GUATEMALA'S PUBLIC TRANSPORTATION DILEMMA

UNCLAS GUATEMALA 000775

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ELTN ENRG PGOV SNAR KCRM KCOR ELAB ECON GT
SUBJECT: GUATEMALA'S PUBLIC TRANSPORTATION DILEMMA

REF: A. GUATEMALA 135

B. GUATEMALA 644


1. (U) Summary: Soaring gasoline prices, increased violence
against bus drivers, and protracted talks of a fare increase
are among the factors placing Guatemala's public
transportation system under increasing strain. Bus owners
demand greater government subsidies to offset their
increasing expenses, while drivers want more police
protection. Passengers have been forced to rely on buses
that are poorly maintained and regulated and prone to
accidents. Government officials and organizations
representing the interests of urban bus companies, bus
drivers, and passengers outlined the competing demands that
make it difficult for the government to act. End Summary.

Rising Gasoline Prices
--------------

2. (SBU) In meetings with poloffs, government officials and
union representatives opined that soaring gasoline prices
could lead to social unrest as bus owners and drivers
threaten to increase fares in order to offset their
increasing operating expenses. According to Luis Gomez, Vice
President of the Association of Urban Bus Companies (AEAU),
which represents bus owners, the bus fare should be increased
by four times the current rate to allow owners to cover their
expenses. Previous attempts to increase the bus fare have
led to localized unrest, as in April 2000 when five people
were killed during violent protests in the capital over an
authorized fare increase. The GOG retracted the fare
increase in response to the protests.


3. (SBU) In a country where the poverty rate is 51 percent,
even a slight increase in the bus fare can significantly
impact the ability of Guatemala's poorest citizens to cover
their basic needs. Gomez believed that politicians would not
risk riots by raising rates. Congressman Noe Orellana,
President of the Communications, Transportation, and Public
Works Committee of Congress, agreed with that assessment.

Gang Extortion
--------------

4. (SBU) Rising gasoline prices and increased criminal
activity and violence on public buses make bus drivers one of
the groups most affected by Guatemala's transportation
dilemma. According to Victoriano Zacarias, Secretary General
for the Guatemalan Drivers Union, a union representing public
transport drivers, bus drivers do not receive a fixed income,
medical insurance, paid vacation, or any of the other
benefits usually afforded to workers. In addition, bus
drivers must pay out of their own pocket the daily rental
fee, gasoline and maintenance expenses, their conductors'
salaries, as well as an extortion commonly known as a "war
tax" to gang members. To compensate, drivers often charge
passengers more than the authorized fare. There is no system
in place to protect passengers from unauthorized fares,
although in recent weeks the transit police have been
imposing fines on bus drivers that engage in such practices.


5. (SBU) A growing concern among unions representing bus
drivers is the increasing level of violence on public buses
(ref A). AEAU's Gomez indicated that in 2007, 43 drivers
were killed in Guatemala City, and that 20 have been killed
already this year. While some were robbed, most were killed
because they did not pay the extortion demanded by gang
members. According to union leader Zacarias, economic
necessity forces drivers to work even the most dangerous
routes, where members of the 18th Street Gang and Mara
Salvatrucha (MS-13) regularly patrol. According to Edgar
Guerra, President of the Association of Urban and Suburban
Passengers (AUTUE),gang members transport drugs on certain
QPassengers (AUTUE),gang members transport drugs on certain
routes, sometimes with the bus driver's complicity, further
complicating the security situation.


6. (SBU) GOG officials and association representatives all
agreed on the need for a pre-paid fare card system. The
pre-paid card would prevent the need for drivers to work with
cash and help reduce the incidence of violence against
drivers. Passengers would go to pre-established sites to
credit their bus cards, and an electronic system in each bus
would then debit the correct fare. Guerra estimated that the
system could be implemented in all 3,000 buses in the capital
in two years. He said that the bus owners should cover the
additional costs.

Government Subsidies: Where's the Cash?
--------------

7. (SBU) Government subsidies are intended to cover bus
owners' expenses while maintaining the current passenger
fare. According to bus owners, the current fare is not
sufficient to cover operating costs. Bus owners had also
expressed concern that the monthly subsidy of Q25 million
(USD 3.36 million) was not enough to cover their expenses.
On June 12, in response to bus owners' demands, the GOG
authorized an additional Q8 million (USD 1.1 million) in
monthly subsidies. Passengers, however, cite lack of
accountability and corruption in the transfer of government
subsidies as factors that undermine the quality of public
transportation. According to AUTUE's Guerra, all transfers
of the subsidies are in cash and there are no effective
controls. The GOG reportedly has been unable to reconcile
more than Q300 million (approximately USD 40 million) in
authorized subsidies between 2005 and 2006, and documents
showing the receipt of those funds have disappeared.


