Central America: Reconstruction After Hurricane Mitch

On February 16, the Administration transmitted an emergency supplemental request for $955.5 million to provide reconstruction assistance to the Central American countries devastated last Fall by Hurricane Mitch. The supplemental did not include any of the trade expansion provisions which the Administration has proposed previously, and which the Central American countries include as their highest priority. The Senate supplemental appropriations bill ( S. 544 ) passed the Senate on March 23 and the House bill ( H.R. 1141 ) passed the House on March 24. The final legislation, P.L 106-31, increased the funding to $999.9 million. Trade expansion provisions were included in the Central American and Caribbean Relief Act ( S. 371 ), introduced on February 4 by Senator Graham of Florida and 9 cosponsors and its companion bill ( H.R. 984 ) introduced on March 4 by Congressman Crane and 3 cosponsors. The Administration bill, H.R. 1834 , was introduced on May 18.

Hurricane Mitch left a swath of destruction in its path across Central America from October 26 through November 5, 1998. The storm, which dumped torrential rains on the region, devastated Honduras and caused severe damage in Nicaragua. It produced lesser destruction in El Salvador, Guatemala, Belize, and Costa Rica. In addition to killing thousands and displacing many from their homes, the floods and mud slides also threaten the economy of the Central American countries through destruction of crops, cropland, and infrastructure, such as roads, bridges, and electric power equipment. The United States and international donors began providing emergency relief once access to the area became possible. By mid-December, the U.S. government had pledged or provided $304 million. By mid-November, the immediate emergency was over, and donors began to focus on longer term recovery. The Inter-American Development Bank (IADB) and the World Bank sponsored a donors' meeting on December 10 and 11 in Washington to examine the damage assessments being made by the regional governments and U.S. and U.N. experts and to develop a multilateral reconstruction program. USAID sponsored a meeting for private sector donors on December 14. At a May 25-28 follow-up meeting in Stockholm, donors pledged about $9 billion, including $5.3 billion from the InterAmerican Development Bank and World Bank over the next four years and over $3 billion by bilateral donors. The Administration has clearly stated its intention to use the opportunity provided by the disaster and the necessity for reconstruction to bring about significant changes in Central America. The reasons given for this emphasis are the trade potential of the region, support for the growing movement toward democracy, and concern that a slow response might trigger instability in the region or encourage large numbers of disaster victims to migrate to the United States. The President traveled to the region on March 8 to 11. This report describes the situation within the region, and the U.S. and international response to the disaster. It also discusses the longer term needs so far identified and the U.S. and international response to these needs.