Guatemala Elites and Organized Crime: Introduction

Guatemala is Central America’s most populous country and its largest economy. But an intransigent elite, an ambitious military and a weak state has opened the way for organized crime to flourish, especially since the return of democracy.

During three decades of democratic rule since 1985, the longest such period in Guatemala’s history, economic elites have sought to gain hegemonic control. In doing so they have tried to exercise power that is not sustained by military force, but rather by legitimacy and consensus, at least among the diverse group of elites who share power.

This is one part of a multipart series concerning elites and organized crime. Read the full Guatemala report here, or read the other parts of this investigation here.

Historically, there were two prominent power actors: ideologically conservative businessmen and high-ranking military officials from the middle classes who derived their influence by maintaining the army as an institution of social and political control. The political parties distinguished themselves between those that mobilized the social base to gain power and those who opposed them while at a disadvantage and under persecution. In contrast, almost all popular movements were opposed to the power groups, or openly challenged the established political system. Some of these popular movements eventually formed the core of insurgent groups which fought with the state between 1960 and 1996 in a brutal civil war that left more than 200,000 dead and 70,000 disappeared.

Throughout, elites have remained central actors in Guatemalan politics, as their economic power is based on their influence within political circles. They employ diverse mechanisms — formal and informal — to influence public policy. They can differ in their interests, values and functions, and operate on an unequal plane of power relations, being simultaneously in conflict with and dependent on society. These actors exercise autonomy and can formulate as well as carry out projects at the local and national level.

Elites in Guatemala

Despite their dependence on foreign commerce, economic elites in Guatemala managed to create a closed culture, avoiding the outside world and its modern tendencies. They trusted that their control over large tracts of fertile land and the certainty of counting on seasonal farm workers, in addition to the subordinated political regime that provided them physical security and potential financial benefits — credit, tax exonerations, and tariff protections — were sufficient to preserve their power, peace, and well-being.

The coming of modernity, therefore, was undesirable. The elites largely ignored it in order to minimize the effects on the gears of the well-oiled machine they had constructed. They imposed a defensive and conservative mentality that eventually defeated the reformist regime of Jacobo Árbenz. Árbenz had become president in 1951 amidst a wave of discontent and had tried to open the political process and institute a controversial land reform. His so-called October Revolution implemented mandatory wages for farm workers, social security and the limited repartition of land, changes that have been diluted by subsequent administrations. Although the elites could not immediately repeal some of the October Revolution policies, they joined the United States government and conservative military forces in fostering a coup that removed Árbenz in 1954. Despite these efforts to resist change, however, the world was becoming irrepressibly bigger and more complex.

Import substitution policies implemented during the 1960s and 1970s created a new social ladder. The stimulus generated in the middle of the 20th century by new agricultural products for sale in foreign markets expanded the traditional closed circles of economic power. The enlargement of the agricultural sector, as well as the promotion of cooperatives linked to export goods and the introduction of chemical fertilizers in the farming economy did not represent so much a threat to power or a change in the rules. But it did alleviate pressure on the land, encourage small surpluses, and provide jobs for an emerging rural middle class. Some members of this new middle class belonged to the civil and military bureaucracy, or were descendants of prosperous indigenous merchants from the northwest and from the states of Alta Verapaz and Petén.

At the same time, Guatemalan economic actors were severely affected by abrupt changes in the global economy. The economic elites learned — at a high cost — to insert their businesses into the global economy, put their investments in several countries and vertically integrate their local production chain.

It is only with this backdrop that we can analyze the slow transition process of Guatemala’s economic elites during the second half of the 20th century. In the economic realm, this transition occurred where traditional plantations lost importance and leaders of the agriculture industry lost political weight. In the political realm, the transition saw the introduction of more democratic rule and the promotion of civil liberties as a condition of international legitimacy in a market economy. And in the domestic and international cultural setting, media exposure and new conditions for economic competition — including the formation of human capital and modern infrastructure — became unavoidable challenges for the reproduction and consolidation of the principal economic actors.