8. (SBU) While bus owners receive monthly subsidies for each
bus, the GOG does not have a mechanism to effectively verify
that the buses are actually circulating or that the subsidies
are appropriately spent. According to Marco Antonio Arango,
Deputy Director of the Transportation Directorate in the
Ministry of Communications, there are only 12 inspectors to
verify that the estimated 3,000 buses in Guatemala City are
operating at least 26 days per month, as mandated. Guerra
recommended increasing oversight with the use of a GPS system
to ensure that buses receiving subsidies are in circulation.

"Only God Knows Whether I'll Get There"
--------------

9. (SBU) An association representing passengers highlighted
deficiencies in customer service and demanded a safe and
effective public transportation system. Guerra accused bus
owners of importing abandoned second-hand buses from the
U.S., barely repairing them, and using them for public
transportation so that owners can receive government
subsidies without investing in improving the transportation
system. The result, he said, is that passengers are
"shuttled like cattle" in overcrowded buses with broken seats
and glass-less windows. Prayers and slogans painted on the
back of buses, such as "Only God Knows Whether I'll Get
There," reinforces passengers' sense of insecurity.

The Wheels on the Bus
--------------

10. (SBU) While local law stipulates that buses older than
20 years cannot operate, bus owners often do not comply with
this law. A study completed by Guerra's organization found
that of the 3,000 buses operating in Guatemala City, 80
percent were in poor condition. According to Transportation
Directorate Deputy Director Arango, more than 8,500 buses
nationwide operate without the required insurance that would
compensate passengers in case of injury. Many drivers do not
comply with speed limits. According to Guerra, an estimated
15 percent of bus drivers do not even have licenses and some
drivers are as young as 14. Arango added that bus drivers
can easily obtain fraudulent licenses.


11. (SBU) On February 29, 56 passengers died in an accident
reportedly caused by the bus driver's excessive speed,
overcrowding on the bus, and perhaps faulty brakes.
Corruption may also have been a factor. According to press
reports, the former Deputy Director of the Transportation
Directorate approved a circulation license for the bus,
although the bus did not comply with legal requirements. The
current Director of the Transportation Directorate, Augusto
Marroquin, acknowledged that there is corruption in his
agency. Congressman Orellana urged the Transportation
Directorate to fire several employees, including inspectors.
As a result, the Transportation Directorate canceled two
QAs a result, the Transportation Directorate canceled two
employees' contracts and is conducting investigations on
several others.

Comment
--------------

12. (SBU) Guatemala City authorities are apparently
contemplating a dramatic shift in the city's public
transportation system. The proposal being considered would
involve replacing the entire city fleet with new gas
propelled buses imported from China. Supposedly the fuel
savings over a seven-year period would be sufficient to pay
for the buses. The buses would operate with a pre-pay system
and would presumably be more environmentally sound. The GOG
proposal sounds attractive, but questions remain as to how
the fuel savings would be channeled to pay for the buses as
well as questions regarding the logistics of switching from
diesel to gas-operated units.


13. (SBU) Guatemala's ramshackle public transportation
system is a danger to its users and a source of public
frustration. With gasoline prices soaring and bus owners and
drivers both demanding that the GOG take measures to lower
operational costs, the situation remains volatile. Ensuring
transparency and the proper use of subsidies and the
implementation of a pre-paid fare card system could decrease
the incidence of violence and extortion. Stricter
enforcement of penalties against bus companies and drivers
who violate the law as well as effective monitoring could
reduce the number of bus accidents and regularize bus fare
collection. The GOG's decision to authorize additional
subsidies is a temporary palliative, since by September 1 the
Executive would have depleted the funding authorized by
Congress to cover subsidies. Subsequent government action
could have both a social and economic cost. Should the
government approve fare increases, riots by consumers also
squeezed by rising food prices are likely. Alternatively,
should the government not approve fare increases, bus drivers
may strike with increasing frequency, putting the brakes on
the economy.
Derham