The United States Created Its Guatemala Problem – Does it Have the Courage to Fix It?

Large-scale international migration has been an external escape valve for Guatemala, a response to the country’s autocratic and corrupt governments.  Unbelievable rates of poverty, hunger, and discrimination against indigenous populations have led to outmigration into the United States.  Nativist United States movements have struck back against such but the United States is its own worst enemy and has caused its crisis. The solutions to these problems are clear but whether the United States government has the ability and courage to enact them remains in doubt.

​Guatemalans are the sixth-largest population of Hispanic origin living in the United States; about 2% of the United States Hispanic population in 2017.  The Guatemalan foreign-born population living in the United States grew by 171%, from about 320k in 2000 to 860k in 2017.  Poverty demographics of Guatemalans in the United States trail that of the Hispanic population, which in turn trail that of white United States citizens.

Guatemala has some fundamentals that could make for better outcomes:

• Guatemala has achieved national economic stability due to a combination of prudent fiscal supervision, inflation targeting, and a floating exchange rate.
• The Guatemalan economy -the largest in Central America- has been stable, with average growth rates of 3.5% in the last five years before COVID.
• Guatemala is the most populous country in Central America, albeit with a GDP per capita roughly half the average for Latin America and the Caribbean, and could provide a base for manufacturing labor.
• The agricultural sector accounts for about 14% of GDP and about 30% of the labor force with agricultural exports including sugar, coffee, bananas, and vegetables.
• Guatemala is the top remittance recipient in Central America as a result of Guatemala’s large expatriate community in the United States.  These inflows are the primary source of foreign income, equivalent to two-thirds of the country’s exports and about a tenth of its GDP.
• The country is beautiful by any measure and has the natural resources to develop a modern tourism industry resulting in substantial foreign investment, jobs, and currency.

​On its face, the Guatemalan income tax appears progressive but it is two-tiered, with 5% and 7% tax rates representing a flat tax, regressive by nature and functioning to increase the disparity of wealth.  Low central government revenues, 11% of GDP on average in recent years, limit the quality and number of public services including welfare programs, education, health care, transportation, and access to clean water.  

The results are a tragedy:

• Gross Domestic Product (GDP) per capita, about $2,800 in 2018, has remained static and compares unfavorably with other countries in Latin America and the Caribbean (LAC) as delineated in the previous graphic.
• Guatemala is the fifth poorest economy in the LAC.
• Income distribution is highly unequal with the richest 20% of the population accounting for about 51% of Guatemala's consumption.  
• More than half of the population is below the national poverty line, and 23% of the population lives in extreme poverty.  
• Poverty among indigenous peoples, which make up more than 40% of the population, averages 79%, with 40% of the indigenous population in extreme poverty.  
• Nearly one-half of Guatemala's children under age five are chronically malnourished and it has the 6th highest rate of chronic malnutrition in the world and the highest in LAC.
• Chronic childhood malnutrition and stunting affects about 47% of all children under the age of five, 58% of indigenous children, and 66% of children in the lowest income quintile.
• In 2019, Guatemala ranked 68th in food security out of 113 countries, with only 40% of Guatemalan families enjoying food security.

Carlos Castillo Armas and Alicia Odilia Palomo Paíz | © History and Art Collection/Alamy

Long a client state of the United Fruit Company and the United States government, the Guatemalan government underwent a renaissance period from 1944 to 1954 when progressive governments attempted land reform and other broadminded actions to improve the standard of living for average citizens.  In 1954 a CIA-led coup installed a government aligned with the interests of the United States – fierce anti-communism at any price combined with protection of United States business interests.  Carlos Castillo Armas, a Guatemalan military officer and a member of the right-wing National Liberation Movement (MLN) party, was installed as President.  Remnants of the progressives advanced a rebellion movement and picked away at the Guatemalan military resulting in a decades-long civil war.