Corporations now represent Guatemala’s oligarchy, and this is where old surnames from the end of the 19^th century are mixed with the modern families that emerged with the industrialization policies of the 1950s. These entities, which also control some 90 percent of the banking sector, represent around 10 percent of Guatemala’s gross domestic product, but their power has been translated into control over mass media, the hiring of lobbying firms in the United States and Europe, the organization of private security and intelligence, or espionage, offices, as well as extensive influence in the court system and the federal government.

In tandem but independent of this group, new fortunes have surfaced whose origin is — as it had been with families of the traditional elite — related to government. A third group has emerged around trade and non-traditional exports, tourism, and contraband. Some of the members are second-generation families that fell into bankruptcy in the 1980s and others are first-generation middle-aged business people between 40 and 50 years old. Finally, the power of the cooperatives is represented by the National Coffee Growers Association (Asociación Nacional de Cafeteros – Anacafé) and the Rural Development Bank (Banco de Desarrollo Rural – Banrural) with 16,000 investors that include cooperatives, indigenous capital, women, nongovernmental organizations and micro and small businesses. The cooperative sector has the most extensive physical presence in the country and now successfully competes with the traditional banking sector.

In her renowned investigation Lineage and Racism, Marta Casaus demonstrated how dominant family groups have preserved their power since the beginning of the Republic.¹ The entrance of the emergent sectors during the 20th century was realized through a marriage of convenience among aristocratic families. It involved a mechanism of mutual assimilation that permitted the closure and control of the elites’ circle.

Of course, there were always dissident interests and attempts by dissident interests to break up the established order by leveraging state power. This is what happened at both the beginning and at the end of the period of military government from 1970 to 1982. A family-economic group close to President Carlos Arana Osorio (1970-1974) tried, unsuccessfully, to break up the beer and cement monopolies by attempting to build its own plants, which caused a small war that went beyond finances to include coercion and violent attacks. Another group tried to do something similar under the presidency of Romeo Lucas García (1978-1982) in the agro-export cotton sector and the promotion of large public infrastructure projects that contributed to the deepening economic isolation of the regime. Lucas García was finally deposed via a coup d’état, and repudiated by the population for his administration’s efforts to regain power via electoral fraud.

The realignment period of 1982 to 1985 saw the transition to a democratic regime. The United States proposed via the Caribbean Basin Initiative an alternative process for reviving the local economy, as well as offering a platform to dispute power, beyond the military, to keep the “communist threat” at bay. This process again tested the political power of the economic elite.

The so-called “communist threat” helped to solidify the last line of defense. Guatemalan guerrilla groups, as well neighboring insurgencies, awakened a sense of self-preservation that was placed above the squabbles and conflicting interests of economic groups that arose out of the economic diversification and narrowing social stratification during these three decades; thirty years that saw appreciable and sustained economic growth, the growth of the middle class and of urban centers.

Based on anti-communist principles that rejected the totalitarian state model, Guatemala’s economic elites embraced with great ease the package of ideological principles that emerged as the winner of the Cold War: neoliberalism. But they embraced a primitive and closed version known as the Austrian School. The University of Francisco Marroquín, founded in 1971, and its associated think tank, the Center for Social-Economic Studies (Centro de Estudios Económico-Sociales – CEES), led this metamorphosis and were home to the most conspicuous anticommunist-neoliberals of the era.

Economic actors are ubiquitous in the political realm. They are interchangeably represented by corporations, family organizations and interest groups, but also via their associations with politicians and business alliances. This includes employers’ associations or coalitions, with the prototypical example being the Coordinating Committee of Agricultural, Commercial, Industrial, and Financial Associations (Comité de Asociaciones Agrícolas, Comerciales, Industriales y Financieras – CACIF). The first constitute informal pressure groups, or networks, that manage private interests within the state, while the associations are formal lobbying groups representing business or union interests. The takeover of mass media has been another means of control acquired in recent years with the emergence of a group of ideologically neoconservative activists that produce brochures, booklets, television and radio programs, and even give lectures at universities.

What’s left are two principal ways to influence policy and maintain the status quo.

