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GUATEMALA:
Controversy Dogs New Highway
By Danilo Valladares
GUATEMALA CITY (IPS) - Construction is
expected to begin soon on a new highway
across north-central Guatemala, the largest
infrastructure project tackled so far by the
government of Álvaro Colom.
But the bidding process for the contract has
drawn criticism, and there are questions as
to what extent the highway will benefit poor
rural villagers.
The 362-km multi-lane Franja Transversal del
Norte (FTN) highway will cut across the
country, from Mexico to the west through the
provinces of Huehuetenango and Quiché in the
northwest and Alta Verapaz and Izabal in the
northeast, to neighbouring Honduras and the
Caribbean Sea to the east.
The highway is part of the
Plan-Puebla-Panama, a mega-project that is
to create a "development corridor" running
from Puebla, Mexico to Panama, opening up
nine states in southern Mexico and the
Central American countries of Belize, Costa
Rica, El Salvador, Guatemala, Honduras,
Nicaragua and Panama to private foreign
investment to attract industry and
agribusiness and expand natural resource
extraction.
The PPP project, which has the support of
multilateral lenders like the Inter-American
Development Bank, the International Monetary
Fund and the World Bank, involves the
construction of roads and hydroelectric
dams, the joint management of natural
resources, harmonisation of trade policies,
electrical interconnection, and the
installation of maquila or export-oriented
assembly plants, among other aspects.
The road will facilitate trade flows in the
four Guatemalan provinces that it will
cross, and will give the national economy a
boost by opening up tourist and trade flows
with Mexico, said social democratic
President Colom, who took office in January
2008.
"We are going to publicise the tourist areas
in this region," the president told
journalists during a recent tour of the
future route. "The FTN is not just a
highway; it is a corridor of rural,
municipal and urban development."
There is an urgent need for road
infrastructure in this Central American
country of 13 million people, which is one
of the poorest countries in Latin America,
with 50 percent of the population living in
poverty according to the government -
poverty that is aggravated by serious
shortcomings in transport and
communications.
But the project has run into controversy.
While neither social organisations nor
opposition lawmakers have focused their
criticism on the construction of the FTN
itself, they have questioned the process by
which the contract was awarded.
The process began in 2007, when the
government of then right-wing President
Oscar Berger granted the contract for the
construction of the highway to the only
company that placed a bid: Solel Boneh
Building & Infrastructure Ltd., Israel's
leading building contractor.
Then in June, Congress passed reforms to the
law that regulates the construction of the
FTN, effectively changing the rules of the
game.
Whereas the law originally required the
company that won the contract to drum up
financing for the project, under the amended
legislation, the Guatemalan state is
responsible for raising the funds.
Congress thus also gave the government the
go-ahead to take out a 203 million dollar
loan from the Central American Bank for
Economic Integration (BCIE).
The modifications to the law also confirmed
the outcome of the bidding process, so that
even though the rules of the game were
changed, Solel Boneh still had the contract.
This drew questions from opposition
legislators and social organisations, who
pointed out that the company was evidently
favoured. Guatemalan Vice President Rafael
Espada even suggested that the bidding
process be reopened.
Jorge Santos, an analyst with the
International Centre for Human Rights
Research (CIIDH), clarified to IPS that
"social, popular and human rights
organisations are not opposed to the
construction of the FTN, but to the spurious
mechanisms used to approve the contracting
of the BCIE loan, as well as the
developments to which that approval will
give rise."
One of the aspects that drew the most
criticism was the fact that in the new law
on the FTN, no limit is set on costs, which
means the cost of the construction work
could skyrocket, according to NGOs.
"The estimated cost of the project is 273
million dollars (203 million dollars from
the loan and 70 million in government
funds), but around three-quarters of the
highway has not been designed yet, which
means they are not sure about the actual
costs that the company is going to incur -
and the precedents are extremely negative,"
said Santos.
The 1978-1983 construction of the Chixoy
hydroelectric dam, which was originally
supposed to cost 240 million dollars, soared
to more than 1.2 billion dollars, which had
a heavy impact on public finances, the
Colectivo de Organizaciones Sociales (an
umbrella of social organisations) and the
Convergencia por los Derechos Humanos (a
coalition of human rights groups) pointed
out in an ad in the press.
Independent lawmaker Aníbal García told IPS
that the most worrisome aspect of the FTN
contract was that it included no cost
limits, which means the costs could soar, as
they did in the case of Chixoy, the
country's biggest hydroelectric complex.
García, who voted against the amendments to
the FTN law, said the Finance Ministry even
recommended a 10 percent price ceiling for
the contract. But that suggestion was
rejected.
"This business deal smells fishy, because
the issue of price fluctuations should have
been resolved as the Finance Ministry
recommended," said the legislator.
García also acknowledged that there are
powerful economic sectors interested in the
construction of the highway, because they
have oil palm plantations and mines in the
area it will run through.
Eduardo Velásquez, director of the Centre of
Urban and Rural Studies at the public
University of San Carlos, told IPS that the
lack of transparency surrounding the project
was disturbing.
"We still do not know what the total cost of
the highway will be. In any case, if there
was only one bidder, the bidding process
should have been reopened, so that other
companies would participate," he said.
The idea of a highway cutting across
north-central Guatemala dates back to the de
facto government of General Romeo Lucas
(1978-1982).
"At that time it was known that military and
civilian officials and corporate interests
with ties to the government had purchased
land along the route, whose value would rise
(as a result of the construction of the
highway). It rests to be seen whether poor,
remote communities will benefit from the
project," said Velásquez.
Gregorio Nolasco, mayor of Santa Cruz
Barillas, one of the Huehuetenango
municipalities that the FTN will run
through, told IPS that as it is currently
mapped out, the highway will be located so
far away from the town that it will hardly
benefit local residents.
"Maybe a few people will benefit, but the
town will remain isolated, because we don't
have an asphalt road to connect to the
future highway," he complained.
Nolasco said he would form a committee to
talk to President Colom, to try to bring the
highway closer to the town, although he
added that there is pressure from large
landowners to stick to the current route. |
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