Honduras's Millennium Challege Scorecard, 2015 Edition.

Honduras once again failed to resolve issues that prevent it from obtaining a Millennium Challenge Compact from the US Government.  Honduras failed to score a passing grade on 10 criteria, though not the same 10 criteria it failed to score a passing grade on last year.  These yearly scorecards determine a country's eligibility for a Millennium Challenge Compact.

The Millennium Challenge Corporation (MCC) uses what it describes as"objective and quantifiable policy in­dicators in three broad policy categories: Ruling Justly, Investing in People, and Encouraging Economic Freedom".  These broad areas are broken down into several measures in each area, each listed with the third party that developed and scored the countries.

Ruling Justly
     Civil Liberties (Freedom House)
     Political Rights (Freedom House)
     Control of Corruption (World Bank/Brookings Institution WGI)
     Government Effectiveness (World Bank/Brookings Institution WGI)
     Rule of Law (World Bank/Brookings Institution WGI)
     Freedom of Information (Freedom House / FRINGE Special/ Open Net Initiative)
Investing in People
     Immunization Rates (World Health Organization and UNICEF)
     Public Expenditure on Health (World Health Organization)
     Girls’ Education (UNESCO)
     Primary Education Completion (Scorecard LICs)
     Secondary Education Enrolment (Scorecards LMICs)
     Public Expenditure on Primary Education (UNESCO)
     Child Health (CIESIN and YCELP)
     Natural Resource Protection (CIESIN and YCELP)
Encouraging Economic Freedom
     Business Start-Up (IFC)
     Land Rights and Access (IFAD and IFC)
     Trade Policy (Heritage Foundation)
     Regulatory Quality (World Bank/Brookings Institution WGI)
     Inflation (IMF WEO)
     Fiscal Policy (IMF WEO)
     Access to Credit (IFC)
     Gender in the Economy (IFC)

This set of criteria was adopted in 2012. 

The Millennium Challenge Corporation board then selects five countries from those that receive passing scores on all indicators and allows them to develop a compact, based on available moneys allocated by the US Congress.  These compacts can be worth up to $250 million to a country.  In addition, a few countries each year get a 1-3 year grant called a Threshold grant designed to help them improve their score where they fall below the 50% threshold.  Threshold grants are $10-$30 million.

In August, 2013 Honduras received a 3 year, $15.6 million,  Threshold grant to "to improve public financial management and create more effective and transparent public-private partnerships."  This program had a number of concrete programs designed to improve Honduras's scores in several areas:

Public Financial Management
     1. Budget and Treasury Management
     2. Improve Procurement Capacity, Planning, and Controls
     3.  Improve the Capabilities of the Tribunal Superior de Cuentas
     4. Grants to Civil Society Organizations to Foster Accountability
Public - Private Partnerships
     1. Enhance COALIANZA's capabilities to Select, Finance, and Manage Risk.
     2. Fund Fundación para la Inversión y Desarrollo de Exportaciones to provide government solutions supported by user fees and manage exports through an eregulations.org government platform.

Depending on the statistic, the years 2012 and 2013 form the baseline for evaluating the effectiveness of the Threshold program. 

The 2013 scorecard forms the basis of assigning Honduras to the Threshold program, so lets look at the areas where Honduras was deficient (below average) on that scorecard and see what's happened since then. 

Under the rubric of scoring Economic Freedom, the MCC uses a number of indicators.  Honduras in 2013 had deficient scores (below the median score) in four of them:  Fiscal Policy, Gender in the Economy, Land Rights and Access, and Business Start-Ups.  In 2013 Honduras scored a 50% in Fiscal Policy.  That meant that 50% of the countries scored better, and 50% scored worse than Honduras.  Its ranking on this criterion worsened in 2014, to 46% and plunged on the 2015 scorecard to 26%.  That plunge can directly be attributed to the economic policies of the Porfirio Lobo Sosa government, whose last year in office forms the basis of the 2015 score.  The Threshold program has not yet had a chance to affect this indicator.

Honduras was deficient in 2013 in women's participation in the economy, called Gender in the Economy.  Here Honduras started with a score of 21% on the 2013 scorecard, improved its score in 2014 to 41% then saw its score decline again in 2015 to 37%.  No Threshold grant goals sought to address this criterion.

Land rights and Access was another criterion where Honduras was deficient.  Here Honduras began 2013 with a score of 32% and saw it decline on the 2014 scorecard to 23%.  On the 2015 scorecard it improved slightly to 25%.  No Threshold grant goals seek to address this criterion.

