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

Guatemala Embassy files, lot 60 F 65, “350—Guatemala”

Minutes of a Meeting, Held at the Department of State, August 8, 1954¹

secret

August 8, 1954

Subject:

• Guatemala

• Participants: Mr. Henry F. Holland
• Ambassador John E. Peurifoy²
• Mr. Raymond G. Leddy
• Mr. Jack D. Neal
• Mr. John W. Fisher

Political Situation

Ambassador Peurifoy reported that the political situation was encouraging since the August 2 rebellion of Army elements³ had been put down. Castillo Armas had tremendous popular support, and gave signs that he intended to use his power to consolidate his control firmly.

Castillo Armas proposed soon to call elections for delegates to draft a Constitution and elect a president for a specified period. This would terminate the Junta, and would be preferable to Cordoba Cerna’s idea of submitting a “statute” to referendum, which would provide for continuation of Castillo Armas in power. Castillo’s popularity right now was so great that no opposition candidate would have a chance, if one could be found. Mr. Leddy expressed concern over risking elections, pointed out the danger of adverse results, citing the case of Venezuela.⁴ Mr. Holland felt the situations were dissimilar in that view of Castillo Armas enjoyed great popularity at this moment, and his potential opposition had not had three years to prepare, as had been the case in Venezuela.

Cordoba Cerna appeared to be the best man in sight as advisor to Castillo Armas, and perhaps eventually president. He would return to Guatemala next week, after Ambassador Peurifoy had had an opportunity to confer with him. Ambassador Peurifoy would return shortly afterwards.

Labor

Principal problem is lack of leaders. Solutions suggested: creation of a labor leader training institute in Guatemala, which has been proposed by ORIT leaders. Guatemalan leaders may also be trained in the United States, where they can observe highly developed trade union practices, and in Puerto Rico, where they can be seen adapted to more primitive conditions.

A further problem is that of employers attitudes. The IRCA is reported to have begun to institute a retaliatory policy against employees who have been strong union men, as distinguished from Communists or sympathizers. This must be stopped, as it will put United States concerns in the van in a turn-back-the-clock operation. Montgomery⁵ and others should be approached on this problem.

The Guatemalan labor code will have to be overhauled or replaced. Vallon⁶ will be able to make recommendations on a United States or other technician who can help with this.

A fourth problem is that of the affiliations of such Guatemalan labor organizations as develop there. Our position is that we support free labor organization at the local level, as well as free association with international groups except Communist controlled or anti-United States ones. We, therefore, look with approval on affiliation with ORIT, but that is Guatemala’s business.

Asylees

There were a total of 770 persons who took asylum after Arbenz’ downfall. The Castillo Armas government considers them to be in four categories: (1) women and children in asylum only because of family relationships; (2) Communists; (3) criminals; and (4) relatively harmless members of the Arbenz political regime. The Guatemalans are examining each case to determine whether the individual is guilty of crimes or Communist activities. The Guatemalan Foreign Office has no plan for disposing of the asylee problem.

There are four alternative courses: (1) turn all the asylees loose in the hemisphere with safe conducts; (2) keep all or many of them holed up in Embassies indefinitely—the Haya de la Torre⁷ solution; (3) submit to the OAS;⁸ (4) try to persuade the host governments to withdraw asylum from criminals and Communists, i.e., evict them from the Embassies. The host governments would have to be assured that the evictees would get humane treatment, i.e., Guatemala would have to guarantee prosecution in good faith of the criminals, to send to the Iron Curtain any Communists choosing to go there and accepted by a Soviet country, to free the harmless asylees, and to try to rehabilitate the dangerous ones. Alternative courses 1 and 2 constitute no solution for obvious reasons, and No. 3 would probably result in interminable debate and no solution.

Therefore, Ambassador Peurifoy should urge the Government to release the women and children, and to guarantee the humane treatment mentioned in No. 4 above so that arrangements could be made with host governments that the latter withhold or withdraw asylum from people active on behalf of international Communism, and from criminals, both upon presentation of charges supported by prima facie evidence. If the Guatemalans accept, Mr. Holland should go to Mexico City to try to sell it to President Ruiz Cortines. Mr. Holland said Generalissimo Trujillo liked the plan but thought it wouldn’t work. An alternative would be to issue safe conducts conditioned on going to an Iron Curtain country. Mr. Fisher should draft a memorandum⁹ to the Secretary recommending this course.

Economic

The Embassy had submitted some recommendations on FOA programs in agriculture, health and sanitation, and education. Our agricultural experiment station staff should be reinforced, and the corn breeding program examined for possible inclusion. The Roosevelt Hospital should be finished off as quickly as possible.

