Complete Thesis_double spaced abstract.pdf

egard to the establishment of appropriate regulations is thought to be one of the precursors to the
future banking disaster in Guatemala (Central America Report, 2005).
The first major instance of the privatization of a government owned enterprise was the
sale of the National Institute of Electricity (INDE) to the U.S. corporation Enron. As a state
owned enterprise INDE had provided 83% of the electrical power in Guatemala. After the sale of
INDE there were allegations from the state that Enron had not paid its public debts to Guatemala;
furthermore it was revealed that Enron did not pay taxes in Guatemala. Under Enron’s ownership
state subsidies for electricity to consumers in Guatemala ended. The government suggested 47%
price increases for electricity, thousands of protestors descended on the capital city; ultimately the
government retreats from the price hike. President Serrano attempted an auto-coup in 1993 under
the pretext of fighting corruption. He suspended the constitution and dismissed the National
Congress and Supreme Court. His actions, ruled unconstitutional by the courts, momentarily
unite the military and business elites in their opposition to his auto-coup.
This momentary unity was immediately tested under the new President Carpio; there
were increasingly strong pressures from the business elites to continue privatizing state
enterprises. The business elites began to realize that the process of privatizing was directly
inimical to the interests of the military, since military personnel either own or operate the state
owned enterprises. The benefits to privatizing would be captured by the business elites and the
costs would fall on the military who are directly engaged in the ownership or management of the
enterprises. There was a concerted effort by the business elites to purge the military of the older
officers, those most likely to be involved in the graft of the 1970s and 1980s. The number of
kidnapped and murdered businessmen begins to increase as the efforts for privatization continue.
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