US embassy cable - 03GUATEMALA770

C O N F I D E N T I A L SECTION 01 OF 03 GUATEMALA 000770 
 
SIPDIS 
 
E.O. 12958: DECL: 03/24/2013 
TAGS: PREL, ELAB, PGOV, KTIA, MARR, SNAR, KDEM, PHUM, EFIN, ETRD, CU, IR, GT 
SUBJECT: MEETING WITH PRESIDENT PROTILLO 
 
REF: A) STATE 66351 B) GUATEMALA 0735 
 
Classified By: AMBASSADOR JOHN R. HAMILTON FOR REASON 1.5 (b) 
 
 1. (C) Summary: Over dinner at the residence March 22, 
President Portillo acknowledged that Guatemala ought to 
support a UNHCR resolution on Cuba but said he has a problem 
with General Rios Montt's resentment over U.S. opposition to 
his presidential candidacy.  Portillo said Guatemala agreed 
with us that Iraq should stay in the UNSC.  He promised to 
look into allegations reported by MINUGUA that a recent drug 
bust was facilitated by illegal detentions and torture, as 
the Ambassador warned him that such methods are totally 
unacceptable.  He also pledged greater protection of labor 
rights, particularly in areas highlighted by the AFL-CIO GSP 
petition.  On his agenda: neutralizing perceived USG 
opposition to a controversial bond issue and venting over 
last October's congressional testimony that "did me 
irreparable harm."  End Summary 
 
2. (C) The Ambassador reciprocated March 22 Portillo's 
February 25 dinner for the Ambassador.  Like that dinner, 
this was a one-on-one that got down immediately to discussion 
of a (mostly) pre-agreed agenda. 
 
Iraq 
---- 
3. (C) Portillo said he had been watching CNN all day and 
agreed with the Ambassador's observation that U.S. forces 
were taking extraordinary precautions to minimize loss of 
life and damage to infrastructure.  He did not commit to 
coming any further toward support of our position in public 
but did agree that the UNSC is the appropriate venue for any 
further UN consideration of the issue. 
 
Cuba 
---- 
4. (C) Portillo said he completely agreed with the Ambassador 
that Castro has again showed his true colors in the arrests 
of the last week and mustered a seemingly genuine show of 
indigation.  To the Ambassador's observation that surely, 
after this, Guatemala would vote in favor of a resolution, 
Portillo acknowledged that a yes vote is in order.  After 
passing allusion to the views of FonMin Gutierrez (old line 
leftist reluctance to fall in with the U.S. to condemn 
Castro), however, Portillo said his main problem is with 
General Rios Montt, who resents U.S. opposition to his 
presidential ambitions.  The Ambassador again reviewed our 
position on this (up to the FRG and the Guatemalan 
constitutional court to decide whether Rios Montt runs but, 
as President, Rios Montt could not expect warm relations with 
the U.S.)  Portillo said he finds the U.S. position 
understandable and realistic and said he tried to make the 
General understand it but that Rios Montt is angry and the 
subject pops up whenever the Cuba resolution is raised.  The 
Ambassador was loaded for bear to refute the Guatemalan claim 
(made by FonMin Gutierrez during the visit of Cuban FonMin 
Perez Roque) that Cuban doctors here have achieved a "70 
percent reduction in infant mortality" but with Portillo 
candidly admitting that Rios Montt is the problem, the 
subject did not come up. 
 
Narcotics Certification 
----------------------- 
5. (C) The Ambassador went over re-certification criteria in 
detail with Portillo and gave him copy of the diplomatic 
note, drawn from ref a, that explains the entire process and 
sets forth the general and specific criteria.  Portillo made 
a pitch for funds to repair Guatemalan helos.  The Ambassador 
pointed him instead to quick adoption of asset forfeiture 
legislation, saying aid to the military would violate the 
spirit of U.S. legislative prohibitions on FMF.  Portillo 
appeared to accept this answer and was aware that the FRG 
caucus is busy on such an asset forfeiture bill.  The 
Ambassador told Portillo that we have received a report of 
testimony taken by MINUGUA to the effect that Guatemalan 
police illegally detained and tortured two individuals to 
extract information that led to the March 6 drug bust (ref 
b).  The Ambassador said such actions, if true (and he noted 
that we are checking) are totally unacceptable.  They would 
be, moreover, extremely prejudicial to Guatemala's 
possibiliies for re-certification, as one of the most 
damaging charges against Guatemala last year was the 
anti-drug police conduct at Chocon.  The Ambassador also 
noted that, in this instance, it is possible that military 
intelligence, not police, were responsible -- all the worse, 
if true, the Ambassador said, repeating that this has to stop 
immediately.  Portillo said he would find out immediately and 
make sure it stopped.  He said he had already fired one 
military intelligence official for a misguided effort to push 
anti-drug efforts forward (note: which takes credit for 
our/our insistence that this official be removed, but the 
Ambassador led that point pass). 
Article 98 
---------- 
6. (C) The Ambassador walked Portillo through this issue in 
some detail.  Portillo was vaguely aware of it and promised 
to consult with FonMin Gutierrez and get back to us. 
 
