TABLE OF CONTENTS
Page
THE PROBLEM
CONCLUSIONS
L BACKGROUND
IL TIIE PRESENT SITUATION
Forces
The Section of Much
The New Admmirtratioo
Opposition Parties
The Communist*
Economy
III. PROSPECTS
FJrst So: Months
Longer Bun
Mac
PROSPECTS FOR STABILITY IN GUATEMALA
THE PROBLEM
To estimate the situation in Guatemala and the prospects for stability over the next year or two.
CONCLUSIONS
staying power of the now, moderate-left governmentwill depend primarily on its relationship with theThe military leaders, recalling the Communist surgein the, may tend to overreact to anyor policy moves which they regard as favorable toleft.roud and somewhat sensitive man, is likelyrestive over such circumscription of his powers.
our view, his chances of maintaining himself in powerare good. During this period he will have the opportunityhis ties with military leaders and the economic elite,this would require the sacrifice of some of the reformhe favors. The Communist guerrilla bands, although nottalcing power, are strong enough to carry out terroristcould keep tiie government under heavy pressure from theThese campaigns might be used to justify militarythe right and the military leadership became dissatisfiedconduct of his administration.
view of the economic, social and political problems whichMendeze are not confident that he willoffice through the next two years. His adrninistration's chancesmuch, either in reform or in significant economicdevelopment, will depend heavily upon whether it acceptsoutsideits attendanteffectively.
SECRET
DISCUSSION I. BACKGROUND
uatemala has had little experience will) representative government, and the military establishment continue* to be tho most important political {actor. Until Worldhe country was fettle aSected by tba political and soda! currents of the twentieth century. The reform -minded government which came to powerong period of dictatorial rule,ar-reaching program of change aimed at eradicating the remnants of the feudal part. But tbe Guatemalan Communists gained strong Influence in the Arevalood, under President. they became the controlling force tn the government.
'1 During these years the political predominance of large landowners and merchants, in alliance with the military, was undercut, but their ecooomic power was not much reduced. Though the Communists had control of organized labor, their efforts to build strength throughout the countryside were not successful.4 when anti-Communist Guatemalans launched an invasion from neighbor* ing Honduras, neither peasants nor workers showed much Inclination to fight for the Arbenz regime. The military chiefs refused to commit troops against the invaders and Arbenz was quickly deposed. Tbe leader of the victors, Col Carlos Castillo Armas, proceeded tourge of the Cornmunirts and their associates in which tbe country's labor and small-landowner organizations were almost completely destroyed. Thus the way was opened for the right to regain its former political predominance; It baa not done ao largely because of personal rivalries among rightist leaders, and the failure of any rightist leader toopular and effective program.
3 The military esuhhshroenl. however, hai clearly indicated tbat It will notecurrence ofattern of Communist mfihialioo. Inhe Minuter of National Defense, Col. Enrique Perarta,oup which removed President Ydfgoras for his equivocal handling of former Presidentcandidacy in the3 elections. The military leaders made clear their intention of retaining direct control of the caretaker government by decreeing that the Minuter of National Defense would alio serve aa Chief of Government.
uatemala remains underdeveloped Although new exports have been developed, including some manufactured products for tbe Central American Common Market, the economy remains vulnerable to downswings in work) commodity prices for codec and ootton, its principal oiports. The reaction to tbe Arevalo-Arbenz period has been characterizedesistance to change that has Impeded movementore modern society. About half the population, which at present totals, continues to follow tradi-
clonal Irrfiaa ways in largely self-contained communities that participate only marginally, if at all, in national economic aod political life.'
H. THE PRESENT SITUATION
A. Political Forces
cfion ot6uaternalar, pofeioal parties axe prcdorrdoarrtry raerea.uli.tlc, and poubcaJ
EE y ballots.
