This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 GUATEMALA 000001 
 
SIPDIS 
 
E.O. 12958: DECL: 12/30/2008 
TAGS: PREL PGOV EAID SNAR KDEM PHUM CASC US GT
SUBJECT: DRUGS, TRADE, AND HUMAN RIGHTS: AMBASSADOR'S FIRST 
MEETING WITH PRESIDENT PORTILLO 
 
REF: GUATEMALA 3306 
 
Classified By: Ambassador John R. Hamilton 
 
¶1.  (C)  Summary:  At an informal dinner at the home of 
President Portillo December 28 that also included FM 
Gutierrez and the DCM, the Ambassador emphasize the need to 
focus in Portillo's remaining year in office on being 
recertified and on making progress in other areas -- human 
rights, corruption and American citizen murder cases -- 
which, left unattended, could endanger U.S. Congressional 
approval of the CAFTA.  Although the conversation was civil, 
Portillo was upset about Guatemala's impending 
decertification, claiming it would weaken his ability to 
govern effectively and undermine the "reformist" elements of 
his government.  The Ambassador disagreed, indicating that it 
was not the reformist elements that were being decertified. 
End Summary. 
 
¶2.  (C)   President Portillo invited the Ambassador to an 
"informal" dinner at his home before his presentation of 
credentials ceremony, now set for January 8.  The backdrop 
was the increasingly public USG criticism of the government 
in the latter half of 2002.  In the two weeks before the 
dinner, the local press had run stories based on two leaked 
Guatemalan foreign ministry cables (from Brussels and 
Washington) that, inter alia, reported that the USG was 
weighing the cancellation of Portillo's visa and the 
impending counternarcotics decertification of Guatemala. 
 
------------------------- 
CAFTA AND DECERTIFICATION 
------------------------- 
 
¶3.  (C)  As it had been in a meeting the previous day with 
the Foreign Minister (ref), the Ambassador's main message was 
that time had run out on taking steps that could avoid 
decertification.   The government needed to react, when the 
announcement came, as positively as possible, making clear 
its determination to win recertification by the time of the 
next formal review process, in September.  The Ambassador 
also emphasized that the government would need to make 
progress in other areas -- human rights, 
corruption/transparency, American Citizen murder cases and 
the like -- which, left to fester, could endanger U.S. 
Congressional approval of a CAFTA agreement.  The Ambassador 
emphasized what an extraordinary opportunity CAFTA is for 
Guatemala and Central America, offering the best 
possibilities for reducing poverty and containing elements 
that will strengthen transparency in all areas of government 
having to do with trade.  Portillo professed to be a strong 
believer in free trade, pointing to several tariff cuts that 
had increased competition in formerly protected markets 
(Comment:  his prime motivation for the cuts probably was to 
attack opponents in the private sector).  The Ambassador 
recapped his December 27 conversation with FonMin Gutierrez, 
in which the latter described steps (ref) that the GOG would 
take to strengthen its trade negotiating team, which the 
Ambassador candidly told the President was the weakest in the 
region.  Portillo, who showed no awareness we could detect of 
the steps the FonMin had described (ostensibly with 
Presidential approval), nodded his assent. 
 
¶4.  (C)  Decertification, the Ambassador said, was 
essentially a done deal.  It would not be announced until 
early to mid-January, but the decision had been objectively 
based upon the GOG's performance, including the widespread 
use by traffickers of the ports (comment:  this was a 
deliberate zinger, as the President's personal secretary, 
Julio Giron, exercises de facto supervision over ports), and 
the poor performance against traffickers, including the 
failed raid in Zacapa, which clearly was leaked by someone in 
the GOG (comment:  another zinger).  Portillo's reaction to 
the latter was to agree that the failed raid was a shame and 
to suggest later in the conversation that the Public Ministry 
was to blame. 
 
¶5.  (C)  However, based on some recent positive steps the GOG 
had taken, the Ambassador said, it was likely that, in the 
absence of any egregious backsliding in the interim, the USG 
would approve a national interest waiver for Guatemala, thus 
avoiding any economic sanctions.  And, recertification during 
2003 was a possibility, but one that the GOG must earn 
through sustained, serious accomplishments.  They should 
start by complying with our six benchmarks. But the GOG would 
need to do much more to get recertified. (Note:  The 
President was unaware that former FonMin Orellana had told 
the Ambassador December 16 that his latest analysis was that 
the President could order the extradition of Marin Castillo, 
one of the six benchmarks for certification.  Gutierrez will 
see where the decision memo is -- but this illustrates the 
sloppy staffing of important issues in the GOG.) 
 
¶6.  (C)  The Ambassador said that decertification with a 
waiver would permit CAFTA negotiations to begin with 
Guatemala included (local rumor had Guatemala excluded) but 
he said it was politically awkward to decertify a country and 
begin free trade negotiations almost simultaneously.  That 
was why he had suggested to the Foreign Minister that we meet 
again in early January for a more structured discussion of 
the steps the GOG would need to take to be recertified and to 
clear the way for CAFTA approval.  Later in the dinner 
Portillo asked how the USG had analyzed the likely political 
consequences of decertification.  Would it increase or 
decrease his ability to govern effectively?  Would it hurt 
the traffickers or embolden them?  In his opinion, echoed by 
the Foreign Minister, decertification would weaken the 
reformist and positive elements in the GOG during the final 
and hardest year of his administration and would actually 
strengthen the drug cartels, whose beyond-the-reach-of-law 
status would only become more obvious.  It would also become 
a political issue, Portillo and Gutierrez admitted candidly, 
during an election year. 
 
