Latin America Advisor

A Daily Publication of The Dialogue

Has Morales Picked the Best Cabinet for Guatemala?

Guatemalan President Jimmy Morales swore in his cabinet after taking office on Jan. 14. Which appointments are likely to be most significant in his administration’s policy setting and ability to govern? Did Morales pick the right people for the job? What do the president’s cabinet picks reveal about Morales’ priorities during his presidency? In what direction will Morales and his cabinet take Guatemala’s economy?

Salvador Paiz, president of the Sergio Paiz Foundation in Guatemala City: “Jimmy Morales, a relative newcomer to national politics, obtained widespread support through his anti-corruption message. FCN, a small party with no representation in Congress, served as his platform. As per the Electoral Board official figures, his political campaign cost 65 times less than the runner-up UNE and 165 times less than LIDER. All of this is important as he did not bring with him a lot of the baggage and commitments that normally constrain cabinet decisions. His party did not offer a deep pool of talent to choose from, and he couldn’t resort to ‘the usual suspects’ given his anti-establishment platform. President Morales decided, wisely I might add, to establish a rigorous human-resources evaluation program to select his cabinet. He requested CVs of interested individuals, used technical profile definitions by post and conducted graded interviews through human-resource professionals. All of this happened with the help of an international consultant who had done the cabinet selection under a prior Mexican president. The process took a bit longer than most citizens would have hoped for, but the result is a technically solid cabinet. The process employed denotes a willingness to get government working again. His most pressing issue is getting fiscal revenues back up after a precipitous slide in the aftermath of the corruption scandals and protests. Therefore, his minister of finance, Julio Hector Estrada, will play a critical role. On the social side, the ministers of health and education have their work cut out for them given ambitious programmatic goals but constrained budgets. President Morales now needs to deliver on the anti-corruption promises that propelled him to power. The fate of the country and his presidency rests with the judicial branch and its ability to deliver sentences on a growing queue of corruption cases.”

Jonathan Menkos Zeissig, executive director of Central American Institute for Fiscal Studies: “President Morales began his term with a stable economy but with rising levels of poverty, ungovernability and social need. He has offered support for production to businesses, a rescue of the public health system and improvements in education. However, his short agenda does not have concrete actions and fiscally, the government has started broken without the possibility of offering substantial changes, as there is no credible agenda for transparency and governance. Another negative factor is that the cabinet does not appear to be homogeneous, as a result of accords (or impositions) with different economic sectors—officials aligned with the agroexport, industrial, telecommunications and other sectors stand out. They may compete to take control of economic and fiscal policy. These groups could push controversial policies from within the government such as differentiated salaries, payments of illegitimate public debts, new tax breaks and the privatization of social security institutions and the electrical system or deepen the commercialization of health and education. President Morales needs to balance the internal forces of his government and chart an economic and fiscal course that allows it to meet the high expectations of a public that is fed up with corruption and corporatism. Otherwise, his government may be as disastrous as that of Otto Pérez Molina and, even more likely, shorter.”

James Meyer, partner at Harper Meyer in Miami: “For some reason, it seems to have come as a surprise to many that Guatemalan President Jimmy Morales’ cabinet appointments are so closely tied to the private sector and organizations such as CACIF. These observers, however, should rest assured that this is a very positive indication that he intends to honor the theme of his campaign by forging a viable government with as little undue influence from organized crime and other corrupt actors as possible. Contrary to any commentary attacking his cabinet appointments as being inconsistent with his promises to break with the past, it should be noted that President Morales was not elected on an anti-establishment campaign. Rather, it was clearly an anti-corruption campaign, which is perfectly in line with the goals of the legitimate, mainstream private sector. By naming cabinet members who will help the president pursue sound economic policies instead of the siren’s call of populism (which is more often than not itself a symptom of the corrupt government), hopefully Morales is sending a message that he should be taken seriously and that his government will not be ‘open for business’ as were many of its predecessor administrations. Despite what was likely a tremendous effort to lead him astray, President Morales should be given credit for elbowing his way through the crowd of charlatans to find and select guidance from individuals who have knowledge and experience in how to grow an economy, rather than choosing cronies who are focused on not much more than becoming re-elected and lining their own pockets in the process.”

Juan Carlos Zapata, CEO of the Guatemalan Development Foundation (FUNDESA): “Guatemala is setting the pace in the region on how to fight corruption and is now getting back on track toward increasing social investment by identifying taxpayer waste. The latest scandal in Congress, due to powerful labor unions and corrupt deputies, is helping the government to identify where it is possible to generate efficiency. The government’s most significant appointments are the head of the Ministry of Finance, a Young Global Leader and a former head of the National Public-Private Agency for Infrastructure Development (ANADIE), Julio Hector Estrada, and the minister of interior, Francisco Rivas, a career prosecutor and former undersecretary of the attorney general’s office. They will have to generate a strategy to increase social government spending and persist in tackling crime, which can lead to a continued drop in homicide rates, as in the past few years, from 46 homicides per 100,000 people in 2009 to 29 this year. President Morales did an excellent job in scouting young professional talent and used a hiring agency to assign many members of his cabinet. In general terms, the picks are a good step in the right direction, noticed as a first signal toward reactivating investment, since corruption is mentioned as the second most difficult factor in doing business in the country after violence, according to the World Economic Forum. If he is able to focus his agenda on generating sound economic policies that can reduce red tape and continuing to tackle corruption, Guatemala can increase economic growth and be a new beacon for the rest of Latin America.”

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