Envío Digital
Central American University - UCA  
  Number 94 | Mayo 1989



Negotiations Held Hostage

Envío team

Three models in vontention

Three development models are contending for leadership of Guatemala's sociopolitical and economic process.

1. State Stabilization Option. This model has been under development since 1982. Its goal is a search for equilibrium based on the reconciliation of five fundamental sources of power: military, economic, political, social and geographic.

The army understands that its role is to be the hub around which all other power sources must arrange themselves. This permits the development of national policies that assure the stable reproduction of the socioeconomic system.

Those with economic power are the most difficult to incorporate into the stabilization model, in part because they are now developing their own option. But the difficulty also has to do with the thorny relationship between the bourgeoisie and the state in the last twenty years, and particularly in this decade.

The political factor includes the governing party, opposition parties and the state bureaucracy. This force is politically, organizationally and ideologically weak, with few links to civil society. But while it lacks an overall national vision, it does have dynamic young cadre and experienced politicians who could become effective agents of the stabilization model. The bulk of these politicians take a center political position and have a modern, consensus vision of the exercise of power.

The rest of civil society, which has relatively little power, comprises the social factor. Within this group, the Catholic Church is the most important element because, like the army, it is one of society's permanent and stable institutions. The Church has been close to the stabilization project from its early stages, although it has always maintained autonomy and a critical spirit. One of the unresolved points with the Church is the space it will be given, particularly in the rural areas, to carry out its own community development projects. The experiences of the seventies and eighties, when the military brutally repressed Church organizing efforts, created a mutual lack of trust.

Other groups included here are the popular movement, professional associations, cooperatives, etc. There are differences within the military about the control that should be exercised over this sector, particularly over the popular movement. One point of view, that of General Alejandro Gramajo, holds that the past destruction of organizations and the picking off of their leaders to avoid the "manipulation" of the popular sectors by the revolutionary movement was an error because it eliminated the social cushions necessary to prevent political polarization. Another vision says that one must distinguish between a "genuine" popular movement and an "infiltrated" one whose growth and influence should be limited. In any case, the military has developed its own strategy to prepare for war and, since 1983, has encouraged a "new kind" of unionism, often with professional cadres from the army itself. The goal is military control of popular organizations, which would allow the army to forestall social explosions without destroying entire organizations.

The geographic factor—decentralization of state power—has recently been incorporated into the state stabilization model. For a number of years, the Inter-institutional Coordinating Councils and the Christian Democratic government have pushed regionalization policies including administrative decentralization and the organization of Development Councils. Key to this process is the reconceptualization of local power as a pillar of the state in society. Decentralization sprang from the emergency military situation in the country's highlands in the early 1980s and thus has a strong military component (civil defense patrols, model villages, development poles). In recent years, however, this vision has expanded to the whole country and the state apparatus is adapting itself to strengthen local power. For example, 8% of state spending is earmarked for distribution directly to the municipalities.

2. Neoliberal Alternative. Neoliberalism in Guatemala is not characterized, as it is in other countries, by an official reformism. It would be more accurate to link the Guatemalan neoliberal alternative to the vision held by neoconservatives in the United States and France.

The neoliberal plan comes from an emerging and still weak sector within private enterprise: the directors, managers and high-level technicians of the enterprises of the old oligarchy. They are Guatemala's new rich, who accumulated capital during the 1980s crisis through control of the main currents of capital transfers, both to and from countries abroad. Though they are economically and politically weak, they have a fairly coherent vision of the economy, politics and society. In the last five years, they have assumed leadership of the employers' associations and given the business sector a new dynamic, particularly in terms of the role of the bourgeoisie vis-à-vis society and the state, replacing the old anticommunist rhetoric of the oligarchy.

The most developed aspect of the neoliberal alternative is the economic one. This group proposes the reinsertion of the Guatemalan economy into the international market with nontraditional exports, including assembly-plant products in the style of Taiwan and Korea, and the maquila industry in Mexico along the US border. They receive institutional support from the US Agency for International Development (AID) and with that financing have established some organizations (Businessmen's Council, Free Enterprise Council, FUNDAP, FUNTAG) and reorganized others (Friends of the Country Association). The plan's backers see two key obstacles to changing Guatemala's relationship to the world economy: the state, with its business and regulatory functions within the economy, and low productivity based on an inadequate skill level among workers.