¶7.  (C)  The Ambassador replied that we did not believe that 
decertification would weaken the reformists.  They were not 
the ones responsible for decertification.  Although the 
opposition and press would seize upon decertification, the 
GOG also had the opportunity to get recertified.  When 
Portillo complained that the system of criminal justice was 
penetrated and corrupted by the drug traffickers, tying his 
hands, the Ambassador responded that one of the weaknesses 
that puts the drug kingpins beyond reach is the lack of a 
criminal conspiracy statute.  Portillo and Gutierrez reacted 
positively to this, Portillo instructing Gutierrez to look 
into it.  The Ambassador suggested the GOG could best exert 
political damage control by reasserting its commitment to 
fighting drugs and its determination to win recertification 
through tough action.  It was in theory possible to win 
recertification before the November elections.  Portillo said 
the GOG would of course adopt the most positive public 
posture possible, as it had no other choice. 
 
------------ 
Human Rights 
------------ 
 
¶8.  (C)  The Ambassador asked Portillo and Gutierrez why 
there was an increase in threats against human rights groups. 
 Portillo asked Gutierrez to respond; the Foreign Minister 
said the basic reason was that several of the human rights 
groups were involved in prosecutorial investigations that put 
at risk numerous former members of the military.  The latter 
responded with the actions and threats of clandestine groups. 
 Portillo added noted that some in the international 
community (comment:  an allusion to us) had called upon the 
government to use military intelligence (D-2) against the 
clandestine groups.  When previous governments had turned to 
the D-2 to carry out police investigations, however, the 
price was a lack of civilian control and human rights 
violations.  The DCM responded that our proposal was for the 
D-2 to provide only information to the appropriate police and 
public ministry officials, nothing more; if the D-2 refused 
to share such information, it certainly provided a test of 
civilian control of the military.  Shifting subjects, the 
President highlighted the impending reduction of some 150 
members (about 20 percent) of the EMP (Presidential Military 
Staff), a long overdue Peace Accords requirement.  (Comment: 
The President did announce this reduction the next day in the 
six-year anniversary commemoration of the Peace Accords 
(septel). 
 
------------ 
Transparency 
------------ 
 
¶9.  (C)  The recently created Transparency Commission, 
observed the Ambassador, was under considerable pressure to 
resign due to the President's charging the Commission with 
ensuring the transparency of the disbursement of funds to be 
collected through the (controversial) 750 million dollar 
Eurobond issue.  Could the President not assign this task to 
some other entity, and allow the private and public members 
of the Commission to focus on larger structural transparency 
issues?  The President agreed that this was a possibility, 
and that perhaps the GOG could instead use a private 
verification service to perform these functions.  The 
Ambassador then raised the lack of transparency and the size 
of the military budget -- two items that went against the 
Peace Accords, and also prevented the USG  -- along with 
other problems -- from having a normal relationship with the 
Guatemalan military.  Portillo agreed that the military 
budget needed more transparency, and said he would explore 
this (comment: a promise he has made before but never 
followed through on).  He disagreed, however, that the 
military budget had increased significantly in real terms 
since 1996 (comment:  according to Minugua, the 2002 budget 
is about 50 percent higher than the Peace Accords target of 
0.66 percent of GDP). 
----------------------------- 
American Citizen Murder Cases 
----------------------------- 
 
¶10.  The Ambassador said that, with another American citizen 
murdered in December, eleven U.S. citizens had been murdered 
in Guatemala in the last two years.  None has been solved. 
It is impossible to explain and justify the lack of progress 
in these cases to the families involved and to the Congress. 
 
-------------------- 
Election Observers 
------------------- 
 
¶11.  (SBU) Asked, Portillo told the Ambassador that the GOG 
would once again invite international election observers for 
the 2003 elections -- the campaign as well as election day 
itself.  He urged the US to work with the Supreme Electoral 
Tribunal (TSE), which he described as new and inexperienced. 
(Comment:  WHA DAS Fisk signed our assistance agreement with 
the TSE in November.  Portillo's statement is positive in 
terms of assuring that the elections are free and fair.) 
 
 
------- 
Comment 
------- 
 
¶12.  (C) The meeting covered our most pressing issues with 
the GOG, and initiated the working relationship between the 
President and the Ambassador.  Portillo was polite and 
responsive, but was uncharacteristically subdued.  He showed 
little enthusiasm for his upcoming last year in office. 
Portillo is a complex personality; part of his positive and 
pragmatic side was to invite the Ambassador to this working 
dinner before the credentials ceremony.  The decertification 
decision, however, rankles him. He claimed that local 
misinterpretation of A/S Reich's HIRC testimony cost him a 
teaching job in Mexico after he leaves office in 2004 -- and 
his tendency will be to respond to it negatively.  We will 
keep working with FonMin Gutierrez to get the GOG to react in 
the most positive way possible.  On CAFTA, the President was 
relatively uniformed and unengaged.  He is probably 
personally suspicious of any process that might provide 
benefits to the private sector, in which a number of his 
enemies work.  At the same time, he doesn't want to be left 
behind by the rest of Central America.  All in all, not a bad 
first meeting, but genuine progress in all the areas 
discussed will not be easy. 
 
Hamilton