Analysts: Isabella Caravaggio & Isaac Kinsella
Team Leader: Haliz Doskee
Since the 1980’s Guatemala has been heralded as the most populous country in Central American, with an estimated population of 15.5 million. Formally a country under autocratic rule, Guatemala has shifted their government to a representative structure with a democratically inaugurated government which was put into office in 1986. After the transition to a democratically organized structure, Guatemala has entered into the arena of global politics seeking to become a major actor in Central America. The global perspective of Guatemala is met with mixed reviews. In particular, the global community is making note of Guatemala’s human rights conditions which fall behind the standard of other Central American countries with similar GDP and populations. There are many issues leaving Guatemala far behind on global standards. This summary will overview some of the relative social and economic conditions within the country. Highlighting key issues of inequality in indigenous populations, and the issue of extreme wealth inequality within the country.
Guatemala’s Economic Analysis
Guatemala resides within a key region in Central America. As a border country for most goods and services to travel either north to Mexico, or south-east to Brazil; Guatemala’s geographic location offers the country a continual supply of foreign goods flowing through the country. Guatemala currently has the largest economy within Central America, yet out of neighbouring countries Guatemala ranks the lowest in the region in relation to the Human Development index as per 2013. With a gross domestic GDP of $54 billion and a per capita income of just over $3,341 Guatemala has been assessed to be a lower middle income developing country.
Despite relative political and macroeconomic stability, the level of poverty and inequality in Guatemala remain well above the averages of neighbouring countries. Topping out with over 54% of the country living below the poverty line. Programs put forth by the Guatemalan Government have continually be undercut by the low level of resource investment backing into the country. Guatemala has some of the lowest levels of spending in relation to their GDP, particularly in the areas of healthcare and educational spending. With one of the lowest tax bases in the region it would follow that the country would be able to reinvest back into social welfare programs to redistribute the inequality in wealth. The Guatemalan government uses this low tax base as an incentive; drawing in businesses with generous tax exemption policies, as well as fiscal incentives for companies developing within Guatemala. Ironically, the main source of revenue from the public comes from indirect taxation, which falls disproportionately on the poor.
In 2002, within Guatemala, the wealthiest 10% of the population was accounted for having 42% of the county's total income, and the poorest 10% only accounting for 1.4% of the county’s total wealth. In a more recent survey the inequality has become even greater in its divide. The top 10% of the wealthiest now consume 47% of the wealth, and the poorest 10% only making up 1% of the total income. As a result Guatemala suffers from severe social development, particularly when compared against other countries of similar GDP. One in two children under the age of five are chronically malnourished. This is twice the rate of both Ecuador and Jamaica countries who share a similar GDP bracket with Guatemala. This trend is even worse for indigenous children whose chronic rate of malnutrition is upwards of 70%.
With no plan to create a redistributive tax system, policies put forth by the Guatemalan government have little impact on combating poverty and inequality in Guatemala. There is a required re-evaluation of Guatemalan politics and fiscal makeup that are necessary to create actual change within the country. Without assessing the problems within the system first there can not be progress made in Guatemala towards eliminating the high degree of inequality within the country.
Land Uses by the Guatemalan Government
As a country that has been suffering from violence for the past thirty years, Guatemala is viewed as one of the most insecure places in the world. A rate of over 35 homicides per 100,000 people as well as a general distrust of both the local government and the police force Guatemala has created a long standing issue of fostering positive relations between the government and their citizens. Guatemala was engaged in a 36-year civil war in which there were pogroms, massacres and violent repression of civil society. A large majority of the civil rights violations during this time fell heavily upon the indigenous population.
Despite the democratic remodelling, Guatemala’s governmental structure is fragile at best. With the continued violation of human rights, crime cartels, drugs and large amounts of corruption found within the government there is cause for concern amongst other nations that the continued violations will lead to significant ramifications for the country. Particular concern is directed towards land use conflicts and indigenous relations in Guatemala.
