Foreign Relations of the United States, 1951, The United Nations; The Western Hemisphere, Volume II

611.14/5–251

Policy Statement Prepared in the Department of State

secret

Washington, May 2, 1951.

Guatemala

a. objectives

The objectives of the U.S. policy with relation to Guatemala are:

1. To bring the Guatemalan Government to recognize the danger involved in the present substantial influence of the Communists in the Guatemalan Government and in other important fields of national life and effectively to oppose it.

2. To bring about the establishment in Guatemala of favorable conditions for the conduct of business by U.S. interests on mutually advantageous terms.

3. To obtain Guatemalan understanding of and support for U.S. policy objectives in the hemisphere and throughout the world, so as to assure every form of cooperation, including when necessary, permission to construct and use air and military bases in Guatemala.

4. To assist Guatemala, when and as appropriate, in her efforts to strengthen and expand her economy and raise the standard of living of her people.

5. To secure access to and to maintain and expand the production and flow of raw materials which are strategically necessary for our defense and that of the hemisphere.

6. To assist in the training and equipping, as a source of supply, of the Guatemalan Armed Forces, so that they will be able to oppose the spread of Communist influence in Guatemala and to assume their proper role in hemispheric defense.²

general background information

For several years there has been developing in Guatemala a situation which the Department has viewed with concern. Excessive nationalism, manifested by a hostile attitude toward private U.S. companies, the proclivity of an enigmatic and crusading President and others for fuzzy economic and political philosophies and a serious penetration by international Communism, which has taken full advantage of the first two factors, have combined to create this situation.

Historically, Guatemalan politics has been turbulent and unstable. Since its independence in 1821, the Republic has almost always been ruled by dictators, some of them notorious for their cruelty and ruthless repression. The social system inherited from the Spaniards has for centuries been nearly feudal. The small propertied class, perhaps 5 percent of the population, has regarded the Indians, who comprise roughly two-thirds of the population, as vastly inferior beings and has treated them accordingly, excluding them from the political life of the nation. In between these extremes is the Ladino class (mixed Indian and European blood) which, unlike the Indian group, is generally landless and comprises the bulk of labor for hire in Guatemala. It is within this group that the revolutionary parties have secured their support and that the Communists, through the labor unions, have been able to make most effective progress.

The wide cleavage in the command of wealth and resources in Guatemala has been reflected in low standards of living and social rights for the masses. Foreign companies, which comprise the largest economic entities, have in the past realistically suited their policies to conditions as they found them, made favorable arrangements with the dictators in power, and thus secured large concessions and special privileges. Accordingly, foreign companies are identified with oppressive governments and the propertied class as exploiters of the people.

In 1944 one of the most ruthless of all Guatemalan dictators³ was overthrown by an uprising supported by all segments of the population. Juan José Arévalo,⁴ a seemingly liberal and progressive ex-teacher, returned from long exile in Argentina and was elected President by an overwhelming popular vote.

Shortly thereafter Guatemala embarked on a social, economic, and political program which in general terms aimed at achieving freedom and democracy for the people, protecting them from the abuses of the old feudal system and improving their standard of living.

This program appeared at its outset to be commendable. By and large, there was freedom of speech and of the press. The first mid-term Congressional elections were conducted fairly, the opposition won seats and there were few political exiles. The Government instituted a system of social security which was efficiently and honestly run and it undertook to provide the people with better educational and health opportunities. In order to further the cause of the workers it enacted labor legislation and sponsored the formation of labor unions.

Soon, however, the Government’s excessively zealous approach resulted in a biased, pro-labor attitude. This, together with increasing nationalism and chauvinism brought it into direct conflict with large domestic and U.S. interests. The conflict was further aggravated as the Communists gained strength within the Government and the unions from which they could exploit the issues. The U.S. firms (against which there already existed a deep-seated mistrust and resentment on the part of many Guatemalans because of their privileges, past policies, size, prosperity, and foreign ownership) became typified as the arch enemies of Guatemala’s “democracy” and the revolution. They were charged with being in conspiracy with the so-called “reactionary” elements to oppose the democratic privileges which Guatemalans were told they were so bitterly winning. The U.S. Government, because of its support of U.S. interests seeking fair treatment under Guatemalan law, and because of the Communist seizure of the situation to air their “imperialistic” charges, also became in the eyes of many Guatemalans a bitter enemy of the Revolution.

Penetration of Guatemala by agents of international Communism has not been confined to the growth of their influence within the labor movement alone. The Government, by ignorance of the danger or by design (and perhaps by a mixture of both) has, as the self-styled model of Latin American liberalism, welcomed within its borders political exiles of leftist inclination, radicals, and avowed Communists. It has, furthermore, given positions of influence within the Government to many people of open Communist sentiment or reputation. While the Arévalo Government cannot be said to be Communist or controlled by Communists, it nonetheless holds a strong sympathy for Communism. The considerable influence of this doctrine on the Government of Guatemala is reflected in its actions and policies and must not be underestimated.

Within Guatemala itself a great many people, not only the wealthy class, became resentful of the Arévalo regime. They feared the excesses of the regime, especially its pro-labor bias and its exploitation by Communism.

They also feared and resented large-scale graft which was previously almost unknown, the growth of a large and expensive bureaucracy, and the Government’s dissipation of the largest budgets in Guatemala’s history on unproductive and wasteful projects. For example, the Government constructed an Olympic stadium, the cost of which approximated one-fourth of an annual budget while the roads of the country were rapidly deteriorating.

Internal dissatisfaction has been so great that the Government itself admits (even with some pride) to having put down twenty-nine separate revolutionary attempts against it.

