CODEL BALLENGER VISIT ADVANCES U.S. INTERESTS

C O N F I D E N T I A L SECTION 01 OF 05 GUATEMALA 002014

SIPDIS

SENSITIVE

USDOL FOR ILAB:ROBERT WHOLEY
USTR FOR VIONDETTE LOPEZ/BUD CLATANOFF

E.O. 12958: DECL: 08/06/2013
TAGS: PREL PGOV ETRD SNAR ELAB CASC GT
SUBJECT: CODEL BALLENGER VISIT ADVANCES U.S. INTERESTS

REF: GUATEMALA 1908

Classified By: PolOff Erik Hall. Reason 1.5 (b).


1. (SBU) Summary: A U.S. Congressional delegation led by
Rep. Cass Ballenger, and including U.S. Representatives Kevin
Brady, Jerry Weller, and Marsha Blackburn, visited Guatemala
August 4-6. The CoDel conveyed to the GOG, civil society,
the private sector and the press USG concern over recent
election-related violence, our interest in assuring free and
fair elections in Guatemala, Congressional support for a
CAFTA agreement including strong labor rights and IPR
protections and the need for continued GOG progress in
combating drug trafficking. The CoDel visit demonstrated
strong U.S. Congressional interest in Guatemalan democracy at
this crucial juncture, and advanced our other highest
priority goals in Guatemala. End Summary.

Background
--------------

2. (U) Congressman Cass Ballenger, Chairman of the Western
Hemisphere Sub-Committee of the House International Relations
Committee, headed a Congressional delegation that visited
Guatemala August 4-6. The CoDel included U. S.
Representatives Kevin Brady, Jerry Weller and Marsha
Blackburn, as well as Mrs. Donna Ballenger, HIRC staffers
Caleb McCarry, Jessica Lewis and Ted Brennan, State
Department H officer James Hagen, and military escort Maj.
William McCollough. The CoDel met with the Country Team and
Embassy Homeland Security Working Group, with Acting
President Francisco Reyes Lopez and selected ministers, with
Foreign Minister Edgar Gutierrez and the GOG's
Inter-Institutional Counter-Narcotics Cooperation Group, with
representatives of the Guatemalan Congress, employer groups,
civil society representatives and human rights NGOs. Press
coverage of the visit was positive and straightforward.

Meeting the GOG: Narcotics, CAFTA, Elections
--------------


3. (C) The CoDel met with GOG officials at a reception
hosted by the Ambassador on August 4, and again on August 5
at a lunch hosted by Acting President Francisco Reyes Lopez.
The Vice President was accompanied by key members of the
Economic Cabinet. They met with Foreign Minister Gutierrez
and the Inter-Institutional Counter-Narcotics Cooperation
Group on August 5, and attended a dinner hosted by the
Guatemalan Congress in honor of the delegation that evening.
In each event, CoDel members raised concerns over recent
pre-electoral violence (RefTel),the need for an honest
election process in the run-up to Presidential elections on
November 9, the unprecedented opportunities offered by a
possible CAFTA agreement, the strong Congressional interest
that labor and IPR protections be incorporated into such an
agreement. They also highlighted the importance of continued
GOG cooperation in combating narco-trafficking.


4. (C) Senior GOG officials used the inter-ministerial
counter-narcotics meeting to underscore GOG efforts to meet
each of nine counter-narcotics problem areas identified by
the USG. After the GOG presentation, CoDel members
acknowledged GOG efforts, but urged continued commitment to
combat narco-trafficking, and noted the issue would come up
in the context of Congressional debate on CAFTA. Rep.
Blackburn pressed for a firm GOG commitment and additional
GOG resources to continue the fight. Attorney General Carlos
de Leon cited resources already committed by all
participating institutions to address the problem areas, and
said the creation of the inter-ministerial group also
embodied the GOG's commitment. Vice Minister of Foreign
Affairs Gabriel Aguilera said the GOG is firmly committed to
address each problem area completely, and emphasized that the
inter-institutional working group has been formally
constituted into a permanent body. Rep. Brady also said that
counter-narcotics cooperation will factor strongly in the
CAFTA debate expected in the U.S. Congress and asked whether
the Guatemalan Congress was funding the resource requests of
the institutions present. Minister of Government Reyes
Calderon said his ministry's money-laundering unit had
received an 18% budget increase from Congress over the past
year. Supreme Court Justice Napoleon Rojas said no US
extraditions were pending (Comment: Not quite right; the
Ambassador corrected. End Comment.),and that the court has
auctioned seized assets and used the profits to create two
new courts dedicated to trying cases involving organized
crime.


