BLUE LANTERN END USE CHECKS UNRELIABLE IN

UNCLAS GUATEMALA 000769

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETTC KOMC GT KCOR PM
SUBJECT: BLUE LANTERN END USE CHECKS UNRELIABLE IN
GUATEMALA - 05-985279 AND 05-985856

REF: A. GUATEMALA 690


B. SECSTATE 09461

C. IIR 68389941


1. (SBU) EconOff attempted to conduct a pre-license end-use
check on potential US munitions exports to private Guatemalan
distributor, Poligonos S.A. Due to unreliable GOG
counterparts, private sector practices that lack
transparency, porous borders, and generally weak law
enforcement, meaningful end-use checks cannot be done on
sales to Guatemala. Guatemala is a violent country awash in
legal and illegal firearms. The quantity of US origin
firearms and munitions that enter Guatemala through legal
channels is very small compared to the overall market. And
while there is no apparent economic rationale for legally
imported US weapons to enter the black market or regional
arms trade, it is not currently feasible to evaluate
compliance with US export end-use regulations (REF A). The
existing legal framework, which includes licensing of all
levels of arms and munitions distribution and use, is not
adequately implemented and therefore applies only to the
relatively small legal trade. End summary.

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Failed GOG Regulatory Entities
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2. (SBU) The Department of Arms and Munitions Control
(DECAM),within the Ministry of Defense, has primary
responsibility for regulating the import, export,
distribution, ownership and carrying of firearms, munitions,
and other types of weapons in non-military hands. The
national police (PNC) and customs, share enforcement
responsibility of these regulations. Due to the combination
of a lack of resources, incompetence, corruption, and the
sheer enormity of the task, DECAM recognizes that it only
effectively regulates a small portion of the weapons in the
country. IAPEDES, an NGO advocating arms control, estimates
the number of guns outside of GOG security forces at over two
million, of which less than 15% are registered in some form
or other by DECAM. There are no reliable statistics on the
extent of the illegal arms trade.


3. (SBU) DECAM has been implicated in numerous scandals over
the years, from licensing gang members with arrest records to
carry AK-47s, to running their own illegal arms distribution
operations. Most gun dealers interviewed by EconOff claim to
have experienced some level of extortion by DECAM officials
in the past. Even a perfect regulatory body would rely on
effective customs enforcement and border controls to regulate
weapons import and export. Guatemalan borders are extremely
porous and everything from chicken to people is routinely
smuggled in and out of the country. Carolina Rca, Director
of the Tax and Customs Authority ha repeatedly admitted her
own lack of control overcorrupt customs officials at formal
ports of entry, and acknowledges the multitude of illicit
crossing points along the country's various borders. The PNC
is the third GOG agency with enforcement potential, but they
also suffer from a lack of resources, training, and
widespread corruption at the lower levels (REF B).

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No Reliable Information
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4. (SBU) Unfortunately, the failure of the country's
regulatory agencies to control arms sales cannot be offset by
reliable intelligece on arms movements. There is currently
no civlian intelligence agency, and the discredited military
intelligence organiation is generally in disarray. There
has never been transparent civilian regulation of the arms
sector. With such a murky history, it is difficult to have
confidence in private sector agents who have their own
interests in filtering the Embassy's understanding of local
market conditions.

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Blue Lantern on Poligonos S.A.
--------------

5. (SBU) EconOff visited Poligonos facilities and met with
owners Jesus ARRIAZA and his son Juan Diego (REF C). The
family run business - son Manolo Jesus ARRIAZA is also listed
as an owner - has one store in a shopping mall in downtown
Guatemala City. The location appears relatively secure in a
larger shopping complex with security personnel. The owners
claim to keep detailed lists of all customers and sales,
although Post has no way to confirm the validity of these
lists. The store is also known by its prior name, Safari
Shooting, which according to Jesus Arriaza was Remington
Arms' exclusive Guatemalan distributor from 1995 to 1999 when

their business was much bigger (he claimed it was the largest
in Guatemala) with locations throughout the country. Arriaza
described how they changed names after Safari Shooting was
run out of business and had their licenses revoked by corrupt
DECAM officials in October 1999. He alleged that DECAM
officials, working with organized crime and angered by his
refusal to pay bribes, revoked his licenses and illegally
opened their own competing operations to replace his (he
himself claimed to have started his business as the son of a
General). Arriaza went on to discredit much of his
competition in the sector, alleging corruption, dirty deals
with the military, illegal re-export and a host of other
sordid activities.


6. (SBU) Arriaza said he has since come to terms with new
DECAM leadership and has been legally operating under the
name Poligonos since July 2004. His stated intention is to
retake his lost market share, justifying his large orders of
munitions (his current operation does not appear large enough
to move major quantities in retail sales). He says he does
not currently supply other businesses but plans to re-enter
that market as he expands operations. DECAM confirmed to the
Embassy that Poligonos S.A. is a licensed firearms and
munitions importer and distributor, but would not comment on
Safari Shooting and the previously revoked license. Listed
Guatemala City intermediary, Kabat, is unknown to Arriaza.
Kabat appears to be a customs clearing service company
located near Guatemala City's international airport.

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Comment: End-Use Checks Simply Not Reliable
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7. (SBU) Responsible GOG agencies admit their inability to
adequately monitor or control the arms and munitions trade.
Law enforcement is generally ineffective at supporting the
regulators, and there are currently no intelligence services
capable of monitoring the sector. Private sector actors
invariably produce stacks of unverifiable, hand-written
"evidence" of their own compliance, and spiral into a
he-said-she-said slandering of their competitors' practices,
leaving Post with no way of sorting out fact from fiction.
Against this backdrop, Post cannot verify local compliance
with USG export end-use regulations.
DERHAM