Neighbors in Arms

How U.S. guns are turning Central America into one of the most dangerous places in the world.

When President Barack Obama meets with various Central American leaders in Costa Rica this weekend, he will likely face criticism of U.S. domestic firearm laws. Like Mexico, where he met with President Enrique Peña Nieto on May 2, Central American countries have increasingly raised concerns about U.S. firearms trafficking. They have good reason to do so: more and more arms that originated in the United States are being used in violent crimes across the region. And given the recent death of background check legislation in the U.S. Senate, Obama may find it difficult to reassure his critics that the United States is effectively tackling the problem at home.

According to data compiled by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) on U.S. firearms trafficking and an analysis of related U.S. prosecutions, thousands of U.S.-origin firearms (firearms that were either manufactured or imported into the United States) are finding their way to criminals in Central America in the last few years. The flow of U.S. weapons is heaviest to El Salvador, Guatemala, and Honduras -- all among the top 10 most violent countries in the world.

According to a new Woodrow Wilson Center report focusing on Guatemala, ATF discovered that 2,687 (or 40 percent) of the 6,000 seized firearms it analyzed from just one Guatemalan military bunker in 2009 originated in the United States. In the past five years, there have also been at least 34 U.S. prosecutions related to American firearms trafficking to Guatemala involving a total of 604 U.S.-origin firearms.

U.S. entities opposing stricter gun control laws have often claimed that Central American countries -- and not the United States -- are the major source of firearms trafficked to Mexican organized crime. Wayne LaPierre, executive vice president of the National Rifle Association, made exactly that case on Fox News in 2011, claiming that drug cartels are getting their guns "largely through Central America." But it is clear that many U.S. firearms are also flowing illicitly in the opposite direction: from the United States through Mexico to Guatemala and other Central American countries. (For accurate information on the magnitude of U.S.-origin firearms seizures in Mexico, see ATF's data from 2007 to 2012.)    

Examples of north-south arms trafficking abound. As Los Zetas, a notorious Mexican drug cartel, has pushed into Guatemala in recent years to secure narco-trafficking routes, they have brought with them their U.S.-purchased weapons. After an apparent Zeta killing of 11 members of the Guatemalan Leon organized crime group in Zacapa in 2008, for instance, U.S. authorities traced two Beretta 92FS 9mm pistols found on the perpetrators to a McAllen, Texas gun store.  In another case in May 2011, Zetas reportedly killed 27 farm workers, including two women and three teenagers, in Los Cocos, Guatemala,   

At the same time, organized crime groups and common criminals from El Salvador, Guatemala, and Honduras are also accessing U.S. firearms purchased at gun stores and gun shows throughout the United States. In September 2010, the U.S. Department of Justice revealed that Honduran nationals had purchased hundreds of firearms -- including Glock and FN Five-Seven semi-automatic pistols, and AR-15-style rifles -- at gun shows in Florida for the eventual illicit transfer to Honduras and other Latin American destinations. 

According to sources at the ATF, traffickers are smuggling some U.S.-purchased firearms to Central America through lesser-known shipping companies by land and sea -- often hiding firearms in shipments of older cars, clothes, and audio equipment. After a weather-related accident totaled a Guatemala-bound truck near the U.S. border with Mexico in 2009, for instance, U.S. authorities discovered that one of the boxes in the debris contained five U.S.-origin Glock pistols, among several other firearms hidden inside speakers. In Honduras, the ATF says, auto shops are even offering catalogues of various firearms to purchase that they will then smuggle into the country in old vehicles from the United States.

The new Woodrow Wilson Center report also reveals that Guatemalan authorities seized 46 U.S.-origin ordnance items in recent years, ranging from M-67 hand grenades to M-406 40mm grenades to an M-72 light anti-tank rocket. Except for the M-72 rocket, which the United States sold to Colombia, most of these items were part of U.S. Foreign Military Sales (FMS) to El Salvador in the late 1980s and early 1990s. According to ATF, MS-13 transnational gang members are smuggling these items from El Salvador into Guatemala, for sale to Los Zetas and other Mexican cartels.  

