Guatemala Stumbles in Central America's Anti-corruption Fight

A remarkable and hopeful two-year interlude in one of Central America's most corrupt countries may now be ending.

The key reversal came on Friday 25 August 2017, at a meeting requested by Guatemala's President Jimmy Morales with UN Secretary-General António Guterres in New York. Morales signalled his intent to eject the head of the UN-backed International Commission Against Impunity in Guatemala (CICIG), Iván Velásquez. Morales protested that Velásquez had interfered in Guatemalan politics by calling for constitutional reforms and by exploiting media coverage in legal proceedings. After returning to Guatemala he declared Velásquez persona non grata and ordered his expulsion from the country.

This represents a setback to the progress made toward rooting corruption out of Guatemala's political system between 2015 and 2017, thanks to a combination of popular protests, a new president, a brave external judge and a groundswell of support for change in the growing educated middle class.

Guatemalans are still not ready to go back to the old ways. Two days later, on 27 August, the Constitutional Court - Guatemala's highest court on constitutional issues - temporarily suspended President Morales' order. Some members of the government resigned to protest Morales' move, notably the minister of foreign affairs, the minister of health and most of their vice ministers. Demonstrators in support of Velásquez poured into squares in Guatemala City, while other sets of demonstrators voiced their support for Morales' move against CICIG's Commissioner. On 29 August, the Constitutional Court overturned the expulsion order.

Exactly what will happen next is unclear. In a social media posting on Monday 28 August, Guatemala's president said that he will respect resolutions from judicial bodies. While the fact that he has adopted this position is welcome, it does not mean he will halt his efforts to ensure Velásquez departs the country and to curb CICIG's influence.

Why has President Morales moved against CICIG?

CICIG - proposed by Guatemalan civil society, in operation since 2007, and acting through the attorney general's office - has been steadfast in its fight against corruption in Guatemala. Central to CICIG's recent success has been Velásquez, a courageous former judge with considerable experience dealing with political corruption in his native Colombia. Velásquez has moved CICIG away from a more general mission of fighting impunity toward a tightly-focused mandate of combating illegal money-producing schemes. It has spearheaded probes into political funding and corruption, resulting in almost two hundred defendants facing investigation and trial this year alone. Most are currently jailed on remand, including former President Otto Pérez Molina and his Vice President Roxana Baldetti.

Corrupt traditional actors who have profited in the past from Guatemala's rigged political system have campaigned relentlessly against CICIG. Morales was swept into office after the country experienced a wave of disgust at revelations of the depth and breadth of a high-level corruption scandal in 2015 that forced the previous incumbent, Pérez Molina, to resign. Since then he has come under considerable pressure from elements of Guatemala's political and business elite to revise his initially supportive attitude toward CICIG's agenda of reform and to oppose the anti-corruption campaign.

Morales had some success in treading a balanced line, but events last week altered his political calculus. On 25 August, the same day that Morales flew to New York, CICIG and the attorney general's office formally presented a request to the Supreme Court to lift Morales' presidential immunity, a necessary step before a final decision is made by Congress. They claimed there are sufficient grounds to investigate Morales for illicit financing of his 2015 presidential campaign, specifically $900,000 USD in unreported contributions. It was the first time in Morales' presidency that CICIG had targeted the president himself, making clear to Morales that his political survival could be at risk. Rather than abiding by his previously balanced line, the president heeded the counsel from elements of the business and political elites and set out to defend his own endangered mandate by seeking Velásquez's expulsion.

Why does the attempted expulsion of the head of CICIG matter?

The future of Guatemala's corruption-fighting commission is closely tied to the country's development as a democratic state. Since the 2015 corruption scandal, CICIG has capitalised on the political fallout from the previous government's collapse. It has sought to bring about lasting change by backing proposals to reform the constitution and bolster the justice system's independence.

But Guatemala has been ensnared in an ongoing political crisis between two camps. On one hand, there are social, political and business actors supporting CICIG's efforts to strengthen Guatemala's justice institutions. On the other hand, there is a traditional, conservative group of actors who seek to maintain their privileged position. They control ports and customs offices, have links to organised crime and are involved in illicit activities such as people smuggling and drug trafficking. They have wielded significant power and influence over various government institutions for many years.

