Retired general leads Guatemala vote, faces run-off

Reuters News
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Posted: Sep 12, 2011 2:38 PM
Retired general leads Guatemala vote, faces run-off

By Mica Rosenberg and Mike McDonald

GUATEMALA CITY (Reuters) - A right-wing retired general promising a crackdown on rampant crime led Guatemala's Sunday presidential election, although he fell short of the votes needed to avoid a run-off in November.

Silver-haired Otto Perez who promises to send troops into the streets to fight criminal gangs, won 36 percent support with almost all the votes counted, far short of the more than 50 percent needed for an outright first-round victory.

Centrist Manuel Baldizon, a wealthy hotel owner and former congressman with a populist message of supporting the elderly and the poor, had 24 percent of the vote and seemed certain to face Perez in a November 6 run-off.

Baldizon, who defected from the ruling center-leftist UNE party, only surged in the polls after President Alvaro Colom's wife, first lady Sandra Torres, was blocked from participating. Trying to skirt a rule banning the president's close relatives from seeking office, she tearily divorced Colom earlier this year, but a series of courts ruled against her bid.

Perez's share of the vote was less than earlier opinion polls had indicated. But his showing suggests he is well-placed to win in the second round.

Fellow rightist candidate Eduardo Suger, an academic, was in third place with about 16 percent support and many of his supporters could turn to Perez in a second round, when the candidate with the most votes wins.

"We are confident that in the next round, the second round on November 6. We will win again and win by a strong margin," Perez told reporters in the early hours of Monday as the tally was still slowly trickling in.

If he does win, he would be the first former army officer to take power since Guatemala returned to democracy in 1986 after decades of military rule.

Perez's main campaign promise was a "mano dura" -- or "firm hand" -- against violent street gangs and Mexican drug cartels that have moved into Guatemala, using it as a key route in smuggling South American cocaine to the United States.

Human rights groups warn that Perez's tough crime-fighting message may have a dark side in a country with a history of extra-judicial killings by security forces.

Still, with around a dozen murders a day in a country of 14.7 million people -- smaller than the U.S. state of Florida -- many voters say they have had enough.

"See a thief, kill a thief. Forget locking them up," said Perez supporter Hilda Lopez, lifting aloft her finger marked with ink to show she had voted.

SECURITY SPENDING

Perez, 60, commanded troops during a brutal 1960-1996 civil war against Marxist guerrillas when a quarter of a million people were killed and the army committed many massacres. He served as head of the military intelligence unit accused of engineering assassinations of political rivals.

But he denies accusations of wrongdoing, there are few specific claims against him, and many voters more concerned about current problems shrugged off his civil war past.

The winner of the election will face a grave fiscal situation in the sugar and coffee exporting nation, with the government pulling in one of the lowest tax rates in the Western Hemisphere, just 10 percent of gross domestic product.

That, along with growing debt and a widening fiscal deficit expected to reach 3 percent next year, prompted Standard & Poor's to put Guatemala's credit rating on negative watch.

"Perez is certainly highlighting the security side and it is hard to imagine strong efforts on that front without the need for further expenditures," said Lisa Schineller, sovereign ratings director at S&P, who expects Perez to take the presidency in a second round.

Perez will likely have a hard time convincing powerful business leaders who supported his campaign to pay more taxes, and his right-wing Patriot Party will not have a majority in the 158-seat Congress.

Tax evasion is around $1 billion per year. "With a fractious congress and the strength of the private sector, it has been extremely challenging to try take steps to move ahead with raising the tax take," Schineller said.

Stopping short of proposing new taxes, Perez wants to raise mining royalties from 1 to 10 percent to draw more revenue from the country's gold and nickel mines. He told Reuters in an interview he would be cautious about taking on more debt.

The deeply religious 41-year-old Baldizon pledges to continue Colom's popular cash and food programs for the poor but he also holds more conservative views like reviving the death penalty. He says he would repeal a 12 percent sales tax in favor of a 5 percent flat tax, a proposal knocked by some economic experts.

Perez softened his tone in his second bid for the country's top office -- he lost the 2007 race to Colom -- and promises more social spending to counteract deep inequalities between the wealthy elite and the rural, largely indigenous poor.

The only leftist in Sunday's election, well-known Mayan rights activist and Nobel Peace Prize winner Rigoberta Menchu, won just under 3 percent of the vote.

(Additional reporting by Herbert Hernandez; Editing by Kieran Murray and Cynthia Osterman)