WRITTEN QUESTION E-1275/97 by Johanna Maij-Weggen (PPE) to the Commission (11 April 1997)

Subject: Aid to Guatemala

Can the Commission state what aid it grants to Guatemala, now that peace has been established after 36 years of civil war?

What projects are being implemented with the aid of European funding?

How does the Commission monitor the disbursement of the European funding concerned and can it state whether consideration is being given to the involvement of civil society and the Foro de Coordinacion de Organizaciones No Gubernamentales de Guatemala (Coordination Forum for Guatemalan Non-Governmental Organizations)?

Does the Commission know whether the Guatemalan Government is now getting to grips with the tax system and what reforms can be expected with a view to improving the financial situation of the country itself?

Answer given by Mr Marín on behalf of the Commission (16 May 1997)

At the meeting of the Consultative Group on Guatemala in Brussels on 21 and 22 January the Commission undertook to focus its action in the following fields:

- demobilization and resettlement of the Unión revolucionaria nacional guatemalteca (URNG);

- modernization of the legal system;

- training programmes for the new national police;

- creation of a new land registry;

- strengthening of local authorities;

- modernization of public administration, notably tax administration.

Focusing aid on a few specific areas is in keeping with the need to make it more effective and more visible without spreading it too thinly, which is consonant with the principle of multi-annual programming reiterated in the Florence solemn declaration on the renewal of the San José process.

Guatemala is now the chief beneficiary of EC aid in Central America which rose to some ECU 180 million over the period 1993-96 (ECU 45 million per annum on average) when all aid instruments are taken into account.

Community aid to Guatemala is concentrated in two areas: financial and technical cooperation, which is channelled mainly through integrated rural development projects in the poorest and most marginal indigenous regions, and assistance towards the resettlement of returnees, refugees and displaced persons in the shape of emergency operations, self-sufficiency programmes and support for specialized bodies.

Other projects approved last year will be launched in 1997 in the health and education sectors.

Other headings concern support for democratization, economic cooperation (chiefly promotion of exports to the Community), humanitarian aid and support for rehabilitation. Getting on for ECU 9 million in humanitarian aid was allocated between 1994 and 1996 to the people worst hit by the fighting, in particular those displaced within the country and refugees returning from Mexico.

Regular project monitoring is carried out by the Commission and the Court of Auditors.

Under the financing agreements each Commission project is subject to a financial audit by an outside consultant during implementation and on completion.

The Asamblea de la sociedad civil and the Foro de coordinación de organizaciónes no gubernamentales referred to by the Honourable Member are generally consulted when projects are identified but those bodies are not involved in the monitoring exercise.

The Guatemalan Government says that the increase in tax revenues provided for in the peace agreements (12% of GDP by the year 2000) will not require a new tax reform - which would not necessarily have the desired effect - but rather a stricter application of existing tax laws which were quite satisfactory.

To that end, and taking into account the experience of other Latin American countries, the Government plans to set up a new body, the Superintendencia de Finanzas, which will have a considerable measure of autonomy plus the instruments it needs for efficient and effective tax collection.

The Commission is keeping a close eye on the development of tax policy as the increase in tax revenue is a key aspect of the conditionality attached to EU aid.