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Luxury look in Guatemala deceives: It's drug money

Returning to Guatemala recently after a 15-year absence, I was struck by the new luxury condo buildings and tinted-glass office towers that have sprung up in the south of the capital.

Central America's most populous and industrialized country, Guatemala always had a more prosperous look compared with Honduras or Nicaragua. How looks can deceive. It was depressing to hear that for all the appearance of wealth, Guatemala remains on the bottom rung economically, with rural poverty indicators on a par with Haiti and Afghanistan.

All those condos, I was repeatedly told, were the product of rampant money laundering, a sign of Guatemala's growing status as a key player in the drug trade.

I worked for five years in Central America, from 1987 to 1992, reporting on the U.S. efforts to stem the spread of left-wing movements. Back then, the drug trade was already a factor, but it played second fiddle to Cold War ideological battles. The civil wars are long over. Sadly, the same cannot be said for the spread of the drug trade.

The signs are visible everywhere in Guatemala. Newspapers carry frequent accounts of grisly execution-style murders, often involving Mexican nationals who are linked to the Zetas, a drug-related gang created by former members of an elite Mexican antidrug police unit.

They now compete with Guatemalan gangs for control of lucrative drug routes that transport more than 30 tons of South American cocaine monthly through Central America to Mexico, according to U.S. officials.

Last November, at least 17 people were left dead on the border with Mexico in what authorities say was a clash between Guatemalan and Mexican drug gangs. Another dispute between rival gangs over a cocaine shipment from Nicaragua led to 16 people being burned alive in a bus.

Guatemala's rise as a trafficking center is only the latest symptom of what experts call the "balloon effect." Pressure applied to other drug routes through the Caribbean to Miami, for example, forced drug lords to look to other more vulnerable transshipment points.

Guatemala is an ideal conduit for cocaine traffickers. Most of its 600 miles of border with Mexico are remote mountain and jungle, dotted with dirt airstrips. Ports on both the Pacific coast and the Gulf of Mexico are poorly policed.

U.S. officials estimate that 70 percent of the illegal drugs that enter the United States now pass through Central America. The Mexican cartels began moving part of their operations to Guatemala about three years ago, says Mexican security expert Alberto Islas. In part that was because of increased pressure by Mexican authorities. But they were also attracted by Guatemala's porous borders, and corruption in law enforcement, the judiciary and the banking system.

Deposits in the country's banking system have grown 20 percent annually over the last three years, despite economic troubles and falling remittances from Guatemalans abroad, Islas notes, a sign that organized crime is using local banks to launder money.

"Money from the drug trade has woven itself into the fiber of Guatemalan law enforcement and justice institutions," according to the U.S. State Department's annual narcotics report released in February.

U.S. officials acknowledge the government of President Alvaro Colom has increased efforts against drug traffickers, but they remain concerned about low drug seizures.

"Widespread corruption and inadequate law enforcement efforts contributed to dismal interdiction numbers over the past several years," the State Department said. "The narcotics police and Guatemalan military seized only 2.2 tons of cocaine, although more than 400 tons is estimated to flow through the region."

Guatemala needs to get a grip, U.S. officials warn. As Washington steps up its antinarcotics support for Mexico, with increased border inspections for money and guns being smuggled south to the cartels, officials say traffickers are likely to turn to Mexico's southern flank to smuggle weapons and launder money.

"As the Mexican cartels make greater inroads, the Colom administration will be faced with even greater security challenges in Guatemala," the State Department warned in February.

Guatemala's security forces are ill-prepared. This year Colom announced a $75 million anticrime initiative that aims to clean up police forces and improve crime-fighting. But he is still seeking to raise international funding to pay for it.

Guatemala is due to receive about $20 million from the United States over the next three years as part of a counternarcotics effort dubbed the Merida Initiative. Brazil is also offering help to finance Guatemala's purchase of six military airplanes and a radar system to boost its drug-fighting capability.

Judging by the condo boom, and all the money in the banks, the traffickers are offering a better deal.

David Adams can be reached at

Luxury look in Guatemala deceives: It's drug money 06/13/09 [Last modified: Saturday, June 13, 2009 6:54pm]
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