CICIG's work also has kindled discord in Guatemala's foremost business elite group, the Coordinating Commission of Agricultural Commercial Industrial and Financial Associations (CACIF). Within the organisation, which traditionally has presented a united public face and has been a powerful actor in Guatemala, younger industrialists and tradesmen who support CICIG's anti-corruption agenda are pitted against others who seek to reduce the risk of their own prosecution. President Morales' recent move to weaken the anti-corruption agenda will make it more difficult for the business organisation to maintain its unified position.

CICIG's support to the justice system through technical advice and direct collaboration designed to reveal large corruption schemes has catalysed previously unthinkable modifications to Guatemala's legal order. The expulsion of its head would have represented a significant setback to the anti-corruption fight, validating claims that CICIG has exceeded its mandate when in reality it is robustly enforcing it. It might even have served as a stepping stone toward a "conservative restoration" - a return to the more corrupt mores of the past - in the country's political system and damage the country's favourable image in Latin America as a relative success story. Such an outcome would have reassured other regional leaders that they could continue to act with impunity and could fight back any effort to establish a CICIG-like entity in their country. Finally, it would have meant that even the most innovative tool of international cooperation to strengthen the rule of law in the form of CICIG is not strong enough to break a well-established corrupt system.

What are the next steps and potential risks?

The Constitutional Court's provisional decision to block Velásquez's expulsion is now definitive. The court's final ruling found that the order violated the constitution because it was only signed by the president and not by all of his ministers. While some observers speculate that this merely was a temporary, face-saving measure approved by the UN and Morales to avoid a direct conflict, and that Velásquez will still eventually be removed, for now the president has had to back down.

This is good news. Although there is a risk that Morales might seek to assume more power in light of this crisis, this seems limited given the potential for judicial action against him and significant public opposition to his recent actions. Nor does Guatemala appear likely to experience a resumption of the state-sponsored violence that plagued it in the past. Both the minister of defence, General Williams Mancilla and government Spokesman Heinz Heimann have ruled out the imposition of a state of siege or punitive measures against those who had protested President Morales' decision to expel Velásquez. That the minister of the interior, Francisco Rivas, a trusted former attorney, has remained in place suggests that heavy-handed methods can be avoided. The army, too, has been weakened in recent years and no longer is a decisive political actor.

That said, protests could well grow. For now, widespread turnout remains significantly short of the unprecedented level of mobilisation that was witnessed during the 2015 corruption scandal. However, should there be a future attempt to remove Velásquez or curb CICIG, this could trigger wider anger. Most importantly perhaps, it remains to be seen what Morales will now do to resist CICIG's requests to lift his immunity from prosecution for illicit campaign financing.

What can the international community do?

The U.S. has important interests in Guatemala, frequently referred to by high-level U.S. officials as a significant national security concern. The European Union (EU) also has an interest in Guatemala. It has provided as much financial support to CICIG as the U.S. Both the EU and U.S. have made clear their opposition to Morales' action, the EU through communiqués opposing Morales' decision, the U.S. through the voice of its ambassador to the UN, Nikki Haley, as well as through various members of Congress. They, along with others, should continue to support Velásquez's position but without a heavy-handed approach that would smack of interference. Facing such pressure, Morales may already have realised that he has committed a political error, and will need to devise less provocative strategies to avoid the threat of prosecution and a premature end to his presidency. He also will want to avoid overly alienating the U.S., given the risk of counter-measures from Washington, in particular a halt to its financial aid to the Northern Triangle area.

For the international community, CICIG is a unique case study in international support for the justice sector in a weak democracy. It remains to be seen if CICIG will be strong enough to stand up to the power of a national corrupt system under threat. Whatever happens, measures to clean up Guatemala's system should emanate from Guatemalan institutions, not from obvious direct impositions by outside powers, and the international community should demonstrate its confidence in them and in the country's citizens. Over the past decade, the CICIG has shown the capacity to act effectively, even if it is now threatened by those who stand to lose money and influence or who seek to justify the defence of their interests by denouncing foreign intervention in a sovereign state. That is an indicator in itself of CICIG's success, which can and should be replicated in other Latin American countries.

