On 15 March 1951, Jacobo Arbenz was sworn in as the 25th President of Guatemala. In the more than 100-year history of this poor Central American country, he was only the second man to be elected to power through democratic elections. For a region where military dictatorship was the traditional form of government, this in itself was something special. But Arbenz made history for something else. He incurred the wrath of the US by introducing radical economic and social reforms. In Washington, he was accused of being a communist and a puppet in the hands of the Kremlin. With the Cold War already in full swing, such a label did not bode well, and shortly afterwards a coup d’état took place in Guatemala, removing Arbenz from power.
Although coups were not uncommon or unexpected in Central America, this time it was different. It was the first time that the CIA, the US intelligence agency that had previously been more often than not in charge of gathering information, was directly involved. Moreover, it was at least unusual that Arbenz was not in fact a communist at all.
Guatemala had no diplomatic relations with the Soviet Union at the time and the communist threat warned against in Washington was entirely fictitious. Moreover, Guatemala was one of the few countries in Central America where “democracy” was not just an empty word. The coup d’état by the Americans was not a response to the communist aspirations of Arbenz. Bananas were to blame.
United Fruit Company – Banana Republic
The term banana republic was coined by the American journalist William Porter in the early 20th century. He was referring to the Central American countries, all of which were politically unstable and economically totally dependent on the US. Bananas were their main and virtually only export commodity.
Banana cultivation and trade was dominated by the American United Fruit Company (UFCO), which was the main employer and the largest wholesaler in the region. Central American countries were effectively hostages of this successful and powerful corporation. Local dictators sold off state land for sacks of greenbacks, granted lucrative concessions to the UFCU and turned a blind eye when plantation workers’ rights were violated. The United Fruit Company was not subject to the normal rules of the game.
The history of Central America’s most powerful corporation dates back to the late 19th century. It was then that Lorenzo Baker, a Massachusetts merchant, noticed on his travels in the Caribbean that bananas were the most popular fruit among the locals. He decided to conduct an innocent experiment, loading a few more crates of bananas in the hold of his ship before heading home, to see if North Americans would be so keen on this tropical fruit.
The response was so good that Baker soon set up the Boston Fruit Company, which initially dealt only in bananas. But demand grew, and within a few years, Bostonians were growing bananas. For this purpose, they bought land in all the countries of Central America.
And because bananas needed to reach American buyers as quickly as possible, in 1899 the company joined forces with Minor Keith, owner of most of the railways in Central America. The bananas travelled from the plantations by train to the nearest port, from there by ship to New Orleans and on to American tables. Thus was born the largest empire in Central America, the United Fruit Company.
In addition to plantations and the banana trade, UFCO also controlled other sectors that are normally the domain of the State. In Guatemala, for example, it even had a concession to provide postal services. The Americans also owned the only power station in the country and the most important railway line linking the capital with Puerto Barrios, Guatemala’s window on the world, the only port on the Atlantic coast. The port infrastructure there was also in American hands. In the middle of the 20th century, Guatemala was a ‘banana republic’.
October Revolution
At the time, the country was led by General Jorge Ubico, another in a long line of dictators who repressed the population with one hand while pocketing US dollars with the other. He had been in power for 13 years, an enviable period for Guatemala, where coups were more frequent than elections. Like all dictators before him, Ubico was totally dependent on the landlords who controlled the country’s entire economy.
Guatemalan society has been extremely stratified. Two per cent of the people owned more than 70 per cent of all the land in the country. The majority of the population lived in poverty, especially the Indians, descendants of the Maya, who worked the banana plantations, where feudal relations still prevailed, so to speak. Three quarters of the population was illiterate and people lived on average 50 years. For the Indians, the figures were even lower – illiteracy in the Guatemalan jungles was 95% and life expectancy was less than 40 years.
