VZCZCXYZ0000
OO RUEHWEB

DE RUEHGT #0254/01 0771821
ZNR UUUUU ZZH
O 181821Z MAR 09
FM AMEMBASSY GUATEMALA
TO RUEHSN/AMEMBASSY SAN SALVADOR IMMEDIATE 4357
RUEHTG/AMEMBASSY TEGUCIGALPA IMMEDIATE 2286
RUEHC/SECSTATE WASHDC IMMEDIATE 7134

UNCLAS GUATEMALA 000254 
 
SENSITIVE 
SIPDIS 
 
SAN SALVADOR PLS PASS TO A/S SHANNON 
TEGUCIGALPA PLS PASS TO A/S SHANNON 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PINR ASEC SNAR EAID GT
SUBJECT: SCENESETTER FOR A/S SHANNON'S MARCH 19-21 VISIT TO 
GUATEMALA 
 
Summary 
------- 
¶1.  (SBU) President Colom's tenure has been characterized by 
a number of successes in the social field, and growing 
challenges in others, especially security.  Controversial 
First Lady Sandra de Colom leads the government's efforts to 
fulfill campaign promises of poverty alleviation and social 
inclusion of indigenous people.  Guatemala's economy, which 
is closely tied to that of the U.S., is being buffeted by the 
global financial crisis.  The country continues to suffer at 
the hands of Mexican and Guatemalan drug traffickers as well 
as gang members, and the security situation continues to 
deteriorate.  The GOG is advancing its legislative agenda, 
which includes an important package of security related 
reforms, with the help of center-right congressional allies. 
Guatemalan foreign policy is aimed at maintaining good 
relations with the USG while burnishing center-left 
credentials with other regional governments.  The GOG 
observed the Salvadoran election with interest, and hopes 
that the Obama Administration will change USG policy toward 
Cuba. 
 
¶2.  (SBU) Among the topics President Colom and FonMin Rodas 
will want to discuss with you are the Vice President's 
upcoming visit to Costa Rica (Colom plans to attend), the 
Summit of the Americas, immigration, and the Merida 
Initiative.  You may also wish to raise Pathways to 
Prosperity, congratulate President Colom on his government's 
growing efforts to alleviate poverty, and encourage thorough 
reform of rule of law institutions in the face of the growing 
threat from narcotraffickers.  Given Guatemala's close ties 
with El Salvador, you might also discuss USG expectations for 
the new FMLN government.  End Summary. 
 
Advances in Poverty Alleviation 
------------------------------- 
¶3.  (SBU) President Colom was elected on the strength of 
support from rural voters to carry out a poverty alleviation 
and rural development agenda.  The GOG's flagship poverty 
alleviation program, "My Family Progresses," is a Conditional 
Cash Transfer (CCT) program modeled on CCTs in Brazil and 
Mexico, and run by First Lady Sandra de Colom.  Via "My 
Family Progresses," according to government statistics, 
approximately 28,000 mostly rural and indigenous families 
received a small monthly stipend in exchange for keeping 
their children in school and keeping up on their vaccinations 
during 2008.  Business elites and other opinion leaders in 
Guatemala City have derided the program as fomenting 
dependency on the state, lacking in transparency, and as a 
vehicle for political patronage and corruption.  Despite the 
criticisms, the program is popular with the rural poor.  The 
Ambassador has praised the GOG's effort to use its CCT, while 
privately urging the GOG to improve the program's 
transparency. 
 
¶4.  (U) The GOG established other popular programs for poor 
families, such as providing children with vitamin supplements 
and opening primary schools on Saturdays so that children can 
play in a safe place where they are protected from gangs. 
For the first time, families did not have to pay to register 
their children for public school in 2009.  The GOG's success 
in conveying an image of social activism is all the more 
noteworthy because the state remains chronically 
under-funded.  Tax receipts were just 11.3% of GDP in 2008, 
the lowest in the hemisphere, according to U.S. Treasury 
officials.  Per latest estimates, even if fully implemented, 
the GOG's tax reform package would increase the tax take by 
only about 1% of GDP. 
 
