IV.  Political Environment

A. Nature of Bilateral Relationship with the United States

Relations between the United States and Guatemala are generally
good, but have fluctuated over the years.  Current US political
policy towards Guatemala includes:

       -Supporting the institutionalization of democracy;
       -Encouraging Guatemalan respect for human rights
        and the rule of law;
       -Supporting the peace process to end the country's
        long-running insurgency;
       -Supporting broad-based economic growth; and,
       -Cooperating with the Guatemalan Government in
        fighting the illegal drug trade.

B. Major Political Issues Affecting Business Climate

Over the past decade, foreign investors have not generally been
the target of political violence, although Guatemala continues to
struggle to end its 33-year-old insurgency, led by the Guatemalan
National Revolutionary Union (URNG).  Some public installations
and projects have, however, been affected by the violence.
Numerous electrical towers and some bridges have been destroyed
or heavily damaged over the years.  Occasionally, restaurants and
shopping centers in the capital have been targets of politically-
inspired violence, but usually with the intent to cause property
damage rather than casualties.  Oil trucks have periodically been
forced to dump their loads by the side of the road in the Peten
Department.  Recent advances in the peace process offer hope that
the insurgency is coming to a close.

On March 30, 1994  the Department of State issued a Travel Warning
advising all US citizens to avoid non-essential travel to
Guatemala because of widespread, unfounded rumors that foreigners
were stealing children in order to extract and sell their vital
organs.  None of the victims of the violence and harassment
resulting from the so-called "baby parts" hysteria had been US or
foreign businessperson.  In addition, the travel advisory was
revised in June 1994 to state that the reported incidences of
violence have not occurred in the traditional tourist destinations
of Tikal, Antigua, Panajachel, Chichicastenango, Quezaltenango Rio
Dulce, Puerto Barrios, Santo Tomas de Castilla, and the
tourist/business sections in Guatemala City.  The modified travel
warning did, however, advise that travelers avoid contact with
Guatemalan children, especially in rural areas, to prevent any
appearance of Guatemalan child theft.


C.  Brief Synopsis of Political System, Schedule for Elections,
      and Orientation of Major Political Parties

Guatemala's 1985 Constitution calls for election by universal
suffrage of a one-term President, a unicameral Congress, and
municipal officers; it mandates an independent judiciary and a
human rights ombudsman, who is elected by and reports to Congress.
Democracy's roots are still relatively shallow in Guatemala.  The
1990 election  was the first peaceful transfer of power from one
civilian government to another since 1951.  Voter participation
is low.  The abstention rate in a runoff election for the
presidency in 1990 was 55 percent.  More recently, 84 percent of
eligible voters stayed home in a January 1994 referendum on
constitutional reforms.  Twenty-six percent of the population --
the highest in Central America -- do not oppose military
intervention in politics, according to a reliable 1993 survey.
Polls also consistently show little confidence in the judicial
system.  Most political parties are on or towards the right of the
spectrum.  Less than 5 percent of adults, however, belong to a
formal political party.

Former Human Rights Ombudsman Ramiro De Leon Carpio was elected
President by the Congress on June 6, 1993, after President Jorge
Serrano fled the country in the wake of his failed attempt to
assume dictatorial powers.  As a result of a lengthy anti-
corruption campaign by De Leon that ushered in constitutional
reforms, the country is scheduled to hold congressional elections
in August 1994 16 months early.  A new Supreme Court will also be
selected shortly after the August voting.  General elections will
be held as previously scheduled in November 1995 to select a new
congress and president.  Winners will take office in January 1996.