Sanctions on corrupt players can build stability in Central America

Fifteen years ago, the United States sought to bolster its partnership with Central America with an ambitious free trade agreement to fuel honest commerce, strengthen democratic institutions, and share the benefits of economic growth. But even before the coronavirus, the region became mired in corruption and crony capitalism, hampered by the entrenched patronage networks that stretch back to turbulent civil wars.

Democratic institutions and rule of law, which are the cornerstones of economic growth and security, are not only stagnant but receding in the region. While the administration of Joe Biden might be tempted to throw more development aid at the issue, it must also tackle corruption.

While President Obama missed the opportunity to press for the reforms necessary to leverage the potential of Central America, the priorities of President Trump on migration overlooked the democratic backsliding by cutting deals with corrupt leaders willing to do its bidding. Concerns over human rights and governance led Congress to suspend the participation of Honduras, Guatemala, and El Salvador in a State Department program that assists the finance and purchase of defense equipment.

A bipartisan cadre in Congress has been focused on advancing solutions to the challenges in Central America. Eliot Engel, the former chairman of the House Foreign Affairs Committee, has contributed to some tangible improvements. A provision he authored within the omnibus spending bill mandates the State Department to name and shame those “corrupt and undemocratic actors” in Central America and bar their entry to the United States. The bill also mandates the State Department to present a strategy to fight insecurity and illegal immigration in the region by confronting corruption and bolstering democratic governance.

The first target for the “Engel List” should be José Luis Merino, who is the Salvadoran kingpin and former commander of the communist insurgency. Among his litany of crimes, Merino has procured weapons for Colombian guerrillas and helped Hugo Chávez loot billions from the Venezuelan oil industry. Merino is arguably the most powerful man in El Salvador, armed with a corrupt fortune and a ruthless reputation.

A research report by the American Enterprise Institute found that Merino served as a key facilitator of the Colombian guerrillas and in their drug smuggling and weapons trafficking, supercharging their war against the Colombian government. Along with Chávez, Merino was also the linchpin in constructing an international financial network that launders money from drug trafficking and fraudulent oil deals, including the firm of Alba Petróleos, a Salvadoran venture that Merino and his network utilized to launder billions, according to allegations now under investigation by the Salvadoran attorney general. While his crimes started decades ago, Merino still enjoys tremendous influence in the government.

A research report authored by analyst Douglas Farah asserts that some of the closest associates of Merino are in the inner circle and on the payroll of Salvadoran President Nayib Bukele. The report documents that Bukele, family members, and senior advisers were among the beneficiaries of substantial “loans” from the fraudulent Alba Petróleos.

The report concludes, “While Nayib Bukele promised a new governing paradigm breaking with both the traditional right and traditional left, his government remains deeply penetrated by criminalized elements of both groups. These elements are united through the Alba Petróleos structure and under the direction of José Luis Merino” who “does not fit the model of the clean government Bukele claims to be building.”

On several occasions, members of Congress, including Engel and Marco Rubio, have denounced Merino and demanded the Treasury Department to impose sanctions on him with the Global Magnitsky Act meant to deny criminals and human rights abusers access to the financial system. In light of the involvement of Merino in drug smuggling, weapons trafficking, and massive corruption, the news that he is under investigation by the United States comes as no surprise. Until now, he has evaded justice, creating a sense of impunity that pervades Central America as he executes corrupt deals with the most powerful players in El Salvador.

If the next administration has any hope of Central America rising above the chaos and another migration crisis, it should bring sanctions and indictments down on Merino, his Salvadoran collaborators, and many others in the region like him. The “Engel List” may prove to be just the nudge the Treasury Department needs to set Central America on a path toward the prosperity and rule of law for which it longs.

Ryan Berg is a research fellow focused on Latin American government and security studies for the American Enterprise Institute based in Washington.