Ambassador Peurifoy recommended that strong assistance be given the American School in Guatemala. It badly needs a new building. If the FOA cannot do it, thought should be given an EXIM or other type of loan.

The Guatemalan school system, formerly riddled with Communists, should be restored as fast as possible. A suggestion is the importation of teachers from other countries, after an expert survey, possibly by FOA, reveals the requirements and recommends remedies.

The FOA labor exchange program should be implemented. An instruction¹⁰ on this has already gone down to the Embassy.

Ambassador Peurifoy should try to get the Government to invite Muñoz Marin¹¹ to visit Guatemala. Further discussion and planning of ways in which the many good examples set by Puerto Rico can be made useful to Guatemala can then go forward.

Financial

Guatemala has a public internal debt of about $30,000,000. The Government would like to get a 30 million dollar 6-year loan or series of loans, without any publicity. It would be used to pay off the 4 to 6 million immediately and urgently due in back salaries to government employees, to start immediately a public works program, including low cost housing, and hospitals in seven zones, to complete the Roosevelt Hospital, to complete the Inter-American and possibly the Atlantic Highways, to install a $7 million hydro-electric plant at Lake Amatitlan and other projects.

A secret loan is impractical. Guatemala may be able to get loans from several different private banks, possibly with EXIM guarantees.

The Guatemalans need first of all a fiscal expert to help them find out their true financial condition. The IBRD should send a team down to examine the economy and outline what it can do in the way of loans. Sound projects not financed by IBRD should be supported by EXIM Bank loans.

Minister of Communications Prado Velez,¹² or whoever is going to be directly responsible, should be urged to draw up plans and come to the United States to discuss them in concrete terms.

Mr. Neal should look into ways and means of furnishing Guatemala with a short term loan to meet its immediate operating needs.¹³

1. Drafted by Mr. Fisher on Aug. 12.
2. Ambassador Peurifoy was in Washington for consultations at the Department of State during most of the early part of August; he returned to Guatemala on Aug. 16.
3. Documentation relating to this subject is in file 714.00.
4. Apparent reference to the Venezuelan national election held on Nov. 30, 1952; see Mr. Miller’s memorandum to the Secretary, Dec. 5, 1952, p. 1635.
5. Presumably Joseph W. Montgomery, vice president, United Fruit Company.
6. Edwin E. Vallon; on detail from the Department of State to the Department of Labor from June 30, 1952 to mid-July 1954, when he was assigned to temporary detail as labor consultant to the Embassy in Guatemala. He was appointed labor attaché on Dec. 6, 1954.
7. Víctor Raúl Haya de la Torre was a Peruvian political leader who had sought asylum in the Colombian Embassy at Lima in January 1949, and was unable to obtain safe conduct to leave the Embassy until March 1954, when the Peruvian Government allowed him to proceed to Mexico.
8. In a memorandum to Deputy Assistant Secretary Woodward, Director of the Office of South American Affairs Atwood, and Mr. Burrows, dated July 5, 1954, Assistant Secretary Holland stated that “a novel, but perhaps practical solution” to the problem of the disposition of Communist leaders who took asylum in different Embassies in Guatemala “might be the establishment of two or three large prison camps, operated by the OAS itself and in which Communist agents would have a chance to demonstrate their eschewal of Communism as the price of liberty.” (714.001/7–554) In a memorandum to Mr. Holland, dated July 7, 1954, Mr. Burrows commented that he believed that the Assistant Secretary’s suggestion was “not a feasible or practicable one” (714.001/7–754), and in a memorandum to Mr. Holland, dated July 13, 1954, Mr. Woodward stated in part that the “establishment of an OAS detention center would be likely to create so much bad publicity that it should not be suggested unless we are certain that the dimensions of the problem are so great that they cannot be handled by Guatemala alone.” (714.001/7–1354) There is no indication in Department of State files that Mr. Holland pursued the idea of a detention center.
9. Infra.
10. Not identified.
11. Luis Muñoz Marin, Governor of Puerto Rico, 1949–1957.
12. Martín Prado Velez.
13. During the latter part of August and early September, officials in the Department of State discussed the possibility of a short-term loan for Guatemala against Guatemalan gold reserves. In telegram 247, from Guatemala City, dated Sept. 7, 1954, Ambassador Peurifoy stated in part the following: “Federal Reserve loan does not appear necessary since further review here indicates probability Guatemalan Government can for the present meet its obligations.” (814.10/9–754)