In a 2001 interview, a Salvadorean businessman recalled what ex-combatants of the demobilised Frente Farabundo Martí para la Liberación Nacional (FMLN) had told him when they met: ‘The worst mistake we made since [the government of President] Duarte [1984–1989] was that we negotiated with politicians; we should have negotiated with the owners of this country, the business people’.Footnote 1
As this remark implies, the private sector plays a fundamental role both in peace negotiations and in the subsequent implementation of peace agreements. It generates and controls many of the resources necessary for building peace, including taxes, investments and production. As a result, even in the absence of explicit political motives, private sector decisions have the capacity to limit, condition and shape the agenda and scope of peace negotiations and the implementation of accords reached.Footnote 2 Thus, while the mere inclusion of the private sector in peace negotiations cannot guarantee that viable agreements will be concluded and implemented, the exclusion of the private sector will challenge – if not thwart altogether – the consolidation of peace.
Yet this general insight does not help to account for variations in when, how and why private sectors in different countries get involved in peace processes. This article seeks to move beyond the ‘business matters’ argument and identify specific aspects in which private sector involvement in peace negotiations varies across cases. It does this by analysing three peace processes in Latin America. In the past decade peace negotiations with leftist insurgents took place in El Salvador, Guatemala and Colombia. The Central American talks resulted in peace accords (concluded in 1992 in El Salvador and 1996 in Guatemala), while the Colombian government's peace negotiations with the leftist Fuerzas Armadas Revolucionarias de Colombia (FARC) collapsed in 2002. The three countries differ in many ways, including size and composition of the national economy – Colombia's Gross Domestic Product (GDP) is more than six times that of El Salvador and more than four times that of Guatemala.Footnote 3 The weight and role of external factors also varies across the cases – Guatemala and El Salvador's conflicts were clearly linked to the Cold WarFootnote 4 while international attention towards the Colombian conflict has highlighted the role of the US war on drugs. The history of the armed conflicts is also markedly different. Though all three conflicts are related to issues of land tenure and other socioeconomic problems, the political economy of narcotics more consistently marks recent developments in Colombia. However, in one key respect the cases resemble each other: in all three countries the domestic private sector was important in shaping both the political environment preceding the initiation of peace talks and the development of negotiations. In El Salvador and Guatemala the private sector also had a significant impact on the content of the peace agreements and their subsequent implementation.
However, private sector involvement in peace negotiations adopted different forms in each country. In El Salvador the development of peace talks, the content of accords and the period of implementation were marked by private sector control, whereas in Guatemala the private sector tended to obstruct the peace process. Colombia represents a case of ambivalence, as the private sector has yet to develop a generalised interest in a peaceful solution to the conflict or organise itself as a significant force with the ability to shape and support the development of peace talks.
This article suggests that three groups of factors explain this variation. Drawing on a growing literature on the political economy of civil wars,Footnote 5 the first of these refers to the costs – both perceived and real – imposed upon the private sector by armed conflict and the perceived or expected costs and gains of ending conflict and establishing peace. Actual and perceived costs of conflict include levels of kidnapping, extortion, domestic physical destruction and a general sense of (in)security, as well as international pressure via sanctions or conditional loans and credits. Costs of peace include new taxation to support reconstruction efforts, while gains of peace refer to new investment and saving opportunities which have been difficult or impossible to realise due to the conflict. The costs of armed conflict have not been measured by an absolute value or according to a specific threshold; perceptions are highly context-related and what is tolerable in one country may by far exceed conditions deemed acceptable in another. It will be shown here that private sector perception of costs and gains – and therefore its willingness to support and be involved in, or to oppose and obstruct peace negotiations – can shift considerably. This may be, for example, in response to the rapid deterioration of conditions or targeted international intervention to generate awareness of the costs, such as missing out on the potential gains to be made from the global economy.
The second group of factors explaining variation in how the private sector becomes involved in peace negotiations relates to whether or not those private sector factions in favour of negotiating peace have managed to promote private sector unity in order to exert corporate pressure in peace negotiations. Business unity may be reflected in leadership composition and in the public positions adopted by business associations, but can also derive from dominant sector shares and composition of exports and domestic production. Some of the variation in this regard can be attributed to the presence or absence of targeted intervention by state or external actors who can convey the desirability of peace as a worthwhile economic undertaking or underscore the costs of ongoing conflict. This can occur via awareness raising campaigns or through more direct promotion of certain factions within the private sector, for example by means of credit dispensation or preferential trade treatment.
The third group of factors refers to the ability of different private sector factions to exert control over the processes of negotiation and implementation, or at least to monitor them on an ongoing basis. This control can occur either directly or indirectly. Direct access to the policymaking process can result from private sector or government initiative and can be more or less institutionalised. When it is informal, it depends on the political and economic affinity between government and business leaders. Indirect control is exercised by means of vetoes by recalcitrant private sector factions. As will be shown below, both access to peace policymaking and the capacity to effectively veto peace policy derive from institutional patterns of business-politics relations established prior to the initiation of peace talks. In this sense, this last group of factors takes into account ‘actions of state actors and the cumulative effect of these actions’Footnote 6 as well as historical differences in the way business actors in Latin America have developed their political preferences and capabilities.
This article seeks to contribute to a growing debate about the role of the private sector in conflict and peace-building in developing countries. In particular, it engages two different but complementary schools of thought. One group of scholars points to the stakes of business in maintaining the status quo. Grounded in studies of conservative oligarchies, this literature underscores elite resistance to change, especially to integrating a former rebel group into civilian politics by means of a peace agreement.Footnote 7 This emphasis on the potential of business to act as a ‘peace spoiler’Footnote 8 is contrasted here with an examination of how even recalcitrant private sector elites may find it in their interest to support change.
Another group of arguments stems from the literature on the political economy of armed conflicts, which is concerned with the potential or actual contribution of private sector activity to maintaining conflict.Footnote 9 This study considers factors that prompt domestic business to seek an end to conflict because it is in their own self-interest, inviting scholars to unpack a seemingly homogeneous category – the private sector faced with conflict – in order to identify splits, conflicting interests, and potential allies of peace negotiations.Footnote 10
The argument presented here draws from a rich institutionalist literature on the formation of business preferences, according to which economic actors are embedded in institutional contexts that shape their preferences and explain variation in terms of what they want, when they get it, and what they need in order to be effective. This confirms the broader relationship between institutions and the nature of economic actors, specifically how the relationship between business and politics and the character and organisation of capital are linked and mutually determined.Footnote 11 The literature on business and politics in Latin America highlights some of these insights, underscoring historically grounded and institutionally articulated variations in the make-up of domestic business communities as political actors and in their ability to influence policymaking.Footnote 12 The focus here on the conflict-to-peace transition in three Latin American countries intends to contribute to this literature.
