US embassy cable - 04GUATEMALA3071

C O N F I D E N T I A L SECTION 01 OF 03 GUATEMALA 003071 
 
SIPDIS 
 
E.O. 12958: DECL: 12/01/2014 
TAGS: PREL, ECON, GT 
SUBJECT: LETTER FROM GUATEMALA 
 
 
Classified By: Ambassador John Hamilton for reasons 1.4 (b) & (d). 
 
1. (U) This is the first of a series of biweekly cables with 
which, in a more discursive style than the standard telegram, 
the Embassy intends to report on newsworthy political and 
economic developments and provide some context to Guatemalan 
policy-making. 
 
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Cabinet Changes Coming 
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2. (SBU) There is much speculation that President Berger, 
nearing completion of his first year in office, is 
considering changes in his cabinet.  It is already public 
that his young, dynamic Minister of Energy and Mines, Roberto 
Gonzalez, will move over to the presidential palace in 
January to become chief of staff.  At lunch with the 
Ambassador, Gonzalez displayed a detailed knowledge of the 
mining and energy issues he had been working as Minister and 
a lively curiosity about new issues outside his current 
portfolio.  He said that in his new position he hoped to work 
closely with the Embassy and intended to pay special 
attention to the bilateral agenda. 
 
3. (SBU) At the Ministry of Energy and Mines, Gonzalez is to 
be replaced by his competent, respected and energetic Vice 
Minister, Carolina Roca.  She will have her hands full over 
the coming weeks.  Guatemala's Constitutional Court 
unexpectedly ruled against the regulatory authority for 
electricity (CNEE), ordering reversal of the CNEE's decision 
to limit subsidized electricity rates to those who consume 
less than 100 KWH per month.  The Court also ordered 
reimbursement of all who were affected.  The court was 
responding to a motion filed by the Human Rights Ombudsman, 
who is known to argue that inexpensive electricity is a basic 
human right.  Guatemala's model legislation and regulatory 
structure were not affected, but the court-ordered firing of 
the CNEE's board sets a potentially damaging precedent of 
intrusion into the board's autonomy.  This week, Roca has 
organized a major forum on mining in Guatemala that has 
become a magnet for anti-mining activists of all stripes. 
The Marriott decided late last week to cancel its offer to 
host the event when local groups (Madre Selva and Marielos 
Monzon) demanded equal time and space for an event they 
wished to organize.  Consequently, the event was moved to a 
hotel away from the city center.  Finally, Roca and the 
revenue collection service (SAT) are under pressure to do 
something about the mushrooming problem of gasoline and 
diesel contraband, which the major distributors claim is 
driving them out of business.  We are working with Roca to 
try to get TDA assistance in establishing better controls. 
 
4. (C) Berger, who is leaving this weekend for Miami to be 
one of the keynote speakers at the opening plenary dinner of 
the Miami Conference on the Caribbean Basin (CCAA), has been 
openly pressing for the well-respected Lizardo Sosa to quit 
his job at the Central Bank.  Sosa's star lost some luster 
over his support for the Portillo Administration's Eurobond 
issuances.  More recently, Sosa is rumored to have incurred 
the displeasure of exporters over monetary policy, 
particularly exchange rates.  Berger reportedly wants to move 
Finance Minister Toni Bonilla to the Central Bank, inviting 
speculation about who will take over the Finance Ministry. 
Berger cannot legally force Sosa out of the Central Bank but 
with his public comments is clearly trying to make Sosa 
uncomfortable and leave.  There is some criticism that 
Berger's campaign against Sosa is not only unseemly but 
encroaches on the Central Bank's autonomy.  Likewise, having 
moved Willy Zapata from the SAT to the Superintendence of 
Banks, we hope he will find someone equally respected, and 
possibly more operational than the able but sometimes 
ethereal Zapata, for the SAT position. 
 
5. (SBU) MinDef Mendez Pinelo is expected to move out in 
January because he is already past the military's mandatory 
retirement deadline.  We have also heard that Health Minister 
Sosa, having dragged Berger into IPR grief by pushing new 
legislation on generic pharmaceutical drugs, may be moving 
on.  Thanks to Sosa, intellectual property rights are 
consuming much of our time.  Sosa took advantage of a lull to 
stampede a bill through the Congress on November 19 that 
eviscerates data protection for pharmaceuticals and 
agricultural chemicals.  We and others had been assured that 
the bill was dormant.  The bill is a case study in cynicism, 
guaranteeing the rights of developers of new products in its 
operational language and then defining "new products" so as 
to ensure that none will ever exist.  The Ambassador told 
Berger in the clearest terms that this was exactly the sort 
of issue that was getting the Dominican Republic kicked out 
of CAFTA.  Berger has fifteen days to veto the bill once he 
receives it (he has not) and has thus ordered Sosa to launch 
a process to come up with something acceptable with which to 
replace it.  Berger told the Ambassador December 1 that it 
would be too politically costly simply to veto the bill. 
Berger and Vice President Stein seem to recognize that 
Minister Sosa will not be helpful in producing a decent 
substitute and have now inserted presidential advisor and FTA 
advocate Mickey Fernandez into the process -- a good sign. 
 
