bribe to buy an apartment in Miami or open a bank account in Houston or Los Angeles, he or she has violated U.S. antimoney laundering laws. Depending upon whether they traveled in the United States, used U.S. mail services, or U.S. email servers, they may have also committed wire fraud or violated the laws forbidding travel across state lines in furtherance of fraud or corruption. A task force of U.S. personnel drawn from ICE’s Foreign Corruption Investigations Group, DOJ’s Foreign Corrupt Practices Act (FCPA) unit, the U.S. Attorney’s offices in Miami, the FBI’s international corruption squads, DOJ’s kleptocracy unit, and other relevant agencies should be available to work with Latin American counterparts on possible violations of U.S. law committed by corrupt Latin American officials. Greater intelligence sharing and joint investigations in association with Latin American anticorruption agencies and prosecutors would enhance both regional and domestic efforts against corruption and ill-gotten gains. Enact the Incorporation Transparency and Law Enforcement Assistance Act. Introduced by Congresswoman Carolyn Maloney and colleagues in the House of Representatives and Senator Sheldon Whitehouse and colleagues in the Senate, this would end the ability of corrupt officials, as well as drug traffickers and other unsavory individuals, to keep investigators from learning how much money they have and where it came from. Under current law, a corrupt Latin American official can open a bank account in the United States in the name of a Delaware limited liability company. He or she can own the company anonymously, that is, without anyone, in Delaware or elsewhere, knowing his or her identity. If Global Witness’s exposé of U.S. lawyers counseling an investigator posing as the agent of a corrupt minister weren’t enough to persuade lawmakers of the need for the legislation, the April 3 revelations of massive abuses in the use of anonymous shell companies by the International Center for Investigative Journalism (ICIJ) should lay to rest any lingering doubts about how critical this legislation is to the fight against not only corruption but terrorism and organized crime as well. End secrecy in the U.S. real estate market. Thanks to gaps in U.S. antimoney laundering regulations, corrupt officials in Latin America (and elsewhere) can use the proceeds of corruption to secretly buy property in the United States. Requiring real estate agents, title insurance companies, and others involved in the purchase and sale of condominiums, houses, and other U.S. real estate to comply with the antimoney laundering rules will expose attempts by corrupt officials to create a “safe haven” for when they leave office. The U.S. Department of the Treasury took a small, first step in this direction in January when it issued an emergency order (in response to a New York Times’ exposé) requiring title insurance companies in Manhattan and Miami-Dade Country to apply antimoney laundering rules to all real estate purchases over $1 million in cash for the next six months. The rule should be made permanent and extended to all regions. Since 2002 the Treasury Department has given real estate brokers a “temporary” exemption from the antimoney laundering rules while it studies their situation. The time for study is over. The Treasury Department should follow the European Union’s lead and require brokers to comply with the antimoney laundering rules. The burden of ridding Latin America of the corruption that infests so many of its governments remains first and foremost the responsibility of its governments. But the United States has much to gain if they succeed, and there is much it can do to help them. The steps above are a modest beginning; it should move on them expeditiously. This piece also appeared on the Global Anticorruption Blog.