The principle focus here is on endogenous factors at work in the transition to peace; however, the power of external factors, such as shifts in US foreign policy associated with the end of the Cold War (Guatemala and El Salvador) or the war on drugs (Colombia), financial aid conditionalities, and diplomatic pressure, in affecting domestic actors' preferences and strategies is also acknowledged.Footnote 13 In an effort to explain why peace is included in the agenda of business groups, some arguments attribute changes in elite behaviour to pressure ‘from below,’Footnote 14 namely insurgent strength, or underscore clear-cut distinctions between large groups of ‘centaurs’ (counterinsurgency coalitions of military and civilian elites) and ‘doves’ (civil society organisations that believe in and commit to peaceful settlements).Footnote 15 By contrast, this analysis focuses on shifts and splits in economic elites' organisation, perception and behaviour, perceiving these as factors which facilitate the involvement of the private sector in peace negotiations. While any particular outcome, including whether peace is ultimately achieved or not, depends on a variety of factors, the argument presented here illustrates how private sector perceptions of conflict costs, private sector unity and organisation, and business-state ties vary across three Latin American cases and help explain the very different outcomes in terms of how business became involved in the search for peaceful solutions to armed conflict.
El Salvador: the private sector's peace
In his address to the plenary of El Salvador's main business association, the National Association of Private Enterprise of El Salvador (ANEP, for its Spanish abbreviation), President Alfredo Cristiani expressed his gratitude for ‘the support the business community has provided us with in every moment and under all circumstances’.Footnote 16 It was September 1991 and El Salvador was close to celebrating the signing of the peace agreement which, in January 1992, put an end to twelve years of civil war. The president had good reasons to be thankful. As in few other countries, an important faction of the Salvadorean private sector acted as a crucial interlocutor and ally of Cristiani's Administration in the design and development of peace negotiations.
Private sector activism and involvement in peace talks during the Cristiani administration contrasted with fierce resistance during previous attempts at bringing a negotiated end to the Salvadorean conflict. Most notably, Christian Democrat José Napoleón Duarte, president between 1984 and 1989, alienated the business community with a reform package aimed at redistributing wealth,Footnote 17 thereby undermining business support of his proposed negotiations. ‘They [the business community] boycotted Duarte. They viewed him as something dangerous, [they] said he was a Communist when he first announced that he was going to talk to the FMLN’ recalls a former FMLN leader.Footnote 18 An ANEP leader shared this perception: ‘When Duarte wanted to negotiate, private sector opposition was severe. There was great fear of the Left’.Footnote 19
Given this precedent, what produced the change that allowed President Cristiani to garner business support of negotiations only a few years later? First, a profound shift in the structure of the Salvadorean private sector occurred during the 1980s, leading to the consolidation of a new ‘modern’ elite. While agricultural exports represented 13 to 14 per cent of the Salvadorean GDP in the early 1970s and increased their participation to 25 per cent in 1975, by the end of the 1980s agriculture's participation had fallen to less than five per cent giving way to increased diversification into new sectors such as commerce, agri-business and financial services.Footnote 20 Over a decade later, El Salvador had steadily moved away from being under the legendary control of fourteen familiesFootnote 21 and had increasingly opened its economy to international markets.
Much of this transformation was induced by targeted US intervention. Founded in 1983 with funds from the United States Agency for International Development (USAID), the Fundación Salvadoreña para el Desarrollo (FUSADES) exceeded by far the functions of a regular think tank and became the seedbed of the neoliberal economic elite, dispensing credit and supporting activities in new sectors of the economy to the detriment of traditional products, such as coffee.Footnote 22 The strategy was successful inasmuch as it shifted the balance among diverse sectors of the economy and nurtured a generation of young business leaders occupying leadership roles in private sector associations and in government, effectively displacing the traditional land-based economic elite.
In contrast to their parents, for this new business generation the Salvadorean conflict became more a matter of missed opportunities than one of principles. The private sector was a target of kidnappings and extortion and the destruction of infrastructure and lost investments made it complicated to do business. According to the Salvadorean Planning Ministry, between 1980 and 1990 direct and indirect costs of the conflict totalled around US $1 billion.Footnote 23 The debt crisis of the 1980s added to this predicament. As a private sector leader recalled, ‘in four years the Salvadorean GDP fell 25 per cent’,Footnote 24 a tendency reflected in the data of the Economic Comission for Latin America and the Caribbean.Footnote 25 Salvadorean exports to the Central American Common Market, the country's largest regional trading partner, were also affected, falling by some 40 per cent during the decade. In response to deteriorating conditions, wealthy Salvadoreans abandoned the country and capital flight reached epidemic proportions in the early 1980s, reducing the capital available for investment.Footnote 26 For those who stayed, prospects were grim, as vividly described by one association leader: ‘A generation of young entrepreneurs lived in the midst of conflict [for] years, they had little opportunity for growth.’Footnote 27 Thus, for most, the ongoing Salvadorean conflict imposed a high price.
This became particularly apparent when attempts to consolidate the new economic model promoted through the Washington Consensus revealed the difficulties the country would encounter if the conflict persisted.Footnote 28 Actively promoted by FUSADES,Footnote 29 the model favoured increased competition among economic actors, trade liberalisation and the limitation of the state's role in the economy. According to a former FMLN leader, ‘FUSADES’ economic programme could not be executed in the midst of war. […] They [business] realised that the FUSADES design would not work in the absence of peace'.Footnote 30 ‘[The end] of conflict would not come for free’ said the executive director of an export company.Footnote 31 In brief, the generation reared under the FUSADES umbrella understood that their economic viability and success in the new economic model was dependent on an end to the armed conflict. One former FMLN leader and prominent academic stated this more bluntly: ‘For the Salvadorean bourgeoisie, peace became an economic necessity’.Footnote 32
While economic factors pushed the Salvadorean private sector in the direction of supporting negotiations, political organisation provided it with the necessary support. On the one hand, by 1986–7 the leadership of ANEP, the main private sector association, reflected the gradual FUSADES-induced transition from hard-line agricultural interests to the industrial and commercial bourgeoisie.Footnote 33 Founded in 1966 in order to support Central American economic integration, ANEP claims to represent more than eighty per cent of the Salvadorean private sector in diverse sectors of the economy.Footnote 34 However, by comparative standards ANEP is not a strong organisation.Footnote 35 In fact, given historically strong ties between economic and state elites, a strong private sector organisation has been largely absent in El Salvador. In addition, El Salvador has lacked institutional incentives, such as a vigorous legislature, which might encourage the development of strong business associations to lobby for their interests.Footnote 36
More important than ANEP in producing changes in the organisational and political structure of the Salvadorean private sector was the emergence of the Alianza Republicana Nacional (ARENA), the private sector-dominated party founded in 1981. In its early days the ideological leanings of its leading figure and founder, Roberto D'Aubuisson, as well as control by the extreme right accounted for the party's association with conservative politics. ARENA's electoral defeats in 1984 and 1985 in part explain D'Aubuisson's bold decision to expand the party's political platform from simple anti-communism and turn it into the key political force behind massive private sector support of peace negotiations. In 1984, D'Aubuisson recruited Alfredo Cristiani to the party. Cristiani was the son of an immigrant family that had made its fortune in coffee and in a San Salvador-based pharmaceutical company, and was a loyal disciple of FUSADES. In what has been dubbed a master move,Footnote 37 D'Aubuisson thus provided the backing of the party to a legitimate representative of the new agro-industrial generation, the most progressive expression of the economic elite.Footnote 38 Today ARENA's anthem still proclaims El Salvador to be the ‘tomb of the Reds’, but enlisting the support of private sector moderates such as Cristiani strengthened its status as the expression of the private sector as a whole. The move paid off, as ARENA won legislative elections in 1988 and Cristiani the presidential elections of 1989.
