THE CENTRAL AMERICAN INTEGRATION SYSTEM

C O N F I D E N T I A L SAN SALVADOR 000041

SIPDIS

SIPDIS

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E.O. 12958: DECL: 01/10/2017
TAGS: PREL PGOV KCRM XK ES ETRD EU
SUBJECT: THE CENTRAL AMERICAN INTEGRATION SYSTEM

REF: A. 06 SAN JOSE 2806


B. 06 HELSINKI 1236

Classified By: DCM Michael A. Butler. Reasons 1.4 (b) and (d)


1. (C) SUMMARY. Although established in 1992, the Central
American Integration System (SICA) remains an incipient
attempt by the countries of Central America to achieve
regional integration and cooperation. The organization
includes the member nations of Belize, Costa Rica, El
Salvador, Guatemala, Honduras, Nicaragua and Panama. The
Dominican Republic is an associate member, and Mexico, Spain,
and Taiwan are observers. To date the USG has had limited
engagement with SICA as a political entity. USAID has,
however, worked extensively with two of the 20 plus
subsidiary organizations for nearly a decade, and beginning
in 2005 all USAID funding for subsidiary organizations is
being provided through agreements signed with SICA. The most
recent agreement (800,000 USD to support Central American
efforts to combat gangs and violence through preventative
actions) received prominent mention in the October Central
American Summit of Presidents held in Tegucigalpa. The EU
has already made clear that it will negotiate and implement
all aid and trade deals for Central America on a regional
basis only, and thus SICA may become more important as the
Europeans use their leverage to encourage increased
integration in Central America. SICA and its subsidiary
organizations could provide a path for the U.S. to engage and
influence on items in our interest as well. The USG could
invest significantly in strengthening the organization by
becoming an observer, or could help influence it by asking
the friendliest governments in the region like El Salvador to
guide the organization in a helpful direction. END SUMMARY.

Background
--------------


2. (U) SICA was established with the signing of the
Tegucigalpa Accords on December 13, 1992. The Protocol built
on the already existing Organization of Central American
States, and envisioned Central America as a region of peace,
liberty, democracy, and development. The primary
institutions of SICA include: the Central American Parliament
(PARLACEN) which is located in Guatemala and consists of 130
representatives who are given diplomatic privileges and
immunities; the Central American Court of Justice located in
Managua; and the Secretariat General of SICA (SG-SICA) in San
Salvador. Two of the nearly 20 subsidiary organizations of
SG-SICA deserve special note--SIECA and CCAD (regional
organizations of Ministers of Trade and the Environment
respectively). SICA's highest body is its Summit of
Presidents, and any agreement on fundamental changes or
direction for the organization must be agreed upon directly
by the Heads of State of the various members. SICA hosts
quarterly meetings of the Central American Presidents, Vice
Presidents, and Foreign Ministers. Periodic meetings of
Ministers of Labor, Agriculture, Environment, Public
Security, and other sectors are also convened by the SICA
subsidiary organizations.

Rule of Law and Political Integration
--------------


3. (C) SICA and the subsidiary organizations of SG-SICA
(comparable in structure although not in authority to the
European Commission) have many of the bearings of a serious
regional organization. Its ideals are sound, it has regular
institutions, and its high-level meetings are noteworthy and
often productive for dialogue among the leaders in the
region. Yet while the Summit of Presidents contemplates
"defining and directing Central American politics,
harmonizing foreign policies, and strengthening regional
identity," the organizations achievements toward integration
to date are modest at best. (Note: The current Secretary
General of SICA is Honduran lawyer and career diplomat Anibal
Enrique Quinonez Abarca, a relative unknown in the power
structures of Central American politics. End Note). Some
success has come in the area of rule of law, however. The
Democratic Security Treaty of Central America gives the SICA
members a solid framework for improving rule of law and the
administration of justice, and gives the members a framework
for cooperation on security matters. Chapter Two of this
Treaty has specific interest for the USG as it addresses
issues like combating terrorism, human trafficking and the
narcotics trade. Chapter Three is also important because it
addresses regional security and mandates that the states
share certain information on a military to military level.
This document is one of the most important efforts at
political integration and coordination the group has made
since its founding.


4. (C) Concerning the administration of justice, the
Central American Court of Justice can play a decisive role in
solving disputes, and provide a forum for the redress of
wrongs committed by certain corrupt politicians or others
that may be shielded in their home countries. PARLACEN,
however, has achieved little during its existence and is seen
by many citizens of the region as simply a vehicle for
providing out of work politicians with a salary and
diplomatic immunity that protects them from prosecution
throughout the region. (Note: One PARLACEN representative
from El Salvador recently had his immunity removed by the
Legislative Assembly for egregious acts of corruption while
previously serving as a mayor. End Note).