This is a guest blog post by Dr. Richard Messick, an anticorruption specialist. It is based on a talk he gave at a CFR roundtable on March 24 hosted by Matthew M. Taylor, adjunct senior fellow for Latin America Studies. One of the most promising developments in U.S. foreign relations is the all-out war on corruption being waged across Latin America. From “Operation Car Wash” in Brazil to investigations of presidential wrongdoing in Bolivia, El Salvador, Honduras, Guatemala, and Panama, across the region independent, tenacious prosecutors and investigators are out to end the massive theft of state resources that for so long has hobbled political development and throttled economic growth. The United States should be cheering for these corruption warriors, for we have much to gain if they succeed. Less corruption translates into more stable, reliable political allies; it means faster, more equitable growth and that means shared prosperity and less northward migration. Finally, less corruption in government will offer U.S. firms new opportunities. Think what the end of corruption in Brazilian public works would mean for U.S. engineering and construction companies. But given the stakes in Latin America’s corruption war, the United States should be doing more than cheering from the sidelines. It should be doing everything it can—without infringing the sovereignty or sensibilities of Latin American neighbors—to see its corruption warriors succeed. Here are five things to start with: Fund the U.S. Department of Justice’s Office of International Affairs (OIA) budget request. If a Latin American investigator learns an official he or she is investigating has a bank account in the United States, the investigator can ask the OIA to obtain the account’s records to see if corrupt money is being parked there. But the office had at latest count more than 11,000 requests pending and was receiving 3,000 plus new ones each year. Unless the investigator gets lucky and the request finds its way to the top of the pile, he or she will be long retired, and the suspect long dead, before the OIA responds. For years the U.S. Department of Justice (DOJ) has asked Congress, without success, for funds to hire more staff to speed requests. This year it has requested $10 millionto add 97 positions, 54 attorneys, and 43 paralegals and support staff. Isn’t it time Congress said yes to this modest request? Name a single focal point to help Latin American law enforcement agencies. When looking to the United States for assistance, Latin Americans face a bewildering number of agencies, bureaus, and offices: the Federal Bureau of Investigation (FBI), the Drug Enforcement Agency (DEA), U.S. Immigration and Customs Enforcement (ICE), the U.S. Secret Service, the Financial Crimes Enforcement Network (FinCEN), the 92 U.S. Attorney’s offices, and these are just at the federal level. There are hundreds, if not thousands, at the state and local level. It takes experienced U.S. law enforcement officers years to figure out where to go for information. Why not make it easy for Latin Americans who don’t have years to decipher the complex and bewildering U.S. system? Create one office, staffed with personnel fluent in Spanish and Portuguese from across the federal and state governments who can serve as a “one-stop shop” for Latin American police, prosecutors, and judges needing information from their U.S. counterparts. Create an interagency task force to work with Latin American counterparts to target corrupt Latin American officials. Whenever a corrupt Latin American official uses the proceeds of a bribe to buy an apartment in Miami or open a bank account in Houston or Los Angeles, he or she has violated U.S. antimoney laundering laws. Depending upon whether they traveled in the United States, used U.S. mail services, or U.S. email servers, they may have also committed wire fraud or violated the laws forbidding travel across state lines in furtherance of fraud or corruption. A task force of U.S. personnel drawn from ICE’s Foreign Corruption Investigations Group, DOJ’s Foreign Corrupt Practices Act (FCPA) unit, the U.S. Attorney’s offices in Miami, the FBI’s international corruption squads, DOJ’s kleptocracy unit, and other relevant agencies should be available to work with Latin American counterparts on possible violations of U.S. law committed by corrupt Latin American officials. Greater intelligence sharing and joint investigations in association with Latin American anticorruption agencies and prosecutors would enhance both regional and domestic efforts against corruption and ill-gotten gains. Enact the Incorporation Transparency and Law Enforcement Assistance Act. Introduced by Congresswoman Carolyn Maloney and colleagues in the House of Representatives and Senator Sheldon Whitehouse and colleagues in the Senate, this would end the ability of corrupt officials, as well as drug traffickers and other unsavory individuals, to keep investigators from learning how much money they have and where it came from. Under current law, a corrupt Latin American official can open a bank account in the United States in the name of a Delaware limited liability company. He or she can own the company anonymously, that is, without anyone, in Delaware or elsewhere, knowing his or her identity. If Global Witness’ expose of U.S. lawyers counseling an investigator posing as the agent of a corrupt minister weren’t enough to persuade lawmakers of the need for the legislation, the April 3 revelations of massive abuses in the use of anonymous shell companies by the International Center for Investigative Journalism (ICIJ) should lay to rest any lingering doubts about how critical this legislation is to the fight against not only corruption but terrorism and organized crime as well. End secrecy in the U.S. real estate market. Thanks to gaps in U.S. antimoney laundering regulations, corrupt officials in Latin America (and elsewhere) can use the proceeds of corruption to secretly buy property in the United States. Requiring real estate agents, title insurance companies, and others involved in the purchase and sale of condominiums, houses, and other U.S. real estate to comply with the antimoney laundering rules will expose attempts by corrupt officials to create a “safe haven” for when they leave office. The U.S. Department of the Treasury took a small, first step in this direction in January when it issued an emergency order (in response to a New York Times’ expose) requiring title insurance companies in Manhattan and Miami-Dade Country to apply antimoney laundering rules to all real estate purchases over $1 million in cash for the next six months. The rule should be made permanent and extended to all regions. Since 2002 the Treasury Department has given real estate brokers a “temporary” exemption from the antimoney laundering rules while it studies their situation. The time for study is over. The Treasury Department should follow the European Union’s lead and require brokers to comply with the antimoney laundering rules. The burden of ridding Latin America of the corruption that infests so many of its governments remains first and foremost the responsibility of its governments. But the United States has much to gain if they succeed, and there is much it can do to help them. The steps above are a modest beginning; it should move on them expeditiously. This piece also appeared on the Global Anticorruption Blog.

