From the late 19th century to the Second World War Guatemalan politics followed a familiar path to most states in Latin America at the time – dominance by caudillos – military strongmen who were favourably disposed towards foreign investment and economic exploitation, especially from the USA.  Under General Jorge Ubico (president 1931-44), this practice intensified with massive concessions given to Guatemala’s biggest foreign investor, the US United Fruit Company (UFCo), and to the country’s wealthy landowning class.

⇑ Belize (to the west of Guatemala) was the colony of British Honduras till 1964

By 1944 the economy in Guatemala was effectively monopolised by a “Big Three” oligopoly of US corporations – UFCo, in commanding control of the banana industry, International Railways of Central America, with its stranglehold (together with UFCo) over the country’s rail and ports facilities, and Electric Bond and Share, which controlled over 80% of Guatemala’s electricity supply. Poverty among the bulk of the rural population was endemic, agricultural workers earned between five and 20 centavos a day. 72% of the country’s land was held by just 2% of the population and there was an over-reliance on food imports because of the under-utilisation of land. Ubico’s oppressive rule was iron-tight and likened by international visitors to a “police state” [Gordon, Max. “A Case History of U. S. Subversion: Guatemala, 1954.” Science & Society, 35, no. 2 (1971): 129-55. Accessed July 27, 2020. www.jstor.org/stable/40402561].

Guatemala. Izabal. Banana plantation.

(Source: AFAR)

The spring of democracy 1944-1954
In 1944 a coalition of middle class professionals, teachers and junior army officers❈, with the backing of trade unions, forced Ubico’s removal [Juan Gonzalez, Harvest of Empire: A History of Latinos in America, (2011)]. This “Guatemalan Revolution” paved the way for free elections and an overwhelming victory for liberal professor Juan José Arévalo. The Arévalo government followed a moderate reformist path, establishing civil rights, a social welfare apparatus and achieved considerable success in improving national literacy levels. Arévalo was succeeded in 1951 by another democratically elected government, this time led by former soldier and defence minister Jacobo Árbenz. The progressive Árbenz moved beyond his predecessor in introducing much-needed, comprehensive agrarian reforms, something Arévalo had carefully avoided for fear of antagonising Guatemala’s landed elite and being branded pro-communist [‘Foreign Relations of the United States, 1952-1954, Guatemala’, Office of the Historian, www.history.state.gov/].

President Árbenz Guzman ⇓
(www.wikia.org)

Decreto número 900
This put the Árbenz regime on a collision course with UFCo and the US government. The government’s Agrarian Reform Law (Decree 900) allowed for the expropriation of all Guatemalan land more than around 600 acres in size that was not under cultivation (which nonetheless only added up to less than 5% of all private land-holdings). UFCo’s reaction was to complain to Washington that Árbenz’s land reforms threatened its monopolistic position in Guatemala. The Company’s resolve to resist the Guatemalan move was hardened by the government’s offer of about $627,000, a figure derived from UFCo’s own estimate of the land value for tax purposes. The US State Department then demanded compensation from Guatemala of over $15,800,000 for UFCo’s properties in the country  [‘Decree 900’, Wikipedia, http://en.m.wikipedia.org/].

Árbenz’s ‘gift’ to the landless masses
(Source: Life Mag.) ⇓

Upturning democracy: the build-up to the coup
UFCo turned its energies to lobbying Washington to secure its assets and investments in the small Central American country. The US government however had its own (wider) agenda in mind. With America in the grip of the “Second Red Scare” of McCarthyism in the early 1950s, the US chose to see Árbenz’s anti-colonial land reforms (an attempt by the Third World agrarian country to extricate itself from a backward feudal mode of existence) as prefiguring an encroachment of communism onto the Guatemalan political landscape⍟. The US government, operating through the agency of the CIA⚄, initiated a smear campaign against the Árbenz regime, using misinformation and infiltration to try to undermine its legitimacy within the country and the region. By 1952 the decision had been made to intervene in Guatemala. President Truman authorised the CIA to launch Operation PBFORTUNE, with the complicit involvement of Nicaraguan dictator Somoza García (Snr), but when its cover was prematurely blown the operation was quickly aborted. Plans in Washington for the coup d’état were shelved – for the time being, and the CIA and its co-conspirators resumed the covert task of subverting and destabilising the increasingly isolated Guatemalan government.

⇑ Allen Dulles, CIA director

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❈ drawing inspiration from FD Roosevelt’s American “New Deal” and from Mexico’s nationalising Cárdenas regime

⍟  Árbenz has the support of the small Guatemalan Communist Party and some communists filled minor offices in the administration but there were no communist members in the ruling cabinet

⚄ which had connexions with UFCo through those arch-cold warriors, the Dulles brothers, John Foster and Allen