Financial Times
Monday, July 1, 2002, p. 5

Mexico joins plan for regional development
By Sara Silver

Mexico City — The leaders of Mexico and Central America have agreed to push ahead towards an ambitious plan for regional development, backed by a Dollars 4bn (Pounds 2.7bn) credit line.

Plan Puebla-Panama, announced by Mexico's President Vicente Fox nearly two years ago, aims to link Mexico's poor southern region, starting with the state of Puebla, to Central America through a series of public-private sector partnerships that would increase trade and build infrastructure.

Environmentalist groups have strongly opposed the plan, but the leaders insist it could help strengthen and integrate the region's transport and energy systems. "Only together and integrated in our political plans and programmes can we be successful in today's world of globalisation," said President Enrique Bolanos of Nicaragua at a summit in Merida, Mexico, last week.

The Dollars 4bn credit line, led by the Inter-American Development Bank, is intended to draw investor attention to a region emerging from decades of civil war.

Among the most ambitious projects is the International Network of Mesoamerican Highways, which includes building three roads totalling 4,500 miles. These roads could fill in gaps in the route to the US border and in east-west connections.

Another project would link the electricity grids from Guatemala to Panama, the southernmost Central American nation, before hooking up the system to Mexico and Belize. The project has already received the first firm commitment of private funds - Dollars 70m from Edesa, the Spanish power company.

"Infrastructure doesn't necessarily guarantee development, but it's impossible without it," said Florencio Salazar, co-ordinator of Plan Puebla-Panama.

More than 780 companies sent representatives to the summit seeking local partners. They ranged from multinationals seeking to build water treatment facilities to a co-operative from the southern Mexican state of Tabasco, which dreams of distributing dairy products in the heavily populated Guatemalan capital.

"Southern Mexico looks a lot like Central America", said Arnulfo Garcia, sales director for ICA, a large Mexican construction company. "It's important that Mexico promote and accelerate Central America."

Mexico, whose 100m people have an average per capita annual income of Dollars 8,000, dwarfs Central America's total population of 37m, who earn about Dollars 1,000.

Just as the US acts as an economic magnet for Mexican immigrants, Mexico is increasingly a destination for migrants seeking to support their families.

Leaders stressed their commitment to putting human development at the centre of the agenda.