Quote:
19 Apr 2006
FORMAL SETTLEMENT OF BORDER DISPUTE PAVES WAY FOR GREATER CO-OPERATION ON ECONOMIC, ENERGY ISSUES
President Tony Saca on 18 April met his Honduran counterpart, President Manuel ‘Mel’ Zelaya, at El Poy (Chalatenango department) to formally recognise the newly demarcated border between the two countries.
The resolution of the longstanding border dispute between the two countries will pave the way for greater bilateral co-operation on a range of issues. In the immediate term, the agreement will act as a spur to bilateral trade and facilitate the flow of goods and people between the two countries. However, plans to construct a hydroelectric plant on the border between the two countries and improve transportation infrastructure between the Pacific and Caribbean coasts are only likely to be accomplished in the medium-to-long term. In the meantime, infrastructure linking the two countries will remain deficient, and regional integration will remain more of an aspiration than a reality.
Nonetheless, the resolution of the border dispute sends a strong signal that both countries’ governments are prepared to implement reforms and resolve longstanding obstacles to accommodate an expected influx in foreign investment now that the US-Central American Free-Trade Agreement (CAFTA) is in effect. Although CAFTA will improve the operating environment for foreign companies among signatory countries, the success of the agreement will depend on parallel efforts by signatory governments to pursue regulatory and institutional reforms, and to improve infrastructure. Although the Saca administration has shown more appetite for reform than most other governments in the region, there is likely to be a substantial delay before all reforms are truly functional.*
Background
A dispute over poorly-demarcated border territory and an influx of Salvadoran immigrants looking for land and work sparked the 100-hour ‘Soccer War’ in July 1969 with Honduras. The catalyst for the war was nationalistic sentiment aroused by a series of soccer matches between the two countries. A peace treaty in 1980 put the border dispute before the International Court of Justice (ICJ) in The Hague (Netherlands). In its 1992 judgement, the ICJ awarded 69% of the disputed territory (known as bolsones) to Honduras. With 4,000 Salvadorans effectively residing in Honduran territory, there have been regular bouts of tension between the two countries as Salvadoran civilians clashed with Honduran security forces.
