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

UNCLAS SECTION 01 OF 02 GUATEMALA 000188 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958:N/A 
TAGS: PREL EAID SNAR PGOV PHUM GT
SUBJECT:  AMBASSADOR'S FIRST MEETING WITH G-13 
REPRESENTATIVES (DONOR DIALOGUE GROUP) 
 
 
¶1. (SBU) Summary:  The Ambassador met on January 14 with 
members of the Donor Dialogue group (6 major bilateral 
donors, plus 4 multilaterals, MINUGUA, USAID, and UNDP) to 
discuss development cooperation and preparations for the 
May consultative group meeting. Ambassadors and IFI Reps 
queried the Ambassador on possible narcotics 
decertification, voicing concern that it could negatively 
impact on promoting the Peace Accord agenda and the 
Consultative Group meeting scheduled for May, as well as 
complicate multilateral loan review and approval processes. 
Spain cautioned that decertification could influence 
Guatemalan electoral outcomes.  The Ambassador said the USG 
is committed to promoting peace, human rights, anti- 
corruption -- not just a narrow anti-drug agenda -- and 
described how U.S.-Central American trade negotiations 
would also lend support for advancing a broad agenda.  He 
discussed the difficulty that we would have in securing 
Congressional ratification of a trade agreement if 
Guatemala was not cooperating fully in counter-narcotics 
efforts, and if there was not progress on human rights, 
corruption and the like.  There was agreement to work 
together on a public relations strategy that would preserve 
the unified front and strength of the group's message 
before GOG and civil society.  End summary. 
 
¶2. (SBU) On January 14, the Ambassador, USAID Director 
Anders and Deputy Director Kennedy met with Ambassadors 
from the Netherlands, Spain, Canada, Germany, and Norway, 
Charge d'Affairs of Sweden, and Resident Representatives of 
IDB, World Bank, EU and MINUGUA.  Following opening remarks 
by the Ambassador on U.S. policy priorities in Guatemala 
(improved cooperation in drug trafficking, trade 
negotiations, Peace Accord implementation, improvements in 
human rights and anti-corruption), the chair of the donor 
dialogue group (Dutch Ambassador Arend Pieper) welcomed the 
Ambassador's participation in the donor dialogue group, 
noting how important U.S. leadership had been to organizing 
the donor dialogue group, building credibility with civil 
society, and facilitating a common front of donors at the 
last Consultative Group.  Ambassador Pieper expressed his 
hope that the donor dialogue group could again reach 
consensus on a group statement for the upcoming 
Consultative Group. 
 
Decertification, Peace Accords, and the Upcoming Elections 
--------------------------------------------- ------------- 
 
¶3. (SBU) Discussion quickly turned to the issue of possible 
U.S. counter-narcotics decertification, with IDB 
representative Barbery asking whether the public 
announcement would make specific mention of involvement of 
high level GOG officials in drug trafficking or 
moneylaundering, or if the public statements would remain 
more general.  Barbery noted that the Board members have 
increasingly raised the issue of corruption in loan review 
and approval meetings. The Canadian Ambassador asked about 
the timing of the U.S. decision and benchmarks for a 
recertification decision.  The Ambassador noted that any 
U.S. public statement would be carefully crafted, and that 
countries not certified would be reviewed periodically and 
could be recertified when significant progress had been 
made against quantifiable benchmarks.  The Ambassador noted 
that we would again review Guatemala's level of cooperation 
and efforts in September, along with other countries. 
MINUGUA Rep. Koenigs noted that if decertified, a 
"recertification" for Guatemala in September or October 
could have tremendous impact on the Guatemalan elections. 
The Spanish Ambassador echoed this concern, stating that a 
decision would have negative ("nefasto") consequences. 
The IDB opined that both the opposition and FRG would hope 
to use certification in the upcoming electoral campaign, 
either as a promise of future performance ("we'll get the 
country recertified") or as a vote of confidence (if the 
FRG succeeds in getting Guatemala recertified).  The 
Ambassador noted that without a possibility of 
recertification, the Portillo Administration would have 
little incentive to make improvements, and that we would 
make a judgment strictly on the merits of the government's 
response. 
 
