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A Brief History of the CIA: Part 3 (The CIA in Guatemala)

Written by Jeff Drake
1 · 26 · 18

Compiled by Jeff Drake 1991

In the last two articles I discussed the origin of the CIA; the cloud of controversy surrounding the birth of the Central Intelligence Agency i.e. who was going to run the CIA, what was its scope going to be, etc.; that the CIA was given incredible access to funds with little oversight; and the fact that although intelligence gathering and analysis was the Agency’s publicly stated purpose, its “real” purpose (demonstrated by the intervention in Italy’s 1948 elections) was to carry out covert foreign policy activities. Italy was just the beginning. Now, on to Guatemala…

Guatemala is a significant historical event in the history of the Central Intelligence Agency for several reasons: it involved the first CIA overthrow of a democratically elected foreign government; the first massive disinformation campaign both at home and abroad; and it involved a high-level government cover-up. (All very good practice, of course, for what was to come later.) In this sense, by studying Guatemala we can get a good understanding of the foundation that was being laid for future cold war covert operations, in addition to a clearer understanding of United States covert foreign policy pertaining to the Third World. Indeed, the same elements are displayed over and over again, the most recent being the illegal invasion of Panama.

Some background Information:

Guatemala has a long history of foreign intervention in their affairs, starting most notably with the Spanish Crown. The fact that there was no gold in Guatemala did not deter the Spanish colonizers from exploiting the country for other resources. The indigent population of Indians were forcibly removed from their land, turned into slave labor, and used to “grow cocoa and produce indigo and cochineal dye for export.” Between 1519 and 1610, the Guatemalan Indians paid the price of being a conquered people with their lives. Most horrifying is the fact that the Indian population in Guatemala dropped by two-thirds as a result of disease and brutality.[1]

Spain, in true imperialistic fashion, prohibited Guatemala from manufacturing products that would compete with Spanish trade to the Latin American colonies. Eventually, in 1821, the criollos (native-born Spanish) declared independence from Spain. Unfortunately, this new situation had no effect on the miserable Indian population.

In the mid-1800’s, coffee bean agriculture began, thus creating an oligarchy of wealthy families, “many of who have passed on their riches and power to the present generation.” However, from the beginning, the financial interests and marketing of Guatemalan coffee was in the hands of outsiders, particularly Germans.” However, during World War II the Guatemalan government, under intense pressure by the US, confiscated German coffee interests and forced German citizens into confinement, thereby allowing US interests to gain hold of the coffee market.”

Actually, the first investors from the United States came to Guatemala, not for coffee, but… bananas. The dictator of 1904, Manuel Estrada Cabrera, gave the United Fruit’s[2] affiliate, International Railways of Central America, a 99 year contract to finish building the railroad that ran from the capital to Puerto Barrios, an Atlantic harbor. In return, for completion of the railroad, United Fruit “received a contract in 1906 for 170,000 acres of some of the country’s best land for banana production on the Atlantic coast.” Not a bad deal, considering that all the profit from the banana production was destined to leave the country.

By 1930, United Fruit had become the “largest landowner, employer, and exporter in Guatemala.” (An interesting point to remember is that the majority of the tremendous land tracts owned by United Fruit were uncultivated.) In 1936, United Fruit signed another contract with yet another dictator, General Jorge Ubico, to operate a plantation on the Pacific coast. “Ubico granted the company the kind of concessions to which it had become accustomed: total exemption from internal taxation, duty-free importation of all necessary goods, and a guarantee of low wages.[3]

Thomas McCann, a former official of United Fruit said: “Guatemala was chosen as the site for the company’s earliest development activities at the turn of the century because a good portion of the country contained prime banana land and because at the time we entered Central America, Guatemala’s government was the region’s weakest, most corrupt, and most pliable. In short, the country offered an `ideal investment climate’ and United Fruit’s profits there flourished for fifty years.”[4]

The Trouble Begins…

In 1944, a popular coalition was formed to break the power of the oligarchy and modernize the country through reforms. The coalition, supported by 85 percent of the literate male vote, elected an intellectual by the name of, Juan Jose Arevalo as president, thus ending over one hundred years of dictatorship.

Arevalo was succeeded as president by Jacobo Arbenz in 1951. Arbenz promised to carry out a complete land reform, redistributing the country’s uncultivated  land. He said, “First [we have] to convert our country from a dependent nation with a semi-colonial economy into an economically independent country; second, to transform our nation from a backward past with a predominantly feudal economy into a modern capitalist country; and third, to see that this transformation is carried out in such a way that it brings with it the highest possible elevation of the standard of living of the great masses of people.”[5] This type of transformation, from a feudal economy to one that is independent spelled trouble for the US corporations that comfortably dominated the country at the time: United Fruit, International Railways of Central America, and Electric Bond and Share Company.

