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From issue: China's Global Rise: Implications for the Americas (Winter 2012)

AQ Feature

Guatemala's Military Man, Nicaragua's Revolutionary

The newly elected leaders of Guatemala and Nicaragua are familiar. So are the problems they face.

Guatemala and Nicaragua, two Central American nations grappling with uncertain futures, chose starkly different paths in the November 2011 elections. Their presidents, both inaugurated in mid-January, will face challenges—some of their own doing—in an unstable region with scant resources, fragile public institutions, and the constant threat of organized crime.

Guatemala swore in a hardline former army general as president, the first time that a former military officer has taken power since the end of military rule in 1986. Otto Pérez Molina, 61, of the conservative Partido Patriota (PP), battled leftist guerillas during a 36-year civil war and skated to victory (winning by over 7 percentage points) in a runoff election against Manuel Baldizón of the Libertad Democrática Renovada (LIDER) party. Pérez Molina’s victory represents a swing to the Right after his soft-spoken predecessor—Álvaro Colom, who defeated Pérez Molina in the 2007 election runoff—served as Guatemala’s first left-leaning president since 1954. (Guatemala’s constitution does not allow for reelection.)

Nicaraguans reelected Daniel Ortega of the Frente Sandinista de Liberacion Nacional (FSLN) for a second consecutive and third overall term. Ortega, a socialist revolutionary who changed the constitution to permit reelection, has won over voters with a populist message to help the poor. He was helped by a decidedly uneven electoral playing field in which state-owned and pro-government media gave the president overwhelming coverage and state social programs were portrayed as party patronage. Ortega’s campaign and presidency have been punctuated by Marxist slogans and discourse reminiscent of Fidel Castro in Cuba and Hugo Chávez in Venezuela—two leaders that Ortega honored in his victory speech. Over the next five years, Nicaraguans can expect more of the same.

What Awaits Pérez Molina and Ortega

The two newly inaugurated Central American presidents come from opposite ends of the ideological spectrum, but both must find ways to improve socioeconomic conditions.

For Guatemala, the chief challenges are improving security, reducing inequality and generating opportunities that deter at-risk citizens from a life of crime. Nicaragua has yet to experience violence comparable to its neighbors in the Northern Triangle (Guatemala, Honduras and El Salvador), but persistent inequality remains a major challenge. Ortega’s international legitimacy is also a lingering question. While observers recognized the election results, they qualified the election process as “tainted” and riddled with “irregularities” and “anomalies.”

In Guatemala, Pérez Molina’s victory did not come with asterisks. The former general, who entered politics in 2001 and founded the PP after hanging up his decorated military uniform, enters the presidency with a bold legislative agenda. But with only 58 coalition lawmakers in the 158-member unicameral congress, he is well short of the two-thirds majority (105 legislators) needed to swiftly push through reforms. That means the Guatemalan president will look to form alliances with other conservative parties and seek to lure centrist lawmakers to the PP ranks. In doing so, he will face fierce opposition from a Left still sour over losing the presidency.

Pérez Molina campaigned on a mano dura (iron fist) platform, promising to crack down on crime in one of the world’s deadliest nations. “I am going to work tirelessly for security, for a safe country and for a prosperous and secure Guatemala,” Pérez Molina told a cheering throng of supporters dressed in Partido Patriota orange just hours after the election. Still, the myriad problems and obstacles that have stalled progress in Guatemala will test the president’s campaign promise that “change is coming.”

Passing the torch: Outgoing Guatemalan President Álvaro Colom with Otto Pérez Molina. (Rodrigo ABD/AP)
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Ortega will not face the same domestic political constraints as his Guatemalan counterpart. He enters his third term without congressional opposition. Given the outcome of the November elections, Ortega will enjoy a legislative super-majority in which the FSLN will control 63 seats in the 92-member unicameral congress. Without the need for support from opposition parties to change the constitution, Sandinista opponents and international observers have raised concerns about dictatorship.

Although Ortega said he won’t seek “dramatic changes” to electoral laws for his reelection, he already altered the constitution once in 2009.

The 66-year-old Nicaraguan president, who sports white, band-collared shirts and a black leather jacket, will continue to promote popular social programs in one of Latin America’s poorest nations. “If things are going well and we are getting results, why are we going to change?” Ortega said in his victory speech.

But security increasingly dominates the policy agenda in much of Central America, and Nicaragua and Guatemala are no exception.

The homicide rate in Guatemala has doubled since 2000, and while it has dropped slightly since 2010, it remains the seventh highest in the world at 38.6 murders per 100,000 people, according to January 2012 figures released by the Guatemalan Ministry of the Interior. Massacres and beheadings have become common as rival gangs battle for control in a country whose location makes it a key transit point for cocaine traffic to the United States.

Pérez Molina’s top priority and greatest challenge will be restoring order to this largely lawless country, where communities have lost faith in law enforcement and often take justice into their own hands. In 2011, more than 230 people were lynched or beaten in public squares by their neighbors, mostly in rural towns.

