U.S. Department of State

Washington, October 29, 1953.

/1/Source: Eisenhower Library, Jackson Records. Confidential. A covering memorandum by H. S. Craig of the Operations Coordinating Board to C. D. Jackson, dated Oct, 29, reads as follows: "Ambassador Schoenfeld's estimate of the advanced state of communist infiltration in Guatemala may interest you. Meanwhile, the staff is developing a possible action proposal for your consideration."

SUBJECT
Debriefing of Ambassador Rudolf E. Schoenfeld, October 28, 1953

Of the various comments made by Ambassador Schoenfeld on the communist situation in Guatemala, the following are most relevant to OCB interests:

1. The communist power-drive in Guatemala has reached an advanced state of infiltration, they hold key positions in (a) the agrarian movement, (b) the labor movement, (c) government administration short of cabinet level.

2. President Arbenz, who is half Swiss, has a granite streak of stubbornness in addition to his volatility and firmly convinced that he can deal with the communists whenever he has to. This optimism is not shared by Ambassador Schoenfeld, who feels that Arbenz has not even begun to appreciate the real purposes and techniques of communism as a power-seeking movement, not a social reform.

3. On the anti-communist side, there are very few positions of strength. The church is extremely weak, all of its property having been confiscated, and a strong anti-clerical attitude exists. The intellectuals are either bemused by the appeals of communism, or are hypersensitive to the U.S. The land-owners are strictly apolitical and will not permit themselves, or their sons, to engage in political activity. They feel that Guatemalan politics has three unattractive destinations: the palace, the jail, or the cemetery. The independent press, however, is very alert to the communist danger.

4. Guatemala represents in miniature all of the social cleavages, tensions, and dilemmas of modern Western society under attack by the communist virus. Conditions will worsen considerably before we can improve them, and we should regard Guatemala as a prototype area for testing means and methods of combating communism.

5. It will be of primary importance for U.S. labor organizations to encourage the growth of free trade unions in Guatemala, for U.S. corporations to adopt enlightened labor policy in the area, and for the U.S. Government to develop information activities along non-attributable lines.

Richard Hirsch

Washington, November 25, 1953.

/1/Source: National Archives and Records Administration, RG 59, Central File 814.2333/11-2553. Confidential.

PARTICIPANTS
Mr. Jim O'Connor, President, National Coffee Association
Mr. R. A. Medina, R. A. Medina Co.
Mr. Phil Nelson, Ruffner, McDonnell & Burch, Inc.
Mr. Harry H. Allen, Vice President, Otis McAllister Coffee Corp.
Mr. John F. McKiernan, Executive Vice President, National Coffee Association
Mr. Cabot, ARA
Mr. Cale, AR

Mr. Cabot pointed out that the Department is faced with a very difficult problem as a result of communist influence within Guatemala. He said that in considering possible courses of action to meet the situation the question of economic sanctions has to be considered. In this connection, coffee, which supplies some 80 per cent of the Guatemalan foreign exchange, is obviously the most important single individual commodity on which action might be taken.

/2/A previous conversation relating to possible action against Guatemala involving coffee took place at the Department of State on Feb. 27, 1952, between Mr. Mann, Mr. Cale, Mr. Siracusa, and a representative of the National Coffee Association; a memorandum of that conversation, by Mr. Siracusa, dated Feb. 27, 1952, not printed, is ibid., 814.2333/2-2752.

Mr. O'Connor pointed out that the companies of Messrs. Medina, Nelson and Allen do the major part of the import business in Guatemalan coffee and that they are accordingly in an excellent position to advise the Department on the matter.

Mr. Cabot stated that the Department would like to have the group's views as to the feasibility and mechanics of a Government embargo against or an industry boycott of Guatemalan coffee.

