US embassy cable - 04GUATEMALA531

C O N F I D E N T I A L SECTION 01 OF 03 GUATEMALA 000531 
 
SIPDIS 
 
E.O. 12958: DECL: 03/02/2014 
TAGS: PGOV, PINR, PREL, SNAR, ECON, ETRD, EAID, MOPS, GT 
SUBJECT: THE BERGER GOVERNMENT'S FIRST FIFTY DAYS 
 
 
Classified By: PolCouns David Lindwall for reason 1.5 (b) and (d). 
 
1. (C) Summary: In his first fifty days in office, President 
Oscar Berger increased his influence in Congress, removed the 
controversial Attorney General and the corrupt head of the 
Tax Authority, relaunched the fiscal pact, dealt effectively 
with his government's first protest demonstrations and 
increased military participation in support of the police in 
high crime zones.  Counterdrug efforts netted over 1,000 
kilos of cocaine.  In his first test of his relationship with 
Congress, Berger secured overwhelming support (with some help 
from us) for a two-year agreement covering U.S. 
counter-narcotics joint exercises (Mayan Jaguar). Berger has 
promised to investigate and prosecute official corruption, 
and the Constitutional Court removed the immunity of former 
President Portillo -- who traveled to Mexico just ahead of a 
court order not to leave the country.  The governability pact 
with the UNE and PAN in Congress suffered new strains as 
evidence emerged that the government's two coalition partners 
had received campaign financing indirectly from the FRG.  The 
media remains strongly supportive of Berger, and his early 
demonstrations of leadership on key issues have impressed 
former critics.  Some of his closest allies, however, are 
concerned that by taking on so many controversial issues at 
once -- including a major reduction of the armed forces -- 
Berger may be overextending himself and undercutting the 
institutional support he will need to implement other 
important reforms.  End summary. 
 
Building consensus 
------------------ 
2. (C) President Oscar Berger has gotten off to a strong 
start, using his first fifty days in office to broaden the 
consensus for his plan of government and take immediate 
actions against official corruption.  In the hours before 
being sworn in as President on January 14, Berger negotiated 
a governability pact with two other like-minded parties in 
Congress (the UNE and PAN).  This ensured that Berger's GANA 
coalition (which has less than a third of the seats) would 
have representation on the legislative governing board and 
gave presidencies of key Congressional committees (including 
the Budget and Finance Committee) to GANA legislators. 
Perhaps more importantly, the pact excluded the FRG from any 
leadership role in Congress, from which they could have 
undermined the new government. 
 
3. (C) Berger sought to deepen the relationship with major 
coalition partner UNE (which had 32 of the 158 seats in 
Congress; GANA has 54) by inviting former presidential 
candidate Alvaro Colom to the Palace in early February for a 
highly publicized meeting on social policy -- a high priority 
for UNE.  The alliance began to fray, however, when 
investigative journalists found that UNE and PAN received 
hundreds of thousands of dollars in campaign contributions 
from the FRG-controlled former head of the Tax Authority and 
the Comptroller General.  President of Congress Morales (from 
UNE) effectively suspended discussion in Congress of the 
matter, in what appeared to be an attempt to cover-up UNE's 
illegal acceptance of public funds for their presidential 
campaign.  The Public Ministry is investigating the case and 
may bring money laundering charges against UNE and PAN 
representatives that received the illegal donations -- 
including UNE leader Alvaro Colom.  Colom told the press that 
the media should investigate Berger for receiving funds from 
drug-traffickers, leading Berger to call Colom a liar and 
calling for him to present the facts (Note: Vice President 
Stein was scurrying to mend fences with Colom late March 2. 
End note). 
 
4. (C) The congressional alliance among the GANA, UNE and PAN 
has always been fragile, and the latest spat only reminds the 
government that it must seek a consensus issue by issue. 
Four UNE legislators, two from the PAN, two from the FRG and 
one from DIA have already declared their independence from 
their parties, and can be counted on to vote with the 
government.  Other defections to the government are expected, 
and the biggest incentive the UNE and PAN have for remaining 
within the governability pact is to keep the government from 
seducing their legislators into joining GANA. 
 
Getting rid of De Leon: Berger's trial by fire 
--------------------------------------------- - 
5. (C) During the presidential campaign, Berger had told us 
that complete inaction by Attorney General De Leon against 
official corruption, drugs, trafficking in persons, organized 
crime and increasing violent crime would make it difficult 
for the new government to enforce the law and control crime. 
Civil society, the media and representatives of all the major 
political parties (including the FRG) told us they would 
support De Leon's removal.  Berger reportedly gave the 
Attorney General warning that he either had to enforce the 
law or resign.  When De Leon responded that he was autonomous 
and did not serve at the pleasure of the President, Berger 
fired him.  The laws that regulate how the Attorney General 
can be removed are vague (though there is recent precedent 
for a President firing the Attorney General).  De Leon 
appealed to the Constitutional Court, which unanimously and 
immediately ruled against him.  Berger named a new Attorney 
General (loyal to him), and De Leon appears to have left the 
country.  While some in civil society have objected to Berger 
picking an Attorney General allied with the government, no 
one has yet objected to De Leon's removal. 
 
