Corruption And Violent Crime To Remain Atop The Agenda - OCT 2014

BMI View: Belize will continue along its present political trajectory over the next 10 years, with the government remaining unable to tackle corruption, and violent crime posing an ongoing threat to citizens . Nevertheless, we believe that Belizean society will remain stable, and future transitions of power will occur within Belize's constitutional framework.

Challenges And Threats To Stability

Corruption : We believe any meaningful reform on this front is unlikely over the coming years, regardless of a potential change in administration. The ruling United Democratic Party (UDP) and the main opposition Peoples' United Party (PUP) have both refused to sign the UN Convention Against Corruption whilst in power, making Belize the only country in Central America to remain outside the convention's purview. Prime Minister Dean Barrow was elected on an anti-corruption platform in 2008, pledging to work with the international community to reduce graft in Belize, yet progress has been extremely slow. For example, in 2013 the UDP sacked former secretary of state Elvin Penner from the cabinet due to an immigration scandal involving the sale of visas and passports to foreign nationals, yet he retains his parliamentary seat.

Belize has also been excluded from Transparency International's Corruption Perceptions Index since 2008 due to a failure to provide sufficient data. Before its exclusion country ranked 109 th out of 180 countries worldwide.

Crime: A number of high-profile drug cartels operate in Belize including Sinaloa and Los Zetas, and we believe that the country will become increasingly important base of operations as cartels' operations expand over the next 10 years. Violence linked to the increasing transit of drugs, particularly cocaine, methamphetamine and cannabis through Belize over the past decade is the principal driver behind the country's soaring murder rate. Indeed, latest data indicates that Belize has the sixth-highest murder rate worldwide according to the United Nations Office on Drugs and Crime, with an average of over 40 homicides per 100,000 residents.

Murder Rate On The Rise
Murder Rate And Murder Count

The state's weak enforcement capability has already helped make Belize vulnerable to money laundering, and its location next to Central America's principal drug transit nations also makes it a useful transshipment point. As a result, the Belizean police force will be unable to stem the violence perpetrated by the cartels, and crime will remain elevated over the long term.

Poverty And Inequality : Belize suffers from a growing income disparity, and we see little to suggest a change in this trend over the long term. The country is among the most unequal in Central America and the Caribbean. According to the latest available data, Belize's gini coefficient increased from 40 (rounded up) in 2002 to 42 in 2009. Moreover, the poverty rate in the country has increased from 33% in 1995 to 41% in 2009, despite real GDP growth averaging 4.3% per annum over the same period. Given our forecasts of moderate economic growth and rising per-capita income, we believe that public pressure on the authorities to step up land reform programmes to ensure a broader spread of wealth within the economy is likely to mount.

Immigration : Immigration will pose a risk to Belize's social stability over the next 10 years, but is unlikely to boil over into ethnic conflict or result in repressive policies from the ruling party. Nevertheless, 15% of the Belizean population are foreign-born, with many having emigrated from other Central American countries in recent years. As such, mestizos have long-since overtaken creoles (of mixed African ancestry) to become the country's largest ethnic group, making up half the population.

Ethnically Diverse Society
Breakdown Of Belizean Society By Ethnicity

Belize now also has more native speakers of Spanish than of English or Belizean Creole. We believe that English will remain the primary spoken language and the only official language in Belize, but Spanish will continue to grow in prominence over the coming decade. This is likely to be a source of friction, as multilingual mestizos are likely to replace monolingual creoles in services jobs. However, political parties in Belize are not divided along ethnic lines, and politicians have courted the newcomers' votes in recent elections, which will be positive for social stability in the long run.

Policy Continuity: Belize's political system has been characterised by peaceful and democratic transitions of power since gaining independence from Britain over 30 years ago, and we believe that most major political actors will remain committed to constitutional transference in the next decade. Governance continues dominated by two major political parties, and the constitution, which was ratified in September 1981, has remained broadly intact since. While the UDP and PUP differ over policy details, transitions of power between the two parties have failed to drastically alter the country's policy direction, and have been done within the established constitutional framework.

Long-Term Political Risk Ratings

Belize scores 63.8 out of 100 in our long term political risk ratings. The country receives its highest score for 'policy continuity' with 80.0 out of 100. The strong 'policy continuity' score is balanced by a poor performance for 'scope of state', for which Belize receives 55.0 out of 100, due largely to the government's ability to enforce policy being undermined by corruption. Belize scores 57.5 for 'characteristics of society', and 65.0 for 'characteristics of polity'.

Weak Scope Of State
Long-Term Political Risk Ratings

Scenarios For Change

Shift To The Centre-Left: Given the reduced majority (one seat) the ruling centre-right United Democratic Party (UDP) won in the 2012 parliamentary elections, a PUP victory is likely over the next 10 years. A swing to the left in either of the next two elections could result in improvements in tackling a number of the problems highlighted above. Prospects for reducing inequality, in particular, would increase significantly, as a left-leaning government would be more willing to address land reform, the crux of Belize's income inequality. We believe land reform would aim to promote poverty alleviation through first time land ownership drives and the implementation of incentives for small scale agricultural development.

Increased Cartel Violence: The violent turf war currently being waged by numerous local gangs in Belize could offer an opportunity for the Salvadorian MS13 to expand while domestic groups are engaged in conflict. MS13 has a reputation for being particularly violent, and if they manage to secure a foothold in Belize, we expect to see further increases in violent crime.