They maintain that Guatemala's reinsertion into the international market would be based on replacing the old concept of comparative advantage, which meant stressing traditional exports, with a competitive vision. For this to become possible, they identify a number of needs, including labor training on a national level. One of the most serious difficulties in tackling this is the more than 50% illiteracy rate in the economically active population. For the last three or four centuries many Guatemalans have lived completely on the margins of "capitalist development." In fact, their marginalization and misery, now presented as an obstacle to development, were a "sine qua non" for capitalist accumulation in agriculture.

The neoliberals propose that this population be brought into the mainstream of the economy. With that in mind, they launched a series of literacy initiatives and private health and vocational training programs. These programs, which have relatively little impact given the magnitude of the needs, allow the bourgeoisie to establish contact with the population and reduce their isolation as an elite within society. The backers of this model also hope to demonstrate the state's inability to carry out its own functions. Whatever the results of these initiatives, one thing seems certain: the Guatemalan bourgeoisie is developing a more holistic vision of society which could later replace the state's stabilization plan.

The neoliberals also envision incorporating new regions of the country into the international market. The regions traditionally plugged into the economic life of the country have been agriculturally exhausted, and thus modernizers believe it necessary to add other areas, namely the provinces of the central highlands (Chimaltenango and Sacatepéquez) and some regions in the eastern part of the country. In the last 10 or 12 years, these areas have begun to add the production of nontraditional crops to their traditional agricultural work and assembly manufacturing production.

While the neoliberal option is led by an emerging sector of the bourgeoisie, the most forward-looking families of the oligarchy have also participated. But most of these old oligarchs, who accumulated their capital through the cultivation of coffee, and later cotton and sugar, still view the economic restructuring process with great mistrust. They prefer to wait and see how things turn out for the "pioneers" before risking diversification themselves. Meanwhile, they remain relatively inert, substituting the cultivation of cotton with corn or cattle at most, thus underutilizing both land and the work force.

The neoliberal model is politically weak, a fact due to the inability of politicians to develop a coherent national plan, and to the short-term vision of the business sector, beset by internal contradictions and power struggles. This leaves it with little leverage in mediating with the state.

3. Revolutionary Alternative. Although the revolutionary movement is disadvantaged with respect to the other alternatives, their conflicts with each other give it greater hopes of success.

The essential characteristic of the revolutionary option in the last three years has been its tremendous tactical flexibility on both the political and military terrain. The revolutionary movement has called for a negotiated solution to the war in Guatemala, an initiative which gave it influence over the agendas of the other options and precipitated contradictions and fissures in the dominant model. Because of this flexibility, the revolutionary alternative has been able to maintain its presence on the national political scene and in the consciousness of the popular sectors.

The political flexibility of the Guatemalan National Revolutionary Unity (URNG) is a complement to its military strategy, not a substitute. The organization has been able to maintain and defend its strategic rearguard despite the concentrated offensives launched by the army during 1987 and 1988; extend the war from the five provinces to which it had been reduced in 1985-1986 to eleven (half of the provinces in the country, or 50,000 square kilometers); and reestablish links with the popular sectors, both in the countryside and in the city.

Sad state of Guatemala's economy

The neoliberals are imposing their agenda in the economic arena and, through apparently short-term economic policies, are trying to make their plan, based on competing in the world with nontraditional exports, viable for the medium and long term. But how healthy is Guatemala's economy and how solid is this new formulation?

What stands out most in a quick look at the macroeconomic variables from 1986 to 1988 is that the deterioration of the economy has been contained. The GDP, for example, had zero growth in 1986, but it grew 2.5% in 1987 and between 3.5 and 4.1% in 1988. Another positive fact is that the main financial variables have gotten under control. Inflation has dropped to an average of 11.8% in the last 2 years; the exchange rate has remained stable (except for the 8% devaluation in June 1988) and the money supply has grown at a much slower rate than expected. The amount of currency in circulation without backing in production dropped in the second semester of 1988.

The macroeconomic variables have stopped deteriorating mainly because of adequate management of national monetary policies, particularly severe and restrictive in 1987 and 1988. Most economic analysts of Guatemala agree that to pursue such policies could be risky in the medium and long term since the economic recovery is based primarily on encouraging external savings and on the economy's significant dependency on its financial and commercial sector.

