363. Telegram 3250 From the Embassy in Guatemala to the Department of State1 2
Subj:
- Guatemala at Mid-Year—An Assessment
Ref:
- Guatemala 0109
Summary: At mid-year, Arana administration remains firmly in power and is likely to continue so for foreseeable future. Terrorist capabilities remain, but govt not likely reimpose state of siege. Level of political violence is considerably reduced from last year. Government coalition won March municipal elections handily as expected, and govt interests have capitalized on internal problems of two legally inscribed opposition parties to split one and keep other nervously apprehensive. There are, however, increasing signs of friction within ruling MLN/PID coalition itself and, more important, indications of growing tensions between President Arana and President of Congress Mario Sandoval. Heart of problem is question of who will be the government’s presidential [Page 2] candidate in 1974. Sandoval wants the nod, and Arana is not inclined to give it. Economic activity, bolstered by good world commodity prices, has proceeded at most satisfactory pace, and we now estimate growth rate of slightly over 6 percent for 1972. Government’s progress in implementing economic and social development programs has been mixed. Rural electrification and health programs are progressing well, and it looks as though govt may finally overcome business opposition to the establishment of Corfina, its long projected industrial development bank. However, GOG programs to make agricultural credit and technical assistance available to small farmers have run into difficulties as have school construction programs. Embassy will continue to pursue principal objectives for 1972 stated in our January assessment: assist government in implementation of development programs; discreetly discourage illegal police actions by security forces; and tactfully encourage mutually satisfactory settlement of issues between a number of American companies and GOG. Two additional objectives are: encourage mutually satisfactory resolution of Belize question by GOG and UK; and support strengthening of democratic institutions. End summary.
1. At mid-year and halfway through its four-year term of office, the Arana administration remains firmly in power, and is likely to continue so for the foreseeable future. Arana continues to enjoy the full support of the Army, all signs point to continued economic prosperity. The stresses and strains brought on by the government’s pacification program have abated somewhat, and despite anxiety brought on by the June 25 assassination of MLN Deputy and First Vice President of Congress Oliverio Castaneda, there is less concern over the violence issue than was true a year, or even six months ago. And the level of political violence has dropped to about half of last year’s average. While left-wing terrorists retain the capacity to mount actions at any time, they have not been able to build back to their 1970 levels. The terrorist move to the countryside contemplated in our January assessment did take place, but the GOG has been relatively successful in keeping terrorists on the defensive. The most significant development in this area has been that the leadership of the principal left-wing terrorist organizations, the FAR and the PGT/FAR, are moving toward union, while at [Page 3] same time seeking a larger political role. While this development will have little short-term effect, it may be important in the long run. We, OAS in particular, have been and will be keeping a close eye on this situation. We continue to believe as we did in January that government is not likely to reestablish a state of siege this year. Tension over Belize which reached a high point in January–February, has abated. We do not believe a recurrence of the January–February tensions is likely, so long as the Guatemalans do not come to believe Great Britain is about to grant Belize unilateral independence. We are mildly hopeful that talks between Guatemala and Great Britain on this subject may resume near the end of the year, especially if the British are able to reduce their garrison in Belize.
[Page 4]2. Political activity, which regained momentum with the lifting of the state of siege last November, has continued apace. The government coalition won the March municipal elections handily as expected, and government interests have capitalized on internal problems of the two legally inscribed political parties, the Revolutionary Party (PR) and the Christian Democrats (DCG), to split the former and keep the latter nervously apprehensive. The split of the PR (the party in power from 1966 to 1970) was accomplished by secretly supplying aid to Carlos Sagastume of the PR’s right wing in his fight to win the party’s Secretary Generalship away from the old guard and the younger more left oriented members. Sagastume won, and the dissidents under the leadership of Rafael Pantoja are now seeking to form a new political party of the left. The government’s principal tactic with the Christian Democrats has been to take advantage of a DCG splinter group’s (FLOR) public accusation of illegal activities by the party leadership [Page 5] that threaten revocation of the party’s registration. The left is further fractionalized by mayor Colom Argueta’s thus far unsuccessful effort to register a new party, the FURD.
