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Guatemala puts Reforms on Hold in the Wake of Earthquake

November 27, 2012

by Nic Wirtz

The aftershocks from Guatemala’s largest earthquake since 1976 continue to reverberate around the country, causing a halt to governmental efforts to introduce constitutional reform.

In August, President Otto Pérez Molina went to Congress with a list of 35 proposed constitutional reforms covering everything from the mining industry to educational reform. This prompted countrywide protests, leading to the deaths of six civilians in Totonicapán.

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On a visit to San Marcos, the area most affected by the 7.2-magnitude earthquake on November 7, Pérez Molina announced that the Q200 million ($25.2 million) that was to be spent on constitutional reform will be set aside to help with the earthquake recovery.

The sheer scale of the earthquake is only just being felt, with 3.4 million people affected by it and 225 aftershocks ranging from 3.5-6.1 on the Richter scale in the past three weeks. At its peak, over 30,000 people were evacuated from their homes. 

Although there were far fewer than the 23,000 victims in 1976, with 44 official deaths, there are many reported missing and La Coordinadora Nacional para la Reducción de Desastres (The National Center for Disaster Reduction—CONRED) believes that the death toll could rise.  Tragic stories of an entire family of 10 being buried together and of the six-year-old boy on his school holidays killed while “working” at a quarry with his grandfather and uncle dominated international media. The last victim found was 22-year-old Wilfredo Geremias Adriano Fuentes. Rescuers were alerted to his body by Fuentes’s dog, which had not left the site for over a week and was attempting to dig up his master.

Any good feeling that was built up by decisive action in the aftermath of the earthquake was balanced out by an unseemly Twitter row involving Vice President Roxana Baldetti and El Fondo Nacional para la Paz (The National Foundation for Peace—FONAPAZ) Director Armando Paniagua. Three house prototypes have been designed to replace those that were lost or marked for demolition after the earthquake; one such model was described as a “Casa Tipo Baldetti” (“Baldetti-type house”).  After a furious reaction on social networks, the vice president protested her innocence and FONAPAZ claimed there had never been an order to call the houses “Baldetti-type houses.”

However, as the nation swung into a much-practiced emergency mode, the decision to put a halt to the constitutional reforms garnered local media attention.  Protests were not confined to students taking over schools to complain about proposed education reform. The business community has been voicing its discontent about new changes to the tax system, a new customs act that goes into force in January and a variety of industry-specific changes.  Main concerns are the speed of which the laws are proposed—although they can be delayed in Congress for years—as well as the lack of consistency in enforcement from government to government.

The four constitutional areas marked for change were policy improvements, reinforcing the justice and security system, reinforcing taxation and finance, and promoting transparency and accountability.  Some recommendations, such as increasing the budget of the judicial system from 2 percent to 4 percent of GDP, are to be welcomed.  Recent improvements in the Public Ministry’s ability to investigate and try major cases will be further enhanced by an additional 1 percent of national funds.  However, some observers are concerned about the administration of judicial and security issues, and which executive branch will maintain overall control over them.

At the heart of Guatemala’s economic woes, including a widening trade deficit and increasing foreign debt, is a tax collection system that receives income similar to that which is collected in Haiti. With its natural resources and closer proximity to the all-important North American market, Guatemala is considerably richer than its island counterpart. Although they both suffer considerably from natural disasters, Guatemalans’ reluctance to pay any form of tax is rooted in a suspicion of authority and widespread corruption. Tax revenue was set at 12 percent of the GDP in the 1996 Peace Accords, but is more of a fantasy than a reality, given that Congress has managed to postpone its implementation ever since.  The result is a series of increasingly creative ways to wheedle money out of a population that reluctantly accepts taxes as obvious state revenue generating systems, but avoids income tax collection.

One significant proposed change to Guatemala’s tax collection system was an attempt to enhance taxation on mining rights and approve oil drilling in Guatemala.  Currently, the State receives 1 percent of all profits from mining; the proposed change was to increase this to 40 percent ownership or equity in any natural resource exploitation.  The Committee on Agriculture, Commerce, Industry and Finance (CACIF) resisted this change, and an amendment watered down the wording.  Mining remains an explosive issue in Guatemala after 300 protestors in Mataquescuintla hijacked five mining trucks filled with explosives and set fire to them last week.  Residents in Santa Cruz Barillas are continuing to fight against perceived injustices following riots in May of this year.  Some locals who were arrested during the unrest are still awaiting judicial hearings.

With Guatemala’s recovery efforts ongoing, it faces a challenge it has learned to deal with – that of restoring homes and infrastructure with little to no money available in the public coffers.

Positioned in the middle of three structural faults, Guatemala will always be at risk of a major natural disaster. As Pérez Molina’s government is finding out, attempting to change the country’s internal structures is equally as difficult, with so many competing factions and a population still coming to terms with its recent history.

Tags: Guatemala, Central America, Earthquake

To speak with an expert on this topic, please contact the communications office at: communications@as-coa.org or (212) 277-8384.
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