A/S SHANNON'S MARCH 19-21 VISIT TO GUATEMALA

S E C R E T GUATEMALA 000311

SIPDIS

E.O. 12958: DECL: 03/23/2018
TAGS: PREL ECON SNAR CVIS PGOV PHUM UN HO ES CU GT
SUBJECT: A/S SHANNON'S MARCH 19-21 VISIT TO GUATEMALA

REF: A. GUATEMALA 222

B. GUATEMALA 170

C. GUATEMALA 239

D. GUATEMALA 265

E. GUATEMALA 134

F. 2008 GUATEMALA 1550

G. 2008 GUATEMALA 387

Classified By: Pol/Econ Counselor Drew Blakeney for reasons 1.4 (b&d).

Summary

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1. (C) During his March 19-21 visit to Guatemala, WHA
Assistant Secretary Shannon met with President Colom, other
senior members of government, CICIG Commissioner Castresana,
and representatives of civil society, press, and the business
sector. Colom said Guatemala's fiscal conservatism would
help it weather the global economic crisis, but that the
economy is vulnerable to weakening export markets and slowing
remittances. Enhanced counter-cyclical assistance from IFIs
could help limit the social and political impact of the
economic crisis. Also discussed were the security
environment and counternarcotics assistance, including the
Merida Initiative. CICIG Commissioner Castresana sought
support for extension of CICIG's mandate, and addressed
worrisome developments on the security front. End Summary.


Meeting with President Colom

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2. (SBU) President Alvaro Colom opened his meeting with
visiting WHA Assistant Secretary Tom Shannon by confirming
his attendance at the March 30 meeting with Vice President
Biden in Costa Rica. He thanked Assistant Secretary Shannon
for USG counternarcotics assistance and specifically for the
Merida Initiative, and lauded President Obama's announcement
that his administration would pursue immigration reform. A/S
Shannon said counternarcotics and economic issues would be
priorities at upcoming meetings with Vice President Biden as
well as at the Summit of the Americas.

Economic and Regional Developments

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3. (C) The USG is looking at how it can help the most
vulnerable Latin American countries, specifically those of
Central America and the Caribbean, weather the global
economic downturn, A/S Shannon said. Colom said that
Guatemala's traditional fiscal conservatism had positioned it
fairly well, but the country's principal export markets --
the U.S. and Central America -- are being hit hard.
Additionally, Guatemala's economy is vulnerable to
diminishing remittances from the U.S. A/S Shannon said the
USG was working with International Financial Institutions
(IFIs) to help the most vulnerable countries ensure that the
economic crisis does not become a social and political one.
The region will have many elections in 2010, and it will be
important that the resulting governments not be the product
of voters' economic desperation. Colom urged the USG and
other participating countries to recapitalize the
Inter-American Development Bank (IADB). Colom said economic
issues would dominate the upcoming Summit of the Americas,
and that President Obama would be "the star of the summit."
Regarding El Salvador, A/S Shannon opined that the FMLN was
better positioned than ARENA to manage the serial
consequences of the downturn due to the FMLN's strong
organization in El Salvador's poorest communities. Colom
said he was deeply worried by Daniel Ortega's erratic
leadership in Nicaragua. Turning to his recent visit to
Cuba, Colom said his decision to bestow the Order of the
Quetzal on Fidel Casto had been "a huge mistake."


4. (C) Turning to human rights, Colom mentioned civil
society and state efforts to gain access to military
Qsociety and state efforts to gain access to military
archives, and said the state needs to develop better
mechanisms for exploiting state security force archives in
support of investigations into conflict-era crimes (ref a).
Colom mentioned that the Army is recruiting 2,000 more
soldiers in order to strengthen state control in areas under
threat from narcotraffickers.