Under Arbenz, Guatemala built an Atlantic port and a highway to compete with United Fruit’s holdings (United Fruit’s subsidiary owned every square mile of railroad in the country), in addition to building an hydro-electric plant that offered cheaper energy than the US-controlled electric monopoly.[6]

Arbenz had a plan to limit the power of foreign companies through direct competition rather than nationalization. Arbenz stated that, “Foreign capital will always be welcome as long as it adjusts to local conditions, remains always subordinate to Guatemalan laws, cooperates with the economic development of the country, and strictly abstains from intervening in the nation’s social and political life.” (Needless to say, Arbenz was going to pay for such “irrational” views.)

United Fruit was upset immediately, for they didn’t exactly fit into this picture since they had attempted to frustrate Arbenz’s reform programs from the very beginning by discrediting him and causing his downfall. Their situation looked even worse when it came to the question of land, of which United Fruit owned a lot.

In 1952, the Agrarian Reform Law was passed. This law expropriated large tracts of uncultivated acreage which was then distributed to approximately 100,000 landless peasants. The chief target of this law was of course, United Fruit, which owned more land than the combined holdings of 50 percent of the total population (85 percent of which remained idle). Expropriating 387,000 acres, “the government offered to compensate the company $1.2 million[7] based on the company’s own tax declaration. But that apparently wasn’t enough, as the US State Department and United Fruit countered with a demand for $16 million compensation.” Arbenz further irritated United Fruit by improving union rights for workers.

Reaction to these Guatemalan reforms was immediate (and predictable). In 1952, Nicaragua’s dictator, Anastasia Somoza and an attorney for United Fruit, together tried to pressure President Harry Truman to approve a plan to overthrow Arbenz. This plan was called aptly, “Operation Fortune.”

But, Secretary of State Dean Acheson persuaded Truman to abort the plan at the eleventh hour. United Fruit then started a media blitz in an attempt to discredit Arbenz with claims that “an iron curtain” was falling over Guatemala. They played upon the three things that made Arbenz a marked man to many Washington officials: his reluctance to embrace multinational corporations (and who could blame him, based on his experience with United Fruit?), his expropriation of United Fruit’s uncultivated land (imagine the cheek), and his tolerance of communists in his government. For many, these policies were all inter-related, the result of “communist influence,” not due to any type of social or economic urgency for needy Guatemalans.

US Ambassador to Guatemala, John Purify, typified the voice of doom and said: “The candle is burning slowly and surely, and it is only a matter of time before the large American interests will be forced out completely.” A. A. Berl of the State Department declared that Guatemala was “in the grip of a Russian-controlled dictatorship.”[8] Really? Granted, Arbenz did allow the Communist Party of Guatemala official recognition as a party (common in many other countries as well), but he himself actually rejected the class analysis familiar to Marxists, in favor of a reformist ideology. This hardly makes him the communist leader that United Fruit and the State Department painted him to be. Secretary of State, Dulles, asserted that Guatemalans were living under a “Communist type of terrorism.” President Eisenhower, having replaced Truman,  warned about “the Communist dictatorship” establishing “an outpost on this continent to the detriment of all the American nations.” (Does any of this sound familiar?)

Meanwhile, this must have all been somewhat interesting to the Russians, for “they had little interest in Guatemala at the time, did not provide the country with any kind of military assistance, did not even maintain diplomatic relations with it,” and “thus did not have the normally indispensable embassy from which to conduct such nefarious schemes.”[9] (This type of “red-baiting” would turn out to be a popular and by now familiar method used by politicians to stir up the US citizenry for action and support of interventionist policies.)

In reality, the only East European country to have anything to do with Guatemala during this time frame was Czechoslovakia. They made a single arms sale to Guatemala for cash. (An attempt was made to blow up the trains carrying the Czech weapons en route to Guatemala City from portside, but torrential rains ruined the detonators. Opening fire on the train, the CIA team killed one Guatemalan soldier and wounded three others, but the weapons still got through).

