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[edit] National Intelligence Estimate with regards to Arbenz (1952)

(Source: http://www.state.gov/r/pa/ho/frus/ike/iv/20208.htm)

3. National Intelligence Estimate/1/

NIE-62

Washington, March 11, 1952.

/1/Source: Department of State, INR-NIE Files. Secret. A cover sheet, dissemination notice, and title sheet are not printed. National Intelligence Estimates (NIE's) were high-level interdepartmental reports presenting authoritative appraisals of vital foreign policy problems. NIE's were drafted by officers from those agencies represented on the Intelligence Advisory Committee (IAC), discussed and revised by interdepartmental working groups coordinated by the Office of National Intelligence Estimates of the Central Intelligence Agency (CIA), approved by the IAC, and circulated under the aegis of the CIA to the President, appropriate officers of cabinet level, and the National Security Council. The Department of State provided all political and some economic sections of NIE's.

PRESENT POLITICAL SITUATION IN GUATEMALA AND POSSIBLE DEVELOPMENTS DURING 1952/2/

/2/ A note on the title sheet reads as follows: "The intelligence organizations of the Department of State, the Army, the Navy, the Air Force, and the Joint Staff participated with the Central Intelligence Agency in the preparation of this estimate. All members of the Intelligence Advisory Committee concurred in this estimate on 6 March 1952. See, however, footnotes to paragraphs 7 and 27."

The Problem

To analyze the present political situation in Guatemala and possible developments during 1952.

Conclusions

1. The Communists already exercise in Guatemala a political influence far out of proportion to their small numerical strength. This influence will probably continue to grow during 1952. The political situation in Guatemala adversely affects US interests and constitutes a potential threat to US security.

2. Communist political success derives in general from the ability of individual Communists and fellow travelers to identify themselves with the nationalist and social aspirations of the Revolution of 1944./3/ In this manner, they have been successful in infiltrating the Administration and the pro -Administration political parties and have gained control of organized labor upon which the Administration has become increasingly dependent.

/3/ For documentation relating to the Guatemalan revolution of 1944 and recognition of a new regime by the United States, see Foreign Relations, 1944, vol. VII, pp. 1132 ff.

3. The political alliance between the Administration and the Communists is likely to continue. The opposition to Communism in Guatemala is potentially powerful, but at present it lacks leadership and organization. So far Communist-inspired Administration propaganda has succeeded in stigmatizing all criticism of Communism as opposition to the Administration and to the principles of the still popular Revolution of 1944

4. Future political developments will depend in large measure on the outcome of the conflict between Guatemala and the United Fruit Company. This conflict is a natural consequence of the Revolution of 1944, but has been exacerbated by the Communists for their own purposes.

5. If the Company should submit to Guatemalan demands the political position of the Arbenz/4/ Administration would be greatly strengthened. It is probable that in this case the Government and the unions, under Communist influence and supported by national sentiment, would exert increasing pressure on other US interests, notably the Railway./5/

/4/Jacobo Arbenz Guzmán, President of Guatemala.

/5/International Railways of Central America (IRCA).

6. If the Company should withdraw from Guatemala a worsening economic situation would probably result. It is unlikely, however, that the economic consequences during 1952 would be such as to threaten political stability unless there were a coincident and unrelated decline in coffee production, prices, or markets.

7. Any deterioration in the economic and political situations would tend to increase the Administration's dependence on and favor toward organized labor, with a consequent increase in Communist influence. However, it is unlikely that the Communists could come directly to power during 1952, even though, in case of the incapacitation of President Arbenz, his present legal successor would be a pro-Communist.*

• The Special Assistant, Intelligence, Department of State, would substitute the following paragraph: "Any deterioration in the economic and political situation would probably at first tend to increase the Administration's dependence on and favor toward organized labor, with a consequent increase in Communist influence. However, an economic crisis might force the Government to turn against the Communists in order to save its political position. On the other hand, it is unlikely that the Communists could come directly to power during 1952, even though the incapacitation of President Arbenz would bring a pro-Communist as his legal successor." [Footnote in the source text.]

8. In present circumstances the Army is loyal to President Arbenz, although increasingly disturbed by the growth of Communist influence. If it appeared that the Communists were about to come to power in Guatemala, the Army would probably prevent that development.

9. In the longer view, continued Communist influence and action in Guatemala will gradually reduce the capabilities of the potentially powerful anti-Communist forces to produce a change. The Communists will also attempt to subvert or neutralize the Army in order to reduce its capability to prevent them from eventually taking full control of the Government.

Discussion

The Arbenz Administration

10. The present political situation in Guatemala is the outgrowth of the Revolution of 1944. That Revolution was something more than a routine military coup. From it there has developed a strong national movement to free Guatemala from the military dictatorship, social backwardness, and "economic colonialism" which had been the pattern of the past. These aspirations command the emotional loyalty of most politically conscious Guatemalans and the administration of President Arbenz derives corresponding strength from its claim to leadership of the continuing national Revolution.

11. President Arbenz himself is essentially an opportunist whose politics are largely a matter of historical accident. Francisco Arana,/6/ the principal military leader of the Revolution of 1944, became Chief of the Armed Forces under President Arévalo/7/ and Arbenz, a lesser member of the military junta, became Minister of Defense. As the Arévalo Administration turned increasingly leftward in its policies Arana opposed that trend. His possible election to the Presidency in 1951 became the one hope of moderate and conservative elements in Guatemala. In view of Arana's political position, Arbenz, his personal rival for military leadership, became the more closely associated with Arévalo and the leftist position in Guatemalan politics. The assassination of Arana in 1949/8/ cleared the way for Arbenz' succession to the Presidency in 1951.

/6/Col. Francisco Javier Arana.

/7/Juan José Arévalo Bermejo, President of Guatemala, 1945-1951.

/8/Colonel Arana was assassinated in Guatemala on July 18, 1949.

12. By 1951 the toleration of Communist activity which had characterized the early years of the Arévalo Administration had developed into an effective working alliance between Arévalo and the Communists. Arbenz, to attain the Presidency, made with the Communists commitments of mutual support which importantly affect the present situation. He did not, however, surrender himself completely to Communist control.

Communist Strength and Influence

13. The Communist Party of Guatemala has no more than 500 members, of whom perhaps one-third are militants. The Party, however, has recently reorganized and is actively recruiting, especially in Guatemala City, on the government-owned coffee plantations, and among United Fruit Company workers. It is in open communication with international Communism, chiefly through the Communist-controlled international labor organizations, the Latin American CTAL and the world-wide WFTU.

14. The Communists have achieved their present influence in Guatemala, not as a political party, but through the coordinated activity of individual Communists in the leftist political parties and labor unions which emerged from the Revolution of 1944. The extension of their influence has been facilitated by the applicability of Marxist clichés to the "anti-colonial" and social aims of the Guatemalan Revolution.

15. With the assistance of the Government, Communist and Communist-influenced labor leaders have been the most successful organizers of Guatemalan labor, especially among the United Fruit Company and government plantation workers. Their formation of the General Confederation of Guatemalan Workers in 1951 and Government pressure for labor unity have facilitated the extension of their control over all organized labor. They have been less successful in converting to political Communism the mass of labor, which is illiterate and politically inert. In the important railway workers' and teachers' unions there is opposition to association with Communism.

16. Through their control of organized labor and their influence within the pro-Administration political parties the Communists have been successful in gaining influential positions within the Government: in Congress, the National Electoral Board, the Institute of Social Security, the labor courts, the propaganda office, and the official press and radio. Their influence is extended by the presence of an indefinite number of Communist sympathizers in similar positions. The Communists do not fully control the Administration, however. Over their protests President Arbenz has recently dismissed a pro-Communist Minister of Education and appointed a non-Communist Minister of Communications.

17. If President Arbenz should become incapacitated his legal successor would be Julio Estrada de la Hoz, the President of Congress, an ardent nationalist. . . . In this event, however, the Army would probably seize power itself in order to prevent the Communists from gaining direct control of the Government.