Respect for Market Economics 
---------------------------- 
¶5.  (SBU) A pragmatist, President Colom has been careful to 
preserve the free market mechanisms that are slowly helping 
rural people to slip the bonds of extreme poverty.  He has 
embraced CAFTA as a boon to small farmers, who have increased 
non-traditional agricultural exports to the United States. 
Colom has also resisted the temptation to tax remittances 
from Guatemalans in the U.S., which at more than $4 billion 
annually (but now declining) have done far more to transform 
the countryside than any government program, or even trade. 
At one point during 2008, year-on-year inflation exceeded 
14%, the basic basket of consumer goods was up 22%, and 
gasoline spiked to $4.50 per gallon, but inflation has since 
fallen in line with global trends.  Spurred by soaring fuel 
prices, Colom rushed to sign a PetroCaribe deal with 
Venezuela in 2008.  Now that oil prices are lower, the GOG 
appears to have lost interest in finalizing the terms of the 
agreement.  Driven by external factors, GDP growth fell in 
2008 to about 3.5% as the main drivers of the economy -- 
tourism, remittances, and exports -- slowed sharply. 
 
Legislative Alliances Delivering Key Votes 
------------------------------------------ 
¶6.  (SBU) The governing UNE party has only 37 of Congress's 
158 seats.  Nonetheless, the GOG continues to advance its 
legislative agenda thanks to President Colom's ability to 
forge and maintain alliances with center-right and other 
parties.  Prospects look favorable for an omnibus security 
bill now before Congress.  Drafted with assistance from the 
International Commission Against Impunity in Guatemala 
(CICIG), the bill would reform and modernize the Penal Code, 
Code for Penal Procedures, Femicide Law, Extraditions Law, 
and the Organized Crime Law.  The Embassy has been vocal in 
its support of the legislation.  By threatening to make 
public documents implicating General Otto Perez Molina, 
leader of the opposition Patriot Party, in the congressional 
embezzlement scandal, the UNE muted a main source of 
opposition.  Little real opposition is left in Congress.  The 
role of opposition is now mostly played by the press and 
private sector. 
 
Security Dire and Getting Worse 
------------------------------- 
¶7.  (SBU) The GOG continues to lose significant control of 
entire swaths of the national territory -- concentrated in 
border regions -- to narcotraffickers.  With a homicide rate 
of 48.4 per 100,000, and with over 6,200 murders in 2008, 
Guatemala is among the most dangerous countries in Latin 
America.  The current government inherited a police force 
that for the last nine years at least has been understaffed, 
usually poorly led, underpaid, and corrupt.  The military, 
which was capped at approximately 33,000 members by the 1996 
Peace Accords, was reduced to approximately 14,500 under the 
Berger Government.  It is under-staffed and under-resourced 
for the security functions it has; it does enjoy increased 
public confidence.  Gravitating toward Guatemala's weak rule 
of law, Mexican Zetas (the armed wing of the Gulf Cartel) 
displaced Guatemalan traffickers in bloody shoot-outs, and 
established a permanent presence in several border and 
interior regions.  The removal of several key traffickers 
from the scene in eastern Guatemala brought on a bloody 
battle to fill the resulting vacuum.  (Comment: The GOG 
believes the Mexicans are being pushed out of Mexico by more 
aggressive GOM actions; we believe, however, that Mexican 
cartels are attracted to Guatemala by the relative power 
vacuum in the drug transit areas.)  Encouraged by a homicide 
impunity rate of at least 93% (and even higher for other 
kinds of crime), gang members increased their extortion 
business in Guatemala City and other urban areas.  Among 
their victims in 2008 were 163 murdered bus drivers, most of 
whom failed to make extortion payments demanded by the gangs. 
 
 
¶8.  (SBU) CICIG Commissioner Carlos Castresana publicly 
characterized Guatemala's rule of law institutions as being 
in a state of "collapse."  Vulnerable judges, prosecutors, 
and police in rural areas are unprepared to confront 
narcotraffickers' increasing challenge to state authority. 
While Vice President Espada publicly named the judiciary as 
the country's most corrupt rule of law institution, the 
competition is stiff.  Approximately 900 police officers were 
removed for cause (though in most cases not prosecuted) 
during 2008, including the National Civilian Police's (PNC) 
top leadership.  At Castresana's urging, Colom undertook a 
major house-cleaning at the Attorney General's Office.  While 
the AG's Office is much improved, much remains to be done.  A 
new Supreme Court should be elected not later than September; 
the Embassy, CICIG, the GOG and other donor countries have 
begun working for a new court that is better.  Authorities 
seized just three of the approximately 200 to 300 metric tons 
of cocaine estimated to have passed through Guatemalan air, 
sea, and land space during 2008.  Under rising public 
pressure to improve the security situation, in January Colom 
replaced Minister of Government Francisco Jimenez with 
Salvador Gandara, who has increased the PNC's operational 
tempo.  Colom has also replaced three senior military 
officers that we believe have ties to drug traffickers. 
 
