VZCZCXYZ0001
PP RUEHWEB

DE RUEHGT #0867/01 1912212
ZNY CCCCC ZZH
P 092212Z JUL 08
FM AMEMBASSY GUATEMALA
TO RUEHC/SECSTATE WASHDC PRIORITY 5704
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHCV/AMEMBASSY CARACAS PRIORITY 0630
RUEHME/AMEMBASSY MEXICO PRIORITY 4890
RUEAIIA/CIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L GUATEMALA 000867 
 
SIPDIS 
 
E.O. 12958: DECL: 07/08/2028 
TAGS: PREL PGOV ENRG ECON GT
SUBJECT: AMBASSADOR'S FAREWELL CALL ON PRESIDENT COLOM 
 
REF: A. GUATEMALA 783 
     ¶B. GUATEMALA 821 
     ¶C. GUATEMALA 854 
     ¶D. GUATEMALA 759 

Classified By: Ambassador James M. Derham for reasons 1.4 (b&d). 
Summary ------- 

¶1. (C) During the Ambassador's July 8 farewell call on President Colom, Colom defended his decision to sign a PetroCaribe deal with Venezuela, asserting that the deal would help to alleviate rising fuel and food prices. Colom expressed confidence in new Minister of Government Jimenez, and reviewed the mixed performance of Attorney General Florido and Environment Minister Ferrate. Colom said that Nobel Peace Laureate Rigoberta Menchu, whom he called a "fabrication," had incited indigenous residents of San Juan Sacatepequez to oppose local construction of a cement plant; one person had been murdered as a result. End Summary. 

Colom to Sign PetroCaribe Deal ------------------------------ 

¶2. (C) During his July 8 farewell call on President Alvaro Colom and Foreign Minister Haroldo Rodas, the Ambassador inquired about President Colom's planned July 13-14 trip to Caracas to sign a PetroCaribe agreement with Venezuela (ref a). President Colom confirmed his travel plans, and defended his decision. He said he was surprised that the Guatemalan countryside had not yet "exploded" in protest at recent increases in fuel and food prices, and expressed concern that a popular backlash might not be long in coming. Food and fuel inflation was straining people's budgets, resulting in increased pressure on the state's limited social welfare net. Colom added that Congress was unlikely to approve his proposed tax reform plan, so expected increases in state revenues would not be realized. PetroCaribe offered attractive financing terms, and would free up considerable funds for social welfare programs. Just a month ago, PetroCaribe negotiations had ground to halt, Colom said, but changing economic conditions had required the GOG to reconsider. Colom said he had discussed PetroCaribe with Dominican President Fernandez, who had encouraged Guatemala's adhesion. 

¶3. (C) Foreign Minister Rodas added that the decision to join PetroCaribe was strictly economic. The GOV had pressed the GOG to join the Venezuelan-led ALBA anti-American trade block, but the GOG wanted no part of it, and would not accede to any Venezuelan political conditions. "We're Social Democrats, but we're not fanatics, and we're aware that radicalism in governance leads to failure," Colom said. 

¶4. (C) (Note: FRG Congresswoman Zury Rios separately told the Ambassador that she believed the PetroCaribe deal, which requires congressional approval, would easily pass Congress given the current inflationary environment. She also predicted Colom's tax reform proposal would fail. "Guatemala Bench" Congresswoman Rosa Maria Frade also told us that PetroCaribe would pass, and opined that savings realized from a PetroCaribe deal might compensate the loss of anticipated revenues from the fiscal reform package. End Note.) Review of Senior Officials' Performance --------------------------------------- 

¶5. (C) President Colom lamented the recent deaths in a helicopter accident of Minister of Government Vinicio Gomez and Vice Minister Edgar Hernandez Umana (ref b). Colom expressed confidence that newly appointed Minister Francisco Jimenez would continue Gomez's efforts to reform the police (ref c). Regarding Attorney General Juan Luis Florido, Colom Q(ref c). Regarding Attorney General Juan Luis Florido, Colom said Florido is amicable and is making a sincere effort. Nonetheless, he expressed frustration at the Attorney General's Office's seeming inability to progress with certain kinds of prosecutions, such as corruption, the murders of two union leaders, and the recent scandal over the illicit investment of congressional funds (ref d). Colom said that Commissioner Carlos Castresana of the International Commission Against Impunity in Guatemala (CICIG) is very demanding, and that under his leadership, CICIG is making some progress in helping the Attorney General's Office to put its house in order. 

¶6. (C) The Ambassador asked about Environment Minister Luis Ferrate, noting that Ferrate's indiscreet public declarations at times gave potential investors second thoughts. Colom agreed that Ferrate should be more measured in his public statements, and noted that he had regular, sharp disagreements with other cabinet members, especially Minister of Energy and Mines Carlos Meany. 
 
 Menchu Inciting Indigenous Communities --------------------------------------
 
¶7. (C) Regarding the investment climate, the Ambassador raised the June 21 incident in which indigenous protesters opposed to the construction of a cement plant killed a community leader who had favored the project (septel). Colom said that former presidential candidate and Nobel Peace Prize Laureate Rigoberta Menchu was at least partly responsible for inciting local opposition to the proposed plant. She had told Colom of her involvement and that she would continue to encourage indigenous people to protect their land. Colom said he had responded by saying that encouraging indigenous people to protect their land was acceptable, but that killing was not and that the GOG would act to enforce the law. 

¶8. (C) Colom said Menchu was a "fabrication" of French anthropologist and author Elizabeth Burgos, who wrote the book, "I, Rigoberta Menchu," that brought Menchu to international attention. Colom said that Menchu is widely disliked by Guatemalan indigenous people, as demonstrated by her poor showing in the 2007 presidential election. He said he was present at a 1997 ceremony at which Mayan leaders formally pardoned Menchu for "betraying her people." Observing that Menchu was unfit for the presidency, Colom said he had advised her against running, saying she should not risk sullying her reputation in politics. Regarding the polemics about the circumstances in which Menchu learned Spanish, Colom said he knew the truth -- his older sister Yolanda, while a guerrilla leader, taught Menchu "up in the mountains." Colom said his venerable indigenous "teacher" had once commented to him that "no indigenous person would ever be president of Guatemala" due to the deep rifts among Guatemala's 22 Mayan indigenous groups. 

Comment ------- 

¶9. (C) President Colom took this opportunity to reiterate the high priority he places on good relations with the United States, and was concerned about the USG's potential reaction to the PetroCaribe deal. With year-on-year inflation now at 13.5%, and inflation of the basic basket of consumer goods at 22%, Colom has reason to be concerned by the potential for popular backlash against rising prices. We agree with our several interlocutors' assessment that, in the current inflationary environment, Congress will likely approve the PetroCaribe deal, and that it will not approve tax reform. Derham