The Anti-Communist Potential in Guatemala

18. Various elements in Guatemala, including many loyal adherents of the Revolution of 1944, view with misgiving the rapid growth of Communist influence in that country. The principal elements of this latent anti-Communist potential are:

a. The Catholic hierarchy, implacably opposed to Communism. While its influence has been considerable, the Church has been handicapped by the small number of priests and by a lack of a constructive social program.

b. Guatemalan landholding and business interests. These interests, which are now enjoying prosperity, resent increasing taxes and labor costs, but so far have not been subjected to direct attack, as have corresponding foreign interests. They may shortsightedly hope for advantage at the expense of these foreign interests.

c. The strong railway workers' union, which has repudiated its adherence to the Communist-controlled Confederation and has ousted its former leaders.

d. A large proportion of university students and an important segment of leadership in the teachers' union.

e. The Army, which has shown some concern over the growth of Communist influence. The Army command is loyal to President Arbenz and to the Revolution of 1944, but is probably prepared to prevent a Communist accession to power.

19. So far, Communist-inspired Administration propaganda has been successful in stigmatizing all criticism of the Administration as opposition to the principles of the Revolution of 1944. So long as it remains possible to discredit opposition to Communism by identifying it with opposition to the Revolution of 1944 and with support of foreign "colonialism," it is unlikely that a coherent, sustained, and effective opposition to Communism will develop. Moreover, political dissatisfaction in Guatemala has been strong enough to unify the pro-Administration parties, and to prevent members of these parties from openly opposing the Communists. For the period of this estimate, therefore, it is likely that the alliance between the Administration and the Communists will continue, and that the potentially powerful opposition to Communism will remain ineffective.

The United Fruit Company Crisis

20. The United Fruit Company, which conducts extensive operations in nine Latin American countries, dominates Guatemalan banana production. The Company controls the only effective system of internal transportation, the International Railways of Central America. Through its merchant fleet the Company has a virtual monopoly of Guatemalan overseas shipping. It owns or leases large tracts of land in Guatemala and is second only to the Government as an employer of Guatemalan labor.

21. The important position of the United Fruit Company in their economy has long been resented by Guatemalan nationalists, regardless of the fact that the wages and workers' benefits provided by the Company were superior to any others in the country. When the Revolutionists of 1944 undertook to "liberate" Guatemala from "economic colonialism" they had the Company specifically in mind. The Government can therefore count on the support of Guatemalan national sentiment in its conflict with the Company.

22. The present crisis had its origin in the virtual destruction of the Company's principal Guatemalan plantation by wind storms in September 1951. In view of previous Communist-inspired labor troubles, the Company unsuccessfully demanded Government assurances against future increased labor costs before it would undertake to rehabilitate the plantation. Meanwhile the Company suspended some 4,000 out of the 7,000 workers at that plantation. With Government support, the Communist-led union demanded that these workers be reinstated with pay for the period of suspension and the labor court ruled in favor of the union. The Company refused to comply with the court's decision and in consequence certain of its properties have been attached to satisfy the workers' claim for back pay. The scheduled sale of these properties has been postponed, however, in circumstances which suggest the possibility of a compromise settlement of the dispute.

23. The Communists have an obvious ulterior purpose in forcing the issue with the Company. The Government, however, probably does not desire to drive the Company from Guatemala at this time, preferring that it remain in the country on the Government's terms. The Company's employees also have an interest in the continuation of its operations. For its part, the Company has an interest in preserving its investment in Guatemala.

Possible Future Developments

24. Future developments will depend in large measure on the outcome of the struggle between the United Fruit Company and the Guatemalan Government.

25. If the Company should submit to Guatemalan demands the political position of the Arbenz Administration would be greatly strengthened. The result, even if it were a compromise agreement, would be presented as a national triumph over "colonialism" and would arouse popular enthusiasm. At the same time the Company would continue its operations, paying taxes and wages. The Government and the unions, under Communist influence and supported by national sentiment, would probably proceed to exert increasing pressure against other US interests in Guatemala, notably the Railway.

26. If the Company were to abandon its investment in Guatemala there would also be a moment of national triumph, but it would soon be tempered by realization of the economic consequences of a cessation of the Company's operations. It is unlikely, however, that these consequences during 1952 would be severe enough to threaten the stability of the regime unless there were a coincident and unrelated decline in coffee production, prices, or markets.

27. Any deterioration in the economic and political situations would tend to increase the Administration's dependence on and favor toward organized labor, with a consequent increase in Communist influence. However, it is unlikely that the Communists could come directly to power during 1952, even though, in case of the incapacitation of President Arbenz, his present legal successor would be a pro-Communist./*/

/*/The Special Assistant, Intelligence, Department of State, would substitute the following paragraph: "Any deterioration in the economic and political situation would probably at first tend to increase the Administration's dependence on and favor toward organized labor, with a consequent increase in Communist influence. However, an economic crisis might force the Government to turn against the Communists in order to save its political position. On the other hand, it is unlikely that the Communists could come directly to power during 1952, even though the incapacitation of President Arbenz would bring a pro-Communist as his legal successor." [Footnote in the source text.]

28. If during 1952 it did appear that the Communists were about to come to power by any means, the anti-Communist forces in Guatemala would probably move to prevent that development. In particular, the Army command would probably withdraw its support from the Administration and seize power itself.

29. In the longer view, continued Communist influence and action in Guatemala will gradually reduce the capabilities of the potentially powerful anti-Communist forces to produce a change. The Communists will also attempt to subvert or neutralize the Army in order to reduce its capability to prevent them from eventually taking full control of the Government.

[edit] National Intelligence Estimate with regards to Arbenz (1953)

(Source: http://www.state.gov/r/pa/ho/frus/ike/iv/20208.htm)

15. National Intelligence Estimate/1/

NIE-84

Washington, May 19, 1953.

/1/Source: Department of State, INR-NIE Files. Secret. A cover sheet and dissemination notice are not printed.

PROBABLE DEVELOPMENTS IN GUATEMALA/2/

/2/A note on the cover sheet reads as follows:

"The following member organizations of the Intelligence Advisory Committee participated with the Central Intelligence Agency in the preparation of this estimate: The intelligence organizations of the Departments of State, the Army, the Navy, the Air Force, and the Joint Staff.

"The Intelligence Advisory Committee concurred in this estimate on 12 May 1953. The AEC and FBI abstained, the subject being outside of their jurisdiction."

The Problem

To estimate the current political situation in Guatemala and probable future developments.

Conclusions

1. The current political situation in Guatemala is adverse to US interests. The Guatemalan Communists exercise a political influence far out of proportion to their small numerical strength. Their influence will probably continue to grow as long as President Arbenz remains in power.

2. Communist influence in Guatemala is based on militant advocacy of social reforms and nationalistic policies identified with the Guatemalan Revolution of 1944. It is exercised through the personal influence of individual Communists with the President and within the pro-Administration political parties, through infiltration of the bureaucracy, through control of labor organizations, and through leadership of the agrarian reform movement. The Communists' present objective is not open and direct control of Guatemala. Rather, they seek to neutralize Guatemala as an ally of the United States and to convert its Government into an effective, though indirectly controlled, instrument of Communism.

3. President Arbenz still exercises personal control of the Administration and of the Army and the Police. It is still possible for him to break his ties with the Communists and to moderate the policies of his Administration, but it is highly unlikely that he will do so.

4. Implementation of the Agrarian Reform Law of 1952 will be the principal objective of the Arbenz Administration during 1953. It is to be expected that the large Guatemalan landholders and the United Fruit Company will be victimized in the process.

5. The implementation of Agrarian Reform has intensified a sense of insecurity which has had a depressing effect on business activity in Guatemala. However, its direct effect on agricultural production is likely to be negligible, at least for several years. As long as coffee prices hold up the general economy of Guatemala will not be vitally affected.

6. The net internal political effect of the implementation of the Agrarian Reform Law will probably be to strengthen the Arbenz Administration and to increase Communist influence and capabilities. Neither the landholders nor the Fruit Company can expect any sympathy in Guatemalan public opinion. Redistribution of their land will be used to mobilize the hitherto inert peasantry in support of the Administration.