5. (C) In a separate meeting with Foreign Minister Gutierrez
(Defense Minister Moran was also present, but did not speak),
Rep. Ballenger said his comment in October, 2002 to the
effect that Guatemala should not be certified as cooperating
fully in the counter-narcotics fight was not meant to offend,
but to encourage stronger efforts in this mutual endeavor.
He noted positive actions taken since de-certification by the
GOG. Gutierrez described those efforts, including progress
in meeting the USG's 9 benchmarks, but said he was still "not
fully satisfied" with the results. "We are determined to do
more," he said, "and have formed the inter-institutional
counter-narcotics working group to continue improve
cooperation." In response to a question from Rep. Ballenger,
he also described GOG negotiations with Belize and the
current status of border talks. While not resolved, he said,
incidents in the adjacency zone have declined and the OAS has
opened an office in the zone as a means to build mutual trust
between the two nations. Rep. Weller expressed hope that a
fair and balanced CAFTA will be achieved, which incorporates
the labor and IPR protections of the US-Chile FTA.


6. (C) Rep. Brady described Congressional debate over CAFTA
and the importance of the labor issue in the U.S. Gutierrez
responded that a CAFTA is not limited to commercial relations
but also expresses shared values and is a means to modernize
Guatemala's business sector, which has profited from
protectionism and lax enforcement of labor laws in the past.
The GOG is pursuing an "aggressive" policy on CAFTA labor and
commercial offers, and has been criticized by some other
governments in the region for doing so. The current
government has achieved major labor law reforms and major
(more than 50%) increases to the minimum wage, and President
Portillo is asking the ILO to evaluate Guatemalan labor law.
Weak enforcement is unfortunately a result of weak state
structures. Greater fiscal and social reforms are needed to
form the basis for a CAFTA and a later FTA with the EU. In
response to a question about the status of Article 98
discussions, the Foreign Minister said the GOG was studying
the USG proposal, but could not take a position on an
agreement when it has not yet ratified the Treaty of Rome.
(Comment: This was bad news. The Ambassador raised this with
Guatemalan Ambassador to the U.S. Antonio Arenales on August
5, telling him that Gutierrez needed to hear from him how
important an issue this is to the USG and asking him to speak
with the Foreign Minister; he said he would. The Ambassador
told Gutierrez on August 6 in a TelCon that his reply to the
CoDel was like a bucket of cold water to our hopes of getting
an Article 98 agreement soon and that it did not make sense,
inasmuch as our proposed text does not even refer to the ICC
or Rome Treaty. Gutierrez replied that he may have listened
too much to his legal advisors and said he would reconsider.
The Ambassador suggested he seek Arenales' views as to the
importance of this issue in Washington; Gutierrez pledged to
consult with Arenales on both legalities and political
importance. End Comment.)


7. (C) Asked by Rep. Ballenger for his views on the violent
FRG protests of July 24-25, Gutierrez responded that these
events "are not easy to understand and are harder to
explain." The upcoming elections will be historic, he said,
because this will be the first election where former
guerrilla combatants will stand directly for election
(referring to the URNG party, which has nominated Rodrigo
Asturias (AKA Comandante Gaspar Ilom) for President, and
which previously stood only in coalition with other parties).
It is also historic because never before in Guatemalan
history has a second consecutive democratically-elected
government passed power to a third. President Portillo has
made a firm commitment to a clean, credible election, but the
pre-electoral campaign has become very controversial, causing
great public confusion. He has asked the OAS to monitor the
use of state funds for electoral purposes. "I personally
reject the July 24-25 demonstrations, but also believe it is
not helpful to exaggerate the facts. For example, the word
"rioters" was incorrectly used here. What I saw was a
well-organized and highly controlled movement. It is vital
for Guatemalans to keep a cool head." The Ambassador
responded that it is important to note that the demonstrators
carried machetes, clubs and guns, and while they did not use
them, they were acting in a way clearly intended to
intimidate. He urged all sides to work to improve the
electoral climate.


8. (C) At a Congressional dinner on August 5, host Vice
President of Congress Zury Rios toasted the CoDel and said a
majority of the Guatemalan Congress fully supports the
counter-narcotics fight and will continue to do so. She also
said Congress would support CAFTA approval. In response,
Rep. Ballenger toasted US-Guatemalan friendship and told
representatives that "the eyes of the world will be on
Guatemala" during this election year, and urged the GOG to
conduct free and fair elections, free from violence and
intimidation. He pledged to return to Guatemala to observe
the elections himself. In private conversations with Rios,
Rep. Ballenger and the Ambassador urged her and other FRG
leaders present to prevent violence and intimidation of the
sort witnessed on July 24-25.