The final Economic Freedom indicator where Honduras was deficient was in Business Start-Ups.  In 2013 Honduras scored 28%.  That improved to 50% on the 2014 scorecard, but decreased to 43% on the 2015 scorecard.  No Threshold grant goals addressed this criterion.

Honduras was also judged deficient in Girls Secondary Education Enrollment Rate.  Here Honduras began with a score of 16% and actually managed to improve it in the 2014 and 2015 scorecards, so that in the latest scorecard its 31%, nearly double what it was two years ago.  Still there's a lot of room for improvement here.  No Threshold grant money had improving this indicator as a goal.

Under the rubric of Investing in People, Honduras had two areas of concern:  Girl's Secondary Education Enrollment Rate and Children's Health.  Honduras scored 16% on the 2013 scorecard in Girl's Secondary Education Enrollment Rate.  This continued to improve in 2014, where Honduras scored 22% and 2015 where Honduras scored 31%.  Children's Health scored 43% in 2013 but improved to good levels in 2014 and 2015 (56% in each) and is not currently an area of concern.  By comparison, another criterion, the Immunization Rate, became of concern in 2014 and continues to be of concern as Honduras's ranking plummets.  Honduras scored 87% on the 2013 scorecard.  It scored 44% on the 2014 scorecard, and 37% on the 2015 scorecard.  No Threshold grant goals address any of these three criteria.

Under the rubric of Ruling Justly, the MCC found Honduras deficient in four of the six criteria in 2013:  Freedom of Information, Government Effectiveness, Rule of Law, and Control of Corruption.  Honduras scored just 28% in Freedom of Information on the 2013 scorecard.  Its score has decreased on each subsequent scorecard to 27% in 2014 and 21% in 2015.  Government Effectiveness follows the same trajectory.  Honduras scored 44% on the 2013 scorecard, and its score declined in each subsequent scorecard, to 27% in 2014, and 25% in 2015.  The criterion Rule of Law scored 44% on the 2013 scorecard, but only 4% on the 2014 scorecard, and 7% on the 2015 scorecard.  Finally, in Control of Corruption, Honduras scored only 16% on the 2013 scorecard, 15% on the 2014 scorecard, and 21% on the 2015 scorecard.  The Threshold grant was designed to affect both the Government Effectiveness and Control of Corruption criteria, but because these measures only reflect the years of the Porfirio Lobo Sosa government, it has yet to show any results.

So Honduras is still deficient in 10 criteria though not the same 10 criteria that were deficient in 2013.  Child Health was eliminated as a concern, and Immunization Rates became a concern during the last two years.  The Threshold grant has yet to be able to show any results, but that is to be expected.  The scorecard has yet to report on years in which the Threshold Grant was active.  Honduras's deficiencies are directly attributable to the Porfirio Lobo Sosa government's actions, not the drug trade, not gangs.

Whether the Hernandez government can use the Threshold grant to turn some of these scores around remains to be seen.

Rumors of a Coup

Here we go again.

Marvin Ponce, Vice President of the Honduran Congress, says that he's been present at various discussions of political scenarios with politicians and businessmen in which they were discussing that Porfirio Lobo Sosa could be a victim of a coup.

According to Ponce, there are groups within Honduras that want to take advantage of the political destabilization and the internal chaos caused by the "discovery" of police corruption to get rid of Lobo Sosa:

These groups would like to take advantage of the Police crisis and can count on a sector of the Armed Forces with which they could go as far as to stage a coup,

Ponce told El Tiempo. He added:

there's a geopolitical game between Honduran politicians and businessmen.

Ponce was even more forthcoming in what he told El Heraldo's reporters:

In the last few days they have been talking about coups in political circles, that they no longer want Pepe Lobo as president. There is a geopolitical game between the US Embassy and powerful economic and political groups that want a government that serves them.

Ponce went on to allege that the US Embassy is behind an intentional destabilization of the democratic order in Honduras, pointing to the failure of Honduras to qualify for a Millennium Challenge grant and the withdrawal of the Peace Corp.

He also included a recent Washington Post article describing conditions in Honduras as out of control due to drug trafficking in his list of US Embassy efforts to destabilize Honduras.

So two and a half years on from the first coup in Honduras in over 30 years, and there's talk of a coup again.

Why?

Well for one thing, those who carried out the first coup, who did the unthinkable, got away with it, unpunished in any fashion.

Why wouldn't they think about doing it again if they're unhappy with Lobo Sosa?

Never Mind

Porfirio Lobo Sosa announced Wednesday morning that if Honduras didn't qualify for the Millennium Challenge grants competition this year, next year he would consider withdrawing from the competition for chance at $200 million in program funds and projects.