Orcted president has complied his term of office. Againstolitical past, the prohny with which An electionarch was conducted and the larTo violence during and after the halloting were unprecedented and unexpected The Peralta adrnitdrtratioo apparcwly believed thatcancudatc couldf WhfRevohrdooary Party (PR) came out on lop Peralta made good on his commitment to respect the results.ie PR candidate, |uho Cesar Mendez Montenegro, did notajority or
ffesatawleats),
which sub^uently oonfirmed hisince the election ol fl March. I* recurrent etforts of anti-PR forces to secure military supportoup have been nullified by Pewlta's control of the military establarunent
Thu Now Administration
.JLIIr? <* Boo^^utust
tradition of4 revolutionary tnovwnent Its meet Uutuerrtialtoaetj lor tbrmooo J
l-aama^Prria^^
Horny,Congrea, mult choo*.
ol tot the Mali nth party nurfvad.
FIGURE 1
MffiULTS OP THE ELECTION OFfl
racm^
Rf.clulioiuryCfcar X
Uomocraticda Din.
Uonal PartyLafa 20
National Anpl
Saiyo. 8
PID^ Co*tenuUa Sort*1 Included a. the
is largely drawn from moderate? leftiil elements rrf urban labor, pejlicularly white collar workers, and from irrtellectual, professional, and other groups of the country's slowly emerging middle sector. Lower class rural end urban Ladmot also contributed heavily to the PR victory. Tbe PR 1ms expelled roost of its extremis! elements, some of whom were COrrununisU. and has moved toward the center of Cuacrmalan politics. Tbe party platform advocates agrarian and other socio-economic and political changes by constitutional means. But the PR leaders, although tbey have Indicated priorities for action, beginning with rural electrification and road building, have not yet put forward specific measures.
Mendea liad not participated actively In Guatemalan politicshen he broke with the Arfvalo adminiitratwn. untlt that time fee accepted the PR nomination after the death of hi*ario, tbe party* founder, dominant leader, and presidential candidate. Julio Cesar's selection was in part an effort to exploit both his prestigerofessor and dean of the Faculty of law at San Carlos University and the emotion aroused by Marios sudden death. It also reflected the lack of other appealing candidates in (he PR.
The President-Elect, whose Inaugiuation is scheduleduly, will have the initial advantage of assuming office with few political enemies. He is popular with Guatemala's intellectual and professional groups, including the university students However, although the PR favors private enterprise it has few supporters among theeconomic elite. The party is drrnonstrabty anti-CommunW but its leaders' participation in4 revolutionarycontinues to be cited by the fax right as evidenceR admuustratioo willommunist resurgence. Such allegations aro bolstered by the activities of minority elements in the PR, who ore considerably more radical than the party leadership. Finally, the PR has relatively little support amongmilitarygroup that, In the past, haa boon able to change Guatemalan governments virtually ut will.
Mender himself has had little experience at the upper levels of Guatemalan politics and even leu in working wilri tbe military establishmenL He may also have some difficulty in working with the new Congress, particularly ia securing approval for any far-reaching policy Initiatives. Even though be beginsajority In the Congress, his party is not entirely united, and he will need to make effective use of patronage and pressure. Thus far, bo has shown good judgment in accepting advice from other party loaders.
'The Guatemalan Armed Form indudoCO man la uniform, of whom fewermo Ui the Navy and Air Faroe.
4
Role of iheike their predecessors the presentaxe determinedommunist resurgence shall not occur. Attime, despite their misgivings, they appear Willing to give the newa chance to prove itself. For his part. Mender has used his brother,director of the military hospital, to convey personal reassurance* toleaders. The PR took one step toward cooperation with tbe military
in early May. when the PR majority in the new Congress collaborated with the military government in tbe impositiontate of siege toenewal of Communist terrorism.
Opposition Partial
The National Liberation Movement (MLN) is the politically organized die-hard rightist opposition to the new administration. It was formed by Mario Sandovallose collaborator of Castillo Armas, after the latters assassinationhe MLN continues to be dorninatcd by Sandoval's personal ambition for power and bis deep-seated distrust of the political left and fearommunist resurgence. The party cooperated with Petal ta in preparing for the election but refused tooalition candidate When the MLN ran its own ticket, spotting the right, its presidential candidate finished last and tbe party elected only five deputies. At presentMLNecliningact which is reflected in the formation of several rightcst terrorist groups.
