Generating Terror

Jubilee Debt Campaign’s new report examines the way that western-backed institutions, such as the World Bank, supported the government of Guatemala as it terrorised its own people in the late 1970s and early 1980s.

Although the story of Guatemala’s genocidal regimes has been told before, and individual projects have been extensively criticised, there has not been an attempt before to analyse the role that debt and lending from International Financial Institutions played in supporting these governments.


The report finds that:

  • There was a very dramatic increase in lending to Guatemala in the late 1970s and early 1980s – the period of the highest wave of terror in the country. Loans of over $100 million a year were made in 1978, 1979 and 1980, and then over $300 million a year in 1981 and 1982 at the height of the terror. By 1985 the country’s debt had reached $2.2 billion – an increase of over $2 billion in 10 years.
  • The most significant element of this lending was accounted for by multilaterals like the World Bank, which reached nearly three-quarters of total debt in some years. From 1977 to 1982, multilateral institutions were responsible for 60 per cent of the lending to Guatemala. By the time the peace agreement was signed in 1997, Guatemala was repaying multilateral institutions nearly $130 million a year, rising to over $400 million today.
  • One project funded by the World Bank and the Inter-American Development Bank, the Chixoy Dam, was a major factor in the massacre of 400 people, mass displacement, torture, rape and starvation. Despite these horrific events, the banks gave further support to the project 7 years later.
  • The Guatemalan government appears to have repaid almost all of the loans that funded the Chixoy Dam, costing the country significantly more than was lent because of interest charges. Some of the debt remains on the books in ‘recycled’ form, as Guatemala was given new loans to repay old debt. These new loans were conditioned on implementing economic policies which opened the country to international corporations.
  • Although there is acceptance by government and institutions involved that communities affected by the construction of the Chixoy Dam should receive reparations, they have yet to be compensated. Moreover, no wider reparations have been agreed for the odious lending that sustained Guatemala’s governments during the period of terror.
  • Few broader lessons appear to have been learnt by the World Bank, as Guatemala’s economy today is opened up to massive mining operations and mega-dams that threaten to further impoverish people.

Guatemala remains a highly impoverished and unequal country, its people subject to high levels of violence, discrimination and human rights abuses. Unlike the majority of countries in Latin America, the number of people living in poverty in Guatemala has increased in recent years from 51 per cent in 2006 to 53 per cent in 2011. Tax revenue remains the lowest in Central America – which itself has the lowest tax revenue of any region in the world.


The report calls for:

  • All projects from the period from 1954 onwards – and especially between 1978 and 1997 – to be audited. Payments on all loans from this period should be immediately suspended.
  • Projects such as the Chixoy Dam should be audited so that proper reparations can be made to those affected and to the Guatemalan economy as a whole.
  • There must be an audit of all ongoing mega-projects, driven by the communities who are being or will be affected, to see whether and on what terms they should continue.

The resistance taking place to mines and dams in Guatemala, and the experiments with popular forms of consultation and democracy which have come out of this resistance, is a cause for great hope. But Guatemalans have a long way to go to combat the racism, poverty and injustice that confronts them. The world has a duty to stand with Guatemala’s people.


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