Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

PPS files, lot 65 D 101. “Guatemala”

Memorandum by Louis J. Halle, Jr. of the Policy Planning Staff to the Director of the Policy Planning Staff (Bowie)¹

top secret

[Washington,] May 28, 1954.

Our Guatemalan Policy

Major decisions affecting our Latin American policy are being made in an atmosphere of urgency generated by (a) the outbreak of a strike among United Fruit Company and Standard Fruit Company workers in Honduras, and (b) the delivery at a Guatemalan port of a cargo of arms from behind the Iron Curtain. The consequent haste in decision involves certain dangers which are already being realized and may be realized further in the absence of precaution:

(a) There is no time for preliminary staff-work to provide an adequate basis of information and thought;

(b) The concentration on what appears to be a local emergency may result in inadequate attention to larger considerations that are not local or short-range;

(c) The atmosphere of emergency breeds a disposition to exaggerate dangers, and this disposition is strengthened by the necessity of “making a case” in order to get effective action.

The purpose of this memorandum is to put into your hands (a) such intelligence with respect to the Guatemalan situation as can be assembled at short notice, (b) a brief account of the historic inter-American context in which the situation arises, including the complex of international commitments within the terms of which it has been our policy and pledge to act; and (c) opinion on the consequences of alternative policies.

I. The Guatemalan Situation

[Here follows a description of the Guatemalan economy.]

This typical underdeveloped country is now undergoing the social revolution that typifies underdeveloped countries generally in our time. That revolution is an expression of the impulse to achieve equality of status (a) for individuals and groups within the national society, and (b) for the nation-state within the international community. Social reform and nationalism are its two principal manifestations.

We see the same revolution at various stages of development in Asia and Africa. On our own side of the globe it has taken various acute forms in Argentina, Bolivia, and Mexico—less acute forms elsewhere. It has hardly manifested itself at all, as yet, in Honduras (before May 1), Paraguay, or Haiti.

In Guatemala historic conditions provide substantial fuel to fire the revolution. Foreign ownership of the elements of Guatemala’s economic life, together with the pattern of its international trade, gives the Guatemalans a vivid and unwelcome sense of dependence on foreigners. This is not too galling with respect to foreign ownership of coffee plantations, for the owners are scattered individuals of various nationalities who lack collective means of exercising control over the country’s economic and social life. The case is different with the utilities, the vital transportation and communication facilities, and the banana empire of the United Fruit Company (which is a monopoly). U.S. ownership is overwhelmingly predominant here.

Up to twenty years ago the United Fruit Company and the International Railways of Central America (now controlled by United Fruit) still practiced marked discrimination against native employees in favor of U.S. employees. Today the Fruit Company is, as it was becoming then, an agent of social betterment; but its past is not forgotten and what really counts is that, whether beneficent or maleficent in its practices, it remains the expression of Guatemala’s economic colonialism.

The international Communist movement is certainly not the cause of the social revolution in Guatemala, but it has made the same effort there that it has made everywhere else to harness the revolutionary impulses—nationalism and social reform alike—and exploit them for its own purposes. In Guatemala this effort has been less successful than in Vietnam and perhaps no more successful than it was in Mexico twenty years ago under the regime of Lázaro Cárdenas. It has, however, been impressive in its success, all the circumstances considered. It has achieved a high degree of covert control over the reformist regime of President Arbenz and is dominant in the national labor movement.

The revolution in Guatemala is nationalist and anti-Yanqui in its own right. It is, in its own right, a movement for “social justice” and reform. If the international Communist movement had gained no foothold at all in Guatemala one might expect that the United Fruit Company, the Railways, and the Electric Power Company of Guatemala City would still be the victims of persecution in Guatemala, and that the U.S. would thereby be presented with diplomatic problems of a serious nature. All this is merely aggravated by the participation of Communism, which supplies a leadership and a body of tactical doctrine beyond the capacity of native resources alone.

More serious in its implications is the use that the international Communist movement might make (or be making) of Guatemala as a base from which to operate against the political and social structures of other Latin American states, and from which to organize sabotage of physical installations that contribute to the defense of the Hemisphere. It is the projection of the Communist will from Guatemala across its borders that properly gives us the chief cause for concern.