With regard to external savings, transferals of foreign capital were an average of $700,000 a day in 1988, and will rise to almost $1 million in 1989. The easy terms of access to foreign credit (interest rates of 14% in comparison with 19-20% rates for domestic credit, exemption from certain taxes, guarantees against exchange losses etc.) have meant that domestic credit decreased by 1% in real terms in 1988. The slow pace of the paperwork—up to six months—and the endless loan guarantees required by local banks are also no small disincentive to domestic credit. The most affected sectors are the small and medium producers without access to quick credit from abroad.

In terms of the GDP, the accelerated growth of the financial and commercial sectors and the sluggish pace of development in agriculture and industry stand out. This trend, characteristic of the last five years, was also evident in 1988. While the latter two had an average growth of 2.5%, less than the population increase, the financial sector grew 12% and commerce, 30%. Growth in construction (18%) should be encouraging because of its multiplier effect on the economy, but it is a growth without long-term prospects. The type of construction (300% in commerce and only 2% in housing, far below demographic growth and the housing deficit) does not begin to respond to national needs. Furthermore, construction was one of the sectors hardest hit by the crisis of the 1980s (suffering a 60% reduction), so that the current growth should only be seen as initial recovery.

The current growth in Guatemala's economy is generating imbalances which will have a medium-term destabilizing effect. On the one hand, inequality in the distribution of income is worsening. The population in 1980 without access to a basic consumer basket represented one third of the national total. By 1985, it was up to two thirds. The average salary for 75% of Guatemalans is 200 quetzals, while a basic market basket costs 258.

Employment figures are also disturbing. According to a National Institute of Statistics survey done in 1987, nearly two thirds of the economically active population is underemployed, 3% are unemployed and only 35% have full employment. The fact that in Guatemala a person who does not work in some activity, no matter how unproductive, simply cannot survive, explains the low level of actual unemployment.

The rural situation has seriously deteriorated. This is particularly true in the highlands, where peasants can no longer survive on the land alone and are being forced to abandon it on a massive scale. In the 1970s, the number of tiny landholdings doubled, but the area of land on which this growth took place only increased by 35%. The result was a net decrease in the size of peasant landholdings. In addition, this land was already worn out from overuse. Traveling through the highlands, it is common to see corn with yellow leaves and ears without kernels, clear signs of a nutritional lack in the soil. A study comparing the situation in 1976 and 1988 indicates that 12 years ago, 50% of peasant income came from the cultivation of the land. That percentage has now dropped to 25%, marking a strong proletarianizing tendency among medium-sized landholders. This could provoke a reconcentration of the land into fewer hands within a few years, mainly in the highlands.

The situation is no less serious in the city. Plant closures and an increase in idle industrial capacity have raised urban unemployment. Informal activities—street vending and small-scale home production of everything from tortillas to furniture—as a means of survival are becoming increasingly important for family income. But this informal sector is not stimulated by increased production, as may be happening in Italy, for example; it is instead a product of the crisis itself. It springs from the low annual average of private investment (24%) between 1982 and 1985, and the inability of the formal economy to absorb 4 of every 5 young people who enter the labor market each year. The result is an informal sector where 90% of the population has an income of less than 200 quetzals a month and must work 60 hours a week just to survive, double the time they would have to work in formal economic activities.

There is also imbalance in the external sector, which is related both to financing the economic growth and to the unfavorable terms of Guatemala's changing role in the world economy. This disadvantageous relationship is marked by capital flight of about $3 billion (official figures) between 1982 and 1985, a drastic increase in imports and stagnation of exports since 1980 due to the deterioration in the terms of exchange.

After accumulating a negative growth of 36.6% between 1980 and 1987, exports hovered at zero growth in 1988, even though nontraditional exports grew 50%. Imports, on the other hand, grew 40% in 1987 and 20% in 1988, recovering 1980 levels. These figures reflect problems in the current account of the balance of payments.

The Guatemalan economy is fueled by an enormous quantity of foreign financing. In 1988, for example, $323 million in loans (almost triple the 1987 amount) entered the country; AID donated
$75 million and the IMF freed $58 million from a "stand-by" loan agreement it made with the government in mid-year. The total foreign exchange from official sources reached $237 million ($145 million more than in 1987) while from private sources it was approximately $465 million, a good part in credit lines and loans, although there was also some repatriation of capital.