In the view of many Guatemalans the tragedy of the last few years lies in the fact that the early aims of the Revolution have largely failed of substantial achievement. They attribute this to their leaders’ failure to take advantage of a golden opportunity for constructive work made possible by Guatemala’s most prosperous era and the utilization of power to advance the interests of the revolutionary groups, including personal enrichment of the leaders without regard for the overriding interests of the people. The revolutionary aims were distorted through their confusion with Communist jingoism in the domestic and international fields. Furthermore, the Government resorted to strong-arm police state methods as a means of keeping itself in power after the first two factors had created such revulsion that overt attempts to unseat it were made.

As a result of these developments, our relations with Guatemala have gradually deteriorated over the past several years. We would have been concerned with any tendency toward excessive nationalism in Guatemala as being contrary to the best interests of both that country and the United States, but we are the more deeply concerned because the Communists have been able to distort this spirit to serve their own ends. A low point was reached in March 1950 when the Guatemalan Government requested the recall of our Ambassador, the Honorable Richard C. Patterson, Jr., on the charge—which the Department categorically rejected—that he had intervened in Guatemala’s internal affairs.⁵

Since that time, during which we have been without an Ambassador in Guatemala, national elections have been conducted. Colonel Jacobo Arbenz,⁶ one of the three leaders who engineered the revolution of 1944 and who served throughout most of the intervening years as Minister of National Defense, was elected as the candidate of the Government.⁷ The manner in which the election was conducted permitted no result other than Arbenz’ overwhelming majority. As the Government’s candidate, Arbenz was backed by all those who support the current Government, including the most radical political parties, the Communist-dominated labor unions and the Communists and pro-Communist groups. During the course of the campaign Arbenz, probably as a matter of strategy, appeared to disembarrass himself of the most vociferous avowed Communists who then formed their own political party. (Political organization of an International or Foreign character is outlawed by the Guatemalan Constitution, Article 32). This group was more a front than an actual party and for practical purposes, Arbenz was elected with their backing and is essentially committed to continue the policies of the present regime.

In the campaign and pre-inauguration period, there has been much speculation as to what Arbenz would do once in power. It is recognized that he, unlike President Arévalo, has no deeply engrained political or social convictions. He is considered by most to be an opportunist who will mold his activities in such a way as to best suit and provide for the continuity in power of himself and his adherents. Whether his judgment of the situation will call for a mild or drastic modification of the Arévalo policies, or whether it will call for continuation along present lines cannot now be forecast with accuracy. Arbenz has not definitely committed himeself one way or the other, but the consensus of most observers is that he will steer a more nearly middle course than Arévalo, partly because world conditions and Guatemala’s geographic position would seem to demand such a course, regardless of whether it is to his liking. The fact that he appears to have full control of the Army (resulting from the purge of a pro-Arana⁸ officer group after the latter’s assassination) would seem to give him the means to oppose the Communists if he so desires. The future of U.S.–Guatemala relations, however, depends upon Arbenz’ actions on this question and the extent to which the influence of the United States may properly be brought to bear on the formulation of his decision.

b. policies

1. In order to bring about a recognition of the menace contained in Communist influence and to induce possible counter-measures, we have employed frank and open discussion of the Communist problem with appropriate Guatemalan officials both in Washington and in Guatemala. In these discussions we have endeavored to expose the methods by which the agents of international Communism attempt falsely to establish an identity of purpose with domestic Communists, leftists, radicals, ultra-nationalists, and other dissident groups. It has been our aim to isolate the Communists and to destroy their power by making non-Communists aware of the real danger which they represent to legitimate Guatemalan liberal aspirations, and the harm they do to Guatemala’s relationships with the United States and others of her close neighbors. We have endeavored to maintain an atmosphere conducive to the continuation of these frank exchanges of opinion with Guatemalan officials by displaying a genuinely sympathetic interest in the problems incident to the revolutionary experience of that country. As set forth below, we have utilized certain forms of influence where we could properly do so. However, we have avoided any official acknowledgement of the existence of strain in U.S.-Guatemalan relationships, public expressions of censure for occurrences in Guatemala, and other acts which might have been construed as exerting improper influence or direct or implied intervention such as economic pressure, sanctions, or direct military action. Our attitude of patience in dealing with Guatemala has been, in part, motivated by a recognition of the fact that in an election year it would be politically difficult for the more moderate elements to assert their position in regard to the radicals and the United States. We believed that our objective of exposing the Communists would be abetted by their need to maneuver for power within the heterogeneous revolutionary parties, and to reveal their doctrine in direct appeals to the electorate. From time to time and when deemed appropriate to the circumstance, we have indicated whom we believe to be the most obvious and active agents of international Communism, particularly those who held key or influential positions within the Government. We also have endeavored to convince Guatemalans that the restriction and control of Communists, as a means of self-preservation, is not inconsistent with the ideals, the aims, and the institutions of democracy.

2. In order to secure the establishment of favorable conditions for U.S. enterprise, it is our policy to impress upon Guatemalan officials the desirability of employing, to mutual advantage, private U.S. capital for the development of their resources. We have endeavored to secure conditions which would not only lead to expanded investment by existing firms, but which would also prove attractive to new capital. We have in this connection counseled the need for impartial access to the courts, equitable and fair administration of Guatemalan laws as they concern foreign individuals and interests, equitable taxation laws, realistic attitudes toward the employment of foreign officials and technicians, provision for the repatriation of a fair amount of earnings, impartial administration and interpretation of labor laws, and, in general, practical and realistic basic laws to govern the exploitation of natural resources which, while adequately protecting the national interest, would permit foreign companies to undertake long-term investment under satisfactory conditions and proper safeguards. We have endeavored to soften and to refute the erroneous and harmful doctrine of excessive economic nationalism and misguided patriotism. At the same time, we have been diligent in endeavoring to secure from U.S. interests an appreciation and understanding of the revolutionary era through which Guatemala is passing as a reflection, in fact, of the wave of liberalism which has followed the Second World War and as a reaction against the continued existence there of an outmoded semi-feudalistic economic, social, and political system. We have therefore counseled their exercise of patience and flexibility in meeting day-to-day problems in the face of the obstructionist attitude of the Government, and the need for a review and modification of their general policy and modus operandi to meet the new and changing requirements of the day. This has been considered by the Department to be a prime necessity for the continuation, in an atmosphere of good will, of their operation in the territory of another sovereign country and for reducing the possibility of expropriation. We have counseled the necessity for an absolutely apolitical attitude on the part of the companies and their officials and, at the same time, the need for good public relations programs as a means of convincing the Guatemalan people and Government of the many benefits which their operations provide.