Latin America’s corruption scandals of the past two years are moving slowly toward resolution. As they move forward, it is interesting to note that in a region that has been particularly protective of its sovereignty, foreign cooperation has played a significant role, whether it is via bilateral exchanges between prosecutors, mutual legal assistance treaties, or even United Nations support, as in the case of Guatemala’s International Commission Against Impunity (CICIG). But these various forms of international cooperation may soon be joined by another international anti-corruption effort that is less well understood in Latin America: prosecution by U.S. attorneys. The Petrobras scandal has so far touched down in Argentina, Peru, Panama, Brazil, and the United States, making it a truly hemispheric corruption case. I was therefore taken aback when a well-informed colleague from the region suggested to me that in his view, the United States would never prosecute Petrobras, because doing so might harm U.S. foreign policy interests. In reflecting on this remark later, I think that he meant that a U.S. government that seems to be trying hard to mend fences in the region would be loathe to be seen as violating national sovereignty or acting in ways that could cast the United States in the familiar role of an avaricious exploiter of Latin American resources. This perspective has deep roots. Brazilian academics have argued that the United States seeks to limit Brazil’s energy self-sufficiency as part of its broader geopolitical strategy of hegemony. A Brazilian senator echoed this perspective in floor debate last week, noting that, having weakened Petrobras, investors were now seeking a reduced role for the oil company that would hand “the future of Brazil to Shell.” Meanwhile, other prominent Brazilian politicians have shown little understanding of the independence of their own national prosecutorial office, and therefore may not be ready to accept that the discretion of U.S. prosecutors is also significant, even when foreign policy is on the line. Domestic legal calculations also play a role: Brazilian prosecutors, for example, have been very careful to paint Petrobras as a victim rather than a target. There are many reasons for this prosecutorial caution: there is doubt about the culpability of many of the firm’s directors, Brazil’s Clean Company Law is new and untested, and there are a variety of more attractive targets for prosecution. Furthermore, there may well be trepidation about the political costs of taking down the the crown jewel of Brazil’s state-owned companies: most Brazilians are up in arms that Petrobras has been so violated by graft and gross mismanagement, but they understandably do not want to see it further damaged. On the U.S. side, however, the big question is not really whether U.S. prosecutors are going to prosecute wrongdoing, but when. Given the sharp drop in Petrobras’ market capitalization—from a high of $380 billion to $23 billion today—the U.S. Securities and Exchange Commission (SEC) may have little option, given that its mandate is to curb behaviors that cause damage to shareholders and stock market integrity. Already, Petrobras has taken a write-down of more than $17 billion for overvalued assets, including $2 billion associated with corrupt acts, and the U.S. Department of Justice (DOJ) and SEC have announced investigations. News reports suggest that Petrobras could be the target of the largest ever penalties ever levied by U.S. authorities in a corporate corruption investigation, exceeding the record-breaking $800 million paid by Siemens in its 2008 agreement with the DOJ and SEC. If such fines came to pass, they would have a shocking effect on a Brazilian public already reeling from more than their fair share of bad news. A former Brazilian Supreme Court justice predicted that for those who are unaware that it is coming down the pike, a U.S. prosecution will be a “humiliation and a devastation.” U.S. prosecutors will also be keen to understand kickbacks and corruption that may have taken place on U.S. soil, as in possibly fraudulent refinery purchases, or that might have passed through U.S. banks via offshore accounts in Panama or Switzerland, as Brazilian investigators allege. There are a variety of potential avenues for enforcement, ranging from SEC administrative sanctions through a full prosecution under the Foreign Corrupt Practices Act (FCPA), made possible because Petrobras is publicly listed on the New York Stock Exchange (NYSE), and made more likely by the DOJ’s recent efforts to ramp up FCPA prosecutions. Prosecutions could be led by state prosecutors, the DOJ, by the U.S. Attorney for the Southern District of New York, whose office has been aggressive in prosecuting violations of corporate malfeasance, or by some combination of all of these autonomous actors. Potential oversight bodies could also include an alphabet soup of agencies involved in asset forfeiture and money laundering, in the DOJ and U.S. Department of Treasury, as well as state governments. And of course, Petrobras is already facing civil litigation in the United States, as well as the legal costs associated with nearly 300 foreign business partners who are also potential targets of investigation. In sum, the international dimension of Latin America’s corruption saga is only just getting underway. Legal action by the United States may not be greeted with acclaim across the Brazilian political spectrum, but together with Brazil’s enthusiastic prosecution of the case, it brings the hope that the regional compliance environment may change for the better.