The United Fruit Company prospered under Ubico’s regime and made huge profits, but this had little impact on the standard of living of the locals. Among other things, the American corporation was exempt from all taxes and paid no customs duties on the materials it imported to build its empire. Moreover, General Ubico made sure that the plantation workers never thought of demanding higher wages or better working conditions. For every dollar that UFCO generated at the expense of the work and suffering of the Guatemalan people, only a few cents remained in the country. But in October 1944, a new, revolutionary wind blew.
A wave of protests swept the country, with students and workers’ organisations demanding democratic change. Ubico declared a state of emergency and sent in the army, but it was too late. At the end of June, he was forced to tender his resignation. Thirteen years of tyranny had been enough. He handed over power to a three-man junta, which promised to call new presidential elections.
It soon became clear that the interim authorities did not really believe in democracy and, in keeping with the local political tradition, a coup d’état took place that changed Guatemala forever.
Guatemala’s fragile democracy
The putsch was carried out by the army, specifically by a group of liberal officers who agreed to the protesters’ demands. A new three-man junta, including the late President Jacobo Arbenz, took power and promised to call presidential elections again.
This time, the officers kept their word and called the first democratic elections in Guatemala’s history in December 1944. Juan Jose Arevalo, a professor of philosophy who had been living in exile in Argentina, won the election. A ten-year period of the so-called Guatemalan Revolution began, which ended when the CIA intervened in 1954.
Arevalo was the white crow in Guatemalan politics. He was an intellectual and a liberal, and a civilian to boot. His term of office was marked by democratic reforms that cut through the autocratic practices of his predecessors. He adopted a constitution that was one of the most progressive in Central America. He abolished media censorship, introduced the right of association and banned political participation by members of the army.
Although with Arevalo, Guatemala turned a new page in its history and embarked on the path of democracy, the goal was still a long way off. Guatemala’s young democracy was fragile and delicate. Arevalo survived dozens of coup attempts during his term in office – his presidency teetered from the start.
As he neared the end of his term, Arevalo already knew that he no longer enjoyed the support of the army, which had opened the door to the presidential palace for him a few years earlier. There had been a rift among the officers. Behind the scenes of Guatemala’s democracy, two factions were vying for power. The conservative officers believed that Arevalo was too radical and that his reforms were leading the country towards collapse, while the younger and more liberal officers believed that democratisation must continue.
Among them was Jacobo Arbenz, a hero of the revolution who took part in the coup that brought democracy to Guatemala a few years ago. He eventually became the face and leader of the liberal faction in the army, and was supported by students and workers’ organisations for his services to the revolution.
As the presidential elections approached, conservative officers demanded that the President expel their liberal opponents from the army and ban them from taking part in the elections. They also threatened a coup d’état, but Arevalo did not give in to their pressure, and the country found itself on the brink of chaos.
Tensions peaked before the elections, when the leader of the conservative camp, Major Francisco Arana, was assassinated under suspicious circumstances. The President had previously ordered his allies, the Liberal officers, to expel Arana from the country, but something seems to have gone wrong. Although the full details of Arana’s assassination are still not known, it is clear who benefited most – Jacobo Arbenz, a young liberal colonel in the Guatemalan army, became the most influential man in the country.
Revolucionar
The elections were almost never going to take place, as conservative military circles attempted a coup d’état, killing more than a hundred people. President Arevalo, with the help of a liberal section of the army, prevented a violent takeover and called elections in accordance with the constitution. He could have clung to power and turned from president to dictator, as many of his predecessors did, but Guatemala’s first democratically elected President remained true to his principles. Aware that the revolution had a new leader, he withdrew from the electoral race.
In November 1950, Jacobo Arbenz won the elections, promising the people a continuation of the revolution. The era of hordes, military coups, street protests and behind-the-scenes power struggles was over.
The new President was the son of a Guatemalan mother and a Swiss father. The Arbenz family was well-to-do and little Jacobo dreamt of one day becoming an economist. But his father, who was a pharmacist, became addicted to morphine and within a few years had wiped out the family fortune. Soon after, he committed suicide and the impoverished Arbenzos had to move in with relatives in the countryside.