They told me that I should defer (another year). What's going on? I have been thinking of telling the Vice President (Maria Antonieta Guillen) that she should say that in the following year we will waive it, because they show that they don't behave well, what it is, it isn't fair. When they want to help, they help. There are countries that don't go around with so many things.

He added:

My mother had a saying. She told me: "My son, do good and don't look at anyone else". When you want to help, you help; this gives me, I don't know, I feel at times as if someone said I have money but if you want me to give it to you, do this and that. I'll tell you something: I received this country not at zero, but at minus 10....

Talking about what he felt were too-demanding requirements, he said:

We haven't hidden the weaknesses that we have, all the will, the affection and gratitude, but I feel that it shouldn't have to do with passing an exam. If the brother who is there is not able to investigate, because I recognize, I have the will to clear things up, but not the capacity.

He also criticized the United States for its lack of support for developing the investigative service of the police in Honduras:

I have never hidden my concern with what has happened with the journalists. Never, either, have I hidden that we don't have the ability to investigate... if a country wants to help us and knows that we have a problem with investigations, then what they should do is say "Look sir, I will send you a contingent of 50 investigators to clear up the crimes."

That left the Presidential Minister, Maria Antonieta Guillén to clean up the mess. Late Wednesday she read a statement to the press that said (in full):

The government of the Republic recognizes the good relations with the government and people of the United States and thanks them for the support and resources they've given which support the different program and projects that benefit our people.

At the same time, we would like to emphasize the positive impact that the first Millennium Challenge grant compact left for our compatriots.

The government of Honduras is making a great effort to reach the agreed levels in security, human rights, and the struggle against corruption.

It is in the permanent interest of the people and government of Honduras to agree to new or existing programs that will contribute to the well being of the Honduran people.

She went on to say:

"There's no contradiction between what I said, and what he (Lobo Sosa) said. They have helped us a lot."

Honduras's previous evaluation, in 2010, disqualified it in part based on measures of corruption, freedom of information, and economic activity.

On Thursday, it was confirmed that they would not be included in the current Millennium Challenge Corporation funding either.

Control of Corruption

So just what is this indicator called "control of corruption" for which the Lobo Sosa government would like to allocate blame to Manuel Zelaya Rosales?

The Millennium Challenge Corporation scorecards are built from data assembled by a variety of third parties. This particular indicator is one of six assembled by the World Bank ('voice and accountability', 'political stability and absence of violence', 'government effectiveness', 'regulatory quality', 'rule of law', and 'control of corruption').

The World Bank says the 'control of corruption' measure

captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.

Note that last part, about capture of the state by elites and private interests. That's a big part of the problem in Honduras. Not to say that there isn't corruption by government officials for private gain because there certainly is, though no one has quantified it. However, the capture of the state by elites is a significant factor in this indicator, and the coup d'etat exposed just how tightly the Honduran state has been captured by "elites and private interests".

As our previous post shows, the MCC scorecards don't support the claim that this measure was the key to Honduras not being selected for a new Compact. Here's a chart of the World Bank data on this measure from 1996 to 2009:




What the chart shows is that 71%-80% of the world's countries rate better than Honduras on this measure, and that the results haven't changed that much, regardless of which party is in power, since 1998.

Our previous post also noted that Honduras had some problems during the MCC Compact in the 'rule of law' measure. According to the World Bank, 'rule of law'

captures perceptions of the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of the contract enforcement, property right, the police, and the courts, as well as the likelihood of crime and violence.

The World Bank supplies data from 1996 through 2009 for this measure. Here's the chart:


As you can see, here the chart again shows Honduras with a low score, with 70% to 82% of the countries rated scoring better. It shows a pattern of year to year gains, then a steep crash under the Maduro administration, and then slight gains again under Zelaya.

Politicians, of course, are not required to pay any attention to actual data. In the Honduran context, it is probably great politics for the Lobo Sosa administration to blame this decision on Zelaya. But failing to come to grips with the actual history of performance is unlikely to help the country make a case to the MCC for a future Compact.

It isn't hard to find the data; what may be lacking is the will to face the facts.

A (Millennium) Challenge for Honduras

The Washington Post today published an English-language version of press reporting from Honduras following the decision by the Millennium Challenge Corporation to postpone a decision on whether or not to include Honduras in the next phase of the program.

The story, by AP reporter Freddy Cuevas in Tegucigalpa, repeats claims made by the Lobo Sosa government attributing the MCC's decision to corruption that took place under the Zelaya administration:

"We lament this decision because it was based on an evaluation of the perception of corruption levels in the country. And it affects the people the most," said Maria Guillen, Lobo's chief Cabinet minister.

Guillen told reporters that the decision was "due to corruption detected in 2007, 2008 and 2009," though she did not elaborate.