5. (C) In a recent conversation, Jorge Alberto Umana (Head
of Central American Integration Issues at the Salvadoran MFA)
told poloff that the GOES is most optimistic about the
possibilities for success in regional cooperation on the
issue of security. While not downplaying the importance of
economic integration and successes in that area to date,
Umana stressed that the GOES would be particularly interested
in more regional engagement on security. USAID has invested
USD 800,000 to support the effort to stop gang violence, but
a major political strategy to address the problem has not
been brokered at a regional level. While gang violence is of
greater concern in the "Northern Triangle" of Central America
(El Salvador, Honduras, Guatemala),there is increasing
recognition by the governments of the region and Mexico that
a regional approach will be necessary to fight this
transnational problem.

Economic Integration
--------------


6. (U) Economic integration in Central America continues
to deepen as the region reaps the benefits of CAFTA and takes
advantage of arrangements such as the new customs and border
agreements between Guatemala, Honduras, El Salvador and
Nicaragua (CA-4),which allows for the freer flow of goods
and people in the northern half of Central America. The
Economic Integration Secretariat for Central America (SIECA),
a SICA subsidiary, has become the key regional body promoting
economic integration among Central American countries. One
of its most notable achievements has been the reduction and
harmonization of external tariff rates across the region. To
date, 97 percent of external tariff rates have been
harmonized; the remaining 3 percent are for sensitive goods
such as dairy, coffee, sugar, rice, and a number of
industrial goods. SIECA has also worked with customs
authorities to modernize their operations and reduce the time
and cost of trading across Central American borders.
Ministers of Economy of the region meet at least quarterly
through SIECA, and other technical sub-committees work to
implement regional agreements on a variety of topics
important to regional commerce. There has been some progress
on labeling issues; however, much work remains in developing
a common market on other issues such as intellectual property
rights, quota management, sanitary and phytosanitary
standards, and technical standards. During CAFTA-DR
negotiations, SIECA played a role coordinating common
positions and providing technical expertise to member
governments.


7. (U) The Central American Commission for the Environment
and Development (CCAD, the environmental equivalent of SIECA)
is currently playing a useful role in CAFTA-DR
implementation. Chapter 17 of CAFTA-DR requires signatory
countries to effectively enforce their environmental
standards, and CCAD has been the major source of technical
expertise when Ministries of Environment face challenges in
meeting this commitment. Again, CCAD has no supra-national
authority, but by convening Ministers of Environment across
the region, the organization is able to point out areas where
particular countries face the risk of not complying with
CAFTA-DR, and thus serves as an effective, if informal, "peer
review" process. We understand that CCAD forums frequently
serve as the venue for discussion and agreement on Central
American positions on votes in international organizations
such as CITES (Convention on Trade in endangered Species).

The European Angle
--------------


8. (C) Reftels A and B give some background on current
European desires to manage the vast majority of their
business with the Central Americans on a regional basis. The
example in reftel B of how the Finnish are managing the
investment of 7 million euros to support renewable energy
projects in Central America is a perfect example of how the
Europeans envision their engagement with the region. The
other major issue is the EU demand that new trade
negotiations between the EU and Central American be conducted
at a strictly regional level, with one sole Central American
interlocutor and spokesman for the national negotiating
teams. The Central Americans have agreed to rotate this
spokesman between the countries, but are unsure if the EU
will accept the plan (reftel A). It is unclear how
successful the European efforts to encourage regional
integration modeled on their own institutions will be. What
is clear is that the Europeans will continue pressing the
issue, and the Central Americans will at least try to comply
with their wishes. The Government of Spain just announced it
will donate 26 million USD for the members of SICA to pursue
increased integration. Costa Rica also announced at the last
summit that an Executive Council should be re-activated to
monitor the success of implementing Presidential mandates
agreed upon at the summits.

Comment
--------------


9. (C) As the Department considers options for sustaining
progress on free trade and democratic consolidation, the SICA
network of organizations clearly offers additional venues for
engaging senior officials from all Central American
countries. The USG could take the step of becoming an
observer, like Mexico and Spain, and use this formal route as
a method to influence the agenda and monitor the work of the
organization at all levels. Another option is for the USG to
continue to engage our most reliable interlocutors and allies
in the region to help press issues of USG interest at their
high level meetings. Sustaining the modest levels of support
for the Secretariat, and in particular SIECA and CCAD, also
enables us to engage in ministerial and technical-level fora
on a range of trade and economic policy issues. As the
Europeans continue to obligate Central American governments
to negotiate as a regional group, the Central Americans may
be forced to give SICA a more important role in issues of
political and economic import. Post remains ready to help in
coordinating with SICA as the Department sees fit.
Barclay