24. Telegram From the Ambassador in Guatemala (Armour) to the Department of State1

493. For Dulles from Nixon. My personal observations here supplemented by conferences with Embassy and government officers including President convinces me that vigorous US support essential to preserve in power the first government in history resulting from overthrow of a Communist regime. Failure abundantly to insure stability this government would mark loss of opportunity which may not recur for years; will discourage oppressed peoples everywhere in world and would reflect unpardonable inaction on part US Government. I appreciate efforts of various government agencies heretofore but I am convinced they have been inadequate and that danger to Castillo Armas’ government is increasing. I urgently recommend to you, to President and all members cabinet following program.

Strong support for Congressional appropriation next fiscal year adequate to complete and pave inter-American highway Guatemala City to Mexican border. Bureau public roads estimates total cost $27 million. Completion highway will produce increase in tourist trade which is critically needed and afford solution grave unemployment problem. Financial straits Guatemalan Government caused by robberies Arbenz regime and falling coffee prices make it [Page 67] essential US contribute entire $27 million including Guatemalan share cost completing inter-American highway.
International Bank should lend dollar component cost completing Pacific coastal highway and Guatemala-Puerto Barrios highway both essential economic development of country and crucial in solving unemployment problems plaguing government. FOA funds available next fiscal year for highway purposes estimated not less $3 million should be used defray local currency costs these two highways leaving burden on Guatemala to supply balance local currency cost estimated approximately $10 million.

Announcement that administration and International Bank will support foregoing program for next fiscal year will have decisive political and psychological effect here and will in my judgment give Castillo Armas government stability necessary to continue in power and carry out its programs for economic development Guatemala. Achievement this end so important to US throughout world that we cannot afford to haggle as to whether few millions less or few months more delay would be dangerous. I feel strongly limitations amount aid granted heretofore and delays in its extension have gravely imperiled basic and vital interests US in world-wide fight against Communism. I urge complete revision our approach regarding aid to this government and realization measures generally applicable in this hemisphere must not control our decisions regarding Guatemala.

Foregoing comments and recommendations have complete approval Ambassador and Counselor as well as Chief, USOM, representative International Bank, and Assistant Secretary Holland.

In submitting foregoing recommendation regarding financing inter-American highway I am not foreclosing possibility that during or after my trip through area I may recommend additional appropriation for further work on highway in other Central American countries. I am more and more convinced that there is nothing which our government can do in this area which will serve our foreign policy as effectively as would completion of this highway to the Panama Canal.

Recommend this cable be repeated to International Bank with request that it advise urgently whether it will promptly grant Pacific Coastal and Guatemala City–Puerto Barrios loans. If it cannot they should immediately be referred to Export-Import Bank.2

  1. Source: Department of State, Central Files, 033.1100–NI/2–1555. Confidential; Priority.
  2. A handwritten notation beside this paragraph indicates that these recommendations were carried out by the Bureau of Economic Affairs.