I attach Intelligence Report No. 6185 of April 30, 1953, on “Guatemalan Support of Subversion and Communist Objectives (1950–1953)”.² The intelligence that it contains is of activities that do not appear to differ substantially from the normal operations of the Balkan-type intrigue that goes on all the time, and has for decades past, among the Central American states. It is quite normal for Central American political parties and governments to conspire covertly against one another across the international borders. To a Central American politician the obstruction of an international boundary is merely like the net in tennis: it makes the game more sporting. This kind of conspiracy is the expression, in fact of what appears to us sober Norteamericanos to be a frivolous temperamental necessity. One expects it, and the Intelligence Report confirms it. The participation of Communism, however, gives it a sinister character that it would not otherwise have.

It is against this background that one must view the two events which, in this month of May, have aroused our alarm.

1. The first was the initial conspicuous manifestation of social revolution in the hitherto stagnant Republic of Honduras, bordering on Guatemala, in the form of a strike that paralyzed the operations of the United Fruit Company and the Standard Fruit Company. That conditions in Guatemala influenced this development is virtually to be assumed. The plantations owned or serviced by the United Fruit Company on the Gulf of Honduras are scattered on both sides of the boundary between the two republics, which boundary would not be apparent to an airplane flying overhead. Until a few years ago, in fact, the location of the boundary was a matter of opinion, since it had not been demarcated and was in controversy. The local farmers were unsure of their own nationality, gratified the tax-collectors of both countries, and had resigned themselves to being policed alternately by patrols of the two respective armed forces (which had the salutary habit of fleeing from each other at sight).

With social warfare, marked by repeated strikes, being waged in the banana plantations on one side of the border, one might expect and even assume that the fever would sooner or later communicate itself to the plantations on the other side of the border. There are no automobile roads or railways that traverse this border, but mules and men go back and forth without hardship. It would be surprising, moreover, if the Communist-controlled labor-union harassing the United Fruit Company on the Guatemalan side denied itself any reasonable opportunity to promote the harassment of the United Fruit Company on the Honduran side. Finally—if only because intrigue is the Staff of Life for Central American politicians—one would expect individual Guatemalan officials or even the Guatemalan Government itself to become involved here or there, in greater degree or less.

The reasonable suspicion of some Guatemalan complicity in the Honduran strike, however, has not been supported as yet by any evidence in the form of hard facts. Our efforts to discover such facts have led us floundering through rumours and reports for which we could get no substantiation. Our main sources of information have been … which has proved itself neither reliable nor altogether disinterested, and … which is not disinterested and has been confused or confusing on some points.

Our Embassy in Tegucigalpa (Honduras) manifested alarm, almost from the beginning of the strike, at the prospect it conceived of an armed attack by Guatemala on Honduras. Specifically, the Embassy saw in the dispatch of Honduran troops from the garrisons of Tegucigalpa to the strike-bound area, where they were needed to keep order, an invitation to the Guatemalan Army to march on Tegucigalpa. Our Ambassador³ had just arrived in Honduras and presumably relied largely on his experience in strife-torn China, which was I believe the only foreign experience he had had. His able deputy⁴ was also just off the ‘plane, having come from Djakarta. (Old Vice Admiral Johnson used to criticize the Department for this sort of thing, pointing out that the Navy never changed both the Captain and the Executive Officer of a battleship at the same time.)

It was at this point that the intelligence services and experienced officers in the Department could have made a useful contribution in “staffing” the situation. Events moved with such speed and drive, however, that subordinate officers who were caught up in them felt that it was “theirs not to reason why….” Otherwise they might have pointed out that the deterrent to armed attack within Latin America is not in any balance of military powers but in Article 3 of the Rio Treaty, which obligates the U.S. to stop any such attack. This, and not the local garrison, was the shield that defended Tegucigalpa; it virtually insured that no armed attack would be launched.

The unfounded alarm, however, created an atmosphere of emergency in our Government and, communicated to the President and the NSC, led to immediate preparations for meeting a Guatemalan armed attack with U.S. military force.

2. It was in the exhilarating atmosphere thus created that news of the second event was received in the Department. This was the arrival at a Guatemalan port of a Swedish steamer with 1900 or 2000 tons of arms from behind the Iron Curtain for delivery to the Guatemalan Government. What the nature of these arms were we did not know then, nor do we now; although it is evident that any elaborate armed equipment would be useless to the Guatemalans in the absence of special training in its use.

At this point we needed, as we still need, an assessment by military intelligence and OIR of the nature and magnitude of the danger to our security interests that this represented. I have asked OIR/DRA to gather some material on this jointly with G–2. Meanwhile, we should bear in mind that the Guatemalan Army has all along had the capability, in our opinion, of whipping the Honduran Army or even the Honduran, Salvadoran, and Nicaraguan Armies together in any trial of relative strength. This estimate has mere academic significance, for the most part, because of the Rio Treaty.