7. The most effective opposition to the Arbenz Administration is found in Guatemala City. The urban elements which constitute this opposition are strongly anti-Communist, but they are also strongly nationalistic. In general they could not be expected to make common cause with the landholders and the Fruit Company or to welcome foreign intervention in Guatemalan internal affairs, although some of them might be disposed to accept foreign assistance in overthrowing Arbenz. There is no likelihood that this urban opposition could alter the course of the Government by political action. It could not succeed in a revolutionary attempt opposed by the Army.

8. The Army is the only organized element in Guatemala capable of rapidly and decisively altering the political situation. Although a quick change of attitude is always possible, there is no present reason to doubt the continued loyalty of the Army high command and of most of the Army to Arbenz. The Army under its present leaders could not be expected to take revolutionary action unless they became convinced that their personal security and well-being were threatened by Communist infiltration and domination of the Government, or unless the policies of the Government were to result in extreme social disorder and economic collapse.

9. So long as it remains united, the Guatemalan Army can defeat any force which the Governments of El Salvador, Honduras, and Nicaragua could deploy against it. These Governments are fearful that the trend in Guatemala will lead to Communist subversion and social upheaval in their territories. They are probably giving serious consideration to the possibility of effecting a political change in Guatemala through clandestine support of revolutionary action there. It is highly unlikely, however, that they would or could mount an open military intervention in Guatemala.

10. Guatemala will probably continue to assist Communist subversive activities in the Caribbean area, but will probably avoid involvement in filibustering operations like those of the Caribbean Legion in 1948-1951. To counterbalance its isolation in Central America it will seek political support elsewhere, particularly in the United Nations. If actually invaded it would seek to invoke the Rio Treaty as well as the UN Charter.

11. Guatemala has frequently taken occasion to demonstrate its independence of US leadership and in general has been less cooperative than could be desired, particularly in Hemispheric affairs. Moreover, the regime has systematically been hostile toward US private economic interests in Guatemala. Detriment to Hemisphere solidarity would not deter Guatemala from any course of action suggested by its own interests.

Discussion

The Arbenz Administration

12. The present political situation in Guatemala is the outgrowth of the Revolution of 1944. That Revolution was something more than a routine military coup. From it there developed a strong national movement to free Guatemala from the military dictatorship, social backwardness, and "economic colonialism" which had been the pattern of the past. These aspirations have inspired the loyalty and conformed with the self-interest of most politically conscious Guatemalans. The Arbenz Administration still derives some strength from its claim to leadership of the continuing national revolution.

13. In the name of the Revolution of 1944 the successive administrations of Arévalo (1945-1951) and Arbenz have pursued increasingly radical and nationalistic policies. Their persecution of foreign economic interests in Guatemala, especially the United Fruit Company, and their demands for the "restitution" of Belize (British Honduras) have had the support or acquiescence of almost all Guatemalans. Their promotion of labor organizations and agrarian reform has tended to neutralize political opposition by creating mass support for the present regime. Any objection to the trend of developments in Guatemala has been stigmatized as resistance to the Revolution of 1944 by "feudal" and "imperialistic" interests.

14. The toleration of Communist activity which characterized the early years of the Arévalo Administration has developed into an effective working alliance between Arbenz and the Communists. The pursuit of leftist and nationalistic policies has been greatly accelerated under the Arbenz Administration. His first year in office was highlighted by active Government support for the formation of a national labor confederation and by a joint Labor-Government attack on the United Fruit Company. That attack failed, but the alliance of the Government with Communist-led organized labor was firmly established in the course of the struggle.

15. The point of reference for consideration of the present political tensions in Guatemala is the Agrarian Reform Law enacted in mid1952. This Law provides for the expropriation of large tracts of unused land and their distribution to farm workers. Although presented as a long-overdue measure of social and economic reform, the Law has strong political motivation and significance. Communists and fellow travelers played a leading part in its enactment; they honeycomb the National Agrarian Department established to administer it. The Communists have incited disorderly peasant seizures of privately owned lands. The Law is being administered in such a way as to destroy the political effectiveness of the large landholders and to mobilize the hitherto politically inert peasantry in support of the regime.

16. The recent congressional electoral campaign has further emphasized Arbenz' political alliance with the Communists. Pressure from the President's office forced some reluctant Administration supporters to accept the newly reorganized and legalized Communist Party (called the Guatemalan Labor Party, or PGT) into the Electoral Front, the pro-Administration coalition. The Electoral Front swept the country, except Guatemala City, where its ticket was decisively defeated by a strong anti-Communist vote. The over-all result of the election was a reduction of Opposition strength in Congress from eleven to five of the 56 seats. Although Communist Party representation remained at four, the Congressional membership includes several additional crypto-Communists and a majority may be considered sympathetic toward the Communist Party line so long as Arbenz favors it.

17. A further increase in political tension has resulted from a Supreme Court decision favorable to a Guatemalan landholder who had appealed for protection from arbitrary execution of the Agrarian Reform Law. At the instigation of Arbenz, the Guatemalan Congress immediately unseated the justices who favored this decision and replaced them with others more reliable from its point of view. This action provoked an intense but transitory reaction on the part of professional and other elements in Guatemala City already anti-Administration in sentiment.

18. President Arbenz has a middle-class background, as have most of his political associates. At least initially, his involvement with Revolutionary forces was probably as much a matter of simple political expediency and opportunism as of personal inclination. By now, however, he has become emotionally committed to the social and nationalistic objectives of the Revolution of 1944, especially to Agrarian Reform. Although probably not himself a Communist, he has found Communist leaders among his most ardent and useful supporters and values accordingly his political alliance with them. Inasmuch as Arbenz has thus far kept personal control of the considerable powers of the Guatemalan Presidency, it is still possible for him to break with the Communists and to moderate the policies of his Administration. He has shown no inclination to do so, however. As the situation in Guatemala develops the political alternatives open to him are steadily reduced.

Communist Strength and Influence

19. The Guatemala Labor (Communist) Party is estimated to have no more than 1,000 members, of whom perhaps less than one-half are militants. The Party is in open communication with international Communism through the Communist-controlled international labor organizations (the Latin American CTAL and the world-wide WFTU) and through visits made to the Soviet Bloc by individual Communists and front group delegations.

20. The Communists have achieved their present political influence in Guatemala, not as a political party competing with others, but through personal influence with the President and through the coordinated activity with individual communists within the leftist political parties and labor unions which emerged from the Revolution of 1944. This Communist infiltration of other parties and organization has been facilitated by the coincidence of avowed Communist social and "anti-imperialist" objectives with those of the Revolution. The recent legalization of the Party and its acceptance into the pro-Administration Electoral Front has not altered its basic strategy of seeking power through infiltration rather than through open political competition. Its immediate objective is not a "People's Democracy" under open and direct Communist control, but rather to neutralize Guatemala as an ally of the United States and to convert the Government into an effective, though indirectly controlled, instrument of Communism.

21. With the assistance of the Government, Communist, and Communist-influenced labor leaders have been the most successful organizers of Guatemalan labor. Their formation of the General Confederation of Guatemalan Workers (CGTG) and Government pressure for labor unity have facilitated the extension of their control over all organized labor. In the important railway workers' and teachers' unions, however, there has been some rank-and-file opposition to association with Communism. In 1952, moreover, rank-and-file defection from Communist leadership was an important factor in breaking a major strike against the United Fruit Company. The basic weakness of Guatemalan Communist labor leadership is that it is imposed from above through top control of the machinery of labor organization and cannot be sure of rank-and-file support in all circumstances.

22. Implementation of the Agrarian Reform Law has opened a new field of Communist organizational activity. The Communists are seeking to mobilize the hitherto inert mass of rural workers through the CGTG and the National Confederation of Guatemalan Peasants (CNCG), in which they exercise a strong influence.

23. Through their leadership in organized labor and their influence with the President and within the pro-Administration political parties, the Communists have gained many positions of influence within the Government: in Congress (where they dominate the Special Committees on Agrarian Reform and Labor Code Revision), in the National Electoral Board, the National Agrarian Department, the Institute of Social Security, the Labor Courts, the Ministry of Education, and the Presidential Secretariat of Propaganda, and in the official and pro-Administration press and radio. Their influence is extended by an indefinite number of Communist sympathizers in similar positions. At the same time, no Communist holds any position of Cabinet rank and the Communists appear to have made little or no effort as yet to gain control over the Police or the Army.

