Global Policy Forum

Inequality and Inadequate Policies:


By Jayati Ghosh

August 13, 2003

Exotic and beautiful birds grace the trees in the courtyard garden of the elegant hotel, a 16th century convent converted into a luxury facility. The birds occasionally squawk, but they do not move from their branches because they can no longer fly. They have had their wings clipped, and are placed in their positions by the staff every morning so that their magnificent plumage can be daily admired by the hotel's guests. It could be a metaphor for the combination of beauty and cruelty that characterises the Central American country of Guatemala.

The town of Antigua Guatemala, just an hour's drive from the capital Guatemala City, was the first colonial capital of the Central Americas, built by the Spanish conquistadores. The picturesque town is now a UNESCO world heritage site, delighting visitors with its charming squares, impressive colonial architecture and chic shops and restaurants. All around, spectacular views of the mountains and a nearby volcano help to explain why – in a country filled with tension and periodic violence - this town remains an oasis, a favourite pleasure ground for the elite of the entire region.

The lifestyle of the rich, at least in this town, appears to be gracious and expansive, in a manner long forgotten elsewhere in the world. A wedding at the same hotel featured guests in evening gowns that could have come straight from the sets of "Gone with the Wind", and with the same degree of elegance combined with racial disparity between the servers and the served.

Elsewhere in the country, things are far from being so serene or secure. Guatemala remains a country of extreme inequality, severe and continuous oppression of the majority of the population, and violence that is never very far from the surface of society. Recent events have only confirmed the feeling of insecurity among most of the people, as life remains fraught both economically and politically.

Guatemala, just south of the Chiapas region of Mexico, is the third largest country in the region, with a population of more than 11 million and a per capita income of around $1,700. But it is a country characterised by oligarchic control and strong social and economic exclusion, typically along racial lines. Some have even described the structure as imitating the apartheid regime of South Africa, albeit without the legal framework.

The bulk of the population – around 50 per cent, which is one of the highest rates in Latin America - are indigenous Mayan people, who are among the poorest in the society. Two per cent of the population are of "European" extraction, in whom both political and economic power are highly concentrated. The rest are mestizos or ladinos (supposedly of mixed racial descent). The diversity of the Mayan population becomes clear from the fact that 22 separate indigenous languages are spoken throughout the country. The most prevalent non-Spanish language is Quiche Maya which has 700,000 speakers, 95 per cent of whom do not speak Spanish.

Some 57 per cent of the population is estimated to be living in poverty, and extreme poverty affects 25 per cent. Among the Mayan population, extreme poverty is estimated to be as high as 70 per cent. Illiteracy is 36 per cent, yet reaches 51 per cent among indigenous women. In some rural areas, where the majority of the population is indigenous, illiteracy is as high as 90 per cent. School dropout rates are as high as 81 per cent in rural areas and 51 per cent in urban areas. Only 17 of every 100 girls complete primary school, and in rural areas 66 per cent of them drop out of school before completing the third grade.

In general, the country has among the worst human development indicators in the entire hemisphere. With respect to health, the deficiency is revealed in the infant mortality rate of 67 for every 1,000 live births. 50 per cent of Guatemalan children suffer from chronic malnutrition. Sanitary conditions are poor. Spending for health care is barely one percent of the GDP; of this amount less than one-third is earmarked for preventive and community medicine. Public health services are highly centralised, concentrated around Guatemala City, and even here equipment is obsolete or non-existent.

The income distribution figures confirm the picture of inequality that is extreme by even Latin American standards. The top 10 per cent of the population account for half of the national income, and the top 20 per cent of population controls 80 per cent of the GDP. Some twenty families are said to control almost all of the country's private agriculture and industry, and are now entering the service industries as well.

This unequal economy and society has had a long and troubled history, beginning with the Spanish conquistador invasion and indigenous enslavement in the 16th century, through the United States-backed military coup against Guatemala's only reforming government in 1954, up to the current globally integrated structure which relies on cheap labour. Guatemala is indeed the quintessential "banana republic".

