EPICA: Ecumenical Program in Central America and the Caribbean

THE PLAN PUEBLA PANAMA IN A NUTSHELL:
A PPP PRIMER IN 17 QUESTIONS AND ANSWERS

Since President Vicente Fox of Mexico announced the birth of the Plan Puebla Panama (PPP) in 2000, hundreds of articles have come out on the subject. There now are even books available. (1) But for many people the PPP is a new and unknown topic, and we thus offer herein to our readers a primer on the topic, as a first introduction, which in due course can be complimented by other studies. For further information, our readers are directed to CIEPAC’s web page, www.ciepac.org , which contains a special section on the PPP with some articles in English and links to other sources.

In this primer we shall cover the following questions:

1. Is there a one or two sentence summary of what the PPP is?
2. Who is pushing the PPP?
3. What does it have to do with NAFTA?
4. How does it tie into other plans?
5. Why is it of importance to people outside Mexico and Central America?
6. Would only American multinational corporations (MNCs) be benefited?
7. Why has this particular area been so designated?
8. Why haven’t the MNCs gone into the area previously?
9. What will the PPP do to entice MNCs?
10. What are the major components of the PPP?
11. How much money is involved and where is it coming from?
12. Who will the PPP affect development?
13. What are the environmental aspects?
14. Will there be positive effects for the poor?
15. Are there alternatives?
16. What are people doing locally to protest the PPP?
17. What can I do to help?

So let’s begin.

1. Is there a one or two sentence summary of what the PPP is?

On one level the Plan Puebla Panama is very easy to understand. It is a vast infrastructure construction project, designed to please big business, that covers 9 states in south-southeast Mexico and the 7 Central American republics.

2. Who is pushing the PPP the hardest?

Ostensibly the answer is Mexico, since the PPP was supposedly conceived by the present Fox administration, but its antecedents lie in plans and projects previously designed by the World Bank and the Inter-American Development Bank for Mexico and Central America. After Fox was inaugurated in December 2000, he put a number of the construction projects in Mexico and Central America into a single PPP package. Fox presented the package to the Central American presidents in a summit meeting in El Salvador on June 15, 2001, which was subsequently approved.

3. Does the PPP have anything to do with NAFTA (North American Free Trade Agreement)?

NAFTA is a 1994 trade agreement that “sets the rules” for trade among nations, in this case between Mexico, Canada and the US. Now, the US seeks to expand the same rules to all 34 countries in North, Central and South America, plus the Caribbean nations (except Cuba), in a trade agreement known as the FTAA (Free Trade Area of the Americas).

The FTAA, we might add, has a geopolitical dimension of great importance to the United States. It would create a single trading block, “from the Yukon to the Patagonia”, under US hegemony, that will rival the European and Asian blocks. FTAA carves out the Western Hemisphere for the United States, at least in terms of trade.

So the trade agreements (NAFTA and FTAA) are a necessary prerequisite for the “proper investment climate” that corporations are looking for. The PPP goes a step further by channeling billions of state funds to develop needed infrastructure to further interest corporations.

4. How does the PPP tie into other plans?

The PPP ties in with a similar infrastructure project in South America called IIRSA (South America Regional Infrastructure Integration Initiative). The PPP and IIRSA seek to create basic infrastructure, or improve that which exists, in an effort to entice large corporations into investing in the area. The improvements in infrastructure would essentially boost corporate profits by easing, for example, the movement of goods in and out of the region, by improving roads. Yet the cost of infrastructure projects would be borne to a large degree by the people of the countries involved, either through direct taxpayer payments, or through loans taken out by participating countries that will eventually be repaid through taxpayer contributions.

5. Why is the PPP of importance to people who live outside the Mexico-Central American region? Why should it be of particular interest to Americans?

Because mostly American MNC interests will be benefited. The PPP will make it easier for large multinational corporations (MNCs) to invest in a region that is rich in oil, mineral deposits, timber, tourism sites. It is one of the most biologically diverse areas in the world, making it of interest to pharmaceutical, seed, and genetic-research firms. It is also strategic for the area’s geography since it is the narrowest part of the Americas, making it a natural corridor for east-west trade.

6. But wait. You say MNCs will be interested, but MNCs come in all shape and sizes. The PPP wouldn’t benefit just American MNCs, would it?

