Democracy and Governance in Guatemala
The Development Challenge: There is a growing sense that Guatemala today faces an important window of opportunity. After Guatemala's third free and most highly participatory presidential election since the signing of the 1996 Peace Accords, the peaceful assumption of power by the Berger Administration brings renewed optimism and even greater expectation about the prospects for progress in Guatemala's persistent struggles with political divisiveness, poverty, and social discontent. The new government appears to recognize the multi-faceted challenge ahead and is appointing capable people, developing creative approaches and, in some cases, implementing new programs to combat crime, reinvigorate the economy, and meet the needs of the rural indigenous population. With the closing of the United Nation's ten-year Verification Mission of the 1996 Peace Accords, growing hemispheric trade opportunities, and advances in the free movement of Central American people and products, the current administration has the context and mandate to further strengthen Guatemala's democratic institutions and make sustainable material changes that will benefit the entire population.
The challenges the country faces are complex and entrenched. The Berger administration inherited a crumbling tax base, enormous social and infrastructure needs in rural areas, rampant corruption, and skyrocketing crime in the face of a neglected judicial system. For most Guatemalans, crime is their primary concern and its alarming growth threatens to undercut the development agenda. The majority of the population has little patience for incremental change, and the Berger administration, perceived as not moving fast enough one year into its term, faces fluctuating popular support. Guatemala's 11.2 million population and $26.7 billion economy are the largest in Central America, yet the country is hampered by a lethargic economic growth rate. Guatemala's progress since the 1996 Peace Accords is laudable, yet the dynamic created by social inequity, corruption, and sluggish economic growth serve to perpetuate its enduring fragility. Guatemala also suffers from the region's lowest public investment in social services and lowest tax collection base (under 10% of gross domestic product) from which to support these investments. Massive inequality in incomes, as well as in access to health care and education, mirrors the urban/rural, non-indigenous/indigenous divide. Guatemala's per capita income of $2,008 (2003) in contrast with its low social equity indicators highlights the paradox of a country that has substantial resources, and yet struggles to transform these into widespread increases in the standard of living. Over 56% of Guatemala's population lives in poverty and 17% live on less than one dollar a day. Of the countries of Central and South America, Guatemala ranks lowest in the United Nation's Human Development Index and other key indicators including: life expectancy (66 years); infant mortality (39 per 1,000 births); chronic malnutrition for children under the age of 5 (49%); and literacy (70%).
Strong leadership, bolstered by growing trade opportunities, a renewed fiscal and institutional reform effort, and international donor support, can help Guatemala embark on a new trajectory. The pending U.S. - Central American Free Trade Agreement (CAFTA) might in the short term result in the loss of revenue and displacement of small farmers; however in the long term it will allow Guatemala's economy to compete effectively in the global market place and produce the needed economic prosperity to invest in services and infrastructure in rural areas, thus reducing poverty. Guatemala continues to rebound successfully from the 2000 coffee crisis by focusing on specialty coffee and high quality markets. The country's rich cultural and biological diversity also offer unlimited opportunity for sustained rural economic growth in two high growth global markets, tourism and high-value natural products. Remittances now surpass $2 billion a year and have become the largest source of foreign exchange. The administration's moves to re-launch the Peace Accords and downsize the military demonstrate an important commitment to redress human rights violations of the past. The government is also taking steps to combat endemic corruption as illustrated by their prosecution of corrupt officials from the former Portillo administration.
U.S. national interests in Guatemala include the containment of illegal migration, reducing organized crime and narcotrafficking, building trade capacity, and strengthening of democratic institutions. Based on a strong partnership with the Berger administration, USAID programs respond to Guatemala's priorities and have helped to improve the lives of millions of Guatemalans, paying special attention to the needs of the indigenous and rural populations. Shared gains in economic growth based on open trade and sound fiscal policy are the best way to address chronic poverty. In addition, strong and transparent democratic institutions that are responsive to citizens' needs and based on the rule of law will consolidate economic prosperity and translate it into higher standards of living. Better educated and healthier Guatemalans will not only be able to contribute to a growing economy, but more importantly, enjoy its benefits as well.
(Excerpted from the 2006 Congressional Budget Justification for Guatemala)
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