Still, the outflow of hard currency was higher than this inflow. Some $220 million was spent abroad by the government; $208 million more went for payment on debt service (and even so, another $168 million in accumulated debt service went unpaid) and $345 million was spent by the private sector to buy imports. Consequently, the balance of payments was once again in the red and international monetary reserves declined. For the first week of December 1988, the net balance of reserves dropped to a deficit of $600 million (equal to the worst years of 1981-1982) and gross reserves covered only five weeks of imports.

Guatemala's growth is illusory. In the import sector, consumer durables and non-durables are growing, while capital goods remain practically stagnant. In the supermarkets, as well as on the streets where the informal vendors sell, most of the consumer goods from wine to soap are now imported. This has extremely serious implications for local production that have yet to be evaluated.

The last fact that should be mentioned is the financing of public expenditures. Historically, external financing rarely surpassed 15-20% of national revenues. By 1988, this financing reached 40% and will grow even more in 1989. These levels are only comparable to those of El Salvador and Honduras, considered extremely dependent countries. Given all this data, it would seem that Guatemala is becoming a hostage of foreign—particularly US—financing. One can conclude that the separation of the real and the symbolic economy is growing and could have drastic consequences. It is unlikely that the new center of accumulation based on nontraditional exports could experience a significant growth spurt; it is characterized by the instability of prices and markets because of excess supply. The consequences of this kind of growth could be very serious because of its superficiality and the impossibility that it will generate new production or internal savings and employment. Unsustainable growth that deepens the problems of income redistribution and dependence on foreign countries cannot be the solution to Guatemala's problems.

Main political events of 1988: How do they fit?

The unfolding of Guatemala's political life last year must be seen in the context of this struggle for hegemony of a new economic project, and the country's changing relation to the international economy, with its domestic repercussions.

The first half of 1988 saw the growing isolation of the Christian Democratic government that gave rise to destabilizing actions. Beginning in August, a second period began, characterized by a search for new accommodation between different social forces as well as a reorganization of political forces, already preparing for the elections of 1990.

The main events of the first months were a consequence of economic confrontations between the government and the business sector organized in the Committee of Agricultural, Commercial, Industrial and Financial Associations (CACIF) which lasted the whole second half of 1987. This dispute, provoked by a tax reform package, spilled into the political and military plane when economic problems (rise in electricity rates and freeing of prices) coincided with military problems (end of the year offensive and dialogue with the URNG), further feeding the crisis. The economic right wing directed its attacks against the government and incited ultraright politicians, disgruntled sectors of the military and some media to conspire against the Christian Democratic administration.

In this context, the popular sectors continued organizing and, at the end of 1987, the Unity of Union and Popular Action (UASP) was created by several worker federations—Union Unity of the Workers of Guatemala (UNSITRAGUA), Federation of Guatemalan Union Unity (CUSG), Union Federation of Banking and Insurance Workers (FESEBS) and National Federation of State Workers of Guatemala (FENASTES). Later they were joined by popular organizations like the Mutual Support Group (GAM), Association of University Students, Committee of Peasant Unity (CUC) and others. In December 1987 and again in January-February 1988, the UASP organized the largest popular mobilizations of the last ten years, averaging 30,000 people.

In view of its isolation, Cerezo's government sought to attract some centrist parties. While they first responded to the call to form a multiparty alliance supporting the institutional process, they quickly withdrew when they saw that there was no will to form a government of national unity. This would have implied giving out some ministerial positions. The only possibility remaining to the government was an alliance with the UASP. On March 8 the government conceded almost all of the popular movement's demands: price controls, supplies of basic goods, agrarian policy, human rights and legalization of popular organizations, including the CUC. In exchange, the UASP accepted the electricity rate increase that had set off popular protests in November and December.

Once the 40 days within which these commitments were to be fulfilled had passed, however, the government reneged, once again isolating itself. But this time the UASP had some internal problems and was not able to respond quickly and demand that the agreements be kept. This created space for the ultraright forces that stepped up their attacks and made open calls for a coup d’état.

On May 11, an uprising broke out on two military bases in the countryside that had the support of the Tactical Group (military air base) in the capital. The attempt, which did not reflect the force of the entire opposition, failed. Nevertheless, the dissidents did extract a series of concessions from the government (arms purchases, a lower profile for the policy of active neutrality, obstacles to the establishment of diplomatic relations with socialist governments, changes in the leadership of the domestic security forces, greater control over administrative corruption, freezing of reforms in the labor code), which kept it semi-paralyzed for at least 90 days.