Quite right. Investment capital from throughout the world might find it profitable to invest in the PPP area, but for a number of reasons American companies are sure to be the major beneficiaries. Here’s why.
•???????For one, it is in the US historical “backyard”, where the US has had a major say in how things are run since the 19th century, to favor its own political and corporate interests. As US Secretary of State Colin Powell has said with startling frankness, “Our objective with the FTAA is to assure for American corporations control of a territory that runs from the North Pole to the Antarctica, free access, without any hindrance or difficulty for our products, services, technology and capital through the hemisphere”. (2)
•???????Security strategists have taken renewed interest in Mexico and Central America since the September 11 attacks.
•???????George W. Bush proposed a new free-trade agreement with the Central American republics in January 2002.
•???????President Bush recently won “fast-track” negotiating authority from Congress which will allow him to push through other trade agreements, such as the FTAA.
•???????Most of Mexico and Central America’s trade, both imports and exports, is closely tied to the US. In the case of Mexico, upwards of 85% of its exports go to the US and a similar amount of its imports come from the US. Central America is similarly dependent on the United States for its foreign trade, but to a lesser degree. (3)

All of this means that American MNCs are the most closely linked to this region.

7. Why has this particular area been so designated? Why link the south-southeast of Mexico to Central America?

The official line has to do with promoting foreign investment in an area which, although rich in natural resources, has some of the highest poverty in the Americas. The Fox administration, at the urging of the IDB and the World Bank, touted the Plan Puebla Panama as a way of addressing the region’s poverty in a supposed “integral” manner. For neoliberal politicians and strategists, poverty must be addressed, but not necessarily “resolved” (which would entail looking at why people are poor in the first place). Their way of addressing poverty is through job creation that hopefully will come with MNC investment, once large companies are enticed into the PPP area.

8. Well, if the PPP area is so rich in resources and opportunities, why haven’t MNCs been chomping at the bit to get in and invest?

MNCs are anxious to exploit opportunities worldwide that will increase profits, but precisely because there is competition throughout the world for investment capital, MNCs can be choosy. They want things their way, and that means having basic infrastructure constraints resolved, but obviously at government (i.e., taxpayers’) expense. For example, why put factories in an area where there is a shortage of reliable sources of energy? If roads are poor, how are inputs and outputs to make their way into and out of factories? If large tracts of land are necessary for monoculture export crops, have the poor farmers been moved out, or neutralized by some sort of deal cut by the government? Same goes for harvesting interesting plants and microorganisms in areas rich in biodiversity. Have the indigenous people been removed or neutralized, thus facilitating MNC access without lengthy delays and (potentially embarrassing) hassles?

The MNCs want these aspects addressed before investing a dime. This is on top of the usual government giveaways: free land on which to build factories, free utilities and tax holidays for decades, government-financed training of the workforce, and other perks.

9. What specifically, then, is the PPP going to do to entice MNC capital to sit up and take notice?

One of the major components of the PPP is highway construction. Two major corridors are to be built, running roughly from the Texas-Mexico border, around the Gulf of Mexico, to the Yucatán peninsula, with spurs leading into Belize, Guatemala and into Honduras. The other is a Pacific coast route that will run from Mexico City, parallel the Pacific into Guatemala, through Central America into Panama.

Another major component in the works is dam construction. A total of 25 dams is planned for the region that will generate the energy needed for greater industrialization of the PPP area and supply the US market. This aspect harbors the greatest threat for indigenous people in the area, due to the flooding of thousands of acres of presently-inhabited land, and destruction of archeological sites, old-growth forests, indigenous communities and even cities. Between two to five dams are on the drawing board for the Usumacinta River that divides Mexico and Guatemala.

Also, if we look at a map of the PPP region, we see it is the narrowest point of the Americas. Much infrastructure is to be built linking the Atlantic Ocean to the Pacific. A “land bridge” in the Tehuantepec Isthmus, at Mexico’s narrowest point, is under construction, which would assure speedy passage of containerized goods for burgeoning east-west trade.

10. What are the major components of the PPP?

There are eight components. When formally presented by PPP officials, the components are usually given in the following order:
1. Sustainable development
2. Human development
3. Prevention and mitigation of natural disasters
4. Tourism promotion
5. Facilitation of trade
6. Highway integration
7. Energy interconnection
8. Integration of telecommunication services

The last four, however, are where the emphasis is being placed; in other words the infrastructure needed to “entice” the multinational corporations into investing in the PPP area. The greatest funding is for construction or upgrading highways, followed by energy interconnection and facilitation of trade.

These eight components each have separate “mega-projects”, some 28 in total

11. Just how much money is behind the PPP and where is it coming from?

The PPP is currently budgeted at US$10 billion, but some sources place the figure at US$25 billion. Principal lenders of this amount are the IDB, the World Bank, European Union, the Andean Development Corporation (CAF), the Central American Integration Bank (BCIE), and development agencies of the US, Japan, Spain and other countries. Some PPP countries will use taxpayer funds to create or improve PPP infrastructure. For example, Mexico has budgeted US$550 million for 16 PPP projects and studies in 2002 (down from the original US$742 million, due to budget cuts). Again, most of the money has to do with highway construction, on the order of 84%.

