Caribbean & Central America - 16 November 2004

GUATEMALA: Ex-PACs win compensation package

Central America 17 November 2004 Modified: 17 November 2004 711 views

Congress finally caved in to the former paramilitaries' (ex-PAC) demands on 3 November. Several thousand ex-PAC took to the streets, blocking the main arteries to the capital and access to ports and airports, to force the government to approve a controversial bill to 'compensate' them for their role during the country's bloody 36-year civil war.

President Oscar Berger has repeatedly vowed not to be held hostage by the ex-PAC's demands in the way that the former Frente Republicano Guatemalteco administration was. However, when push came to shove, and Berger threatened to send the security forces out to remove the blockades, congress was not prepared to take a chance. Legislators hastened through a bill, labelled 'of national urgency', promising the former militiamen Q445m (US$57.27m) for this year and the same again for 2005.

The bill passed thanks to the backing of 127 of the 158 members of the unicameral congress. A scattering of legislators took a principled stand against the bill. Along with supporters of human rights organisations, the legislators argued that the ex-PAC was involved in some of the worst atrocities of the civil war. The ex-PAC lifted the blockades after being informed of the passage of the bill. However, it is not yet a fait accompli. The constitutional court rejected the previous bill passed by congress which awarded the ex-PAC compensation, upholding an appeal from human-rights groups.

Guatemala's murder rate remains worrying despite President Oscar Berger's high-profile anti-crime initiative, which was launched in July. Congress summoned the interior minister, Carlos Vielmann, earlier this month to explain why the monthly number of murders had climbed from 153 in July to 179 in October. Vielmann failed to offer a very satisfactory explanation for the trend. He attributed the increase in murders to the perennial scapegoat, the street gangs known as 'maras'. According to the Policía Nacional Civil (PNC) some 50% of murder cases are the result of inter-gang violence and 30% can be attributed to drug-trafficking.

ECONOMIC OVERVIEW: GUATEMALA

Inflation in the first 10 months of the year hit 7.46%, putting the rate well above the government's target of 6% for the year as a whole. Inflation is accelerating: in October the monthly rate was 0.98%, up from 0.78% in September, and well above the August rate of 0.29%, according to the Instituto Nacional de Estadísticas. The main reason for the jump in October was the rise in crude oil prices. This pushed up petrol prices by 7% and diesel prices by 13.5%. Food prices are also rising sharply: they were up by 1.7% in October. The price of the canasta básica, (the staples needed by a family of five) rose from US$309 in September to US$334 in October.

Outlook

The Banco Centroamericano de Integración Económica expects the government to meet its cautious growth target of 2.6% for 2004. The government is hoping that growth will pick up to 3.2% in 2005. The central bank reckons that 3% is more likely.
Inflation: Inflation for the year to October was 8.64%. Trade: Exports in the first 10 months of the year were up by 10% at US$2.52bn. Traditional exports (sugar, bananas, coffee and cardamom) produced US$1.02bn in the period, thanks to a 19% rise in sugar receipts, a 5% rise in coffee receipts and a 16% rise in cardamom exports.