Guatemala, a Spanish-speaking country of 12 million people, claims Belize's
                 southern half as part of its territory, citing discrepancies stemming from a treaty
                 signed in 1859 with Britain, Belize's colonial ruler until independence in 1981.

                 Prior to 1999, Guatemala claimed all of Belize as its own. Its maps still depict
                 Belize, an English-speaking strip of Caribbean coast and lowland jungle with
                 250,000 people of mostly African descent, as its easternmost province.

                 Guatemalan rulers over the years have invoked the claim as a rallying cry during
                 times of political strife.

                 In the most recent of numerous violent spats along a porous 125 mile (200 km)
                 border, Belize soldiers in November shot dead three Guatemalan civilians on the
                 Belizean side. Belize claims they acted in self defense after being attacked with
                 spear-guns and machetes.

                 But at the end of a visit to Belize and Guatemala earlier this week, British Foreign
                 Office Minister Denis MacShane said Britain and other donors were prepared to
                 offer the countries as much as $200 million in development grants if they can end
                 the dispute.

                 Both countries are now optimistic they can soon agree to disagree on their common
                 history, and decide on moves to become regional partners. The countries are
                 seeking a negotiated solution with the help of the Organization of American States
                 (OAS), and conclusions are expected at the end of August.

                 "Two years ago it was unthinkable that we would sit down at a table and talk about
                 this," Guatemalan Foreign Secretary Gabriel Orellana told Reuters in an interview.
                 "This is the first time we have ever seen a light at the end of the tunnel."

                 Said Belizean ambassador to Guatemala Moises Cal in a separate interview: "We are
                 very optimistic. There seems now to be a real political will to come to a political
                 solution and have this resolved."

                 Moving Closer

                 Both suspecting that international law would rule in their favor, the two countries
                 have considered attempting to solve the dispute through the Internatio nal Court of
                 Justice in The Hague.

                 That process would cost the poor nations millions of dollars in lawyers' fees, and
                 by producing a loser, likely further embitter already rocky relations between them.

                 But in a ground-breaking compromise in July 2000, Guatemalan President Alfonso
                 Portillo and Belizean Prime Minister Said Musa named two international "facilitators"
                 to seek a negotiated solution under the auspices of the OAS.

                 As part of the negotiations, the countries in December begun joint army patrols
                 along the border working together to clamp down on problems such as
                 drug-trafficking and illegal migration. Since then no violent incidents have occurred.

                 For the offer of cash to materialize, said MacShane, Guatemala would have to fully
                 recognize Belize as an independent state with an unchallengeable border and look
                 upon it as a partner nation.

                 Britain wants the Guatemala-Belize border to be taken off the international agenda as
                 a potential flash point and hopes that an agreement will foster trade links and greater
                 cooperation between the two countries.

                 "We think that's worth spending serious money on," MacShane told Reuters.

                 Although Belize has repeatedly said it will not cede an inch of territory to
                 Guatemala, putting an end to the problem will require concessions on both sides
                 that some observers expect will include giving Guatemala access and fishing rights
                 in some Belizean maritime areas.

                 But as Guatemala's constitution states any decision to withdraw the country's claim
                 must be approved by referendum, the Guatemalan people will ultimately decide the
                 issue.

                 Older generations of Guatemalans have had the slogan "Belize is ours" drummed in
                 to them in school. But those eager for an agreement are hoping younger people who
                 make up the majority of Guatemala's population will take a more moderate view.

                 Carlos Morales, a 19-year-old Guatemala City street vendor, said he believed Belize
                 did rightfully belong to Guatemala but would vote to drop the claim if it was put to
                 a vote.

                 "I think it is ours, but it is an independent state now and getting it back would be
                 impossible," he said.

                    Copyright 2002 Reuters.