What Does The US Actually Spend Money On When It Comes To Central American Aid?

The Biden administration plans to send aid to Central American countries in an effort to stem migration despite billions in aid wasted on unhelpful projects in the region.

Several projects that received federal aid failed or ended up wasting resources and cut out local organizations in favor of U.S. contractors leading to a general contempt of American assistance among communities, according to a report from the Wilson Center’s Latin American Program looking at foreign aid to the Northern Triangle from 2015 to 2019.

A project in El Salvador spent over half of allocated U.S. funding on a highway that required constant maintenance and isn’t connected to rural communities, the Wilson Center reported. Another project spent a significant amount of money to build outhouses for potato farmers in Guatemala that were abandoned or torn down for scrap metal, The New York Times reported.

The Biden administration requested $861 million to address the causes of irregular migration to the U.S. from Central American countries for the fiscal year 2022 on May 28, the Daily Caller News Foundation reported. The administration asked private sector companies and organizations to commit resources and create economic opportunities in the region.

“Our comprehensive strategy to address the root causes of migration will involve significant commitments of U.S. government resources to support the long-term development of the region—including efforts to foster economic opportunity, strengthen governance, combat corruption, and improve security,” the White House said.

U.S. aid has improved access to clean water and infant mortality in Central America, however, the three countries, El Salvador, Guatemala and Honduras, are still among the most violent in the world and have yet to demonstrate an ability to overcome structural impediments to improve social, economic, and political conditions, according to the Wilson Center.

Experts said aid sent to El Salvador, Guatemala and Honduras was frequently awarded to American companies who used a substantial amount of federal funds to pay salaries and expenses, the Times reported. Around 80% of U.S.-funded development projects in Central America were given to American contractors between 2016 and 2020.

Local organizations reported feeling like they couldn’t access U.S. aid because the complex reporting requirements made it cost-prohibitive for them and they didn’t think they were given enough training or information, according to the Wilson Center. Organizations also reported poor communication, difficulty submitting bids and a lack of flexibility when trying to work with the United States Agency for International Development (USAID).

“A number of organizations told interviewers that they had implemented U.S. programs in the past but would not do so again because of the difficulty of doing business with US agencies,” according to the Wilson Center. “A number of interviewees said that U.S. development agencies placed an insufficient emphasis on establishing and maintaining a learning process based on prior programs, whether successful or not.”

Contractors said they were reluctant to report negative outcomes associated with assistance programs since they thought U.S. agencies wouldn’t be receptive to information that might lead to congressional criticism or contradict policy positions, the Wilson Center reported. 

Congress withheld 25% of allocated federal aid to the Northern Triangle until the governments demonstrated an effort to limit irregular migration in 2016, according to the Wilson Center. Another 50% of the aid was withheld until the governments address anti-corruption efforts, countering organized crime and protecting journalists and civil rights.

The Biden administration was reportedly uncertain about the effectiveness of developmental aid in reducing migration from Central America, according to The Washington Post. Some officials said expanding U.S. work visa programs beyond the 6,000 H-2B visas allocated for El Salvador, Guatemalan and Honduran citizens could be effective.

Federal aid to El Salvador made it difficult for local organizations to compete with American contractors

Local contractors expressed frustration about competing with counterparts with no communal ties who proposed unachievable ideas they inevitably didn’t accomplish, according to the Wilson Center. One U.S. official said personnel don’t stay in the country long enough to become familiar with the issues and end up relying on local staff.

The U.S. allocated $496 million for security, economic development, and governance objectives in El Salvador from 2013 to 2018, before former President Donald Trump suspended aid to the region, the Wilson Center reported. The remaining funds for El Salvador were reallocated to other countries so the country ended up receiving around $350 million in aid.

USAID allocated $172 million to El Salvador in 2018 for 12 projects spanning from 2013 to 2023 aimed at improving child protection and juvenile justice systems, strengthening the justice center, anti-corruption efforts, assistance for returning immigrants and a handful of other programs, according to the Wilson Center. USAID and the Millennium Challenge Corporation, an organization that provides grants to countries, are responsible for most of the economic development funding through federal U.S. aid in the region.