The Democratic Institutional Party, another oonservative (legally in-scribed) (rroup, was set up4 toehicle for presenting the Pcralta administration's coalition candidate. During the initial sessions of the new Congress theID deputies havo cooperated closely with the PR majority in facilitating the change of adrrunistrations, organizing the new Congress and reacting to Communist terrorism.
There arc several other opposition parties that are not registered. The Democratic Revolutionary Unity Party (URD) is the personal vehicle ofVillagrah Kramer, an inordinately ambitious and opportunistic politician now in exile. Its membership includes pro-Arcvalo groups and individuals expelled from the PR. Vlllagran Kramer has run the scale from close ties with Communists to protestations that the URDember of the non-Communist, democratic left. The Guatemalan Christian Democratic Party (DCG) Is strongly anti-Communist and anti-military, but Is weak and in disarray. Its leadership has been taken over by young liberals who advocate radical solutions to the country's socio-economic problems. Both the URD and the DCG are hopeful ol Inheriting the leadership of the leftR that cannot make good on its reform platform.
The Communists
Guatemalan Communist movement is split into groups whichcooperate but more frequently contend for primacy. The largest isCommunist organization, called the Guatemalan Labor Partyleans to Moscow, rather than Peking or Havana, operates underground,anembers andther supporters. Itweakened by intenial strife and by the Pcralta government's captureof its leaders. The PGT bas had some success in irulltrating theol University Students, but Us influence in organized labor bas been sharply
S^dSrT
RET
curtailed for mare thandecade. At present, only one relatively weakb controlled by the PCT.
he PCTs chief rival on the extreme left isn emberMovementuerrilla resistance movement organized0 by Marco Antonio Yon Sosa nod other renegade army officers. Yon Sosa sought snd received Cuban support, and therebyommunistic coloration. Tbe PCT also gavo him some support, in an effort lo gain control ofut Yon Sosa refused to accept PGT direction and broke with the party.
5 Luis Turcioso-founder ofrokeSosa and led his personal following out ofnto assocdanon withas the Rebel Armed Forceshe PCTs paramilitary arm. Atsame Urn* and in accordance with the resolution of the HavanaLatin American Communist Parties, helduban aid to tbetransferred to the PCT. In6 Turcios led tbeto the Tii-Conttnental Conference in llavanna, at which thewas condemned ason Sosa, for bis part, has adoptedline in opposition to the PGT.
oth guerrilla groups have continued to carry out sporadic attacks on official installations and pro-government individuals In the Isolated Zacapa-Lake Izabal area in eastern Guatemala. Inembers of both bands also carried out kidnaping* in the capital which provided substantial amounts of ransom money and seriously threatened the Pexnlta government's commitment to return to constitutionalism. During the first four monthsowever, such activities were largely suspended; the leaders of the extreme left evidently were convinced that (he PR would be defrauded in the March election and mat Hs members would take to the streets against tbe government. When this failed to occur, the Communists reverted to terrorist tactics. In May they kidnaped three high government officials in retaliation for the disappearance of someGT members, of whom nearly half have almost certainly been executed. An armed attackilitary patrol on tbe principal rural highway.
IS Neither the FAR nor theas the capability to seize power by force. Both groups are small; neither has moreembers. They have managed to survive by following bit-and-nin tactics and by not alienating Ihe peasants in Ihe countryside. Thus far the guerrilla Iwnds have not been able to arouse much activein the countryside or among the urban masses. They are significant because their terrorist activities can keep the administration under heavy pressure from the military and the right, and might eventually provoke another direct military assumption of power.
B. The Economy
bas fewer urgent economic problems than most othercountries Export earnings ore still vulnerable to downswingscoflee and cotton prices, but the quetzal continues to be one of the worlds
most stable currencies. Industrialization is still in its initial stages, and, although Perttempted to increase state control over the economy, the private sector is still clearly piedominanL* The rate of private investment is thus of great importance in deternunmg the over-all rate of ecorwraic growth. During the Ydigoraihe combination of political instability, corruption and incompetence at the highest levels of the government, and low world coffee prices discouraged the private sector, and the rate of privatefell off.esult, the annual rate of Increase in GNP ran at about three percent, approximately the same as the annual rate of increase In population
ith the removal of Ydigoras, greater political stability, more efficient and honest administration,ore stable world coffee situation combined to restore confidence,3NP increased al annual rates of about eight and ten percent, respectively, on the basis of substantial increases in foreign trade, bank credit, investment, and manufacturing output.owever, the rate of over-all economic growth fell back, to about seven percent. This was dueo Ihe private sectors increasing concern with the coining election and partlylowing down in the rule ofrowing trade deficit, and an increasing scarcity of credit.
