Crime, Poverty and Soured U.S. Relations Shadow Guatemala's Vote

(Bloomberg) -- A former first lady and an ex-director of prisons are favorites in Guatemala’s presidential election this Sunday, both pledging to tackle the crime and poverty that has driven migrants to flee to the U.S.

Sandra Torres, the ex-wife of former President Alvaro Colom, has pledged to deploy the army to tackle gang wars and drug violence, and says she’ll create jobs. Alejandro Giammattei, who oversaw the nation’s riot-prone penitentiary system from 2002-2007, has also pledged measures to curb crime, including tougher penalties for illegal gun ownership.

Guatemala has traditionally been a close U.S. ally, but relations soured this year when U.S. President Donald Trump said he would cut off aid to the country, as well as to El Salvador and Honduras, over their failure to curb migration. Extortion by gang members, and extreme poverty aggravated by a drought that has hit coffee farmers, have driven many to flee northward.

“The main challenge for the next government is relaunching the economy after three years of stagnation,” said Paulo De Leon, head of Central American Business Intelligence, a Guatemala-based economics think tank. "Growth of 3% to 3.5% isn’t enough to create jobs.”

Nineteen other candidates are also on the ballot. Polls are open from 7 a.m. to 6 p.m., with results expected later Sunday night. If none of the candidates get more than 50%, there’ll be a runoff vote in August. Voters will also elect legislators for congress, and mayors.

Migrant Crisis

An estimated 70 percent of Guatemala’s labor force is engaged in informal work, and many rural residents earn less than the minimum wage of about $400 per month. U.S. Customs and Border Protection detained over 144,000 migrants at the southwest border in May, many of them Guatemalans, nearly triple the number from a year earlier.

The U.S. provided $257 million in aid to Guatemala in 2017, according to the U.S. Agency for International Development.

Torres leads voter intention with 22.6%, according to a Cid Gallup poll published this week, compared to 11.6% support for Giammattei. In third place is Roberto Arzu, son of former President Alvaro Arzu, with 9.2% support. Arzu is also running on an anti-crime ticket, saying criminals should “surrender or die,” and pledges fiscal austerity.

Either Giammattei or Arzu would beat Torres in a second round, the poll found.

Blocked Candidates

Guatemala’s Constitutional Court last month barred two of the three most popular candidates from running. It blocked Attorney General Thelma Aldana’s candidacy, amid investigations into contracts she approved as attorney general.

It also blocked former congresswoman Zury Rios, on the grounds that family members of presidents who seized power illegally cannot seek the high office. Rios is the daughter of former President Efrain Rios Montt, who took power in a 1982 military coup.

Guatemala’s economy expanded 3.1% in 2018 and growth this year will be between 3% and 3.8%, according to the Central Bank. At 24% of gross domestic product, Guatemala’s public debt levels are among the lowest in the world, and its dollar bonds due 2022 yield 3.9%.

All the main candidates would uphold the nation’s conservative macroeconomic policies, said economist and former Foreign Affairs Minister Fernando Carrera. "Guatemala is boring for bondholders,” he said. “There’s nothing to speculate about."

To contact the reporter on this story: Michael McDonald in San Jose, Costa Rica at mmcdonald87@bloomberg.net

To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Robert Jameson

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