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UNION FENOSA EN GUATEMALA by arenaentrelosdedos

In the smoke and mirrors of global finance, private equity firms have had a major relationship in a majority of firms that defaulted on their debt in 2009 thereby contributing on a grand scale to the recent financial crisis that has seen the burden falling disproportionately, as is the norm, on the world’s poorest, as losses have been nationalised across the world. This last week, we received news that Union Fenosa (Gas Natural) had sold its electricity distribution interests in Guatemala to a UK private equity company.

We have previously presented news of incidents of major human rights violations and deaths related to the Union Fenosa company in Guatemala. These attacks were primarily targeted at union representatives and community leaders. In 1998, then President Álvaro Arzú led the privatisation of the Guatemalan electrical distribution concern in favour of a monopolistic (and oligarchic) venture concerning the Spanish utility, Union Fenosa. As is the norm with these actions, the price of electricity rose to unpayable amounts for most Guatemalans. Over the years following privatisation, thousands of consumers filed complaints about the quality and excessive costs of the service – over 90,000 between January and May 2009 and popular discontent rose.

At the 2000 UN Millennium Summit, world leaders from rich and poor countries alike committed themselves - at the highest political level - to a set of eight time-bound targets (Millennium Development Goals – MDGs) that, when achieved, will end extreme poverty worldwide by 2015. MDG 1 aims to eradicate extreme poverty and hunger. RTVE, the Spanish national broadcaster, broadcast a series of films promoting the MDGs and the film on MDG 1 highlighted the Mendoza family from Guatemala – Juan, Irma and their ten children survive, if that’s the word, on less than a euro a day. The family are Maya Ch’ortí’ and live in the east of Guatemala, near Jocotán, in Chiquimula.

In Guatemala, according to the film, extreme poverty has an indigenous face. Watching this film leaves you in no doubt that it is extremely hard work being poor.

“The decision to lower royalties from six percent to one percent meant that Guatemala forfeited more than US$28m in three years. In 2006, the fiscal cost of this tax incentive to one mining company exceeded Guatemala’s total spending on health infrastructure.”

Recently, Barbara Schieber in The Guatemala Times, published a piece which again highlighted the contradictions in Guatemala around state responsibility and state ability to tackle the endemic violence affecting that country.

The Association of Bi-national Chambers of Commerce (ASCABI) has requested that the Guatemalan government announces a state of prevention (Un Estado de Prevención is its rightful term and doesn’t translate easily into English). It is, in fact, a decree suspending particular and named constitutional rights. The article states that the limitations to civil and human rights include the following: the right to organise meetings, the right to public demonstrations, and includes state censorship of the media. What is exercising the minds of ASCABI is the level of violence in the country and its effect on their ability to make money, sorry, to provide a better environment for foreign investment.

ASCABI constitutes the Chamber of Commerce of Brazil, Colombia, Israel, Canada, US, Germany, Spain, India, and Mexico. On the face of it this appears a strange mixture though off the top of my head, there is the Canadian interest in quelling any struggles against mining interests.  It might be interesting to see what is of interest to, for example, India, Israel and Germany. This grouping sees the Estado de Prevención as being an effective way to control delinquency and to promote security in Guatemala. What might also be an effective measure should they bother to look, would be fiscal reform. However, surprise, surprise, Guatemala´s private sector opposes any fiscal reform to support the justice and security sectors in their country.