In the 1980s, revolution, civil war and the anti-
communist drive of the US in the Western hemi-
sphere turned world attention to Central America.
The year 1990 marked a turning point in these
bloody Central American conflicts. The civil war in
Nicaragua ended. After a fair election the Marxist
Sandinista regime stepped down and handed the
government peacefully over to the opposition.
There are six states wholly in Central America:
Costa Rica, Nicaragua, Honduras, El Salvador,
Panama and Guatemala. Their combined popula-
tion was only about 26 million in 1989, though
population growth had been very high in the
region, as it had been throughout Latin America.
Indeed, population growth in the early 1990s
threatened to prevent any increase in the standard
of living and to condemn the masses to depriva-
tion and poverty. In addition, the resources that
were available were not shared fairly. The contin-
uing inequalities were most marked in the unjust
distribution of the available land. The wildly fluc-
tuating prices for the agricultural exports of
coffee, bananas and cotton, on which these
nations were still dependent, created a severe eco-
nomic crisis, because the prices of manufactured
imports did not move in unison, while the cost
of oil imports reached dizzying heights before
falling back and rising again in 1990.
An attempt was made in the 1970s to create
more balanced economies that would rely less
on manufactured imports and develop import-
substituting industries. Ten years later this only
added to the general economic calamities of the
majority of Latin American nations. In common
with the rest of Latin America the Central
American states borrowed heavily from bankers
flush with Middle Eastern oil money. The result
was that a crushing debt burden, getting ever
larger with high interest rates, turned the appar-
ently temporary difficulties of the 1970s into
permanent crises. Of course, the difficulties never
were just temporary. Political and social reforms,
including a redistribution of land, were indispens-
able preconditions of better economic and social
health. The causes of Central America’s problems
required radical remedies, regional as well as inter-
national. Nothing short of a massive effort could
stabilise the region – an effort of will on the part
of the developed world to cease protecting its
own markets and to pay higher prices for Central
America’s agricultural exports, as well as to
guarantee these prices against wild fluctuations.
International bankers would also need to write
down their investments realistically, while wealthy
Latin Americans would have to invest in their own
economies instead of sending their money abroad.
In 1961 hopes and expectations had been
raised by President Kennedy when he launched
the Alliance for Progress. His aim was to trans-
form Latin America’s economic and social ills by
peaceful means. This was to be the free world’s
democratic answer to the Marxist revolutionary
challenge. But enough aid to meet the enormous
economic problems was not forthcoming; muchChapter 62
CENTRAL AMERICA IN REVOLUTION
COSTA RICA, NICARAGUA, HONDURAS,
EL SALVADOR, GUATEMALA, PANAMA
AND MEXICO