Foreign Minister Mario Canahuati blamed "the previous government" and said "now Lobo has to taken on this burden (even though) he acted transparently."

Poor Lobo Sosa; an innocent victim of a retrospective economic coup by Manuel Zelaya.

Except that this storyline, so pleasing to the Honduran right wing, is not supported by anything said by the US Embassy or the Millennium Challenge Corporation. In fact, the MCC press release said that

“MCC recognizes the positive steps taken by the Government of Honduras, as well as its strong commitment to reform and reconciliation. We look forward to continued engagement with the Government of Honduras and future consideration of the country for a second compact.”

So what actually made Honduras unattractive to the MCC right now-- as opposed to in some mythical future when reconciliation (that word, again) is complete and reform (what reform?) has taken place?

Participating countries are evaluated every year by the MCC, which issues "scorecards" showing how they performed. The scorecards are issued for each fiscal year-- so a scorecard for FY (Fiscal Year) 2011 summarizes a year that began in calendar year 2010.

As we previously discussed, "control of corruption" was one of the few indicators where Honduras failed to meet the standard required in the "scorecard" released by the MCC in October of 2009 (covering 2008-2009), scoring in the 44th percentile among its peer group of countries. (A reorganization of the MCC website broke the original links to this document; all the cumulative scorecards can be found here.) But even so, Honduras actually met its goals in this category in 2009. That's why "control of corruption" was green on the lovely color graphic MCC uses to summarize performance.

(In contrast, the two areas where Honduras failed to meet the criteria in FY 2009 stood out on the scorecard in bright and alarming red: "rule of law" and "fiscal policy".)

In the absence of any clear statement from MCC about where Honduras might have gone wrong-- other than that little coup thing and continuing violations of human rights, of course-- it is useful to simply glance over the scorecards from FY 2005 to FY 2011, covering data from 2004 to now.

"Fiscal policy" was already a major problem in the scorecard for FY 2005, when Honduras scored in the 47th percentile. Fiscal policy remained a problem consistently over the entire history of Honduras' participation in the MCC Compact from 2005 to now. Honduras score dropped to the 30th percentile for FY 2007, rose to the 37th percentile in FY 2008, to the 43rd percentile in FY 2009, and to the 44th percentile in FY 2010. The most recent scorecard (for FY 2011) shows a major erosion, back to the 40th percentile.

Fiscal policy is the only category in which Honduras consistently missed the MCC's targets. It seems much likelier that the decision of the MCC was based on this consistent inability to meet the expectations of the Corporation. But two other indicators shifted back and forth between acceptable and unacceptable: "rule of law" and "control of corruption".

"Rule of law" was marginal-- in the red in FY 2005, back into the green in 2006 where it stayed until FY 2008 (2007-2008, the year that political conflict that ultimately led to the coup began to be really visible). In the 2010 scorecard covering 2009-2010, 'rule of law' was again scored as a failure, which makes sense considering this covered the period of the coup d'etat and de facto regime.

"Control of corruption", the measure that the Lobo Sosa government wants to blame for the failure of MCC to renew Honduras, was an issue in FY 2008, improved in FY 2009 sufficiently to be scored in the green, and then in FY 2010 and FY 2011 reached its lowest point, well within the red (falling to the 44th and 45th percentile). But these results cover the period from 2009-2011: that is, a period when the Lobo Sosa government and its predecessor, the de facto regime of Roberto Micheletti, were in control for the majority of the time.

It is not surprising that the Honduran government would like to blame a scapegoat for this decision. It is unfortunate for them that the data available don't support their claim, and suggest a far simpler explanation: Honduras just didn't meet the economic expectations of what is, after all, a neoliberal economic institution.

But it would be great if the Washington Post could manage to pretend to do some actual reporting rather than simply giving print space to unexamined claims like those made by the Honduran cabinet ministers quoted in the article they chose to print.

Corruption, Impunity, and the OAS High Commission

Today begins a litany of denunciations by the far right of the OAS report as covered in the pro-coup press of Honduras.

Unlike the bombast in Proceso Digital that we blogged about yesterday, these attacks are all carefully attributed to specific individuals with institutional positions lending them credibility at first glance.

In Honduras, corruption falls under the purview of the Consejo Nacional Anticorrupción, the National Anti-corruption Council. This quasi-governmental organization monitors corruption, and accepts denunciations of corruption, but does not investigate or prosecute; the responsibility for that lies with the Public Prosecutor.

