SCENESETTER FOR CODEL COLEMAN

UNCLAS GUATEMALA 002252

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV CONS PREL GT
SUBJECT: SCENESETTER FOR CODEL COLEMAN

Introduction
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1. Your November 23 - 24 visit will afford you a chance to
view adoptions processes and practices in Guatemala. You

will also have the opportunity to review our efforts to
promote economic development, poverty alleviation, democracy,
and rule of law, following the 1996 signing of the Peace
Accords, which put an end to the 36-year armed internal
conflict. The United States and Guatemala enjoy a cordial
bilateral relationship, and all indications are that that
will continue to be the case under President-Elect Colom, who
will take office in January.

Adoptions
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2. Guatemala is the second-largest source for babies adopted
by American parents, after China. Americans adopted over
4,500 babies here in FY2007, and the number increases every
year. The vast majority of adoptions are relinquishment
cases, in which a sole parent voluntarily waives all parental
rights. Legislation that would bring Guatemala into
compliance with the Hague Convention on International
Adoptions is pending before Congress, and may be passed this
year. Since the U.S. will become Hague-compliant on April 1,
2008, it is important that Guatemala approve its own
Hague-implementing legislation this year, in order to permit
continuation of adoptions to the U.S. Hague compliance will
ensure that the system provides safeguards for both the
children and the prospective parents.

Democratic Progress
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3. The United States and Guatemala have historically enjoyed
good relations. The United States is Guatemala's largest
trade partner, foreign investor, and assistance donor. The
United States is home to more than one million Guatemalans --
most of whom are there illegally -- who this year will send
back to Guatemala over $4 billion in remittances (equal to
12% of GDP). In 2007, DHS deported more than 20,000 illegal
Guatemalan immigrants, and U.S. immigration reform is a topic
of major interest here.


4. Trade and investment ties strengthened when CAFTA came
into force one-and-a-half years ago. Two-way trade has
increased 8.4%, and foreign direct investment has tripled.
GDP growth for 2007 is forecast at 5.6%, and year-on-year
inflation is 7.7%, due mostly to increasing oil and food
prices. Guatemala's conservative fiscal policy, with
deficits averaging only 1.5% of GDP, has resulted in public
sector debt that is among the lowest in the region.
Guatemala is working hard to qualify for a compact with the
Millennium Challenge Corporation.


5. Guatemala returned to democracy in 1986, and ten years
later signed the Peace Accords that ended 36 years of
internal armed conflict. Tens of thousands of persons were
killed (including U.S. Ambassador John Mein, assassinated by
Marxist guerrillas in 1968). The chronically under-funded
state is weak but trying to contend with enormous social
problems. According to the World Bank, Guatemala has one of
the most unequal income distributions in the hemisphere, and
a poverty rate of 51%.


6. On November 4, Alvaro Colom of the National Union for
Hope (UNE) Party won a runoff presidential election against
retired General Otto Perez Molina, with 52.8% of the vote.
His inauguration is scheduled for January 14. Colom, who
defines himself as a Social Democrat, is a successful
businessman whose vocation for addressing Guatemala's
pressing problems of pervasive poverty and the social
exclusion of the large indigenous population led him to get
into politics. Despite his upper-middle class background, he
has extensive experience with indigenous communities and
rural development. He seeks to continue Guatemala's good
relations with the United States, and has kept a distance
Qrelations with the United States, and has kept a distance
from Latin American leaders such Venezuela's Hugo Chavez and
Cuba's Fidel Castro. Colom's UNE has more seats in
Guatemala's fractured Congress than any other party, but is
nonetheless short of a majority. Striking alliances with
opposition parties will therefore be key to advancing the
government's agenda.

Berger Leaving a Promising Legacy
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7. The Berger Government is working hard to ensure a
successful transition to the new Colom administration. The
incoming and outgoing administrations are committed to
ensuring that successful initiatives, such as tax reform and
sound macro-economic management, are not interrupted by the
transition. President Oscar Berger took office in January
2004, elected by a center-right coalition (GANA). A former
businessman and Mayor of Guatemala City, President Berger
brought to his administration a cadre of respected and proven
leaders with credibility and integrity. The Berger
Administration has advanced a broad set of reforms that have
improved transparency and accountability, spurred economic
growth, increased investment in education and health,
advanced public administration reform, and secured vital
legislation necessary for more effective administration of
justice. These achievements reflect the Administration's
success in building political momentum for reform among civil
society, the private sector, and even among disparate
political parties.


8. Despite the Berger Administration's progress on many
other fronts, the security situation remains critical. Gangs
and narcotraffickers are responsible for much of the current
crime wave, and Guatemala remains a major conduit for
northbound cocaine and heroin. The National Police are
widely viewed as corrupt and ineffective; citizens at times
take the law into their own hands. In order to combat
organized crime and official complicity and corruption, the
Congress approved installation of the UN's International
Commission Against Impunity in Guatemala (CICIG). CICIG's
international prosecutors and investigators will buttress
weak security organizations. The Army, which most
Guatemalans hold in relatively good regard, revamped its
doctrine to emphasize respect for human rights, external
threats and international peacekeeping. Guatemala has been a
reliable partner in UN peacekeeping missions, maintaining
troops in Haiti and Congo, and operating a school for Central
American peacekeeping forces. U.S. security assistance to
the Guatemalan military remains limited, however, since bans
on FMF and IMET imposed in 1990 remain in place.
Derham