Q&A: How the World Bank is engaging 'Northern Triangle' countries

WASHINGTON — The international community must address development challenges in Central America by improving education, supporting businesses, and creating employment, according to World Bank Latin America and the Caribbean Vice President Axel van Trotsenburg. As migrants continue flowing out of a region that has struggled to provide adequate economic opportunity and public safety for its population, van Trotsenburg said the bank must assess where it can be most effective. “We have a willingness to engage on this,” van Trotsenburg said. “At the same time, also we’re realistic that when conditions are there to engage and when not. It’s not always easy.” Van Trotsenburg recently sat down with Devex to discuss how the bank is approaching the troubled region and how it fits into broader institutional strategies on climate change and fragility. This conversation has been edited for length and clarity. How is the bank approaching engagement with “Northern Triangle” countries — Guatemala, Honduras, El Salvador? We see the issues confronting Central American as structural and require from the international community long-term commitment. We need to keep in mind that there are many common problems that go beyond the Northern Triangle and I think that poverty is certainly one. Fragility is a second, third is the effects of climate change, particularly if you think of the “Dry Corridor” affecting multiple countries. “We need to turn every cobblestone in terms of identifying possibilities to create jobs and hope for young people to find a job.” --— Axel van Trotsenburg, vice president, World Bank Latin America and the Caribbean There are very core issues that will require a sustained development effort. This is particularly a big challenge as it pertains to education and basic services. And why is this important? If you take in the Northern Triangle that every year, if i’m not mistaken, about 360,000 young people enter the job market but only 120,000-125,000 can find a job. That means that a lot of people are left to informality or are tempted to leave. Compounding this is of course also a lot of violence. What the bank is saying is we need to turn every cobblestone in terms of identifying possibilities to create jobs and hope for young people to find a job. That is what we are currently promoting and it needs to be with a view that it is a sustained effort and therefore credible. The U.S. recently announced it is cutting off funds to the Northern Triangle until those governments meet as yet unspecified conditions. Will your assessment of needs in the region be impacted by this shift from one of the region’s major donors? We do read the newspaper but our resolve on development issues stays the same. There are issues which are challenging — that has nothing to do with the United States. Donors have increasingly moved their grand financing towards the poorest countries, the most fragile countries, basically the IDA [International Development Association] countries, while middle-income countries get less and less. At the same time, there are lower-middle-income countries that are still struggling. They will get less support and that is sometimes felt, and Central America is a good case in point. That is something where the international community can make a difference. At the same time, the countries themselves have to think what they can contribute, and I think it can be very difficult to explain to the world that in some countries where the taxation is that low, why the international community has to pay for development efforts where the citizens of that country are not prepared to pay the minimum contributions that are necessary for the good functioning of the state: social expenditures, education, and health. Migration from the Northern Triangle can be caused by reverberating impacts of climate change. How does the region fit into the bank’s overall climate change strategy? The bank has stepped up enormously it’s engagement on climate change because it has become also a clear development issue. In Central America you have the Dry Corridor that affects multiple countries. We have the whole resilience agenda in the Caribbean that is not affecting one island but the whole Carribean. You have deforestation issues from Panama, from Paraguay to Brazil, where you talk about sustainable forest. “Through 2030 we are wanting to develop projects to the tune of $335 billion that have direct climate co-benefits.” --— Through 2030 we are wanting to develop projects to the tune of $335 billion that have direct climate co-benefits. That can be in dealing with droughts, it can be dealing with deforestation, it can be dealing with air pollution, it can be dealing with renewables. In certain countries, the adaptation agenda will be more important, in some it may be the mitigation area. You have plans that governments have formulated but where they would probably appreciate support, not only by the bank, but by the IDB [Inter-American Development Bank] and others. At the end of the day, it is a joint, global effort. You mentioned fragility as one issue facing Latin America. What will the bank’s new fragility strategy do to focus on this? The most prominent of fragile states in Latin America and the Caribbean is Haiti. There we are firmly engaged through our IDA support. I think there are countries that are vulnerable even if you may not call them fragile, that are affected by violence — Honduras is a case in point. That can affect development, that can affect the investment climate. It means that in these areas, very often economic development is constrained. And that constraint is immediately translated in people having no more jobs. And if you then mix that with gang culture, drugs then you have a toxic cocktail. So how can we be there, engaged? I think this is difficult. But the bank has been here for difficult development tasks. We can be also together with our private sector friends at the IFC [International Finance Corporation] to see how we can help de-risk investments, how we can create employment opportunities, particularly for small- and medium-sized enterprises. How we can in that context support particularly female entrepreneurs, and see how one can provide these people the means to create new opportunities and hope in these very challenged environments. That is what we have to try to do. We should not shy away from failure. But we should certainly not accept nonaction.