Jacob’s dream of an expensive and prestigious degree in economics has gone down the drain. He had to settle for the military academy, where he was one of the better cadets. After graduating, he excelled in his new job and was soon promoted to the rank of colonel. When he took part in the coup d’état that removed the dictator Ubic from power, he did not know that a few years later he would have to take off his uniform and become a politician for good.
Poking into a wasp’s nest
Arbenz inherited from his predecessor a country that has made progress in many areas. Democracy has survived the birth pangs with great difficulty, but Guatemala has never been freer in its history. New political parties and trade unions began to emerge in the country, trying to protect the rights of the landless workers and peasants. Freedom of speech was protected by the Constitution. In the economic sphere, however, Guatemala was still a banana republic.
Arbenz faced a difficult task – economic independence. As a testimony to how underdeveloped Guatemala was, in one year the United Fruit Company earned twice as much money as was poured into the national coffers in the same period. “Our economic policy must be based on private initiative and Guatemalan capital… Foreign capital will always be welcome, provided it respects our specificities and laws, contributes to economic development and does not interfere in Guatemala’s political and social life,” Arbenz said at his inauguration. This was a more than obvious allusion to the devastating impact that the activities of the US corporation United Fruit Company have had on Guatemala.
Arbenz announced economic reforms and massive investments in infrastructure to free the country from the grip of the UFCA. He planned to build a highway to the Atlantic coast as an alternative to the US rail line, and a new Guatemalan-owned port was to be built there. As a point of interest, the World Bank economists, who could hardly be accused of Communist leanings, calculated at the time that rail fares in impoverished Guatemala were the highest in the world. Moreover, Arbenz promised that the state would build a new hydroelectric power station, thus breaking the monopoly that UFCO also had in the supply of electricity.
After three years, he even managed to pass a law introducing an income tax, the first time this has happened in Guatemala’s history. Arbenz’s measures have caused shock among United Fruit Company executives, who were used to a completely different “business climate”. For the first time in fifty years, the state was dictating terms to capital, not the other way round. It was the first time that the President of a country did not sell out the interests of its own citizens. Guatemala has made every effort to rid itself of the label ‘banana republic’.
All the measures implemented by Arbenz were resisted by the UFCA, but the agrarian reform known as “Decreto 900”, which came into force on 17 June 1952, broke the barrel. Seventy per cent of all land in Guatemala was in the hands of a handful of landlords. Most of this land was not cultivated, despite the fact that there were many poor peasants in the country who had no property. Under the reform, all parcels of uncultivated land, between 90 and 270 hectares in size, were transferred to state ownership.
The expropriated were compensated with state bonds and their land was distributed among poor farmers. More than half a million of the poorest peasants were given land in this way. A fifth of the population was lifted out of the worst poverty. It is significant to note that Arbenz and some of the ministers in his government were also left without some land at that time.
Fake news
For the United Fruit Company, by far the country’s largest wholesale grower, the reform was the final confirmation that things had changed irreversibly. The American empire was under attack – millions of dollars were at stake. The era of profitable concessions and tax evasion was over. Since Arbenz was clearly uncooperative and incorruptible, he had to be got rid of and replaced by someone who would restore a favourable “business climate” in the country.
UFCO launched its powerful lobbying machine and directed all its forces towards regime change. By signing the decree on agrarian reform, Arbenz had made a powerful and very angry enemy. From then on, the fate of Guatemala was no longer in his hands.
The future of the rebel “banana republic” was decided in New York, at the headquarters of the UFCA, where the Director, Samuel Zemurray, met the man who claimed to be able to save the empire from collapse. This was Edward Bernays – grandson of Sigmund Freud and master of the craft we now call public relations.
In this field, which was still in its infancy at the time, no one could match him. He worked with major US corporations and wrote several bestsellers on the subject. “The conscious and intelligent manipulation of the habits and opinions of the popular masses is an important element in any democratic society,” he once wrote. Edward Bernays offered just that – manipulation – as a solution.
