US embassy cable - 03GUATEMALA2853

C O N F I D E N T I A L SECTION 01 OF 02 GUATEMALA 002853 
 
SIPDIS 
 
E.O. 12958: DECL: 10/26/2013 
TAGS: MCAP, MOPS, PGOV, PINR, GT 
SUBJECT: GUATEMALA DOWNSIZES ITS MILITARY, INCLUDING THE 
NOTORIOUS EMP 
 
 
Classified By: Robert E. Copley for reasons 1.5 (b) and (d). 
 
1. (C) Summary: The first of three voluntary force 
reductions, phased over the next three years, commenced on 
October 29, and involved 1648 Defense Ministry employees 
including 198 career officers, 100 assimilated officers, 600 
non-commissioned officers (NCO's) and 750 civilians.  This 
first phase cost $25 million, reduced the military by about 6 
percent and included the final 564 members of the EMP, 
accounting for most of the discharged civilians.  Among the 
non-EMP retirees, criteria for selection-out were well 
considered but appear to have been poorly enforced--setting a 
costly precedent for future phases and leaving the rank 
structure still top-heavy.  End Summary. 
 
2. (C) The military sought up to $150 million from the 
proceeds of the sale of Eurobonds for the purpose of 
downsizing.  As of September, the Finance Ministry has only 
approved a $25 million budget transfer to cover the first 
phase of military retirement bonuses, severance pay, and 
make-up contributions to the pension fund.  Note: the pension 
fund recently lost $22 million in an ongoing financial 
scandal. 
 
3. (C) The first-round cuts of military personnel were 
targeted at senior NCO's and at the ranks of Major through 
Colonel, where the Army has the majority of its excess 
officers.  Priority for bonuses was given to officers who 
have remained on active duty despite physical handicaps 
related to injuries sustained in the internal conflict. 
Bonuses were not to be used for officers within 1.5 years of 
mandatory retirement, which occurs at 33 years of service. 
Remaining funds were intended to retire officers with 
disciplinary problems.  Prioritized lists of servicemembers 
to be retired were drawn up from a large number of positive 
responses to the call for voluntary retirement. 
 
4. (C) Unfortunately, the criteria do not appear to have been 
strictly enforced.  General Carlos Radford Bonilla, who 
should not have qualified because he is less than a year from 
mandatory retirement, is taking the early retirement package. 
 A number of officers in quasi-retired "disponible" status 
have also managed to get their names on the list.  Very few 
Colonels have volunteered, but as many as half of all NCOs 
have.  An Air Force Officer told us that 83 of the 160 
Airmen, including all the mechanics, had requested early 
retirement.  One of the three Colonels at the military zone 
in Mazatenango (where only one is needed) told us that half 
of the NCO's there had signed up for the package but that 
none of the Colonels had.  According to the criteria, 
officers who have received scholarships from the military to 
train as lawyers, accountants, and doctors were ineligible 
for the early retirement package.  However, the military only 
seems to be holding the line on keeping its pilots.  All of 
the other career officers who requested early retirement were 
granted it. 
 
5. (C) Using his personal situation as an example, one 
Colonel explained why he thought few officers with less than 
25 years of service would find the early retirement package 
attractive.  Leaving now, at his current 22 years of service, 
would result in a payout of about $19,000 and a pension of 
under $900 per month.  After 25 years, officers automatically 
qualify for a severance package upon retirement of 10 months 
wages (about Q120,000 or $15,000 for a Colonel).  Accepting 
early retirement, in his view, is only worth $4,000 (the 
difference between $19,000 now or $15,000 in three years), 
guarantees a low pension, and means never becoming a General. 
 Like many Colonels, this one believes the next government 
will follow President Portillo's example and fire all the 
Generals upon taking office, thus freeing up slots for 
promotion. 
 
6. (C) Although some officers seem to be applying a "bird in 
the hand" rationale, there is no sense of concern in the 
upper ranks that this may be a unique opportunity.  One 
General, who reaches 33 years of service in February of 2004 
told us he plans to take advantage of phase 2 in May--even 
though he will already be retired.  Under current law, 
military retirements become effective only in January and 
June of each year and the General is confident that the new 
government will find the money for continued downsizing.  It 
is unclear whether this first round will become effective 
immediately on October 29, due to the large number of EMP 
civilians being retired, or whether it will actually take 
effect in January with the retirees in "disponible" status 
until then.  At the retirement ceremony, several officers 
wondered when they would actually get their checks. 
 
7. (C) Comment.  The military has reduced its forces on two 
previous occasions since the end of the internal conflict in 
1996.  Although it was poorly managed, this latest effort was 
still a positive effort by the military to reduce its overall 
cost structure.  Also, the Portillo Administration deserves 
some credit for finally keeping its promise to disband the 
EMP.  The first phase of the current round amounted to a 
reduction of about 6 percent of the force.  The remaining 
force of around 27,000 personnel includes about 3,000 mostly 
low-level civilians.  Because it is unlikely that the full 
$150 million originally sought for downsizing will ever be 
available, it was crucial that this first phase of voluntary 
retirement be handled properly.  Unfortunately, most hard 
decisions were avoided.  Allowing Generals and officers close 
to retirement or already in "disponible" status to take 
advantage of the package set expensive precedents and 
encouraged many to wait.  On the bright side, reducing the 
force by 6 percent should allow the GOG to reduce the defense 
budget, freeing up resources for the underfunded social 
sector. 
HAMILTON