The CNA consists of an Assembly composed of representatives of a 12 different civil society groups. Religion is represented both by someone from the Archbishop's office, and from the Fraternal order of Evangelical Churches. Business is represented by someone from COHEP, labor by someone from the Confederation of Workers, and so on. Funding comes as part of the regular government budget, and is supposed to be supplemented by international grants. It's director is called a coordinator.

The Consejo Nacional Anticorrupción is particularly ineffective, as the Millennium Challenge Corporation noted in its FY 2010 report, covering 2008, where Honduras scored lower than the mean in controlling corruption.

Oswaldo Canales is the representative of the Evangelical Churches of Honduras on the council. He is also the coordinator of the Honduran CNA, and was appointed to that post in October, 2009. In today's La Tribuna, Canales, asked about the OAS High Commission report in this capacity, repeated two slogans of the far right in Honduras: "the law is for everyone, equally", and "international organizations need to obey their charters and stop interfering in Honduran internal affairs".

La Tribuna writes:

Canales, although he admits he does not know all of the report of the OAS, regretted that decree "erased and [created] a new account" for presumed acts of corruption in the administration of Zelaya Rosales, this will affect the obligations which the country has with other organizations, and this when these governmental authorities had declared 2010 the year of transparency.

Meanwhile in El Heraldo, Roberto Herrera Cáceres, identified as ex Secretary General of SICA, argues that the report might violate the UN Treaty on Corruption. Herrera Caceres is a noted jurist, which for some reason is not mentioned in the article. Under the presumption of innocence introduced into Honduran jurisprudence in the last decade, opinions about cases should be formed only after they are heard. Herrera Cáceres does not speak after having studied the case against Zelaya or even the OAS report. He's making a political statement dressed up superficially in legalese.

Predictably, Luis Rubi has also come out against the report, raising the same objection in El Heraldo that somehow dismissing this charge would violate international corruption treaties. Rubi, citing the OAS Convention Against Corruption, says,

The Treaty of the OAS against corruption does not permit that these crimes be subject to amnesty.

That seemed curious to us, so we reviewed the OAS Inter American Convention Against Corruption, which can be found here. It makes no mention of amnesty. Neither does the UN Convention Against Corruption, which can be found here. The only discussion of amnesty in the context of corruption is endorsement of its use as an investigative tool in the UN Anticorruption Toolkit.

Neither body envisioned the corruption that is being practiced in Honduras now: using the courts as a political weapon.

Juan Orlando Hernandez, President of the Honduran Congress, insisted that the amnesty he helped approve in January does not apply to corruption charges, nor to violations of human rights. True, but irrelevant.

According to the OAS report, the charges at issue against Zelaya were brought under Article 17 of the Inter American Convention Against Corruption. Article 17 reads, in full

For the purposes of articles XIII, XIV, XV and XVI of this Convention, the fact that the property obtained or derived from an act of corruption was intended for political purposes, or that it is alleged that an act of corruption was committed for political motives or purposes, shall not suffice in and of itself to qualify the act as a political offense or as a common offense related to a political offense.

Which is all about determining if the act was a political offense or common offense, as it relates to Articles 13, 14, 15, 16, not in general. So what are those articles about? They are about, respectively, Extradition, Assistance and Cooperation between States, Cooperation between States regarding property, and Protecting Bank Secrecy.

The OAS report (in paragraph 3i), quoting information supposedly supplied by Porfirio Lobo Sosa, says

He made reference, nonetheless, to the cases where it is not possible to apply said law [the amnesty] in virtue because they involve accusations whose dismissal would imply a violation of Article 17 of the Inter American Convention Against Corruption which is in effect in Honduras.

Lobo uses Article 17 to say that Zelaya's crime is not covered by the amnesty, but Article 17 does not apply. It isn't relevant, since it only refers to a determination of the nature of the crime for the purpose of extradition, cooperation between states, etc (Articles 13-16). Another red herring?

Dismissing the charges against Zelaya does not, as Proceso Digital and Oswaldo Canales asserted, strengthen impunity in Honduras. The Honduran Congress already did that when it carefully crafted the amnesty bill so that it blocked prosecution of those who staged the coup. Neither the reporters behind Proceso Digital nor Canales complained about the amnesty bill.

Nor does dismissing the remaining charges against Zelaya contravene the "apply the law to everyone, equally" precept that the far right trumpets in this instance. In the international context, Honduras was not under the rule of law when the charges were brought against Zelaya, after the June 28, 2009 coup.

Corruption is a serious problem in Latin America. Honduras is no exception. However, corruption charges don't happen equally to all corrupt individuals. Instead, corruption charges can be another tool in the arsenal of those in power against their political foes. So, in Latin America, when someone is charged with corruption, it is necessary to look at who is being charged, by whom, and under what conditions.