Anti-Communist Elements in Guatemala

24. Various elements in Guatemala, including many loyal adherents of the Revolution of 1944, view with increasing concern the rapid growth of Communist influence in that country. These elements, however, have shown little capacity to organize for effective counteraction. In general, each has tended to react only as its own peculiar interests were directly affected and all have been deterred by the success of Administration propaganda in stigmatizing any criticism as opposition to the principles of the Revolution of 1944 and support of "feudalism" and "foreign economic imperialism."

25. Aside from US private interests in Guatemala,/*/the large Guatemalan landholders have been the chief target of the Revolutionary program. During the Arévalo Administration the landholders failed in their attempts to alter the course of the Revolution. They now appear to be politically isolated and incapable of effective self-defense.

• The United Fruit Company, the International Railways of Central America, and Empresas Electricas (the principal electric light and power company). [Footnote in the source text.]

26. The Catholic hierarchy in Guatemala is implacably opposed to Communism, but the Church has been excluded from an active role in national affairs since the late Nineteenth Century. Moreover, the Church is handicapped by the meagerness of its resources, the small number of priests in proportion to population, the fact that most priests are aliens subject to deportation, and the lack of a program capable of competing with the Communist-led labor movement or with Agrarian Reform.

27. Urban opposition to Communism (largely confined to Guatemala City) is composed of: (a) commercial and manufacturing interests; (b) certain professional groups; (c) university students; (d) moderate labor elements; and (e) the market women of Guatemala City. This urban opposition is strongly anti-Communist, but it is also strongly nationalistic. In particular, it resents the predominance of US private economic interests in Guatemalan life. So far the Arbenz Administration has treated Guatemalan urban economic interests with consideration, has supported them against foreign competition, and has made no sustained effort to break their strong political position in Guatemala City. :.

28. The political effectiveness of the urban opposition has been hindered by the multiplicity of its elements and by conflicts of interest among them, as well as by their continuing loyalty to the stated objectives of the Revolution of 1944. Nevertheless, the opposition won the mayoral election in Guatemala City in December 1951 and even more decisively defeated the Electoral Front there in the January 1953 congressional election. The unwillingness of urban opposition groups to be identified with the landholders will remain an obstacle to the unification of all anti-Communist elements in Guatemala.

The Position of the Army and the Police (the Guardia Civil)

29. The Army (6,000 men) is the only organized element in Guatemala capable of rapidly and decisively altering the political situation. The two regiments (1,600 men) stationed in the capital city are an elite force trained under the supervision of the US Army Mission and better equipped than other units of the Guatemalan Army. The Guardia Civil (3,500 men) neither is dispersed in small detachments-it could neither defeat an Army coup nor itself overthrow the Government without Army support. All officers in the Guardia Civil are Army officers.

30. Since the Revolution of 1944 the Army and the Police have refrained from active participation in politics while supporting the constitutionally established administrations of Arévalo and Arbenz. The present Army leaders owe their personal advancement to the Revolution, and particularly to Colonel Arbenz, who was a military leader in the Revolution and Minister of Defense under Arévalo before himself becoming President. There is no reason to question their personal loyalty to Arbenz. Any possible disaffection in the Army would be likely to occur at the junior officer level. Arbenz has sought to enhance morale through pay increases, additional allowances, quarters for many field grade officers, promotions every three years, duty-free commissary privileges, and appointments to desirable government positions. Especially generous treatment has been provided for the officers of the two regiments stationed at Guatemala City, while less reliable officers have been assigned to isolated posts in the hinterland. The military units outside of Guatemala City have little potential for effective revolutionary action because of their dispersion and isolation, the inferiority of their equipment and training, and the watchful supervision of trusted area commanders. The rank-and-file of the Army is conscripted and is susceptible to the same political appeals which the regime addresses to the mass of the population. There is little or no Communist penetration or influence in the Army.

International Relations

31. Guatemalan foreign policies reflect the nationalistic and "democratic" attitudes associated with the Revolution of 1944. Although they have not been systematically antagonistic toward the United States, Guatemala has frequently taken occasion to demonstrate its independence of US leadership and in general has been less cooperative than could be desired, particularly in Hemispheric affairs. Moreover, the regime has systematically been hostile toward US private economic interests in Guatemala (the United Fruit Company, the International Railways of Central America, and Empresas Electrica). In keeping with its attitude toward "colonialism," it has given tacit support to Puerto Rican nationalism. It has complicated its adherence to the Rio Treaty with reservations relating to its claim to Belize (British Honduras). It has subscribed to the principle of inter-American military cooperation, but narrowly interprets that commitment. It voted for the UN "Uniting for Peace" resolution, but has declared that it would not implement it. These attitudes are not unique in Latin America, but Guatemalan propaganda in relation to them has a strong anti-US slant. Detriment to Hemisphere solidarity has not deterred and would not deter Guatemala from any course of action suggested by its own interests.

32. Since 1944 Guatemala has supported the "democratic" elements of other Caribbean countries in their struggles against "dictatorship" and has provided material assistance to "democratic" exiles from such countries. During 1948-1950 Guatemala supported the filibustering operations of the "Caribbean Legion" against the Dominican Republic and Costa Rica. Since 1950 the Legion has ceased to be operational, largely because of the withdrawal of Guatemalan support for such operations. However, Guatemalan official propaganda, with its heavy emphasis on conflict between democracy and dictatorship and between national independence and "economic imperialism," is a disturbing factor in the Caribbean area. Moreover, the Guatemalan Government, at the least, tolerates and indirectly assists clandestine Communist subversive activities in other countries. The Guatemalan Communist Party absorbs Caribbean exiles into its local organization, particularly into its labor and front groups, and through them it maintains contact with disaffected elements in other countries, thus enhancing its capabilities as a focal point for subversive activity throughout the Caribbean area.

33. Ever since the breakup of the Central American federation in 1939 there have been periodic attempts to restore some degree of union among the five states. Guatemala, as the principal state, has usually been the leader in such efforts. In 1951 El Salvador proposed the formation of an Organization of Central American States (ODECA) with a view toward gradual economic union and eventual political union. Guatemala attempted to assume to the leadership of this movement, but El Salvador, Honduras, and Nicaragua, alarmed by the manifestations of Communist influence in Guatemala, showed themselves resolved to use ODECA as a means of combating Communism. In consequence Guatemala has withdrawn from ODECA, alleging the existence of an international conspiracy to interfere in Guatemala's internal affairs. This withdrawal confirms Guatemala's isolation in Central America./3/

/3/On Apr. 4, 1953, Guatemala formally withdrew from ODECA. Foreign Ministers representing the remaining member countries (Costa Rica, El Salvador, Honduras, and Nicaragua), met at San Jose, Costa Rica, on Apr. 16, and resolved to invite Guatemala to reconsider its decision. They met again in an extraordinary session at Managua, Nicaragua, July 11-12, where they adopted resolutions condemning Communist infiltration into the countries of Central America ("Resolution of Managua"), and declaring that no action would be taken to block Guatemala's reentry into ODECA, if Guatemala expressed a desire to rejoin the organization. A translation of the text of the Resolution of Managua was transmitted to the Department of State under cover of despatch 29, dated July 21, 1953 (National Archives and Records Administration, RG 59, Central File 713.00/ 7-2153). Additional documentation relating to ODECA is ibid., 713.00.

34. Simultaneously with its withdrawal from ODECA Guatemala complained to the United Nations regarding this alleged foreign interference. It is notable that Guatemala bypassed the Organization of American States in addressing this complaint to the UN. It probably calculated that its charge that US private interests (i.e., the United Fruit Company and its affiliates) were responsible for a "vast conspiracy" to subvert the existing regime would enlist the support of the Soviet and Arab-Asian Blocs in addition to that of such Latin American countries as Argentina, Bolivia, Chile, and Mexico.