Once a year, policymakers and the press are forcibly reminded of the terrible costs of corruption. This year, it fell on January 27, when Transparency International’s Corruption Perceptions Index (CPI) was released, inciting the ritual gnashing of teeth and beating of chests about relative national corruption gains and losses. This is precisely the sort of attention that Transparency International hopes to draw to corruption. In this sense, the report is very much a continued success. But the CPI’s utility as a policy tool is less clear-cut, not least because there are so many reasons a country might rise or fall, including revelations of previously hidden corruption or simply the movement of other countries, which then push their peers up or down in relative terms. Transparency International routinely acknowledges these issues, and actively encourages readers not to use the measure as a longitudinal indicator. But this advice usually falls on the deaf ears of headline-seeking editors. The CPI remains a blunt tool, which doesn’t provide us much guidance on how and why public perceptions of corruption are changing, or broader lessons about what works in the fight for accountability. Nonetheless, there are a few important takeaways from the report that are especially relevant to Latin America. First, grand political corruption is ubiquitous and no country is immune. Shannon O’Neil pointed last year to the potentially significant political implications of the wave of corruption scandals that have beset Latin America over the past two years. These scandals have erupted at all levels of the CPI: in countries among the highest ranked (Chile, ranked 23rd of 167 positions), at the middle of the pack (Brazil and Mexico, 76th and 95th), and near the bottom (Honduras and Guatemala, 112th and 123rd). Second, if there is one policy recommendation that emerges from recent Latin American experience, it is that increasing checks and balances, granting true autonomy to watchdog agencies, and building budgetary and human resource capacities, all contribute to better control of corruption. Conversely, countries such as Venezuela in which these checks and balances have been eroded for political reasons suffer unintended consequences, including worsening corruption outcomes. Robust democracy, in other words, has some collateral accountability benefits. In the short term, improving capacity may lead to gains in corruption perceptions. One of the most improved countries in the CPI is Honduras, which rose fourteen spots, in part because of massive public protests last year that led a scandal-weakened government to acquiesce to the creation of an independent international panel of judges and prosecutors to investigate corruption: the Organization of American States (OAS)-sponsored Support Mission Against Corruption and Impunity (MACCIH), modelled on Guatemala’s UN-backed International Commission Against Impunity (CICIG). Despite its shortcomings, including fears that MACCIH may merely serve as a smokescreen to protect the president against removal, it is hoped that MACCIH will be strong enough to provide investigatory credibility in an institutional environment marked by a politically-dominated judiciary. Yet even in countries that are moving in the right direction and developing the autonomous capacity of their institutions, the perverse consequence may be the uncovering of major corruption, and a tumble in the CPI, as InsightCrime noted. Guatemala, where last year’s corruption scandal culminated in the forced resignation of President Otto Pérez Molina, declined eight spots. Brazil, where prosecutors have filed more than 1,000 charges, recovered more than a half-billion dollars, and convicted eighty for corruption associated with state-owned Petrobras, has fallen by seven spots. Let me close by floating two suspicions about the extent to which corruption will be relevant to Latin American politics in coming years. First, declining economic fortunes are likely to be accompanied by increasing revelations of corruption that was underway during the boom times. Bad economic times mean turnover in governments, closer scrutiny of past incumbents’ accounts, and an energetic scramble for tax revenue, including through tighter oversight. Able politicians may seek to deflect attention from current economic woes by pointing a finger of blame at corrupt predecessors who wasted the bonanza of the commodity boom. If the first suspicion is correct, the second follows: impunity is likely to be one of the next big political shibboleths in the region. Latin American countries have historically been a paradise for corruption; as Steve Morris noted with regard to Mexico, impunity has long been corruption’s evil twin. Impunity makes corruption much less risky and much more lucrative. A recent estimate suggests that only 3 percent of Argentina’s corruption cases since 1980 have led to convictions, and judges took on average fourteen years to reach final sentences in these cases. Of course, these dismal results are only the tip of the iceberg, since they refer only to those cases that actually saw the light of day. And it seems unlikely that Argentina is an outlier with regard to judicial ineffectiveness, although data on corruption prosecutions and trials is weak around the region. All of this suggests that for all its faults, the CPI release will continue to be closely watched throughout Latin America in years to come.  

