VZCZCXYZ0000
OO RUEHWEB

DE RUEHGT #0132/01 0152226
ZNR UUUUU ZZH
O R 152225Z JAN 10
FM AMEMBASSY GUATEMALA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0798
INFO RUEHGT/AMEMBASSY GUATEMALA

UNCLAS GUATEMALA 000132 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON SOCI GT
SUBJECT: Ambassador Hosts Second Round of GOG-Private Sector Dialogue 
 
REF: 2009 GUATEMALA 1033; GUATEMALA 7 
 
¶1.        (SBU) Summary.  On May 15, the Ambassador hosted the 
second round of GOG-private sector dialogue.  President Colom said 
that, with CICIG's findings in the Rosenberg murder case 
exonerating him, new political space had been opened.  He was 
prepared to work with the private sector to address social welfare 
as well as security objectives.  CACIF President Montenegro 
acknowledged that CICIG's exculpation of the President and his 
inner circle had been absolute, and the stage was set for renewed 
government-private sector cooperation.  The two sides agreed to 
work together on social and security agendas for 2010.  With the 
consent of President of Congress Alejos, who also participated, 
they agreed to push forward competitiveness reforms sought by the 
private sector, and to continue dialogue on tax reform.  Seeking to 
avoid polemics, both sides eschewed discussing specific elements of 
tax reform.  First Lady Sandra de Colom remained behind following 
the meeting to discuss her social welfare programs with some of her 
sharpest critics.  End Summary. 
 
 
 
¶2.       (SBU) On May 15, the Ambassador hosted a second round of 
GOG-private sector dialogue.  The GOG was represented by President 
Alvaro Colom, First Lady Sandra Torres de Colom, Minister of 
Finance Alberto Fuetes Knight, Minister of Energy and Mines Carlos 
Meany, and Private Secretary to the President Gustavo Alejos. 
President of Congress Roberto Alejos, of the governing UNE party, 
also participated.  Jorge Montenegro, President of CACIF (the 
Coordinating Committee for the Associations of Agriculture, 
Commerce, Industry, and Finance) led the conversation for the 
private sector side, in which CACIF and non-CACIF business 
interests were well represented.  The DCM, Pol/Econ Counselor, and 
Poloff also participated. 
 
 
 
¶3.       (SBU) The Ambassador summarized the first GOG-private 
sector meeting he hosted (ref a), recalling that the conversation 
had focused on improving government transparency and improving the 
country's precarious social and security conditions.  The two sides 
had agreed it would be in the country's best interest to make the 
tenor of their public communications less polemical.  Following his 
conciliatory State of the Nation address to Congress January 14, 
President Colom opened the January 15 meeting by saying that he was 
grateful to the UN-led International Commission Against Impunity in 
Guatemala (CICIG) for its diligent and successful efforts to 
investigate the Rosenberg murder case, in which he and his inner 
circle had been implicated.  CICIG's findings, which exonerated the 
President and his closest associates, had created new political 
space for dialogue (ref b).  Colom said he wanted to make a fresh 
start with the private sector in the interest of addressing 
Guatemala's pressing needs in the areas of health, education, and 
security. 
 
 
 
¶4.       (SBU) In a gesture of reconciliation, CACIF President 
Montenegro acknowledged that CICIG's investigation had been expert 
and thorough, and its conclusions exculpating the President beyond 
doubt.  Montenegro acknowledged the government's social welfare 
efforts, particularly in the areas of public health and education, 
and said the private sector agreed they should be budgetary 
priorities.  However, he questioned the GOG's decision  to take on 
more debt, saying that the "unbalanced" budget could have been 
appropriately funded without resort to tax reform.  Montenegro 
asked Colom to help advance the competitiveness agenda CACIF had 
developed.  Specifically, CACIF sought legislative, regulatory, and 
other changes to:  Encourage oil exploration and mining; establish 
duty-free zones; modernize the Santo Tomas Port; clamp down on 
smuggling; increase state support for English language instruction; 
pass the Law on Public-Private Partnerships (to build 
infrastructure); and enhance transparency controls.  In response, 
President Colom agreed to the establishment of working groups on 
transparency, security, and at the Ambassador's suggestion, social 
programs.  President of Congress Alejos said he believed Congress 
could pass this year much of the legislation of interest to the 
private sector, including the Mining Law and Law on Public-Private 
Partnerships.  Montenegro suggested a quid pro quo:  The private 
sector would support Colom's social agenda (provided enhanced 
transparency controls were put in place), and the GOG should 
support the private sector's competitiveness agenda.  Colom 
appeared amenable to the suggestion. 
 
 
 
¶5.       (SBU) In the only departure from the otherwise 
conciliatory tone of the meeting, Colom asserted that he had the 
 
congressional votes to pass tax reform, and said he would do it 
with or without private sector buy-in.  Montenegro responded by 
saying "Let's do it together," and many present indicated their 
agreement that tax reform was needed.  (Comment:  Colom's shaky 
congressional alliance has so far delivered for him on most 
legislation, but taxes have been the exception.  His assertion is 
questionable.)  The meeting ended on a positive note, with both 
sides expressing their appreciation for the Ambassador's role. 
Following the meeting, Private Secretary to the President Gustavo 
Alejos asked the Ambassador to host similar meetings later in the 
month with the two main opposition parties, LIDER and Patriot 
Party.  The Ambassador agreed. 
 
 
 
¶6.       (SBU) First Lady Sandra Torres de Colom stayed behind 
after the meeting to engage with several businessmen with whom she 
usually has an adversarial relationship.  She defended her 
often-criticized efforts to help her husband manage and improve 
social policy, and defended the transparency of her Conditional 
Cash Transfer Program, "My Family Progresses," as well as other 
programs falling under the purview of her Social Cohesion Council. 
Carlos Zuniga, conservative President of the Chamber of 
Agriculture, offered that even though they sometimes disagreed, he 
admired the First Lady's energy and good intentions. 
 
 
 
¶7.       (SBU) Comment:  This meeting augured well for GOG-private 
sector relations during 2010.  In the spirit of reconciliation, 
both sides eschewed getting into details about tax reform, the main 
point of contention which they may soon again to attempt to 
address.  We were pleased that the First Lady and the private 
sector representatives took a first step toward communication, if 
not mutual understanding.  We will continue our efforts to foment 
dialogue with the objective of effectively addressing Guatemala's 
pressing social and security needs. 
MCFARLAND