His plan was simple and ingenious. Arbenz should be presented to the American public as a fervent communist who intended to nationalise all foreign property and turn Guatemala into the Soviet entry point into Central America. Zemurray, the director of the UFCA, who knew the situation in Guatemala well, rejected the plan on the grounds that no one there was thinking of communism, but Bernays was not to be persuaded. If Americans believed that communists were gathering in their backyard, sooner or later, he argued, politics would have to react. He turned out to be right.
He personally knew a number of editors of important American newspapers, and at his instigation they began to publish articles on the spread of communism in Central America. UFCO even organised trips for journalists to Guatemala, where representatives of the American Seventh Power could see for themselves that the arrival of the Soviets was only a matter of time.
These trips were nothing more than carefully planned tricks. The locals who complained to journalists about communist repression were all on the UFCA payroll. The reports read by American readers would probably today be labelled “fake news”. The Soviet Union had no influence or serious interests in Guatemala. And the methods used by the UFCA would probably not have embarrassed even the Kremlin.
Democrats and Republicans
The media campaign launched by Bernays soon bore fruit. In 1953, the average American, who had never even heard of Guatemala before, was already convinced that communism was about to sweep Central America. Edward Bernays was truly a master of his craft. The American public was convinced, but his hard work would have been in vain if he had not also succeeded in convincing American politics. UFCO, which was a big company even by American standards, was fortunate to be able to afford the best lobbyists in Washington.
One of them was Thomas Corcoran, a former adviser to Franklin Roosevelt and a man with many connections in the highest political circles. His work for UFCO was a closely guarded secret. Corcoran spent hours in Washington’s offices, and before long Democratic politicians were appearing before Congress to read reports on the alarming situation in Guatemala.
Corcoran was not only one of the best lobbyists in Washington, he was also hired by UFCO because he was a personal friend of Walter Smith, former CIA Director. Corcoran had worked with the intelligence agency for many years and was well acquainted with its methods of operation. It was thanks to him that the CIA became the main protector of the UFCA’s interests.
Arbenz had no chance against such a strong opponent. In addition to trying to navigate Guatemala’s traditional political turbulence, he also had to lead the country. He had projects on the table that had to be implemented, and he had to face attacks from the opposition in Parliament. He was opposed by UFCO, which had millions of dollars at its disposal, powerful friends in Washington and only one objective – regime change in Guatemala. As if the situation were not hopeless enough, the political climate in the US was not very favourable to Arbenz either.
Friends in Washington
Since 1953, the White House has been occupied by Dwight Eisenhower, a Republican who won the presidential race partly on the promise to fight the spread of communism by all means. The Cold War was then in full swing and the US was in the grip of a “Red Scare”. Alleged communists were hiding behind every rock and, under the leadership of the notorious Senator Joseph McCarthy, the Red Witch Hunt began. In the climate of fear and persecution that gripped the country, the Eisenhower administration was particularly sensitive to news of the spread of communism in Guatemala, spread by UFCO through its lobbyists.
Within months of his arrival in the White House, Eisenhower realised that he had a tool in his hands that none of his predecessors had been able to use. It was the Central Intelligence Agency. Eisenhower was the first US President to use the agency to intervene directly and violently in the political affairs of a sovereign country. In August 1953, the CIA staged a coup d’état in Iran that removed the democratically elected Prime Minister Mohammad Mosaddegh, who was a thorn in the side of American interests.
Eisenhower’s predecessor Truman, who was running the country at the time the Iran crisis broke out, rejected the possibility of CIA intervention because he feared it could set a dangerous precedent. Eisenhower, however, did not have these concerns and the rest, as they say, is history.