Guatemala's would-be reformist President Jimmy Morales won office by a landslide last year by using a simple but effective slogan: "not corrupt, nor a thief". In one of Latin America's most violent, unequal and impoverished countries, his election was part of an anti-corruption "tsunami" that began in April 2015, led by the UN-backed International Commission against Impunity in Guatemala (CICIG) and the Attorney General's Office (AG). The racket that emerged in April 2015 in the customs authorities claimed the scalps of high-ranking officials, sparked massive protests throughout the country, and eventually brought down the corruption-plagued administration of former President Otto Pérez Molina, who was jailed promptly after his resignation.

Pérez Molina's former vice president, most of his cabinet, scores of politicians and many prominent businesspeople now face trial in connections to the customs fraud and a barrage of ensuing cases. As a result, Guatemala stands at a crossroads. Either it continues the unprecedented anti-corruption actions, or falls back into the vice-ridden past where illicit networks sought to embezzle, defraud, bribe and extort public money for private gain, with no adverse consequences.

The past year proved how emboldened institutions are now willing to use legal prosecution to disentangle the state and political parties from criminal groups. Guatemala's capacity to bring to justice officials who had previously enjoyed complete impunity represented a unexpected revolution in national life. The country is still reeling from the shock of this change, and the outcome of this process is far from certain. "Justice doesn't change states on its own, it just contributes to identify what ails them" warns CICIG commissioner, and centrepiece of the judicial campaign, Colombian investigative judge Iván Velásquez.

President Jimmy Morales, an outsider who gained fame as a TV comedian, broke with a relatively long tradition of Guatemalan politics in winning by 67.4 percent of the vote in the second round of the 2015 elections even though he was not the runner-up in the previous presidential contest, nor the greatest spender in the campaign. Manuel Baldizón, the candidate in question on both counts, fled the country after a poor showing in the first round, allegedly to escape the wrath of his many financial backers.

However, Morales is now struggling to differentiate his government from that of his predecessors. A new joint CICIG and AG investigation into corruption in the National Registry of Property (NRP) has enveloped Samuel "Sammy" Morales, the president's older brother and a close adviser, and José Manuel Morales, his son. The two men allegedly presented an invoice in 2013 to the NRP for US$12,000 for an event that never took place. They are barred from leaving the country during the investigation.

The case illustrates the slow pace of change in Guatemala. While the modes and networks of corruption have been disturbed, structural conditions of poverty and inequality, as well as rates of violent crime, remain far above the global or Latin American average. Recent death threats against Attorney General Thelma Aldana and the judge handling the main corruption cases are the most sinister side of this anti-reform backlash: Aldana had to leave the country for a month, but the threats have reportedly continued since her return.

The Guatemalan Congress modified the electoral law in April 2016 and introduced stronger controls over financing of political parties. It also passed laws to strengthen the autonomy of the attorney general and create a much-delayed institute for victims of crime. But critics point out that the initiatives have been hastily patched together to assuage popular demands for reform, and are riddled with inconsistencies. They argue that more stringent rules are needed to ensure internal democracy within parties to prevent them from being controlled by strongmen, or to allow for start-up parties such as "Seed Group" (Grupo Semilla), "Justice Now" (Justicia Ya) and "We Are" (Somos) to get a foothold in the party system.

Even though many of these recent achievements are impressive, frustration has festered among many of the civil society groups that drove the anti-corruption mobilisation last year. Most of the lawmakers elected in 2015 conform to the traditional way of doing politics in Guatemala, described in a report published by CICIG as a system where "the money that comes from corruption [to finance political parties] is increased by resources contributed by criminal organisations, which achieve dangerous influence and, in certain localities, control over authorities". Recent efforts by the president to secure control of Congress' governing board have been sharply criticised for relying on deputies with shady pasts.

Evidently, President Morales has not become the anti-corruption crusader that many voters wished for. His anti-establishment stance still lacks a clear plan to clean up political life and to broaden the state's measly provision of basic services. His effort to improve state finances by raising what are Latin America's lowest tax rates was badly planned and rejected by most sectors of society. The shadow of the so-called military "juntita" - a clique of former army officers who came into power with him - hangs over his administration and undermines his credibility as a political outsider. His call on foreign states not to intervene in Guatemalan judicial matters, presumably under the advice of juntita members bitter at international support for cases against human rights violations during the armed conflict, has also been questioned by international bodies. Falling asleep during the presentation of the 2017 budget has not helped his public image.