While the opportunities offered by the neoliberal economic model and the cost of conflict provided a motive, the political consolidation of the pro-peace Salvadorean private sector through ANEP, FUSADES and ARENA and the victory of Cristiani provided the vehicle for private sector involvement in peace negotiations. These elements assured the private sector continued access to the decision-making process as well as protection and promotion of its core interests. It thus came as no surprise that Cristiani won the presidency on a political platform of peace and fiscal adjustment.
Upon assuming office, Cristiani immediately convened meetings with the FMLN. A final FMLN offensive on the capital in November 1989 confirmed the need to initiate peace talks, as it laid bare the prevailing military stalemate.Footnote 39 Although they were not part of the official negotiating team, representatives of Cristiani's support group from FUSADES, ANEP and ARENA maintained close relations with the government during negotiations as well as a firm, if informal, grip over the peace agenda, as confirmed by several private sector leaders.Footnote 40
To a large extent, the strong private sector-government connection during the peace talks explains the absence of more ambitious socioeconomic provisions in the peace agenda: the central aim of the talks was to end armed conflict and set the stage for implementation of the FUSADES-designed economic model. FMLN leaders, while in charge of an organisation that had been able to inflict severe damage upon the private sector during the conflict, abandoned more profound socio-economic demands in exchange for political and judicial reforms.Footnote 41 While compensated by the FMLN's stellar performance in national and local elections in post-accord El Salvador,Footnote 42 the elimination of socioeconomic issues from the accords represented a triumph of the new private sector eliteFootnote 43 and the delay of more comprehensive democratisation.Footnote 44 This was also reflected in private sector control over the implementation of peace agreements, in particular the successful obstruction of attempts by FMLN-friendly labour unions and other organisations to introduce corporatist arrangements on labour issues.Footnote 45
Fifteen years after reaching an end to the Salvadorean conflict, the words of a company president ring true: ‘The peace accords in El Salvador really have been a success. One of the winners has been the private sector. […] No matter how costly the peace, it will be cheaper than war.’Footnote 46 Indeed, with the accords, the private sector of El Salvador essentially got what it wanted: stability and a private sector-friendly investment climate at home (guaranteed by the lasting tenure of ARENA) and economic rules that enabled them to compete in a new international macroeconomic environment. Despite increasing crime levels and poverty,Footnote 47 Salvadorean business boomed and, between 1990 and 1995, the economy grew at an average rate of 6.2 per cent,Footnote 48 much of it nurtured by growing domestic investment rates in commerce, financial services and industry.Footnote 49 This confirmed expectations that the post-accord economic model would mostly reward the new ‘modern’ elite, which had been instrumental in facilitating and supporting the peace agreements. This group successfully achieved its goal, assisted by their political consolidation in the form of a party (ARENA), an association (ANEP) and a think tank (FUSADES), as well as their unlimited access to the ARENA-controlled decision making process.
Guatemala: uneasy private sector, uneasy peace
Guatemala offers a contrasting experience to that of El Salvador. While the Guatemalan peace accords are much more comprehensive and were heralded as a success because they were broader in scope and more ambitious in terms of social and economic commitments,Footnote 50 a decade later the overall perception is less enthusiastic. As a Guatemalan banker stated, ‘we jumped out of a frying pan into the fire’.Footnote 51
As in El Salvador, the post-conflict crime rate in Guatemala has risen,Footnote 52 but unlike El Salvador, economic growth has not been significant nor has Guatemala been blessed with comparable income from remittances. In May 2003, the international donor community published several reports deploring the country's string of unfulfilled commitments in the implementation of peace agreements, signed by the government and the Unidad Revolucionaria Nacional de Guatemala (URNG) in December 1996.Footnote 53 The reports complement a series of documents that have periodically recorded Guatemala's failure to comply with peace commitments, including fiscal adjustment, increasing the tax rate, and addressing social needs.Footnote 54
In many ways, Guatemala's lukewarm record on peace accord implementation can be attributed to its private sector's consistently more ambiguous involvement in peace negotiations. In contrast to the situation which prevailed in El Salvador, the Guatemalan private sector was less cohesive when faced with the opportunity to reach a negotiated end to conflict and exercised less leadership and control over peace negotiations overall. In addition, it has consistently obstructed implementation by resisting key reforms, such as a tax increase that would help raise domestic funding to meet peace commitments, thus contributing to the instability that has marked peace consolidation in the country.
Several elements explain this difference between the two countries. One important factor relates to qualitative differences between the Guatemalan and Salvadorean conflicts in terms of costs, both actual and perceived. The Salvadorean conflict was of shorter duration yet it was more intense than Guatemala's and inflicted great harm on private sector interests. The Guatemalan Comisión de Esclarecimiento Histórico (CEH), the UN-led investigation into violations carried out during the armed conflict, estimated the destruction of physical capital ‘including private and public goods, in addition to bridges and energy towers’ at over six per cent of Guatemala's 1990 GDP,Footnote 55 but there is no consensus on the magnitude of this cost.Footnote 56 However, because conflict persisted for decades predominantly in the countryside, was geographically confined and generally of low intensity, it was not perceived by the private sector community to constitute a significant obstacle to economic activity. This led many to believe that a negotiated solution was not warranted. As a result, less members of the Guatemalan private sector believed that ending conflict in a negotiated manner would secure or improve their (and their companies') livelihoods. In the words of the agricultural association's leader, ‘here the war had been won. The military were victorious’.Footnote 57 This opinion is widespread even today, as many believe peace talks and agreements were more or less imposed upon Guatemalan society by the international community.Footnote 58
In addition to differences in terms of perception of costs, the Guatemalan private sector community was also less united than its Salvadorean counterpart when faced with the possibility of negotiating peace, which had important repercussions on its involvement in the peace process. As in El Salvador, Guatemala underwent important economic transformations during the 1980s. However, this process was less profound. Attempts by Guatemalan military governments to adopt neoliberal economic policies, especially the modernisation of the agricultural sector, had little effect. In part, this was due to less US funding for economic remodelling, as Guatemala ranked lower on the US list of Cold War hot spots than El Salvador.Footnote 59 As a result, Guatemalan elites continue being characterised as ‘illiberal’,Footnote 60 while more modernising sectors – a younger generation of business people with family ties to traditional agricultural sectors but who are active in commerce, finance, and agro-industry with increasing connections to international markets and networksFootnote 61 – failed to achieve hegemony. In short, those sectors most likely to benefit from and support peace negotiations gained neither economic nor political predominance, while hard-liners opposed to negotiations remained active and effective spoilers.
