PEREZ MOLINA LEAVES GOVERNMENT FOR CONGRESS

C O N F I D E N T I A L SECTION 01 OF 02 GUATEMALA 001259

SIPDIS

DEPARTMENT FOR WHA/CEN

E.O. 12958: DECL: 05/15/2014
TAGS: PGOV PHUM MOPS GT
SUBJECT: PEREZ MOLINA LEAVES GOVERNMENT FOR CONGRESS

REF: GUATEMALA 1241

Classified By: Acting PolCouns Erik Hall, for reason 1.5 (b&d).


1. (C) Summary: On May 17, after meeting with President
Berger, GOG Security and Defense Commissioner Otto Perez
Molina announced his resignation from the Executive branch,
the Patriot Party's (PP) exit from the GANA coalition, and
his return to Congress to lead the PP in opposition. Perez
Molina claimed to have quit on principle, to protest the GANA
alliance with the FRG (plus the Unionista Party and some
independents) in the naming of the Congressional Permanent
Commission (see reftel). The press hailed Perez Molina's
exit and criticized what they characterized as Berger's
blunder. By all accounts, the UNE and PAN say the
Governability Pact is now officially over; the GANA expects
to pick up six Congressional converts after losing the PP's
eight. GANA leaders insist no deal was made with the FRG for
its support, which may continue through passage of the
pending fiscal reforms. It is unclear how Perez Molina's
exit will affect the on-going military reduction. Perez
Molina had been the foremost advocate within the government
of accompanying military reduction with modernization. End
Summary.

Perez Molina's Move
--------------


2. (U) When announcing his decision, Perez Molina told the
press that he resigned in protest over GANA collaboration
with the FRG, and would now return to Congress to lead the
Patriots in "constructive opposition." He predicted that
other parties would reject any future overtures from the GANA
as a result, and that the GANA's "only option would be to
continue (in alliance) with the FRG." Perez Molina said,
that in his meeting with Berger that immediately preceded his
announcement, he had expressed concern to Berger that
authorities were proceeding against two past Defense
Ministers and their chiefs of finance for allegations of
massive corruption, but not (Rios Montt's son) Enrique Rios
Sosa, implying the existence of a corrupt political deal
between Rios Montt and Berger. Perez Molina also told the
press that Berger had told him that as the FRG had not asked
for anything in exchange for its support on the matter of the
Permanent Commission, he believed the collaboration was
limited to this single vote. Later, he blamed GANA
Congressional leader Ricardo Saravia and Presidential Chief
of Staff Eduardo Gonzalez for continually excluding the PP
from GANA decision-making.

Presidential Reaction
--------------


3. (U) President Berger reacted to Perez Molina's
announcement by saying "we were not sure whether it was
better to have them (the PP) as allies or opposition, as we
were never sure of PP votes." He commented that "the
(Governability) Pact with the PAN and UNE was weak and never
worked." Berger said the agreement with the FRG was not
conditional, and no different from what he would seek from
any other party. Berger said the GANA would negotiate vote
by vote to pass pending legislation, including the fiscal
reform package. Eduardo Gonzalez publicly cited the PP's
early insistence on forming its own separate Congressional
bench distinct from that of the GANA, its opposition to
CICIACS, its position on electoral reforms, and the Permanent
Commission issue as evidence that the PP did not share the
GANA's goals. Asked about the political cost to the GANA of
working with the FRG, Gonzalez said that "the divided
Congress was the decision of Guatemalans. This requires that
all political groups in Congress be taken into account,
including the FRG. We must pursue, even with them, what is
beneficial for Guatemala."

The GANA's Side
--------------


4. (C) GANA Congressional chief Ricardo Saravia told PolOff
on May 17 that Molina's exit had been long coming, and the
GANA's cooperation with the FRG is just a convenient excuse.
He accused Perez Molina of personal political motives for the
PP's uncooperative behavior in Congress (over the electoral
reforms and CICIACS, which Saravia said he is now convinced
Guatemala desperately needs) and his seeding of confidants
throughout the Executive branch. Note: Perez Molina
reportedly freed these individuals of any obligation to step
down and Berger said he had no intention of "using the
machete to lop off heads." End Note.


5. (C) With the Governability Pact now definitively over,
Saravia said the GANA (with 39 deputies, after the departure
of the PP's 8) expects to accept 6 converts from the
independent deputies, and will work with the FRG (31
deputies) and Unionistas (7),to achieve the simple majority
needed to pass high-priority pending fiscal reforms during
the recess (by July 30). Saravia is the leader of Berger
loyalists who left the PAN with Berger during the election
campaign, to form the GANA. This group, referred to as the
M-17, is not formally incorporated as a party, and includes
28 Congress members. He claimed that the loyalty of the
remaining two political parties (the Reform Movement, with 4
deputies; and the National Solidarity Party, with seven) was
assured. Note: Press reports raised doubts about this
claim, saying PSN leaders also expressed concern on May 17
about GANA collaboration with the FRG. On May 18, PSN
leaders continued to publicly express concern about GANA-FRG
cooperation. End Note.


6. (C) According to Saravia, the GANA's collaboration with
the FRG is solely focused on the fiscal reforms. He claimed
there is no deal with the FRG involving prosecutions of
Portillo government officials. Saravia said he was forced to
approach the FRG when it became clear that President of
Congress Morales would not agree to GANA's preferred
composition of the Permanent Commission (critical to control
over the Congress during the recess). Morales had also
indicated that the fiscal reforms would be sent to many
different commissions, a recipe, in Saravia's view, for
endless delay. In contrast, the May 15
GANA-FRG-Unionista-independent vote gave the GANA majority
control over the Permanent Commission, and the fiscal reforms
will be considered by the Finance Commission only.

A View from the Opposition
--------------


7. (C) Former UNE Vice Presidential candidate Fernando
Andrade echoed the editorial line of the major papers to
EconCouns on May 18. According to Andrade, the Eduardo
Gonzalez - Perez Molina rivalry came to a head, provoked by
the obsession with cobbling together votes for the fiscal
pact. He blamed Berger for failing to control both these
egos within the government. A better leader would have the
vision, experience, and maturity to keep the PP inside Gana
through the military restructuring and find some way to avoid
the embrace of the FRG. Instead, the GANA set up Otto Perez
to seize the high ground before they got what they needed on
military restructuring and the basic direction of government.
According to Andrade, Perez retains the support of the
ex-PACs and is the person the military high command trusts to
get modernization in return for down-sizing; he will be big
trouble for GANA down the road.

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


8. (C) Perez Molina's presidential aspirations are widely
recognized and an eventual break with the GANA was considered
inevitable. The GANA's collaboration with the FRG offered
Perez Molina an opportunity to claim the moral high ground
(and gain the support of a fiercely partisan print media).
By Saravia's account, the GANA believes the price they are
paying for this collaboration is justified by the near-term
goal of passing fiscal reforms. That price could continue to
mount, however. Opposition leaders and opinion-makers
continue to portray the move as a political blunder and blame
Berger and Gonzalez.


9. (C) It is unclear how the exit of Perez Molina and the
Patriot Party will affect ongoing military reductions and
other issues of USG interest, including CICIACS. Some
members of the military saw Perez Molina as the GOG guarantor
of modernization in exchange for reductions, and may require
reassurance that the promise will be kept.
HAMILTON