35. El Salvador has shown extreme sensitivity regarding the danger of an extension of Communist influence from Guatemala into El Salvador and other neighboring states; there are persistent reports that El Salvador is giving serious consideration to joint military action with Honduras and Nicaragua against Guatemala. Other Caribbean countries, particularly the Dominican Republic, Colombia, and Venezuela, have also shown concern regarding the development of Guatemala as a center of subversive influence and even of subversive operations. Probable Future Developments

36. Implementation of the Agrarian Reform Law of 1952 will be the principal objective of the Arbenz Administration during 1953. In the process the large Guatemalan landholders and the United Fruit Company will certainly be victimized. The net internal political effect of Agrarian Reform will probably be to strengthen the Arbenz Administration. Neither the landholders nor the Fruit Company can expect sympathy from Guatemalan public opinion. Redistribution of their land will be used to mobilize the hitherto inert mass of rural workers in support of the Administration. Agrarian Reform will also afford the Communists. an opportunity to extend their influence by organizing the peasants as they have organized other workers.

37. Agrarian Reform has already intensified a sense of insecurity which has had a depressing effect on business activity in Guatemala. As regards agricultural production its immediate effects are likely to be negligible: as presently implemented it will do little more than increase the number of subsistence farms. In the longer run it may seriously curtail the production of the Fruit Company plantations. As long as coffee prices hold up, however, the general economy of Guatemala is not likely to be vitally effected.

38. The dissatisfaction of important urban elements will probably increase, but effective political unity among these elements is not likely to be achieved. The political union of rural and urban interests in opposition to the Arbenz Administration is even less likely. No group or foreseeable combination of groups is likely to be able to bring about any significant moderation of the Administration's policy by political action. No revolutionary attempt opposed by the Army can be expected to succeed.

39. The Army could effect a rapid and decisive change in the Guatemalan political situation if it were to take concerted action. Although a quick change of attitude is always possible, there is no present reason to doubt the continued loyalty of the Army high command and of most of the Army to President Arbenz. The Army could not be expected to take revolutionary action unless its leaders became convinced that their personal security and well-being were threatened by Communist infiltration and domination of the Government, or unless the policies of the Government were to result in extreme social disorder and economic collapse.

40. As long as President Arbenz remains in power/*/ the Arbenz-Communist alliance will probably continue to dominate Guatemalan politics. Any increase in political tension in Guatemala would tend to increase Arbenz' political dependence on this alliance.

/*/Arbenz' legitimate term in office will expire on March 15, 1957. Whether he will reach the end of his term, whether he would then retire, and what the character of his successor might be cannot now be estimated. [Footnote in the source text.]

41. The Governments of El Salvador, Honduras, and Nicaragua will continue to seek means to oppose the Communistic tendencies of Guatemala, and will give serious consideration to the possibility of effecting a political change in Guatemala through clandestine support of revolutionary activities. It is highly unlikely, however, that they would undertake an open military intervention in Guatemala or actually could organize an effective operation of that character in view of the limited strength of their armed forces, the proportion of that strength required for the maintenance of their own internal security, the fact that their forces are ill-equipped and untrained for field operations, the (for them) probably insuperable logistical obstacles to an open invasion of Guatemala, and the internal and international political difficulties which would ensue. Moreover, foreign military intervention would tend to cause all factions in Guatemala to unite to repel the invasion. So long as it remains united, the Guatemalan Army could defeat any force which El Salvador, Honduras, and Nicaragua were capable of deploying against it. In the event of such an invasion Guatemala could present a clear case of foreign intervention to the Organization of American States.

42. The Guatemalan Government will probably continue to assist Communist subversive activities in the Caribbean area, but will probably avoid involvement in military operations like those of the Caribbean Legion in 1948-1951. To counterbalance its isolation in Central America it will continue to seek political support elsewhere, particularly in the United Nations. If Latin American attitudes, as revealed at the UN, justify such a course, it will probably raise the same issue of foreign interference in the Organization of American States. It would certainly seek to invoke the Rio Treaty as well as the UN Charter if it were to be invaded by its neighbors.

43. Guatemala's tolerance of Communism and hospitality toward exiles makes it available as a convenient haven for Communist fugitives from the United States.

(Source: 15. National Intelligence Estimate/1/

[edit] Draft Policy Paper

17. Draft Policy Paper Prepared in the Bureau of Inter-American Affairs/1/

Washington, August 19, 1953./2/

/1/ Source: National Archives and Records Administration, RG 59, S/P-NSC Files: Lot 61 D 167. Top Secret. This paper, drafted for submission to the National Security Council, was forwarded under cover of a memorandum by Raymond G. Leddy to Robert R. Bowie, dated Aug. 19, 1953, not printed, requesting clearance by the Policy Planning Staff. The paper was returned to Mr. Leddy for revision on Aug. 31, 1953, and a revised draft was submitted to the Policy Planning Staff in mid-October. In late October, it was returned to ARA for additional revisions, and resubmitted to PPS in early November. On Jan. 12, 1954, it was returned to Deputy Assistant Secretary Woodward. None of the revised drafts were found in the files, nor was any indication that the paper was forwarded to the NSC. (Ibid.)

/2/ The source text contains no indication of a drafting date; the date supplied is that of the covering memorandum.

NSC GUATEMALA

General Considerations

1. In Guatemala Communism has achieved its strongest position in Latin America, and is now well advanced on a program which threatens important American commercial enterprises in that country and may affect the stability of neighboring governments. Continuation of the present trend in Guatemala would ultimately endanger the unity of the Western Hemisphere against Soviet aggression, and the security of our strategic position in the Caribbean, including the Panama Canal.

2. Communist strength is derived from control of positions of influence and power in the labor movement, in the pro-Government political parties, and in the Government itself which, though not Communist, tolerates and encourages Communist support as useful to its own social reform program. The Communists have succeeded in identifying themselves with a nationalistic, leftist revolutionary movement that began with the overthrowing of a military dictatorship in 1944, and they have crippled their opponents by ranging the full strength of the Government's coalition against them. The Guatemalan Army, in which ultimate power resides, has displayed indifference toward growth of Communist influence.

3. The immediate Communist objective is the elimination of American economic interests, represented in Guatemala by the United Fruit Company, the International Railways of Central America, and the Guatemalan Electric Company. The loss of these enterprises would be damaging to American interests and prestige throughout Central America, and a severe setback to programs for economic development in the hemisphere through private capital investment.

4. The underlying Communist objectives in Guatemala are to prevent collaboration of that country with the United States in event of future international crisis, and to disrupt hemisphere solidarity and weaken the United States position. The Communists are not seeking open and direct control of the Guatemalan Government, at the present time, but are working to convert it into an indirectly controlled instrument of Communism.

5. Communist success in Guatemala thus far does not constitute a direct military or economic threat to the United States; but the uninterrupted trend in its favor is of serious concern to our interests and future security and requires determined study of means to reverse it.

Objectives

6. The objectives of the United States with respect to Guatemala are:

a. Prompt and effective collaboration of Guatemala with the United States in event of war or major international emergency.

b. Reversal by the Guatemalan Government of its tolerant policy toward Communist influence in the country and its present uncooperative attitude toward the United States.

c. Prevention of the spread of Communist influence from Guatemala to other countries in the hemisphere.

d. Establishment in Guatemala of favorable conditions for the conduct of business by United States interests on mutually advantageous terms.

e. Creation of conditions favorable to Guatemalan participation in hemisphere defense plans./3/

/3/Apparent reference to the Inter-American Common Defense Scheme, dated Oct. 27, 1950, and the General Military Plan for the Defense of the American Continent, dated Nov. 15, 1951. Regarding the former, see Secretary of Defense Marshall's letter to Secretary Acheson, Dec. 16, 1950, Foreign Relations, 1950, vol. I, p. 679; regarding the latter, see the editorial note, ibid., 1951, vol.II, p. 1028.

COURSES OF ACTION

Political

7. The United States should seek to increase to the maximum the likelihood of prompt and effective collaboration by Guatemala in event of war or major international emergency by:

a. Conserving the underlying good will built up in Guatemala (as elsewhere) by our policies of non-intervention, respect for juridical equality and abnegation of a position of privilege.

