LEADING PRESIDENTIAL CANDIDATES SPEAK OUT AT

UNCLAS GUATEMALA 001136

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV EAID KDEM PHUM SOCI ELAB GT
SUBJECT: LEADING PRESIDENTIAL CANDIDATES SPEAK OUT AT
CHAMBER OF INDUSTRY FORUM

REF: A. GUATEMALA 1057


B. GUATEMALA 858 AND PREVIOUS

Sensitive but unclassified. Please protect accordingly.


1. (SBU) Summary: Guatemala's leading presidential
candidates highlighted the key challenges facing Guatemala
and outlined their economic plans during a June 6 public
forum hosted by the Chamber of Industry. All five candidates
stressed the need for macroeconomic stability and greater
economic development to compete globally and to improve the
standard of living for all Guatemalans, especially in the
country's rural areas. They agreed on the need to improve
the investment climate, attract domestic and foreign
investment, increase productivity, reduce poverty, combat
violence, promote tourism, and regulate the informal sector,
but did not differentiate among themselves by articulating
specific measures or funding sources to achieve their goals.
End summary.


2. (U) The five leading presidential candidates --
center-left Colom (UNE),right-wing Perez Molina (PP),
center-right Giammattei (GANA),Nobel laureate Menchu (EG),
and former evangelical pastor Caballeros (Viva) -- shared
their visions of Guatemala's future and economic development
at a June 6 forum hosted by the Guatemalan Chamber of
Industry as part of its 12th Industrial Congress and 2007
InduExpo. In attendance were the Chamber's Board of
Directors and members, cabinet ministers, members of
Congress, members of the press and diplomatic corps, and
representatives of international organizations. The
candidates were each allotted nine minutes to present their
platforms, followed by three minutes to respond to questions
from the Chamber's Board of Directors and three minutes for
closing remarks.


3. (U) Rigoberta Menchu (EG),the first to speak, set the
tone by noting that Guatemala is a country that has
experienced much suffering and that economic stability will
enhance political stability. She proposed a "social
economy," stressing the need for greater economic development
to guarantee social equality and a better life for all
Guatemalans. Economic growth and development, however, must
correspond to the reality of Guatemala, which she described
as a "multi-lingual, multi-ethnic, pluralistic country," and
provide opportunities for all sectors of the population. She
outlined an economic plan focusing on control of inflation
and respect for labor rights and the rule of law. She urged
better access to credit and greater public and private
investment, and pledged to control corruption to restore
credibility to government institutions, and to bring an end
to Guatemala's "discriminatory past" by initiating a new era
of confidence to guarantee "a prosperous future" for
Guatemala and Central America.


4. (U) Harold Caballeros (Viva) echoed Menchu's platform,
stressing the need to strengthen Guatemalan institutions,
promote "zonas francas" (tax-exemption zones),reduce poverty
and malnutrition in the country's interior, and ensure access
to education, health, and credit, especially for commercial
agricultural activities. He noted also the need to
strengthen public-private partnership, develop the tourism
industry, and invest in social capital, educating the
population to ensure a more representative democracy. He
urged Guatemala to take advantage of its four sources of
capital: human, financial via exports, natural via tourism,
and social via security, justice, and participation. He
pointed out that it is the responsibility of the business
sector, not the State, to generate new jobs but that the
State must create the economic and social conditions for job
creation and investment. He estimated that 74.5 percent of
vendors operate in the informal sector.


5. (U) Front-runner Alvaro Colom (UNE) outlined a plan for
macroeconomic stability by lowering inflation, strengthening
the banking system, and increasing national productivity,
with the aim of reaching 6 percent economic growth by 2011
and lowering inflation to less than 3 percent with no greater
than 1 percent in fiscal deficit. He pledged to create
703,000 new jobs in the public and private sectors and to
legalize the informal sector. He highlighted competitiveness
as key to democratic efficiency and noted that insecurity is
a problem that affects every sector of the population.
Guatemala spends millions on private security, which takes
away from productive investments, thus reducing Guatemala's
competitiveness. It needs to establish clear rules for
business, reform its tax system, and control security to be
competitive.



6. (U) Retired army general Otto Perez Molina (PP) noted that
more than 70 percent of the population live in rural areas in
extreme poverty and that investment in health, education, and
rural development would provide greater opportunities for the
poor. In his view, private investment has not resulted in
sustainable development due to two primary reasons:
insecurity and the investment climate. Perez Molina, an
advocate of hard-line ("mano dura") measures to combat crime,
underscored the theme of security as the base for improving
the investment climate and public confidence. He estimated
that the cost of violence is 7.5 percent of GDP, compared to
3 percent in neighboring countries. He noted that in 2006
foreign direct investment (FDI) totalled approximately USD
325 million, with Guatemala ranking 75 out of 125 countries
for competitiveness (2005 World Economic Forum global
competitiveness index),and that Guatemala needs to attract
more FDI for its economic growth. He promised to guarantee
security to increase investment and to provide Guatemalans
better economic opportunities.


7. (U) Alejandro Giammattei of the governing party (GANA)
described Guatemala as a poor country with lack of
opportunities and focused on the need for a national policy
of industrialization for sustainable development and clear
rules for investment. He envisioned a better investment
climate through promotion of the rule of law, elimination of
corruption and organized crime, protection of labor rights in
the informal sector, access to micro-credit, and improvement
in infrastructure. He emphasized the importance of creating
incentives to generate jobs, developing non-traditional
products for export, and promoting clean energy, tourism, and
rural development. He expressed concern over the growing
informal economy, asserting that the government needs to
address the unregulated movement of goods across Guatemala's
border with Mexico and use the military to control contraband
activity and IPR violations.


8. (SBU) The second round of the forum required the
candidates to respond to follow-up questions from the
Chamber's Board members. The questions posed by the Board
were directed at each candidate's economic plan. The
responses were vague, often a repetition of the candidate's
opening remarks. Additionally, most of the candidates
circumvented the questions entirely. When the moderator
asked Menchu about her agrarian reform policy and whether or
not she planned to expropriate land, she responded only that
her proposal was not about expropriation but about legalizing
irregularities in land titles; she did not provide any
details about how she would accomplish her goals. She
affirmed that the indigenous do not oppose globalization or
mining as long as all sectors of the population benefit.


9. (SBU) Comment: The electoral season continues to be
characterized by indifference and apathy with many
Guatemalans lacking confidence in the government to resolve
the country's problems. This joint public appearance of the
leading candidates drew a disappointed reaction from those in
attendance who had hoped to hear more specifics. The forum
was marked by non-differentiated thematic positions, strong
on rhetoric and aspiration but weak on specifics for
addressing Guatemala's ills. While Caballeros and Colom
provided more details about their plans than the other
candidates, none of the five candidates elaborated specific
strategies or focused on the financial resources they would
need to implement their proposals should they win the
elections. There was no clear victor; however, Perez Molina
and Caballeros, who appeared the most confident and
articulate, gave a strong showing, while apparent
front-runner Colom (Ref A) turned in a relatively lackluster
performance. Menchu spoke about the "other Guatemala" -- the
marginalized indigenous and poor -- which she claims to
represent but seemed to lack vision for bridging the gap
between the two Guatemalas in a globalized society.
Derham