Hopes are high in Central America.

BYLINE: LETICIA LOZANO

Recession-driven reality may come as a shock

Like millions of people worldwide, Central Americans are hopeful that the administration of President Obama will bring about a new era in politics, trade, international relations and human rights.

President Martin Torrijos of Panama hailed Obama's victory as offering "the chance of a new era of cooperation and understanding." Honduran President Manuel Zelaya said it was "a triumph for all civilization." For Daniel Ortega, the Nicaraguan leader and a Cold War-era enemy of Washington, the victory was "a miracle."

But the region, which is heavily dependent on trade with the U.S., may be in for a shock. Under President Bush, Central America was not badly served, winning a wide-ranging trade deal, the Central America Free Trade Agreement, which has become one of the key tenets of the bilateral relationship and is credited with transforming Central America from a group of archetypal banana republics into a trading bloc of 40 million people.

CAFTA comprises Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica, as well as the Dominican Republic. During his election campaign, however, Obama said CAFTA failed to live up to labor and environmental standards. Critics of CAFTA say labor laws in the region fall short of international standards and that Central American farmers cannot compete with the U.S. government-subsidized agricultural sector.

"The issue at this moment in Central America is what may happen with free-trade agreements negotiated but not yet ratified in Colombia and Panama," said David Scott Palmer, who specializes in U.S.-Latin American relations at Boston University.