A Guatemalan Lament

Guatemalan President Álvaro Colom has recently declared that his country is in a “state of calamity” due to a lack of food resources for hundreds of thousands of Guatemalans. Attributing the situation to the severe drought and the exacerbating effects of el Niño, a weather phenomenon that has extended the normal dry spell and further reduced agricultural production.

As a result, Colom called upon the international community for emergency aid to alleviate the disaster now in full effect. However, contrary to the claims of the Guatemalan government, this emergency is not entirely the product of unalterable weather patterns. The tenebrous political, social, and economic history of the nation, combined with poor leadership and a gross lack of accountability has directly led to the crisis. The current situation is one of several disturbing events that have taken place in Guatemala in recent months, some of them under the leadership of its first left-leaning president in 53 years. Facing charges ranging from corruption to murder, it is well that Colom should be personally dispirited, as hopes for progress are fading fast.

Colom’s at times feckless rule is not necessarily the only root problem dragging the country down, although his administration has done little to alleviate any of them. His presidency began in an already profoundly aching country. The history of Guatemala is a tragic one, dominated by the legacy of a 36-year civil war that left 200,000 people dead and approximately 40,000 missing and unaccounted for. The country came out of the war severely divided, not only between the wealthy and the poor, but also between the indigenous Mayan communities and the ladinos (those of mixed European and indigenous ancestry). Correctly seen as one of the most corrupt and violent countries in Latin America, Guatemala is also one of the poorest. Approximately half of its 13 million people live on $1 a day.

While Colom has attempted to present the drought as a crisis of Guatemala’s productive capacity, his recent admission that “there is food, what is lacking is the money for the affected people to buy food,” belies his attempts to shift blame for the crisis away from his administration. Although weather has to be seen as a major contributing factor, it is the inability of the country’s leaders to address the systemic problems of a skewed distribution of wealth, a failed tax system, corruption, and unremitting violence in the small country that should be acknowledged as the causative agent behind today’s calamity.

In another bizarre twist to the Rodrigo Rosenberg case, the assistant to the judge presiding over the trial of his murderers, Mark Monzon, was shot and killed on Friday. The case, in which the murdered lawyer accused President Colom of being implicated in his death, has received much international media attention. Eleven people have been arrested in relation to Rosenberg’s murder, but President Colom was acquitted of any wrong-doing.

Colom’s Promises

Colom comes from one of the country’s most illustrious families, but he was elected by the masses. Having instilled hope in the hearts of Guatemala’s long-suffering poor, he represented change and new beginnings. He promised to increase government revenues by ending impunity and promoting transparency. He would increase social spending on education and health, promoting in particular the well being of the impoverished Guatemalan majority. He outlined his goals to promote rural development, moving away from an urban focus and capturing the productive potential of poor indigenous campesinos. And he would alter neoliberalist projects to resemble the Brazilian model, with the benefits being distributed to the masses, while maintaining the country’s basic economic structure. His goals, while lofty and inspiring, appear essentially as failing on all accounts.
Guatemala’s ailing economy

While Guatemala has the potential to be one of Central America’s strongest economies and a significant trading partner with the U.S., lagging social indicators and high rates of poverty register little progress. Coming out of its bitter Civil War in 1996, Guatemala was well positioned for rapid economic success due to its strong coffee, sugar and banana industries.

Unfortunately, only two years later the collapse of the price of Guatemala’s number one export, coffee, set the stage for the crisis that is bedeviling the country today: the slash in per capita income and the subsequent poverty of rural workers. While Guatemala’s macroeconomic management remained level and foreign debt stayed low, rural workers were hit particularly hard.

Meanwhile, as urban elites grew wealthier and the private sector assumed greater control of the economy – producing 90% of GDP – agriculture, responsible for the largest sector of the employment profile (approximately 50% of the population), was reduced to only 13.3% of GDP. Consequently, today Guatemala’s wealthiest 10% own nearly 50% of the national wealth, while the poorest 10% own less than 1%. In stark contrast to Guatemala’s urban elite, rural farmers, mostly of Mayan descent, are isolated from the other thriving private sectors, and remain for the most part unrepresented.