During the 1980s the Guatemalan government acted as a patron state of the United States and in concert with the Reagan Administration’s support of an autocratic regime in El Salvador and against the Sandanista revolution in Nicaragua.  Internally the Guatemalan government policy pursued a brutal and genocidal military pogrom in the Guatemalan highlands which heavily weakened the revolutionaries.  By 1984, the revolutionaries had been pushed back to the hills and although the civil war would carry on until 1996, the fierceness was never the same.  International pressure led to peace talks overseen by the UN commencing in 1990 and in 1996 a peace agreement was signed which essentially consisted of proforma democratic reforms.

The 1996 peace agreements, which ended 36 years of civil war, removed a major obstacle to foreign investment, and Guatemala has pursued economic stabilization through free trade agreements.  The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) entered into force in July 2006, encouraged investment and diversification of exports.  While agreements such as CAFTA-DR helped improve the investment climate, concerns over security, the lack of skilled workers, and poor infrastructure continue to limit foreign ventures.

Guatemala’s political institutions have been known for being feeble, patchy, and anti-democratic.  Political parties are wobbly and transitory.  Politicians from various levels of government rely on quid pro quo relationships with both licit and illicit actors to remain in political power and gain the profits that shadow that control.  Corruption scandals sparked extraordinary public protests in 2015 and led to the arrest and jailing of the President, Vice-President, and other high-profile officials.  In 2016, the first public officials tied to these crimes, a national criminal court judge and former cabinet minister, were convicted and sentenced.  The national Guatemala legislature passed reform legislation 2016 including the Law on Elections and Political Parties, the Organic Law of Congress and Law on Civil Service, and the Migrant Code.

Guatemalan President Alejandro Giammattei

Alejandro Giammattei, a right-wing favorite of then-President Donald Trump’s administration, was elected as Guatemalan President in 2019 with only about 40% of the electorate voting.  Giammattei, nominally a physician, became the head of Guatemala’s prison system in 2006, and in 2010 was accused of being involved in an assassination within the prison while he was the acting director.  Charges were dismissed in 2012 due to a lack of evidence.  His platform included the creation of jobs to mitigate out-migration of impoverished populations but his major accomplishment as President was engaging in an Asylum Cooperation Agreement with the United States, in which Guatemala became a ‘safe third country’ for asylum seekers detained at the United States border.  This agreement was the mechanism for the Trump Administration to off-load unwanted Central American migrants who were often misled about their destination when they boarded the aircraft bound for Guatemala.

​Guatemala is a case study for what goes wrong when the United States interferes with sovereign countries and their evolution to democratic self-governance.  A multi-pronged group of policies intended to foster democratic process, progressive tax policies, labor protections, and public health would encourage the generational stability required to bring Guatemala into relative prosperity.  Such endeavors are much more complicated than building a border wall, however, and it is unclear the United States government has either the patience or the intellectual ability to comprehend these requirements.

​An introduction to the profile of the country was provided by https://www.worldbank.org/en/country/Guatemala.  Information on the economy of Guatemala can be obtained at https://www.cia.gov/the-world-factbook/countries/guatemala/#economy.  Information on tax rates can be discovered at https://home.kpmg/xx/en/home/insights/2011/12/guatemala-income-tax.html.  Information on the political environment can be discovered at https://www.wola.org/analysis/corruption-in-the-guatemalan-political-system-and-the-2019-elections//.  Additional political information can be discovered at https://www.ndi.org/latin-america-and-caribbean/guatemala.  A discussion of the 2019 election can be found at https://www.washingtonpost.com/world/guatemala-awaits-presidential-election-results/2019/08/11/f8d70034-bc3a-11e9-a8b0-7ed8a0d5dc5d_story.html.  The discussion of the third country agreement was provided by https://www.washingtonpost.com/world/the_americas/the-us-is-putting-asylum-seekers-on-planes-to-guatemala--often-without-telling-them-where-theyre-going/2020/01/13/0f89a93a-3576-11ea-a1ff-c48c1d59a4a1_story.html.