Former lawyer and professor Alfonso Portillo won Guatemala's 1999 presidential elections with a mandate to implement the peace accords and tackle the impunity of both the military and criminal gangs. In the grossest of ironies, Portillo sought to boost his ratings during the presidential campaign by confessing to killing two men during a brawl in Mexico in 1982, declaring, "a man who defends his life will defend the lives of his people". He claimed that he had acted in self defence, then fled the country because he had no chance of a fair trial. The tactic paid off handsomely, as Portillo, leader of the right-wing FRG (Guatemalan Republican Front), won by a landslide after a second round of voting. Portillo campaigned on a populist platform to cut poverty by tackling corruption and tax evasion, though perhaps the decisive factor was the support of his political mentor, the former general Ríos Montt and founder of the FRG. Montt himself had been ruled illegible to stand for the presidency because of his role in an earlier coup, but was widely perceived as the real power behind the throne.

Initially, there was a positive groundswell of optimism as Portillo unveiled a diverse cabinet which included academics, indigenous activists and human rights advocates. Nevertheless, many of the key institutions - including the Bank of Guatemala and the Ministries of the Economy, Communications and Interior - were placed under the control of right-wing FRG politicians and pro-business monetarists. In a bold move Portillo broke the military chain of command by appointing a moderate colonel, Juan de Dios Estrada, instead of a general as Minister of Defence, an action which infuriated the army top brass.

Portillo also moved quickly to solve the Geradi murder - another key campaign pledge. Prosecutors arrested three senior military personnel and a priest: in June 2001 they were finally brought to trial and found guilty of plotting Geradi's murder. Despite intense pressure on the prosecution, and a bomb exploding outside the home of one judge on the first day of the trial, justice prevailed, breaking the historically almost complete impunity of the armed forces.

The Geradi case aside, Portillo's brief honeymoon period quickly subsided as he lurched from crisis to crisis as a series of corruption scandals were unearthed, crime rates continued to soar and gangsters and corrupt officials continued to enjoy impunity from prosecution. The new president even dispatched his family to Canada in June 2000 after threats from a kidnapping gang, a savage indictment of the security situation. By early 2001, barely a week passed without an armed bank robbery or a public lynching, as rural Guatemalans, frustrated with the country's bankrupt justice system, exacted their own justice, killing suspected criminals. In March 2001, a judge was hacked to death by a crowd in the isolated town of Senahú after he had freed an accused rapist because of a lack of evidence. Confidence in Portillo plummeted to an all-time low in June 2001 following a mass breakout from Guatemala's main maximum-security prison. Seventy of the country's most notorious criminals - murderers, rapists, kidnappers and gang leaders - blasted their way out of jail, armed to the teeth with a smuggled arsenal of submachine guns and grenade launchers which they had obviously acquired with internal connivance. Many media figures doubted that Portillo would be permitted to finish his presidential term, as persistent rumours of a military-backed coup swept through the country.

Meanwhile, the economy continued to falter, as traditional exports (principally coffee, sugar and bananas) were hit by low commodity prices, and the nation's high interest rates affected investment. The quetzal remained weak against international currencies, prompting the government to introduce dollarization in May 2001, with the US dollar becoming an official currency alongside the quetzal, and to sign up for customs union with Honduras, El Salvador and Nicaragua in an effort to free up trade and boost the economy.

Away from mainstream politics, the country has witnessed a Maya cultural revival , as Guatemala's indigenous people have acquired freedoms denied them for centuries. Important steps to protect indigenous languages have been made, and hundreds of schools founded where Maya children are educated in their own tongue. Increasing numbers of indigenous writers and journalists have emerged, more and more Maya books and magazines are being published and indígena radio stations set up. The shifting mood has even influenced youth culture: Maya shamanic courses have become popular and eager young ladino university students assert their mixed-race identity by proclaiming a Maya heritage. Yet despite these changes Guatemala is still a divided country. Racism remains endemic and Guatemala's Maya continue to be subject to institutionalized discrimination, while most live in extreme poverty.

In many ways, the years since the peace accords have been a bitter disappointment to many Guatemalans. Though the peace has held, political violence has been replaced by random acts of criminal thuggery, and the unreformed justice system is seemingly moribund. The economic outlook remains poor, with low living standards and sub-standard health care and educational opportunities for the vast majority of people. With the issue of land reform still to be tackled and the highest population growth rate in the hemisphere (almost 3 percent per annum), more and more poor Guatemalans have fled to the US as illegal migrants, while those who remain have turned to farming increasingly marginal plots of land, cutting down the country's rapidly diminishing forests and threatening protected reserves and national parks. Though there is ground for optimism in some areas, including a vibrant tourism industry, the key points of the peace accords have not been tackled. Huge obstacles remain, and Guatemala seemingly faces many more difficult years ahead.