Upon initiating his presidency, Colom promised to empower the impoverished indigenous population and create a social democracy with a “Mayan face.” Speaking to a country at least 45% Mayan, his promise instilled hope for thousands. With a priority being focused on a preferential option for the poor, such as an allegedly “unprecedented rural development project,” he proclaimed, “we intend to correct intolerance, discrimination, inequality and the absence of solidarity.” His words remain largely unfulfilled, however. The rural peasants remain marginalized, and living situations, if anything, have deteriorated; an estimated 400,000 families by year’s end will not be getting enough to eat. As the global economy has plummeted, costs in Guatemala have risen. From July 2006 to July 2008 the price of the basic food basket (corn, milk, beans, etc) rose 26%, from $6.92 to $8.75 per day. This increase in prices has greatly diminished the purchasing power of Guatemalan laborers, as the national average income is only $6 a day. 1.2 million Guatemalans are not able to cope with this increase, and unofficial death tolls from starvation are a remarkable 462 for only the first seven months of 2009.

Elites and their position of ascendancy

Guatemala’s failure to achieve food security can be mainly attributed to a distorted distribution of wealth. Based on GDP alone, Guatemala falls into the category of a “low-to middle-income country.” But this does not account for the gross economic disparities that exist between the wealthy and the poor, which are some of the world’s widest. While the increased demand for sugar as an input of ethanol has helped to drive up the national GDP, the “poverty trap” (a self-perpetuating condition in which an economy suffers from persistent underdevelopment) has also increased. In Guatemala, a person whose parents are in the bottom decile has 1/100 chance of making it to the upper decile, while a person born in the upper decile has more than 20% chance of remaining there, no matter his personal achievements.

The elite in Guatemala form a large network that allows its members to interchange positions across ruling institutions in society, and have a documented history of intermarriages as a means of maintaining wealth and power. Upon beginning his presidency, Colom made an attempt to challenge the corrupt and permanent position of the bureaucracy, by replacing several prominent figures such as his defense and interior ministers. Perhaps this was Colom’s attempt to expand the leadership base in Guatemala beyond that of the powerful bureaucracy; however the replacements were not from the marginalized groups, but rather members of same elite class.

A Tax-less Society

No country can succeed without the enforcement of tax collection, and therein lies another systemic problem in this profoundly ailing country. An inadequate tax system, largely dictated by the elite to maintain its position of influence, is Guatemala’s Achilles heel. The wealthy elite who are powerfully positioned throughout the government, chronically refuse to pay taxes, arguing that in paying such imposts they are only supporting a corrupt government. The conservative institution, Barry University and the Universidad Francisco Marroquin carried out a study on the ethics behind tax evasion in Guatemala, surveying 114 Guatemalan graduate students. The results showed that the strongest ethical argument in favor of evading taxes was in cases where “a significant portion of the money collected winds up in the pockets of corrupt politicians or their families and friends.” One participant said, “the government is a bunch of thieves. When someone evades taxes it is like a thief stealing from a thief.”

Corruption remains an organic problem for Guatemala, and consequently, accountability and enforcement are weak. The evasion of land and income taxes weakens the financial base that otherwise has the potential to contribute significantly to public services. Although recent statistics are not available, in the 1990s, approximately 40% of the Guatemalan business sector evaded paying VAT taxes, while 50% evaded income taxes. Such evasions have forced the already marginalized government agencies to scurry after revenue in the form of a consumption tax, at a rate of 12%.

Direct taxes on wealth and income are ineffectively enforced, making the poor pay equal tax rates via consumption as members of Guatemala’s most wealthy classes. The tax returns remain shamefully inadequate, providing the Guatemalan government with only 12% of the revenue needed to cover even bare-bone social spending on education, public services, and health care. The health care system itself is a perfect example of the country’s failed public funding structure, as Guatemala’s annual health-care spending is a mere $15 per capita.

In the 1994-1996 Peace Accords that ended the civil war, Guatemala set stringent financial goals to increase revenue for social spending and to provide the government with a firm fiscal base. However, the most recent budget bill for 2010 projected tax intakes at 9.9% of GDP, which is 8.5% less than in 2008, and far below the 12.5% stipulated in the Peace Accords. While President Colom may initially have promised reform and progress, it appears he can give Guatemala no more than his predecessor. Many of the country’s most astute analysts believe that Guatemala needs more than the rhetoric of a “change-bringing,” left-leaning, possibly corrupt leader: it needs a constitutional over haul.