1) Direct-Action Networks

CACIF is the de facto political party of Guatemala’s economic elites. It is a hierarchical organization, well organized, conservative but flexible, and increasingly sophisticated — an organic class apparatus in the classic sense of the term — which is currently under the control of technocrats. It unites the most important economic actors via a permanent assembly of presidents and is capable of integrating, via informal mechanisms, the heads of consortia and family groups with significant weight in a variety of economic sectors.

CACIF has managed, with relative success, the “principled” battles of its associates, always having as its favorite target the fiscal policies of the government and official corruption. It essentially exerts a veto power on undesirable economic policies. That’s why CACIF takes on a visible and belligerent role in times of conflict, most notably during administrations in which the institutionalized economic agents lose influence. This is what happened during the rule of the Christian Democratic Party (1986-1991) and the Guatemalan Republican Front (2000-2004), in addition to other critical junctures.²

CACIF also closely guards its public image. It nurtures a perception of cohesion — not always based in reality — and of inclusion among the large consortia. No important economic agent would contradict CACIF in public.

2) Informal Networks

During every presidential administration, the traditional and emerging elites who have converted into lobbying groups — which can be comprised of families or business alliances — seek protectionist policies and other advantages that would provide them greater business opportunities. They do this by financing electoral campaigns in order to later have access to the highest level officials. This is also done by selecting a representative within the economic and financial ministries of the central government.

As a general rule, for example, for the past two decades of democratic rule the salaries of top-level public servants have been notably inferior to those of top executives in the private sector — by a ratio of 1:3. The income of ministers is subsidized via bonuses known crudely as “dobletes” and paid by the business alliances. In some cases, the ministers are paid directly by the large corporations. It is not surprising, therefore, that said ministers are always available via phone, or in person, for those who are really paying their salary and that these ministers make fulfilling their patrons’ requests a high priority. The loyalty of politicians is controlled via this redistribution of income and — once they have left their government post — by guarantees of social and economic reinsertion into the businesses that supported them, perhaps even enjoying greater perks and shares in corporate stocks.

Control of government entities and regulatory agencies, such as the ports and the tax agency, is also at the discretion of the president and the economic and public finance ministers. The president even has decision-making power — via a constitutional decree — to exonerate taxpayers that are late in making their payments.³

This type of arbitrary manipulation and influence over market forces — which extends to licenses, privatizations, concessions, usufructs, tax exonerations and more — has had profound social effects. It has led to the bankrupting of small wheat and potato producers and the chronically precarious situation of some 2 million corn farmers. It also limits market diversification, giving rise to monopolies and oligopolies.

This is how Guatemala’s economic elites, despite what some analysts say, have had a decisive influence over public policy priorities and in the overall evaluation of government management during democratic rule, from 1985 to the present. In addition to their traditional economic power, prolonged during this period via the control of strategic public services, these business people, almost exclusively men, have learned to utilize political structures and ideological principle to their advantage, especially during periods of political realignment and capital accumulation. However, these principles and political power rarely work in favor of the common good or contribute to national development.

The Guatemalan State

During the 20^th century, the public sector had been an important mechanism for upward social mobility among the urban middle class in the capital and in the provinces. Beginning in the 1950s, acceptance into the army, teaching, or any government institution — social security, the ministry of health and finance, the electricity institute, etc. — equaled job security. The jobs provided a professional career, guaranteed benefits and a peaceful retirement. This, in turn, permitted expectations of supporting a family, education and even higher expectations of social mobility for the next generation, including the creation of savings. It created, for some, a modest “welfare state.”

But the state’s fragility remained throughout and even deepened during the democratic period (1986-2016). This phenomenon must be understood in the broader context. It resulted from the difficulties of structural adaptation in the face of the demands of a post-Cold War democracy and the challenges of globalization. And, in the Guatemalan context, the development of the state was further hampered by the fact that the state’s very 19^th century foundation was as a centrist oligarchy resistant to modern democratic reforms.