At a moment, however, when we were preparing for a Guatemalan armed attack on Honduras the news that these arms had been delivered naturally took on added significance. The Department issued a statement⁵ “that this is a development of gravity”. The President announced that it was “disturbing”. The Secretary at his press conference⁶ said that it made Guatemala dominant in Central America. The newspapers carried headlines such as: “Dulles Sees Peril to Panama Canal” (N.Y. Times).

At the same time, unconfirmed reports of rumors reached us of two other shiploads of arms from behind the Iron Curtain, perhaps already on the way. We were told that one such shipload might be waiting offshore to move into the dock when the Swedish ship left.

We moved swiftly to prevent the unloading of the Swedish ship, but were unsuccessful. We also took a decision to prevent any further such shipments, even if this should necessitate our use of force on the high seas against friendly foreign flag vessels in violation of international law. In a memorandum of May 20 to Assistant Secretary Holland (copy attached)⁷ the Acting Legal Adviser⁸ stated: “… if the United States were to intercept and escort by force any ships in Guatemalan territorial waters or on the high seas to an American port, there would be no legal justification for such action either under the Rio Treaty or under the United Nations Charter. Such action would constitute a violation of international law, and could be considered an act of war by the countries whose ships were intercepted, and by Guatemala (at least if the interception occurred in that country’s territorial waters).” Nevertheless, on May 22, the following decision was made (quoted from S/S–R’s Top Secret Summary of Decisions⁹ of May 25):

“Foreign Ships Transporting Arms to Guatemala—The Secretary recommended to the President, and obtained Presidential approval, of the following policy with respect to any vessel on the high seas sighted by the US Navy and suspected of transporting arms to Guatemala; 1) if time permits, we shall attempt to persuade the ship’s Flag State to divert it to Panama for inspection; 2) if time does not permit the preceding step, our Navy shall detain the ship while we attempt to persuade its Flag State to divert it to Panama for inspection; 3) if neither of the preceding steps is successful, our Navy should, using force as a last resort, escort the ship to Panama for inspection.”

Even in the absence of relevant intelligence materials one may offer certain conclusions regarding the effect of this shipment on our national security interests:

(a) We have been withholding military equipment from Guatemala and have been concluding military agreements with Guatemala’s neighbors that would call for supplying them with such equipment. This policy was calculated to create dissatisfaction in the Guatemalan Army with the pro-Communist orientation of the Guatemalan Government. The acquisition of arms from behind the Iron Curtain is calculated to neutralize our policy in this respect if those arms are put into the hands of the Guatemalan Army.

(b) If some of the arms are, alternatively, smuggled to dissident groups in neighboring countries they might play a decisive role in any attempt to overthrow the governments of those countries or disrupt civil order. (I have asked OIR/DRA to get together with G–2 for an estimate of (i) the possibilities of successful smuggling, (ii) the precautions against it that may be feasible, and (iii) the amount of smuggling that might have how much effect, etc.)

(c) The fact that Guatemala can and does buy arms from behind the Iron Curtain in defiance or contempt of the U.S. may hurt our prestige in the Hemisphere and elsewhere. It also sets a bad example inside the Hemisphere, suggesting alternatives to dependence on the U.S.

(d) The shipment has a favorable effect on U.S. security interests to the extent that it arouses other Latin American states to the danger posed by Communist influence in Guatemala.

Since the above was written I have received a one-page memorandum prepared in OIR/DRA, which I attach¹⁰ and from which I draw the following. In reply to the question, “What is potential of shipment with respect to subversion outside Guatemala? Possibilities of smuggling, etc.,” G–2 has replied:

At present G–2 feels that the effect would be largely psychological. G–2 doubts that the Guatemalan Government will dispose of any of the arms now. They may do so later when they feel more secure.

In reply to other questions it has offered the following:

G–2 and air force intelligence are of the opinion that there is no immediate military threat to the safety of US. Guatemala’s air force is at present qualitatively inferior to that of Honduras and Nicaragua.

Later, May 28, REW, G–2, called me and informally stated that because of training and technical factors matériel received would not substantially increase Guatemala’s military capabilities.