6. (C) Almost as important as removing De Leon was Berger's 
success in getting the Constitutional Court to support him. 
The unpredictable and mercurial Constitutional Court has 
often been a stumbling block to reform, and their unanimous 
decision to back Berger on the firing of De Leon was viewed 
as a sign that they are prepared to work with the new 
government (at least for now).  Prior to upholding the 
removal of De Leon, the Constitutional Court issued a ruling 
that non-elected members of the Central American Parliament 
(i.e. Former President Portillo and former Vice President 
Reyes Lopez) did not have any immunity from the law, as the 
Constitution only gave immunity to "elected" members. 
Recognizing that the ruling opened the door to numerous suits 
already pending against him in the courts, Portillo departed 
the country for Mexico. 
 
7. (SBU) Berger also fired the head of the semi-independent 
Tax Authority, only to find out that he had already fled the 
country after stealing at least Q53 million (roughly $7 
million) in public money.  The Comptroller General, charged 
with multiple acts of corruption and funneling public funds 
into the election campaign, departed Guatemala hastily on 
March 3 rather than face an impeachment hearing by Congress. 
 
Mending the budget 
------------------ 
8. (C) Berger's experience in the private sector and as Mayor 
of Guatemala City made him a firm believer in fiscal 
discipline.  Having inherited a government short on funds, 
Berger is reaching out to the opposition parties, civil 
society and the private sector in an attempt to revive the 
fiscal pact derived from the 1996 Peace Accords.  His ordered 
reductions in government expenditures have given him 
credibility on this issue, as well as the massive planned 
military reductions.  Symbolically significant, he traveled 
economy class to a meeting of Central American presidents in 
Spain during the week of March 1.  His interest in a broad 
consensus on fiscal policy have deprived would-be critics of 
traction.  Berger realizes he must raise taxes, and his 
allies in the private sector, long opponents of increased 
taxes, reluctantly agree. 
 
Managing public protests 
------------------------ 
9. (SBU) Berger's next challenge came when striking teachers 
protested in front of numerous public buildings and truck 
drivers (angered by a new municipal law restricting the hours 
they can circulate through the city) closed down two major 
highways into the city.  Berger met with the teachers and 
promised to look into their demands, but ordered the police 
to open up the highways closed by the truckers.  The police, 
which had sat idly by in July, 2003 when pro-FRG mobs closed 
down parts of the city, this time used tear gas to disperse 
the truckers and open up the roads.  The population, tired of 
Portillo's tolerance for protests shutting down the city, 
applauded Berger's response to the truckers' strike, and the 
protesters decided to seek other ways to bring attention to 
their demands. 
 
Taking on crime 
--------------- 
10. (SBU) Recognizing that most Guatemalans list rising crime 
as their principal concern, Berger began his presidency by 
increasing military support for police operations in 
gang-infested neighborhoods.  While the military presence 
remains limited to a few particularly dangerous communities, 
the public perception is that this government is getting 
serious with crime.  On a similar note, within two weeks of 
Berger taking office, the counternarcotics police seized over 
1,000 kilos of cocaine in operations around the country. 
 
Improving relations with us 
--------------------------- 
11. (C) Berger's efforts to bring about high-impact changes 
in Guatemala during his first fifty days in office have not 
distracted from his determination to improve the bilateral 
relationship with us.  In his first test of getting a law 
through Congress, Berger sent a decree authorizing a two year 
extension for joint military counter-drug operations (called 
"Mayan Jaguar" locally) in early February.  He sent his 
Ministers of Defense and Government to lobby members of 
Congress, and to push the law through a new Congressional 
leadership that was still learning the ropes.  He also is 
sending his Vice Minister of Foreign Affairs to Washington to 
negotiate an Article 98 Agreement with us. 
 
Honeymoon with the press and civil society 
------------------------------------------ 
12. (SBU) The written press (which strongly supported Berger 
during the election campaign) and civil society continue to 
give him virtually uncritical support.  Even some op-ed 
writers, who questioned his intelligence and disparaged him 
during the campaign as being a stand-in for the private 
sector confederation, have lauded him recently for seeking 
compromises with his political opposition and for taking bold 
action against the Attorney General and Portillo-era 
corruption.  Guatemalans appear generally hopeful that the 
new government will address the economic and security issues 
long neglected by its predecessors. 
 
Overextending himself? 
---------------------- 
13. (C) Berger believes he has a mandate for radical change 
and wants to use his honeymoon to take on the most difficult 
tasks.  He is determined to reduce the military 
substantially, and has been frustrated by foot-dragging on 
the part of the military itself to produce a viable plan. 
Vice President Stein told us that Berger wants to announce 
publicly on March 9 that he is reducing the military budget 
to Q500 million (roughly $63 million) (Note: In 2003 the 
military received Q1.4 billion, or $180 million. End note). 
He has tasked Stein and the Minister of Finance with coming 
up with a plan that would meet that goal, though Stein 
expressed doubt that this was truly viable.  Stein told us 
March 2 that Berger also wants to announce that he is 
suspending contracts at the ports that were given out with 
little transparency in the waning hours of the Portillo 
government.  Stein says that organized crime benefited from 
those contracts, and that canceling them could provoke a 
violent reaction from that sector.  Stein is worried that 
taking on the military and organized crime at the same time, 
at a time when the police remains ineffective, could lead to 
security problems.  He has counseled Berger to undertake a 
more gradual pace of change, but has so far not managed to 
change Berger's mind. 
 
Comment 
------- 
14. (C) The challenges before the Berger government remain 
daunting, but Berger is convinced that he must use the good 
will of his first months in office (and the total disarray of 
the political opposition) to begin implementing the changes 
he was elected to make.  His first fifty days in office show 
that he wants quick results, and that he is prepared to find 
creative, if somewhat unorthodox, ways to address Guatemala's 
pressing problems and pending issues in our bilateral 
relationship. 
HAMILTON