All these events had negative repercussions for the state stabilization plan, the goals of which are to reconcile the sources of power and to implement developmentalist policies. At the beginning of August, the Council of Commanders (commanders of military zones with troops under their authority) met in the capital and demanded the reactivation of developmentalist policies, changes in economic policies and the reinforcement of national and regional planning, rejecting the privatization of state enterprises which CACIF was demanding and AID was willing to finance.

In spite of this pressure, the government took the offensive. First it searched for new agreements with the different social forces. CACIF was very interested in this and sought the mediation of some opposition parties. At the end of August, the UNC (Nationalist Union of the Center), the CAN (National Action Committee), the PR (Revolutionary Party) and the PSD (Social Democratic Party) proposed a social pact between the CACIF, union organizations and the government to negotiate prices and salaries. The pact met its first stumbling block when the UASP refused to attend, arguing that the government should first live up to the March 8 agreements. Immediately afterwards, the CACIF succeeded in kicking off the discussion with a touchy topic for the government: lowering fuel prices. The CACIF soon withdrew and the government remained alone with its allied organizations—some of them government front groups which had appeared suddenly a few days before the initiation of the pact.

So the first effort to reach agreement failed after the May 11 military crisis. It was then proposed that the National Reconciliation Commission, created in the wake of the Esquipulas II accords, convene a national dialogue with the participation of all social sectors. Problems arose quickly. The government vetoed the participation of the URNG and the army refused to attend; thus the two main actors in the military conflict were missing. Later, the dialogue was delayed because of internal differences in the commission about the participation of certain groups. Finally, on November 7, the dialogue was scheduled for January 1989. There was an effort to limit delegate
participation with ambiguous criteria like "legitimacy," "legality" and "representativity." The popular organizations have demonstrated enthusiasm for participation in the national dialogue and have discussed a possible agenda, where the war, human rights, refugees and displaced people and the high cost of living are the main themes. Nevertheless, CACIF has not been eager to get involved and, at the beginning of the year, after a new postponement of the dialogue to February 1989, was still not clear whether it would come to the negotiating table.

Along with attempts to reach agreement, the political parties began to talk about presidential candidates and to form new political alliances. In this scenario, the first to appear was Fernando Andrade Díaz, nominated by the Nationalist Revolutionary Party and negotiating for the support of the Revolutionary Party and other forces of the center Right. The National Liberation Movement dusted off the figure of an old general, Héctor López, and Alfonso Cabrera began to corner government institutions to reinforce his own candidacy. Former military leader General Ríos Montt also announced his return to politics and a number of parties offered him their support.

Throughout the year, human rights violations continued, with strong increases in May, August and November, coinciding with the outbreak of conflicts within the army. There were some 150 victims, including both dead and disappeared for political reasons. The popular organizations were subject to constant harassment, with a number of their leaders assassinated and others forced into exile. In addition to the selective repression used during the last three years, a growing autonomy in the use of repressive methods against the population by the military commanders in the rural areas was notable. This was the case in the massacre of El Aguacate where 22 peasants were murdered at the end of November. Such repressive actions by the army have the unconditional support of the governing party, and in particular, of Vinicio Cerezo.

Regarding the political struggle between the state stabilization model and the traditional bourgeoisie, it is important to take note of the continuation of the 28-year-old armed conflict. At the same time that the first direct conversations were being held between representatives of the Guatemalan state and the URNG in October 1987, the army was carrying out its "end of the year" offensive in three of the most difficult conflict zones: the Ixil Triangle and Ixcán, in the province of El Quiché and Sololá, south of Lake Atitlán. It hoped to deal a decisive blow to the URNG's strategic rearguard and kidnap or exterminate the resisting indigenous peasant population. The force deployed in this offensive—8,000 troops against the Ixil triangle and Ixcán and 5,000 against Sololá, supported by heavy artillery, planes and helicopters—was exceptionally large and costly. Some Guatemalan sources state that the army employed 20,000 soldiers in this offensive and its follow-up operation (through April 1988), the so-called "Stronghold 88."