At the same time that we have (a) prepared to meet an armed attack by Guatemala on Honduras, and (b) issued orders to our naval forces to prevent the arrival in Guatemala of any further shipments of arms, we have taken other steps designed to elicit the concurrence of other American states in the actions we are taking, may take, or may wish to take. Our embassies have discreetly inquired of the governments of the other Central American states, Mexico, and Panama whether they would request action by us to prevent further shipments. Favorable replies have been received from Costa Rica, El Salvador, Honduras, and Nicaragua. We have also been sounding out other American governments to determine the degree of support which might be forthcoming for a proposal that collective action on the arms-shipment be taken under Article 6 of the Rio Treaty, which would require an immediate Meeting of Foreign Ministers of the American Republics (the “Organ of Consultation”). The Chronology of Events attached to this memorandum lists these actions.¹¹

II. The Context of Inter-American Agreements

[Here follows extensive discussion of the historical background of the inter-American policy and commitments of the United States.]

III. Policy Alternatives.

Our main policy alternatives with respect to the Guatemalan situation, in the light of the above, are:

(1) To invoke Article 6 of the Rio Treaty now and seek to carry the matter through by obtaining at least 14 Latin American votes (out of 19) for effective action by the U.S. and others to (a) do away with the covert Soviet political aggression in Guatemala, or (b) remedy whatever the situation is that constitutes a threat to the peace of America;

(2) Determining that collective action won’t work and that the national safety requires us to take decisive measures now, to conclude that the corollary to a failure of collective responsibility is a return to unilateral intervention and to act accordingly;

(3) Determining that an attempt to get collective action now is too risky and that there is no imminent danger to our national safety, to adopt a policy of watchful waiting in the expectation that if the situation gets worse the chances of getting effective collective action will thereby be increased.

The key to a wise choice among these broad alternatives lies in the answer to two questions: (1) What is the magnitude and imminence of any danger that the present situation holds for us? and (2) How much support for collective action can we expect from the rest of the inter-American community?

(1) As to the first question, the evidence indicates no present military danger to us at all. Although we read public references to the facts that Guatemala is three hours’ flying time from the oil-fields of Texas and two hours’ flying time from the Panama Canal, we may console ourselves that Guatemala’s capability for bombing either is nil. The recent shipment of arms makes no difference to this conclusion, nor would repeated shipments.

Guatemala, moreover, may confidently be expected not to launch an armed attack in the direction of the Panama Canal or in any other direction, since under Article 3 that would at one stroke remove the legal and political impediments which now prevent us from dealing decisively with the situation. If Guatemalan military units on the Honduran border should go berserk and make a dash for Tegucigalpa our policy problem would be solved without military danger to ourselves, and the consequence would be the elimination of any military threat that Guatemala may now offer her neighbors.

The real and direct threat that Guatemala poses for her neighbors is that of political subversion through the kind of across-the-borders intrigue that is a normal feature of the Central American scene. The danger is of Communist contagion and is most immediate with respect to Guatemala’s immediate neighbors. The Communist infection is not going to spread to the U.S. but if it should in the fullness of time spread over much of Latin America it would impair the military security of the Hemisphere and thus of the U.S.

The infection could spread by intrigue supplemented by the smuggling of arms—although I note from the attached memorandum that G–2 expects the newly acquired arms to remain in Guatemala for the present. It could also spread through the example of independence of the U.S. that Guatemala might offer to nationalists throughout Latin America. It might spread through the example of nationalism and social reform. Finally and above all, it might spread through the disposition the Latin Americans would have to identify themselves with little Guatemala if the issue should be drawn for them (as it is being drawn for them), not as that of their own security but as a contest between David Guatemala and Uncle Sam Goliath. This latter, I think, is the danger we have most to fear and to guard against.

(2) How much support for collective action can we expect from the rest of the inter-American community? I have asked OIR for an estimate and it is being prepared. Meanwhile, I call your attention to the attached OIR/DRA memorandum of this date entitled “The Caracas Resolution on Communist Intervention in the Hemisphere”.¹²

The nationalistic and reformist elements in the Guatemalan situation have hitherto loomed larger for the Latin Americans than the element of international Communism. They believe that we exaggerate the latter for our own purposes, and this belief is not weakened when we meet it with redoubled protestations. The United Fruit Company is a symbol of colonialism in their eyes which they equate with other like enterprises within their own respective jurisdictions. Under the circumstances, the more we have viewed the Guatemalan situation with alarm the more they have tended to view it with complacency. (There is a parallel, here, in the respective attitudes of the U.S. and India towards Indochina.) The same thing happened in the case of the U.S. vs. Argentina. The disposition develops among the Latin Americans to look upon the whole business as a David–Goliath contest in which they identify themselves naturally with David. (See attached OIR memorandum of this date¹³ on the growth of Societies of the Friends of Guatemala.)

