Guatemala’s state corruption and the heirs of colonial privilege

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In 1985, with the country in a deep economic crisis, Guatemala’s military rulers announced a new economic package that included a rise in the measly taxes imposed on the business sector. The lobby that represented the most powerful businesses in the country was furious.

Demonstrators protest against President Jimmy Morales’s decision to end the mandate of the UN anti-corruption commission CICIG, in Guatemala City January 12, 2019 [File: Luis Echeverria/Reuters]

The Coordinating Committee of Agricultural, Commercial, Industrial, and Financial Associations (CACIF) told the dictatorship to rescind the proposal and to sack the individuals responsible. And this is what happened. The package was revoked. The ministers of finance and economy were replaced.

The country returned to democracy the following year after three decades of dictatorial rule. But the hands that held the reins of the national economy did not change.

Today, society reflects this historic domination. Government’s tax income, for example, is the lowest in the world relative to the size of the economy. The monoculture exporters benefit from extremely cheap labour and the ability to use and pollute the water supply at no cost – proposals to pass a water law that would regulate its use have never been able to pass through congress. In any case, the private sector is considered incapable under Guatemalan law of violating human rights. 

Business groups hold extraordinary sway over the executive and legislative branches, the constitutional court and the retrograde military establishment, which have been an instrument of class interests throughout Guatemalan history.

In 2012, for example, the news website Plaza Publica investigated the voting preferences of members of congress. They discovered that their association with the CACIF was the main determining factor of how they would vote – more so than membership in a certain political party.

In 2013, after the constitutional court suspended the landmark conviction of the former dictator, General Efrain Rios Montt, who was condemned to 80 years in prison for genocide and crimes against humanity, El Pais reported: “It is probable that various external factors influenced that decision, including the pressure exercised by the CACIF.”

In a 2019 article, Martin Rodriguez Pellecer, the director of the investigative website Nomada, described the historic role of the CACIF: “Its members illegally financed politicians and ordered laws and policies in their favour, and it was the politicians (like the military during the dictatorship) who ran the political cost of implementing the development model.”

According to him, this political model has resulted in “60 percent poverty, a lack of economic prosperity, and children who have to migrate alone to the United States because living in Guatemala means condemning themselves to a miserable and undignified life”.

The anti-corruption drive

The UN International Commission against Impunity in Guatemala (CICIG) arrived in the country in 2007. The majority of its costs were covered by the United States. Its official mandate was to assist the public ministry in tackling a specific kind of corruption: “illegal security groups and clandestine security organisations… believed to have infiltrated state institutions”. 

The CACIF was a fervent supporter. In press conferences and newspaper adverts, its members, without irony, praised the attempt to combat corruption, improve the climate for business and create a “state of law”. 

Why would the US have an interest in sponsoring such a commission in Guatemala? According to the CICIG’s reports, around the turn of the century, something had changed in national political life.

“Whereas previously business elites, and in particular the groups linked to the CACIF were the main donors to electoral campaigns, the contribution of these groups has proportionally decreased. The current financing of politics is mainly in the hands of state suppliers at different levels, as well as in the hands of criminal groups.” 

In Guatemala, these state suppliers, or contractors, are known as the “burguesia emergente” – the emerging bourgeoisie. They have bought their way into politics since the early 2000s with the aim of receiving state contracts in return.

This has created a problem for the traditional order and their allies in Washington, who were content with the status quo. Foreign investors also have little to gain from such corruption; in fact, despite being the largest economy in Central America and having an “ultrafree-enterprise economy”, as the New York Times once described it, the country’s ability to attract foreign investment has been lacklustre.

The CICIG had an impressive start. Hundreds of politicians were charged for their links to criminal organisations and dozens of clandestine criminal organisations were unearthed. In 2015, then-President Otto Perez Molina and his Vice President Roxana Baldetti were caught masterminding an enormous fraud scheme known as “La Linea”.

The achievements were widely applauded. But by 2018, the CACIF was criticising the Colombian head of the CICIG, the tenacious judge Ivan Velasquez. And in January 2019, the CACIF announced it approved of the decision of President Jimmy Morales not to extend the organisation’s mandate. What had happened?

In 2016, the CICIG turned its attention from illegal security organisations that infiltrated the state to illegal campaign financing. A CICIG report has noted: “Many of the mechanisms used to finance politics operate outside the law and, in themselves, constitute criminal offenses.

Almost immediately Morales, considered a representative of the emergent bourgeoisie, was implicated. The CICIG claimed he had received almost $1m in illegal cash donations, and it requested congress to remove his impunity. But the request was rejected. Morales was unscathed. But he began to rail against the CICIG, which he claimed was undermining the state and putting “public security and governability at risk”.

The implications of the new focus were significant: by investigating electoral finances, the CICIG as inevitably going to target the business community, as well as politicians and criminal organisations. In the case of Morales, the representatives of the businesses that made the illegal donations held a press conference and apologised, and the matter was considered closed.

But it was not long before more than a dozen representatives from the CACIF were implicated in some form of criminality. In 2018, an investigation by the online magazine Nomada found that a group had been formed the year before, funded by business interests, to lobby Washington to repeal the mandate of the CICIG.

The contracts had been signed by sympathetic government officials, because “the business people that want to attack the CICIG don’t want to suffer public attrition for destroying the organisation that has taken to court 16 of its representatives in the CACIF”.

An uncertain future

Debilitated, and with Ivan Velasquez banned from the country, the CICIG seems destined to collapse in September when its latest mandate expires. The US, despite some vocal objections, has not acted against the persecution of an organisation of which it is the principal funder.

US Secretary of State Mike Pompeo backed Morales, phoning him after he expelled Velasquez to express his “support for Guatemalan sovereignty”. National politics, meanwhile, has been reduced to a contest between those for and against the CICIG.

At this point, Guatemala’s future seems uncertain. The anti-corruption drive has, for all the good work of the CICIG, diverted attention away from the deeper problems that the country faces, including the crippling poverty, the enormous disparities of income, the repression of activists, the colonial nature of the national economy.

None of these issues appeared at the top of the political agenda during the recent presidential elections. And as the country heads to a runoff in August, neither of the candidates offers any hope of significant change. Sandra Torres, the favourite and the more progressive of the two, has faced accusations of corruption and vote-buying, raised by the CICIG; she was saved from prosecution by her presidential run and the machinations of the constitutional court that granted her immunity.

Guatemala has been portrayed, particularly in the international press, as a “captured state” that requires anti-corruption initiatives to return to normality. But Guatemalans know it will take more than this to overcome the rule of those whom former President Juan Jose Arevalo once called “the heirs of colonial privilege”.

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