As a corollary to these efforts it has also been necessary to employ our influence for the protection of U.S. interests in the face of excesses on the part of the Government and the labor unions.

We endeavored to encourage Guatemala to accede to the General Agreement on Tariffs and Trade (GATT)⁹ in order to create a more favorable atmosphere for United States enterprise than exists under the present bilateral trade agreement.¹⁰ In this we were unsuccessful since Guatemala decided at the last minute not to participate in the Torquay tariff negotiations and has evidenced no interest in the GATT since then.

One of the avowed aims of President Arévalo and the leaders of the 1944 revolution was the fostering of a labor movement which, during President Ubico’s regime (1931–44), was suppressed. A Labor Code was drawn up and labor unions were formed. The principal targets for the demands of these labor unions were U.S.-owned companies, which were the largest and the most important in Guatemala’s economy. Singled out particularly were the U.S.-owned United Fruit Company and the International Railways of Central America (IRCA), which the former is believed, for all practical purposes, to control. Pan American Airways, the Empresa Eléctrica (American and Foreign Power Co.), and several U.S. petroleum marketing companies; experienced similar but less important difficulties.

Labor troubles experienced by U.S. firms—principally the United Fruit Company and the IRCA, were of two kinds:

a. A direct controversy between the Government and the United Fruit Company over a provision of the Labor Code classifying agricultural enterprises employing over 500 persons as industries for purpose of the application of certain provisions of the Code which the Company alleged were discriminatory against it. It has been now fairly well established that the United Fruit Company is not the only agricultural enterprise employing over 500 persons. It is clear, however, that in effect this provision is applied only against the Fruit Company; furthermore, legislative debate at the time the Code was adopted indicates that the disputed provision was specifically aimed at the Fruit Company and at no other enterprise.

b. Direct controversy between the labor unions and U.S. firms over the problem of wages and conditions of work. The most important disputes were of this kind. They were complicated by the fact that the Government, through its administrative officials and through the Courts, demonstrated a biased attitude and championed labor’s position to the extent of ignoring the provisions of the Labor Code and of the law. Acts of the Government in these and in other disputes involving U.S. companies included deliberate agitation against the Fruit Company, attempts to influence the Courts, threats—direct and implied—of expropriation, and a general attitude of disregard for management’s legitimate rights in equity and in law.

It has been our policy with regard to Labor Code discrimination, to make representations to Guatemalan officials, both in Washington and in the field, with a view to impressing upon them the existence of discrimination and the need to eliminate it. We have endeavored not only to explain the harmful effects which this discrimination would have upon the expansion of existing U.S. interests in Guatemala, but also on the attraction of capital for new enterprises.

As regards labor conflicts, it has been our policy to make informal and formal representations with a view to preventing their spread and securing for U.S. firms what we regard as just and equitable treatment under the law. One of our principal objectives was to avoid the development of so serious a situation that we would be asked by the U.S. firms involved to take up their cases as a direct denial of justice.

3. It is the policy of the U.S. to cultivate the respect and friendship of Guatemala so as to insure her support for our policies in the Hemisphere and throughout the world. We endeavor to preserve an atmosphere of equality and correctness in offical dealings with Guatemala, avoiding infringement of the sovereignty of that nation. We also endeavor to inculcate in Americans and American interests engaged in travel or business there an appreciation of the need for similar respect.

Effective support for U.S. policy, however, demands that the Guatemalan Government and people should have a full understanding of that policy, and a realization of the manner in which their own direct interests are best served by supporting it. For this reason we consult with Guatemalan officials when feasible and desirable with respect to the formulation and implementation of policy, especially when their interests might be immediately affected by it, and maintain in Guatemala information and cultural programs aimed at cultivating among the people a knowledge of the U.S. as well as an understanding of our policies and activities on the domestic and international scenes. The Instituto Guatemalteco-Americano is supported jointly by the U.S. and by Guatemala as a cultural center. Its activities include courses in English and Spanish, a lending library of books and records, traveling exhibits, special lectures, motion picture programs, and frequent social functions. Its operations are principally aimed at the middle classes and it is most successful among Government civil servants and commercial clerks.

The USIE program seeks to explain and give prominent publicity to U.S. policy and culture through the media of the press, radio, motion picture, visual exhibits, and by cooperation with Guatemalan officials and teachers in the educational field. This program has a great mass appeal, particularly through its public motion picture programs.

It is hoped by these means to emphasize the identity of U.S.-Guatemalan interests and provide a firm basis for Guatemalan friendship and cooperation in peacetime as well as their cooperation in the event of war, including the use of Guatemalan territory if needed by our armed forces for the common defense of the Hemisphere. Effective cooperation in the extreme test of war must not be cooperation based exclusively upon necessity growing out of geographic location and economic dependence upon the United States. It must grow out of a sincere friendship and willing acceptance of the union of our interests which these programs are aimed at cultivating.

As a means of preserving the peace and of achieving solidarity within the Hemisphere, it has been our policy to encourage Guatemala to participate fully in the OAS and in the United Nations, and to respect her commitments incurred by her membership in these organizations. We have made every effort to keep ourselves fully and correctly informed with respect to any developments or movements likely to disturb the peace of the Hemisphere. We have exchanged information with interested states when it appeared to be advisable to do so and we have, by informal representation, counseled restraint and endeavored to discourage the use of territory and facilities for illegal acts against friendly states. Upon the commission of acts of intervention or the development of situations of extreme tension we have encouraged and fully supported investigational action by the OAS. In general, and on appropriate occasions, we have by public statement counseled that democracy must be achieved through the process of internal growth and development and that it cannot be imposed by outside force.