Colom’s neoliberal approach

Colom promised to increase spending on social programs, yet in the past months, the country’s policymakers have attempted to replenish an ailing fiscal base by introducing neoliberal development projects. These initiatives were intended to produce a more efficient government and improve economic indicators, and they would be based on a disciplined tax collection system.

Designed to break down barriers to international trade and investment through free trade and free markets, neoliberal policies have ostensibly been aimed at redirecting public spending to services such as primary education, health care, and infrastructure investment in Guatemala.

However, the realities of neoliberalsm have sparked much criticism. The recent trade agreement between the U.S., the Dominican Republic, and Central America (DR-CAFTA), is an example of a neoliberal project in Guatemala that has taken matters in another direction. The DR-CAFTA region is now the second largest Latin American export market for U.S. producers, behind only Mexico, buying $15 billion of goods a year. While the agreement has thus far eliminated 80% of all previous tariff schedules, its ultimate impact has yielded little results for the poor.

Neoliberalism has been a major object of contention due to accusations that it has failed to address the needs of the poor. While it has shown some success in increasing GDP in a number of developing countries, in a nation such as Guatemala, neoliberal projects tend to only exacerbate the existing socioeconomic divide. While Guatemala’s GDP may, in fact, be rising, the standards of living have not improved for millions of the poor. Some visible consequences resulting from neoliberal projects in Guatemala are the tripling of the trade deficit to the U.S after only one year of the DR-CAFTA, the dramatic rise in the price of corn (Guatemala’s staple food), and the loss of Guatemala’s historic position as Central America’s granary. This directly has led to the current crisis by forcing the country to rely on imports to feed its impoverished population. Colom may have professed the most honorable of intentions in developing neoliberal projects under the context of increasing social spending, but in reality, the results have only exacerbated Guatemala’s current crisis.

Corruption Pays

Neoliberal projects have not failed all Guatemalans, however. For those occupying the upper classes of society, these institutional changes have been an incredible success, especially in combination with Guatemala’s corruption and lack of transparency. According to the Transparency International Corruption Perception Index (CPI), Guatemala is ranked with Vietnam, Nigeria and Iran as one of the world’s most corrupt countries, especially in terms of its political institutions and the performance of its customs authorities. Based on a scale from 1 – 10, with 1 being highly corrupt, Guatemala reported a 2.8 score in 2008, ranking it 111th of 180 countries in the world, and 14th of 19 in Latin America. If Colom is now attempting to address this issue, he has a most delicate task ahead of him due to his own suspect personal history. In 2004 he was investigated for illegal transfers of government funds into accounts belonging to his political party, a case which was finally solved only after he “found a check ”and returned the $65,000, all without penalty.

The root of the problem lies in Guatemala’s habitual lack of enforcement. Crimes such as money laundering, money trafficking, and transnational bribery are all daily occurrences in Guatemala and are not criminalized; in fact, they normally are ignored. It appears that Guatemalans have become so accustomed to these fraudulent acts that they are now almost entirely tolerated. Remarkably, the country still has some of the highest rates of satisfaction when it comes to the level of public services (55.9 of 100 points). The numbers are skewed however, as only 14% participated in a municipal meeting, and only 12% made any request to public institutions regarding topics of collective interest. Additionally, only 19.6% of Guatemalans reported being victim of at least one government act of corruption during the past year. Victimization remains low (which places overall scores even higher) for two main reasons. First, because people normally do not have access (due to location and a lack of funds) to public services where corruption takes place, and second, because many corruption cases do not directly involve the general public, such as embezzlement of public funds, favoritism towards relatives and cronyism in making appointments to office.

Two recent high-profile cases in Guatemala highlight corruption’s endemic presence in the country. Although attempts at uncovering acts of corruption are rarely successful, the case of former health minister Celso Cerezo was an exception. He was fired from his job after only 43% of a $50m loan from the U.S. Agency for International Development was properly used. The money was allocated for the construction of 13 hospitals, but was grossly misused, which led to the near collapse of the country’s hospital system. Although the location of the remaining funds remains a mystery, and although this case was a significant “win” for Colom’s fight against impunity, the entire incident has had no visible lasting impact on the tendency of government officials to resort to embezzlement.