The Millennium Challenge Corporation allocated an additional $277 million to El Salvador from 2015 to 2020, after its first five-year compact of $461 million was given in 2006, according to the Wilson Center. The money was supposed to be invested in education, public services, agricultural production, rural business development and transportation infrastructure.

Over half of the Millennium Challenge Corporation funding went to a highway designed to connect northern areas of the country, but government officials ran out of money and weren’t able to construct roads between rural communities and the highway, the Wilson Center found. A former government official said the highway is “the most expensive” to maintain because it was built using poor-quality materials.

Local officials criticized the cost of U.S. aid programs across the board, according to the Wilson Center. One former official who worked closely with U.S. aid programs said contracting with American consultancies and companies leads to an excessive cost since at least 40% of a project’s total price tag goes to administrative fees.

Another former contractor said the agency was overstaffed and resources were wasted on last-minute projects to spend funds before they expired, the Wilson Center reported.

“The general sense from both local grantees and Salvadoran government beneficiaries was that U.S. assistance projects try to do far too much and disperse their efforts too widely to have the best impact,” according to the Wilson Center.

U.S. programs that were developed through collaboration with local communities were more effective in providing sustainable security improvements in El Salvador, the Wilson Center reported.

Federal aid to Guatemala has been largely ineffective in improving communities

U.S. aid to Guatemala has done little to make a difference in the communities, residents say they’ve received training sessions but that the aid intended to improve the quality of life hasn’t helped the poor, the Wilson Center reported.

The U.S. has allocated just under $2.6 billion in aid to Guatemala since 2001, though the annual amount has decreased since Trump froze aid in response to a lack of mitigating migration from the country, according to the Wilson Center.

The Millennium Challenge Corporation implemented a $28 million program aimed at increasing tax revenue collection efficiencies, reducing corruption and strengthening secondary education opportunities in Guatemala in 2015, the Wilson Center reported.

USAID provided over $215 million for nine projects focusing on security, at-risk youth and violence prevention, and another $112 million aimed at governmental reforms and community development, according to the Wilson Center. The agency allocated more than $600 million towards agriculture, vocational training, health and natural resource management.

“They’ve never helped me,” Guatemalan coffee farmer Pedro Aguilar said after attending a training session for an application used to check global coffee prices provided by an American contractor trying to keep people from migrating to the U.S., the Times reported. “Where does all the money go? Where’s the aid? Who knows?”

Aguilar didn’t sign up for the training and didn’t think it would keep people from trying to leave the country for the U.S., according to the Times. He said someone should call the U.S. “and tell them what our needs really are.”

The Rural Value Chains Project was granted $20 million in U.S. aid and used some of the money to build outhouses for potato farmers that were abandoned or disassembled for scrap metal, the Times reported.

At least three other programs aimed at improving conditions in the San Antonio Huista town of Guatemala were allocated over $100 million in federal aid since the Obama administration have yet to produce long-term benefits, according to the Times.

“So many trainings, but at the end of the day where is the money?” local Elvia Monzón asked, according to the Times. “The aid isn’t reaching the poor,” she added almost everyone she knew had left the area since aid workers arrived six years ago.

Despite over $1.6 billion in aid from the U.S. sent to Guatemala over the last 10 years, the country continues to struggle with corruption, malnutrition and poverty, the Times reported.

Federal aid to Honduras has been limited because of government corruption

The Honduran government disqualified the country for U.S. aid in 2010 after a coup left officials concerned about the country’s commitment to democracy and other anti-corruption efforts, the Wilson Center reported.

Honduras signed a compact with the Millennium Challenge Corporation for $215 million over five years aimed at addressing low agricultural productivity and high transportation costs to improve economic growth, according to the Wilson Center. Most of the aid went to maintenance projects and road construction including redoing a major highway.

The Honduran government failed to meet qualifying conditions to renew the compact in 2010 and lost $10 million in aid because of “serious concerns about the country’s commitment to democracy,” following the 2009 coup, according to the Wilson Center. USAID issued a $5 million grant to the National Anti-Corruption Council to conduct at least 100 investigations in the country.

U.S. aid has largely targeted anti-corruption efforts in Honduras, though efforts to strengthen government institutions involved in the justice system have shown minimal improvements, according to the Wilson Center.

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