4. Consistent with the general policy of the United States, to increase its own strength by enhancing the strength of its friendly neighbors, we have in Guatemala, as in other countries, engaged in a program of cooperative projects involving technical assistance for economic development. Through the Office of Foreign Agricultural Relations we have, in cooperation with Guatemala, maintained the Instituto Agropecuario Nacional which engages in agricultural research, experimentation, and extension to a limited degree. The Institute of Inter-American Affairs¹¹ has supplied project funds and technical direction for the construction of the Roosevelt Hospital near Guatemala City and for the construction of health centers, clinics, drinking water and sewage systems. The United States has contributed funds for construction of the Inter-American Highway in Guatemala, and the Bureau of Public Roads maintains a resident engineer and staff there for the technical direction of this project. Until recently we have had an IIAA education mission in Guatemala which worked jointly with the Ministry of Education and directly in the public school system. The mission was forced to withdraw when the Guatemalan Government allowed the contract to expire allegedly because of lack of funds but actually due to pressure from anti-U.S. sources. Also, we support a staff for rubber experimentation under the Department of Agriculture, a project in Guatemala in connection with the Inter-American Geodetic Survey, military missions attached to the Guatemalan Army and Air Force, a cultural institute, training grants for study in the United States, and from time to time, the assignment of various technicians in such fields as vital statistics, social security actuarial problems, banking and financial legislation, census problems, etc. During 1949 the total U.S. contribution for this type of assistance, exclusive of $1,518,000 contributed by the Bureau of Public Roads to the Inter-American Highway, was approximately $589,000. This figure represents the cost of going projects in Guatemala and does not take into account various experts and technicians who were sent there for brief missions.

In view of the growing strain in U.S.-Guatemalan relationships, it became a matter for decision in the Department whether we would maintain or discontinue these programs, or expand them as has been recently done in other areas, particularly under the Point IV program. Recognizing long-term benefits to be expected from these programs, and the fact that the political difficulties in Guatemala may well prove to be transitory, it has been decided neither to discontinue nor to expand or otherwise enlarge upon the level of U.S. cooperative activities there. Consistent with this decision our Embassy has been instructed specifically not to negotiate a general Point IV Umbrella Agreement¹² with Guatemala. It has been our view that such expansion under the Point IV program could not be justified in a country whose Government has demonstrated itself to be greatly uncooperative in return, which has failed to meet squarely the important issue of Communist infiltration at a time when U.S. blood and treasure are being expended in defense against Communist aggression, and which has in other respects demonstrated itself to be hostile to local and general U.S. interests.

Should developments in the next few months fail to show convincingly that the new administration in Guatemala is prepared forcefully to meet the Communist issue, to treat legitimate U.S. interests in a manner fair to both parties, and to cooperate with the United States against a common enemy in the international field, we should be prepared to consider the withdrawal from Guatemala of the present cooperative programs. It should then become a matter for final determination whether or not the long-term U.S. interests would best be served by continuation of the programs or whether the possible coercive effect of such withdrawal, in conjunction with the application of other policies appropriate to the circumstance, would beneficially affect our immediate objective to eliminate Communist influence there. If, however, the new administration demonstrates a positive desire to cooperate with the U.S. in the defense of free-world principles, and if this desire is backed up by specific action to contain Communist elements and respect U.S. interests, we should then consider bringing Guatemala within the full scope of the Point IV program.

Notwithstanding this policy, however, we should maintain flexibility and be prepared to undertake or enlarge upon any form of cooperative program which Guatemala may request and which gives promise of resulting in immediate or direct benefit to the United States; such as, for example, a program which would develop or increase the supply of strategic materials.

Consistent with the above-mentioned decisions, it is our policy to discourage the Export-Import Bank and other official agencies from making developmental loans to Guatemala.¹³ As with cooperative projects, flexibility should be maintained, so that loans might be encouraged when they directly benefit the United States. In the implementation of this policy we have informally advised the Eximbank that the Department would prefer its deferring action on the formal application now pending for a loan for electric power development. Even though a U.S. company was involved in this case, it was considered that the Guatemalan Government would derive important political benefits if such a loan were made. Alternatively, in the matter of a projected loan for construction of a road to a lead and zinc mine operated by a U.S. firm, we have considered that although the Guatemalan Government would benefit, a controlling factor in any final decision in addition to normal economic criteria, should be the strategic interest of the United States in gaining access to increased supplies of these critical minerals which are in short supply. Consideration by U.S. agencies of any loan requests arising from the recent IBRD Economic Surveys¹⁴ will be governed by this policy. As in the case of the Point IV program, should the Guatemalan Government in future demonstrate a sincere desire backed up by action to cooperate fully with the U.S. we should then give consideration to a revision of this policy.

5. Guatemala is an actual or potential source of supply for the following strategic materials:

Abacà¹⁵

Lead

Zinc

Essential oils

Rubber

Cinchona bark

Chrome

Mahogany and other hard wood

Loofa sponges

Derris root,¹⁶ and possibly

Petroleum

It is probable that other minerals and agricultural products of strategic value could, like some of the above, be exploited under the pressure of wartime conditions and necessity.

The RFC is now financing, under contract with the United Fruit Company, a 5,000 acre abaca plantation and decorticating mill in Guatemala. This project may soon be expanded to 7,500 acres and is the best producer in Central America. The Department of Agriculture maintains a staff in Guatemala to conduct investigations for natural rubber development, particularly in the field of hybridization of rubber trees to secure disease-resistant strains. The aim is to meet Guatemala’s need for natural rubber and to provide the United States with an additional source of supply in this Hemisphere. A U.S. project operated during the last war by the FEA and later by the RFC, in connection with a cinchona plantation in Guatemala, was abandoned some years ago as being commercially unfeasible in peacetime. Provision was made at that time, however, to prevent the plantation’s coming into the hands of the Netherlands monopoly.