Pérez Molina has promised to slash Guatemala’s murder rate in half by the end of his four-year term through anti-crime policies that include legalizing phone taps, the creation of teams of undercover agents and adding 10,000 new police officers to boost the force to 35,000. The government will also train 2,500 new soldiers in the next four years.

Moreover, Pérez Molina pledges to dispatch Guatemala’s elite special forces, the Kaibiles, and teams of military paratroopers to battle drug cartels that have overpowered and corrupted an underequipped and underpaid police force.

Nicaragua, while so far avoiding the complete decay of public order, has seen an increase in criminal networks operating in and around its territory. The country is buffered by Costa Rica and Panama to the south and Guatemala, Honduras and El Salvador to the north, providing it some shelter from drug lords in Colombia and violent cartels in Mexico. Youth gangs known as Maras have wreaked havoc on Central America’s Northern Triangle, demanding extortion money and slaying those who don’t pay, are largely absent in Nicaragua, which has a murder rate that is nearly a quarter of its northern neighbors.

Ortega’s government proudly proclaims that soldiers have protected national borders and prevented cartels from entering. But organized criminals looking to prey on public institutions hollowed out by decades of civil war are increasingly interested in this Central American country. Tales of drug runners operating on Nicaragua’s Caribbean coast have already begun to surface.

To combat insecurity, both Pérez Molina and Ortega favor the Central America Regional Security Initiative (CARSI), a plan that would require Central America’s seven nations to swap information about criminals. They will look for guidance to Mexican authorities, who militarized the drug war in 2007, and will seek foreign donations to modernize outdated security equipment. Still, according to Bruce Bagley, a security expert at the University of Miami, “For the foreseeable future it’s going to get worse in all of Central America.”

This means that the answers go beyond direct security responses. For its part, the U.S. will continue to fund counternarcotics operations in Central America via regionwide measures like CARSI, but will also implore countries to boost domestic revenue to pay for security operations and increase police budgets, a goal that has so far proved elusive to governments in the region.

Beyond Security: More Challenges

Presidents Pérez Molina and Ortega must also address the underlying conditions behind the region’s rising crime: lackluster economic growth and inequality. “We are in dangerous territory,” said Mynor Cabrera, a Guatemalan economist. “Improving security, health and education won’t be possible without some kind of fiscal reform. Even if there were complete austerity, our resources are insufficient.”

At 11 percent of GDP, tax collection rates in Guatemala are among the lowest in the Americas. Tax evasion through contraband and unpaid sales taxes is estimated at $1 billion annually. Pérez Molina backs an anti-tax evasion bill that has been stalled in congress for years, encountering stiff opposition from the country’s powerful private sector. His goal: raise tax collection to 14 percent of GDP by 2016.

Meanwhile, the country’s debt is growing; it hit 25 percent of GDP in 2011 and the fiscal deficit is climbing toward 4 percent of GDP. The new president is hesitant to sell more government bonds or to raise taxes, but analysts see inaction as implausible. Instead, Pérez Molina will try to negotiate a new mining royalty regime which, at 1 percent, is currently the lowest in Latin America. He proposes a hike of up to 10 percent,  a figure that executives from foreign-owned gold and nickel mining companies have blasted as unprofitable.

While debt also threatens Nicaragua, its growth outlook is somewhat better. The economy grew slightly faster than that of Guatemala: 4.5 percent versus 3.5 percent in 2011.

Ortega’s close ideological ties to Hugo Chávez mean that the oil-rich Venezuelans pump millions in aid and oil money annually into Nicaragua, which, by way of a shady oil agreement, boasts the lowest gas prices in Central America. Under the development-cooperation provided under the Alianza Bolivariana para los Pueblos de Nuestra América—Tratado de Comercio de los Pueblos (Bolivarian Alternative to the Americas—ALBA), Nicaragua’s state-owned petrol enterprise purchases discounted oil from Venezuela, sells it and delivers the profits to the privately owned joint Venezuelan–Nicaraguan oil company Albanisa. Ortega has allegedly used the funds to finance social programs, but critics have denounced the lack of transparency surrounding the deal and fear he could secretly be amassing billions.

Surprisingly, the business community hasn’t fled due to Ortega’s unconventional style. Foreign direct investment is on the rise and Ortega will continue to forge partnerships with business leaders in hopes of attracting more investment and jobs.

The Root of the Problem: State Capacity

In both countries, weak national institutions remain a primary challenge. The international community will be watching closely as Guatemala fights to strengthen its justice system; in Nicaragua, judicial independence will increasingly falter the longer that Ortega remains in power.

A special apparatus, Comisión Internacional contra la Impunidad en Guatemala (International Commission Against Impunity in Guatemala—CICIG), was installed in 2007 to investigate serious corruption scandals and organized crime rings—and to train the nation’s investigators. Pérez Molina has vowed to continue the CICIG, so long as the commission establishes clear goals and deadlines before departing when its mandate expires in September 2013.