At Mr. O'Connor's suggestion, Mr. Medina spoke first for the coffee representatives. He said that the group had had an opportunity to discuss the question in a preliminary fashion but that they had not considered the possibility of an industry boycott in the absence of action by the Government. Mr. Medina then called attention to the following considerations:

1. That it is often impossible to distinguish between Guatemalan coffee and coffee grown in nearby countries such as Mexico and El Salvador. Under these conditions, even if the United States Government should embargo Guatemalan coffee, it would be likely to find its way into this country through Mexico, El Salvador and other Latin American countries.

2. That American coffee importers, at any time, have large investments in coffee in Guatemala. Accordingly, an embargo on Guatemalan coffee would subject such importers to considerable financial loss.

To Mr. Cale's inquiry whether it would be possible for the importers to avoid this loss, if they were informed several months in advance of the contemplated action, Mr. Medina stated that prior notice would be helpful. He pointed out, however, that the helpfulness of the notice would depend not only on the period of the notice but on the time of the embargo. Mr. Allen called attention to the fact that his company and certain other coffee importers advance rather large sums of money early during a crop year to finance the production and harvesting of the crop. The crop year in Guatemala, he said, begins around October 1st. If the Government were contemplating action, he said that June 1, with several months of advance notice, would probably be as good from the point of view of timing as any other date.

Mr. O'Connor pointed out, however, that, in view of the present tight market situation, such a date would be about as unfavorable as any that could be chosen from the viewpoint of its effect on price, since there is very little coffee available for sale and shipment during this period. It was Mr. O'Connor's estimate that excluding the 800,000 bags of Guatemalan coffee which we normally import, if such exclusion were possible, would probably raise the price of all coffee to the United States consumer by as much as 10 cents per pound.

Mr. Allen called attention to another adverse effect of embargoing Guatemalan coffee, namely, the fact that it would force the Guatemalan Government to become much more involved in the coffee trade than it is at present. This, he said, he regarded as contrary to the long-run interests of the United States coffee industry.

Mr. Cale then inquired whether it would be possible for this Government to take action only against coffee now grown on the Government's lands, which amounts to some 15 per cent of the total Guatemalan production. The group was of the opinion that even if United States importers did not buy coffee produced on these lands at the auctions at which it is now sold, such coffee would nevertheless find its way into the United States. They pointed out that this coffee is sold before it is fully processed and that there is no way of maintaining its identity.

Mr. Nelson referred to the fact that Mr. Cabot had spoken of a possible boycott on the part of the coffee trade. He expressed the view that this would simply not work, since the coffee business is highly competitive and since, in the unlikely event that all the present members of the coffee trade would cooperate, fly-by-night operators would appear to handle this part of the business. Mr. Nelson also called attention to the fact that even if Guatemalan coffee were excluded from this market, it would very probably be sold in Europe. Mr. O'Connor added that in this event it might very well end up in the United States. He pointed out in this connection that a considerable volume of Brazilian coffee is now being imported into the United States via Europe.

Mr. Nelson also expressed the belief that embargoing Guatemalan coffee would have a very adverse effect on our relations with the Latin American countries generally, since they are very sensitive to economic pressure of any kind by the United States.

Mr. Allen supported Mr. Nelson's views in this regard, pointing out that there are very close family relationships throughout the Central American area and that these would tend to heighten the reaction against the United States.

Mr. Cabot inquired as to the feasibility of levying an import tax on Guatemalan coffee. Representatives of the group said that this would be very dangerous since it might set a precedent for an import tax on coffee from other countries as well. They pointed out that there have been numerous proposals in the past for taxing the importation of coffee, all of which have so far been successfully resisted. They indicated, however, that the coffee trade, to a man, was fearful that an import tax on coffee might some day become a reality. They stated that this would, of course, be harmful to the coffee importers and roasters in this country as well as to the coffee producers in Latin America.

Mr. Cale inquired what the group's views would be as to the feasibility of requiring that the consumer be informed whenever he buys Guatemalan coffee. Mr. O'Connor said that coffee purchased by the consumer is generally a mixture of several types and that all coffee would have to be labeled in order to show the consumer the proportion of Guatemalan coffee. He stated that this would greatly hamper the operations of the coffee roasters who change their blends often in accordance with availabilities of various types of coffee.

