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North American Development Bank should be repurposed to focus on Southern Mexico and the Northern Triangle

by Dan Runde, opinion contributor


The United States should put the North American Development Bank (NADB) on steroids and broaden its mission to focus on Southern Mexico and the Northern Triangle of Central America. With a relatively small sum of money (perhaps a few hundred million dollars which could be paid out over a couple of years) and a new authorization from the U.S. Congress, the United States could create a new instrument to meet the challenges of the Northern Triangle.{mosads}

Such a newly repurposed and super-sized development bank would also send a strong signal to the soon to be installed Mexican government led by president-elect Andres Manuel Lopez Obrador (known as AMLO), who has made confronting the push factors of migration such as regional insecurity, poor governance and a lack of economic growth the focus of Mexico’s future efforts in the region.

President-elect Obrador is correct: people are fleeing the Northern Triangle as a result of limited job opportunities, a deep sense of physical insecurity driven by drug-financed criminal gangs, and an overall weakness in governance and institutions. In 2014, the United States responded to a similar wave with the Alliance for Prosperity (A4P) Initiative. The initiative helped outline a plan that sought to achieve four key objectives:

The Inter-American Development Bank (IDB), where the United States is the largest shareholder, is one instrument that has been used to organize country plans. The United States has also made significant bilateral direct commitments to the three countries, by leveraging its various government agencies like the U.S. Agency for International Development (USAID). Additionally, with the passage of the BUILD Act, the new U.S. International Development Finance Corporation (USDFC) should also be seen as a vital instrument that can respond to the challenges of the Northern Triangle.

President-elect Obrador has made public statements about the importance of having a holistic view of migration problem and dealing with root causes. Those causes certainly include insecurity but also economic opportunities. The NADB – which focuses on the U.S.-Mexico border – has successful experience in infrastructure projects for over a quarter-century. The United States has contributed $450 million in paid-in capital. In September 2018, the NADB had 53 active projects and had received commitments worth $610 million from the NADB in the form of loans and grants. These projects, which are implemented by state agencies and private entities, broadly focus on infrastructure projects in the U.S.-Mexico Border regions and aim to improve economic viability of the region. 

A repurposed NADB that has a focus pivoted towards Mexico’s southern border would do two things:

  1. send a signal to the new president of Mexico that the United States is taking Mexico’s suggestion seriously, and
  2. serve as a strong and robust new instrument to confront the challenges of the Northern Triangle.

Such an instrument would also help Mexico and the United States to get on the same page regarding the difficult conversations with the three dysfunctional governments of El Salvador, Guatemala, and Honduras.

The repurposing the NADB will build a deeper problem-solving partnership with Mexico while managing our shared migration challenge from the Northern Triangle. An increasing number of migrants from the Northern Triangle are not only transiting through Mexico but are now settling in Mexico.

Creating a repurposed NADB would be in line with the priorities of the new Mexican government, cost us very little money, and would help set the table for the sorts of strategic conversations with Mexico that are needed to have a successful relationship with its new president.

Daniel Runde is a Senior Vice President and William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies. He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America, and the Middle East.

Finance