(Adds detail on Hezbollah)
By Sofia Menchu
GUATEMALA CITY, Jan 14 (Reuters) - Guatemala's new president, Alejandro Giammattei, discussed how to curb illegal immigration and improve border security in a meeting with officials of the Trump administration before he was due to take office on Tuesday, as Washington pushes Giammattei to accept an asylum agreement.
A former surgeon and ex-prison chief, Giammattei, 63, ran for top office three times before his victory in an August runoff on a tough-on-crime platform that included returning the death penalty.
"We will bring back the peace this country so dearly needs," Giammattei told reporters on Monday, promising to overhaul the Central American nation's security forces and restructure ministries.
But at the top of his to-do list will be a decision on whether to roll back or expand an agreement with the United States forged by outgoing President Jimmy Morales that makes Guatemala a buffer zone to reduce U.S. asylum claims.
U.S. Homeland Security acting Secretary Chad Wolf, part of the U.S. delegation headed by Commerce Secretary Wilbur Ross for the inauguration, was expected to push Giammattei to expand the agreement to include Mexicans.
In a sign of the urgency of the relationship, Giammattei met with Wolf and Ross in his first bilateral meeting on Tuesday morning. Giammattei said in a tweet that he and Ross discussed investment and economic growth to stem immigration.
The U.S. embassy said Wolf talked to Giammattei about curbing illegal migration and improving border security, and that the U.S. International Development Finance Corp would sign a memorandum of understanding on Wednesday with Guatemala to spur $1 billion in private-sector investment and create jobs.
In steps likely to please the Trump administration, Giammattei signaled he would keep his country's embassy in Israel in Jerusalem and plans to designate Iran-backed Lebanese Shi'ite group Hezbollah as a terrorist organization.
Guatemala is one of Latin America's poorest and most unequal nations, with poverty rising since 2000 despite strong economic growth, according to the World Bank. U.S. officials have threatened it with economic consequences if it does not accept the Asylum Cooperation Agreement.
Giammattei, who previously suggested he would seek to change the agreement, appeared to soften his stance on Monday, saying he had not yet seen the details.
Guatemala is central to U.S. President Donald Trump's escalating efforts to end illegal immigration and asylum claims from people making their way to the southwestern U.S. border.
Under the deal, implemented in November, the United States sends Hondurans and Salvadorans seeking asylum at the U.S.-Mexico border to Guatemala to ask for refuge there instead.
As of Friday, 128 Salvadoran and Honduran asylum seekers had been sent under the agreement, according to Guatemalan data. Only a few have applied for asylum in a country that is itself a major source of U.S.-bound migrants. Others have returned home.
CRIME AND CORRUPTION
Giammattei takes office as the nation suffers from the effects of drug trafficking on politics and distrust sowed by last year's departure of a United Nations-backed anti-corruption body.
Another looming decision will be whether to act on the recommendation of a congressional panel last week that judges and investigators who worked with the anti-corruption body, known as CICIG, be arrested.
CICIG helped topple sitting President Otto Perez on corruption charges in 2015 and put dozens of politicians and businessmen behind bars, before a backlash led Morales to drive the body from Guatemala in September.
Morales, himself investigated by the agency on election financing charges he denies, is due to be sworn into the Central American Parliament a few hours after he leaves office, in a position offering him immunity.
On the bright side, Guatemala's homicide rate is down - to 22 murders per 100,000 residents in 2018, from 45 per 100,000 in 2009.
But the freedom with which drug traffickers influence politics is a challenge. Ahead of last year's election, presidential candidate and occasional Morales ally Mario Estrada was arrested in Miami on charges of seeking funding from drug cartels and conspiring to assassinate rivals.
"We realized that narco-trafficking here is among the most intense in the region," Luis Hernandez Azmitia, an outgoing congressional representative of the Movimiento Reformador party told Reuters. (Reporting by Sofia Menchu Additional reporting by Jeff Abbott in Guatemala City and Daina Beth Solomon in Mexico City; Editing by Frank Jack Daniel, Richard Chang and Leslie Adler)
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