Indeed, the power relations that manifest themselves among the elites with respect to the Guatemalan state cannot be understood without examining the fragility of the state itself. In addition to the gradual loss of authority over society and the precariousness of its fiscal and institutional base, limited capacity to provide security and basic services, the state is sabotaged by corruption via influence peddling and openly corrupt practices. The result is that the state apparatus in Guatemala is suffering a degenerative process, despite a favorable environment in which it has enjoyed the longest period of democratic rule in its history.⁴ The state has suffered an erosion of essential capacities like guarantees of legal certainty, physical security and the production of other vital public goods.

This process accelerated at the beginning of the 1990s with the assimilation of the principles embodied in the Washington Consensus. The transformation from anti-communism to neo-liberalism required few concessions from the economic elites. The highly centralized Guatemalan state operated under a system of clientelism with institutionalized corruption and racism. It was socially ineffective but extremely brutal and repressive, and it did not enjoy the esteem of society. That is why any private sector crusade against the state — above all, the opposition to attempts to reform the tax system — has enjoyed popular support and has mostly succeeded in undermining these government efforts.

The neoliberal paradigm gave to the state apparatus functions that impeded it from becoming a mechanism of social mobility for the middle classes during the democratic transition that began in the mid-1980s. The expectations of the democratic state aroused a kind of social schizophrenia: it demanded solutions to important issues, but at the same time there was a reluctance to pay taxes. The new business models coexist with the old bureaucratic style, which is now marginalized among the strategic tasks. The discrediting and demoralization of state employees are deepening the isolation of the institutions and hamper efforts at comprehensive reform.

The most serious illustrations of state fragility in the context of corruption and insecurity are:

1. The loss of monopoly on coercive power and the use of force, which is associated with high levels of violence and the subtle relegation of authority in almost 50 percent of the national territory.

2. The limited scope of public policies and loss of regulatory capacity over the private sector, both in terms of security and social policies, which is associated with a weak tax system. As a consequence, this produced a lower quality bureaucracy and institutionalized corruption and uncontrolled discretionary spending, as well as a lack of continuity due to a change in administrations every four years.

3. Porous institutions and legislation regarding the economic interest groups that control strategic sectors of the economy and impede the diversification of the market by limiting competition.

The Political System

The nature of the Guatemalan state in the democratic period must also be understood by the limited ability of political parties and their leaders to manage the transition from the old economic models to modern ones. The lack of long-term accords has impeded the formation of stable political coalitions. No political ideology, party or movement has won reelection to the country’s highest office in over 30 years.

This constant alternation of power has conspired against the continuity of basic public policies. In part due to this phenomenon, the education system — the foundation for allowing citizens to live in a modern society — has not been reformed during the democratic period. Moreover, there is still no legal certainty for the population or for investments, and the tax system remains stuck in a morass. As a result, democracy has not been able to generate political parties or social movements that take root at the national level.⁵

The fragmentation of democratic politics facilitated the rapid repositioning of the old business powers. The first institutional failure by a politician, Jorge Serrano’s coup d’etat in May 1993, gave the impression that the acrimonious worker-management disputes had been displaced from the gravitational center of social unrest. Economic elites had little difficulty taking over an ample coalition of civil society that, by claiming the defense of freedom, was key to thwarting the coup. This was the first test of the hegemony of the economic elites in civil society during the post-Cold War transition period, and the elites showed they still held a clear advantage.⁶ As we will see in our case studies, other challenges to the status quo were met with similar strong responses by these elites.

Organized Crime in Guatemala

The evolution of organized crime in Guatemala must be put in the context of three overarching characteristics of the country.

1. Guatemala is one of the smallest countries on the continent (109,000 square kilometers). It has had a long, difficult history: a prolonged and violent 200-year experience with colonization; a permanent regime of dispossession and expropriation of indigenous communities; structural violence organized as political violence and civil war between 1954 and 1996, which has continued as rampant criminal violence in the democratic and post-conflict period; and one of the most unequal societies in the hemisphere with extremely high rates of child malnutrition and poverty.