These operations failed to achieve the hoped-for success. While the army has been unable to present photographs of guerrilla casualties, the media—invited by the army itself—witnessed the fierce nature of the combats and neighbors of the military hospital in the capital noted a significant security presence given the large number of army wounded. The URNG claims to have caused 1824 military casualties, wholly or partially destroyed 15 military installations and damaged 17 helicopters. The army, probably because of the financial cost, could not maintain its simultaneous attack on several fronts and suspended its operations in Sololá after several weeks in order to concentrate on El Quiché. A study by the Guatemalan Church in Exile (IGE), "Guatemala: Security, Development and Democracy," published in January 1989, asserts, on the basis of direct testimony, that the army offensive in the Ixil triangle displaced 7,000 people and captured or starved into surrender more than 3,000. The Guatemalan minister of defense bragged in September 1988 that "we took away almost 5,000 captives the guerrillas had in northern Quiché." In that area then, a significant blow was dealt against the resisting and refugee population. In Ixcán, on the other hand, the army did not affect the population but did carry out scorched-earth actions, causing serious problems for crop planting.

The attempted coup on May 11 was probably provoked in part by the failure of such a thoroughgoing offensive, in which a guerrilla force of only 3,000 or so combatants (according to a URNG commander) caused the army so many casualties. Besides the already mentioned effects of this coup attempt—principal among them the veto of the government-URNG talks and denying the URNG forces a representative in the national dialogue—it seems that the army's military failure has led to a modification of its strategy. It continues small-scale harassment and has increased its permanent presence in the contested zones. Most important, it is attempting to repopulate the zones, threatening the tens of thousands of refugees in Mexico and the thousands of internal refugees with definitive dispossession of their lands.

The year saw an increase in the military capacity of the URNG. In zones very close to the capital (Acatenango, province of Chimaltenango) there were guerrilla strikes in July and August with a toll of more than a hundred army casualties. The massacre of 22 peasants in El Aguacate, a village in the same province, was clearly linked to nervousness on the part of the army because of the close and strong guerrilla presence. The URNG's continuous effort to negotiate an end to the armed conflict is therefore that much more important. From its position of strength, the URNG is not demanding revolutionary power, but rather, as Comandante Pablo Monsanto phrased it, "the participation of the revolutionary forces in a new kind of power, conceived together with the progressive, nationalist and truly democratic forces." According to URNG Comandante Rolando Morán, that organization's defeat of two army offensives, rather than the attempted coup on May 11, is the most important event of the year. The National Reconciliation Commission, by meeting with the URNG in August in Costa Rica, demonstrated that it considers recognition of both contenders and the establishment of a dialogue between them as crucial for the solution of the Guatemalan conflict. But until now both the army and the government have managed to hide the proportions of the conflict from a large sector of the population, particularly in the capital.

Shifts in Guatemala's foreign policy

Some changes in Guatemala's foreign policy took place in 1988. In the first place, the Foreign Ministry abandoned its support for El Salvador, a policy that had been causing serious problems because of the severe international isolation of President José Napoleón Duarte. Guatemala returned to its earlier policy of supporting Latin American countries and multilateral negotiations. Second, the country lost important sources of backing in Western Europe because of renewed human rights violations, including the massacre of peasants and trafficking in children. The Europeans have begun to pressure in international organizations for once again considering Guatemala a serious case in terms of human rights. Third, Guatemala ran into difficulty in trying to join the UN Human Rights Commission, a fact that is seen as a loss of international credibility. Fourth, and as a counterweight, Guatemala benefited from its support of the Latin American Group of Eight's bloc policy thus avoiding even greater deterioration of its international image and strong condemnations in the area of human rights.

The first foreign policy objective was military—to isolate the ongoing armed conflict. Since military success against the guerrilla forces required continued human rights violations, it implied sacrificing the respect of the international community. While an aggressive fight was launched to diminish the impact of this, success began to slip once more in 1988.

The second objective was political—military neutrality combined with a forceful political-ideological presence in the Central American conflict. Underlying this was the desire to prevent the regionalization of the conflict and thus the possibility of its endangering Guatemala's success against its own guerrilla forces. This active neutrality in the regional diplomatic arena was combined with a strong push for democracy inside the country, planning the return to a constitutional regime and stronger civilian government. This was to take place through elections which would legitimate Guatemala's neutrality, put the country more in step with US foreign policy objectives and lead to more economic aid and markets.

