Guatemala - Domestic policy

One of Portillo's greatest challenges is to reassure Guatemalans—and the international community—that he remains committed to the peace process and to cleaning up government corruption. The December 1996 accord, signed by the Arzú administration and leftist forces, was not fully enacted and remains a delicate matter in Guatemala. In a 1999 plebiscite, Guatemalans voted down key constitutional reforms that would have expanded and protected the rights of indigenous peoples. Portillo vowed to wrap up the peace accord and move the country toward reconciliation. He has often spoken of a governability pact to address national problems. But that would mean a closer alliance with the PAN and the leftist New Nation Alliance (Alianza Nueva Nación—ANN). The leftist coalition said it would support a pact only if it was based on the peace accord. PAN has been stung by constant criticism from Portillo and may be unlikely to support any pact with the government. On the economic front, Portillo promised to enact a series of economic policy initiatives to pull Guatemala from an economic crisis and restore stability. International lending agencies have expressed concern over Guatemala's state of public finances. FOREIGN POLICY

In February 2002, Guatemala received a commitment of US $1.3 billion from international donors sponsored by the Inter-American Development Bank. Disbursement of funds is contingent upon the nation's meeting 1996 peace accord goals such as an increased tax collection rate and financial reforms. The Arzú government only approved about 30% of laws required by the peace accord. Portillo has repeatedly assured the international community that he would work to ensure the full implementation of the accord. Portillo is under pressure to reach national reconciliation and press for investigations of human rights abuses. International donors are expected to continue to pressure the government to comply with electoral law reform, justice system reform, and decentralization of government. Portillo also will remain under pressure to promote human rights, and improve the rights and social conditions of the country's indigenous peoples.

In March 2000, the Portillo government accepted "institutional responsibility" for 44 of 155 cases of human rights violations being heard by the Organization of American States (OAS). Human rights organizations feared the Portillo government was only trying to enhance its image by taking responsibility, but would do nothing for the families of victims. The government also must deal with Spain, which accepted a human rights case filed by Nobel laureate Rigoberta Menchú against Montt and others.

Much like Arzú, Portillo wants to continue to open the country's economy and bring Guatemala into the North American Free Trade Agreement (NAFTA). Portillo continues to encourage greater economic cooperation among the Central American countries. With mediation by OAS, he is working with Said Musa, leader of neighboring Belize, to resolve a decades-long border dispute. During his presidency, he has traveled extensively through Central America to improve relations with neighbors.

In February 2002, Portillo traveled to Washington, D.C., where he met with U.S. secretary of state Colin Powell. Powell praised the Portillo government's success in implementing counterterrorism measures and passing anti-money laundering legislation. But in October, an assistant secretary of state (Otto Reich) issued a harsh statement, criticizing Portillo's government of corruption, ties to drug trafficking, and noting a serious deterioration of human rights in Guatemala. Portillo, who had traveled to China and Germany during 2002, seemed to be looking beyond the United States for trade partners and international political allies.