State Efforts on Security 
------------------------- 
¶9.  (SBU) In the face of the formidable narcotrafficking 
threat, the state is making some efforts.  The Organized 
Crime Unit, Counternarcotics Unit, and CICIG-supervised 
Vetted Unit of the Attorney General's Office are working well 
under new leadership and in close coordination with CICIG and 
the Embassy.  The Ministry of Government's budget was 
increased, 4,800 new police will be hired in 2009, and 
Minister Gandara has pushed the PNC to undertake bolder 
counternarcotics operations.  With Embassy and CICIG 
assistance, the Attorney General's Office and Ministry of 
Government are progressing toward full implementation of the 
Organized Crime Law.  Human rights groups have expressed 
concerns about Minister Gandara, but have yet to produce any 
evidence of wrongdoing.  The Ambassador hosted a meeting for 
Minister Gandara and leading human rights activist Helen 
Mack, during which the two made progress toward overcoming 
their differences. 
 
The Kitchen Cabinet 
------------------- 
¶10.  (SBU) There was a marked strengthening of the Kitchen 
Cabinet during Colom's first year in office.  First Lady 
Sandra de Colom regularly attends cabinet meetings, and 
guides social policy via her Social Cohesion Council.  She is 
the most effective manager in the GOG.  After Mrs. Colom, UNE 
campaign financiers brothers Gustavo and Roberto Alejos are 
probably closest to the President.  Colom is rarely seen 
without Gustavo, his private secretary, and Roberto Alejos is 
pushing forward Colom's legislative agenda from his new 
position as President of Congress.  Finance Minister Alberto 
Fuentes Knight and Foreign Minister Haroldo Rodas help set 
the center-leftideological tone for the GOG. 
 
Foreign Policy: Lft, Half-Rudder 
--------------------------------- 
¶11.  (SBU) The mantra of the GOG's foreign policy is 
maintenance of good relations with all countries in the 
hemisphere.  Advancing regional integration is also high on 
the agenda.  As demonstrated by their April 2008 visit to the 
White House, President Colom and FonMin Rodas appreciate that 
their most important bilateral relationship by far is that 
with the U.S.  The MFA's activism on USG immigration policy 
is largely intended for domestic consumption.  The Colom 
Government has occasionally used foreign policy to burnish 
its center-left credentials with other Latin American 
governments, at times by indulging in short bursts of 
anti-capitalist (though not anti-American) rhetoric.  The MFA 
has refrained from taking any principled stands on Cubans' 
human rights, Nicaragua's flawed November 2008 elections, 
Chavez's support for the FARC and anti-democratic 
shenanigans, and similar issues.  It hopes that the Obama 
Administration will change USG policy toward Cuba.  The GOG 
has been publicly neutral toward the FMLN victory in El 
Salvador, but many in the GOG harbor private sympathy for the 
FMLN.  There is some speculation that the FMLN victory will 
encourage the GOG to turn further left to keep pace with 
regional developments, but there is no evidence so far to 
support such a view. 
 
Conclusion 
---------- 
¶12.  (SBU) Your visit to Guatemala comes at an excellent time 
as the GOG seeks to expand its ties to the USG.  The first of 
the Merida Initiative money is coming on-line, and the 
Embassy may soon receive other substantial resources. 
President Colom and the other senior GOG representatives you 
will meet will be eager to discuss the Obama Administration's 
agenda generally, with specific focus on immigration, the 
Merida Initiative, CICIG, Pathways to Prosperity, Vice 
President Biden's visit, and the Summit of the Americas.  USG 
policy toward Cuba may also be raised.  You may wish to use 
your visit to congratulate President Colom on his appropriate 
focus on poverty alleviation.  Guatemala has closer cultural, 
business, and family ties with El Salvador than with any 
other Central American country.  Discussion of our 
expectations for the new FMLN government would be of interest 
to most interlocutors.  We suggest that you encourage GOG 
leaders to undertake thorough institutional reform as an 
integral part of the GOG's effort to combat narcotraffickers, 
who so far have proven much more nimble than the state in the 
ongoing contest for control. 
McFarland