Some private companies have begun to underwrite certain infrastructure costs, but with the intent of getting in on the action early in order to corner the market. One example is found within the energy interconnection component. This plan will link the energy grids of Mexico and Central America, and is slated to cost US$405 million. The Spanish energy company ENDESA is putting in US$45.8 million and in so doing becomes a co-owner of the network.

12. How will the PPP affect development?

Depends how you define development. The PPP is a public-works scheme whose intent is to draw foreign investment into the region. Consequently the PPP is designed to please big business interests. While some of the components (see list in question 10) purportedly address the poverty in the region, these are the least-developed and least-funded components. Neoliberal economists might argue that the PPP covers “social development” insofar as they posit that private investment will create jobs and thus eradicate poverty.

But this is an absurd simplification. Neither public nor private investment automatically leads to higher living standards for the poor, unless steps have been taken beforehand to eliminate the structural injustices that exist in the economic, political, social and cultural spheres. In fact, investment often deepens poverty, as has been the case during the last 20 years of neoliberal policies, precisely because existing injustices have not been eliminated. Thus the rich and powerful benefit more from investments.

In fact no pro-poor policies are contemplated for the PPP that would address the roots of structural poverty. The plans and projects are designed in collaboration with and for big business, not for the 65 million people who live in the PPP area, the vast majority of whom are in poverty (75% living with less than US$2 a day).

Many activists are against the PPP for a number of reasons, but among the most important is the exploitation of natural resources for corporate profit, with only token consideration, or not at all, for the people who will be directly affected by the projects carried out. The PPP area has on the order of a hundred distinct ethnic groups, the majority of whom have not heard of the PPP. At times those consulted by the government and/or the banks have been brought into the fold with vague promises of particular works and benefits for their groups.

13. What about the environmental aspects of the PPP?

Another reason activists have opposed the PPP is that it is environmentally unsound. One of the principal components is the “Meso-American Biological Corridor”, one of the World Bank’s pet projects for years, whose intent is to link various biologically rich and diverse patches of territory throughout the PPP region. Although defended on ecological arguments regarding the need to ensure gene pools and protect territory for diverse animals and plants, the corridors will be opened up for exploitation by pharmaceutical and seed companies, seeking to patent new biological matter. One of the major bioengineering and seed companies in the world, Pulsar, already has signed agreements with Conservation International to work jointly in the Lacandón jungle in Chiapas. CI is a supposed environmental NGO, whose 27-member board of directors harbors CEOs from giant corporations such as Navigation Technologies Corporation, Eagle River Inc. (a telecom holding), Hyatt Development Corporation, First Philippine Holding Corporation (gas and electricity conglomerate), USA Networks, and others.

When one begins to see the multiple business connections and interests, it is difficult to avoid concluding that the PPP is more about energy and resource extraction than it is about development.

14. But surely there will be some positive “spill-over” effects of this investment and economic activity for the poor of the region.

It’s hard to see what they might be. If we keep in mind that this is a plan for big business, then it is easy to understand that all its aspects are geared to please corporate interests, not to benefit the poor majority. A US$10 billion plan to benefit the poor majority would look very different, with emphasis placed on building schools, rural clinics, feeder roads to get agricultural goods to market, rather than toll highways, hydroelectric dams, etc.

But if we search for “spill-over” effects, one of the highly-touted benefitsthat the PPP will bring is, supposedly, jobs for the poor. Not just any jobs, but maquiladora jobs. Maquiladoras are the sweat-shops that have operated on Mexico’s northern border since 1966. Most of them are assembly plants that bring in parts from other countries and use cheap labor to make finished products.

Health and safety requirements, and labor rights, such as the freedom of workers to organize, are laxly enforced on the maquiladoras, and sometimes not at all. Nor do maquiladoras comply with other requirements, such as using locally-made goods as inputs, or transferring technology to the host country. Maquiladoras de-link production from the host country’s needs, and respond exclusively to the needs of the MNCs that set them up.

It would be unfair to deny that maquiladoras have provided employment to over a million people, just on Mexico’s northern border. But apart from the (low) wages they pay, their benefits have been practically nil for the rest of the economy. In spite of certain dynamism (which, in fact, has fallen in the past two years), the maquiladoras’ separation from the rest of the economy makes it virtually impossible for other sectors of the economy to benefit.

