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Perez ‘Iron Fist’ Election Pledge May Deepen Guatemala Drug War

By Eric Sabo
November 04, 2011 2:00 AM EDT

Former General Otto Perez Molina is likely to win Guatemala’s presidency on a pledge to wield an “iron fist” against drug cartels, a policy that may escalate Mexican-style violence in the Central American nation.

Polls show Perez leading Congressman Manuel Baldizon by about 10 percentage points before the Nov. 6 runoff vote, with more than 80 percent supporting a hard-line stance on crime. Perez won the first round on Sept. 11 with 36 percent of the vote, while Baldizon had 23 percent.

Mexico’s drug-fueled violence is flooding south with two of its most deadly gangs, the Zetas and Sinaloa, now holding sway over entire jungle townships in Guatemala, according to U.S. officials. With drug violence escalating and foreign investment stagnating, Perez’s pledge to step up the role of the army has garnered support, just 15 years after the end of military rule and a civil war that left 200,000 dead.

“This is a strategy born of desperation” and may backfire, said Eric Farnsworth, vice president of the Council of the Americas in Washington, who was part the U.S. delegation that worked with Perez to reduce the size of the armed forces after the 1996 peace accords. “It’s a mark of utter failure by Guatemala’s institutions that people are seriously talking about bringing the military back.”

Perez, who heads the ticket for the Patriot Party, was backed by 55.1 percent of those surveyed Oct. 8-17 by Guatemala City-based Borge y Asociados, compared with 44.9 percent for Baldizon. Almost 82 percent said they support Perez’s “mano dura,” or iron fist, approach to crime, according to the survey of 2,016 people. The poll didn’t give a margin of error.

Economic Impact

Foreign direct investment into the country of 14.4 million will stagnate this year at about $668 million, after rising 22 percent in 2010, according to the International Monetary Fund. The economy, Central America’s biggest, will expand 2.8 percent in 2011, the second slowest pace in the region after El Salvador, the institute said in an Oct. 5 report.

Companies say that security accounts for 13 percent of their costs, according to an April survey by the Association for Research and Social Studies, based in Guatemala City. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, runs the Marlin mine in western Guatemala, while Perenco SA, a closely held French oil company, owns oil concessions in the northern state of Peten.

Yields on the country’s 30-year bonds have risen 33 basis points, or 0.33 percentage point, to 6.39 percent this year, according to data compiled by Bloomberg. Guatemala’s currency, the quetzal, has weakened 2.4 percent to 7.83 a dollar.

Civil War

“Throwing the army into this is dangerous,” said Steven Dudley of InSight Crime, a Washington-based security research group, citing a history of human rights abuses and a lack of training.

During the 36-year civil war, the military destroyed areas being used by Marxist and Mayan guerillas. In its 1999 findings, a United Nations-sponsored truth commission said that witness accounts showed the government conducted genocide.

Perez, 61, who headed military intelligence during the latter stages of the civil war, vows to create special units including soldiers to combat drug cartels.

“Many have the view that it’s the military that is going to restore law and order,” said Adriana Beltran, an analyst at the Washington Office on Latin America. “But what does the iron fist mean? Is he going to strengthen the police under a democratic vision or as part of a military doctrine?”

Respect the Law

Perez told the online publication Plaza Publica in July that the army has experience battling drug traffickers and is better at weeding out corruption in its ranks than the police.

The iron fist policy “does not set out to kill the criminal,” he told the Guatemala City-based publication. “It’s to respect and enforce the law.”

Requests for an interview Perez through his spokeswoman, Clariza Castellanos, were unsuccessful.

Standard & Poor’s put Guatemala’s credit rating on negative watch in August, citing low tax revenue and pressures to increase security spending. The company rates the debt at BB, two levels below investment grade. President Alvaro Colom is prohibited by from seeking a second, consecutive four-year term.

Bringing in the army hasn’t proved a solution to Mexico’s violence, where as many as 40,000 people have been killed since President Felipe Calderon declared war on the cartels in 2007.

Now Mexican gangs including the Zetas, Sinaloa and Gulf cartels are battling for drug routes in northern Guatemala, said InSight Crime’s Dudley. The government blamed the Zetas for the killing of 27 ranch workers in May.

‘Ideal Haven’

Guatemala’s location and weak law enforcement make it an “ideal haven” for drug traffickers moving cocaine from South America to the U.S., according to a State Department report in March, which said cartels now control entire towns.

The country already has a murder rate of 46 per 100,000 inhabitants, almost four times higher than Mexico, according to the World Bank.

“Given the shadows that haunt Perez’s past, his promise to govern with an iron fist does not bode well for Guatemala,” said Daniel Wilkinson, deputy director for the Americas division of New York-based Human Rights Watch and author of “Silence on the Mountain,” an account of Guatemala’s civil war.

To contact the reporter on this story: Eric Sabo in Panama City at esabo1@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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