SCENE SETTER FOR THE FEBRUARY 3-5 VISIT TO

C O N F I D E N T I A L SECTION 01 OF 03 GUATEMALA 000223

SIPDIS

DEPARTMENT FOR WHA A/S NORIEGA

E.O. 12958: DECL: 01/27/2014
TAGS: PREL OVIP PGOV SNAR EAID ETRD PHUM MASS KTIA GT
SUBJECT: SCENE SETTER FOR THE FEBRUARY 3-5 VISIT TO
GUATEMALA OF WHA A/S ROGER NORIEGA

Classified By: PolCouns David E. Lindwall, reason 1.5 (b) and (d).

Summary:
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1. (C) Your visit to Guatemala comes as President Berger and
his team are anxious to demonstrate publicly that bilateral
relations have improved and that we have a shared agenda on
trade and investment, fighting domestic corruption and
transnational crime, and the 1996 Peace Accords. As he did
with Governor Bush and with private sector unhappiness over
CAFTA deal growing, Berger will seek your help for "an
adjustment;" he also wants a big assist in investigating and
prosecuting corrupt officials of the Portillo government.
Other request include increased assistance in the war on
drugs, protection for Guatemalan immigrants in the US,
financial assistance for a major reduction of the military
and getting off the FATF list of non-cooperating countries.
We would like you to raise CICIACS, the labor GSP petition,
TIP and Article 98. End summary.

Off to a strong start
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2. (C) In his first days in office, Berger secured a
governability pact with two reform-minded parties in
Congress, ensuring a pro-government majority in the fractious
legislature for now. He named a capable and experienced team
of ministers and advisers who have increased public
confidence that his government will deliver job creation and
improved public security. The governability pact gave
effective control of Congress to the center-left UNE party,
requiring Berger to negotiate on important legislation;
implications there are still unclear.


3. (C) Despite finding their ministries with few resources
and having little formal transition, Berger's team has begun
to implement his agenda. Berger has toured areas of the city
with serious crime problems, and has launched joint
military/police patrols in areas dominated by gangs.
Minister of Education Acena is defusing a threatened
nation-wide teachers strike. The Ministry of Economy is
engaged on CAFTA (a problem area -- see para. 5 below). The
government will soon launch a campaign targeted at
eliminating malnutrition in the areas affected by famine.


4. (C) Berger has drawn public attention to the improvement
in the US-Guatemala relationship. He is an admirer of the
ARENA governments in El Salvador, and is convinced that
progress and development in El Salvador have been driven to a
large extent by the policy of successive ARENA governments to
ally themselves closely with the U.S. Foreign Minister Briz
invited the Ambassador over to the Ministry only days after
taking office and called in the press corps to make the point
that the Berger government values its relationship with us.
Briz told the Ambassador that the GOG wants to give the Peace
Corps the Orden del Quetzal (Guatemala's highest recognition)
in March, in glaring contrast to Portillo's bestowing the
medal on the Cuban medical brigade. President Berger invited
the Ambassador and DCM for a private breakfast at the Palace
on January 29. Berger's ministers are by and large long-time
contacts of the Embassy, and have reaffirmed the priority
they attach to maintaining close ties with us in their new
positions.

CAFTA
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5. (C) Berger is a true believer in free trade and is a
strong supporter of CAFTA, not only as a mechanism to
increase trade and investment, but as a symbol of a new and
much broader relationship between our two countries. But
with Guatemala's private sector increasingly upset over the
outcome for Guatemala and convinced that the Portillo
government negotiated CAFTA in bad faith, making some
concessions intentionally for the purpose of punishing the
economic sectors that financed Berger's election campaign, he
is concerned that this issue is becoming politically
unmanageable. USTR made some "adjustments" this week to
accommodate these concerns and gave Guatemala treatment more
similar to that given the other countries. However, the
Portillo government's concession on beer was not addressed
and remains a particular concern to Berger as the owners of
Guatemala's newest brewery were his largest campaign
contributors. Berger will tell you, as he did the Ambassador
on January 29, that he will "continue fighting" for beer.
We and USTR have countered Berger's concerns by noting that
Guatemala's negotiators worked hard and achieved an outcome
that, on balance, is very similar to what others achieved
(Note: See Guatemala 207 for a more detailed analysis of the
Berger government's views on reopening CAFTA, and our
response. end note).
Corruption investigation
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6. (C) There is growing press attention to major corruption
cases involving senior officials of the Portillo government,
and Berger will ask you for USG support to investigate and
prosecute former officials. He recently asked us to cancel
the visas of a number of former officials (including
President Portillo); we told him that all visa revocations
have to follow due process and that we may have a law
enforcement interest in not/not revoking visas at this point.
Neither should we close that door, however. Other Berger
officials have asked us about pending investigations in the
US against Portillo-era officials, and it is clear that
Berger intends to pursue some legal action against the most
egregious cases of corruption under the previous government.
The past few days have seen a feeding frenzy in the press as
reports of investigations of former GOG officials by US
authorities have made the news. We have made it clear that
we can not comment on ongoing judicial investigations in the
United States. At the January 29 meeting, Berger welcomed
the offer to receive a briefing on the status of the
investigation from U.S. law enforcement officials.