It has been our policy to cooperate fully with U.S. agencies engaged in programs for the production of these strategic materials. Also, our efforts to bring about favorable investment conditions in Guatemala have been motivated in part by the need for attracting U.S. firms to invest in the development of strategic materials.

The existence of commercially exploitable deposits of petroleum in Guatemala has never been conclusively established by successful drilling. Surface geological evidences are, however, favorable and several large U.S. firms have undertaken rather extensive geophysical exploration work in the post-war years. Their findings were such as to warrant their seeking exploitation contracts involving the firm commitment to drill exploratory wells in the Petén province. This involved a decision to risk a relatively large investment, since the Petén is inaccessible for all practical purposes except by air. Negotiations which would have led to the signing of such contracts, under the Petroleum Law promulgated in January 1948, came near to successful conclusion; they were halted, however, when a new ultra-nationalistic petroleum law was promulgated early in 1949. This law contained such restrictive provisions that none of the companies could foresee the possibility of advantageous operations and they withdrew immediately. Angel Hurtado Mendoza, who was Petroleum Advisor to the Guatemalan Government during the critical 1948–49 period and who for practical purposes is responsible for the present Petroleum Law, is an Argentine national who is known to be anti-American and almost certainly is pro-Communist. The Director General of Mining, Jose Mendez Zebadua, and his Associate Chief, Humberto Veliz Gonzalez, are both pro-Communists. They also occupy, respectively, the positions of Director and Sub-Director of the National Petroleum Institute.

Assuming that it is in the interest of the United States and of the Hemisphere to develop all possible sources of petroleum in readily accessible areas, efforts should be made to seek the modification of the restrictive attitude which Guatemala has thus far demonstrated with respect to proving its petroleum potential, and, if such exists, permitting its exploitation. It is therefore the policy of this Government to seek the modification of these restrictions in a manner which will permit advantageous exploration for and exploitation of petroleum in Guatemala by foreign capital, including all legitimate safeguards for the national interests of Guatemala.

Notwithstanding the present policy of withholding cooperative assistance from the Government of Guatemala, it is to be repeated that we should favor loans to either U.S. or Guatemalan companies which will have the direct effect of increasing the source of supply of strategic materials.

6. The key to power in Guatemala, as elsewhere in the volatile political scene of Latin America, rests in control of the Army. So long as the Army remains united, that government and factions which it supports can remain in or achieve political power. Armies in Latin America are traditionally conservative and that of Guatemala, while more liberal, does not deviate sharply from the general character. It has supported the Arévalo regime, in spite of its Communist influence, in an effort to establish and preserve a tradition of constitutionality and legality. There have, however, been signs of dissatisfaction on the part of the Army with the policies of the civilian government and no definite signs of the Army’s having been infiltrated with Communist doctrine. So long as the present situation prevails in Guatemala, U.S. policy does not contemplate the extension of any form of military cooperation or aid which would permit the substantial expansion of the Guatemalan Armed Forces beyond their present levels of strength, except for the maintenance, for the time being, of our military (Air and Ground) missions. This does not mean that an inflexible embargo of arms shipments to Guatemala is to be observed.^* On the contrary, none should be imposed so long as it may be considered that the Guatemalan Army represents the most effective bulwark in that country against the spread of Communist influence. This policy has a two-fold aim:

a. To permit the maintenance of the Guatemalan Army at a level of strength which would allow it, if united, to oppose effectively any conceivable armed threat which Communist elements might be able to make against it.

b. To induce the Army, by the persuasive effect of restraints on the shipment of arms to Guatemala, to oppose the Communist movement there.

It is acknowledged that this policy could result in a military force in Guatemala of an inferior potential fully to assume its assigned role in hemispheric defense. However, the role of Guatemala in relation to the overall plan of hemispheric defense would be relatively small, and it is therefore considered not to be so vital as the immediate and local problem of opposing the Communist threat. Furthermore, the effectiveness with which an army of any strength could assume such a role would depend upon the attitude of the Guatemalan Government and people toward the Communist issue.

As soon as there may be a substantial and favorable change in the situation in Guatemala on the issues in question with this country, and subject to the determination of Guatemalan eligibility, the U.S., acting through its Military and Air Missions, through the Mutual Defense Assistance Act,¹⁷ and through any other form of military grant or aid programs which may be established, should extend to Guatemala assistance and cooperation consistent with enabling it to meet in full its role in hemispheric defense, and if feasible, to contribute military forces for the fight against aggression overseas.

c. relations with other states

During the Arévalo regime Guatemalan relationships with a number of nations, particularly in the Caribbean areas, became strained. Today, Guatemala has either severed relationships with or refuses to recognize de jure the governments of the Dominican Republic, Nicaragua, Venezuela, and Peru. Furthermore, relationships have at one time or another been strained between Guatemala and Costa Rica, El Salvador, and Honduras.

Responsibility for this situation results largely from the revolutionary zeal of the present Guatemalan administration which considers itself to be a model of liberalism and democracy. It, therefore, tends to deplore and in some cases actively to oppose, openly or covertly, those governments which it considers to be “imperialistic”, “reactionary”, or “dictatorial”. This attitude has found expression in Guatemalan support of the Caribbean Legion¹⁸ and other dissident elements plotting against the alleged oppressors in other countries, the severance of diplomatic relationships, and the harboring of political exiles, usually of the leftist stripe and including avowed Communists. During the past year and a half there has been vitrually no evidence that Guatemala has continued actively to support the Caribbean Legion, apparently as a result of the application of the Rio Treaty¹⁹ machinery by the OAS. In its report²⁰ on the attempted invasion of the Dominican Republic at Luperon in June 1949, the OAS Investigatory Committee, appointed under the Rio Treaty procedures, made clear to some extent the degree of Guatemalan connivance and direct participation in this and in earlier incidents, including the blessing of officials at the highest level and the use of elements of the Guatemalan Armed Forces.²¹

The severance of relationships between Guatemala and the Dominican Republic, Nicaragua, Venezuela and Peru has originated in ideological differences fanned by Guatemala’s crusading “sense of mission”. In the case of Nicaragua, the situation has been aggravated by the long-standing contest between Somoza²² and Arévalo, and the deep personal animosity and odium for each other which has resulted therefrom.