¶4. (SBU) European countries and MINUGUA were especially 
concerned that U.S. emphasis on drug trafficking would sap 
what little implementation capability the Portillo 
Administration had left, shifting resources and GOG 
attention away from the Peace Accords and the nine point CG 
agenda.  The World Bank rep noted the possibility that the 
EU would soon release a report critical of Guatemalan 
progress against the CG agenda, possibly coinciding with a 
suspension of project funding, leading Guatemalan 
authorities to question the utility of a CG later this 
year.  (NOTE:  EU rep noted that a consultant's report 
summarizing progress against the nine point CG agenda would 
be presented and discussed in a meeting of EU members in 
early February.  He noted that the EU had already discussed 
suspending specific programs/activities where the GOG 
lacked political will, and that they would soon make good 
on the threat giving two examples, the failure of the 
Government to appropriate counterpart funds for education 
and justice sector programs.  The EU report will not be 
made available publicly, nor to other Embassies.)  The 
Ambassador responded to the concern about overemphasis on 
drugs by detailing again the ways in which the CAFTA 
process could be used to advance a broader agenda, largely 
overlapping with Peace Accords goals. 
 
Leveraging GOG Performance in an Election Year 
--------------------------------------------- - 
 
¶5. (SBU) Spurred by MINUGUA, there was a brief discussion 
of various mechanisms for leveraging GOG performance during 
a difficult election year.  MINUGUA noted several: 
negotiation of a new IMF stand-by agreement; the CG meeting 
in May; and formation of a special investigative body to 
look into parallel forces.  U.S.-Central American trade 
negotiations (including pressure that could be brought by 
other Central American countries on Guatemala to "clean up 
their act") is another.  The Swedish Charge noted that 
their insistence on a CG this year was to keep the Peace 
Accords front and center on the national agenda of this 
Administration as well as that of the opposition parties. 
He noted that the opposition's attention could be easily 
shifted to another agenda, if allowed to by the 
international community.  The Ambassador noted that we 
would be supportive of the various efforts, especially the 
creation of the special investigative body promoted by the 
Human Rights Ombudsman.  He noted that the U.S. was seeking 
ways to contribute financing, and urged other countries to 
provide support.  (Note: The Canadian and Norwegian 
ambassadors told him afterward that, in view of the 
Ambassador's support, they would attend the January 16 
launching of the proposal. End note) 
 
A Carefully-Crafted Public Diplomacy Strategy Needed 
--------------------------------------------- -------- 
 
¶6. (SBU) Ambassador Pieper suggested that the next meeting 
of the donor dialogue group focus on how individual 
countries and the group should respond as the media 
attempts to build the case that the international community 
is making good on conditionality expressed at the last 
Consultative Group to withdraw funding if progress falters. 
World Bank rep Somensatto suggested that it was equally 
important to make sure to clarify differences, if any, on 
member positions on bilateral versus multilateral 
assistance.  He urged all members not to lose sight of the 
importance of helping this Administration sustain macro- 
economic stability during the election period.  Somensatto 
also asked that the U.S. specifically, and donor group at 
large, express public support for the National Commission 
on Transparency and Corruption, so as to ensure this effort 
is fully supported by Guatemalans. 
 
Comment 
------- 
 
¶7.  (SBU) This was a lively and useful exchange of views 
that brought concerns of our donor community colleagues 
clearly into view.  Their fear that decertification will 
hijack the Peace Accords agenda strikes us as a bit 
overdrawn, and the Ambassador attempted to assuage these 
concerns by emphasizing that our bilateral agenda is much 
broader than just drug interdiction.  We will remain 
actively engaged with this group. 
HAMILTON