The United States is responsible for illegal immigrants from Central America crossing the border. Instead of instating the “Zero-tolerance Policy” on unauthorized entry into the United States and detaining and separating parents and children from each other, the country needs to reflect on its history, the root cause of refugee migration from Central America.
What they will uncover is the underlying framework that serves as the instigator of the influx of illegal immigrants into the country — the 1944 Bretton Woods Agreement.
However, the Bretton Woods Agreement was not the only instigator. The International Monetary Fund (IMF) and the World Bank collectively joined it to derail the economies of Central America. Instead of fixing the problem that the United States started, President Donald Trump decided to resolve the issue by building a wall and detaining families.
Since we live in a time dominated by a President shouting “fake news” and dispersion of actual fake news on Facebook, we need to educate ourselves by understanding the real cause of illegal immigrants from Central America — the Bretton Woods Agreement, the IMF, the World Bank and CAFTA-DR.
What Led to the Development of the Bretton Woods Agreement?
The United States’ habit of interfering in the affairs of other countries remains a known fact around the world. The rich history of the U.S. military and economic intervention in Central America weakened the region, causing them to become dependent on the United States. The constant interference of the United States combined with the formation of the Bretton Woods Agreement, the IMF, the World Bank and CAFTA-DR negatively influenced the economy of Central America.
Worsening the region’s economic condition was the ongoing interference from their neighbor and the formation of the 2004 Dominican Republic — Central America FTA (CAFTA-DR). All of this gave rise to drug cartels, violence, corruption, and a failing economy.
This in return led to an increase in illegal immigrants from Central America flooding the United States. It was a combined effort, initiated by them. Now, they face the consequences of their actions, but reversing them is not a priority for them as it would defeat the purpose of them growing as a “Superpower.”
Therefore, they have resorted to other extreme measures to control the influx of illegal immigrants from Central America. These measures have only managed to put a pause on it. Let’s travel back in history by taking a closer look at the Bretton Woods Agreement, the IMF, the World Bank and CAFTA-DR.
The Bretton Woods Agreement: The Conspirator
The Bretton Woods Agreement is the system for monetary and exchange rate management established on July 1, 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The agreement pegged currencies to the price of gold and perceived the U.S. dollar as a reserve currency connected to the price of gold.
From the agreement, emerged the IMF and the World Bank — two global institutions — thus fulfilling the aim of the meeting to ensure a foreign exchange system, promote economic development, and prevent competitive devaluations.
This meant that when a country’s currency fell, other countries agreed to purchase their money in foreign markets at fixed exchange rates between the US dollar and their currency, thus preventing inflation and economic instability.
Unbeknownst to third world countries, this agreement paved the way for the United States to assume dominance over other nations, who were asking for loans from the IMF and funds from the World Bank to rebuild their country. Even though President Richard Nixon suspended and later officially ended the agreement in 1973, the damage was already done.
The International Monetary Fund: The First Accomplice
IMF’s aim is to promote global economic development and financial stability, encourage international trade, and decrease poverty. Although the IMF consists of 189 countries, only the most powerful countries have major influence in the voting process. When the Bretton Woods Agreement ended, the IMF began to promote floating exchange rates. The floating exchange rates rely on the market forces to decide the value of currencies relative to each other.
The World Bank: The Second Accomplice
The World Bank, an international organization, helps reduce poverty by allowing countries to borrow money to fund their projects. It offers countries low-interest loans and interest-free grants and credit, and focuses on improving infrastructure, education, and health.
Its primary objective is to reduce poverty in countries by overcoming it by encouraging growth, reconstructing countries fresh out of war, offering a bespoke solution to third world countries, prompting governments to prevent climate change and control the spread of communicable diseases, working with the Arab League, and sharing its expertise with other countries.
The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR): The Third Accomplice
CAFTA-DR signed in 2004 is a trade agreement that eliminates most tariffs, trade barriers, and customs duties on services and products between the United States and five Central American countries — Costa Rica, El Salvador, Honduras, Nicaragua, and Guatemala as well as Dominican Republic. This agreement gave the United States direct access to markets in Central America on a larger scale, allowing them to introduce banking, media, telecommunications and insurance among other services.
The Negative Effects: How the IMF, World Bank, and CAFTA-DR Become the Primary Cause of illegal immigrants from Central America?
When countries need to borrow money, they borrow money from the IMF and the World Bank to stabilize their currencies. If they decline their request to borrow, the countries either establish trade barriers or increase interest rates.
However, borrowing from both organizations comes at a cost. It burdens countries with strict debt repayment plans that they are unable to repay. It comes with the caveat that the repayment needs to be made only in dollars. Adding to the burden is CAFTA-DR, a free trade agreement that functions in the United States’ favor.
