The recent energy summit between the US, Central America and the Caribbean celebrated in Washington, demonstrated the interest of the Obama government to order the energy sector of the region and exercise greater control over the natural resources of the member countries, especially Honduras, Guatemala and El Salvador. They are also looking to eliminate the dependence on Venezuelan petroleum in the framework of Petrocaribe, as they refer to a reduction of the quantities of crude oil sent to member countries due to the political and economic crisis that the government of President Maduro is facing.

This is occurring since, on the one hand, this sector is fragmented and disjointed; there is a lack of integration, compatibility and coordination of policies, programmes, projects and incentives for a common development with a long-term vision. The system of electric interconnection for the Central American region (SIEPAC) is used as a fire engine, to extinguish the flames of urgent demands, but without a long-term plan or integrated institutional structures. On the other hand, there is still strong dependency on thermal energy, despite the growing opportunities for developing renewable energy projects in the region. In Guatemala it is estimated that renewable energy generated is less than 45%, in El Salvador 43% and Honduras 51%.

Moreover, international cooperation agencies and bodies have the necessary resources to support the execution of these projects, and there is interest on the part of private US companies to invest capital in them, but there is a lack of technical capacity to absorb these resources and use them efficiently. Between 2014 and 2015, the Central American region had access to some three billion dollars from private sources of cooperation to execute less contaminating energy projects, but the potential demand duplicates this amount. 

The problem is that in the Energy Summit there was little mention of the causes that explain the low levels of effective investment in the development of energy projects, in spite of the adjustment of legal-institutional frameworks suffered by the countries to promote the development and availability of external resources facilitated by the international financial organizations. The first cause is the proliferation of an extractive approach to development that prioritizes obtaining economic and financial benefits in the short term without considering the opinion and participation of the people, grassroots organizations and local governments. In the countries of the region, especially Honduras and Guatemala, the execution of renewable energy projects is tied to corrupt institutional practices that lead to public protests by the people affected.

The second cause is covering the costs of negative externalities of projects with undesirable impacts on local economies and the material conditions of the inhabitants.

With respect to the first point, civil society organizations and environmental groups have denounced the fact that renewable energy projects have been carried out without consultation and previous participation, that is to say, without the consent and approval of the people in the areas where dams are built: in the cases where such consultations have been carried out, the majority of the meetings have been manipulated by the mayors, central government and private companies, so that the consent required for the execution of the project does not really exist.

This kind of practice is affecting the construction of projects and has a negative impact on their execution and sustainability. There are occupations of roads and rivers by indigenous groups against the building of dams, as well as due to the decreased water flow of rivers affected by projects under execution, that were approved by decree or imposed by brute force. One example is the building of the Agua Zarca dam, in Honduras, that cost the death of environmental leader Berta Caceres, and led, among other things, to the withdrawal of foreign investors and increased pressure by indigenous peoples and social organizations to stop the projects and demand justice.

As to the second aspect, the governments of the region should demand that the companies provide effective protection against damages and losses caused by the execution of badly formulated energy projects that lack clear mechanisms of regulation and sanction on the part of Central American governments.

The actions to undertake include: a) covering the costs of negative externalities generated by the execution of the projects, elaborating a working plan of the aforesaid actions and additional compensatory projects to be carried out; b) respect for legislation that demands that water for human consumption has priority over other uses; this because the complaints of inhabitants are that the hydroelectric project makes it more difficult to have access to a source of secure water; c) a policy of neutral economic incentives, that is, that does not favour the businessmen of these projects by paying them more for the energy generated compared to other sources due to the heavy investment realized.

The President of Honduras, Juan Orlando Hernández, pressed for liberalization of the energy market of the region, that would allow countries to purchase energy where it is most cheaply produced, even as he proposed to strengthen regulatory frameworks. This is taking place on the eve of entry into force of the Customs Union between Honduras and Guatemala, which is supported by the US and will be employed as an instrument of pressure to include El Salvador in this first stage. The liberalization requested implies that, within the country, subsidies would be eliminated for companies that distort the market and impact negatively on the pockets of consumers by guaranteeing a higher price per kilowatt hour of energy generated, even superior to that of the thermal power stations, which makes Honduras a more expensive and less competitive country due to the high costs of energy.

The presidents of Honduras, Guatemala and El Salvador, members and beneficiaries of the Plan of the Northern Triangle of the Region, or the “backyard” of the US together with Mexico, also spoke of the advances of the aforesaid plan, after a rumour circulated to the effect that Washingon and the Obama administration might suspend these funds due to the lack of results in the struggle against violence, corruption and impunity. In effect, in the case of El Salvador, they thought that this might happen because of the increase of violence in the streets, and in Honduras due to the impunity of corruption and of those responsible for the death of Berta Caceres (four people "supposedly" involved in the assassination have now been captured).

President Obama is pleased with the advances in the alignment of funds, so the governments are requesting the disbursement of 25% of the 750 million dollars approved by Congress that are available until 2017.

In spite of these advances, the Central American region houses two growing breeding grounds of economic and social instability. The first is the so-called environmental crisis due to the loss of forests that threatens to convert countries such as Honduras into deserts, added to the problems of agricultural drought and food dependency due to climate change. The second is the crisis of unemployment where the group of young people who neither study nor work (in Spanish, “Nini”, ie. NeitherNor) is multiplying and the universities are no longer an option due to elevated fees and the scant chances of work and payment of salaries offered in the market for those who have graduated. In Honduras, there are more than a million “Ninis”, without there being clear policies for their progressive insertion in the labour market.

The Obama administration has destined five million dollars to strengthen the regional electrical interconnection and reduce the cost of energy, and there are also resources in the framework of the Plan of the Northern Triangle Alliance to combat violence, strengthen the public security forces and operators of justice, so to reduce the alarming levels of corruption and impunity. Still, in the case of Honduras another compact of the Millennium Account has not been approved, that would allow for the rapid generation of sources of work and improve access to basic foods for the population suffering from poverty. The greatest benefits of the energy projects are destined to a reduced group of national companies and foreign capital, involving congress members and government officials; but the greatest impact and negative effects (increased loss of access to secure sources of water for human consumption and the displacement of people from their natural habitats and territories), are suffered mainly by the low income population.

We should look closely at these problems that foretell another crisis of unsuspected magnitude for the region and its people. We cannot continue destroying the principal sources of value: human labour and nature, with an authoritarian neoliberal model.

(Translated for ALAI by Jordan Bishop)

Tegucigalpa, May 6 2016