1. Central America Security Outlook UK-Central America High Level Conference Carlos Caicedo, Senior Principal Analyst, Latin America March 5, 2014

2. © 2013 IHS Criminality in the region is a concern, but it is not widespread, with it being highly localised Two-thirds of all homicides in Honduras are accounted for by four of the country’s 18 departments. In El Salvador, four zones comprising 11 of El Salvador’s 14 departments account jointly for just over 60% of all homicides. In Guatemala city most cases of homicide take place in three of the capital’s 22 zones. Most victims of violent crime are locals, foreign visitors are rarely targeted. 2

3. © 2013 IHS Homicide rate has been falling in all six countries in recent years Declining homicide levels in Central America Variation since last peak year Country% variationPeriod Rate per 100,000 1 El Salvador-43.02011-1339.8 Costa Rica-22.82010-128.5 Guatemala-19.12009-1334.9 Panama-18.72009-1317.3 Honduras-10.42012-1375.1 Nicaragua -9.42010-1211.7 1 Latest, based on last recorded number of homicides and population figures. 3

4. © 2013 IHS Maras truce and improved state response to crime are helping to contain the threat In El Salvador, the March 2012 ‘truce’ between the maras has been a key factor behind the decline in homicide rates. Guatemala’s ‘Security Pact’ has resulted in 7,000 additional police officers and creation of specialised task force (joint military-police) Honduras has created two new forces: Special Response Group (Tigres) and Military Public Order Police (PMOP) Close cooperation with the US in counter-narcotics have also helped; it has given Central American security forces access to state-of- the-art tracking technology and good intelligence. 4

5. © 2013 IHS Central America’s strategic importance for Mexican cartels is a key driver of violence 5 Disruption of Colombian cartels (1990s) allowed Mexicans to move upstream Sinaloa and Zetas significant presence in Central America, operating in association with local gangs Effective interdiction in the Caribbean made the Pacific and Central America strategic

6. © 2013 IHS Control of key routes is a key source of inter-gang violence in Central America 6 Overland route from Panama and through the isthmus to Mexico Caribbean Corridors of Honduras to Guatemala and on to Mexico

7. © 2013 IHS Security threats are a concern, but they are manageable Kidnapping has not declined as fast as murder rates, but main victims are locals rather than foreigners There are not reported cases of extortion against large foreign companies; small and medium-sized local businesses are main target Collateral damage is a significant risk for foreigners, but awareness of hotspots of crime and how to avoid them should mitigate risk Security threats have not deterred investment in the region; FDI in Central America in 2013 stood at USD 48 billion, a 92% increase on 2012 (UNCTAD) 7

8. Thank you! Carlos Caicedo Senior Principal Analyst, Latin America Country Risk carlos.caicedo@ihs.com