Guatemala on the Brink

When I was younger I greatly enjoyed the gameshow To Tell the Truth. Perhaps it was the fact that one of the regular panelists was named “Soupy Sales,” which, to my young ears, was a wonderful, silly name for someone to carry around, especially on TV. But the premise of the show was even more interesting, in which a panel of “experts” would ask questions of three contestants—one legitimate and two imposters—attempting to determine who was the person he or she really claimed to be. At the end of the questioning, moderator Garry Moore would ask the tag line, would the real so-and-so “please stand up.” And after much jockeying, feinting, and gasping, the person with the true identity would stand.

And the same is going on right now in Guatemala. Though much more serious than a gameshow, Guatemala since the peace accords were signed in 1996 has gone through numerous changes, and the question must be, as new president Alvaro Colom takes the helm, “Will the real Guatemala please stand up?”

I attended the signing of the accords which finally brought to an end the almost 40 years of conflict with the URNG guerrillas and, it was also hoped, years of violent, abusive Guatemalan government repression. I will never forget the promise and hope of that day, when guerrilla leaders arrived in Guatemala City on a commercial jet, in the open, and they and their followers were welcomed back into Guatemalan politics by promising to lay down their arms and integrate into the legitimate political discourse.

Over 10 years on, it’s now fair to ask how the Guatemalans are doing, and where do they go from here.

In truth, the record has been choppy. President Alvaro Arzu, after ending the guerrilla conflict, ended his term in office and is now mayor of Guatemala City. He was followed by Alfonso Portillo, who was widely seen to have backtracked from the Arzu reforms by enabling a culture of corruption, failing to take advantage of the new, post-revolutionary spirit in Guatamala to create jobs and build the economy, and overseeing a deteriorating security environment. (Portillo is now in Mexico facing extradition to Guatemala on corruption related crimes.) In turn, Portillo was replaced by Oscar Berger, a genial, common sense leader who became a high-profile advocate for increased trade with the rest of Central America, Mexico, and the United States, and who left office with a solid record of achievement. In fact, in late 2007 the Americas Society in New York awarded him the “Gold Insigne,” the highest award it can bestow.

Comes now President Colom, an industrial engineer by training, who was inaugurated on January 14 and desires to forge an independent path in governing. He has promised to increase the standard of living for the half of Guatemala’s 14 million citizens who live on less than $1 per day, as well as to bring the majority indigenous population into the mainstream. In so doing, he has raised expectations dramatically among the many impoverished of Guatemala. That’s not at all a bad thing, and his goals are both noble and long overdue for a Guatemalan president, indeed for presidents of much of Latin America. But now he must deliver, and prospects for success are not guaranteed.

The reason is this: unless the president and his team get citizen security under control—the top obligation of any democratically elected government—the rest of the development agenda will be but an audacious dream. In fact, according to former US Ambassador to Guatemala Don Planty, personal security should be the number one priority, because an insecure security environment undermines investment, job creation, and poverty alleviation. And he is correct. The influence of the illegal narcotics trade and organized Central American gangs is pervasive and highly disruptive. The security environment is scaring away investors and foreign visitors, raising costs for businesses caught in the web of extortion, and making it much more difficult for Guatemalans to go about their daily lives. At the same time, given Guatemala’s extraordinarily violent history, where human rights abuses by the government were rampant and are now historically well-established, it is equally clear that a heavy-handed approach to crime and criminal activity could backfire.

Hence the need for a comprehensive security and development plan which could be developed in coordination with such friends as the Inter-American Development Bank, international donors, and of course Guatemalans themselves. Such a plan would have both near term security and mid-term development goals designed to reduce criminal activities dramatically while building the trust between government and the governed that has not always existed. It would begin with a national effort to delegitimize criminal activities in the eyes of citizens. It would focus like a laser beam on reform and professionalization of the police. It would unearth and address crimes through full support for efforts such as the UN International Commission Against Impunity. And it would require that even the hint of government corruption and conflict of interest be scrupulously avoided. Resources for these priorites could come from the US-proposed Merida Initiative, targeted IFI lending, more effective tax collections, and elsewhere.     

Such plan would continue with a comprehensive effort to build on the opportunities provided by the US-Central America trade promotion agreement to create the jobs that are required to build a competitive society and provide opportunities for those who might otherwise be tempted by criminal actions. As the saying goes, you can’t fight something with nothing; jobs must be created in order to provide legitimate opportunities in the formal economy. In addition to getting full benefit from CAFTA, once security improves tourism would also be a natural area of focus and promotion, increasing services exports in a sector for which Guatemala is justifiably famous.

Over the longer-term, Guatemala should seek to work with other nations such as the United States, Mexico, and Brazil to, among other things, build a more integrated energy market, including electrical interconnection and alternative fuels. This would build value-adding industry in Guatemala, while reducing dependence on budget-busting foreign oil and gas imports, though it will take a sustained effort over time to succeed. It will also require continued support even as Venezuelans offer reduced cost energy through the petrocaribe program and as Cuba is said to be offering medical teams. As well, Guatemala should be looking to work as a partner and friend with Mexico on pressing migration issues.

The reality is that the president has taken office during a time of global economic uncertainty, high energy prices, looming recession in the United States that is reducing resources available to Guatemala through remittances, and a continued proliferation of violent crime. At the same time, he has raised public expectations to increase the standard of living and redistribute wealth and power to a broader cross-section of Guatamalan society just when resources are becoming even more constrained.

President Colom genuinely appears to care about the prospects of the poor, seeking social equality. But how will he govern? There are some similarities, in fact, with Brazil’s Lula, who also ran twice for president before he was elected, who also came to power on a platform of economic growth and broader prosperity, who also faces significant security challenges, who has also focused on macroeconomic stability and built a credible, orthodox economic team, and who has defied critics by successfully building an independent course within South America. But Lula has at least one thing that Colom does not: historically high, sustained prices for commodities that Brazil has in abundance, although the Guatemalan sugar, coffee, and chicken sectors are all doing well.

Nonetheless, without decisive actions early on based on a concrete plan to reduce crime and goose economic development, Guatemala faces the prospect of difficult times ahead. With decisive action, and international assistance, the new president has the opportunity to regenerate a broader growth agenda for his nation.