Thank you, Mr. Chair. I would like to thank the committee for this invitation.
First, I'd like to apologize to the francophone members of the committee because my presentation will be in English since my notes and databases are in English. I'm sorry, of course, but I will be pleased to answer your questions in the language of your choice.
The two countries we're discussing today offer radically distinct situations, but also, in both cases, good reasons for selective Canadian engagement.
I'll start with Guatemala, one of the continent's poorest countries. Given the extreme inequality there, the average statistics hide the severity of the deprivation in which a large part of the population lives. It's also the country of the Americas with the largest proportion of indigenous people, the vast majority of whom are among the poorest of Guatemala's poor. If only for those reasons, Guatemala should be a shoo-in as a focus country for Canada's aid program. At the same time, however, the country is plagued by extreme levels of violence, corruption, a formally democratic but in practice extremely exclusionary political system, ineffective public institutions, and willingly underfunded public policies. The former president and vice-president were arrested, at the end of 2015, for literally selling government contracts. New arrests have taken place in recent days.
In a recent report—I think this is very important—the International Monetary Fund, a temple of fiscal orthodoxy, criticized the Guatemalan government for its lack of spending on infrastructure, education, and social services, and for keeping excessively low tax rates that prevent it from acting in those areas. Given the needs and the relatively stable economic situation of the country, the fund encouraged authorities to increase the fiscal deficit. I've been doing Latin American affairs for about 30 years. This was the first time I read a report of the IMF telling people that they could have a larger deficit. This gives you the scale of what I call the “willingly” restricted public policy expenditure in Guatemala.
The military is still unwilling to acknowledge the massive abuse of human rights it committed in the 1980s, which have been called, with reason, genocidal not only by human rights organizations but also by the Supreme Court of Guatemala. The party of the current president, Jimmy Morales, was set up by a group of retired military. Some of his closest advisers were involved in the campaign against the Ixil Mayans, which was basically the centre of the most savage part of the military campaign against the population. About 70% to 90% of the villages in that area were razed by the military during that campaign.
Corruption is rife among the military and the police, some of whose members are involved with major Mexican cartels in the transit of drugs from Colombia to Mexico to the United States. The management of the traffic, however, is poorly organized, contributing to a high homicide rate—less high than in the past, and less high than among some of its neighbours, but at 32 per 100,000, about 30 times higher than Canada's rate. Even if the Guatemalan military and police were functional and free of corruption, the economic power of Mexican organized crime would dwarf the capacity of local law enforcement to counter it. In other words, because of its political stability, Guatemala is not generally considered to be a fragile state, but it should certainly be seen as vulnerable to the ripple effects of Mexico's drug wars.
There are two bright spots in the bleak picture. The first one is the International Commission against Impunity in Guatemala. I think the representatives of the ministry explained what it was. I won't expand more. It's currently financed until September 2017. President Morales has asked for a renewal, and I think it's a good idea to support it. The other bright spot is the Attorney General's office under Thelma Aldana, which, with the support of CICIG but also on its own, has mustered remarkable courage to confront the network of politicians, military, and oligarchs that continues to dominate the local political system.
The rationales for Canadian aid include the dire needs in a country that could easily be destabilized by drug violence, but is tempered by its limited political absorption capacities. Mid-term potential for progress lies essentially in the consolidation of the rule of law where needs are important, credible recipients exist, and the potential for impact is significant.
I would thus recommend a very selective engagement, support for CICIG, and perhaps direct support for the attorney general's office. For the rest, I would say bypass the government and work with NGOs.
Colombia is a middle-income country with a stable democracy, quite effective institutions, and a bold, capable, and creative political class and technocratic elites. It has one of the largest economies in South America. It is second in population, and is still largely unexplored and unexploited in terms of natural, mineral, and agriculture wealth. It has enjoyed decades of stable and disciplined economic policy, no debt crisis, no large fiscal deficit, no hyperinflation. Its long-term prospects are good.
For these reasons, although it remains unequal and is only slowly addressing a large deficit in the provision of public goods to its poor population, it should be the very opposite of a shoo-in for Canadian development assistance. In theory, it should not be a country of focus. I will still make a case for it, though.
Colombia is currently at a crucial moment of its history as a protracted peace process is coming to fruition. It could spell the end of a series of civil wars that have shaken the country since basically the end of the 1940s almost without interruption. There's massive but not unanimous political support for the peace process, from left to right, including by the Uribisto sectors of the former government, and not only for the peace process but also for the government to invest resources in compensation of victims of the conflict, for repossession of land by people who were expelled from it, as well as for ambitious programs of land redistribution. We're talking millions. However, the promises made by the government, particularly with regard to repatriation, are fiendishly difficult to implement and also extremely expensive, probably well beyond the capabilities of the Colombian government at this point.
In addition, Colombia is still confronting extremely high levels of violence, much of it drug-related. Its homicide rate is still 50% higher than Mexico's, although Colombia is presented as some kind of success story in the fight against violence and drug trafficking. The production of cocaine has diminished in Colombia, but just recently eight tonnes of pure cocaine powder was confiscated. Eight tonnes, if sold pure on the Canadian market, would be worth about $800 million. It's still significant in the economy, and it's still a lot of money.
Rationale for Canadian aid: Co-operation with Colombia should be framed as a building block for long-term co-operation with a like-minded country with significant capabilities and a fast-rising regional status. The best way to see it is to think of what Chile has become since the FTA in 1997, only in this case Colombia is a country with much more significant demographic, economic, and military capabilities and potential. Chile is a small country with a small economy; Colombia is a big player.
Colombia is not dependent on foreign aid. The extent of the leverage that can be expected from the kind of money that Canada can offer will be limited, so the value of that aid matters less than the political commitment that it would represent. The recommendation is for selective engagement, mostly financial, mostly in support of the peace progress, perhaps very focused. Gender issues were mentioned. That would be an excellent area in which to focus resources.
There could be technical co-operation in areas of complementarity, such as public and tax administration; taxes could go up there too. In resource and land management, there is a massive challenge in Colombia related to the peace process. Finally, there should be triangular co-operation on drug policy and security, working with Colombia in third countries where and when political conditions are favourable, in Central America's northern triangle as a key target for instance, but not now.