2. The 20th was a lost century for Guatemala, in that the country failed to build state institutions. During this period, a strong military power inhibited the development of the state. There was also more than a decade during which the end of the civil war was not formalized. This led to idle security apparatuses that obeyed certain clandestine interests and diverted into criminal activities. As a result, competent and trained individuals with significant official status were able to weave together criminal organizations and partner with transnational crime.

3. Under these conditions, reforms to Guatemala’s security and judicial system included in the 1996 Peace Accords that followed the country’s civil conflict failed. The country’s traditional military power was ultimately weakened, and the National Civil Police and other investigative bodies were taken over by private networks, both legal and illegal, which sabotaged their ability to impose the rule of law. An estimated 80 percent of police are now considered unreliable. The homicide rate in Guatemala City hovers close to 90 per 100,000, one of the highest in the world, and impunity for violent crimes stands at 98 percent.⁷ Two-thirds of Guatemala’s adult male population carry firearms, and applications for gun licenses from women are growing. In short, the country is overwhelmed by criminal violence and citizen self-defense, which includes routine instances of vigilantism in vulnerable neighborhoods, the lynching of suspected criminals, and the widespread use of hired killers.

The principal failure with respect to reforms is found within the security and justice institutions, since physical and legal insecurity characterize the general fragility of the state. During the period of transition from authoritarian rule to democracy and political peace (1985 – 1996), clandestine operations of remnant security structures infiltrated civil institutions and contaminated the system. This period coincided with the growth and formation of the regional drug trade, which transformed Guatemala into a strategic link for access to the major drug markets of North America.

Corruption in Guatemala also became more unconventional during the period of democratization. As state institutions neglected internal processes of organization and management, they failed to complete — in terms of bureaucratic modernization — the transition from authoritarianism to democracy. Nor did initial economic reforms launched in the mid-1990s result in greater efficiency. These incomplete reforms gave way to serious distortions and administrative disorder, which in turn negatively impacted the quality of public expenditure. Consequently, the social legitimacy of the state was damaged.

Drug Trafficking in Guatemala

In recent years, drug trafficking has represented the most powerful form of organized crime in terms of the volume of money involved. This goes beyond crime,⁸ as drug activity absorbs political and security resources, inoculates the formal economy (financial, agricultural, and real estate), and has international implications — above all by affecting relations with the United States. Two main drug groups are based in Guatemala’s eastern departments of Zacapa and Izabal, and several splinter factions maintain links with the Sinaloa Cartel. There are also emerging groups led by Mexican organizations like the Zetas.

Roughly 90 percent of cocaine consumed in the United States transits Guatemala, but only about 0.5 percent of that is seized during periods of heightened counternarcotics efforts.⁹ Drug trafficking funds political campaigns at both the local (mayors, deputies) and national (presidents, courts, legislators) levels. It also co-opts military officials located in strategic trafficking zones and police structures to the point of becoming an insecurity factor for drug traffickers themselves. Police groups have been known to steal drug shipments and sell them to the highest bidder at the Guatemala-Mexico border.

Guatemala started becoming a drug corridor in the early 1960s. At the time, Miami was the main gateway for drugs entering the United States, with cocaine passing through the US ports hidden in containers of fruit, vegetables and shrimp. In those early days, the drug trade was essentially controlled by Cuban exiles living in Miami and Guatemala. In Guatemala, these traffickers had the backing of the local army and certain anti-Castro Guatemalan businessmen. Although the drug trade in those years was of a much smaller scale than the massive volumes seen today, it was large enough for local Guatemalan and Cuban businesses to capitalize on. By the 1970s they were out of the drug business and expanding their shrimp business, cotton crops or diversifying into heavy industry and banking.

The rise of drug trafficking changed entirely the conventional parameters of corruption. Weak or nonexistent election campaign finance controls, as well as the loss of tradition and partisan loyalty, opened the doors to criminal influence in Guatemala’s new democratic government. This porosity went beyond Guatemala’s security and justice bodies, spreading to the government’s procurement and contracting system. And, as the independence and fiscal autonomy of municipal governments increased, the caudillos and drug traffickers exercised a much more direct and almost total control over local and regional powers.

