Launched by U.S. president Ronald Reagan in 1983, the Caribbean Basin Initiative (CBI) built on the legacy of the Alliance for Progress (1961–69) to foster free trade, open markets, economic growth, and export diversification throughout the circum-Caribbean, including Central America.
Formally called the Caribbean Basin Economic Recovery Act (CBERA), and going into effect on January 1, 1984, the program was made permanent in the Caribbean Basin Economic Recovery Expansion Act (CBI II) in 1990 and was expanded substantially in 2000 under President Bill Clinton in the Caribbean Basin Trade Partnership Act (CBTPA). The CBTPA, set to expire in 2008, includes 24 countries in a regional trading bloc akin to that created by the North American Free Trade Agreement (NAFTA). Measured in terms of the dollar values of goods exchanged, the initiative has proven successful. In 2004 the total value of CBI exports to the United States more than tripled from 1984, reaching $27.8 billion, while U.S. exports to CBI countries reached $24.5 billion, 1.6 percent of total U.S. exports, making the CBI region the eighth largest recipient of U.S. exports.
The CBI was launched during a period of escalating tensions between the United States and the Soviet Union, when the U.S. foreign policy establishment was deeply concerned with the growth of leftist and revolutionary movements in Central America and the Caribbean. By 1983 the Sandinista revolution in Nicaragua was entering its fourth year; the leftist FDR-FMLN political and guerrilla movements in El Salvador posed a serious challenge to that country’s U.S.-supported government; and the Guatemalan military’s U.S.-supported war against several guerrilla groups and genocidal campaign against the country’s indigenous peoples had already peaked.
The October 1983 U.S. invasion of Grenada to oust that country’s anti-imperialist, Marxist-oriented government further underscored the geopolitical concerns of U.S. foreign policymakers. The CBI, which excluded Nicaragua until the Sandinista electoral defeat in 1990, was thus similar to Kennedy’s Alliance for Progress in its goal of weakening Soviet and Cuban influence, preventing leftist movements and governments from expanding their power, and tightening the economic integration between the United States and the nationstates of its historic “backyard.”
Scholarly interpretations of the CBI’s economic and social impact vary widely. All observers agree that the CBI has expanded trade and promoted economic growth, but disagree over whether that growth has fostered sustainable economic development, diminished inequalities, alleviated poverty, or enhanced the social well-being of the majority. Critics charge that the CBI’s export-led model of growth has done little to improve living standards and has perpetuated structural inequalities within CBI member countries and between them and the United States.
The CBI’s supporters argue that economic growth remains the sine qua non of poverty alleviation and improved social conditions. While it is difficult to disaggregate the effects of CBI-induced economic changes from other factors, the evidence indicates that poverty rates, socioeconomic differentiation, and indices of social well-being in most CBI countries have seen marginal improvements at best since 1984. All observers agree that the CBI and related U.S. laws will continue to have a major impact on the region’s economies and inhabitants.