“Of course, it will not be so easy for the Iranian economy to be restored, even if her refineries again begin to operate. This is due to the fact that during the long period of shutdown of her oil fields, world buyers have gone to other sources of supply.… Iran really has no ready market for her vast oil production. However, this is a problem that we should be able to help solve.”26
SIX YEARS AFTER THE COUP, President Eisenhower visited Iran. An American observer said that the drive from the airport to the Shah’s palace was a tremendous triumph—the streets were packed with cheering throngs (the people were paid ten-rial notes to be there, or so the observer was given to understand). The entire distance, five or six miles, was covered with Persian rugs over which the limousine drove. Tens of thousands of Persian rugs. Whatever else might be said of the Shah, he was no cheapskate when it came to showing his gratitude.27
* * *
* Because the financial situation has been so bad, and because liquor taxes produced essential revenue, the implementation of prohibition had been set six months in the future.
* See Note 1, this page.
CHAPTER SIXTEEN
Guatemala
A BRIGHT, SUNNY DAY IN EARLY MAY, 1954. At the East German port of Stettin, longshoremen grunt as they work along the docks, moving heavy crates with Czechoslovakian markings onto a Swedish merchant vessel, the Alfhem. Sea gulls swirl overhead, their raucous cries blending in with the shouts of the longshoremen. From a nearby, unused dock, a bird watcher studies the gulls, scanning the scene with his binoculars, hoping to spot an exotic species.
The bird watcher blinks, lowers his glasses, rubs his eyes, raises and refocuses the binoculars. There is no mistake. The workers are using cranes to lift small artillery pieces into the hold of the Alfhem. The birder makes some notes on his species list, then slowly saunters off in the other direction, continuing to scan the sky for rare gulls.
RETURNING TO HIS APARTMENT, the bird watcher—who was in reality a CIA agent—wrote a seemingly innocuous letter to a French automobile parts concern in Paris. To it he attached a small microfilm dot. The agent in Paris translated the microfilm message into code—the message started with the twenty-second prayer of David in the Book of Psalms, which begins, “My God, my God, why has Thou forsaken me?” He sent it via radio to Washington. That evening in Washington another agent decoded the message, then reported to Allen Dulles. A shipment of Communist-block arms was on its way to Guatemala.
Dulles instructed still another agent to check out the report as the Alfhem passed through the Kiel Canal. He discovered that although the Alfhem’s manifest listed her cargo as optical glass and laboratory supplies, and her destination as Dakar, Africa, in fact the freighter was carrying two thousand tons of small arms, ammunition, and light artillery pieces from the famous Skoda arms factory in Czechoslovakia. Her real destination was Puerto Barrios, Guatemala.1
On May 15, 1954, the Alfhem, after changing course several times in an effort to confuse the CIA, tied up at Puerto Barrios. Two days later, as she was being unloaded, Secretary of State John Foster Dulles called a press conference, where he announced that a shipment of arms from behind the Iron Curtain had arrived in the western hemisphere, in defiance of the Monroe Doctrine. Immediately, Washington was in an uproar. Senator Alexander Wiley of the Foreign Relations Committee called the shipment “part of the master plan of world communism,” and President Eisenhower asserted that this “quantity of arms far exceeded any legitimate, normal requirements for the Guatemalan armed forces.”2
Ike was right, but the arms were not intended for the armed forces. Instead, the President of Guatemala, Jacobo Arbenz Guzman, intended to distribute them to his supporters in order to create a people’s militia, free of any control by the regular army officer corps. Arbenz no longer trusted the American-equipped and -trained Guatemalan armed forces.3
The American public response was swift. The Eisenhower administration announced that it was airlifting fifty tons of rifles, pistols, machine guns, and ammunition (“hardly enough to create apprehension” in Guatemala, Ike later wrote) to Guatemala’s neighbors, Nicaragua and Honduras. In addition, Eisenhower declared a blockade of Guatemala, and called for a meeting of the Organization of American States to consider further steps.4
Those acts were backed up by a far more important decision, made at a secret, emergency session of the National Security Council, presided over by the President himself. Allen Dulles presented the CIA’S assessment of the situation. It was, essentially, that the Communists were trying to establish a foothold in Central America as a base for operations throughout the New World, in blatant disregard of the Monroe Doctrine. He indicated that the CIA had not been caught unawares, that it was ready to move. Eisenhower approved the program Dulles outlined. The CIA-sponsored invasion of Guatemala was on.
