CONCLUSIONS TO NIE-62 STATE DEPT - OIR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00022R000200030045-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 12, 2016
• Document Release Date: September 12, 2000
• Sequence Number: 45
• Content Type: REPORT

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SEC IET 29.
SECURITY INFORMATION
PROBABLE FUTURE DEVELOPt`1TS
1. It is estimated that Communist influence in Guatemala,
which has increased at a rapid rate and has reached a level that
constitutes a serious danger to US security interests, will
continue to grow during the remainder of 1952 unless the government
and the army change the position which they so far have assumed.
Barring this latter contingency the Communists will continue to
extend their influence through the dominance of organized labor.,
infiltration of the administration and of the leadership of the pro--
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g?vernmen
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2. Barring a radical deterioration in Guatemalat s economy, s>? C.
the stability of the Arbenz administration is not likely to be
threatened in 1952Q There is no effectively organized opposition.
Moreover, the Governmentts broad national and social program., the
efficacy of its propaganda, the emotional support engendered by its
contest with the United Fruit Company, the trend toward unity
among the pro Administration political forces, including the Commu-
nists, and the apolitical position of the Army together present a
powerful combination of factors favoring the stability of the
regime.
3. The stability of the regime and the direction of the
Revolution during 1952 are largely keyed to the outcome of the
dispute with the United Fruit Company. The possibilities are:
(a) a settlement with the United Fruit Company Which the Arbenz
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administration can present as a substantial victory, (b) a
continuation and extension of the present dispute with US business
interests, and (c) the breakdown of present negotiations and the
withdrawal of the United Fruit Company frcm Guatemala,
).. In the event that the Arbenz administration reaches a
successful settlement with United Fruit, i,,e., if United Fruit
remains in the country on the governments and laborls terms,
Arbenz would be immeasurably strengthened in the country. Under
these circumstances, the Government should have less difficulty in
winning a victory in the congressional elections to be held in the
fall and will be better able to sustain a show of economic and
social reform.
5, In the event of a settlement with the United Fruit Company,
the Administration, even though freer to pursue an independent
course, will probably continue collaboration, at least until the
forthcoming congressional elections, with Communist-led labor, which
will likewise have been strengthened. The Government would be under
pressure to maintain its anti-US position and to continue its
campaign against foreign interests, directing them against other
large American interests, with the IRCA as the first target. The
Communists would also be able to strengthen their ties with inter-
national Communism, particularly through the international labor
front.
6. it is not impossible, however, that the Government may
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SECURITY IATFOi ATION
recognize the essential danger to itself of continued close
collaboration with Communists and may seize the opportunity of a
"'victory" over the United Fruit Company to begin the separation of
labor from its Communist leadership. This possibility could become
stronger after the congressional elections and over the longer
range. Under such circumstances foreign enterprises in Guatemala
may receive some respite and anti-US propaganda may be tempered
Even in this eventuality, however, it is not likely that the Adminis-
tration would surrender its position with respect to ("colonialismt'
and "democracy", nor its position of independence in world councils.
7o In the event of continued dispute with the United Fruit
Company the present trend of economic deterioration and mounting
political tension will be accelerated. There will be an increase
of restlessness among the middle class and perhaps within the army.
The financial position of the government will become weaker; there
may be cutbacks in economic projects and social services. The
government will be left with little political support outside of
Communist-led labor for political support. There will be a
enrresponding increase of restlessness among the middle class and
perhaps within the army,
8. It is not expected, however, that, barring coffee crop
failure and a sharp decline in coffee prices, the economic situation
will become so critical as to deprive the government of control of
the situations As political insecurity increases the pro A.dminis-
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SECURITY INFORMATION
tration parties although they may lose constituents may be expected
to act in close accord, and the Adrr_inistration, if necessary,, will
supplement its propaganda against the opposition by suppression or
political persecution,
9. Under gradually deteriorating economic conditions the
following developments are possible with respect to the position of
Communism in Guatemala.
at Should the Arbenz administration not' appreciate the danger
of Communist expansion in Guatemala, the Communists are
likely to be successful in intensifying domestic propaganda
against US interests and in extending the area of Guatemalats
non-cooperation and even hostility toward the US. They
will develop their local organizations,, strengthen their
ties with international Communism, and intensify their
relations with Communist organizations in other Central
Am rican countries,
ba Should the Arbenz administration permit the Communists to
realize their potontial to such an extent that they are
able to seize direct or indirect control of the governments
the army is likely to withdraw its support from the adminis-
tration and. join with opposition forces.
c. There is a possibility that the Arbenz administration,
recognizing that the Communists are capable of challenging
its control, may, with the support of the army launch a
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move against the Communists
10. While the growth of Communism will produce a widespread
reaction it is not possible at present to foresee at what point --
short of Communist seizure of government -- opposition to Communist
expansion vwill become effective, The attitude of the army would
be the controlling factor. It is probable that in the early stages
of Communist expansion, since it will be initiated under the guise
of nationalism,, the army. will retain its present posture of non-
interference in political affairs. However, while the army may
continue to tolerate Communist expansion it will at the same time
become apprehensive of the outcome of such a development, especially
if the Administration shows itself unable to circumscribe Communist
influence within limits which it regards as safe. It is almost
certain that the army will take a much more positive stand should it
become convinced that the Communists are on the verge of capturing
direct or indirect control of the government.
11. In the event of a break in the negotiations with the
United Fruit Company and the withdrawal of the Company from the
country, the stability of the Arbenz administration would be
seriously endangered.. It would be confronted with severe economic
dislocations such as unemployment, curtailed national income,,- and
loss of revenue. Drastic social and economic measures would then
be required to cushion the shock to the nation's economy. The
degree to which such measures might be effective would determine the
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life of the Administrations
12., Should these measures prove inadequate to cope with a
severe and prolonged economic crisis, the government will very
quickly lose any middle class support it now haste Labor would
probably turn against both its Communist leadership and the govern-
ment. Under these conditions the army may well estimate that the
government has lost its popular support and may intervene,,
13, Should the government, however,, exploit the Companyts
withdrawal as a great national victory., and, with the enthusiastic
support of the Communists, undertake measures which would shift the
burden of the economic crisis upon the well-to-do groups in
Guatemala, the Administration may succeed in retaining a considerable
measure of its popular support., at least until the end of 1952,
It is not believed that sharp curtailment of banana production and
marketing, or, even a contingency such as IRCA's withdrawal need,
in themselves, prove fatal to the economy over the short run. Under
these circumstances the army may well hesitate to intervene unless
it becomes convinced -that the Communists have assumed control, or
even direction,, of the governmento
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