According to the New York Times, the arms were “worthless military junk.” A big fuss was apparently made of this transaction back in the US as the people spreading propaganda about the communist involvement in Guatemala hastily added it to their list of examples. Much less was mentioned about the fact that Guatemala, if they wanted arms at all, would have had no choice but to buy them from the communists, since the US had repeatedly refused to sell arms to Guatemala since 1948 due to its reformist governments, and had pressured other countries to do the same despite Arbenz’s repeated pleas to lift the embargo. (Another tactic that is still getting a lot of use: cut off all supply routes for arms so a country has no choice but to buy from the communists, then accuse them of being a communist regime when they do it.)

Although Arbenz was being labeled a communist in the US press, during more lucid moments there were people in Washington who knew better. One State Department group charged with the task of planning Arbenz’s overthrow concluded that Guatemala’s UN voting record “would not be particularly helpful in our case.” This was due to the fact that Guatemala had voted at the United Nations so closely with the United States on issues of “Soviet imperialism.”[10]

Nonetheless, the US kept up its pressure on Arbenz to get rid of the communists working in his government. Arbenz stood firm and took the logical position that this was no more than proper in a democracy, while Washington continued to berate him for being too tolerant of such people – not because these people had done anything wrong or even threatening – but simply because they were “of the species communist.”

United Fruit used its close connections in the Eisenhower administration to continue their lobby for a coup. And these connections were everywhere: (this is rather remarkable) Secretary of State John Dulles had been a senior partner of Sullivan and Cromwell, United Fruit’s New York law firm and its principal advisor on foreign operations; CIA Director Allen Dulles (yes, brother to the other Dulles) was also a former member of the same law firm; John Moors Cabot, assistant secretary of state on inter-American affairs, was the brother of Thomas Dudley Cabot, former president of United Fruit; Eisenhower’s personal secretary, Ann Whitman, was married to Ed Whitman, director of United Fruit’s public-relations department; General Walter Bedell Smith, a trusted advisor of Eisenhower and former CIA director (see Part II) oversaw the destabilization of the Arbenz administration and then later joined the board of United Fruit.

In March, 1953, the CIA approached disgruntled right-wing officers in the Guatemalan army and arranged to send them weapons. United Fruit donated $64,000 in cash towards the transaction. These soldiers attempted several uprisings, but were quickly put down by loyalist troops, and eventually caught. While on trial, the rebels revealed United Fruit’s role in the plot, but not the CIA’s.

Later, wanting to do a better job of it, the Eisenhower administration approved of a plan called, “Operation Success,” (who was dreaming up these names?) which was inspired, organized and financed by the CIA. A year was spent planning, step-by-step, the overthrow of Arbenz. Few CIA operations have been as well documented as the coup in Guatemala. Over the years, with the release of declassified documents, the story has emerged.

The center of operations for the coup was established in Opa Locka, Florida, on the outskirts of Miami. Somoza leased his country as a site for an airstrip, and donated hundreds of men – Guatemalan exiles along with US and Central American mercenaries. Thirty planes stationed in Nicaragua, Honduras, and the Canal Zone were assigned for use in the coup, and flown by American pilots. The troops assembled in Honduras and received weapons and munitions from the Canal Zone. They entered Guatemala from Honduras, under the command of Colonel Carlos Castillo Armas. Soviet weapons were also purchased for distribution within Guatemala prior to the invasion to reinforce US charges of Soviet influence.

In 1954, as a result of the Czech weapons getting through, Eisenhower ordered the stopping of all “suspicious foreign-flag vessels on the high seas off Guatemala to examine cargo.”[11] It didn’t matter that the State Department’s legal advisor wrote a brief which concluded that “Such action would constitute a violation of international law.” Two ships at least, were stopped and searched – one French, the other Dutch. (Curious…. The War of 1812 had been fought for just such actions.)

The “build-up” was now in full throttle. The United States signed mutual treaties with Honduras and Nicaragua (both countries hostile to Arbenz), and sent large shipments of weapons to them, hoping to cause the Guatemalan military to withdraw its support of Arbenz. The Navy sent two submarines from Key West, saying only that they were going “south.” And the Air Force publicly sent three bombers on a “courtesy call” to Nicaragua.

The CIA studied the records of the Guatemalan military officers and offered bribes to some. The officers were encouraged through the CIA’s clandestine radio station to join the “liberation” movement. The station also broadcast (the lie) that Arbenz was planning to disband the army and replace it with a “people’s militia.” (An interesting “psychological operation.”) CIA planes dropped leaflets in Guatemala with the same message. Under pressure from Ambassador Puerifoy, a group of Guatemalan officers met with Arbenz, urging him to fire all the communists who held government jobs. Arbenz told them (correctly) that to do so would be “undemocratic.” They also demanded that Arbenz reject the creation of a “people’s militia.” (Disinformation works!). Arbenz himself, reportedly was offered a bribe by the CIA, but the offer was rejected by either Arbenz or a subordinate.