Civil Society
--------------


9. (SBU) On August 4 the CoDel met with the Guatemalan
Forum, a group formed in August 2002 to promote social
dialogue. The Forum comprises individuals drawn from a
variety of civil society organizations, including human
rights groups, indigenous organizations, academic
institutions and think tanks, private sector groups and
unions, and religious organizations. Miguel Angel Barcacel,
a director of a prominent socio-economic analysis think tank
(ASIES),described for the Congressmen an atmosphere of
repression and intimidation of rural voters by the ruling
party, which erupted in violent riots on July 24-25 in the
capital (one journalist died of a heart attack). The Forum
has since issued position papers on national issues including
security, economic revitalization, rural development, justice
and electoral reform. The Forum recently joined with other
civil society groups to form the "Civic Front" to address
fraud in the upcoming elections. He requested USG support
for clean elections and international observation of the vote
in November.


10. (SBU) Carmen Aida Ibarra Moran of the Myrna Mack
Foundation, criticized the lack of access to education,
employment and health care for Guatemala's poor, and the
continued effective exercise of power by "clandestine forces"
linked to the ruling FRG, the Army, and retired Army
officers. The threat from these forces, which have roots in
all the political parties, represents an even greater threat
to Guatemala's democracy that Rios Montt's candidacy per se.
Human rights activist Mario Polanco warned that electoral
fraud will occur well before voting day, and cited the July
24-25 riots as a direct consequence of the FRG's alleged
re-activation of the network of civil self-defense patrols
created by Rios Montt during the civil conflict. Of
particular concern is the security of journalists in this
context. On the brighter side, Federico Licht of the
Guatemalan Jewish Community cited a rebirth of civil society
groups willing to defend democratic freedoms, including the
Guatemalan Forum. Rep. Ballenger commented that in the
elections in El Salvador immediately after the peace accords
were signed, 85% of voters turned out on election day despite
numerous death threats. He encouraged civil society to
educate voters about the secrecy of each vote and said he
would be among those observing the vote in November.


11. (U) At a meeting on August 5 with human rights groups
hosted by Frank LaRue, Director of the Center for Legal
Action in Human Rights (CALDH),the delegation met with Fredy
Peccerelli, Director of the Guatemalan Forensic Anthropology
Foundation (FAFG); Iduvina Hernandez, Director of the
Association for the Study and Promotion of Security in
Democracy (SEDEM); and Nery Rodenas, Director of the
Archbishop,s Office on Human Rights (ODHA). The human
rights leaders described a deteriorating security situation
facing human rights workers, their initiative to create an
international commission to investigate clandestine groups
(CICIACS),and the increase in threats to the opposition from
politically-motivated violence.


12. (U) Peccerelli spoke about his work exhuming clandestine
cemeteries dating from the internal conflict, many of which
were attributed to the counterinsurgency campaigns of the
Rios Montt government in 1981-1982. Peccerelli recounted
numerous death threats he and members of his staff have
received, and described the GOG's protective efforts as weak.
Hernandez and Rodenas alleged that the bulk of these threats
are posed by "clandestine groups" linked to state structures
through networks of retired military officers now involved in
organized criminal activity. They expressed hope that the
CICIACS would help identify and prosecute these networks and
their members and requested USG financial and political
support. The Ambassador responded that the USG has strongly
supported the proposal politically, and is in the process of
identifying financial support. More support will be needed
from other donors, he said. LaRue showed the delegation
several video clips from the riots of July 24-25, which he
characterized as a blatant effort by the ruling Guatemalan
Republican Front (FRG) to intimidate voters and the courts.
Congressman Ballenger responded that the "world will be
watching" the elections in November. Representative Brady
said the Congress continues to make support for human rights
in Guatemala a high priority.

CAFTA, Labor and IPR
--------------


13. (SBU) At a lunch on August 4 with Marcio Cuevas, Vice
President of the main private sector group (CACIF) and
President of the Non-Traditional Export Association
(AGEXPRONT); Peter Lamport, former Guatemalan Ambassador to
the U.S. and business leader; William Stixrud, a
representative of the coffee exporters; and Mario Montano,
ex-President of CACIF; CoDel members emphasized the
opportunity presented by a potential CAFTA agreement.
Congressional debate over CAFTA will be affected by the
unemployment situation in the U.S. when the agreement is
submitted to Congress, probably in March or April of 2004,
Representative Ballenger said. There is great concern over
labor conditions in Central America, he said, and urged
business leaders to provide Congress evidence of adequate
labor protections in law and effective enforcement of those
laws. Rep. Brady emphasized that the vote on CAFTA in the
U.S. Congress will be a close one, and may be determined by a
small group of currently undecided Congress members concerned
about labor rights protections in the region. The U.S.-Chile
FTA is a good model for CAFTA labor provisions, but U.S.
labor groups are skeptical about labor conditions in Central
America. He encouraged business leaders to provide
information about how Guatemalan worker rights are better
protected today, citing Abraham Lincoln's dictum that
"examples are not just the best form of persuasion, but
rather the only form of persuasion." In addition, he said,
the USG hopes CAFTA will help to integrate the region and
build productive capacity. Representative Weller noted that
2004 is an election year in the U.S., and suggested that the
later CAFTA is presented to Congress, the more difficult it
will be to pass. He emphasized the importance of labor law
enforcement, while also raising the importance to many U.S.
Congressional members that IPR protections are fully
respected. Rep. Blackburn expressed concern about IPR
protections and agriculture provisions of a CAFTA.


