Last month, Vice President Harris announced more than $1.9 billion in “private sector commitments” to Honduras, Guatemala and El Salvador to address the root causes of migration from Central America to the USA. The irony is that it is promoting the same economic model that has caused so many to be forced to leave their homes and migrate in the first place, the promotion of corporate interests, which generate profits for U.S. companies and local elites, at the expense of the working people.
The U.S.-based apparel company SanMar will purchase more from Elcatex, a Honduras-based garment manufacturer that it partially owns.
The Collective of Honduran Women (CODEMUH), an organization of women who work in Honduras’ garment sweatshops, has long denounced the low wages, long hours and serious repetitive motion injuries they suffer in Honduras’ textile industry. Elcatex will create 4,000 additional jobs and thus help stem migration. According to the White House announcement, U.S.-based SanMar itself is a part owner of Elcatex, so the profits from this increased purchasing will pad its own pockets. Elcatex is also owned by Jesus Canahuati, one of Central America’s biggest businessmen and part of one of the most powerful families in Honduras.
If the White House was serious about addressing the root causes of migration, it would recognize that low wages are one of the key drivers. The White House’s “Call to Action” should be for U.S. apparel companies to ensure living wages and labor rights, including changes to prevent workers from suffering permanent injuries.
Another of the “private sector commitments” celebrated by Vice President Harris is that of Fundación Terra, the foundation of Grupo Terra. Grupo Terra is a huge conglomerate owned by Freddy Nasser, one of the most powerful men in Honduras.
Grupo Terra’s energy empire includes Hidro Xacbal, S.A., which owns the Xacbal Hydroelectric Project and the Xacbal Delta Hydroelectric Project in Quiche, Guatemala. In December 2020, Guatemala’s Special Prosecutor Against Impunity accused Edwin Alberto Hernandez Roque, General Manager of Hidro Xacbal, S.A., of bribery, allegedly benefiting Hidro Xacbal, S.A. with energy contracts, as part of a case alleging that a network of businessmen and former public officials used the Ministry of Energy and Mines to obtain illicit economic benefits. In 2021, Hernandez Roque agreed to collaborate with prosecutors in the case in exchange for the charges against him being dropped.
Another part of Grupo Terra’s fortune comes from selling energy to the state of Honduras. Honduras’ state electricity company, Empresa Nacional de Energía Eléctrica (ENEE), has operated at a huge deficit for years, which comes in part from paying overvalued prices for energy produced by private companies. According to an investigation by the Jesuit organization ERIC, the ENEE pays 70% of its annual budget to purchase energy from private companies, of which Grupo Terra is the biggest winner — with its companies receiving $327 million in 2019 for 11 energy contracts. ERIC further reports that the ENEE pays six times as much to private companies to generate electricity as it costs the ENEE itself to produce it. Solar projects are especially lucrative for private companies, with Honduras paying an exorbitantly higher price for solar energy than other countries in Central America.
Honduras recently passed a new energy law, which, among other elements, enables the government to renegotiate the contracts by which it purchases energy from private energy producers and set more reasonable rates. The U.S. ambassador to Honduras criticized the law on Twitter when it was introduced in the Honduran Congress, expressing worry about its effect on foreign investment. This raises concerns that the United States’ true motives are corporate profit.
The telecommunications company Millicom, headquartered in Luxembourg, will invest $700 million “to expand and maintain its mobile and broadband networks.” While better internet is certainly a good thing, the idea that Millicom is doing this for any reason other than to increase its corporate profits is ridiculous.
Central America’s mobile and broadband market is highly concentrated; Millicom’s Tigo controls 53.1% in Guatemala and 62.5% in Honduras. Tigo Guatemala is Millicom’s most profitable company, with an astronomical operating profitability margin. The company reports significant potential for increased profit by expanding internet accessibility. Its Tigo Money service, a mobile wallet linked to one’s phone number, receives remittances that those who have migrated send to family members back home.
Investing to expand its business is certainly a good business move for Millicom, and with very little competition it is virtually guaranteed that this investment will result in significant profits. The profits, however, will largely go to its headquarters in Luxembourg and its shareholders on the Nasdaq stock market, not to Tigo’s clients in Central America. Thousands upon thousands of Tigo users will continue to migrate to the United States every year, enriching Millicom’s profits when they send remittances home via Tigo Money.
U.S. priorities towards Central America is, and always has been, corporate profit.
The White House's Plan to Stem Migration Protects Corporate Profits—Not People - In These Times
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