The flip side of this coin was the aforementioned ideological and media offensive waged by traditional business groups — organized as lobbyists with remarkable clout — against the idea of ​​regulatory intervention in the market and the strengthening of the attorney general. The effect of this was a weakening of public service morale and, therefore, a further opening in the level of distrust between society and the state. Thus, personal aspirations for accomplishment and professional prestige could hardly be found through a career in public service.

The contradiction of a state charged with formidable social tasks but denied tax revenues at the same time became the norm. After benefiting from incentive policies in the late 19^th century, large corporations have no direct interest in public spending, but they are interested in the laws that regulate market competition and allow for concessions. Their control via agents and intermediaries over the offices that regulate trade and establish market rules creates another complex picture of corruption, one that has been called “the take-over of the state.”

The Emergence of the CIACS

Within this context, after the mid-1980s and in the heat of Central America’s civil wars, drug trafficking fully established itself in the area and began to take off. Corrupt criminal networks emerged during Guatemala’s civil war, especially during its latter years. Forming these networks were senior officers and mid-ranking elements of the security forces who partnered with the country’s rising aristocratic business class and emerging capitalists. The outcomes of these networks were not uniform. Some administer large estates or are minority shareholders in companies. In others, second generation descendants inherited contraband and smuggling networks — such as controlling the customs office — or became the basis of drug cartels.

But the real seed of drug trafficking survived and flourished during the period when peace was being constructed in the region. The demobilization of large military contingents in Guatemala included the Interior Police, responsible for controlling contraband smuggling along land borders, and the Mobile Military Police, an elite unit that provided security services to private companies. The failure to insert these groups into productive post-conflict activities left an army of unemployed security service workers. Many were recruited by Colombian criminal organizations, and later Mexican groups, in need of protection and operatives.

The security system also suffered at the hands of military intelligence officers who had been forced out of the army for misconduct and then joined the new National Civil Police (Policía Nacional Civil). Altogether, there was a mix of three factors: unemployed soldiers; a police force overtaken by corrupt officers; and Colombian criminal organizations with “visas” to conduct business with the leaders of local security forces. The cartels had already begun installing the import/export front companies they needed to provide logistical support for drug trafficking, and they had business connections for money laundering. All these factors converged in support of the underworld’s interests.

It is therefore no coincidence the major drug kingpins of Guatemala were previously treasury police (Guardias de Hacienda), commissioned military officers, counterintelligence agents, or high-ranking officials. Arnoldo Vargas, for example, the first big-time drug trafficker extradited to the United States in December 1990, had been a police officer, and was on the path to a successful political career — he was elected mayor of Zacapa, the municipality in the eastern state of the same name.

But there was also a military structure that operated as a pseudo-paramilitary force. This network, which had an extended territorial reach and was an extremely effective force, is known as the Military Counterintelligence Service (Dirección General de Contrainteligencia Militar – DGCIM). The DGCIM became autonomous with the end of the civil war and moved to capture the spoils of war. It continued to carry out the wishes of individuals to eliminate alleged criminals such as robbers and horse thieves, but also took the initiative to organize rings that engaged in kidnapping, extortion and car theft.

Subsequently, these bodies — which had military discipline and organization, as well as knowledge of local terrain and networks within state security structures — took on operations for drug cartels and private security firms. They also worked with groups that had developed operational intelligence capabilities to serve their own purposes.

Eventually, these groups became so well defined they were given a name: the Illegal Clandestine Security Apparatuses (Cuerpos Ilegales y Aparatos Clandestinos de Seguridad – CIACS). Many of these CIACS were forged by blood pacts during the most intense military and police operations against insurgents at the beginning of the 1980s. Since their formation, the CIACS have been responsible for numerous executions and threats, as well as the systematic blocking of investigations by the Attorney General’s Office, known in Guatemala as the Public Ministry. One of the CIACS, known as the “La Oficinita,” has operated from within the Public Ministry since 1997. These shadowy groups also have been able to prevent certain cases from reaching trial. A powerful cloak of concealment within the key security institutions enabled them to weave a network of near complete impunity. As we will see in one of our Guatemala case studies, the CIACS are what raised the alarm and spurred the creation of the United Nations-backed International Commission Against Impunity in Guatemala (Comisión Internacional Contra la Impunidad en Guatemala – CICIG)  in 2007.