Many of these tensions of a more divided private sector played out within the Comité Coordinador de Asociaciones Agrícolas, Comerciales, Industriales y Financieras (CACIF). Founded in 1957, the private sector umbrella organisation underwent a gradual shift in the composition of its leadership from representatives of the traditional sectors to members of the modernising group. This shift gained momentum in the early 1980s,Footnote 62 when CACIF began to position itself as the main promoter of economic liberalisation,Footnote 63 in part in an effort to get the military out of business and back to the barracks. As a result, a gap emerged between the private sector, as represented in CACIF, and the military, initially on economic issues alone and later on the overall nature of the political regime. Disagreements over economic policy with the military governments triggered CACIF's transformation into an organisation defending political liberalisation and democracy. In fact, CACIF was instrumental in inducing the military to accept democratic transition, beginning with the reinstatement of constitutional order and the return to civilian rule in 1982, continuing with the drafting of a new Constitution limiting military prerogatives in 1985 and the election of a civilian president, Vinicio Cerezo, in 1986.
However, CACIF's transformation was not a uniform process. A group of young private sector leaders with ties to the modern sector, such as finance and commerce, were in the vanguard of this transformation. For this faction, the democratisation process of the 1980s served as a learning experience that led to their support of peace negotiations in the 1990s.Footnote 64 However, incomplete economic modernisation left profound divisions between traditional and modern sectors,Footnote 65 and explains the failure to dismantle traditional sectors' veto capacity within CACIF. The numerous clashes between both groups underscored the ambivalent position of the private sector as a whole to negotiations in subsequent years.
The weakness of the pro-peace faction was illustrated during the peace process initiated by Vinicio Cerezo. The government's Comisión de Paz (Peace Commission, COPAZ) scheduled numerous meetings between URNG, political parties, religious groups, academics and others. Of these, the first meeting ever between CACIF and the URNG, in 1990 in Ottawa, Canada, was the only one not to produce a joint statement. One private sector leader proudly remembered: ‘We broke their [the URNG's) scheme, we didn't sign [the statement]. […] They had an old speech of the seventies, about the rich and the poor, they were obsolete’.Footnote 66 In addition to ideological reasons, this resistance can be attributed to pressure from hard-liners within CACIF.
The tide temporarily turned during the ensuing government of President Jorge Elías Serrano (1991–1993). In contrast to his predecessor, Serrano appointed leading private sector figures linked to the modernising sector to key government positions, such as Álvaro Arzú Irigoyen (Minister of Foreign Relations) and Richard Aitkenhead (Minister of Finance).Footnote 67 This was a concession to the pro-peace private sector faction but did not guarantee private sector acceptance of Serrano's peace plan, which was considered too hasty by hard-liners and soft-liners alike, as it did not require a ceasefire as a precondition for talks to take place. Serrano's case was not helped by the fact that, after resisting pressures of a corrupt Congress, he himself yielded to the temptation of personal enrichment. Faced with street protests and a surge in guerrilla violence, Serrano closed Congress and suspended constitutional provisions. This self-coup boosted the position of private sector soft-liners of the modernising faction. CACIF served as the headquarters of the Instancia Nacional de Consenso, a civil society initiative set up to coordinate opposition to Serrano and promote an end to the interruption of Guatemala's newly established constitutional order.Footnote 68 The mobilisation was effective: after a week of mounting tension and growing international pressure, Serrano resigned and turned the presidency over to Ramiro de León Carpio, formerly his Human Rights Ombudsman.Footnote 69
The Serrano episode of 1993 provided an impulse for the creation, in 1994, of the Comisión Empresarial de Paz (Business Peace Commission, or CEPAZ for its Spanish abbreviation). The official purpose of this body was to lead CACIF's contacts and determine private sector positions and involvement in peace negotiations. CEPAZ's creation also suggested that, as in El Salvador, the modernising private sector faction had come to appreciate the link between ending conflict and an improvement in their economic perspectives. Neither had the mounting international condemnation of the Guatemalan private sector's perceived complicity with human rights abuses or the conditionality of development aid on an improvement in human rights escaped the attention of this group. In addition, ‘access to free trade agreements such as [the North American Free Trade Agreement] NAFTA, to foreign investment, and to international funding promised to Guatemala after the signing of the peace accords’Footnote 70 provided them with important incentives. Not surprisingly, one CEPAZ member reported, ‘peace was necessary to “sell” the country and attract investment’.Footnote 71 Another argued, ‘the world was changing. Levels of international support for continuing conflict were declining while support for peace was high. There was a possibility for a win-win, for investment and for the globalisation [of the Guatemalan economy].’Footnote 72
As a result, CEPAZ – pejoratively referred to as ‘the Swiss’ by recalcitrant private sector factions – pursued three ‘confessed but undocumented objectives’, namely, to ‘create a group of influential business people with the ability to monitor the [peace] process; exert influence on the process given that there were socioeconomic issues [to sort out]; and embark upon a mission of internal persuasion [within CACIF]’.Footnote 73
This proved to be no easy undertaking. Tensions within CACIF constrained CEPAZ. Its members were forced to perform repeated balancing acts between maintaining overall private sector support for negotiations and preventing hard-liners from hindering progress. In the process, CEPAZ made several concessions to hard-liners, such as the decision to oppose CACIF's inclusion in the Asamblea de la Sociedad Civil (Assembly of Civil Society, ASC for its Spanish abbreviation), a group of diverse social organisations designed to serve as civil society interlocutor of the parties to the negotiations. Additionally, CEPAZ was unable to prevent the Coordinadora Nacional Agropecuaria (CONAGRO) from withdrawing from CACIF in protest over CEPAZ's support of negotiations and from filing lawsuits against government negotiators citing treason.Footnote 74 However, CEPAZ also used the threat of the hard-liners for strategic purposes at the negotiation table: ‘When we wanted to toughen discussions, we adopted their [the hard-liners'] discourse’, recalls a member of CEPAZ.Footnote 75