Discussion with Senior Security Leaders

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5. (C) The Ambassador hosted a security issues meeting for
A/S Shannon with Minister of Government Salvador Gandara,
Attorney General Amilcar Velasquez, Minister of Finance
Alberto Fuentes Knight, and Coordinator of the National
Security Council Francisco Jimenez. Attorney General
Velasquez said the current Extraditions Law hamstrings
authorities by requiring that foreign nationals be tried
first in Guatemala for any crimes committed in the country
prior to extradition. CICIG was working with Congress on
draft legislation that would change that. Minister Gandara
said the press were to blame for misconstruing his public
comments about remitting approximately USD 35 million to the
Treasury because the police did not need additional
equipment, and there were pressing needs at other ministries.
In fact, he said, he had to return the money -- which had
been earmarked for police salaries -- because the Ministry
had been able to hire only 4,800 new police officers, rather
than the planned 10,000. NSC Coordinator Jimenez said
consensus on the need for specialized courts to deal with
organized crime cases was emerging (ref b). AG Velasquez
urged the Assistant Secretary to support extension of CICIG's
mandate, which is currently due to expire in September (ref
c).

More Unconditioned Financial Assistance Needed

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6. (U) Minister of Finance Fuentes Knight told A/S Shannon
that Central American countries need more counter-cyclical
assistance resources with fewer conditions attached. Too
much of donors' (U.S., Germany, Taiwan, Japan, and others)
assistance ebbed and waned in line with global economic
conditions. More IFI resources were needed. Minister
Fuentes opined that the current recession would get much
worse in Central America (ref d). Gangs and
narco-trafficking were always a temptation for poor young
people, and could be relatively more attractive as Guatemala
begins to feel the full effects of the global downturn. Tax
revenues were already falling in line with decreasing
economic activity, which would in turn further weaken the
state's inadequate social safety net, Minister Fuentes said.

Meeting with CICIG Commissioner

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7. (S) CICIG Commissioner Castresana told Assistant
Secretary Shannon that CICIG's lawyers and the GOG's
disagreed about whether the Guatemalan Congress would need to
approve a two-year extension of CICIG's mandate. CICIG
thinks it does, but the GOG intends to renew via an exchange
of diplomatic notes with the UN. (Note: Earlier in the day,
Foreign Minister Rodas told A/S Shannon that CICIG's mandate
can and will be extended via an exchange of diplomatic notes
with the UN. End Note.) Castresana said that immediate
congressional approval would be politically useful because he
will soon announce indictments of former President Alfonso
Portillo and several former senior military officers for
corruption. He anticipated that would earn him many enemies
in Congress. Castresana said he also soon would have major
announcements in the case against former Chief Homicide
Prosecutor Alvaro Matus (ref e) and the Nicaraguan bus
murders case (ref f).

CICIG's Security Concerns

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8. (S) Targeted criminals so far are opposing CICIG's
efforts mostly in the courts, Castresana said, where they
currently have the upper hand. If their legal defenses
falter, those under CICIG investigation might next resort to
a public campaign to disparage CICIG. Only if that too fails
does Castresana believe that the next step might be violence,
first against CICIG's Guatemalan collaborators and perhaps
then against himself and his staff. Noting that the state
has yet to provide adequate security for its own public
servants, Castresana said that he feared for the security of
Qservants, Castresana said that he feared for the security of
Organized Crime Chief Prosecutor Rony Lopez and Police Chief
Marlene Blanco. He said Attorney General's Office needs $4
million for armored vehicles and other protection for its
staff; the bill for hardened courts that would try organized
crime cases would be higher. It will be important to get
clean magistrates elected to the Supreme Court (the election
must be held NLT Sept. 12),Castresana opined. In response
to A/S Shannon's question about Mexican narcotraffickers'
penetration of the state, Castresana said Guatemalan
traffickers had initially thought they could form
partnerships with the Mexican traffickers, but that the
Mexicans are now taking over, as was graphically demonstrated
by the March 2008 narco-massacre in Zacapa (ref g). The
Guatemalan traffickers are now being forced to loan to the
Mexicans their entire infrastructure -- police, prosecutors,
judges, and Members of Congress. Castresana thanked A/S
Shannon for the USG's and the Embassy's strong operational,
financial, and political support. He said he enjoys good
relations with President Colom and correct relations with
MinGov Gandara and AG Velasquez; the tremendously corrupt
courts -- including the Supreme and Constitutional Courts --
are the weakest links.


9. (U) WHA Assistant Secretary Shannon cleared this message
prior to transmission.
McFarland