The second highlighted case is the recent appointment of 13 new, and highly controversial, members to the Guatemalan Supreme Court. The case has attracted widespread attention, as at least six of the appointees do not satisfy article 207 of the Constitution, which requires that each member be of “honorable repute” and non-partisan. Several of them have been linked to corrupt leaders such as former congressional leader, Eduardo Meyer, who was forced to step down after his alleged involvement in a major financial scandal. Legislators from Colom’s UNE party have been closely involved in the appointments, and at least one incident involved a member who admitted that under-the-table negotiations had occurred. These cases are only two examples of the many that highlight Guatemala’s endemic corruption, and although goals were established by the UN-sponsored International Commission Against Impunity in Guatemala (CICIG) to strengthen public institutions and fight the culture of impunity, there remains much to be done.

Colom: A Controversial Leader

On top of corruption, poverty and inequality, Guatemala has a tragic history of violence and heavily stained leadership at the top. Citizens report that their biggest worry is security, and for good reason, as an average 17 homicides occur daily, one of the highest rates in the world. Due to corruption in the security forces, an appalling 98% of all crimes remain unsolved, which is largely attributed to corruption within the security forces.

Drug trafficking is a major contributor to the violence: approximately 200 tons of cocaine are moved through Guatemala’s jungle annually. Under President Colom, the army has been redirected to address drug-related violence committed against the indigenous communities living in and around the primary trafficking routes, but his efforts have inspired few results. Furthermore, the initiatives that Colom has undertaken are suspect, given the accusations that have linked him to Mexican drug cartels.

Further diminishing any prospects of relief for the floundering president and ailing country is the ongoing and unsolved case of murdered lawyer Rodrigo Rosenberg. In one of the biggest scandals in Guatemalan history, President Colom was accused of complicity in the murder of Rosenberg in a video recovered from the lawyer’s possessions. In the video, Rosenberg also accused Colom of covering up “dirty” business deals in the Rural Development Bank. CICIG undertook investigations and recently arrested eleven suspects, including police officers and members of the military.

Although the President was officially cleared of any wrongdoing, the case and corruption charges only add to Colom’s increasingly murky reputation, especially in a country so woefully lacking transparency.

What Lies Ahead

Guatemala faces a forlorn future. Due to its ineffective democratic bodies and inadequate representative institution, it is among the Latin American countries with the lowest percentage of citizens who think they are living in a “stable democracy.” Only 57.2% of all Guatemalan’s prefer democracy, while for many of them, democratic governance “does not matter.” Further challenging Colom’s tenuous rule is Guatemala’s placement third from bottom in the region for attitudes of its citizens, which put democracy at risk.

Although it would be a stretch to suggest that Colom’s days as president are numbered, it is not inconceivable that members of the right might harbor thoughts of overthrowing him. A few months ago, his attempts to eliminate corporate tax loopholes, as well as accusations linking him to the murder of prominent lawyer Rodrigo Rosenberg, provoked thousands of angry members of the elite to the streets demanding his resignation. Although his name has since been cleared of murder charges, and the demonstrations have ceased, Colom’s fate remains uncertain. He has recently lost support in Congress, not only verifying the power of the elites, but also their ability to undermine his legitimacy, illustrating the instability and the fragility of his presidency.

If Colom intends to look to the left for support, his base is faltering. As Guatemala’s poor and hungry await promised food shipments and a government willing to address failing public institutions, there is a certain attraction among some of the marginalized to emulate Guatemala’s neighbor, Venezuela. As an advocate for the poor, Hugo Chávez has certainly empowered the rural poor of Venezuela, not only lifting most of them out of extreme poverty, but affording them a voice to assert themselves within their country. Colom’s administration has thus far grossly failed his people, and if the situation continues, the poor majority may feel forced to either organize to take power, or prepare to starve.

The task ahead for Colom is mighty. Guatemala needs to see immediate action as tensions continue to rise on both sides of the political spectrum.

On the left one can see increased anger and disappointment arising from the poor, while the elites flex their muscles more strongly out of fear of losing control. The visionary polity that Colom’s administration once inspired has thus far only exacerbated the divide without beginning to erect a just society. If Colom wishes to preserve his presidency, the future of his party, and Guatemala’s still fledgling democracy, he will have to bring a sense of participatory zeal to the table.

SOPHIA WEEKS is a research asssociate at the Council on Hemispheric Affairs.