In recent years, U.S. and Central American authorities have begun to address arms trafficking -- though much more could be done to combat the problem. Since the ATF placed its first firearms regional advisor in El Salvador in 2009, for instance, it has begun to sketch a better picture of U.S. trafficking there and in Guatemala. In February 2013, the ATF trained 56 Central American officials -- mostly from Guatemala's National Crime Laboratory -- and since then, Guatemala has sent more than 100 firearm-trace requests per month to the ATF. Likewise, El Salvador also recently allowed the ATF to evaluate and trace thousands of firearms it has seized over the last few years. Still, U.S. authorities are struggling to get a picture of firearm-trafficking patterns elsewhere in the region, as other governments -- Honduras and Nicaragua, in particular -- have been slower to submit firearms trace requests. 

As President Obama meets with Central American leaders this weekend to discuss regional security issues, citizens of these countries may want to urge their governments to step up efforts to trace firearms to their origins. Timely tracing data not only provides the ATF with critical information needed to identify and stop traffickers in the United States, it also assists Central American governments in mapping how criminal networks in their countries operate and intersect.

Obama could also support efforts to establish a permanent ATF presence in the U.S. embassy in Guatemala and potentially other U.S. embassies across Central America. Since government-owned stockpiles of firearms and ordnance have been a major source of illicit arms transfers to organized crime here as well as in Mexico, Obama would do well to continue to fund efforts to destroy large surpluses of arms in these countries. According to a September 2012 U.N. study, both El Salvador and Guatemala have enough arms to provide each of their soldiers with seven firearms.

This weekend's summit in Costa Rica provides an ideal opportunity for the United States and its Central American partners to commit to addressing the scourge of arms trafficking. The region is already one of the most violent places on Earth and the U.S. arms have clearly contributed to that mounting death toll.


Democracy Lab

Finally, Good News from Haiti

Haiti is no economic success story. But that may be about to change.

Haiti has been independent for 209 years, but Haitians don't have much to show for it economically. The country is plagued by poor infrastructure, political instability and violence, an inefficient and corrupt bureaucracy, and low standards of education. These are all factors that make it increasingly vulnerable to shocks from natural disasters and now barely able to support its growing population. While there have been some moments of optimism over the years, they've usually been short-lived. Over the past decade, hurricanes, floods, a devastating earthquake, and an outbreak of cholera have repeatedly derailed an already struggling economy.

Though Haiti has attracted vast amounts of aid and disaster relief, there are few signs of tangible improvements in the lives of most of its people. Donors and the government pledged that economic aid after the 2010 earthquake would be used to "build back better," but the sad reality is that, even if donors keep their pledges, the funds needed for this task are much higher than what has been committed.

The country has suffered negative economic growth in three of the last four decades. As of early 2013, roughly three-quarters of Haitians were either unemployed or trying to make ends meet in the informal economy. Big foreign investors, worried about the political risks, are reluctant to make major commitments. The inability of poor Haitians to exploit opportunities that could lead to growth fuels a vicious circle of high unemployment, persistent poverty, aggravated inequality, and the mass emigration of skilled workers. Today, roughly 82 percent of Haitians with a college education have left the country.

Yet Haiti may be about to make a turn for the better. And the reason has a great deal to do with technology.

Haiti's long record of dysfunction has promoted the creation of a huge overseas diaspora, mostly in the United States and Canada. These emigrants are increasingly affluent, and new information technology is allowing them to play a more active role in Haiti's economy. Until recently the main contribution of overseas Haitians came in the form of remittances to family members back in the homeland. Roughly a third of the country's population depends on income from remittances, which run from $1.5 billion to $2.0 billion annually. But while money transfers certainly help, they aren't as useful as actual investment in Haitian products and services, which would not only create jobs and infrastructure, but also bring in much-needed management expertise and know-how.

