At the end of May 2013, nearly 1000 people gathered at the Camino Real hotel in Guatemala City’s upmarket district, Zona 10, for the Guatemala Investment Summit 2013. Those in attendance were addressed by Guatemala’s president, Otto Pérez Molina, and discussed proposals such as gold and nickel mining in the eastern state of Izabal, the construction of airports in various parts of the country, and sovereign wealth funds.

Guatemala’s minister of economy, Sergio de la Torre, told attendees that Guatemala was “the best country for foreign investment in the region, because we offer macroeconomic and political stability, clear rules and tax laws, and growth opportunities like few countries in Latin America”, as was reported in the daily newspaper Prensa Libre.


The largest economy and most populous country in Central America, Guatemala hoped to attract up to $11bn-worth of investment from the event, which had been organised by the Chamber of Industry and the Ministry of the Economy. Despite its large market share and the wealth of its endowment with natural resources, in 2012, Guatemala – which has been dubbed 'the land of eternal spring' for its temperate climate – had one of the lowest rates of FDI in Central America, a mere 2.3% of GDP, which on a regional scale put it ahead of only El Salvador.

History of violence

The reasons for Guatemala's poor FDI performance are complex. A few years ago, Guatemala appeared to be spinning out of control. In addition to a long-standing problem with local maras (street gangs), many of them with their roots in the US, Mexican cartels pushed south by then-Mexican president Felipe Calderón's militarised campaign against drug traffickers began to proliferate throughout Guatemala.

None made a bigger impact than the Los Zetas cartel. Formed by a member of a Mexican army unit designed to combat drug trafficking that went rogue and became the armed wing of Mexico's Gulf Cartel, Los Zetas struck out on their own in early 2010, and in recent years have been reinforced by deserters from Los Kabiles, a special operations unit of the Guatemalan army trained in jungle warfare and counterinsurgency tactics.

Los Zetas announced their presence in Guatemala in spectacular fashion with the March 2008 killing of Guatemalan drug lord Juan 'Juancho' José León Ardón and 10 other people in the eastern state of Zacapa, and they subsequently established a strong foothold in the country, but especially in the states of El Petén and Alta Verapaz in the north, and Izabal in the east. In May 2011, 27 farm workers were found massacred in El Petén, a crime blamed on Los Zetas. Subsequently the dismembered body of the prosecutor investigating the case was found in Alta Verapaz. Both states were subject to state of siege orders during the 2008 to 2012 presidency of Mr Molina's predecessor, Álvaro Colom.

Question of justice

Since Mr Molina took office in January 2012, however, the violence in Guatemala has been less spectacular. There is little evidence to suggest that Los Zetas, or Mexico’s Sinaloa Cartel, which also has a presence in Guatemala (its leader, Joaquín 'El Chapo' Guzmán Loera, was arrested in Guatemala in June 1993 and escaped from Mexican custody eight years later) have been routed, although Los Zetas leader Miguel Angel Trevino Morales was arrested in Mexico in July.

But thus far in Mr Molina’s tenure, the downward spiral into violence (in a country that experienced a bloody 30-year civil war) seems to have, if not reversed, at least been halted somewhat. Ambitious projects, such as the plan presented by the country's Partnership for the Development of Economic Infrastructure to build a port on the border between Guatemala and Mexico, now seem to be a real possibility.

Mr Molina, a former general in the Guatemalan army, also comes with his own baggage, however. During the March 1982 to August 1983 dictatorship of Efraín Ríos Montt, Mr Montt launched a military offensive in Guatemala’s western highlands, where Mr Molina was serving as a military commander in El Quiché, one of Guatemala's most heavily indigenous and war-wracked states. Earlier in 2013, Mr Montt was convicted by a Guatemalan court of genocide for the army’s actions in El Quiché at the time. Though the conviction was later vacated and Mr Montt’s legal status currently remains up in the air, the links between the two men have thrown a large question mark of potential culpability over Mr Molina himself.

Both Mr Colom and Mr Molina have had sometimes tense relations with the International Commission Against Impunity in Guatemala (or CICIG as it is known), a UN-mandated body that since 2007 has been charged with investigating criminal organisations and exposing their relation to the country, and which has been operating with varying degrees of success.

Until June 2010, CICIG was under the direction of Carlos Castresana, a Spanish magistrate experienced at prosecuting drug-related cases in Mexico. Mr Castresana resigned after charging the Colom government with undermining CICIG's work, and the mantle of leadership was passed to Francisco Dall'Anese Ruiz, the former attorney general of Costa Rica. Mr Dall'Anese Ruiz himself announced that he was quitting earlier this year. Guatemala’s own attorney general, Claudia Paz y Paz, however, is widely regarded as honest and competent, and remains in place.

Digging a hole?
An equally thorny issue is Guatemala’s mining sector. During an October 2012 mining dispute near the town of Totonicapán in the state of the same name, soldiers – sporadically used by Mr Molina for law enforcement duties – opened fire on unarmed indigenous protesters who had blocked a major road, leaving eight dead and 34 wounded. Significantly, however, unlike in days of yore, eight army privates and a colonel were arrested for the killings.
Moreover, in May 2013, a local study found that mining near the municipality of San Miguel Ixtahuacán in the state of San Marcos had resulted in at least 100 cases of disease related to high concentrations of arsenic, which amounted to “slow poisoning”. Researchers at the University of Michigan and the University of Ghent, Belgium, came to similar conclusions. The company operating in the area, Mina Marlin-Montana Exploradora, is a subsidiary of Vancouver-based Goldcorp.
In a country buffeted by such unrest, the response to events such as the Guatemala Investment Summit 2013, which had a greater-than-expected attendance, may be a sign that things are changing, if Guatemala can get a handle on the drumbeat of violence and address the yawning economic inequalities that underlie it.
Guatemala’s riches go beyond its natural resources, to include a vibrant tourist sector boasting the sparkling colonial city of Antigua and the striking Lake Atitlán, as well as many other attractions. However, the reminders of how tough a task Guatemala's leaders face in tackling violence in the country never seem far away. Near the radiant city of Quetzaltenango, where thousands of foreign students study the Spanish language, in the state of the same name along the border with Mexico, an armed attack in June on a police station in the town of Salcajá left eight policemen dead.

At the time that this article went to press, the Guatemalan government said it believed the attack was carried out by drug-traffickers.