The CICIG has served as a crutch to public prosecutors, who often turn to the UN-backed commission for guidance in major cases. Headed by former Costa Rican prosecutor Francisco Dall’Anese, the CICIG has unearthed clues in landmark cases such as the bizarre tale of Rodrigo Rosenberg, a tax attorney who plotted his own murder in 2009 in an attempt to frame former President Colom. CICIG experts have also helped draft norms for the election of Supreme Court judges and reforms to the country’s weak anti-corruption laws.

But impunity still haunts Guatemala. Only 5 percent of crimes result in convictions.

In December 2010, Colom appointed a progressive and stern attorney general, Claudia Paz y Paz, who has been hailed as a savior both inside and outside Guatemala. A human rights professional, Paz y Paz gave priority to cases against war criminals from the country’s atrocious 1960–1996 civil war. Nearly 250,000 mostly Indigenous civilians were killed.

Since Paz y Paz’ appointment, authorities have arrested top military brass on genocide charges, including former generals and defense ministers. Human rights defenders worry that Pérez Molina, whose election has revived horrific memories of brutal right-wing leadership in Guatemala, could remove Paz y Paz from her post in an effort to block war crimes trials and protect his old army buddies.

Still, Pérez Molina, amid pressure from the U.S. and the UN, has hinted at allowing Paz y Paz to finish out her four-year term: “We think she is doing her job well and we have no reason to remove those who are doing their job well.”

In contrast, Ortega’s reach into the judicial branch will continue. The Sandinistas still have a majority in the Supreme Court. His cabinet will look the same as it has in the past, with positions filled by Sandinista sympathizers loyal to Ortega’s polarizing leftist proposals.

Nicaragua’s health and education ministries, key to Ortega’s subsidy-filled agenda, will receive the largest slice of the fiscal pie under the 2012 budget, which is nearly 15 percent higher than last year and includes plans to modernize hospitals and build 1,300 new homes for the country’s marginalized poor.

Promoting Social Programs

More than half of Guatemala’s population live in poverty. One out of every five children suffers from malnutrition and two-thirds of Guatemala’s land is in the hands of just 2 percent of the population. But Pérez Molina’s government will ignore land reform—the controversial issue that ignited the war—and proposals for the 2012 minimum wage will not cover the cost of the minimum monthly food basket for the nation’s poorest families.

Colom’s government laid the groundwork for Guatemala’s welfare programs. During his presidency, he and his ex-wife, Sandra Torres, launched the Bolsa Solidaria (Solidarity Budget)—a monthly food ration for the neediest families—and Mi Familia Progresa (My Family Progresses), a conditional cash transfer program to mothers to buy school supplies for their children and pay tuition.

Pérez Molina will continue these initiatives under his new ministry of social development, although he could change how the programs are administered. Pregnant mothers will receive priority under his plan and will be given basic food rations of rice, beans, corn, and cooking oil until their children turn two years old—the most crucial years of development.

He also will focus on pulling underemployed and informal workers, who make up 60 percent of Guatemala’s population, into the formal sector with plans to boost tourism and attract renewable energy companies. But increased training and education for the nation’s low-skilled, self-employed workforce is unlikely to bear fruit in his four-year mandate.

In Nicaragua, funds from Venezuela finance social programs that combat hunger and improve literacy. While the programs have helped, poverty and unemployment persist. Around 7 percent of Nicaragua’s 5.8 million citizens are jobless and nearly 70 percent of the population works in the poorly paying informal sector. The number of poor has dropped since Ortega took office in 2006, but 45 percent remain impoverished, 15 percent survive on one dollar per day and nearly 20 percent are illiterate.

Ortega will be under the microscope during the next five years and will look to expand his programs to include scholarships, housing, food rations, and medicine funded by Albanisa, before oil money from Chávez dries up.

The campaigns of Pérez Molina and Ortega laid out ambitious plans for improving their respective countries. But now comes the hard part for both leaders.

Pérez Molina’s popularity will depend on his ability to tackle crime, and his legacy will be measured by his response to wartime human rights abuses. He will need to tread delicately in congress if he doesn’t want to further isolate an agitated left looking to obstruct PP proposals in an effort to crush the party’s reputation. His 2012 budget falls short of what he needs to jumpstart his agenda and—with no motivation for reelection—his agendas for change could easily fall short.

Ortega will be judged on his ability to continue delivering social handouts. Any changes in the financial pipeline from his Venezuelan benefactors will threaten Ortega’s ability to realize his social agenda. Ultimately, sustainable, long-term progress will depend on creating an institutional framework—including an independent, nonpoliticized judicial system—that can effectively reach the neediest beyond his political clients and beyond the largesse of President Chávez.

Elections always bring hope of change. But in a region where optimism has frequently been curdled by reality, the differences in temperament, background and philosophies of the new leaders of Guatemala and Nicaragua will prove less determinative than the harsh challenges of the deeply entrenched problems they face—and the weak states they inherited.

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