We should therefore reject any action which by having the appearance of unilateral intervention in Guatemala would cause the Guatemalan people to turn against the U.S. and decline to offer their cooperation in time of emergency.

b. Pursuing the further objectives and courses of action outlined in paragraphs 8, 9, 10, and 11 below.

8. The United States should bring pressure on the Guatemalan Government to take effective action against Communist influence in the country and abandon its unfriendly attitude toward the United States by:

a. Impressing upon the Guatemalan Government at every opportunity the serious concern with which the United States views Communist influence in Guatemala, making it clear that this is the only important obstacle to cordial relations with this country. Correct diplomatic relations should be maintained with Guatemala to afford means of getting our views directly to the Government.

b. Withholding all further loans, grants and other favors from the Guatemalan Government, including U.S. cooperation in completion of the Inter-American Highway section in Guatemala.

Alternative course: Withholding of further loans, grants and other favors from the Guatemalan Government, with the possible exception of U.S. cooperation in completion of the Inter-American Highway section in Guatemala.

c. Limiting United States technical assistance in Guatemala to the present minimum operation, maintaining it only on an interim basis pending improvement in conditions in order to keep contact with influential non-Communist elements in and out of the Government.

d. Increasing isolation of the Guatemalan Government from its Central American neighbors and demonstrating more strikingly to the Guatemalan Army the advantage to be gained if the Guatemalan Government were to disengage itself from the Communists in the country by (1) seeking to conclude a military assistance agreement with Nicaragua/4/ under the Latin American grant aid program; (2) giving special attention to requests from other Central American countries for the purchase of military equipment from either U.S. Government or commercial sources. The question of whether other Central American countries should be approached for the negotiation of grant aid agreements should be kept under review in the event that circumstances should prove that such agreements would contribute effectively to this course of action.

/4/On Apr. 23, 1954, the United States and Nicaragua signed at Managua a Military Defense Agreement, which entered into force on the same date; for text, see 5 UST 453, or TIAS No. 2940. See the editorial note in Foreign Relations, 1952-1954, vol. IV, p. 1378.

e. Refusing to sell arms and military materials to the Guatemalan Government under Sec. 408(e) of the Military Defense Assistance Act,/5/ and refusing to license the export of any other arms or military materials for the Guatemalan Army and Police, so long as they are responsive to the instructions of Communist-influenced elements in the Government. Certain materials, such as blasting powder, airplane parts, etc. should be excepted from the foregoing in specific cases where denial of licenses would have unwarranted adverse effect on our interests.

/5/ Of 1949.

f. Encouraging the ODECA to implement its resolutions/6/ against Communist infiltration, but without affording the Communist-influenced Government an opportunity to unify the Guatemalan people behind it to combat a real or supposed threat to that nation's sovereignty.

/6/Reference is to the "Resolution of Managua" adopted by ODECA at its meeting of July 11-12, 1953; for additional information, see footnote 4, Document 15.

g. Developing and keeping under constant review the factual record of specific evidence of Communist influence in the Government and official toleration or encouragement of international Communist activities, including attempts to subvert other American governments, in order to ensure the best possible presentation of the case for collective action through the OAS against Communists in Guatemala should it appear likely that such a move will obtain sufficient support from the other American Republics or should the Guatemalan situation be brought up in the OAS by some other government.

h. Arousing Latin American public opinion against Communist progress in Guatemala through a covert information program.

i. Intensifying United States information programs, both overt and covert, aimed at isolating Communist elements in Guatemala from the Guatemalan people and government. Maximum use should be made of Bogotá Conference Resolution XXXII, Resolution VII/7/ of the Washington Foreign Ministers Meeting, and any other OAS or ODECA actions aimed at international Communist influence.

/7/For text of the referenced resolution, see Proceedings of the Fourth Meeting of Consultation of Ministers of Foreign Affairs, pp. 243-244.

j. Lending assistance wherever prudent to the Catholic Church in its fight against Communism in Guatemala.

k. Assisting United States labor organizations to develop relations with Guatemalan non-Communist labor leaders and encouraging the growth of a non-Communist labor movement.

9. The United States should seek to prevent the spread of Communist influence from Guatemala to other countries in the hemisphere by:

a. Consulting with other Latin American governments, pursuant to existing agreements, on measures to control international movement of Communist agents.

b. Implementing any collective action undertaken through the OAS. (See paragraph 8(g) above.)

c. Strengthening Guatemala's militarily weak Central American neighbors by entering into grant aid agreements with Nicaragua and other Central American governments whose eligibility may be established, and by making arms and materials available to them under Section 408(e) of the Mutual Defense Assistance Act.

10. The United States should seek establishment in Guatemala of favorable conditions for the conduct of business by United States interests on mutually advantageous terms by:

a. Continuing correct diplomatic relations with Guatemala insofar as possible, so that matters concerning protection of United States interests in Guatemala may be dealt with directly between the two Governments as occasion demands.

b. Impressing upon the Guatemalan Government the need for reasonable treatment of foreign capital in order to further the orderly economic development of the country.

c. Encouraging the three principal United States firms in Guatemala to make modifications, at the appropriate time, in their contracts with the Guatemalan Government which would be acceptable to both sides and which would eliminate some of the grounds for misunderstanding and resultant popular resentment against the companies.

d. Encouraging the principal United States companies in Guatemala to continue development of improved labor relations and public relations policies.

e. Making clear and reasonable diplomatic representations whenever United States interests in Guatemala are deprived of substantial rights to which they are entitled under international law.

11. The United States should seek establishment of conditions favorable to Guatemalan participation in hemisphere defense plans by: a. Maintaining our Military and Air Force Missions in Guatemala as long as local conditions permit, in order to maintain friendly contact with non-Communist elements in the officer corps, pre-empt the function of military adviser to the Guatemalan armed forces, and maintain the present degree of standardization of arms and training insofar as possible; also by the presence of these missions to keep the door open to a more complete standardization if and when conditions are such that authorizations for arms exports from the U.S. can be renewed.

b. Seeking to retain the good will of the officer corps, particularly through the present period when arms exports from the U.S. are not authorized, by conveying to them an understanding of the reason for such action on our part and by every other means reasonable under the special circumstances of present relations between our two countries.

Annex

STAFF STUDY

General Considerations

1. Guatemala is the northernmost and third largest of the five small republics between Mexico and Panama. It is roughly 1,000 miles south of New Orleans and 750 miles northwest of the Panama Canal. Over half of its 2,900,000 people are Indians who participate only to a limited extent in the money economy and political life of the nation. Guatemala is predominantly an agricultural country, and although well endowed by nature for producing a variety of crops, its economy is still heavily dependent on coffee.

2. In terms of its own resources and manpower, the contribution that Guatemala can make toward United States security is slight. Although useful sources of a few strategic materials might eventually be developed, present production of such products is of negligible importance to this country. In the event of war, Guatemala, as in the last conflict, could provide the United States with the site for an air base at Guatemala City, but the greater range of modern aircraft may have considerably diminished its present or future usefulness to us. The International Railways of Central America, though of possible value as a trans-isthmian route in event of destruction of the Panama Canal, is a narrow gauge (36") line of limited capacity, easily sabotaged, and has only open roadsteads at the Pacific termini.

3. Guatemala could endanger United States security, however, were it to give refuge or aid to enemy saboteurs and propagandists, or were it to allow use of its airfields, ports and other facilities and resources by an enemy power. Sabotage to airfields and military installations would be of importance only in relation to the degree to which these are built up and used by United States forces in event of war. Sabotage against the railroads and other United States-owned commercial interests would injure the Guatemalan economy far out of proportion to the adverse effect on the United States war potential. Since Guatemala would be incapable of resisting a strong attacker, denial of Guatemalan facilities and resources to an aggressive enemy power would necessarily fall to the United States. Should the Guatemalan Government assume a hostile attitude in an emergency, the United States could secure the airport and other strategic points against its forces with a battalion or two of well-trained troops.

4. Guatemala is of special importance to the United States primarily for having provided the leading example of Communist penetration in the American Republics. This situation tests our ability to combat the eruption and spread of Communist influence in Latin America without causing serious harm to our hemisphere relations. It may be assumed that fundamental Communist objectives in Guatemala include the following: (a) to prevent collaboration between that country and the United States in time of future emergency, (b) to encourage the growth of Communism elsewhere in Latin America, and (c) to provoke the United States into action which would be contrary to our Inter-American commitments and which would injure hemispheric solidarity.

