4.22.2008 Lecture Guatemala The economy Neo Liberalism Ethnic Question Negotiations Marco Cerezo (Christian Democrat)- Dec 1985 Won elections Undertake mild reforms But would not press for land reform Not repressing strikes Taxing unused agricultural land Acknowledged power would be limited due to the power of the military International financing for the country only came because they allowed a civilian to take office 1980 Worst Economic Crisis Sharp cut in the price of Guatemala's main export products Major contraction in the sale of Guatemala's industrial goods Private sector was too nervous to invest and instead they shipped large amount of capital abroad Military government (Lucas Garcia) tried to compensate for private sector's lack of investment large scale public works project, this only compounded the foreign debt because of military corruption Fiscal deficit increased rapidly- states have income from taxes, grew more because of the spending in large public works project The key sector of the economy crashed, export crop production increased, unemployment increased by 500% o No aid or unemployment benefits for people Most turned to informal sectors Those that still had jobs dealt with low wages because of inflation Prices increased 35% but wages were still staggering Food prices had serious political consequences 1985-The price of maize and beans rose by 300% Guatemala- experienced deindustrialization o Triggered by the collapse of the central American common market
New model of development in 1970s It is dependent on non traditional exports Traditional (cattle, cotton, bananas) Non traditional 1970s(Agriculture) Winter vegetables and flowers for the North This approach was formalized through the Caribbean Basin initiative o Initiative of Ronald Reagan o Gave preferential treatment of duty free access to US markets o Gave US investors incentives to invest in the country o In non traditional exports key beneficiaries were the US based transnational corporations Local farmers were sub contracted After a number of years these strategies expaned But they did not produce an economic miracle 1980s-Guatemala (opium Producer)non traditional export o Significant tran shipment point for cocaine o Military played a key role in this area of the economy o Represented a temporary boom but drug production o But would never truly relieve the crisis 1990s Industry (Maquila sectors) o Based on cheap labor they are often established next to port and airports in order to facilitate shipment o Assembly of certain kinds of goods for exports Utilize the regions comparative advantage =cheap labor Which would draw in foreign investment Would give region competitive insertion in world Military finally consented to step aside from holding the presidency o This is why they were constantpressure o B/c the economy was in crisis and they were being blamed for it o Formal shift in power, b/c institutions still had control over civilians them around the region to maintain control over the country o Apparent shift in power opened the gates to economic aid The US was the major source of this new aid After a period of only providing limited economic assistance to guatemalea Carter's concern with human rights came a concern Guatemala became the focus of Carters human rights Cutting off military aid Seized supporting the extension of multi lateral bank loans Carter policy did not generate any changes from the human rights policy in Guatemala
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Guatemala gov. refused to accept the US ambassador 1980 the Guatemalan and US gov. were not in good relations o In terms of aid o This did not had impact on Guatemala's Human rights Because the military had eliminated moderate reformist groups Principal flaw of Carter reform Is that his intentions were far too late, wait to long to step in and demand change Laugarud- 1977 (military aid was cut off) Turned down US gov. aid if they would get involved their with human rights In spite of ban of funds previously allocated form of aid continued because they had already agreed to Israel still continued to provide aid o Armament was bought from Israels o Guatemala found ways f around Carter 1980s- Reagan Administration o Sought to improve relations with Guatemala o 1981 Envoy to Guatemala- Defend peace and liberty June 1981- allowed sale of military vehicles in Guatemala April 1982- end freeze on arm sales lifted by Reagan administration Decided to end the ban on multilateral bank loans(world bank, has major power deciding who gets loan) Citing the improved human rights administration 1983 Arms flow decreasesd due to congressional opposition 1984 increased once again Congress approved 40 million of development aid Guatemala's military gov. strategy continues Cerezo o No reform o Sought to achieve a basic social pact o Priority on winning support of country's civilian economic elite o Neo Liberal Strategy Letting the market choose the course of the economy o Policies Clearly designed to benefit industrialist and large growers But he brought inflation under control by holding down wages but not prices No overall program for reducing unemployment and social services were cut back Insured Economic recovery for the private sector
This pattern of Neo Liberalism took hold in the 1980s but also in Venezuela When these economic policies provoked an angry response of poor Repression took place However not on scale of earlier years but served to show who was in reform o Began slow and cautious process of unions and other civic organizations in response to repression Gov. response to those with repression o Military left economy in shambles after (civilian ) Major social dilemma The ethnic question o 50-60% were indigenous Until late 1970s Guatemala's gov. ignored the indigenous population except for the extent that they were incorporated into various labor arrangements Late 1970s- indigenous population were able to maintain most aspects of their cultures 1960s-1970s- economic growth ( cotton, Sugar Cane) Broke down barriers that kept the indigenous population in isolation Brought them in more contact with the ladino individuals They sought every effort to preserve their own identity o Both civic and guerilla organizations was recovery of their land and effort to resist further expropriation of their land were central to their participation in opposition o Also ethnic discrimination was a reason for their participation The economy was totally ethnically segmented End to ethnic oppression and class Reasons: Came from material circumstances and missionaries played a key role in raising these issues and initiating a process of consciousness raising Indigenous pop. Target of most intense repression in the 1908s o Consequences for their participation 1990 (noV.) Second Civilian Gov. Election o Ended in draw (Jorge Serrano and Jorge Carpio) o Winner: Jorge Serrano Only 30% of population passed valid votes Absenteeism was so high that the new gov. was legal but not representative Few changes: Important moves: negotiations with the URNG(opposition) URNG pressed for negotiations since 1986 however for years the gov. insisted that the insurgents laid down their arms Late 1990s the war was intensifying once again
Mid 1990s the way began to be open for the search for alternatives After many failures 1989 church sponsored national Dialog o (series of meetings between the URNG with the national reconciliation commission, 2nd meeting URNG and political parties, 3rd URNG and the social sectors, 4th URNG and the Gov. And Army o Initiates the National Dialog( negotiations) No support of gov., military, o June 1990s agreement ( URNG and political parties) Need for modification in the constitution Because of the agreements, the guerrillas agreed that they would not disrupt the elections o Next agreement (CACIF and URNG) o Sept 1990