The economy has gradually developed somewhat greater flexibility through increased production for export of cotton, sugar, and beef; this has lessened the traditional dependence upon coffee and bananas. Industrialization has proceeded far enough to provide certain types of consumer goods for the domestic market and some export lo the Central American Common Markethile per capita Income5 rosebout equal to the average for Central America, the Pa alia government made little progress on Guatemala's basic socio-economiccoupled withof skilledigh rate of illiteracy, and limited economic and social mobility. Although the relatively isolated Indlb society has not been much concerned, lower class Ladino dissatisfaction contributed heavily to lite PR victories inarch elections.
A continuinghe short supply of trained personnel for the upper levels of government and private industry.esult, Guatemalaimited capacity to absorb foreign investment and assistance. At the same lime, ihe extent to which foreign technicians and guidance can bo employed is sharply circumscribed by ihe xenophobic nature nf Guatemalan niitioitalism. Recent decrees issued by Ihe Perolla government, which attempt lo funnel the movement of goods and produce via government-operated carriers and ports, haveiscouraging effect upon both domestic and foreignand have generated strong oppositio- in commercial circles.
'Pubbr sectornull. about three percent of CNP, and the national budget it mil) rum tan percent of CNP.
III. PROSPECTS
A. Th* First Six Months
We are confident that rVesident-elect Mendez will be Inauguratedury. The outgoing Chief of State and Minister of National Defense, Col. Peralta. is committed to honoring the election results. He appears to be able and determined to fulfill that commitment.
First order of business for the new President will be to solidify bis working relationship with the military and some kind of modus tmeruli with the right-of-center groups. To accomplish this, Mendez will have to demonstrate con-virxingty his determination to proceed vigorously against terrorist activities, toesurgence of extreme leftist influence in Guatemala, and to preserve the traditional prcrogotives of the military. Al the some time, he will have to focus on the kind of economic measures that will reassure the private lector of the economy. Yet he will need to give some indication of progress on the reforms demanded by his supporters, and be cannot afford to delay this process long.
Wc believe that Mendez probably will make sufficient progress on those matters to maintain himself in power during the next six months or so. Mendez bas agreed to make his seWrionow Minister of Defenseist of three candidates prepared by the armed forces high command. The newwill probably make an overture to the private Motor by repealing the restrictive decrees axTeeting trimportation and port facilities. Over tbe short run. however,ot likely to be able to improve significantly the economy's prospects. The adverse credit and balance of trade situations, which have slowed the economy's growth from the rates attained3annot under the best of circumstances be corroded for atear or more.
The leaders of the extreme left will probably try to maintain someover the months to come. The Communbts ore not likely to givo up. Indeed, if Mendez and the military* manage to work closely together thewiD probably continue and may intensify their terrorist activities- They are capable of sporadic hit-and-run attacks and kidnapping, but we do not tii.nl. that they can maintain such activitiesevel high enough toilitary coup. On the other band, some of the PCT and possibly some others on the extreme left probably wiD try to retain some ties to th* PR and other moderate leftists in hope of being able to make common cause with these groups in the eventilitary seizure of power.