In the late 1940s and early 1950s, there were attempts at redistributive land reform made by the military government of Colonel Urbans followed by the regime of President Arevelo. As a result there was expropriation of the substantial land held by the United Fruit Company, the same American multinational which subsequently dominated Latin American politics and whose activities are even described in the poetry of Pablo Neruda.

Obviously, such a situation in the US' backyard could not be allowed to last. The US government assisted local landed elites in engineering a military coup in 1954, which created a dictatorship that lasted until the late 1980s. The mass resistance to this oppressive dictatorship was led by leftist guerrilla peasant movements, of whom there were four major factions. The resulting civil war lasted 36 years, in which more than 200,000 people (mostly Mayan peasants) are said to have been killed.

Finally, exhaustion with the continuing violence and terror led to the emergence of a peace agreement finally signed in 1996, brokered by the United Nations. The agreement promised some concessions to the indigenous peoples, peasantry and urban workers, in the form of poverty alleviation programmes, improving access to land for the small peasantry, increasing economic activity and employment, improving access to basic services, consolidating the democratic system, intensifying the decentralisation process and strengthening the rule of law. However, given the polarisation of national political life and the continued stranglehold of the landed and business elite on the government, the process set in motion by the Peace Accords did not proceed very far, has already lost momentum and is falling well behind schedule. In particular, the promise of agrarian reform remains unfulfilled. Land reform are supposed to be "market-based", in that compensation to existing landlords will be at the market value of the land. This effectively rules out any significant redistribution, since the government's available resources simply do not allow it to purchase substantial land at prevailing market prices. Other social expenditures remain low, and even growth has faltered in recent years.

Guatemala's economy is dominated by the private sector, which generates about 85 per cent of GDP. Agriculture contributes 23 per cent of GDP, accounts for 75 per cent of exports and around 40 per cent of employment. Most manufacturing is light assembly and food processing, geared to the domestic, US, and Central American markets. While there has been some increase in tourism and exports of textiles, garments and non-traditional agricultural products such as winter vegetables, fruit and flowers in recent years, the traditional exports of sugar, bananas, and coffee continue to represent a large share of the export market.

Meanwhile, the open trade regime has created problems of viability for Guatemalan agriculture as well. Not only have coffee and banana prices crashed, but even subsistence bean farming is under threat from cheaper and more subsidised US imports. The recent downturn in world prices has contributed to Guatemala's relatively slow growth over the past two years. The government sector is small and shrinking, with its business activities limited to public utilities, most of which have now been privatised, ports and airports, and a few development-finance institutions.

This has created an economy in which the struggle for basic survival dominates the existence of the bulk of the population. In the rural areas, less than 2 per cent of the population owns at least 65 percent of the land and resources. Nearly 80 per cent of all the farms are less than 3.5 hectare and occupy just over 10 per cent of the land, mostly in the central, less fertile, hilly areas.

Small peasants, nearly two-thirds of whom are of Mayan descent, are restricted to these small, largely unviable holdings. They are therefore forced to migrate to large plantation farms for seasonal wage work on the Pacific coast sugar and coffee plantations. These seasonal workers join with the permanent labourers to drive the large agro-export industry, which creates more than half of all export earnings.

The entrenched latifundio-minifundio system is enforced through the powerful political alliance of the landowners (The National Farmers and Ranchers Association, and CONAGRO) whose interests are typically protected by the corruptible and deadly military. Meanwhile, the rich landlords are coping with the falling profitability of agriculture by diversifying into other activities. One of the largest landlords, the Gutierrez family, has moved into the fast food business through a very successful chain of restaurants ("El Pollo Campero") across Central America, and also owns the private TV channel Guatevision.

Most non-agricultural business is located around the urban centre of Guatemala City, home to more than 1.5 million people. Migrants who have been driven to the city by the unequal rural land distribution and the growing non-viability of agriculture, have created a pool of cheap, desperate and disorganised labour. This has led to the emergence of a maquila industry for garments in particular, mostly directed by US investors. The government's export strategy remains confined to easing labour laws in the maquilas and the Free Trade Zones. The work force in this sector is composed of mainly young women between 18 and 25 years, typically working in poor and insecure conditions.