This free trade agreement caused domestic industries to weaken and deteriorate by creating a massive trade imbalance and importing American agriculture and industrial goods into the Central American markets.
Each of them worked to drive out people from Central America and escape to the United States.
The United States has an upper hand, as it is the only country with the authority to print dollars. Both the IMF and the World Bank give loans in US dollars to third world countries. These countries need to earn more dollars to repay their debt. The United States has a monopoly when it comes to reproducing dollars. For third world countries to repay their debt, it gave the “Super Power” access to their resources and gave American businesses an opportunity to enter the Central American market.
Allowing American businesses to establish their base in their market did not benefit their failing currency, causing it to decline further. This scenario has left them with no choice but to borrow more dollars to stabilize their currency. Failure to stabilize their currency means no international trade. Then, there is CAFTA-DR that has caused the local agricultural economy of the countries in Central America to gradually wither away, leaving American products and services to reign supreme.
How Can Central America Repay the Hefty Debt?
Central America has turned its attention to growing and selling drugs to repay the hefty debt. To repay the debt, earning in dollars is a must. With the demand for drugs high in the United States, drug cartels have sprung up in the region, growing and selling drugs for dollars across the border.
The drug cartels in Central America evoke fear in people through violence. With corruption in drug-ridden areas being high, even the police turn a blind eye to the drug lords based in these regions. Families pack up and leave for the United States due to the constant terror of being targeted by drug cartels and becoming another statistic added to the body count.
The Rise of Drug Cartels in Central America and How They Triggered Mass Illegal Immigration
The following facts on the rise of drug cartels in Central America offer an exclusive insight into the relation of drugs, violence and illegal immigration:
· El Salvador, Honduras, and Guatemala have the highest crime rate with El Salvador and Honduras making the list of the top five most violent countries in the world
· Drug cartels especially target women and children, forcing the youth to join them or extort them while threatening women and girls to get into a relationship with gang members
· Seeking help from the police is of no use, as they are often corrupted and involved with the drug cartels
Who is to blame for the rise of drug cartels in Central America? — The United States
Between 1996 and 2002, the United States sent back thousands of convicted criminals to economically and politically fragile countries in Central America. Gang members saw this as an opportunityto combine local youth gangs and promote the use of violence to control entire neighborhoods in the region.
Another example of the United States intervening into the affairs of Central American countries is when the CIA ousted the democratically chosen government of Guatemala in 1954, resulting in decades of civil war and dictatorship. What about the time when the United States sent the gang that supplied MS-13 to the streets in California back to El Salvador?
The presence of these immensely violent gangscoupled with the increased demand for drugs in the United States and Central America’s dire need to repay the debt with dollars has kept the drug trade alive, especially in Honduras. The drug trade is a trillion-dollar business controlled by drug cartels, but the dollars earned from it are illegal and thus hidden away.
On the other hand, we have the United States which has waged a prolonged war on drugs, one that is costing them trillions of dollars. However, do not expect them to change their strategy, as the drug money they seize benefits them; it increases the existing value of the dollars circulating in the United States. Since Central America cannot repay their debt with drug money, they invite American businesses to establish stores so they can repay their debt back in dollars.
Back in the day, the Bretton Woods Agreement tried to help, but it did more harm than good.
The Bretton Woods Agreement sought to repay those countries by offering them loans in U.S. dollars to rebuild their economy. These countries used the money to pay contractors from the United States, but that left them in even more debt than before.
Central American countries can neither print money nor borrow against an asset. If the countries chose printed money and spent it where needed, it would result in hyperinflation. Hyperinflation erodes the value of the currency, increases the price of goods, and causes people to decrease their holdings in that currency in exchange for a stable foreign currency.
To stabilize their currency, the countries would need to request for additional loans from the IMF, thus sinking them further into debt. Not only has the United States put their interests first and above all else, they have repeatedly meddled into the affairs of countries in Central America, causing further damage to an already fragile economy.
U.S. backed-military coups, neoliberal mining of resources, and corporate plundering have fueled poverty, instability, and violence.
Even though the Bretton Woods Agreement was the wheel that set everything in motion, the IMF, World Bank, CAFTA-DR, and repeated intervention of the United States throughout the history of Central America have wreaked havoc on their economy.
The region’s economy, which shows no signs of getting better, has served as the stepping stone for drug cartels to roam freely and spread their fear through terror tactics, corrupt the police with money, and silence the people with the threat of violence. Without having a voice, people belonging to countries in Central America feel unsafe and the only way to ensure their safety is to flee to the United States.
Separating families at the Southern border and putting up a wall is not the answer. Instead, the United States needs to rewind the clock to see how they can make these wrongs right. Only then, can they take steps to resolve the issue of illegal immigrants from Central America coming to the United States to start their new life. The world would be better, safer and more humane if globalization meant that all economies thrived and not subjugated by debt.