LIKE VIRTUALLY EVERY ADMINISTRATION since Teddy Roosevelt’s, Eisenhower’s had come into power promising a new policy toward Latin America. No more gunboat diplomacy, no more big-bully tactics, no more Marines landing the moment a government to the south displeased Washington. In addition, Eisenhower’s chief adviser on Latin America was his younger brother Milton, one of America’s foremost experts on the area, a highly intelligent, keenly sensitive man who was well aware of Latin resentment of any American intervention for any reason into their internal affairs. How then could it be that Ike would approve—and enthusiastically at that—a clandestine operation designed to overthrow a democratically elected government in favor of a military regime?
To friendly observers, the answer was clear and straightforward. The threat of international communism overrode all other considerations. Ike was simply not going to allow the Communists to establish a base in Central America, a base from which they could subvert the governments of their neighbors.
To critics of the Eisenhower administration, the answer was also clear and straightforward. The Arbenz regime represented a threat to the financial interests of the United Fruit Company; the United Fruit Company had powerful friends in high places (including the Secretary of State and the director of the CIA); Eisenhower therefore acted to protect United Fruit.
The first view was stated in official form in October 1954 by the American ambassador to Guatemala, John E. Peurifoy, in testimony before the Subcommittee on Latin America of the House Select Committee on Communist Aggression: “The Arbenz government, beyond any question, was controlled and dominated by Communists. Those Communists were directed from Moscow. The Guatemalan government and the Communist leaders of that country did continuously and actively intervene in the internal affairs of neighboring countries in an effort to create disorder and overthrow established governments. And the Communist conspiracy in Guatemala did represent a very real and very serious menace to the security of the United States.”5
The second view was expressed in an interview in December 1977 by the CIA’S political director of the operation designed to overthrow Arbenz, E. Howard Hunt. Hunt declared, “I’ve often said of that project [Guatemala] that we did the right thing for the wrong reason. And I always felt a sense of distaste over that. I wasn’t a mercenary worker for United Fruit. If we had a foreign policy objective which was to assure the observance of the Monroe Doctrine in the hemisphere then fine, that is one thing; but because United Fruit or some other American enterprise had its interests confiscated or threatened, that is to me no reason at all.”6
UNITED FRUIT’S INVOLVEMENT in Guatemala began shortly after the turn of the century when, because the fertile country offered “an ideal investment climate,” it became the site of the company’s largest development activity. The quaint little banana republic, in which all but the few enjoyed what Mexicans used to call la paz de la tumba (the peace of the tomb), was safe for foreign companies, foreign merchants, wandering foreign students, scholars of Mayan antiquities, and missionaries. The company was the dominant economic institution in Guatemalan life.7
In 1931, as the Depression hit Guatemala, a new caudil
lo (dictator), Jorge Ubico, took power. Four years later the law firm that represented United Fruit, Sullivan and Cromwell, negotiated a ninety-nine-year contract with Ubico that improved the company’s already favorable position. First, United Fruit got more land, bringing its total possession to more than the combined holdings of half of Guatemala’s landowning population, including the Catholic Church. Second, the contract exempted United Fruit from virtually all taxes and duties; even the export tax on its major commodity, bananas, was insignificant. Additional concessions included unlimited profit remittances and a monopoly of the communication and transportation networks.