Despite such difficulties, CEPAZ's efforts were not fruitless, as was illustrated by the victory of Álvaro Arzú Irigoyen in the presidential elections of 1995. A former member of President Serrano's economic team, Arzú enjoyed significant support within the private sector and was identified particularly with the modern economic elite. For CACIF, and CEPAZ in particular, the arrival of a like-minded businessman-turned-politician provided the private sector with smoother access to the decision-making process than ever before. The appointment of a trustworthy businessman and advisor to CEPAZ, Richard Aitkenhead, as member of the four-person government peace negotiating team, COPAZ, soothed the private sector's overall resistance to negotiations. ‘He kept them informed. They had one of their own at the table’, recalled a member of COPAZ.Footnote 76 ‘We trusted that those leading the accords were people with whom we could communicate’, said a leader of CACIF.Footnote 77
This renewed trust in government facilitated the finalisation of the Accord on Social and Economic Aspects and the Agrarian Situation, which addressed issues of state modernisation and rural and social development. Previous attempts to reach agreement on this matter had failed due to private sector resistance to tax increases and to recognising the social function of property.Footnote 78 In a document issued in 1995, for example, CEPAZ had blamed the Guatemalan tax system as well as ‘the constant pressure for more income’ for discouraging investment, unemployment, reduced international competitiveness of Guatemalan products and ‘the country's economic stagnation’.Footnote 79 In addition, a CACIF document of the same year stated that taxes, such as a progressive income tax, were unacceptable. During the Arzú government, the private sector, led by CEPAZ, finally accepted a Value-Added-Tax (VAT) increase of 50 per cent (elevating the overall tax burden from eight to twelve per cent by 2000, still well below the low Latin American averageFootnote 80), but conditioned the tax increase on a GDP growth rate of six per cent.Footnote 81
Only a year after being sworn into office and seven years after initiation of the peace process, President Álvaro Arzú presided over the signing of the final peace settlement in December 1996. However, in light of the difficulties the Guatemalan peace negotiations and accords encountered in earning sustained private sector support and involvement, it is perhaps not surprising that the post-conflict private sector-peace relationship has been less than harmonious. This has been reflected most vividly in the ongoing debate surrounding the promised tax increase, one of the cornerstones of the peace agreements. In 1997, for example, the proposal to reform the Single Property Tax in order to raise income for municipalities by elevating the tax burden of large landowners was passed by Congress, but opposition by CACIF caused Arzú to request Congress to repeal the reform.Footnote 82
As with the initial launching of peace talks, the role of the international community proved crucial in exerting pressure on the Guatemalan private sector to finally accept a new tax dispensation. On the one hand, hints by international donors that Guatemala's failure to meet its fiscal commitments would jeopardise further funding signalled the limits of donor patience with domestic resistance to sharing the peace burden.Footnote 83 On the other, dire economic prospects for Guatemala predicted by the Interamerican Development Bank generated substantive concerns that the private sector stood to lose substantially in economic terms if key reforms, including fiscal reform, were not adopted.Footnote 84 In addition, the likelihood of an electoral defeat of the Partido de Avanzada Nacional (PAN) and a victory by its opponent, the anti-oligarchic Frente Republicano Guatemalteco (FRG) in the November 1999 elections, signalled that the private sector would soon lose the access to power it had enjoyed during the Arzú government.
As a result of these factors, the Fiscal Pact Preparatory Comission (CPPF, for its Spanish abbreviation) was able to enlist CACIF's support for the Fiscal Pact, an agreement to increase the tax rate to 12 per cent by 2002. The Pact reflected the private sector's interest in placating the international donor community, while, most importantly, tying the incoming FRG government to a multisectorally approved set of fiscal targets.Footnote 85 However, in yet another twist of the Guatemalan post-conflict saga, both the FRG government of Alfonso Portillo and the FRG-dominated Congress refused to adopt the Pact.
By the end of 2004, when the UN's Verification Commission closed its offices in Guatemala, most peace commitments had been rescheduled several times or had simply not been met.Footnote 86 Today the vast majority of the Guatemalan population is frustrated with the results of the peace process.Footnote 87 The country is far from reaching the 12 per cent fiscal goal set for 2002.Footnote 88 Indeed, a recent study suggests that the fiscal burden has fallen to just 8.5% of GDP.Footnote 89
Even an administration staffed and supported by the modernising private sector, led by Arzú protegee Oscar Berger (elected to the presidency in 2003),Footnote 90 has been unable to implement crucial reforms and maintain private sector support. Berger's campaign promises included a commitment to reinvigorate the Fiscal Pact,Footnote 91 yet this has not been fulfilled, further confirming the weakness of the modernising faction's agenda and political leverage.Footnote 92
To be sure, there has been some private sector activity in promoting rural development and local leader empowerment, as well as other Corporate Social Responsibility (CSR) initiatives, signalling a gradual shift within the private sector towards a more active role in the construction of peace.Footnote 93 However, when the UN mission closed its offices in Guatemala at the end of 2004, the organisation's Secretary General noted that ‘serious problems’ continued to ‘plague Guatemalan society. [Among them] Guatemala has fallen short of its obligations […] to substantially increase tax revenues to pay for much-needed social investments’.Footnote 94 In the meantime, a World Bank Report on Global Development and ‘Investment Climate’ stated that 80.4% of companies in Guatemala identify criminal violence as an impediment to investment.Footnote 95 For their part, CACIF supporters periodically chant ‘no more taxes’ during protests in upscale Guatemala City residential areas.
Colombia: private sector ambivalence
While the Salvadorean peace was largely a private sector initiative, and Guatemala's peace has held despite private sector scepticism and resistance, Colombia offers yet another variation on private sector involvement in peace negotiations. Here, peace talks initiated in 1999 between the government of president Andrés Pastrana and the main armed rebel group, the FARC, collapsed in February 2002 while attempts to negotiate with the Ejército de Liberación Nacional (ELN – National Liberation Army), the second largest leftist rebel group in Colombia, have also not led to a ceasefire. Despite the failure to achieve lasting agreements, both processes involved an increase in private sector involvement in peace negotiations. By contrast, the private sector's participation in the ongoing negotiations with the rightist paramilitary groups – which were initially created by the rural private sector as a protection against guerrilla attacks in the 1980sFootnote 96 – has been more discrete. In light of the failure to achieve tangible results in negotiations with the leftist groups, the private sector has alternated its endorsement of talks with support for those promising to end conflict by means of strong-hand approaches. What explains this ambivalence in the Colombian private sector's involvement in peace negotiations?