These inclinations of the Latin Americans are in part masked when it comes to a conference like that of Caracas, since we are able to put considerable indirect pressure upon them to get their votes. But the 17 votes for our anti-Communist resolution at Caracas were granted only after the resolution had been watered down to the point of saying virtually nothing, and then grudgingly. The speeches indicated that there was more fear of U.S. interventionism than of Guatemalan communism. The pressures we brought to bear were resented and the scars remain. We should not, therefore, be deceived by the fact that 17 out of 19 were officially “for us”.

Without having an OIR estimate on this I can only guess. My guess is that under present circumstances we could hardly win more than a Pyrrhic victory in a meeting of the Organ of Consultation, obtaining fourteen votes for relatively innocuous measures only by putting the thumbscrews on our neighbors. I doubt that it would be worth it in terms of the consequent further deterioration of our relations with Latin America in general. However, we ought to have, and promptly, a very thorough OIR estimate on this.

If the above analyses are sound the conclusion must be that the time is not ripe for collective inter-American action under the Rio treaty. This conclusion is reinforced by the indications that the situation poses no immediate danger for us. The conclusion raises the question, however, of what policy we should follow to expedite the ripening of time.

In this connection it seems to me that the two events which have so aroused us are as if calculated for our advantage. In the absence of undue excitement on our part they are bound to arouse alarm among Guatemala’s neighbors, which alarm would tend to communicate itself throughout Latin America. If other like events ensued, the alarm would increase—but we would not ourselves be directly endangered. The Latin Americans would begin to ask whether the U.S. could be counted on to defend them against this growing menace. At that point they would be in the suppliant position vis-à-vis us rather than ourselves being suppliants to them. And this would be proper, for their danger is the greater. We could at this point act the part of the big brother who was not scared for himself but would stand by his small neighbors and live up to his commitments.

But if we present, instead, the spectacle of the elephant shaking with alarm before the mouse, if Guatemala disturbs us by gaining military dominance in Central America and imperilling our Canal in Panama, then the prestige of underdog Guatemala will be greatly enhanced throughout Latin America and Asia, and Latin American bosoms will (secretly or otherwise) swell with pride at the spectacle of one of the least among them actually arousing us to alarm for our own safety. Our own prestige and influence will be correspondingly diminished and the time will not ripen as we would wish it to.

We could be quite complacent about the Indochinese situation if only we could afford to let it get worse until the corresponding alarm in India and Indonesia made it possible to deal with that situation by really effective united action. Unfortunately, our danger there is extreme and we cannot be complacent about allowing it to get worse. The Guatemalan situation, however, can safely get worse and, if one leaves historical caprice out of account, cannot get better until it does get worse.

If we should adopt, instead, the second alternative of intervening unilaterally with whatever force was necessary we would, in effect, be making a colony of Guatemala that we could maintain only by continued force, and by so doing we would turn all of Latin America against us to the advantage of the international Communist movement. If our intervention was less than decisive the Argentine experience would be repeated and we would have strengthened Communism in Guatemala while antagonizing Latin America generally.

It would seem to me wise for us to countermand the present orders to our naval forces in the Caribbean and, for the rest, to take a more relaxed attitude generally. In this connection we ought also avoid needlessly alarming and arousing our own public, for that would end by making the pursuit of a considered policy impossible.

1. In a brief covering memorandum, Mr. Halle noted that the drafting of this memorandum began on the afternoon of May 27.
2. Not printed (PPS files, lot 65 D 101, “Guatemala”).
3. Whiting Willauer. He was appointed Ambassador to Honduras on Feb. 5. 1954; he arrived in Tegucigalpa and presented his credentials on Mar. 5.
4. Wymberley DeR. Coerr.
5. Press release 260, dated May 27, 1954; for text, see Department of State Bulletin, May 31, 1954, p. 835.
6. Presumably the Secretary’s press conference held on May 25, 1954; for text of the Secretary’s remarks, see ibid., June 7, 1954, pp. 873–874.
7. Not printed as an attachment; a copy of the memorandum is also in file 714.00/5–2754.
8. Benedict M. English.
9. File of summary of major decisions made by the Secretary of State and the Under Secretaries of State for the period 1954—1955, as retired by the Executive Secretariat, lot 61 D 258.
10. Not printed.
11. The referenced chronology is not printed as an attachment.
12. Reference is to Resolution XCIII, adopted by the Tenth Inter-American Conference; see footnote 2, p. 1093. The memorandum is not printed.
13. Not attached to source text.