Over time, the CIACS have taken on various functions. Some are permanent and have legal status, but they can also commit illegal acts and operate clandestinely. Others form parts of complex structures that have longer-range objectives, and are of a political or business nature. In these organizations the CIACS constitute the armed and intelligence wings, essentially replicating the state apparatus in miniature. There are still others that are extremely flexible; they band together to complete certain tasks and then immediately dissolve. They are not permanent and their members sometimes switch ranks.

The most powerful CIACS are without a doubt those that are associated with organized crime groups and those that have started private corporations. Those associated with organized crime have taken root in local government, while those aligned with corporations have branched off into various institutions within the central government and civil entities. The CIACS are a kind of Sicilian-style mafia in the sense that they thrive off the weakness of state institutions, they are at the service of both licit and illicit private interests, they provide security, and they arrange contracts or eliminate competition. They are always, however, jealously keeping watch over their principal task: to produce impunity by maintaining a gelatin state that can be malleable but gradually returns to its initial structure despite repeated efforts at reform and modernization over a period of almost 25 years.

Other Criminal Networks

Human trafficking is a centralized and growing criminal activity with global connections, more diverse and far-reaching than those of drug trafficking. These traffickers maintain operational contacts throughout the Americas, Europe, and various countries of Africa and Asia, including the Middle and Far East. Its activities include trafficking in undocumented migrants from Cuba, Ecuador, El Salvador, Honduras, Nicaragua and other countries outside the region and the international adoption of children to the US and Europe. They work through networks of lawyers and justice officials. Guatemala was, until recently, the largest per capita exporter of adopted children and the second biggest by volume, behind only China. Guatemalan crime networks engaged in human and migrant trafficking also sell passports, identity cards, licenses and even birth certificates for illegal use, meaning that Nigerians, Chinese, Ecuadorans, Colombians, Syrians and others pass through migratory controls in Europe and North America with Guatemalan documentation. The basic controls of this illegal business are within the Migration Office (Dirección de Migración) and the security subsystems of companies contracted to make these personal identity documents.

Arms trafficking is also a business bringing together networks that perform various functions. One of these functions is to serve Guatemala’s domestic market, which is comprised of drug cartels, criminal elements — kidnappers, assassins, muggers and street gangs — security companies, which outnumber the police by a factor of five, and even corporations. Another is the re-export of arms to rebel groups, cartels and mafias in other countries, especially in South America. One goal of these arms trafficking networks — hastened by heightened arms restrictions — is to legalize their income and assets, which makes it essential to control the weapons registry office within Guatemala’s Interior Ministry.

Contraband networks are the oldest criminal networks, emerging in 1970 after the army took over the customs office on the premise of controlling arms trafficking to leftist guerrillas. Civilians within the armed forces, including specialists and customs employees, became the base of extensive smuggling networks which both colluded and competed with import businesses. There are strong links between customs agents and military and political networks, as well as various local and foreign trading communities, Middle Eastern and Chinese. Contraband covers 70 percent of internal trade and has become a major employer, much like agricultural harvesting on large farms was up until 1980. Smuggling networks, however, tend to decline with trade liberalization and diversify into other criminal activities, such as the trafficking of drugs, people, weapons or other goods of market value.

Money laundering is the most sophisticated and difficult network to pursue since it consists of injecting the profits of illegal activities into the legal economy. Those who engage in drug trafficking, contraband smuggling, and, to a lesser extent, human trafficking, must all integrate themselves with strategic contacts and networks knowledgeable about state mechanisms. These contacts must have detailed knowledge of terrain and military discipline and organization. But they do not necessarily have to belong to the country’s elites. Money laundering, however, does require criminals to extend their network to the top of the social pyramid, for both banking and financial services, as well as for investing in large commercial centers, corporations, old-style real estate and exclusive residential condominiums. Where this does not occur — and when it occurs, certain elites tend to control the process, all the way down to drug trafficking and trafficking of people — drug cartels will still use large amounts of cash in their transactions, especially in the country’s interior or in border regions where state controls are weak.