As a result of its tolerance and support of interventionist activities and its pious attitude, Guatemala stands today virtually without a single sincere and undisturbed friend among her immediate neighbors of comparable size, with the exception of Cuba. In the past year or two El Salvador has become fearful of the penetration of Communist influence from Guatemala. As a measure of self protection, El Salvador has recently asked this Government for a full exchange of information on Communism and Communist activities within her borders. Although relations with Honduras were temporarily improved at the outset of the Galvez²³ regime, that country has become less confident as a result of recent developments in Guatemala and the fear that leftist agitators, operating from Guatemala, will penetrate into Honduras and create dissension there.

Guatemala’s relationships with Mexico in this period have been cordially correct. Guatemala, however, maintains close contact with and is greatly influenced by the more radical elements in Mexico, inside and outside of government, particularly and most importantly Lombardo Toledano and the CTAL (Confederacion de Trabajadores de America Latina). At the present time Mexican leftists and radicals appear to be effectively represented in Guatemala by Mexican Ambassador Luis Rodriguez, an associate of ex-President Cardenas²⁴ who has closely identified himself with the activities of admitted Communist groups and individuals in Guatemala.

With respect to Guatemala’s long standing controversy with Great Britain over British Honduras (Belize), it has been our policy to encourage a peaceful solution by bilateral negotiation of the disputant parties or by judicial procedures.²⁵ Guatemala has utilized this issue as a means of diverting attention, when convenient, from domestic problems and has also rallied to her cause, with some success, the moral support of some of the other American Republics. Her championing of this issue has placed Guatemala in the forefront of the anti-colonialism movement in the Hemisphere, which has included tacit support for the Puerto Rican independence movement.

Directly as a result of Guatemalan maneuvering with respect to Belize, complete Inter-American ratification of the Rio Treaty has been jeopardized. In presenting its instrument of ratification of this Treaty, Guatemala filed a reservation, the acceptance of which, without satisfactory modification by Guatemala, has been considered to be unacceptable by the United States and certain other American states which have thus far responded. As written, the reservation preserves for Guatemala the right to endeavor to “solve” the Belize controversy by whatever means she may see fit, including, presumably, the use of force, and to invoke the Treaty at any time on this issue. Accordingly other parties to the Rio Treaty might be called upon to support Guatemala’s actions on this issue with resultant involvement with Great Britain and danger to the peace of the Hemisphere.

Guatemala recognizes but does not exchange diplomatic representatives with the Soviet Union. The contact, if any, of the Guatemalan Government with the Soviet Union, and of Guatemalan Communists with the Soviet Union, is therefore not direct but devious; probably through the Soviet Embassy in Mexico or other channels.

Guatemala recognizes the Spanish Republican Government in exile and has maintained an attitude toward Franco which parallels her attitude toward other countries she considers to be dictatorial. Guatemala opposed the UN resolution to return ambassadors to Spain.

The principle of Central American Union receives the oral support of Guatemalan officials and is written into the Guatemalan constitution as an objective. Pursuant to this objective, Guatemala concedes citizenship to persons who are citizens of other Central American countries and has certain preferential tariff arrangements with them. It has been the policy of the United States neither to support nor oppose efforts to bring about a Central American Union. We recognize that, while it might contribute to economic and political stability in the area, it can come about only upon the initiative and by the agreement of the interested states.

d. policy evaluation

1. In general there is little evidence that the Guatemalan Government has recognized the danger which exists in Communist penetration and there has been little definitive action or demonstration of desire by it to contain Communism. It has, nonetheless, taken certain steps which either reflect uneasiness on the Communist issue or a recognition of the need, on occasion, to appease domestic and international public opinion. If these steps did in fact signify uneasiness, they possibly did not receive greater expression because of election necessities. Outside the Government definite and growing elements of the population have become increasingly preoccupied in these matters, and reflect their concern in stronger opposition to the Government.

Evidences of Government uneasiness have been limited to the following acts:

(a) Dismissal of the editor of the official Guatemalan Government newspaper and of the chief of propaganda of the government radio station when they exposed themselves by association with the Communist newspaper Octubre.

(b) Dismissal of a minor Foreign Office official after we pointed out that he had supported Communist opposition to the Government-sponsored ratification of the Rio Treaty.

(c) A short-period closing of the Communist newspaper Octubre and the “labor” school “Jacobo Sánchez.” This was apparently a trial balloon, which was hastily hauled down by dismissal of the Minister responsible, Colonel Elfego H. Monzón,²⁶ who, seemingly sincere, was sacrificed to political exigencies.

Public preoccupation was most strikingly expressed in the bloody “minute of silence” demonstrations in July 1950. These, carried out on the pretext of commemorating Arana’s assassination, were really expressions of popular opposition to Government policies. This opposition was also expressed to some extent by the largest and most important labor union, the SAMF, when it took steps several months ago to divest itself of Communist leadership—notably Manuel Pinto Usaga—and withdrew from the Communist-led FSG labor federation, which is affiliated with the WFTU.