The Sullivan and Cromwell lawyer who negotiated the deal for United Fruit was John Foster Dulles.8
In 1944 a military junta overthrew the Ubico dictatorship. In October of that year, in Guatemala’s first free election, Juan José Arévalo was elected President. Arévalo was an educator and an intellectual with leftist tendencies; he called his program “spiritual socialism,” a concept which caused much derision. United Fruit agents made it synonymous with fuzzy political thinking and softness toward communism. His nickname was “Sandia,” or the watermelon, which everyone knows is green on the outside and red inside.9
Arévalo introduced reforms that were modeled, in part, on the New Deal, including health care, worker’s compensation bills, and a social security system. He gave women the right to vote. He started a massive Indian literacy campaign. He allowed a completely free press and tolerated all political activity. The Catholic Church took advantage of this freedom to agitate against him, sending in anti-Communist priests from other Central American countries who adopted a bitterly anti-government line. Communists also flocked to the country, both previously exiled Guatemalans and foreign-born. The Communists had a flourishing newspaper, became increasingly active in the government, and began organizing labor unions.10
In 1947 the Arévalo government enacted a new Labor Code. The code called for compulsory labor-management contracts; it required collective bargaining in good faith; it expressly acknowledged the right of workers to organize; it established the principle of minimum salaries. At that time the FBI was still responsible for espionage in Latin America, and J. Edgar Hoover’s men began compiling dossiers on Arévalo and other leading figures in the government. These documents, which have recently been declassified under the Freedom of Information Act, reveal that most of the FBI’S informants were former Ubico supporters who naturally enough stressed the Communist influence in the new government. The main “proof” was Arévalo’s encouragement of labor unions.11
Much of the FBI’S evidence of Guatemala’s penetration by international communism was equally silly. For example, in 1950, Tapley Bennett, the State Department’s officer in charge of Central American Affairs, charged that Guatemala’s failure to sign the 1947 Rio de Janeiro Treaty of Reciprocal Assistance (which called for American nations to come to each other’s aid in the event of an armed attack) was “a pertinent example of the influence on Government thinking [in Guatemala] by Communist-minded individuals.”12 In fact, Guatemala’s opposition stemmed from its historic controversy with Honduras over Belize. Even the military government that the United States set up in Guatemala in 1954, when it signed the Rio Treaty, added the reservation, “The present Treaty constitutes no impediment preventing Guatemala from asserting its right with respect to the Guatemalan territory of Belize by any means by which it may deem most advisable.”13
There was, however, some real evidence of Communist infiltration. In the regularly scheduled elections of 1950, the campaign manager of winning candidate Jacobo Arbenz Guzmán was José Manuel Fortuny, founder of the Guatemalan Communist Party and editor of its newspaper. (But Arbenz vehemently denied that he himself was a Communist, and Fortuny lost his own bid for a seat in the National Assembly.) Arbenz was inaugurated on March 19, 1951; two weeks later Fortuny signed, for the first time, a public manifesto as the Secretary-General of the Communist Party of Guatemala. In October the Confederation General de Trabajadores de Guatemala became the single national labor federation, with a self-proclaimed Communist as Secretary-General. Two months later, the CGTG affiliated with the World Federation of Trade Unions, the Communist international labor front.14
One man who never questioned the Communist influence on Arbenz was the CIA’S agent in Mexico City, E. Howard Hunt. Of medium height, Hunt was broad-shouldered, powerful, sure of himself. Casual of manner, soft of voice, he was nevertheless deliberate in his movements, straightforward in his actions. Articulate and intelligent, he had a flair for descriptive and imaginative writing and a penchant for action. He was quick to form judgments and brutal in expressing them.
In the early fifties, Hunt was sending in reports from Mexico stressing the dangers in Guatemala. Most of his information came from Mexican students who had conferees in Guatemala. Hunt was, in his own words, “subsidizing and directing a very powerful anti-Communist student organization in Mexico, and these young people, and it’s not proper to call them agents because they didn’t know who was behind them, were reporting student activities in Guatemala, and this was very alarming.”
