The US takes over Guatemala, as democracy slips over a banana peel.

Guatemala City

The lid is on again in Guatemala. The ousting of President Arbenz and his replacement by Castillo Armas accomplished that at any rate. United Fruit has a nice new contract, agrarian reform has been stopped in its tracks, and the big landowners are happily cutting wages again.

Yes, the lid is on again; but if reform has to come by violence for want of legislation, God help the few hundred ladinos and foreigners who are squatting on top. The Communists no doubt figured prominently in the efforts of the Arbenz government to modify the existing economic inequalities, but that does not make the inequalities tolerable. Calling the Arbenz regime Communist-controlled was pure McCarthyism. By initiating agrarian reform in a country where 2 percent of the people owned 70 percent of the land, by encouraging workers to join labor unions and by furthering public education for a population two-thirds illiterate, Arbenz and his predecessor, Arevalo, had aroused the implacable opposition of Guatemala’s feudal aristocracy — army leaders, churchmen, and landowners.

Deep down everyone in Guatemala knows that communism was not the issue. Feudalism was the issue, and those who profited from feudalism won. Guatemala did have some tough, intelligent, well-disciplined Communists in posts of power and influence. The country reeks of poverty, and the stench of it drew them like buzzards. But they were a mere handful. Our State Department could find none in the Arbenz Cabinet.

Possibly some Communists had the ear of President Arbenz. The President of Guatemala has to have an ear like a switchboard operator, but it is the line to the army that he always keeps open. No Guatemalan President lasts very long if he lets himself get cut off from the army. Colonel Arbenz had good contacts, for a while, until the State Department got busy. Then the army would neither fight for him nor allow his followers to have arms.

His allegedly tremendous Communist backing proved to be a myth. So when the army told him he was through, Arbenz stepped aside.

How well the Arbenz administration did for itself is still unclear. There was undoubtedly graft; there has always been graft, south and north of the Rio Grande. But when Castillo took over, Guatemala was not only well along on a vast public-works program but had some $40,000,000 in gold to its credit. There can be no question that under Arbenz the country was making real progress toward democracy. The administration’s main projects — land reform, the highway to the Atlantic, public port facilities at San Tomas, and public-power development — had all been suggested by either the World Bank or the United Nations. Land reform was needed to free the people from domestic tyranny; the highway program and the rest to free them from foreign monopolies.

Fortunately for Guatemala, Castillo Armas seems honest and conscientious. But to picture him as the Guatemalan St. George who rid his country of the Communist dragon is ludicrous. Any study of the “liberation” shows there was no dragon, and the new government’s acts show it is headed by no St. George. Like most of Washington’s friends in Latin America, Castillo rules by force, without a congress or a constitution — although a constitution is being written. Stability is the watchword these days.

Dictator though he is, Castillo is not having an easy time. Unemployment and the lack of purchasing power are his biggest economic problems; agrarian reform is his biggest political problem. Guatemala is a vulnerable one-crop country. Coffee is the crop, and most of it has to be sold abroad. Coffee forms 65 percent of the country’s exports, and 35 percent of the government’s income is derived from export taxes on coffee. Recently coffee prices have been falling, but production has remained about the same. Overall agricultural output is expected to decline about 10 percent this year, partly on account of bad weather, partly because the small farmers have had their enthusiasm dashed by the delay in land reform. While normally Guatemala exports corn, 700,000 quintals of corn, the basic food, have had to be imported.

With shrinking revenues Castillo will be compelled to adopt a reduced budget. Government employees may have to take a 15 percent cut in salary, although food prices are nearly 50 percent higher than they were ten years ago. Work on various government projects — for example, University City and the National Library — has had to be curtailed or halted. Private employers have also felt the lack of cash. Much of the wealth accumulated during the boom years of the Arbenz regime, when coffee prices hit record heights, is hiding out abroad — $500,000,000 of it, they say.

Rich Latin Americans, mindful of the sudden violent turns their politics can take and with a traditional hankering for conspicuous spending, have always shown a reluctance to reinvest their profits at home, preferring to spend or bank them in the United States. This bleeding away of the national substance accounts in some measure for the persistent poverty of the Latin American countries. Foreign-owned companies, however handsomely they treat their employees, contribute to the same process.

Nobody has the exact figures on unemployment, but local business men are gloomy. Such symptoms of trouble as falling retail sales are not to be mistaken. Beggars are quiet and dignified, but they are ubiquitous; and so are shoe-shine boys — from seven to seventy years old — who are to Guatemala what the street-corner apple vendors were to America during the depression.

