May 06, 2010

Russia Finds Banana Republics More Attractive

06.05.2010Source: Pravda.RuURL:

In the last few years there has been an obvious desire to come closer among the so-called “Banana Republics” of the Central America (Guatemala, Salvador, Honduras, Nicaragua, Costa Rica, and Panama).

For example, in 1991 the Central Integration System was created to promote economic cooperation. In 1997, another important event occurred when the countries of the region signed the “Declaration of Nicaragua” regarding the intent to form a political union. If this happens, the existing “Banana Republics” may become history, replaced by a much stronger in all respects Central American state. The nature of economic and political cooperation in the future will depend on Russia’s relations with its individual parts.

At the moment, Russia cannot boast significant achievements in the development of trade relations with the countries of the region. While the total volume of their trade amounts to 110 billion US Dollars, Russia accounts for mere 0.1%, which is a little over 100 million dollars. The top places in the trade with these countries are shared between the USA, Mexico and China.

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The majority of Russian export is fertilizers, paper and cardboard, plastic and plastic items, and ferrous metals. The export from the countries of the region to Russia is represented by tobacco, coffee, fruit (mostly bananas) and nuts. It also includes sugar, cardamom, timber, seafood, beef and poultry. All countries of the region import grains, fertilizers and energy equipment.

This region can be also interesting because of its rich resources that until recently have been weakly developed. The economy of these countries is very dependent on fluctuations of world prices for agricultural goods; therefore many of them are willing to develop other sectors as well, including mining. First of all, it is natural resources such as mercury and sulphur. There are large deposits of non-ferrous metals (lead, zinc, and copper) and precious metals (gold and silver). Additionally, according to geological research, there are large deposits of asbestos, iron, titan, chrome, wolfram, and platinum.

According to Guatemala President Colom, his country is very interested in cooperation with Russia in oil sector considering that Guatemala has significant oil resources, although it is not on the list of the countries believed to be large oil extractors. It is worth mentioning that there are large oil resources on the shelf of the majority of Central American counties which they are not capable of exploiting without foreign aid. Russia has fruitful cooperation with some of them, including Nicaragua.

Additionally, considering large dependence of the region’s countries on the import of electric power, we could suggest that they would be interested in the development of geothermal energy and hydro energy, considering significant natural capabilities.

Tourism is another important area of cooperation. To stimulate this area, Guatemala cancelled entry visas for Russians in 2009. Other countries of the region also introduced various simplifications of the visa process and their leaders openly state that they want to attract Russian tourists to their countries.

Yevgeny Khakimullin, an expert in the countries of the region, provided his comments to

“The positive moment is that there are no visa barriers between the majority of the countries, and tourists can easily visit other countries of the region. All these countries are interesting because of their versatile natural environment. A number of countries, including Belies, Guatemala and Salvador, boast monuments that attract tourists from all over the world. I mean city-states of the famous Maya that virtually have not suffered in contemporary times. However, serious disadvantages are high price of tour packages because of long flights. A package is no less than $2,000. Another minus is the lack of good beaches loved by Russian tourists in these countries.”

Another negative moment is the fact that Central American countries have the highest level of crime in the entire world. In Guatemala, there are 46 murders per 100,000 residents a year. This is not surprising because over 50% of the population live below poverty level.

Yet, Costa Rica has proved that the development of ecotourism can attract millions of visitors from all over the world and raise the country’s economy to the unreachable heights compared to its neighbors.

Military and technical cooperation is also very important. First of all, it is Nicaragua, as well as Guatemala that is also interested in purchasing of special equipment for divisions participating in fighting against drug mafia. Guatemala’s Vice President Rafael Espada stated in an interview with a local newspaper Prensa Libre that the country was interested in purchasing planes, armored equipment and other weapons to fight organized crime. He said that the Russian party suggested Guatemala could pay with sugar and coffee.

But here is a legitimate question: what to do with the dependency on the US? In particular, during his visit to Russia, Guatemala’s President expressed his desire to refocus his trade connections to Russia. He acknowledged that their cooperation with the US, Mexico and in a lesser extent, Europe, was a historic matter. Today, there is a strong tendency in the region toward liberation from one-sided dependency from the US.

This is the same reason the development of relations with local elite seems to be very important. Salvador President Funes is the most popular president of the western hemisphere who is more popular than Obama. He is a former TV journalist who became popular due to exposure of corruption and social inequality. Now he declared a merciless war on local rich who evade taxes. Additionally, he restored diplomatic relations with Cuba destroyed 50 years ago. This act was a challenge to once popular opinion that Salvador remained a US satellite in all respects. Funes is not alone in this desire and Guatemala’s Colom and Nicaraguan Ortega share his position.

Sergey Balmasov


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