Guatemala moves toward civilian rule. Economic woes are one reason military rulers are ready to yield power

Guatemala's military government is moving toward civilian rule in the midst of an economic crisis, persistent guerrilla activity, and a lingering reputation as one of the hemisphere's worst human-rights violators. Strapped for cash, the hard-line Guatemalan government hopes that elections Nov. 3 -- with a December runoff -- and the transition to civilian rule will improve the country's tarnished image. They hope to attract foreign investment and more American aid. Over the years, US investors have been attracted by Guatemala's oil reserves, rich farmland, and industrial capabilities.

But diplomats and political observers are skeptical about the elections. ``The military will continue to rule,'' points out one European diplomat, ``and any civilian president will have to walk a very narrow path.''

Guatemala's fame was once as a tourist's paradise. The coolness of its pine-covered mountains and the existence of a vital and colorful Indian culture made tourism one of Guatemala's main earners of foreign exchange.

At a glance, Guatemala -- the richest, most industrialized country in Central America -- still looks peaceful and prosperous. In the Indian highlands, neatly tended fields flank the volcanoes. Skyscrapers dot the capital city as late-model cars zip along the wide boulevards of its fashionable zones.

Yet Guatemala is a highly divided country. Wealth and power are in the hands of the Ladinos -- non-Indians of Spanish descent -- who make up roughly 35 percent of the population. Many Ladinos are shopkeep-ers or landowners. The majority of the population, descendants of Mayan Indians, have little political power, little economic power, and no social power.

Military dictatorships have traditionally kept the lid on this unstable setup. Since 1954 the country has had a succession of rightist-military, or military-dominated civilian governments that have used violence liberally to combat leftist guerrilla movements. They have even targeted such moderate opposition as the Christian Democratic Party. Violence was so extreme that the US stopped military aid in 1977.

Urban political violence and corruption peaked during the government of Gen. Romeo Lucas Garc'ia (1978-82). Death lists were drawn up in the presidential palace and the assassinations were often carried out by the GUATEMALAGUATEMALA government's judicial police, according to a former high government official.

A 1982 coup by Gen. Efra'in R'ios Montt, an evangelical Christian, slowed the violence in the city. But the coup signaled the start of the Army's campaign to annihilate Indian villages in the highlands which supporting the guerrillas.

When the ruthless campaign was over, tens of thousands of Indians had been killed and many more were forced to flee into the mountains or into Mexico.

The government then began new tactics to solidify its control in the countryside. It instituted a system of obligatory civil-defense patrols and a controversial series of ``model villages'' similar to the strategic hamlets of the Vietnam war.

Although the Army has pushed the guerrillas north toward the border with Mexico, the guerrillas are still active. Guerrilla attacks have increased significantly this year in provinces on the Guatemalan-Mexican border. They have started attacking larger Army targets, showing an increased military capability, researchers say.

But more than the ongoing war, it is the economy that is troubling the military government. This makes the military government all the more eager to hand over management to a civilian government.

Guatemala has almost no dollars. It recently mortgaged one-third of its gold reserves to pay for the next four months of oil shipments. The nation's currency, the quetzal, at parity with the dollar for 30 years, is now trading at three to the dollar and expected to sink to about five by year's end. The nation's inflation rate is estimated at between 60 percent and 90 percent.

Government measures to deal with the crisis, such as raising the price of gas, will fuel the inflationary spiral still further, financial experts say, and increase the possibility of social unrest.

The Army now espouses reforms and development to deal with Guatemala's problems. But many observers doubt that commitment. They expect the Army to return to its traditional means of accomplishing change -- repression.

There has been a slight improvement in human rights since the days of General Lucas. But political violence is still widespread and institutionalized, according to political and diplomatic observers.

``Whoever wins will have his hands completely tied,'' says one foreign political analyst. ``With all the budget cuts, there is practically no budget and the military is totally running the show in the countryside. The elections are mainly for foreign consumption.''

Four political parties are considered to have a chance at the presidency. They range from the liberal Christian Democrats led by Vinicio Cerezo Ar'evalo to the ultra-right National Liberation Movement. While Mr. Cerezo's Christian Democrats, having suffered from government repression in the past, are the greatest advocates of social reforms and human rights, they are distrusted by the Army, which would ``watch them like a hawk'' if they won, as one diplomat put it.