Eisenhower’s coming to power was a real blessing for UFCO. Many members of his administration had personal and business ties to the Corporation. US Secretary of State John Foster Dulles and his brother Allen, Director of the CIA, worked for a bank in the 1930s that did business for UFCA in Guatemala. Eisenhower’s personal assistant was married to the UFCU’s public relations director. The Assistant Secretary of State for Latin America in the State Department was a shareholder in the corporation and his brother was even a director in 1948. The US Ambassador to the United Nations, Henry Cabot Lodge Jr., was also a great supporter and shareholder of the UFCA.
It is difficult to assess the exact influence that these people had on the decision-making process regarding the Guatemalan situation, but it is safe to assume that the United Fruit Company executives must have been happy to have so many good friends in Washington.
Painful isolation
The UFCU’s persistent lobbying and a well-executed media campaign have paid off. The official decision to remove Arbenz from power was taken by Eisenhower in the autumn of 1953 and extensive preparations for Operation Success began. The choice of a name for the covert operation betrayed the optimism that prevailed among its organisers.
It was agreed that the CIA should do the dirty work on the ground, and the State Department would do the rest. The coordination between the two was certainly facilitated by the fact that the heads of the CIA and the Foreign Office were related. Brothers Allen and John Foster Dulles were the godfathers of the whole operation that led to the change of power in Guatemala in less than a year.
The American public was not supposed to know that their government was interfering in the internal affairs of a foreign country, let alone that it was doing so at the instigation of a private company. All the pressure on Guatemala was presented as a way of containing the spread of communism. The US authorities claimed that the US would not intervene militarily and added in the same breath that it was prepared to support all those forces in Guatemala that were fighting communism. The diplomatic rhetoric concealed the real intention of the Americans – a plan for regime change in Guatemala was already in place. For Arbenz, the days were numbered.
The pressure on Guatemala started on the diplomatic floor. US Secretary of State John Foster Dulles increasingly warned the international community of the rise of communism in Guatemala, in an attempt to justify further moves in US foreign policy. Moreover, the US was so influential in Central America that it was not difficult to persuade local leaders to join the attacks on Arbenz.
Guatemala finds itself in complete diplomatic isolation – without allies and without friends. Even the Soviet Union, which the Americans had scared the public with, showed no interest in this peripheral Central American country.
Guatemala’s Foreign Minister Guillermo Toriello has tried his best to convince the American public that his country does not believe in Marxism. There were communists in the Guatemalan parliament and government, but they were few and all democratically elected. It was no secret that Guatemala was a democratic country, he explained. But there was not a single minister or senior official in the government who was a member of the Communist Party. After all, communists played a much more prominent role in political life in Chile, Brazil and even Costa Rica, but this did not seem to bother the Americans. Toriello failed to convince the convinced.
Liberation
The US needed to find a man who would become the face of a free and democratic Guatemala in the post-Arbenz era. They found him in Honduras, where Carlos Castillo Armas, a former Guatemalan army general who had been on the CIA payroll since 1951, was living in exile. The American media, which suddenly began to show an interest in him, christened him “the liberator”.
Since he had to forcibly remove Arbenz from the Presidential Palace, he needed men and weapons. The Americans provided him with a few hundred mercenaries and the Liberation Army was born. These few soldiers, however, did not really pose any serious threat to the regime. The Liberation Army was nothing more than a kind of scarecrow and a reminder to the people and to the President of Guatemala that there was a powerful force hiding in the jungles of Honduras that could sweep away the Communist regime and take power. Operation Success was not based on the real military power of Armas mercenaries, but on psychological warfare carried out by the CIA.
The Americans also tried to scare the regime’s supporters with rather unorthodox methods. For example, some of Arbenz’s colleagues started receiving fake bombs and small wooden coffins in the mail – a hint of what was in store for them if they did not cross over to the right side. But propaganda in its traditional form had the greatest impact: US planes dropped leaflets over Guatemala, telling the population that the Liberation Army was advancing on the capital and that Arbenz’s days were numbered.