Immigration
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7. (C) During the campaign, Berger met with Guatemalan
immigrants to the US, recognizing the growing importance of
their remittances to family members in Guatemala (which, at
close to $2 billion in 2003, exceeded foreign currency
earnings from coffee, sugar, and tourism combined). Berger
and Foreign Minister Briz have told us that migrant issues
will be high on their agenda, and have asked us informally if
the US would consider extending TPS benefits to Guatemalan
migrants. Assistant Secretary of State for Consular Affairs
Maura Harty, during a January 21 visit to Guatemala, told
senior MFA officials that President Bush's initiative on
immigration is designed to address the concerns the Berger
government is interested in, and urged the GOG to follow that
process carefully. The Ambassador reinforced that point and
further noted to Berger on January 29 that Guatemala is
increasingly taking advantage of the H2-B program, and said
the Berger government can take credit for the consolidation
of this program in coming years.

Counter-narcotics cooperation
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8. (C) President Berger is also determined to crack down on
drug trafficking through Guatemala, and cocaine seizures
during his first two weeks in office have already topped
1,200 kilos. Berger is looking for additional resources to
dedicate to the war on drugs, and would like to see our
financial assistance increase. He told the Ambassador on
January 29 that the poor state of maintenance of Guatemala's
air force assets makes it difficult for the GOG to provide
support at the level it would like to counter-narcotics
operations. We have told him that the seizure in 2003 of $22
million in cash demonstrates the potential for Guatemala to
use seized assets to fund GOG efforts in the war on drugs,
and encouraged him to seek an agreement with the Supreme
Court on how to use those funds (Note: The Constitution
assigns all seized assets to be administered by the Supreme
Court. We have long encouraged the GOG to negotiate an MOU
with the judiciary which would allow for the sharing of those
assets -- currently not being used -- with the narcotics
police and other GOG agencies active in the war on drugs. End
note).

Reducing the military
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9. (C) The spiraling military budget during the Portillo
administration convinced Berger to reduce the armed forces.
He told the Ambassador on January 29 that he commissioned the
new Minister of Defense to devise a plan to reduce the
military, and sent the first draft back asking the Minister
to cut deeper. Berger would like to cut 16,000 officers and
troops, and estimates that severance benefits alone will cost
roughly $200 million. He would like to finance it with
foreign aid, and hopes to enlist Nobel laureate Rigoberta
Menchu to pass the hat among traditional donors. He asked
for our help. The Ambassador told Berger that, irrespective
of our support for military reform, the donor community would
not easily be persuaded to finance job layoffs, and urged
Berger to explore ways to finance the reform by selling
valuable property currently owned by the military. On
military assistance more broadly, the Ambassador noted that
current congressional prohibitions could only be overcome by
profound reforms in the military and a serious and public
accounting for past human rights violations.

Berger is open to our agenda
--------------

10. (C) Berger will welcome engaging in a dialogue with you
on our priorities in the bilateral agenda. He has asked the
Foreign Ministry to review the status of our discussions on
an Article 98 Agreement, and appears poised to expedite a
negotiation. The Foreign Ministry is also preparing draft
legislation to renew authority for Mayan Jaguar
counter-narcotics exercises, and is preparing a presentation
for an upcoming GSP review. Berger is also anxious to resume
meetings of the bilateral working groups on counter-narcotics
cooperation, trafficking in persons and labor rights, and the
Foreign Ministry intends to convoke all three groups during
February.


11. (C) Berger strongly supports the creation of CICIACS,
though that ball is now in the hands of Congress and the
Constitutional Court. We expect him to use his considerable
political capital to positively influence debate in Congress,
but his influence with the high court is limited. The
Constitutional Court magistrates have not tipped their hands
on how they might rule on CICIACS' constitutionality. This
initiative is unprecedented in form and scope, and -- while
expensive -- could save us significantly greater expenditures
five to ten years down the road. This is definitely an area
where we can already see around the corner.

Comment
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12. (C) Berger will use your visit to gauge how important
these issues are to us, and to see if there are any
additional resources we can bring to bear to advance our
common agenda. Your restating the priority we attach to
concluding an Article 98 Agreement, passing a law extending
Mayan Jaguar, increasing cooperation against drugs and
illegal alien smuggling, tightening GOG actions against
trafficking in persons, improving respect for labor rights
and signing CAFTA will not be lost on Berger or his team. We
look forward to your visit and believe it will significantly
advance USG interests with the new government.
HAMILTON