The other survival strategy for the poor is migration. Ten per cent of the entire population of the country is now estimated to be living in the United States, and the second and third largest "Guatemalan" cities are now Los Angeles and New York respectively. In some parts of the country, this has depopulated the area of young people, and also created a remittance economy whereby household survival is linked to the remittances sent by such migrant workers, who are typically at the bottom of the labour market hierarchy in the US.

Current politics hold little promise for the ordinary people of Guatemala. Elections are due in November, but the main parties remain controlled by the elite, and represent a choice between neo-liberal marketist control and semi-fascist control. Human rights advocates, including associates of the Nobel prize-winning Mayan peasant activist Rigoberta Menchu, are routinely attacked, and even murdered. The partially US trained military continues to act with impunity in the repression of all acts of reform and empowerment. This dominates the social consciousness of Guatemala, especially among the rural, indigenous Mayan population, who have been and remain the main targets of the military.

The Inter-American Development Bank has described Guatemala as one of the world's five most violent countries, citing the many (often politically motivated) murders, the treatment of indigenous people by the military and police, as well as the increasing prevalence of vigilante law and lynching in a countryside bereft of police. One report published in June 2000 by the Dallas Morning News, predicted that guns would outnumber people in Guatemala City by the following year, and this may well have been achieved.

The most recent instability concerns the presidential ambitions of General Efraí­n Rí­os Montt, a former ruler who was associated with one of the darkest periods of Guatemalan history. He was put in power by a military coup in 1982 and served until 1983. During his term as president, the Guatemalan military carried out a "scorched earth" campaign of hundreds of massacres, tens of thousands of extrajudicial executions, and - according to a UN-sponsored truth commission - "acts of genocide." The regime destroyed and murdered entire villages, creating barb-wired, Spanish-only speaking "model villages" in their place, using methods of documented torture and, in general, creating an environment of fear and terror throughout the country side.

Rí­os Montt is currently the President of Congress and the head of the Guatemalan Republican Front (FRG), the political party of the current president, Alfonso Portillo. He is widely acknowledged as the real power behind the throne. He made two attempts to run for president in the 1990s, but his candidacy was barred by a provision of the 1985 Constitution that prohibited people who had participated in military coups from becoming president. Guatemala's electoral court and the Supreme Court both reaffirmed that prohibition, ruling against his candidacy on 22 July.

In response to that decision, on 24 and 25 July, there were major riots as armed mobs of ex-paramilitaries and officials, allegedly organised and financed by the FRG, held Guatemala City to ransom. In the international press, the coverage focused on the violence near the US Embassy, but it was far more directed to local targets. Individuals, especially those associated with human rights groups and peasant and workers movement, were attacked, buildings and institutions were destroyed and properties were burned. Rí­os Montt and members of the FRG allegedly involved in the events, deny any responsibility for orchestrating them despite the circumstantial evidence pointing to their involvement.

The court meanwhile heard motions by two political parties concerning the constitutionality of its original 14 July ruling in Rí­os Montt's favour. On 30 July, the Constitutional Court confirmed its ruling that Rí­os Montt's candidacy for President in the November 2003 elections was admissible. This admission contradicted its own previous rulings. However, this time around, three of the seven judges on the court have close ties to Rí­os Montt and his party. The contorted argument used to justify the decision was that that Rí­os Montt is not covered by the ban, because his seizure of power occurred three years before the law was adopted.

While the situation may appear truly depressing, there are also signs of some protest and revival of mass politics, especially among the indigenous population. In the rural highlands, Quezaltengo has recently elected an indigenous mayor. In some places, peasants have forcibly occupied land and now cultivate it collectively. Civil rights groups and activists for economic and social justice remain vigorous despite the threats and intimidation. These brave men and women who continue to fight oppression and repression, and represent a very long struggle of the Guatemalan people for the minimal enforcement of their rights, do give some indication of hope for the future.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.