When asked about Arbenz himself, Hunt replied, “Well Fortuny was the principal Communist. He and Arbenz’ wife, who came from a very good Salvadorean family (in fact they became neighbors of ours years later in Montevideo). Arbenz was a very weak individual. His two daughters were beautiful and nubile.… She [the wife] was really the agitator, and he was sort of one of those faceless persons.… She on the other hand represented the might of the Communist world. He was I would say their puppet.* Of course I had ample opportunity in later years to observe them in Montevideo. We even belonged to the same country club. He liked to live well.”15
Whether or not Arbenz was the weakling Hunt thought he was—his portrait shows a man strikingly handsome, in a Spanish Don sort of way, with a high forehead and long, aristocratic nose, who looked like he might have been a bullfighter if he had not become a politician—the Guatemalan President did have enough courage to push through the Agrarian Reform Law of 1952. In the words of one careful historian of the Guatemalan revolution, “The law itself is widely accepted by critics writing in both Spanish and English as justified under Guatemalan conditions and as basically aimed at idle land.”16
The bill redistributed all estates taken by the government from German owners during World War II. More important, it expropriated some 240,000 acres of United Fruit’s Pacific coast holdings, all of it idle land, and (a year later) another 173,000 idle acres on the Atlantic coast. This left the company with 162,000 acres, of which only 50,000 were under cultivation. Arbenz offered to pay $600,000 for the land, but in long-term non-negotiable agrarian bonds.17 Eisenhower, while admitting that “expropriation in itself does not, of course, prove Communism,” nevertheless charged that the compensation offered was “woefully inadequate” for “this discriminatory and unfair seizure.”18 The figure $600,000, however, was not pulled out of thin air—it was United Fruit’s own declared valuation for tax purposes.
The company, furious, struck back with all its considerable resources. Although it was not able to force the Truman administration to send in the Marines or otherwise actively intervene, it did use its contacts and influence to picture Arbenz as a Communist to be feared. These United Fruit contacts included Spruille Braden, Assistant Secretary of State for Latin American Affairs, later public relations director for the company, and Edward Miller, Jr., another assistant secretary who had been a member of Sullivan and Cromwell. They helped paint the picture of Arbenz that United Fruit wanted the American people to see. The company launched a sizable publicity campaign and sponsored junkets to Guatemala.
Truman’s Guatemalan ambassador, Richard Patterson, Jr., said that he could tell a Communist by applying the “duck test.” He explained, “Many times it is impossible to prove legally that a certain individual is a Communist; but for cases of this sort I recommend a practical method of detection—the ‘duck test.’ … Supp
ose you see a bird walking around in a farm yard. This bird wears no label that says ‘duck.’ But the bird certainly looks like a duck. Also, he goes to the pond and you notice that he swims like a duck. Then he opens his beak and quacks like a duck. Well, by this time you have probably reached the conclusion that the bird is a duck, whether he’s wearing a label or not.”19
Patterson’s successor, appointed by Ike, was John Peurifoy. According to Howard Hunt, Peurifoy got the job for three reasons. First, the Republicans were stuck with him. “You know Peurifoy started out as an elevator operator,” Hunt explained, “and with the oncoming Eisenhower administration he would have been cast out, but the Democrats did what they are so skillful at doing, they encapsulated their people, giving them civil service protection.… There was a hell of a stink at the time. In any event, Peurifoy was an unwanted man at the ambassadorial level.” Second, he had been ambassador to Greece in the late forties, at the time of the Truman Doctrine, so he had experience fighting Communists. Third, “he was expendable. Nobody in the Eisenhower administration owed him a damn thing … and they needed a guy who could take the heat in case things went wrong.”20
Peurifoy applied Patterson’s duck test to Arbenz and it came out positive. “I spent six hours with him one evening,” Peurifoy explained, “and he talked like a Communist, he thought like a Communist, and he acted like a Communist, and if he is not one, he will do until one comes along.”21
Official Washington, in short, was convinced that with Arbenz the Communists had succeeded in establishing their first regime in the New World. Given what had recently transpired in China, Czechoslovakia, East Europe, and in Vietnam (the Geneva Conference on Vietnam was just then getting under way); given Ike’s own views on Communist aggression, as well as the Dulles brothers’ and that of nearly every senator and representative in Washington; given the CIA’S recent success in Iran; given that the CIA had already set up an operation, code name PBSUCCESS, to overthrow Arbenz, it was probably inevitable that the United States would intervene in Guatemala, United Fruit or no United Fruit.