4. Economic Objective. In 1988, the Foreign Ministry began to reorganize its own structure to assist in the search for markets and broadening of commercial relations. The reorganization aims
at a third objective of the country's foreign policy: to contribute to Guatemala's new insertion into the international economy. If this succeeds, it is likely that foreign policy will maintain its relatively progressive line, unless the state stabilization option is besieged by an intense and/or prolonged economic policy dispute between the army-government and the bourgeoisie, by a strategic alteration of the armed conflict in El Salvador or by a worsening of the armed conflict in Guatemala similar to what has happened in El Salvador. But maintaining something of a progressive posture is not the same as achieving a relatively autonomous foreign policy. It may be impossible to reactivate the economy through serious reforms which promote the extension of the domestic market and the consequent integration between society and the state. On the other hand, the orientation of the economy toward the international market which allows the bourgeoisie greater opportunities for accumulation threatens growing dependence. If Guatemala continues trying to finance its export expansion directly or indirectly with US funds, it will run the risk of once again becoming a hostage of US geopolitical interests. So, foreign policy will go on losing its ability to contribute to the stability of the state and avoiding a new crisis of power.

Three perspectives for the future:
Which of the two dominant alternatives will win out?

The two options contending for power over Guatemala's national development are not moving toward mutual integration. Between the state stabilization model and the neoliberal plan of nontraditional export promotion and reinsertion into the international economy there are many conflicts, but the most important concerns the roles of the state and the army. The state stabilization plan is an attempt to extend the state's influence in all areas of society, including the economy, and to avoid the deterioration of the standard of living of the poor majority. The neoliberal plan insists on the privatization of the economy and on labor-force training programs in health and education, as well as the economically innovative use of geographic regions traditionally of little economic importance.

The army tries to resolve this disagreement through ongoing initiatives like the August 12, 1987 "National Forum," and, the creation of the Center for Strategic Studies for National Stability, where officials, politicians, businessmen and union leaders can discuss their different philosophies, get to know each other better and come up with "integrated strategies” in the nation's common interest. The army's goal is the creation of a new political class, of a unified Guatemalan "establishment." The last years of the twentieth century will be the acid test for these two options. But it is likely that in the long run the tendency favoring the reinsertion in the international economy will emerge victorious over the state stabilization model. Meanwhile, the conflicts and imbalances between these two models will offer opportunities for the revolutionary option. The latter must enhance its proposals, taking into account the difficulties of the Nicaraguan process and putting forward programs capable of challenging the ideological domination of the other two options.

5. Israelization of Guatemala? If the ongoing liquidity crisis in the Guatemalan economy and the need for financing from abroad continue, and if this financing comes primarily—directly or indirectly—from the United States, Guatemala will become a country held hostage to US geopolitics. A kind of "Israelization" of Guatemala could occur. This might mean the development of a weapons industry that would produce arms for other countries and ammunition for the M-16, the rifle used by most armies in the isthmus. In the past Guatemala has established a margin of autonomy from the United States and its army has proven itself proficient in counterinsurgency warfare. Based on this history, a new role for this army could emerge: taking on dirty work alone or as assistants to US military advisors in other countries like El Salvador, where Guatemalan military methods are much admired. (The Argentine army played this role in Honduras before the Malvinas crisis.) The metamorphosis would be all the more likely if the balance of forces in El Salvador between the army and the FMLN changes strategically or if the FMLN extends its actions to the western part of Salvador, bordering Guatemala, with the same strength with which it operates in other regions.

6. Rise of the Popular Movement? It is likely that the Guatemalan popular movement will grow in the near future. Its ability to maintain unity with maturity, refusing to participate in the national dialogue until the government lived up to its commitments in the social pact was a sign of significant advance in 1988. Although the national dialogue is not likely to succeed, given the army's self-exclusion, CACIF's refusal to participate and the exclusion of the URNG, it will still create a new space within which demands, denunciations and political programs may be put forth and discussed. The recent outbreak of the largest farm workers' strike since 1980 also indicates a new level of militancy. The government answered with the militarization of the sugar refineries and a military siege of the struck farms.

In the popular movement, the training of cadres still lags and there are ideological differences and defects in internal democracy. The bourgeoisie is on the offensive as solidarity grows. But the non-revolutionary options' lack of response to social needs creates objective conditions for popular mobilization. The fact that this mobilization has already grown indicates that the popular movement has begun to overcome the scars left by the era of terror.

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