From the Editors

Neo-Liberal Wars in Central America

This edition of Challenge focuses on Neo-liberal Wars in Central America.  We chose this title not as a metaphor but as a graphic characterization of neo-liberal economic policies in the region.  Miguel D'Escoto, in his article of the same title, refers to "economic wars... wars between the haves and the have nots."  While the military wars of the past decade have formally ended, these new economic wars once again threaten the life of the poor.

This war is being carried out through a series of neo-liberal policies which will further restructure the global economy in favor of the North against the South; in favor of production for the global market and against production for domestic needs; in favor of free market economies and against measures to protect domestic industries, labor rights and the environment; in favor of exorbitant profits by multinational banks and corporations and against development of peoples in the Third World.

This agenda is being imposed on the poor of the region by the United States primarily through "structural adjustment" policies of the International Monetary Fund (IMF) and the World Bank.  Entire economies of Third World nations are being restructured to produce for the global market and earn badly needed foreign currency (dollars), not to reinvest in the domestic economy and to produce for domestic needs, but to repay the foreign debt to northern banks.  This has had a devastating effect on the poor of the Third World.

The "development" of the First World has been possible because of a global economic order that keeps the Third World in a permanent state of "underdevelopment."  Between 1984 and 1990 there was a staggering net transfer of financial resources -- $155 billion -- from the South to the North, principally to repay the foreign debt.  The disparity between rich and poor in the world is double what it was in 1960.  According to this year's United Nations Development Fund report, the richest 20% of the world's population account for 82.7% of the world's income, while the poorest 20% account for only 1%.

A second related neo-liberal agenda is a series of "free trade" policies being imposed on the poor of the hemisphere through the North American Free Trade Agreement (NAFTA) and the Enterprise for the Americas Initiative, and globally through the General Agreement on Tariffs and Trade (GATT).

These free trade agreements favor multinational corporations and place labor at a distinct disadvantage, driving wages down and pitting workers in different countries against each other as they compete for jobs.  This has had a devastating effect, particularly on poor women who compete for starvation wages in the maquiladora industries.  What is needed is "fair trade" rather than "free trade."

The key to the success of any alternative model of development is the participation of the poor.  This is particularly true in El Salvador, where popular organizations and repatriated communities struggle to rebuild the country and design a model of equitable and sustainable development based on the needs and participation of the people.

The next decade will be crucial for defining the quality -- and even the possibility -- of life, especially for the poor in the Third World.  For that reason it is essential that we build solidarity with the poor and their struggle to define a popular alternative for development in Central America.