Now improvements in communication technologies are causing a surge in diaspora investment in the Haitian economy. The key component is the growth of a highly creative sector of grassroots organizations in Haiti that are committed to helping the poor and eliminating poverty. The two best examples are Zafen and Fonkoze, web-based crowd-funding platforms that are helping focus investment opportunities.

Zafen provides interest-free loans to Haitian entrepreneurs who are unable to find funding from traditional banking sources. The loans are then distributed through Fonkoze, the country's largest (and phenomenally successful) microfinance institution. Between 1996 and 2011, the organization has grown from two volunteers in one location to 899 full-time staffers in 46 branches that serve 333,212 primarily rural-poor clients. With the advent of ventures like Zafen and Fonkoze, members of the successful Haitian diaspora now have a viable mechanism for sharing share their knowledge, expertise, and financial resources with promising local entrepreneurs.

One way or the other, mobilizing the diaspora is likely to be key to the future of Haiti's economy. Back in the late 1970s and 1980s, few outsiders in Europe or the United States were willing to take a chance on the first opportunities for investment in post-Mao China. Chinese leader Deng Xiaoping, understanding this only too well, specifically targeted investors in the ethnic Chinese diaspora, who understood the language, mentality, and bureaucratic culture of the mainland. Deng's government set up the first Special Economic zones directly opposite the thriving capitalist outposts of Taiwan and Hong Kong -- and investment from investors there soon started flooding in.

Similar plans have long been mooted for Haiti. President Michel Martelly, who likes to proclaim that "Haiti is open for business," is trying to set up a series of integrated economic zones that use local inputs for foreign manufacturing, and make Haiti an attractive destination for foreign investment. Martelly's scheme echoes one broached over 30 years ago by then-President Jean-Claude ("Baby Doc") Duvalier. Duvalier spoke of transforming Haiti into the "Taiwan of the Caribbean," a vast factory complex where foreign firms could assemble textiles, electronics, and baseballs for the nearby U.S. market.

For a while, indeed, industry thrived, but it became obvious that the export-zone strategy was incapable of making a significant dent in the country's rate of poverty and unemployment. Coups, crumbling infrastructure, and trade embargoes by the United States and the United Nations directed against the country's military regime created unemployment at around 40 percent in 2010.

Is there any reason to be optimistic this time? The answer, fortunately, is yes. The world economy has changed dramatically since the first wave of export zones were set up in the 1970s. A conspicuous feature of globalization is the decentralization of production, which has benefited large numbers of workers in the developing world. Technological change, lower transport costs, and the resulting creation of global supply chains are shifting comparative advantage in many areas of manufacturing to Haiti's favor. Rising labor costs in China and East Asia are pushing many U.S. firms to move production from those parts of the world to new ones. This movement of manufacturing back to the United States will likely create an expanding manufacturing sector ideally supplied by nearby low-cost countries like Haiti. Complementing these developments, U.S. legislation such as the Hope Act has provided Haiti with access to the American market on very favorable terms. Leveraging the interest of investors from the Haitian diaspora -- though not only them, of course -- could provide the necessary catalyst.

We now also have access to a fairly long history of export zones in developing countries, enabling in-depth studies to identify why some succeeded and others failed. It turns out there are a number of success stories that could be easily replicated in Haiti. The idea is to focus reconstruction and aid efforts toward economic zones as a way of replacing the current haphazard system of allocating foreign aid. Haiti's new economic strategy is evolving along these lines. For what it's worth, the International Monetary Fund is projecting growth in Haiti to accelerate to 6.5 percent in 2013 from 4.5 percent in 2012.

By lifting large segments of the population out of poverty, grassroots movements such as Fonkoze and Zafen have the opportunity to empower the country's population to overcome and reform the traditional impediments posed by the national government -- corruption, inefficiency, and the extractive institutions that have plagued the country for decades. Many Haitians are beginning to gain a sense of what needs to be done to make their government more efficient and accountable. They are beginning have a frame of reference for what is possible. After years of bad luck, a number of key elements are finally coming together for a prosperous new Haiti.

An earlier version of this piece reported that Haiti has been independent for 199 years. Haiti has been independent for 209 years.