Yet this is the economic model that the PPP seeks to encourage in Mexico and Central America. The improved infrastructure that the PPP would bring, plus the low wages paid in south Mexico and Central America, would entice MNCs to set up maquiladoras that, in turn, would absorb, in theory, some of the peasants that are sure to be expelled from their land due to certain PPP projects such as dams.

15. Are there alternatives to these corporate-led plans?

Yes. For example the Hemispheric Social Alliance, a group of civil organizations from throughout the Americas, has drawn up a detailed alternative proposal to the free trade agreements and the rules of the game that the rich and powerful would impose on us through the FTAA. The proposal has received support from hundreds of civil and social organizations throughout the Americas. The HSA’s documents are available on their web page www.asc-hsa.org or through organizations such as Common Frontiers in Canada, www.web.ca/comfront and Alliance for Responsible Trade in the United States, www.art-us.org .

As Global Exchange has written,

“Policy makers and pundits often try to make it seem that corporate globalization is a naturally occurring phenomenon. Nothing could be farther from the truth. In fact, the current economic processes known as “globalization” have been defined and driven by a very small number of corporations. Citizens around the world are creating an alternative: grassroots globalizationa people’s globalizationthat puts economic, social and political justice at the center of trade and investment. Citizens groups from across the Western Hemisphere have written an “alternative Agreement for the Americas” that offers guidelines for building this socially responsible and environmentally sustainable commerce.” (www.globalexchange.org )

16. What are people doing locally to protest the PPP?

In a year and a half there have been three regional encounters on the PPP that have brought activists together from Mexico, Central America and other parts of the world. These events have been held in Chiapas, Mexico (March 2001), Guatemala (November 2001), and Nicaragua (July 2002). A fourth such encounter is scheduled for Honduras in March 2003. Attendance at the events has grown from over 300 participants in Chiapas to over 1,200 in Nicaragua, representing over 400 organizations.

Participants at the PPP encounters have sounded a resolute NO! to the PPP. Activists are coordinating education and protest activities on a national level, and, in Nicaragua, agreed to a region-wide day of protest on October 12, 2002. The protests will vary from country to country, but may include sit-ins at border crossings, protest marches at PPP infrastructure works, demonstrations at the Inter-American Development Bank and World Bank offices in each country, etc.

17. What can I do to help?

Find out more about the PPP and then talk about it to your organization, community or neighborhood group. Get training so as to give talks. There are organizations who can help you to do this. Talk to groups about the PPP’s links to the wider FTAA negotiations now underway. Tell people that there are alternatives to corporate globalization, and that different options have been proposed by the Hemispheric Social Alliance. Get the word out that people organizing together have achieved victories against corporate globalization throughout the world, and that activists, organizers, and common citizens from the PPP have met on three occasions in the past year and a half to say NO! to the PPP. And that they need your solidarity and participation. Find out how you and your group can protest the PPP on October 12, or join the activities of other groups. Continue to encourage grassroots globalization.

Notes within the text:
(1) One of the most complete books is a series of essays published as “Mesoamérica, los ríos profundos: Alternativas plebeyas al Plan Puebla-Panamá” (published by Instituto Maya, Armando Bartra, Coordinator, Mexico City, 2001). We know of no book yet in English on the subject.
(2) Osvaldo León, “Movilización continental contra el ALCA”, January 24, 2002, in ALAI (Agencia Latinoamericana de Información), http://alainet.org/docs/1698.html
(3) The figure for Mexico during 1994-1998 is 85.1%, according to a Economic Commission for Latin America and the Caribbean (UN) study by Enrique Dussel Peters, “El Tratado de Libre Comercio de Norteamérica y el desempeño de la economía en México” (Mexico City, 2000), ref. LC/MEX/L.431, p. 20.
Miguel Pickard

The Center for Economic and Political Investigations of Community Action, A.C. CIEPAC,
CIEPAC is a member of the Movement for Democracy and Life (MDV) of Chiapas, the Mexican Network of Action Against Free Trade (RMALC) www.rmalc.org.mx, Convergence of Movements of the Peoples of the Americas (COMPA ) www.sitiocompa.org, Network for Peace in Chiapas, Week for Biological and Cultural Diversity www.laneta.apc.org/biodiversidad, the International Forum "The People Before Globalization", Alternatives to the PPP http://usuarios.tripod.es/xelaju/xela.htm, and of the Mexican Alliance for Self-Determination (AMAP) that is the Mexican network against the Puebla Panama Plan. CIEPAC is a member of the Board of Directors of the Center for Economic Justice http://www.econjustice.net and the Ecumenical Program on Central America and the Caribbean (EPICA) http://www.epica.org.

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