5. The principal subsidiary problem facing the United States in Guatemala concerns treatment of private United States interests. Influenced by extreme nationalists and Communists, the Guatemalan Government has begun expropriation of substantial United States owned assets in the country, having for several years followed a policy of increasing hostility and harassment toward the principal American companies operating there. These are the United Fruit Company; the International Railways of Central America, (partially owned by the former); the Empresa Electrica de Guatemala, (owned by a subsidiary of the Electric Bond and Share Company); and Pan American Airways. All but the last named have large capital investments in Guatemala. The crippling or expulsion of these American enterprises would adversely affect the position of United States commercial interests elsewhere in the hemisphere, and would produce a number of subsidiary but troublesome local problems, such as securing just compensation for property seized.

6. Communist influence in Guatemala grew up in the aftermath of the Revolution of 1944, which brought an end to the latest of the country's many military dictatorships and replaced it with a liberal minded administration which promised quick change. Initial popular enthusiasm for the 1944 revolutionary movement attested to the depth of discontent with the political repression, social backwardness and "economic colonialism" which had been the pattern of the past.

7. The Administrations of President Arévalo (1945-51) and President Arbenz (1951- ), in frustration at the frictions caused by their own ignorant tampering with the national social and economic structure, have attempted to shift responsibility for Guatemala's difficulties to forces outside its borders. Exploiting nationalist sentiment to the utmost, they have insisted that Guatemala is the victim of a conspiracy directed by the United Fruit Company which is determined to prevent the betterment of the Guatemalan people.

8. Communists ably supported Arévalo and Arbenz in their attacks on "economic imperialists" and in their efforts to legislate sudden reform. The Communists identified themselves with every aspiration of the revolutionary administrations. Toleration of Communist activity which characterized the early years of the Arévalo administration developed into an effective working alliance between the Communists and Arbenz.

9. Key to present political tensions in Guatemala is the Agrarian Reform Law, enacted in mid-1952 and described by President Arbenz as the most important measure of the Revolution. This law provides for the expropriation of large tracts of unused land and their distribution to the peasants. Although presented as a long-overdue measure of social and economic reform, the law has strong political motivation and significance. Its drastic provisions are designed to produce social upheaval rather than to execute any economic plan. Communists and fellow travelers instantly seized the opportunity afforded them by the Administration's proposal to institute agrarian reform. They played a leading part in the preparation and enactment of the agrarian law. They have infiltrated the National Agrarian Department established to administer it, and have incited disorderly peasant seizures of privately owned lands. The Agrarian Reform Law is being used to attack the United Fruit Company, to destroy the political effectiveness of the large landholders, and to mobilize the hitherto politically inert peasantry in support of the regime.

10. Militant Communists in Guatemala are estimated at a few hundred. Of these perhaps two or three dozen are dangerous leaders or agitators. Almost without exception they are indigenous to the area and are Mexico-trained rather than Moscow-trained, although some have visited the Soviet orbit and may have received brief instruction there.

11. The Communists have achieved their present political influence in Guatemala, not as a political party competing with others, but through personal influence with the President and through the coordinated activity of individual Communists within the leftist political parties and labor unions which emerged from the Revolution of 1944.

12. With the assistance of the Government, Communist and Communist-influenced labor leaders have been the most successful organizers of Guatemalan labor. Their formation of the General Confederation of Guatemalan Workers (CGTG) and Government pressure for labor unity have facilitated the extension of their control over all organized labor. The Communists are seeking to mobilize the mass of rural workers through the CGTG and the National Confederation of Guatemalan Peasants (CNCG), in which they exercise a strong influence. The basic weakness of Guatemalan Communist labor leadership is that it is imposed from above through top control of the machinery or labor organization and cannot be sure of rank and file support.

13. Through their leadership in organized labor and their influence with the President and within the pro-Administration political parties, the Communists have gained many positions of influence within the Government: In Congress (where they dominate the Special Committees on Agrarian Reform and Labor Code Revision), in the National Electoral Board, the National Agrarian Department, the Institute of Social Security, the Labor Courts, the Ministry of Education, and the Presidential Secretariat of Propaganda, and in the official and pro-Administration press and radio. Their influence is extended by an indefinite number of Communist sympathizers in similar positions. At the same time, no Communist holds any position of Cabinet rank and the Communists appear to have made little or no effort as yet to infiltrate the Police or Army.

14. Opposition to the Arbenz regime is disorganized and ineffective. There is no likelihood it could alter the course of the Government by political action. It could not succeed in a revolutionary attempt opposed by the Army.

15. The Governments of El Salvador, Honduras, and Nicaragua are fearful that the trend in Guatemala will lead to Communist subversion and social upheaval in their territories. They are probably giving serious consideration to clandestine support of revolutionary action in Guatemala. It is highly unlikely, however, that they would or could mount an open military intervention against Guatemala. The Guatemalan Army could probably defeat any force which they could deploy against it.

16. The Army is the only organized element in Guatemala capable of rapidly and decisively altering the political situation. There is no reason to doubt that President Arbenz still has the loyalty of the Army, which has taken its lead from him and thus far refused to concern itself over the growth of Communist influence in political life.

17. It is possible that President Arbenz thinks of the Communists in Guatemala only as reformers and useful allies rather than as Soviet agents. Since he has no support of consequence from any propertied interests other than those created by the Revolution, he is probably unwilling to repudiate the Communists and risk the loss of much of his organized political backing. Therefore, even though Arbenz still exercises personal control of the Administration, the Army and the Police, and could break his ties with the Communists and moderate the policies of the Government, it is not likely that he will voluntarily do so under present conditions.

18. In addition, Arbenz and other Government leaders, as officials of a small country near the United States who feel some resentment against it for one reason or another, may tend to find satisfaction in deliberately affronting the United States by showing friendliness to Communist leaders and in observing the attention aroused by their attitude. In any event, Guatemala's protestations of friendship with the United States have thus far been given against a background of official Guatemalan encouragement to Communist activity.

19. On the other hand, there are certain factors which would impel most Guatemalans, possibly including President Arbenz and other non-Communist Government officials, to identify Guatemala's ultimate interests with those of the United States rather than the USSR and to desire to cooperate with the United 'States in controlling enemy saboteurs and propagandists in event of war or major international crisis. These factors are: (1) Guatemala's western cultural and political orientation; (2) Guatemala's proximity to and economic dependence on the United States; and (3) the fact that the United States has built up in the American Republics, especially in the Caribbean area, a great reservoir of fundamental good will through our policies of nonintervention, respect for juridical equality and abnegation of a position of privilege.

20. Notwithstanding the disturbing amount of Communist influence in Guatemala, its Government still votes with the free world on most of the substantive issues between it and the Soviet bloc. There are certain other small signs of its continued willingness to remain in our camp, such as the fact that our Military and Air Missions are still operating in Guatemala.

21. Nevertheless, any likelihood of voluntary cooperation by the Arbenz Government with the United States in a future crisis would vanish (a) if the Communists in the Administration should overpower it completely, or (b) if President Arbenz should meanwhile conclude that all means of reaching an understanding with the United States were closed, and commit himself to a policy of frank hostility toward this country.

22. Our present position in Guatemala is progressively deteriorating. Politically, Communist strength grows, while opposition forces are disintegrating; economically, American enterprises suffer continuous whittling away of their properties and contractual rights, while our remonstrances are rejected. Ultimate Communist control of the country and elimination of American economic interests is the logical outcome, and unless the trend is reversed, is merely a question of time. In seeking means to reverse this trend, we must consider:

a. A policy of non-action would be suicidal, since the Communist movement, under Moscow tutelage, will not falter nor abandon its goals.

b. Ineffective defense of American enterprises will be followed by similar attacks on these same companies in neighboring countries, and subsequently on other U.S.-owned industries in other Latin American countries.

c. A solution of the Guatemalan problem by means repugnant to the rest of Latin America might cost more than it would be worth, as it could create a larger problem with the hemisphere than we would have ended with one country.

d. Any solution will depend on our action, since other American republics have neither the capacity nor decision to act.