To reinforce the idea abroad that the Guatemalan intervention was due to its being communist, the US Information Agency (USIA) went to work. Numerous unattributed articles were placed in foreign newspapers, labeling certain Guatemalan officials as communists and referring to various Guatemalan government actions as “communist inspired.” In the few weeks prior to Arbenz’s removal, over 200 articles about Guatemala were written and placed in scores of Latin American newspapers.

President Arbenz was eventually overthrown by Colonel Carlos Castillo Armas, who had been trained at the US Command and General Staff School in Fort Leavanworth, and had served as director of the military academy under Ubico. Thomas McCann later wrote that the United Fruit company “was involved at every level” in the CIA’s successful Guatemalan coup.[12]

In the book, The Declassified Eisenhower, by Blanche Cook, she writes: “Guatemala represented a new level of political warfare, including a fully orchestrated cover-up and significant aerial bombing.” What was covered up was the fact that Castillo Armas’ army had been trained on a United Fruit plantation in Honduras with arms flown in from a secret airport in Florida. On the day of the coup, Castillo Armas arrived in Guatemala City on a US Embassy airplane.

Armas attempted to solicit sympathy from Americans by referring to the coup as the “Liberation,” thus identifying the coup with the popular liberation of European countries from the Germans. After the coup, the new government launched a national anticommunist propaganda campaign using the CIA-funded Liberation Radio. “In the end, however, it was only United Fruit that could rightly declare that it had been liberated.”

The coup resulted in over 9000 people being arrested and many tortured. Over 1.5 million acres of land were returned to the large landowners, including United Fruit, and the Armas government abolished 533 unions.[13] The 10 year Guatemalan experiment with political freedom and democracy ended, only to begin a series of military dictatorships, each worse than the one before it.

Immediately after the coup, the US rushed both money and advisors to the Armas regime. It increased its personnel in the Guatemalan mission sevenfold. Salvage operations for the first few post-coup years, excluding military aid, cost $80 to $90 million – “more than the entire funding for the rest of Latin America.” This assistance, together with funds from multilateral agencies, particularly the World Bank, financed massive infrastructure projects, such as roads and electrical networks. A condition attached to these funds was that the roadbuilding contracts had to be given to private construction firms, which were primarily US companies. (Another tactic that would gain popularity in a few years – more on this in a later article).

“The sad consequences of the 1954 liberation can be summoned as follows: 1) repeal of agrarian reform 2) destruction of trade-union and peasant movements, and 3) institutionalization of the right wing and the military in national politics. Mexican novelist and essayist Carlos Fuentes wrote: `It was an important year, 1954, because development in Guatemala was not merely interrupted by violent foreign intervention; it has been continually perverted and poisoned to this very day.'”

And the story does continue to this day, although the American media reports little of the terrible human rights abuses occurring in Guatemala, a country looked at as a “friend” of the US.



[1]Eric Wolf, Sons of the Shaking Earth (Chicago: University of Chicago, 1959), pp. 31, 195.

[2]United Fruit is a US-based corporation notorious for it’s exploitation of Central and South American resources

[3]Stephen Schlesinger and Stephen Kinzer, Bitter Fruit: The Untold Story of the American Coup in Guatemala (Garden City, NY: Doubleday, 1982), p. 70.

[4]Thomas McCann, An American Company: The Tragedy of United Fruit (New York: Crown, 1976), p. 45.

[5]Blanche Cook, The Declassified Eisenhower: A Divided Legacy of Peace and Political Warfare (Garden City, NY: Doubleday, 1981), p. 224.

[6]William Blum, The CIA A Forgotten History, op. cit.

[7]Editor’s Note: This figure varies from $512,000 to $1.2 million, depending on who you are reading. More sources quote the high figure.

[8]Cook, op. cit.

[9]William Blum, The CIA a Forgotten History (Zed Books, lLtd., 1986)

[10]Cook, op. cit.

[11]Dwight Eisenhower, The White House Years; Mandate for Change, 1953-1956 (New York, 1963) p. 424.

[12]McCann, op. cit.

[13]Jonas and Tobis, op. cit; Cook, op. cit. Schlesinger and Kinzer, op. cit. Lars Schoultz, “US Policy Toward Guatemala” (unpublished paper, University of North Carolina, 1981).

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Jeff Drake

Retired IT consultant, world-traveler, hobby photographer, and philosopher.