STRONG STATE INSTITUTIONS ARE KEY TO GUATEMALA'S

C O N F I D E N T I A L GUATEMALA 001337

SIPDIS

E.O. 12958: DECL: 10/27/2018
TAGS: ECON PGOV PREL GT
SUBJECT: STRONG STATE INSTITUTIONS ARE KEY TO GUATEMALA'S
ECONOMIC PROSPERITY

Classified By: Pol/Econ Officer Mordica M. Simpson for
reasons 1.4 (b&d).


1. (U) Summary: On October 14, the Foundation for the
Development of Guatemala (FUNDESA) hosted its fifth annual
meeting of the National Encounter of Businessmen (ENADE).
Representatives from all sectors, including Colombia's former
President Pastrana, emphasized the important role that strong
state institutions and social responsibility have on security
and a productive economy. Finance Minister Fuentes Knight
outlined the GOG's five principle strategic challenges and
President Colom also addressed the audience in a speech that
covered the government's Pro-rural program, job losses, and
rumors of a military overthrow. End Summary.


2. (U) Over 2000 guests attended ENADE's annual business
forum, including senior members of the Colom Administration,
influential business leaders, and former President of
Colombia Andres Pastrana. In his opening address, Edgar
Heinemann, President of FUNDESA, highlighted the global
financial crisis and the lack of confidence that Guatemalans
have in their state institutions as the two greatest threats
to the country's economic stability. Heinemann also stated
that corruption and crime have negatively affected
Guatemala's GDP, setting the tone for subsequent speakers who
also discussed the negative impact of weak institutions and
corruption on Guatemala's prospects for economic growth.
Jose Pivaral, President of the CACIF (Coordinating Committee
of Agricultural, Commercial, Industrial, and Financial
Associations),cited fiscal discipline including control over
public spending and social policies such as gang
rehabilitation programs as essential for Guatemala's economic
growth.


3. (U) Former President of Colombia Andres Pastrana
(1998-2002) credited Plan Colombia - initiated during his
administration - as the greatest influence in helping his
country leave the list of "failed states." According to
Pastrana, Plan Colombia helped Colombia confront challenges
that Guatemala faces today, such as narcotrafficking, a weak
judiciary, and the need for a professional ARMY and police
force. Pastrana also emphasized that improved access to
education and technology is critical to Guatemala's
development and described Guatemala's low levels of
educational attainment as "worrisome."


4. (U) Finance Minister Fuentes Knight enumerated the
following five principle strategic challenges for the GOG:

-- guaranteeing macroeconomic stability;

-- strengthening competitiveness;

-- supporting energy generation and food production;

-- promoting social cohesion, citizen security, and equality
of opportunity; and

-- promoting fiscal modernization.

According to Fuentes Knight, confronting these challenges is
essential for Guatemala's economic growth and ability to
successfully compete in the world economy.


5. (SBU) In a long and meandering address, President Colom
emphasized the important role of the business community to
Guatemala's economic prosperity and highlighted that there
have been 47 government-private sector dialogue tables since
January tasked with reconciling policy differences between
the two sectors. According to Colom, his administration will
focus on a policy of "human development with economic
responsibility." He highlighted the importance of the GOG's
Pro-rural program, which is designed to improve agricultural
productivity for farmers in the poorest municipalities, as
illustrative of this policy. In a comment that caused
illustrative of this policy. In a comment that caused
whispers from the audience, Colom challenged the business
elite to do more to help Guatemala's impoverished population,
stating that "it is not worth it to be a millionaire in a
country where people are starving." Colom dismissed press
reports of 200,000 lost jobs as incorrect and stated that
while some jobs have been lost, 109,000 new jobs have been
created. Colom also dismissed rumors of a military
overthrow, stating that such an occurrence would be condemned
by the international community.


6. (C) Comment: Colom's recognition of the important role of
the business community in promoting Guatemala's economic
growth was a clear olive branch, given the audience of
business owners. However, Colom's meandering speech that
wandered from technical details of a large national park
project (Cuatro Balam) to vigorous denial of coup rumors,
gave the overall impression of a leader searching for an
agenda. There are no credible rumors of a military coup.
Colom's mention of the topic was probably a bid for sympathy.
End Comment.
McFarland