The most common of these issues is the use of land for mining or creation of hydroelectric dams; issues which are often answered through protest by indigenous populations. The Guatemalan government often uses these projects as a source of potential revenue for the country in order to amplify their often lacking social welfare programs, and poverty. As direct beneficiaries of these program many do not see eye to eye with government. In fact, many see this land use program as a violation of traditional lands. Changes in the land structure directly affect indigenous livelihood, and without proper representation within the Guatemalan government, the indigenous populations enjoy no say in how wealth from these land use changes should be spent. This is a major consideration to be taken into account by any potential investor looking to become involved within Guatemala
Although Guatemala’s indigenous community comprises 44% of the nation’s total population, they are severely underrepresented in the nation’s political institutions and government. There are no indigenous members of cabinet and of the 158 seats in congress, only 22 are held by indigenous persons.
Since the early 2000s there has been a large increase in the flow of non-governmental organizations (NGOs) operating within Guatemala. This influx of international involvement has brought concepts of social change, multiculturalism and social perseverance to Guatemala. These themes have intersected with Mayan and other indigenous communities’ with their attempts to assert ownership over land and resources as private resource extraction and energy production-related companies increasingly make claims on their territory.
Because these communities are largely excluded from public and private decision making processes they have adopted a conception of social perseverance and have resorted to alternative means in order to voice their concerns and encourage the government to take action: environmental activism.
Environmental activism will be the most prominent concern for any and all energy investors. However, the use of environmental activism is something that cannot be overstated for potential investors in the Guatemalan energy sector. Guatemala and Honduras are often labelled as most dangerous countries in the world for environmental activists. In Guatemala, a majority of these activists hail from indigenous communities in an attempt to urge governments and private companies to respect their land and resources. Protection mechanisms for indigenous environmental activists have proven to be ineffective and many activists are victims of smear campaigns or violent treatment from police forces. Although the Guatemalan constitution protects the right to freedom of assembly and association, these rights are often overlooked by police and military forces.
In 2014, approximately 1,500 police officers raided a non-violent indigenous protest against the proposed Santa Rita hydroelectric dam, which would occupy the lands inhabited by the Q’eqchi community. This clash resulted in the death of seven Q’eqchi protesters -two of which were children- the detainment of over 10 villagers and the injury of over 60 people.
Recently, the president of the Real Madrid football club has proposed to build a vast hydroelectricity complex in the Cahabón river in 2018. This has resulted in an outcry from indigenous activists who claim that this complex will affect the lives of over 30,000 Q’eqchi living in the surrounding area. These actions by the indigenous population have resulted in comments from international NGOs who denounce the club’s president for failing to fully assess the environmental and local community damage that this complex would incur.
Impact on Potential Investors
Violent clashes between indigenous environmental protestors and police forces have significant ramifications for companies looking to invest within the energy sector of Guatemala. The indigenous population is very active in its environment-related protest efforts and there are no signs that this activism is slowing down. Local and international NGOs also add to the impact and exposure of these indigenous protests. A number of international human rights and environmental NGOs in Guatemala support indigenous activists, and are quick to denounce energy and resource-extractive companies who fail to incorporate environmental impact and community sustainability assessments in their project proposals. This denouncement also applies to companies in the renewable-energy sector. Despite the fact that their projects may be more environmentally friendly in the long run, they too have the potential to cause disastrous consequences in surrounding communities, as demonstrated in Rio Cahabón.
This implies that energy companies operating within Guatemala will be subject to an extreme amount of scrutiny and exposure when dealing with resources and territory that fall under indigenous jurisdiction. This can work very positively or negatively for potential investors in Guatemala. If investors support a project that disregards the indigenous community and their land, they could be subject to local and international scrutiny which could affect the confidence of their shareholders and their overall profits. However, if the project they invest in manages to support the goals and wishes of the indigenous community and successfully includes them within their project, they have the potential to be gain considerable notoriety in Guatemala, Central America, and Latin America. Indigenous environmental activism in Guatemala makes the energy sector a high stakes investment that could result in incredible profit or loss. It is up to the investors, CEOs, and project managers of these companies to ensure that the rights and voices of the indigenous populations are not compromised, marginalised, or undermined.