However, a counter-reformist backlash is unlikely. The traditional powerful actors who dominated Guatemala's post-conflict democracy and might seek a return to the old order have lost the initiative and lack an agenda. The army is no longer a preeminent political force, and would be very reluctant to join an anti-reform effort that would face fervent opposition from citizens and international opprobrium. Opposition from the private sector has also weakened. The head of the main business association and a former fortress of political power, the Coordinating Committee of Agricultural, Commercial, Industrial, and Financial Associations (CACIF), recently pledged the private sector would continue to support the anti-corruption campaign, even if it harms its members. Another new constituency vocally supporting reform is an engaged and critical middle class making use of new outlets in cable television, online newspapers and radio.

At the same time, some of Morales' high-level appointments have pumped oxygen into his faltering administration. One of them is Francisco Rivas, a lawyer who ascended through the ranks of the prosecution service leading investigations that produced the arrests of major drug traffickers - earning him the trust of the attorney general, the CICIG and U.S. security agencies. Rivas is now providing the operational back-up to their investigations, which was not always forthcoming in previous administrations.

Another fresh face is the current Health Minister Lucrecia Hernández, daughter of Myrna Mack, an anthropologist murdered by a military death squad in 1990 due to her work with communities displaced by the conflict. Hernández and her aunt, Helen Mack, have carried out a decades-long struggle for justice in the case and created the Myrna Mack Foundation, one of Guatemala's leading human rights organisations. Waging a complicated battle against entrenched corruption in the health ministry, Hernández confronts an acute crisis of medical supplies in hospitals.

Juan Francisco Solórzano Foppa, for his part, was allegedly blackballed by the military juntita and prevented from joining Rivas in the interior ministry, but has since become another member of Morales'young bloods after his appointment as chief of the Guatemalan Tax Bureau (SAT). He worked for thirteen years in the Attorney General's Office, where he carried out investigations against street gangs and undertook the wiretap recordings that helped bring down the Pérez government. "Foppa" developed a reputation of fearlessness, and in his new role has taken on large firms formerly considered untouchable, such as the steel works "Aceros de Guatemala", the soft drinks firm "Big Cola" and the drugstore chain "Farmacias Galeno", which during his first three months in his job returned over US$110 million in unpaid taxes.

But Guatemala needs more than new faces in politics to right the wrongs of the old establishment. International backing is fundamental in this effort, and unless the Republican president-elect's campaign against undocumented migration affects other areas of policy in Central America when he takes power in 2017, U.S. support seems reliably strong.

The U.S. remains the region's geopolitical hegemon, and regards the Northern Triangle of Central America (El Salvador, Guatemala and Honduras) as one of its national security priorities, largely due to the stream of migrants and refugees fleeing the region's poverty and violence. Guatemala is exemplary in enjoying bipartisan U.S. support in its anti-corruption crusade and is a beneficiary of the Plan of the Alliance for Prosperity of the Northern Triangle of Central America, which will significantly increase cooperation funding.

Extraordinarily, the actions of the U.S. in Guatemala are regarded as welcome even by individuals personally harmed by its earlier Cold War interventions. The "holy trinity" of the U.S. embassy, the attorney general, and the CICIG, as certain wits brand it, has been fundamental to the high-level corruption cases and reform plans in the fields of justice, politics and the constitution as a whole. Allies of the U.S. government in Guatemala are also changing, as reflected by the absence of some of its usual political associates during independence day celebrations in July 2016: most of those present were less prominent civil society activists and academics.

The strengthening justice system, new initiatives for political reform processes and support from an activist citizenry and the international community provide President Morales with exceptional opportunities to turn his campaign slogan into the new identity of the Guatemalan state. If properly implemented, reforms to the electoral law and the subsequent constitutional amendments may go a long way to cleaning up politics, but the construction of a new political party system is a challenge that must be dealt with head on. Rules must be simplified so that new groups, composed primarily of young people, are able to participate. These new political actors should hopefully be able to overcome the divisions of the past and the injustices in Guatemala society. There is a long road to travel, but the journey has at least begun.