These limited evidences, however, do not constitute effective acknowledgment of the threat of Communism or action to contain it. The Communist newspaper Octubre is still openly published and distributed; the Communist “labor” school “Jacobo Sánchez” is still functioning; the two labor federations, CTG and FSG, as well as the National Committee for Syndical Unity (CNUS) are still controlled by Communists; Guatemala continues to welcome and harbor foreign Communists and known Communists remain in Government positions; for example, the head of the Secretariat of the Presidency, Hugo Salguero,²⁷ and the head of the President’s Publicity Office, Humberto Alvarado. Furthermore, ex-President Arévalo recently appointed two persons, one an avowed Communist and the other a suspected Communist, as Government directors of the semi-autonomous Social Security Institute; the Government’s radio station and official newspaper continue to reflect the Pravda-line; Government officials continue to associate themselves with such public demonstrations as the Communist-organized celebration of the Russian Revolution, beneath blown-up portraits of Lenin and Stalin and huge red banners prominently displaying the hammer and sickle; and, in spite of the constitutional provision for it, no action has been taken to disband the recently-formed Communist Party.

The ground work, however, has at least been laid for recognizing and eliminating the Communists since they have come into the open to some degree, and their methods of exploiting nationalistic causes have become evident. How much of this is due to our policies to isolate and expose the Communists, and how much is due to circumstances beyond our control cannot clearly be evaluated. It would be an error to assume that our policies have been more important than (or even as important as) other factors which have influenced this situation; for example, the international situation resulting from the Communist invasion of South Korea,²⁸ election-year politics, the effect within Guatemala of the increasingly bad press in the United States, etc.

This does not mean, however, that our policies were not correct. They were appropriate to the conditions prevailing in the last year and, furthermore, they properly recognized the need to encourage and permit Guatemala to work out her own problem so long as this did not pose an immediate or direct threat to the security of the United States or neighboring countries. Nothing would have harmed the overall U.S. interests more than the premature adoption of an overly aggressive policy. It would have furnished the Communist world with a valuable propaganda weapon, and would have done great harm to the Inter-American System, reviving mistrust of the United States and a fear of “dollar” and “big stick” diplomacy. In the next few months, however, should there be no concrete actions and evidence to substantiate the hope that the new administration will take steps to contain Communist influence, our policies should be reevaluated with a view to the adoption of a more positive approach.

2. We have not been successful in bringing about in Guatemala conditions which are favorable for the investment of U.S. capital. In spite of Guatemalan protestations to the contrary, the fact remains that their actions in regard to foreign capital do not bear out their words. There still remains an attitude of distrust on the part of U.S. interests already there, and a lack of interest in Guatemala by potential new investors. Examples are the United Fruit Company’s abandonment of a proposed ten-million-dollar expansion program, and the withdrawal from Guatemala of all U.S. oil exploration companies.

So long as the Government of Guatemala remains influenced to a large degree by Communists and ultra-nationalists, favorable conditions for U.S. business will be virtually impossible of attainment. Our hope of long-run success lies in preventing a complete evacuation of U.S. interests by proper application of protection policies, and of inducing U.S. firms, by their own policies, to discredit the extremists and overcome the popular mistrust of their activities.

With respect to the protection of U.S. interests, it is believed that our representations have materially contributed to curbing the logical end of Communist and ultra-nationalist influence, i.e. the expropriation of U.S. interests or the carrying of unfair practices to such extremes as would have further impaired our relations with Guatemala by presenting this Government with a case of a denial of justice.

Our corollary policy of encouraging U.S. interests to adapt their operations to conditions in Guatemala, as a practical necessity for staying in business there, may have contributed to their proven willingness to meet the Guatemalan labor unions and the Government more than half way in seeking solutions to their problems. As an example of this willingness, the United Fruit Company has informed us that it plans to open negotiations with the new Government for a revision of their contract on terms which should be far more attractive to Guatemala. It also plans to initiate an extensive and modernly conceived public relations program.

3. Although it is often unenthusiastic, Guatemala generally supports the U.S. position in the UN. Also, the President and the Foreign Minister²⁹ have given public assurance that Guatemala would be on the side of the United States in the event of war. However, Guatemala does not have a genuine understanding of U.S. policy and its statements and acts of support do hot stem from an ideological community of interest. They stem rather, in the most practical sense, from a recognition of Guatemala’s geographic, economic, and power position in relation to the United States.

We believe, therefore, that in the event of war Guatemala would feel compelled to offer to the United States such use of her territory, including bases, as may be necessary in the free world defense. Should the influence of Communism proceed unchecked, however, it is not inconceivable that Guatemala might assert her sovereignty to preserve a neutral position. Such a position could well serve Communist ends especially if it provoked U.S. impatience and intervention.

Our programs to promote an appreciation of American life and an understanding of our policies among the people of Guatemala are popular and should have long-term beneficial results. However, there is little evidence that they have had much effect on Government policy and their good effects on the populace are generally limited and countered by anti-U.S. Communist propaganda.

On the positive side, Guatemala maintains full participation in the UN, in general association with the free world position, and she is an active member of the OAS. With respect to the OAS, however, Guatemala is the only state which, because of her reservation, has not completed ratification of the Rio Treaty. Guatemala remains therefore as the only Republic in the Hemisphere which has not fully entered with the United States in this collective defense and regional arrangement.

Our policies, aimed at curbing unrest in the Caribbean, have been successful with respect to Guatemala. As a result of the OAS investigation, and the consequent action of the Organ of Consultation, Guatemala appears to have desisted for all practical purposes from supporting the Caribbean Legion or ancillary revolutionary and interventionist activities. The Legion has virtually ceased to exist as a force in being for lack of support by Guatemala and other countries, although members of the Legion continue to find haven in Guatemala and are continuing their scheming and propaganda against so-called tropical dictatorships.

4. Except in the long run, results obtainable from cooperative programs aimed at raising the standards of living, of health, education, etc., cannot accurately be evaluated. The most which can now be said is that such programs seem to be performing measurable good work. Likewise it is too early to assess the impact, if any, of our policy of not expanding cooperation under the Point IV program for the time being. In this connection it is worth noting that the effect which this policy might have on Guatemala is countered to some extent by her ability to obtain technical assistance from international organizations which are largely financed by the United States. The policy itself, however, is considered to be correct for the circumstances prevailing, so long as the recommended degree of flexibility is maintained, and so long as we continue efforts to reach the people through other available means.