To a large extent, oscillating private sector interest in negotiated peace in Colombia is a result of varying levels of actual and perceived costs of conflict across the private sector. Having remained geographically confined to rural areas for decades, armed conflict became internalised by many Colombian business people in a pattern similar to that observable in Guatemala. The domestic private sector failed to include the costs associated with conflict, such as high risk premiums, high transaction and operating costs, damaged infrastructure, and security-related expenses, into their calculations.Footnote 97 As recalled by an important private sector leader, conflict ‘took place somewhere out there, in remote mountains and valleys, where neither society nor the state were present, which is why its impact on urban life was of little significance’.Footnote 98
However, a rapid deterioration of conditions during the 1990s caused many to change their views. The National Planning Department estimates suggest that the conflict cost the country between two and four GDP points per year between 1991 and 1996,Footnote 99 and over seven per cent of GDP between 1998 and 2003.Footnote 100 This had an important international dimension: a World Markets Research Centre report ranked Colombia as the most likely country among 186 to be targeted in a terrorist attack in 2004, a fact that 72 per cent of the companies factor into their decision-making process when defining locations for investment.Footnote 101 In addition, beginning in the mid 1990s Colombia witnessed a severe drop in economic growth, caused in part by liberalisation reforms and major economic restructuring measures adopted in the early 1990s. Although the country has been able to maintain levels of economic growth similar to or higher than the Latin American average, it experienced severe recession in the 1990s reaching minus seven per cent GDP growth in 1999.Footnote 102
The Colombian private sector has undoubtedly suffered the costs associated with armed conflict and economic recession. A recent survey suggests that companies are spending up to five per cent of their sales on protection of their staff, equipment and operations, and invest another five per cent in security-related insurance,Footnote 103 while insecurity consistently ranks among their prime reported concerns.Footnote 104 Private sector operations are affected by the repeated destruction of infrastructure such as energy and communication towers and roads.Footnote 105 In addition, members of the private sector are preferred targets of kidnappings and other types of extortion.Footnote 106 The Colombian private sector has also been pressed hard for resources from government. Since the mid 1990s, the state has collected more than US$900 million in different forms of security taxes and bonds. Capital flight has risen in response, amounting to US$10 billion between 1998 and 2003,Footnote 107 while 1.9 million Colombians left the country between 1996 and 2005, many of them highly educated and with significant investment capacity.Footnote 108 Although conflict affects sectors differently (kidnappings are more common in rural/agricultural areas while uncertainty about the country's future affects retail and investments more), together this indicates that the private sector has faced significant negative consequences as a result of the armed conflict.
At the height of the most recent wave of violence in the 1990s, many considered this disruption too high a price to pay. In this respect the experience in Colombia was similar to that in El Salvador. ‘In essence, business people feel that the main solution is to leave for Miami’, one businessman commented.Footnote 109 More than ever before, conflict was perceived as a liability affecting the country's international competitiveness. ‘They fear being kidnapped, they see real danger. (…) Fear has forced change,’ said one private sector leader.Footnote 110 Private sector surveys reflected this, with public order (or the lack thereof) consistently ranking among the most important problems, as well as the perception that only a better security climate would bring improved conditions for investment.Footnote 111
Issues related to economic viability and stability provided an important stimulus to growing business involvement in seeking a negotiated solution to the Colombian conflict. ‘Instead of asking for bullets, they are saying “fix this fast, we can't take more of this.” This is not because of conviction but because of fear. They are very pragmatic,’ said one important business leader.Footnote 112 The underlying rationale was simple; as stated by one Colombian executive, ‘peace is better business’.Footnote 113
The private sector was not a newcomer to the turbulent history of Colombian peace negotiations. Beginning in the mid 1980s, when President Belisario Betancur (1982–1986) launched the first serious round of talks with the Colombian rebel movements, private sector associations participated in the design of peace strategy and occupied key positions in government negotiating teams.Footnote 114 However, this earlier participation did not reflect a widespread concern with conflict or peace on behalf of the entire Colombian private sector. At the time, levels of conflict were still low compared to those experienced subsequently. As a result, according to a former association president ‘the private sector in the 1980s was either sceptical or clearly opposed to peace negotiations.’Footnote 115 ‘Faced with the prospect of peace, our main responsibility was to do business’, said one business man, summing up the dominant private sector perception.Footnote 116
During the Samper government (1994–1998), Colombia was catapulted into the international political arena because of the increasingly documented link between the drug trade and domestic politicsFootnote 117 and the surge in the intensity of the conflict. In response, both to international discredit and conflict escalation, private sector associations leapt onto the public peace agenda, actively participating in the movement for a Citizen Mandate for Peace, Life and Freedom, a civil society initiative against conflict which, in a nationwide poll held on 26 October 1997, collected 10 million citizen endorsements. ‘For us, [participation in] the Citizen Mandate was like a public declaration that we [the private sector] were in for this’, said an association advisor,Footnote 118 illustrating how participation in the Citizen Mandate became the seed of private sector involvement in the peace processes of the coming years.
Encouraged by the success of the movement and concerned by the bad publicity Colombia was getting abroad, private sector associations led efforts to resume contacts with guerrilla groups in search of a negotiated solution. Beginning in 1998, they established contacts with imprisoned leaders of the ELN, leading to the signing of a good will accord pledging the parties to seek a solution to the Colombian crisis. Representatives of a wide range of private sector associations, including small- and medium-sized companies, retailers, chambers of commerce, industry, and cattle ranchers, were among the signatories.Footnote 119
While the peace process with the ELN was characterised by the dominant role of private sector associations from multiple sectors of the economy, the election of Andrés Pastrana in August 1998 marked a shift in the involvement of the private sector in peace negotiations. Pastrana's high impact pro-peace campaign and his boldness in approaching FARC leaders (during his campaign he held a meeting with FARC's main leader in a remote place in the Colombian jungle) spread optimism and earned him the widespread support of the private sector, as measured by surveys.Footnote 120 In addition, Pastrana's proposal to launch Plan Colombia, a bilateral strategy designed to complement the US war on drugs with an attempt to end the Colombian armed conflict, also enjoyed widespread private sector approval. For many, Pastrana embodied hopes that a centre-right president would be able to reach a negotiated solution, much as Cristiani had done in El Salvador.
These high expectations explain some of the manifestations of private sector enthusiasm witnessed at the outset of Pastrana's administration. For example, the cattle ranchers' association, which represented one of the sectors of the economy worst affected by the conflict, proposed to donate land as a contribution towards reducing tensions between landowners and peasants.Footnote 121 The industrialists' association offered to fund ex-combatants as a contribution to an effective demobilisation scheme. More specific was the private sector's commitment to support the Pastrana administration's ‘peace bonds’, a measure to collect revenues for social and military investment.Footnote 122 In addition, in numerous workshops and public events members of the private sector referred to the importance of a peaceful solution to the conflict and emphasised the private sector's responsibility in peacebuilding.Footnote 123 ‘The subject was [also] dealt with extensively in committees and executive board meetings. You could feel the high expectations people held regarding peace as well as the conviction that it would be achieved by negotiated means’, recalled the leader of the tourism association, another sector which particularly suffered the effects of the conflict since its escalation in the mid 1990s.Footnote 124 ‘The private sector wants peace and is willing to pay for it’, said the president of the financial sector's association.Footnote 125 ‘We need to be aware of the hidden costs [of conflict]’, reported one businessman, ‘[a] peace agreement will be less expensive than what we're already paying for, the cost of [operating in] a country in conflict’.Footnote 126
Some of these private sector forums were funded by external actors, both governments and international agencies, underscoring the role these agents can play in generating awareness and providing encouragement to domestic peace-building allies. However, a considerable part of private sector activism also stemmed from the perception by Colombian business people that, as never before, domestic conditions now warranted the participation of the private sector in the search for a negotiated solution to the armed conflict.