14. (SBU) Cuevas said that successfully achieving a CAFTA
agreement is CACIF's highest priority, to encourage greater
foreign investment and joint ventures in Guatemala. He
expressed "total agreement" that the Labor Ministry's
inspectorate will require support to better enforce existing
labor laws. He also expressed concern over the $15 million
maximum sanction for labor rights violations under the
US-Singapore agreement. Lamport said that beyond its effect
on trade, a CAFTA will help strengthen Guatemalan democracy
by strengthening the rule of law. Guatemalans view a CAFTA
as a tool to help maintain the competitiveness of exports
from the region, and as a way to counter-balance potential
dominance by Mexican firms. He claimed Guatemalan labor law
to be "more than adequate," and cited voluntary industry
efforts to improve working conditions out of a recognition
that Guatemala cannot compete successfully "based on cheap
labor alone." Unionization, however, is not the best way to
benefit workers, he argued, citing the closure of the
Phillips Van Heusen factory after a collective bargaining
agreement was achieved in the mid-1990s. Lamport also cited
the newly-created Civic Front as evidence of a mature,
non-violent reaction by civil society to the inscription of
Efrain Rios Montt as a candidate for the Presidency. In
response to the Ambassador's query of what the Front will do,
Lamport said the Front will begin observing election fraud or
abuse of public resources now, and would encourage voters not
to be discouraged by FRG intimidation tactics.

Press Gets Message
--------------


15. (U) The visit received extensive coverage by local
media. On August 5, Rep. Ballenger was interviewed by
journalist Carlisle Johnson on his English-language morning
show and asked about the delegation's views on CAFTA, the
fight against drugs and upcoming general elections in
Guatemala. Later the same day, following a lunch meeting
with Vice President Reyes Lopez, Rep. Ballenger was
interviewed by major newspapers, news radio and TV regarding
efforts made by the Government of Guatemala to combat
narcotics trafficking. Finally, later that day, the media
attended a press conference immediately following a meeting
with human rights groups where reporters inquired about the
CoDel's views on the violent demonstrations that took place
in Guatemala City on July 24 and 25. In total, press items
appeared in four daily newspapers, on two TV news reports,
and three radio stations.


16. (U) Leading daily "Prensa Libre" ran a headline on
August 6 that said "US warning: If there's fraud, no CAFTA;
eyes of the world will be on the elections, signal U.S.
Congress members." While predictably the press tried to draw
Rep. Ballenger out on the possible effect of a Rios Montt win
on CAFTA, Rep. Ballenger's response was that if Rios Montt
wins in a free and fair election, he doubted that it would
affect the vote on CAFTA. Reps. Ballenger and Brady strongly
emphasized the need for continued progress on
counter-narcotics cooperation, saying Congress will give that
issue significant consideration when debating a CAFTA
agreement. On narcotics certification, Rep. Ballenger told
the press that encouraging progress has been made, and noted
that it is President Bush's decision whether we certify or
not.

Comment
--------------


16. (C) This was a timely, extremely useful visit and we are
grateful for the CoDel's interest and support. The CoDel
visit was well received by all sectors here, including the
press, and supported USG interests and Embassy efforts on a
range of issues. For its part, the GOG rolled out the red
carpet, with the VP hosting a lunch and Congressional Vice
President Zury Rios hosting a gala dinner with all but the
GANA Congress members present (they were invited but
declined). Guatemalans who had contact with the CoDel went
away convinced of U.S. Congressional interest in Guatemalan
democracy at this critical juncture: in the wake of
pre-electoral violence and in the context of the
unprecedented opportunity offered by CAFTA negotiations. At
a reception hosted by the Ambassador for a broad
cross-section of Guatemalan civil society, government members
and opposition figures, Rep. Ballenger made a strong
statement about the need for clean, peaceful elections, the
importance of CAFTA to the region, and the need to address
labor rights issues.


17. (U) This cable was not cleared by CoDel members prior to
their departure.
HAMILTON