During the summer of 2014 tens of thousands of unaccompanied minors surged across the U.S-Mexico border. Over the course of the fiscal year, nearly 70,000—mostly from the Northern Triangle countries of El Salvador, Guatemala, and Honduras—endured brutal and at times even deadly conditions as they made their way to the United States. While most of these children were between the ages of 13 and 17, the fastest growing group was 6 to 12 years old. Of the many factors that influenced their individual decisions, four stand out. U.S. Customs and Border Patrol, “Unaccompanied Alien Children Encountered by Fiscal Year,” 2015. The first is violence. In 2012, the homicide rate in Honduras reached 90 per 100,000—the highest in the world. El Salvador and Guatemala’s homicide rates were 41 and 40 per 100,000, respectively, some of the highest in the hemisphere. Much of this violence is gang related, fueled by robbery, kidnapping, extortion, and drug trafficking. Extreme poverty and inequality also leads children north. Nearly 67 percent of Hondurans, 45 percent of Salvadorans, and 55 percent of Guatemalans live in poverty. One in two Guatemalan children under five suffer from chronic malnutrition, affecting their physical and cognitive development for life. Add in bad schools and few good jobs, there is little reason to stay. The third driving force is family. Over 3 million Central Americans live in the United States, the result of past migration waves. Surveys by Fulbright Scholar Elizabeth Kennedy found that 90 percent of the unaccompanied minors she interviewed from El Salvador had a family member living in the United States. One in three said reuniting with them was the main motivation for leaving home. The importance of family networks is reflected in the disparities in migration paths: despite extreme poverty, few Nicaraguans head to the United States; instead they flock to Costa Rica. Finally, misinformation from client-seeking coyotes pushed many to come. Last spring and summer these traffickers spread rumors that for a limited time United States government would give children amnesty. Pushed out through social media, many families spent upwards of US$8,000 to take advantage of this supposed relaxation in rules. The surge seemed to end as quickly as it began. By September illegal apprehensions were less than half May numbers. One reason for this rapid decline is seasonality. More Central Americans (and Mexicans) come in the spring and summer months when labor needs spike. A second are U.S. efforts to counteract coyotes’ erroneous claims. A US$1 million Spanish-language multi-media “Dangers and Awareness” Campaign ran some 6,500 radio and television advertisements in El Salvador, Honduras, and Guatemala to dispel the falsehoods being spread. Perhaps most importantly, Mexico stepped up its southern border and transit route enforcement; curtailing, for instance, migrants riding the infamous train “The Beast.”In 2014, deportations back to Central America jumped by a third. Still, the United States should prepare for a new influx this spring. Poverty, inequality, and violence continue unabated in the region. And a decent U.S. economy provides opportunities that, for many, outweigh the dangers of the trip. If early trends hold, unaccompanied minors heading north in 2015 will likely be second in number only to the record breaking 2014 flows. To help tackle the root causes, President Obama has asked for over US$1 billion to, in the words of Vice President Joe Biden, support the “difficult reforms and investments required to address the region’s interlocking security, governance and economic challenges.” Skeptics may argue that the billions of dollars spent in the past have little to show. Others may question whether just US$1 billion, divided between three troubled nations, can make a difference. Leadership and political resolve will matter just as much as resources. But without steps to change the calculus, Central America’s youth will continue their treks to the U.S. border.