Overnight, the mysterious “Voice of Liberation”, a CIA-run radio station, also appeared in the country. At first it broadcast only a few hours a day, but soon CIA technicians succeeded in almost completely wiping out the state radio frequencies, so that the “Voice of Liberation” became virtually the only source of (false) information in the country. Arbenz also tried to address his fellow citizens on the radio, but the signal interference was so strong that no one could hear him.
Meanwhile, Armas’ mercenary army crossed the border and the “liberation” began. The Americans thought that the locals would join the rebels, but they did not. So the CIA used a new tactic – air strikes. Planes flew over the capital and other major cities, this time dropping bombs as well as leaflets. The attacks were part of a psychological war and did not cause any major material damage, but were aimed at intimidating the population. The Guatemalan army had a total of six obsolete test planes and the air battle against the US planes, piloted by US pilots, was a foregone conclusion.
Within a few months, America’s psychological warfare had achieved its purpose – the population was panicking and people were fleeing the capital in fear of war. Planes flew over the presidential palace, signaling that it was all over. The army knew it could easily defeat the improvised Liberation Army, but the problem was not Armas’ mercenaries – Guatemala was actually fighting the most powerful country in the world.
When it became clear that the US was not going to back down, Guatemalan army officers demanded Arbenz’s resignation. The President, realising that he was in a lose-lose situation, acceded to the demand of his former colleagues. Jacobo Arbenz resigned on 27 June 1954 and, after ten years, the Guatemalan revolution was over.
Epilog
Arbenz’s resignation was followed by several months of chaos, marked by a power struggle between various internal and external forces. The uncertainty was only broken by the US ambassador to Guatemala, who acted as a negotiator between the warring parties. The US, which had the final say on who would lead Guatemala, kept its promise and formally recognised the authority of Carlos Castillo Armas.
In October 1954, the Liberator called new presidential elections, in which he was the only candidate. He won with 99% of the vote. All the democratic gains of the Guatemalan revolution had evaporated. Political parties were banned, trade unions disbanded and opposition voices silenced. Arbenz’s agrarian reform was also abolished. Guatemala became a “banana republic” once again.
The CIA’s operation was so successful that it certainly deserves a place in the textbooks on how coups d’état are carried out. Allen Dulles, Director of the CIA, declared that the resignation of Arbenz was a victory for democracy, won by the Guatemalans themselves. Today we know that this is not true, but during the Cold War, Operation Success truly lived up to its name.
It is also true that her success was more short-lived. Just three years after the coup, Armas, the liberator, was shot dead by a leftist member of the presidential guard, and Guatemala plunged into civil war shortly afterwards. During this time, various left-wing guerrillas fought against authoritarian governments supported by the United States.
Critics of US foreign policy have identified a bitter irony in the Guatemalan story. Before the Americans ousted Arbenz, there were several thousand communists in Guatemala. They wore ties and tried to come to power exclusively by democratic means, through elections and political agitation. A few years after the coup, however, armed masked men with a red star on their chest began to appear in the jungles, and they no longer cared about democracy. The civil war in Guatemala only ended in 1996. Hundreds of thousands of people died.
United Fruit Company came through a chaotic period that it helped to create, but a few years later it was already falling on hard times. Profits were shrinking with each passing year, and even friends in Washington couldn’t seem to help. In 1968, the majority of the impoverished UFCA was bought out by the American entrepreneur Eli Black, and from then on the United Fruit Company brand ceased to exist.
Jacobo Arbenz spent his entire life in exile. He first lived in Paris, and later visited Prague and Moscow, earning him much criticism in the Western media. He then moved to Uruguay, the only country in South America willing to take him in. After the Cuban Revolution, Castro invited him to Havana and the Caribbean air initially did him good, but the enthusiasm did not last long. Arbenz had not been a happy man for a long time. A few years later, his daughter committed suicide and he fell into alcoholism. He died in 1971 in Mexico.
Finally, after 55 years, the US has admitted its guilt. In 1999, Bill Clinton formally apologised to Guatemala for the US role in the coup and the war that followed.