3. There are, however, also increasing signs of friction within the ruling MLN/PID coalition itself, and, more important, indications of growing tensions between President Arana and MLN leader and President of Congress Mario Sandoval. Sandoval, a hard line, unreconstructed right winger from the Castillo Armas days, wants the presidency in 1974 very badly, and can count on the support of the bulk of MLN in his bid. President Arana, who would prefer to put off the selection of a government-backed candidate as long as possible, does not want Sandoval to be that candidate and will work actively to prevent it. The PID, for its part, is mainly interested in being part of a winning ticket, and does not believe Sandoval can win. As the 1974 presidential elections draw nearer, we can expect the tensions noted above to increase. They might even lead to an open break between Sandoval and the President. However, since Arana seems sure to retain his trump card, the support of the Army, Sandoval will not be able seriously to challenge the President’s ability to govern, even if a break occurs. And there is a good possibility that Sandoval will eventually step aside and support another right or right/center candidate for the sake of an election victory. In this connection we should mention that Sandoval does not enjoy significant support within any faction or the Army.
4. While the left is in disarray at the moment and will probably remain so for the balance of the year, there is a good chance that it will form a coalition as the ’74 elections draw nearer. It is still too early to speculate meaningfully on particular presidential candidates.
5. Economic activity, bolstered by good prices and markets for Guatemala’s principal commodity exports, has proceeded at a satisfactory pace and we now estimate a growth rate of slightly over 6 percent for 1972 barring a collapse of the Central American common market. The purchase of US-owned Empresa Electrica for $18 million cash in May of this year has bolstered the GOG image in international economic circles.
[Page 6]6. The government’s progress in implementing its economic and social development programs has been mixed. Rural electrification and health programs, which have a considerable aid input, are progressing very well. The new school for paramedics at Quirigua is now in operation, and the conditions precedent for our rural health loan are on the verge of being met. The new police academy, so long a goal of our public safety program, has now opened in rented quarters. It has 100 students and has been operating with a most encouragingly low dropout rate. Plans for the permanent police academy structure are proceeding apace, as are government programs to increase spending for police equipment on a matching basis with USAID funds in order to arrive at a self-sufficient level. The government has pushed through a reorganization of the Treasury Department designed to significantly improve tax administration and collection. It also looks as though the government may finally have overcome business objection to the establishment of Corfina, its long-projected development bank.
[Page 7]7. On the other hand, GOG programs to make agricultural credit and technical assistance available to small farmers have not fared so well. While the experience with cooperatives has been good, Bandesa, the govt’s new agricultural bank has encountered difficulty in reaching target levels for the first crop year. This is primarily due to unseasoned organization and staffing and because of the tendency to stick to traditional methods. Newer techniques under study are not likely to be effective until next crop year. And on the education side, although the GOG pilot school project to orient primary education more directly to rural needs is going reasonably well, there have been problems in the implementation the AID-funded school construction program. These problems involve both personalities within the GOG, primarily in the Ministry of Education, and complex administrative procedures and delays. We are seeking ways to resolve [Page 8] these problems in the near future.
8. The rise in government revenues resulting from the reorganization of the Ministry of Finance and other fiscal reforms has been less than expected and is not sufficient to finance present development programs at projected levels. And there is likely to be more slippage. While we nevertheless continue mildly optimistic that real progress will be made on the development front, we doubt even more than we did in January that goals will be fully met. We will continue to monitor implementation of development closely with a view towards helping overcome bottlenecks. In this connection, I have proposed to the GOG the establishment of a high-level joint Embassy-GOG review of aid programs on a quarterly basis and believe that this proposal will be accepted. I hope it will prove useful.
9. With the successful resolution of the Empresa Electrica situation (see para 5) the major remaining GOG–US company problems concern Exmibal (financing), PanAm (operating contract), IRCA (compensation for disputed items under mortgage foreclosure), and United Fruit (divestiture order). As we did in the Empresa Electrica case, the Embassy will, to the extent feasible and advisable, discreetly use its influence to promote GOG-company negotiations toward mutually satisfactory agreements. PanAm has recently told us that it is now encountering a most encouraging GOG attitude and that it hopes to conclude a satisfactory new contract this year. Exmibal officials are expressing optimism that they will obtain the necessary financing to go ahead on a reduced scale, but we are not sanguine about early progress. The United Fruit situation is relatively dormant and recent overtures we have made re IRCA have not been very encouraging.
10. As will be noted above, we are basically sticking with our January assessment of relative tranquility, satisfactory economic progress, and continued stability for Guatemala in 1972. We repeat caveat that this assessment is made with the full realization of how rapidly situations can change in Latin America.
- Source: National Archives, RG 59, Central Files 1970–73, POL 15 GUAT. Secret. Repeated to Managua, Panama City, San José, San Salvador, Tegucigalpa, and CINCSO for POLAD.↩
- The Embassy provided a mid-year assessment of the situation in Guatemala, noting that the Government would likely not re-impose a state of siege and that political violence levels were considerably reduced when compared with 1971.↩