B. The Longer Run
endez' survival in office over the longer run will depend on ha abiUty to holdarrow and delicate course. On the one hand, he is keenly aware of Guatemala's need for modenuzation of its institutions and for numerous reforms, political social, and economic. To retain the support of those who
B
SOCKET
eluded him will require Initiatives and some progress on hit part on these fundamental matters. But unless the measures he puts forward are carefully tailored, cautiously presented, and tactfully implemented, any one of them may weaken his administration's political position by dangerously offending the military, or its economic position by shaking the confidence of the private sector. Allaying the apprehensions of the sharply differing interest groups will not be easy on any one proposal or measure of major importance; doing the same successfully over timehole series of measures will be difficult in tho
conomic problems willimilar dilemma. World marketfor coffee and cotton will almost certainly inhibit any significantin Guatemala's export earnings. At the same time, domestic credit probably will continue lo be restricted, and direct import controls may be imposed, in order to limit foreign trade imbalances and to conserve foreign exchange reserves. The Mendez government would probably like to expand public mvestmenl in infrastructurearious socially oriented rjcograms. But the present regressive tax system is not suited to provide the necossary funds, and it would be necessary to seek higher taxes on personal incomes, property, and exports, which at present yield only about one-sixth of total tax revenues. Such measures would strike directly at the economic position of powerful agricultural and commercial intrustsashion to kiopardize Mendez' exmtinoance in office. The oudook for the economy, then, is for moderate growth with GNP innnnsing, at best, four or live percent annually7
ositive relationship with the Guatemalan military' has always been difficult for civilian political figures. Moreover, certain of Mendez* characteristics can bo expected to add to the difficulty. Heroud and sensitive man who may become restive about sharing his presidential powers de facto with the military leaden. His own political tendencies are liberal and rather legalistic, and there are figures in the military, and the economic elite as well, so conditioned by the Communist surge to power in tbeliat they may overreact to an appointmentolicy move by thewhich they interpret as favorable to the far left. However. Mendez has shown good judgment and flexibility in dealing with the problems which he has thus fax confronted.
Considering all these difficulties wo are not confidcttt thai Mendez will survive in orficx* through the next two yeais, His chances of holding an to power would be maximizedealignment of pohtical forces from which the PR emergedentrist movementoderate reform program which the military and enlightened tight would tolerate. Even under these circum-slances his administration's chance* for accomplishing much on either reform or significant economic growth and the development will depend heavily upon whether It accept* substantial outsideIts attendantuses it effectively.
i Mendez should be removed Irom office. It would probably be by military coup. Tbe mort likely successor wouldilitary regime which described itselfcaretaker" and promised new elections at some trine In the future. Depending on the events which precipitatedoup and on tbe speed and skill with which it was carried out, elements of the PR might take to the streets in opposition. This danger would be greater In tbe eventpbt in ihe military. Under these circumstances, Communists and other leftists would make common cause with the PR activistsangeroussituation could result Even if violence were avoided and tlse military assumption of power were neat and quick, thr extreme left would probably gain adherents among erstwhile nioderates of tbe PR.
believe that Mendez or any likely successor will continue.record of cooperation with the US on nearly all important worldIssues. He has already made constructive overtures to UShis administration will almost certainly be more accessible than Nevertheless, relations with the US probably will continue to be affected
by tbe intensely nationalistic attitudes of the country's political and economic
groups.
may prove to be somewhat more flexible than histhe problem of British Honduras, which Guatemala claims as Its ownHe already bas indicated that be will not continue the part policypayment on Guatemala's sterling debteans of applyingthe UKettlement of the territorial dispute. If the debt is paid,probably would relax its pas) policy of not approving any assistancefrom tbe Internationa! Bank for Reconstruction and Development.
probably will make few significant changes in Guatemala'swith its other neighbors. He has indicated his intention toactive role in tbe Central American Common Market.Mexico are likely to remain coed, reflecting differences overfisheries disputes, Guatemalan Communist exilea in Mexico, andmaintenance of diplomatic relations with Cuba. As for Cuba,nor any successor government would be likely to change itsof opposing the Castro regime.
CuaUimalnn claim rocs back mowentury and minitiations betvwo Cuatemala anil the UK hav* been unsuccessful b> lite past- Tbe usue hai recently bean submittedS owdiaba. It has cewatdanible propaganda valueuatmakn saaalaarn-ahnn seekbif popular support and diierUon uf public attention fromtrouble*.
i
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Oeport-neil of the
Chief of Novo! Operotiortior the Depart men
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sd separately^froa/mo text'sh--.
2
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