In ‘States of Emergency’, How Companies Pay Dearly

Ten police officers have been killed amid gang violence in Guatemala and the country’s president has announced a state of emergency to quell unrest, raising questions about what the future may hold for the Central American nation.

The declaration, made by President Bernardo Arévalo on Monday last week, restricts the rights of citizens for a 30-day period as the government attempts to control prison uprisings led by suspected gang members.

A report released by Latin American security firm HELPS says the immediate impacts of the violence in Guatemala is disruption to business continuity and a sharp increase in security costs.

“The combination of mobility restrictions, rising urban violence and pressure from criminal groups creates an environment where corporate agendas, strategic meetings and the movement of key personnel are compromised, ultimately affecting business operations,” the report states. “Additionally, the legal uncertainty arising from the suspension of constitutional guarantees compels legal teams to review force majeure contracts and political risk insurance policies urgently.”

To Guatemala’s south is El Salvador, a country that has undergone a massive transformation under a government-sponsored crackdown that has both limited citizen’s rights and the country’s once out-of-control murder rate.

Like Guatemala, El Salvador’s restrictions, which began in March 2022, were also announced to last for a 30-day period. That period has since been extended every month by the government and continues today as elected officials tout the benefits that the country has experienced under increased control.

The legal uncertainty arising from the suspension of constitutional guarantees compels legal teams to review force majeure contracts and political risk insurance policies urgently. — HELPS report

According to government data, El Salvador’s homicide rate has dropped 98% from 53 per 100,000 in 2018 to 1.9 per 100,000 in 2024. Tens of thousands of suspected gang members have been arrested with estimates exceeding 80,000 people.

The El Salvadoran populace have sided with the crackdown, with polls showing more than 80% of the population supports the government’s security push during its first year. However, much of the stats released by the government have been contested and human rights advocates have voiced concern about the ongoing trend of extending the government’s state of emergency.

Nevertheless, business activity is also reported to have improved during the gang crackdown and government officials have noted an increase in international tourism — a boost of 17% year-over-year in 2024 — and noted that the increase in security has reduced barriers to trade.

According to a report from Harvard International Review, extortion fees had previously accounted for up to 3% of the country’s gross domestic product before the security measures were implemented.

Over the years, Honduras and Ecuador have also relied on emergency decrees during periods of heightened insecurity, while Peru has repeatedly used them in response to crime spikes and unrest.

The Caribbean has seen similar patterns in past decades, particularly in countries grappling with gang violence or political instability. In those cases, emergency declarations were often followed by extended security operations and long-running debates over civil liberties and government oversight.

In Guatemala, officials have framed the emergency declaration as a necessary response to an unprecedented security challenge, pointing to coordinated actions by criminal groups and threats against state institutions. The government has said it will not negotiate with gangs and has emphasized that the measures are time-limited.

Monday’s declaration is the second such move made by Arévalo in the past two months, though it is the first decree encompassing the entire country. He also declared a 15-day state of emergency in mid-December following attacks by armed men on a military post and police station in western Guatemala. At least five were killed in those attacks, though the state of emergency was limited to just two municipalities.