In terms of direct participation in talks, Pastrana privileged and fostered the active but low-profile involvement of prominent private sector executives in his negotiation team, rather than incorporating the leaders of the private sector associations. In addition, he favoured seeking an end to the confrontation with the larger and militarily stronger FARC, putting the process with the ELN, which had been marked by active private sector association participation, onto the backburner.
As a result, high-ranking executives of the largest Colombian companies became particularly active during the Pastrana-led negotiations, some as members of the government negotiating team. This points to an important government-promoted split within the Colombian private sector. Whereas association leaders represented sectoral interests in the formal political process, Pastrana preferred to include individual capitalists in the discussion of his peace strategy, thereby circumventing the formal expression of private sector interests and exploring non-institutionalised but arguably more effective channels of private sector participation in policymaking.
Indeed, whereas business associations like ANEP and CACIF in El Salvador and Guatemala are led by individuals who run their own companies in combination with their corporate representational duties, in Colombia business associations are fronted by former politicians or hired managers. While such a strategy is effective in terms of running complex organisations and gaining a friendly ear in congress and the executive, it has caused a progressive rift between representatives and represented. Often, business' public face (the association) fails to secure the support of ‘real’ business as defined by control over assets, operations and investments. Criticisms of the associations' lack of representativeness and politicking abound and the owners of large companies tend to bypass the formal associations, instead enjoying direct access to the decision-making process. This allows for a different approach to the question of business unity.Footnote 127
In the Colombian government's view, this more individually-based approach was the correct way to include the private sector in peace talks, given that the sustainability of an eventual peace accord would hinge more crucially on the willingness of business to pay some of the burdens of peace than on the negotiating capacity and political visibility of association leaders who lacked economic decision-making power.Footnote 128
This distinction was clear not only to the government: guerrilla leaders also showed an appreciation of the qualitative differences within the private sector when they gave big business leaders a warm and respectful welcome in their camps in early 2000.Footnote 129 ‘We wanted to send a clear message to the guerrilla that the private sector is in this’, said one of the private sector visitors.Footnote 130 ‘If we felt like we were talking to saints before [when other prominent national and international figures visited FARC in the Caguán], now it feels like talking to God’ commented one of FARC's negotiators.Footnote 131 In contrast, a visit by a delegation of business association leaders a few weeks later was not met by FARC commanders and their presentation was sabotaged by whistles and shouts.
Despite private sector enthusiasm with the peace process in the first half of the Pastrana Administration, hopes faded towards the end of his term of office, contributing to an end of private sector cooperation and involvement. The main factor contributing to disenchantment was gradual frustration over the lack of progress of Pastrana's peace strategy, the less-than-expected ability of Plan Colombia to curb the drug trade, and a further escalation of the costs of conflict as a result of progressive cheating by guerrillas. For example, in April 2000 the FARC launched ‘Law 002’, which imposed a ‘tax’ of up to ten per cent on asset holders of more than US$1 million in exchange for exemption from attacks. Resistance to pay effectively prevented the distribution of goods of Colombian companies in 100 municipalities nation-wide.Footnote 132 In addition, in early 2000, the ELN kidnapped over one hundred parishioners at a religious service and over fifty guests at an upscale restaurant in the city of Cali, and later abducted an airplane with all its occupants. The FARC put private sector patience to the test when it kidnapped the industry association's president's daughter. Finally, FARC's growing rents from the lucrative drug-trafficking business made it clear that this was not a weakened rival but a formidable military opponent.
In addition to the growing costs of conflict, the realisation that involvement of private sector executives in the negotiating team was no guarantee that private sector interests would be included in the design of the peace process also weighed on perceptions of progress and support for the peace process. Peace policy-making by the Pastrana Government came under fire for its isolation from the advisory team and for its improvised quality. Altogether, events disappointed those who thought peace talks would be an easy bargain. By the end of 2000 a turning point had been reached. While a Gallup poll of 500 business executives in March 2000 showed 70 per cent to be in favour of negotiations with the guerrilla, that figure had dropped to just 11 per cent by the end of that year.Footnote 133
In February 2002, the FARC kidnapped an airplane and its occupants, providing the government with the final justification for ending peace talks with this insurgent group. Four years of accumulating material and human cost eroded the private sector's enthusiasm for a negotiated solution, and, most importantly, expectations that negotiations were likely to succeed. A nationally televised private sector tribute to the armed forces in August 2001, in support of the militaries' request for added funding in order to bolster their war effort against the guerrillas, exemplified the prevailing private sector mood at the end of the Pastrana Government.
Against this background, Álvaro Uribe promised the reestablishment of government authority and an emphasis on security, and severely criticised his predecessor's negotiation scheme. Uribe enjoyed widespread support from the Colombian private sector in the presidential elections of August 2002. Upon entering office, he increased the tax burden to support the war effort against the Colombian insurgency by implementing a tax of 1.2 per cent on liquid net assets for working capitals of US$60,000 or higher. Capitalising on frustration with Pastrana's failure, Uribe was able to enlist the support of the private sector, as reflected not only in surveys but also in the composition of his cabinet, which included several individuals with a private sector background.
Re-elected to the presidency in 2006, Uribe has maintained historically high approval ratings and has raised hopes that security can be achieved by means of a military strategy. Kidnappings are down, the tourism industry is booming and the Colombian economy is growing.Footnote 134 However, there are already signs that President Uribe's security strategy may face more obstacles than anticipated. Conflict continues unabated in rural areas and has expanded into the cities, reflecting the guerrillas' military strength and will to consolidate. In addition, extortion of all types of private sector activity has failed to slow, suggesting that illegal armed actors are supplementing missed income from increasingly difficult-to-sustain kidnappings.Footnote 135 Hints that the government might transform exceptional ‘war bonds’ into permanent taxes have met private sector criticism and spurred tax evasion.Footnote 136 Furthermore, evidence that war bonds have not been invested in the projected activities but have been kept in savings funds to meet other government obligations has also occasioned considerable disquiet.Footnote 137 Finally, while the first months of the Uribe government witnessed a downward trend in private sector perceptions of insecurity, more recent surveys have illustrated renewed concerns with the impact of continued armed conflict on private sector activity.Footnote 138
In this context of renewed awareness of the costs of conflict, in addition to accumulated experience indicating the difficulties associated with a negotiated solution, it is perhaps unsurprising that the Uribe government has found it hard to attract the support of the Colombian private sector for its efforts to demobilise groups of rightist paramilitary combatants. Not only has the process uncomfortably exposed the private sector's responsibility in the creation of these forces, but it has also tested its willingness to support the process of demobilisation and reintegration by such means as employment creation.