Other criminal networks are operational in Guatemala. They are minor but well-organized criminal structures that engage in multiple illegal activities. This rarely happens independently, and in most cases they are linked to networks that engage in the drug trade or the trafficking of people, weapons or contraband. They typically look to associate with or become extensions of Guatemala’s official security apparatuses and the judicial system. The most prolific of these are the kidnapping networks, followed by networks for extortion and assassination. They often involve mid-level businessmen and other individuals who employ gang members as hired guns. Finally, the networks of muggers and thieves are much more decentralized, and typically involve police officers.

Major Challenges for the State and Society

A premise of the “Elites, State, and Organized Crime” project — and of the general understanding of the status quo following the fall of the Berlin Wall — is that for elites in the countries of Mesoamerica, organized crime represents a threat because it is an invasive foreign body. From an economic point of view, its visibility muddies the business climate, its enormous liquidity upsets market prices, and its foray into business activities generates unfair competition. From a policy perspective, corruption has unleashed criminal enterprises and led to a loss of confidence and legitimacy in rule-of-law institutions, further destabilizing them. In countries like Guatemala — conservative and decidedly elitist — the natural dynamics of promotion or social mobility often equate to “intrusion” when not subject to “suspicion.” In Guatemala, elites usually distrust not just what they do not know, but what they do not control.

But drug trafficking, for example, has brought with it mixed results for the elites and Guatemalan society. Drug activity has created economic circuits that have inoculated the overall economy. In certain areas of the east (Zacapa, Chiquimula, Jutiapa), northeast (Izabal), north (Petén) and northwest (San Marcos, Huehuetenango, Quetzaltenango and Quiché), drug traffickers have fueled economies of consumption, production and service. These have higher standards than the formal market, and in fact have replaced the state’s social and security presence. The emergence of a middle class in these regions tied to this economy generates consumer demand for imported goods, homes with certain security standards, and recreational facilities, including hotels and restaurants. Moreover, the payment of wages to construction workers and farm workers, for example, is two to three times above the market rate. Projects include the construction of infrastructure and educational facilities and health centers, which the state does not provide, tightening associations with the informal economy. In addition, criminal money is penetrating weaknesses in financial and business capital. That is, criminal capital is no longer limited to flashy new business magnates; those with well-established family names are not immune to the lure of quick money.

In the last three decades, a growing demand for market liberalization and less state interference in market decisions — along with the end of the civil war and temporary absence of hypothetical border conflicts — have limited the traditional model of public/private relationships. But, as already noted, limited institutional reform and discretionary forms of privatization left the state vulnerable. Additionally, an emergency occurred, with transnational organized crime mobilizing massive quantities of money it had gained. This atmosphere of widespread corruption, weak institutions and law-breaking security structures proved an ideal breeding ground for criminal activity.

Thus, the main threat facing Guatemala is the growth of corruption via violent criminal practices. The attraction of the old corruption networks to criminal groups with international links tends to occur because of the mutual need to win the complicity and/or protection of political authorities or security structures — and even alliances with certain economic elites — to carry out illegal activities without interference. As we can see in our Guatemala case studies, the line between corrupt and corrupting networks, along with criminal networks, becomes blurred.

*Edgar Gutiérrez is a Guatemalan economist and political analyst. He was secretary of the Strategic Analysis Secretary and foreign chancellor during the Alfonso Portillo administration (2000 – 2004). He also coordinated the “Recuperation of the Historical Memory” (Recuperación de la Memoria Histórica – REMHI) project. He is currently director of the Fundación DESC for Latin America and Institute of National Problems at the San Carlos University in Guatemala. Map by Jorge Mejía Galindo. Graphics by Andrew J Higgens.

Endnotes

[1] Marta Casaus, Guatemala: linaje y racismo (San José 1992).