With only 28,000 of Guatemala’s total working force engaged in industry, it is no wonder that the country’s per capita income is only $180 a year. And this in a country where the cost of decent living is higher than in the United States; a dozen eggs, for instance, cost 80 cents, and a small apartment in the capital rents for from $70 to $90 a month. Two-thirds of the population produce little, consume little, and buy practically nothing.

But regardless of the living conditions or their politics, Guatemalans are agreed on one thing: the country needs economic aid and needs it fast. They cannot understand Washington’s niggardliness when they note the billions handed out to other parts of the world. “We cleaned out the Communists,” the people chant, tossing the fiction back to Mr. Dulles, “now please do something for us.”

Resident Americans, whatever their affiliations, are of the same mind. In some cases their very profits are at stake. American road-builders are constructing or hope to construct many of the highways for which United States’ funds have been or soon will be allocated. The canny Franklin D. Roosevelt kept Latin America happy with friendly words and self-liquidating loans. The blundering Mr. Dulles is going to have to square his mistakes with cash handouts. Castillo’s government needs $25,000,000 immediately. If the United States financed Castillo’s revolt, as Time jubilantly hinted, we did not buy ourselves a government with the money — we simply made a down payment.

Castillo never had a party behind him, and his support would make anyone nervous. How long, for instance, will the army stand behind him, the army whose once-powerful Colonel Elfego Monzon is waiting eagerly in Miami, Florida, not altogether out of favor, obviously, with the State Department? The landlords, who were all for Castillo a year ago, have become more and more impatient with him for not restoring the land that was expropriated. But a decree invalidating the Arbenz reforms would make desperate, homeless wanderers out of a hundred thousand peasants. The dictator has therefore put off the day of reckoning by freezing the agrarian status quo until January 31, 1956 — except for some 130,000 acres handed back to United Fruit. Some claimants have repossessed their estates by force, others through the courts.

Guatemalan labor, rural and urban, could give no effective support to Castillo even if it wanted to, for one of the dictator’s first acts was to dissolve the labor movement. He has since permitted unions to reorganize, but not until their leadership has been cleared by the all-powerful Committee for National Defense Against Communism. Only completely emasculated groups have been able to reform after such a going-over. In addition, anyone who takes part in an “illegal strike” can be imprisoned for three years, although Decree No. 59, which prescribes this penalty, does not explain what constitutes an illegal strike.

Some 75,000 persons are said to be on the committee’s suspect list. Anyone who ever helped organize a union, signed a peace petition, or accepted a homestead from his duly constituted government is probably on the list — if not already in jail. Decree No. 59 empowers the committee to throw a man in jail and keep him there for six months without trial on the mere suspicion of being or aiding a Communist. No matter how many times a suspect is freed by the courts, he can always be picked up again and held without trial for another six months. With the committee and its secret investigators combing the population, it is farcical to pretend that free speech or a free press exists.

The Guatemalan press’s delicate references to the situation are pathetic. How the people really feel came out during the students’ annual rag at Easter, a traditional parade and spree that the dictatorship dared not suppress. Under the immunity of the accepted fiction that it was all in fun, the students savagely lambasted the committee, Castillo’s dependence on Uncle Sam, Vice-President Nixon, and the dictatorial acts of the government.

By all means let us send help. But gifts, loans, and private investments will make Guatemala more dependent, and therefore more restless, unless the money is distributed so as to gain lasting good-will rather than as a temporary anesthetic to facilitate political and economic operations. In the first place we must make sure that the money does not stick to the palms of the political hacks who surround Castillo. Gastub may be the dedicated man his admirers say he is, but no one can deny that his government is carrying a heavy load of grafters and cutthroats. In the second place we must see to it that the flow of gringo gold is not diverted to their own purposes by the economic elite of the country or over-eager American promoters. Far from holding with the trickle-down theory of prosperity, Guatemala’s feudal aristocrats believe that wage increases are bad for the workers, that destitution has moral value. Thus they not only block individual betterment but stand in the way of industrialization, since the present pitiful average income prevents the people from ever providing the mass market an industrial system must have. Thirdly, of course, we should aid in the development of Guatemala’s entire economy — away from one-cropism, for instance, and the frittering away of foreign exchange on luxury goods. Here the recommendations of the World Bank and the United Nations could be of great value, being beyond suspicion of commercial self-interest or Communist intrigue.

But if Guatemala is to be a real friend of the United States, its borrowings should be self-liquidating, and foreign capital should be self-effacing, not politically and economically avaricious as has been the case in the past. For in the end Guatemala and all other Latin American countries will want full independence, economic independence as well as political.