Shifting perceptions of costs thus weigh heavily on the Colombian private sector's willingness to support a peaceful solution to the armed conflict. At the same time, having supported both approaches without an end to the conflict in sight, the Colombian private sector has been propelled back into a state of uncertainty in which unity favouring peace negotiations is difficult to achieve and the siren calls of a simple and speedy solution lack credibility.
In part, the difficulty in translating the real and perceived costs of conflict into a private sector disposition to support peace negotiations can be attributed to the absence of an economic model explicitly tied to peace, such as the one FUSADES successfully sponsored in El Salvador. In Colombia, substantial economic restructuring took place in the early 1990s and Colombia's economy diversified much earlier than in Central America.Footnote 139 As a result, entrenched rural interests such as those that led opposition to peace negotiations in Central America are comparatively weaker in Colombia and industrial, financial and commercial sectors, and even an incipient service industry, have developed vigorously while divisions between modern and traditional sectors of the economy are less visible. In contrast with the Salvadorean and Guatemalan cases, ‘selling’ peace with a clear link to the ‘carrot’ of economic restructuring is difficult. This explains why the peace dividend may appear less compelling for the Colombian private sector.
In addition, in Colombia's still predominantly bipartisan political system, where ideological distinctions are fluid and parties compete for similar constituencies, there has been no initiative to create a private sector party similar to ARENA in El Salvador or even the PAN in Guatemala.Footnote 140 Combined with organisational weaknesses of the Colombian private sector associations, this has meant that sustained access to the decision-making process has been difficult to achieve.
Whether Colombia eventually achieves peace will depend on a variety of factors, such as success in cutting the flow of resources nurturing illegal armed actors and overcoming deep-seated socioeconomic grievances. In addition, as indicated here, the incipient and ambivalent nature of the private sector's involvement in peace negotiations, and the absence of both formal and informal mechanisms to address private sector concerns in peace policy design, have not contributed to generating a pro-peace environment.
Three variants of private sector involvement in peace negotiations
This article has emphasised three factors in the cases of El Salvador, Guatemala and Colombia to explain variation in how, when and why private sectors have become involved in peace negotiations. One key factor is the perception of costs imposed on the private sector by conflict and the extent of those tangible costs. As explained above, real and perceived costs were high in El Salvador prior to the initiation of peace negotiations and grew in Colombia from the mid-1990s. This motivated active private sector participation in both countries in the search for a negotiated solution, as future prospects of economic success were perceived to be vitally linked to ending conflict. While in El Salvador attempts to end armed conflict militarily had failed, making peaceful means appear a more feasible option, in Colombia high costs of conflict combined with difficulties both in negotiating peace and in reaching a military solution have caused the private sector's involvement in peace efforts to be one of persistent ambivalence. In contrast, an internalisation of costs in Guatemala combined with low key confrontation in rural areas led the majority of the Guatemalan private sector community to downplay the cost of conflict as a motivation to initiate and support talks, and allowed recalcitrant sectors to more effectively veto key issues during negotiations and the implementation of accords.
The article has also emphasised private sector unity as an explanation of differences among the cases. Overall, the Salvadorean private sector was united in a stronger consensus in favour of negotiations. Since the mid-1980s, the leadership of ANEP, the main private sector association, reflected the gradual FUSADES-induced transition from hard-line agro-industrial interests to the industrial bourgeoisie. In addition, the electoral triumphs of ARENA provided the centre-right with a formal vehicle for the expression of its interests.
In Guatemala, the diversity of interests represented within CACIF made it difficult for that organisation to provide a common platform during negotiations. As a result, CEPAZ failed to produce united private sector positions while steadfast opposition to negotiations from the right persisted. In addition, expectations that the centre-right PAN would do for Guatemala what ARENA had done for El Salvador, remained unfulfilled. The PAN lacked the sustained support and leadership that had underpinned ARENA's strength and longevity, as partly indicated by Arzú's failure to win the post-accord elections in 1999. The dissolution of CEPAZ in 1997 and the inability of the government of Oscar Berger to pursue fiscal reform also underscore the failure of the Guatemalan modern and pro-peace sector to achieve political unity.
In Colombia, given earlier economic modernisation, the distinction between modern and traditional interests is not as useful as in the Central American cases to understand internal divisions among the private sector in the face of peace negotiations. As major economic reforms have already been implemented, the peace dividend has been more difficult to determine. Thus, after a generalised fascination with peace talks during the Pastrana Government, a negotiated end to conflict is now defended by only a small group within the business community. In addition, differences in political leverage between private sector associations and big business were important sources of division within the Colombian private sector. These distinctions are not displayed in terms of positions vis-á-vis negotiations (both groups may be supportive or unsupportive of a negotiated solution to conflict), but rather in terms of location and degree of influence. While associations are more visible, low-profile activity by individual business players has been geared towards influencing the policymaking process from within. Finally, no attempts have been made in Colombia to provide the private sector with a partisan expression which was a crucial element in attempts to bring together and transmit private sector interests in negotiations in El Salvador and Guatemala. From these different perspectives, then, private sector unity in favour of a negotiated end to conflict is still pending in Colombia.
Finally, access to the government decision-making process is a third factor explaining variation in private sector involvement in negotiations. Given affinities between the Salvadorean president Alfredo Cristiani and the pro-peace faction, access was not a concern for the Salvadorean private sector. Contacts were informal but frequent and were reflected in the private sector's widespread support for a negotiated settlement. In Guatemala, the multiple changes in peace policy experienced during three administrations diverged significantly from the tight control that one private sector-friendly government exerted over negotiations from beginning to end in El Salvador. This in turn fostered tensions and mistrust in the Guatemalan case. Both presidents Serrano and Arzú designated private sector representatives in their governments and negotiating teams, instructing the main peace negotiators to maintain close consultations with the private sector. However, in the case of Serrano, this proved fruitless given the disastrous end of his administration and, in the case of Arzú, it came too late, as confrontation with two previous administrations and deep splits within the private sector prevented the pro-peace faction from consolidating its position. Since gaining access to government with Oscar Berger's Gran Alianza Nacional (GANA), the moderate faction has still been incapable of implementing crucial reforms and sustaining private sector support for the government.
In Colombia, private sector participation in negotiations worked in two ways: through inclusion of large capital owners in the president's negotiating team and through the advocacy work of private sector associations. However, the decision to shut civil society out of negotiations affected the associations' prospects of exerting influence on both sides to the conflict. At the same time, the inclusion of members of the private sector in the advisory team to the negotiations failed to guarantee that private sector interests would be taken into account, nor did it avoid stand-offs between government and the private sector. Thus, in terms of access, the Colombian private sector, while better off than their counterparts in Guatemala, lacked the Salvadorean private sector's firm grip on peace proceedings.
Both in the academic literature and on the streets of Latin America, there are common expectations that economic elites will resist change as a point of principle. By analysing the factors shaping private sector involvement in peace negotiations, this article has shown that we need to consider how historical and institutional contexts lead to differences in the organisation of the private sector and the make-up of business-politics relations, as well as in the way they are intertwined.
