CIA HISTORICAL REVIEW PROGRAMUNITIZED
ROUTING A
RD SHEET
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CivtcK eitcrllvrtj J
UNCLASSIFIED
GUATEMALA
OOLWGE
LASfilS
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Lt. Col. Carlos Castillo Armas, who led the rebellion which resulted in the overthrow of the pro-Communiet Arbonz regime onune, assumed the presidency of Guatemalaeptember,the resignation from the former junta of two membersi Colonel Rlfego Konzon and Major Enrique Oliva. This developmentonth of growing discontent among Castillo's own associates in the "liberation movement" and rumors of amy dissatisfaction, and serves to strengthen Castillo's personal prestige. It does not assure elimination of the rivalry between the strongly enti-CoBmunist, pro-clerical, conservatives who favor the preservation of thearmy" as an instrument of government policy, and the professional army. This rivalry is opt to determine the course of political maneuvering for months to come.
Currently, Castillo Armas ruleselatively"political statute" which has replaced the liberal The statute invests him with all legislative and executive functions, but not those of the judiciary. ItIlliterates and stipulates thet lsoor, social, and agrarian matters will be the subject of separate lows. It is oossiblc, however, that$ constitution, in modified form, may be rosdoptad pending the convocationonstituent assembly and the -adoptionew basic law. All political parties have been suspended.
The success of the new replme in securing the backing of labor, with its greet potential political importance, will depend upon its ability to eliminate the Communist excesses without repudiatingiel and economic advances made elnee the popular revolution of lpUi. Although thn government has, to date, permitted anti-Communist labor leaders to attempt reorganization of tho labor movement, these leaders have*Seon given littl* encouragement by Castillo. The morale of labor is currently low because of indiscriminate and uncontrolled action by employers in the guise of "anti-Conmunism".
There apoesrs to be little chanceesurrence of Communist leadership in the near future. All Communist organizations hove been dissolvedrastic anti-Communist decree of broad applicability has been enacted. However, as the result of strong pressure by other Latin Amorlcan countries, the most important Communistow in asylum in foreignre
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expected to leave Guatemala under safe conducts. Economic
The Castillo government inherited an unsound, though noteconomic situation snd has been confronted by increasedand depressed business conditions. Restoration of politioal stability and the establishment of confidence in the new government should cause conditions to return to normal, however, and greater guarantees for foreign and domestic capital aay result in business conditions better than those existing under the Arbenz regime. The reconstitutton of coffee plantations subdivided under the former agrarian law may help to restore government and private revenues.
To restore confidence, to consolidate its political position, and to stimulate business, the government has outlined an ambitious public works program, to costillion dollars the first year ond emphasizing higlrway development, housing, power, and irriaation. United States eid i3 being sought, and will be necessary, for the successful imolementetion of this dan.
Thebasis for political power continues to reside in the Guateaalan army ofen. Dissatisfaction with Castillo's leadership has been apparent in unsuccessful or aborted revolts onndugust and in rumors of continued plotting. However, Castillo has sought to assure his control over the amy by the arrest or dismissal of officers known to bo disloyal, by the reassignment of loyal officers, by the nlflcinj, of trusted leaders of his "liberation arisy" in key posts, and by theof irregular liberation troops into regular army units. The army's potential for unified opposition has therefore beenreduced, though by the same token the resertfient cfofficers has been Incurred and the strength of the relatively small liberation force has been dissipated.
neral professional army dissatisfaction be paralleled by continued dissatisfaction among organizedowerful liberal, thoupl, non-Comaunist, alliance could eventually develop which vould rravely threaten the stability of the present regime.
Original document.
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