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Congress Gets a D; Changes May Improve Grade 
-------------------------------------------- 
 
6. (C) The Congress went into recess November 25 and was 
pretty much panned by the critics, who noted that it was the 
least productive session in at least eight years.  This is 
due in large measure to it being the most fractious congress 
in recent memory.  In addition to its lack of legislative 
accomplishments, however, the Congress was buffeted by 
nagging scandals, ranging from revelations of exorbitant 
salaries paid to ghost advisors, questions about the 
procurement of a new telephone system and the contracting of 
a security firm, the end-use of vehicles donated by Taiwan 
and congressional junkets.  The most egregious of the last 
appears to be an all-expenses paid trip for the departing 
president of congress, Rolando Morales, to Thailand and 
Indonesia in the company of a female "advisor" whose name 
does not show up anywhere in personnel files of the congress. 
 UNE leader Alvaro Colom told the Ambassador that Morales, 
who also belongs to UNE, did not have the managerial skills 
or experience to run Congress.  It is widely believed, 
however, that Colom and Morales were treating each other as 
rivals within UNE.  Colom told the Ambassador (and, the 
following day, announced to the press) that he was asking 
UNE's "Discipline Tribunal" to review allegations against 
Morales of corruption and mismanagement. 
 
7. (SBU) In the last month, however, the Congress elected new 
leadership for 2005.  It also approved some changes to its 
internal procedures that could help make it more productive 
next year.  These include reducing to 25% the quorum 
necessary for committees to do their work, eliminating the 
requirement for multiple readings (literally) in plenary of 
the full text of all legislation and making the texts of all 
bills available electronically.  With these new rules and the 
leadership of the new "junta directiva" headed by president 
Jorge Mendez Herbruger, who belongs to President Berger's 
coalition, there is reason to hope that next year the 
Congress might accomplish more. 
 
8. (SBU) Mendez Herbruger told the Ambassador he was fully 
aware that the Congress had plummeted to an all-time low in 
public prestige.  He said his task was to rescue the image of 
Congress by putting it to work.  He noted that he and his 
junta directiva had been elected without an opposing slate, 
although UNE and PAN absented themselves from the vote.  JMH 
claimed to enjoy direct access to President Berger and all 
the cabinet ministers but also expected to consult with key 
presidential adviser Eduardo "Guayo" Gonzalez on political 
issues. 
 
9. (SBU) Until the Congress comes back into session January 
14, it will be under the care of a five-member Permanent 
Committee that is to dispatch all urgent business requiring 
immediate attention.  The press, however, is speculating that 
the Permanent Committee is conspiring to vote a pay raise for 
all 158 congressional deputies of an additional $15,000 per 
year.  Public opposition to the pay raise when it was first 
floated earlier this year was so intense that the congress 
quickly backed off.  The press is convinced that the 
Permanent Committee members will somehow pull a fast one and 
push through a pay raise, thus absolving their congressional 
colleagues from responsibility. 
 
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Military Mystery:  Whodunit and Who Is it? 
------------------------------------------ 
 
10. (SBU) Meanwhile, some of the public's attention has 
focused on last week's "discovery" of the alleged burial site 
of Col. Raul Cerna.  As finance chief of the now-dissolved 
EMP, Cerna was a key witness in efforts to track down the 
whereabouts of at least $30 million of the $115 million or 
more that went missing in military hands under the Portillo 
administration.  Cerna dropped out of sight in April, but 
only now is it surfacing that he may have died at that time 
in a city hospital of poisoning.  The hospital report 
concluded that he accidentally poisoned himself by drinking 
muriatic acid, a conclusion that is raising eyebrows. 
Although the dead hospital patient had identification 
documents with Cerna's name and address, neither the hospital 
nor the morgue notified Cerna's family.  For that matter, 
many Guatemalans are wondering why Cerna's family did not 
report him missing and therefore conclude that Cerna may be 
alive and hiding.  An exhumation at Cerna's burial site has 
been ordered, and it is hoped (but not fully expected) that 
it will lead to a determination of whether the cadaver is 
indeed Cerna's.  Even for a Guatemalan public long-inured to 
jaw-dropping displays of incompetence among police, 
prosecutors and courts, the handling of the Cerna case is 
disturbing.  The Prosecutor's Office has announced an 
internal investigation into why its staff failed to pursue 
leads on Cerna's whereabouts. 
 
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Rios Sosa the 6th Beatle? 
------------------------- 
 
11. (SBU) Another episode of the military corruption soap 
opera starred the appearance in court of retired General 
Enrique Rios Sosa, the 56-year-old former Army Chief of Staff 
and Minister of Defense accused of diverting $4 million from 
the coffers of the National Mortgage Fund (CHN).  Rios Sosa 
is also the son of Efrain Rios Montt, the former president, 
who is accused by human rights activists of genocide against 
indigenous in the early 1980s.  Prosecutors failed to get the 
judge who temporarily took over the Rios Sosa case to recuse 
herself, and through some questionable maneuvers she 
proceeded to let Rios Sosa free on a $12,000 bail bond. 
Prosecutors allege she railroaded the hearing to preclude 
them from making their case.  A self-satisfied Rios Sosa 
(whose grinning visage made all the front pages November 30) 
reportedly chanted "Peace and Love" in English to mystified 
journalists as he departed the courtroom. 
 
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Politics at the MFA? 
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12. (C) Without much notice or fanfare, Juan Jose Cabrera 
joined the MFA last week as a vice foreign minister.  We were 
impressed by his hands-on responsiveness to us in getting our 
CNIES dip note turned around in time to meet our December 1 
deadline -- in his first week in office.  It is noteworthy 
that this very pleasant fellow, with no known prior 
diplomatic or international relations experience, moved to 
the MFA directly from Eduardo Gonzalez's office (Executive 
Secretary) in the Presidency.  Earlier this year we had heard 
 
SIPDIS 
that Gonzalez was one of the people behind the sniping 
against and anonymous criticism of FM Briz, who is widely 
expected to be Gonzalez's rival in the 2007 elections.  This 
makes us wonder whether Cabrera might be a "political 
commissar." 
 
HAMILTON