Labor Rights 
------------ 
7. (C) The Ambassador briefed Portillo on the AFL-CIO GSP 
labor petition, urging that he personally involve himself to 
push for rapid progress in the three areas of deficiency: 
lack of prosecution in cases of violence against labor 
leaders; a clogged system of labor justice, and the system's 
inability to force the re-hiring of illegally fired workers. 
Portillo is familiar with the most egregious case of fired 
workers (the Maria Lourdes finca case), said Labor Minister 
Moreira is pushing for reforms to the labor code that could 
clear up the backing of labor fines and other issues and 
pledged to push for more vigorous investigations. 
 
"Eurobonds" 
---------- 
8. (C) Portillo as expected made a strong pitch for the USG 
not to oppose the placing of a bond issue that includes US$63 
million for a first payment of US$225 compensation for 
wartime services rendered to each of some 250,000 ex-civilian 
patrol members.  He seemed to accept the Ambassador's reply 
that, despite our deep misgivings over the appropriateness of 
such compensation, especially in an election year, we had not 
opposed the bond issue.  Portillo spoke at some length and 
with some anxiety about the danger to public security and 
order that the so-called Ex-Pacs represent.  He claimed that 
their ambitions and resentments have been egged on 
irresponsible elements in the ruling FRG, by the URNG (former 
guerrillas) and by the PAN (center-right, leading 
oppposition) and that a march on Guatemala City, if they make 
one, could turn extremely violent.  Hence the importance of 
buying them off. 
 
The October Testimony 
--------------------- 
9. (C) At one point Portillo went off on a tear, prefaced 
only by "the spirit of candor that informs our discussions" 
to complain bitterly of State Department congressional 
testimony last October that he had links to organized crime. 
He seemed  particularly hurt by the criticism of then A/S 
Reich, with whom he thought he had had a strong personal 
relationship.  The Ambassador said we could understand how he 
felt, but what about financial contributions and his other 
ties to the Ortega Menaldo crime syndicate of ex-military 
officers?  Indignant (or with a good show of indignation), 
Portillo responded with some heat that his entire campaign 
was funded by banker Francisco Alvarado Maldonado.  Portillo 
pointed out that Alvarado is currently being prosecuted for 
the failure of his two banks, i.e., Portillo has not come to 
his aid despite the past political support.  The Ambassador 
let the subject drop without giving any indication that we 
accept that reply at face value. 
 
CONTIERRA 
--------- 
10. (C) Portillo assured the Ambassador that CONTIERRA, the 
government agency that seeks to resolve land tenure 
conflicts, would be funded and kept in operation (note: there 
has been doubt on this). 
 
Leadership of Guatemalan tax authority 
-------------------------------------- 
11. (C) The Ambassador told Portillo that the quality of 
performance at the Guatemalan tax authority (SAT) is 
deteriorating badly since Marco Tulio Abadio took over as 
Director in late 2002.  All the donor countries and the IFI's 
are losing confidence in the SAT and are backing away from 
their programs of support.  Portillo, showing no surprise, 
said he would take (unspecified) action.  (Comment: Portillo 
picked the mercurial Abadio to serve as an attack dog against 
Portillo's private sector opponents.  He has not been 
effective in his or other roles.) 
 
April 10 meeting with the President 
----------------------------------- 
12. (C) Portillo understands that CAFTA is the only issue for 
discussion in the meeting between the President and the 
Central American presidents, though he equally understands 
that Cuba, Iraq and narcotics cooperation will come up in any 
side meetings with senior U.S. officials. 
 
Comment 
------- 
13. (C) Even on the subject of Eurobonds and Ortega Menaldo, 
this was a civil exchange and it is clear that earning 
re-certification and avoiding other blows to Guatemala's 
image is high on Portillo's agenda in his final months. 
HAMILTON