Alternate Lines of Policy

23. The United States could follow one of four general lines of policy with respect to Guatemala:

a. Policy of direct intervention. Militarily, Guatemala would be defenseless against direct United States action. Imposition of unilateral economic sanctions, if mechanism to enforce them were made available, would at least cause a drastic and no doubt painful shift in the flow of Guatemala's trade, since the United States takes 85 percent of Guatemala's exports and supplies 60 percent of its imports. However, the use of direct military or economic sanctions on Guatemala would violate solemn United States commitments and under present circumstances would endanger the entire fund of good will the United States has built up in the other American Republics through its policies of non-intervention, respect for juridical equality, and abnegation of a position of privilege. Loss of this good will would be a disaster to the United States far outweighing the advantage of any success gained in Guatemala.

b. Policy of covert intervention. Our secret stimulation and material support of the overthrow of the Arbenz Government would subject us to serious hazards. Experience has shown that no such operation could be carried on secretly without great risk of its leadership and backers being fully known. Were it to become evident that the United States has tried a Czechoslovakia in reverse in Guatemala, the effects on our relations in this hemisphere, and probably in the world at large, could be as disastrous as those produced by open intervention.

c. A policy of inaction. The United States could allow events to take their course in Guatemala in the hope that the problem will solve itself, possibly along the lines of the Mexican Revolution, which also had Communist backing for land "reform" and foreign expropriation. This is obviously a false hope in the existing context of world affairs, and disregards both the importance of Communist penetration and the certainty that the United States must aggressively lead the fight against it wherever it appears in the hemisphere.

d. Policy of firm persuasion. As long as the Government of Guatemala cooperates with the Communists we should decline to cooperate with it. The United States should adopt courses of action which will oblige the Guatemalan Government to see for itself that its persistence in favoring the Communists will lead the country to ruin; and which will induce it to recognize the advantages of cooperating with the United States. In exploiting all the possibilities of this policy we should endeavor in all appropriate ways to bring the pressure of Latin American public opinion to bear upon the Guatemalan Government and people; we should encourage ODECA in its moves aimed at the Communists in Guatemala; and, if and when it occurs that a case has been developed which will command support from a majority of the OAS, we should initiate or support OAS action against Guatemala. , If direct unilateral action should become necessary in a future emergency, the Arbenz regime could easily and quickly be overthrown possibly with less Latin American opposition than we would encounter under present conditions, and very possibly with Latin American support. Meanwhile, we must recognize realistically that our present policy of firm persuasion, though avoiding an outright break with the Guatemalan Government, has not deterred it from its stated course.

Courses of Action

24. Although Arbenz is sensitive to pressure exerted by the United States, he will resist it without regard to practical consequences wherever he believes he can gain political advantage by so doing. This makes execution of our policies a delicate and dangerous matter.

25. We have frankly discussed the Communist problem with high Guatemalan officials in Washington and in Guatemala. They have brushed aside our views on Communist influence in the country as exaggerated. They have described the Communist issue as a false one fabricated by the United Fruit Company. We must continue, however, in the effort to dispel the illusions of anyone in the Guatemalan Government who believes the Government's official version.

26. We have for some time withheld virtually all cooperative assistance from Guatemala. The exceptions have been a reduced Technical Assistance Mission (engaged in three small projects begun during World War II) which we have desired to maintain at a minimum level as a toe-hold pending improvement in political conditions; and our military and Air Force Training Missions, which we have desired to keep friendly United States contact with the politically important officer corps.

27. The withholding of other favors has proven effective in demonstrating to the Guatemalan Government the seriousness with which we view its cooperation with Communism, and the policy should be continued. However, consideration should be given the alternatives of withholding or granting our cooperative assistance in completion of the Guatemalan sector of the Inter-American Highway.

28. Guatemala has formally offered to enter into an agreement with the United States for the continued cooperative construction of its sector of the Inter-American Highway, making all of the assurances required by law for the expenditure of United States funds. We have already made such agreements with El Salvador, Nicaragua, Costa Rica, and Panama. On the one hand, our refusal to resume cooperation with Guatemala on the Highway will constitute the most forceful measure available to us under the policy of withholding favors, as it is the one most urgently desired by Guatemala. On the other hand, it would be in our interests to conclude a cooperative agreement with Guatemala for construction of the Highway, for the following reasons:

(1) It is the only means of insuring that the as-yet-unconstructed 25-mile gap immediately adjacent to Mexico will not become a serious bottleneck for the entire Central American portion of the Highway. Guatemala will sooner or later attempt to build this section itself if we fail to enter into the agreement, and will probably exercise its consequent freedom to place on it the special tolls or other restrictions which would be expressly forbidden under the terms of the agreement.

(2) It would open Guatemala and the rest of Central America to Inter-American Highway traffic which is now unable to pass beyond the Mexico-Guatemala border because of the gap on the Guatemalan side. This would stimulate extensive tourist travel and commercial movement on the Highway between the United States and Guatemala and would to that extent increase beneficial United States influence in Guatemala.

29. Careful study should be given the concluding of Military Defense Assistance Pacts with El Salvador, Nicaragua, and Honduras./8/ Exclusion of Guatemala would have the practical effect of emphasizing to the Guatemalan Army the disadvantage to it caused by the Government's friendliness toward Communism. To be weighed against this is the risk that conclusion of the pacts might stir nationalist feeling in Guatemala and strengthen rather than diminish Army support of the Arbenz regime. An additional difficulty is the apparent disinclination of El Salvador and Honduras to conclude such agreements. A pact with Nicaragua should be pushed as a first step toward bracing Guatemala's neighbors with our military support.

/8/On May 20, 1954, the United States and Honduras signed at Tegucigalpa a Military Assistance Agreement, which entered into force on the same date; for text, see 5 UST 843, or TIAS No. 2975. See Mr. Murphy's letter to Assistant Secretary of Defense Hensel, Aug. 10, 1954, in Foreign Relations, 1952-1954, vol. IV, pp. 1311-1312.

30. Pending the conclusion of Military Defense Assistance Pacts which would enable the United States to give military grant-aid to El Salvador, Nicaragua, and Honduras, we should make arms and materials available to them by direct purchase under Sec. 408(e) of the Military Defense Assistance Act, in order to help strengthen those militarily weak governments against Communist subversion and pressure from Guatemala.

31. The United States should continue to refuse to sell arms and materials to Guatemala under Sec. 408(e) of the Military Defense Assistance Act, and to continue to deny export licenses for other arms and materials sought in this country for the Guatemalan Armed Forces. This policy should be enforced so long as they are loyal to the Communist-influenced central authority and hence likely to employ their weapons against anti-Communists. It is recognized that the withholding of arms will necessarily impede the functions of the United States Military and Air Force Missions in Guatemala. We should consider occasional approval of export licenses for materials other than military arms and ammunition should it appear in specific cases to be in our interest to do so.

32. An arraignment of Communist penetration in Guatemala and from Guatemala to other American Republics should be prepared for use in the event that OAS action appears feasible and practicable. The United States should assist by developing a factual case record of specific evidence of (1) Communist influence in the Government; (2) encouragement or toleration by the Government of Communist elements who are acting or appear to be acting under Kremlin directives, and (3) encouragement or toleration by the Government of attempts at subversion of any other American Government. This case record should be kept under constant review in order to determine whether or when its nature is such that its presentation in the OAS would gain sufficient support from the other American Republics to assure that collective inter-American action will be taken to achieve the elimination or marked diminution of Communist influence in Guatemala.

33. Many of the difficulties encountered by United States commercial interests in Guatemala are the direct work of Communists, but certain problems would remain even after elimination of their influence. Deep-rooted nationalist feeling will remain an obstacle to the solution of some of the principal ones. We should encourage the United Fruit Company, the IRCA, and the Empresa Electrica to negotiate with the Guatemalan Government, whenever that Government is disposed to enter such negotiations in good faith, with a view to revising their concession contracts in such a way as to diminish nationalist prejudices against the companies and at the same time obtain from the Government satisfactory assurances of reasonable treatment of the companies.