5. Because of natural limitations, there has been little of a positive nature which our policies could contribute toward improving Guatemala as a source of supply of strategic materials. We should, however, press with greater vigor our desire to have Guatemala establish conditions which would be conducive to exploration and possible subsequent exploitation of petroleum and strategic minerals. Our success in this endeavor again will be largely determined by the extent to which Communists and ultra-nationalists are able to continue their influence within the Government.

6. Partly as a result of U.S. policy and legislative restrictions and partly as a result of the actual non-availability of materiel in the United States, the Guatemalan Army has not been able to achieve the strength in arms which it currently desires. It is, nonetheless, sufficiently well armed and equipped at this time to oppose effectively any threat which Communist-led elements in Guatemala could pit against it. There is reason, furthermore, to believe that the Guatemalan Army, more than civilian elements of the Government, is aware of the threat implied in Communist penetration, and of U.S. preoccupation with this threat.

To date, the ability of Guatemala to play its part in hemispheric defense has not been materially altered by this policy.

2. For documentation concerning United States policy with respect to hemisphere defense and related matters, see pp. 985 ff.
3. Reference is to Jorge Ubicoy Castañeda, who held power in Guatemala from 1931 to 1944.
4. Juan José Arévalo Bermejo.
5. For documentation on the efforts of the Guatemalan Government to have Ambassador Patterson recalled, see Foreign Relations, 1950, vol. ii, pp. 869–877. Ambassador Patterson’s mission was terminated on April 24, 1951, when his successor, Ambassador Rudolf E. Schoenfeld, presented his credentials. Ambassador Schoenfeld had been appointed on March 13, 1951, but he did not arrive in Guatemala City until April 14.
6. Jacobo Arbenz Guzmàn.
7. President Arbenz had been elected in mid-November 1950, and he assumed office on March 15, 1951.
8. Reference is to the followers of Col. Francisco Javier Arana, Chief of the Guatemalan Armed Forces, who was assassinated on July 18, 1949.
9. For text, see Department of State Treaties and Other International Acts Series (TIAS) No. 1700, or 61 Stat. (pts. 5–6).
10. Apparent reference to the Reciprocal Trade Agreement signed at Guatemala, April 24, 1936, which entered into force June 15, 1936. For text, see Department of State Executive Agreement Series (EAS) No. 92, or 49 Stat. (pt. 2) 3989.
11. The Institute of Inter-American Affairs (IIAA) was established in 1942 and became a United States Government corporation in 1947. Its purpose was to aid governments in the Western Hemisphere by promoting technical programs and projects for health, sanitation, and food supply; as of mid-1950 it operated in conjunction with the Technical Cooperation Administration (TCA) in Latin America. For background on the IIAA, see the statement made by Assistant Secretary of State for Economic Affairs Willard L. Thorp to the Senate Foreign Relations Committee on June 10, 1949, printed in the Department of State Bulletin, June 19, 1949, pp. 795–797. For information on the activities of the IIAA and its relationship with TCA in 1950, see the editorial note in Foreign Relations, 1950, vol. ii. p. 679. For documentation on the IIAA for 1951, see pp. 1038 ff.
12. For documentation concerning United States policy with respect to the negotiation of general Point IV agreements, see Foreign Relations, 1950, vol. i, pp. 846 ff.
13. No loans were approved for Guatemala by the Export-Import Bank or the International Bank for Reconstruction and Development during 1951. The Department of State interposed no objection to a request made by the Bank of Guatemala for a short-term loan of $5,000,000 from the Federal Reserve Bank of New York, which was to be guaranteed with gold on deposit with the Federal Reserve Bank (814.10/10–251).
14. The IBRD Economic Survey Mission, under Dr. George E. Britnell, had visited Guatemala during the summer of 1950 in order to conduct studies of the country’s economy. For the mission’s report, see International Bank for Reconstruction and Development, The Economic Development of Guatemala: Report of a Mission Sponsored by the International Bank for Reconstruction and Development in Collaboration With the Government of Guatemala (Washington, 1951).
15. A plant yielding fiber for the manufacture of manila hemp.
16. A root used in the manufacture of certain insecticides and fish poisons.
17. Until Guatemalan ratification of the Rio Treaty is complete she is ineligible to purchase munitions from official sources although she may purchase from commercial sources subject to export control. [Footnote in the source text.]
17. For text of the Mutual Defense Assistance Act (Public Law 329), approved October 6, 1949, see 63 Stat. 714.
18. A group of political exiles and military men from countries in the Caribbean region with the alleged aim of overthrowing certain dictatorial regimes in the area.
19. For text of the Inter-American Treaty of Reciprocal Assistance (Rio Treaty), opened for signature at Rio de Janeiro, September 2, 1947, and entered into force for the United States, December 3, 1948, see TIAS No. 1838, or 62 Stat. (pt. 2) 1681.
20. For text, see Organization of American States, Investigating Committee of the Organ of Consultation, Results of Its Labors, Document C–I–67–E, March 13, 1950 (Washington, 1950).
21. For previous documentation on the attitude on the United States toward the investigation conducted by the Organization of American States, see Foreign Relations, 1950, vol. ii, pp. 641 ff.
22. Anastasìo Somoza Garcìa, President of Nicaragua.
23. Juan Manuel Galvez, President of Honduras.
24. Làzaro Càrdenas, President of Mexico from 1934 to 1940.
25. For previous documentation on the policy of the United States toward the Guatemala-United Kingdom controversy with respect to Belize, see Foreign Relations, 1948, vol. ix, pp. 81 ff.
26. Col. Monzón had been Minister of Interior.
27. Alvaro Hugo Salguero.
28. For documentation on this subject, see Foreign Relations, 1950, vol. vii, pp. 125 ff.
29. Manuel Galich.