Mr. McKiernan pointed out, in addition, that the net effect of such a requirement might be to reduce coffee consumption generally. He feared, he said, that any action to get the American public to consume less Guatemalan coffee would result in a decline of consumption of all coffee.

/3/On Feb. 8, 1954, Senator Margaret Chase Smith (R.-Maine) introduced Senate Resolution 211, calling upon the President, inter alia, to take the necessary steps to institute an embargo against the importation of Guatemalan coffee into the United States; for text, see Congressional Record, 83d Cong., 2d sess., vol. 100 (pt. 2), p. 1475. Department of State files indicate that representatives of the Department advised Congress against taking such action.

Guatemala City, December 17, 1953-7 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 611.14/12-1754. Secret. John E. Peurifoy was appointed Ambassador to Guatemala on Oct. 5, 1953, he arrived in Guatemala City on Oct. 29, and presented his credentials on Nov. 4.

/2/Maria Cristina Vilanova de Arbenz Guzman.

I opened conversation by telling President I was interested in seeing what I could do to improve relations and asked if he had any suggestions. He began by saying problem here is one between United Fruit Company and his government. He spoke at length and bitterly on Fruit Company's history since 1904, complaining especially that now his Government has a $70 million budget to meet and collects only $150,000 in taxes.

I interrupted here to say I thought we should put first things first, that as long as Communists exerted their present influence in Guatemalan Government I did not see real hope of better relations.

President then answered that there were some Communists in his Government and that [they] had certain amount of influence, but they were "local." He described his friendship with Victor Manuel Gutierrez, Communist secretary general of country's only national labor federation, and Jos? Manuel Fortuny, head of Guatemala Communist Party.

They were both "honest" and followed Guatemalan not Soviet interests. They went to Moscow (Fortuny is on trip there now) merely to study Marxism, not necessarily to get instructions.

I asked by name about several Communists and Communist suspects in National Agrarian Department, directorate general of Radio Broadcasting and Guatemala Institute of Social Security. Before translating, Mrs. Arbenz started in each case to deny twenty were Communists, but three times President contradicted her saying he was sure they were. I asked whether Government adverting [advertising?] helped support Communist Tribuna Popular and after Mrs. Arbenz again started to deny, President admitted that it did. Also asked about Guatemalan Congressional memorial observances for Stalin's death and Mrs. Arbenz explanation was Guatemalan people regarded Roosevelt, Churchill and Stalin as saviors of world. Communists presented no threat and his government was in full control.

/3/Reference is to the Tenth Inter-American Conference, which convened at Caracas, Venezuela, Mar. 1-28, 1954; for documentation on the conference, see Foreign Relations, 1952-1954, vol. IV, pp. 264 ff.

/4/Ambassador Peurifoy had been Ambassador to Greece, 1950-1953.

Foregoing took place in atmosphere of frank and polite exchange of views, and on leaving I told President I was disappointed because we had not accomplished anything. He said after I had become familiar with country, I would probably come around to his way of thinking. 1 told him I did not believe anything would make me convert to Communism and feared situation would get worse because Americans had given blood and paid high taxes and would continue to do so as long as Communism threatened free nations. President ended by giving me private phone numbers, saying I should get in touch with him whenever I wanted without going through Foreign Office.

I came away definitely convinced that if President is not a Communist he will certainly do until one comes along, and that normal approaches will not work in Guatemala. I am now assessing situation in this light and expect to submit recommendations in a few days.

Peurifoy

Guatemala City, December 23, 1953, 3 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 611.14/12-2353. Secret.

/2/Document 20.

/3/Reference is to Resolution XCIII, the "Declaration of Solidarity for the Preservation of the Political Integrity of the American States Against the Intervention of International Communism", adopted by the Tenth Inter-American Conference; for text, see Tenth Inter-American Conference, Caracas, Venezuela, March 1-28, 1954: Report of the Delegation of the United States of America With Related Documents (Department of State Publication 5692, Washington, 1955), pp. 156-157, or the Department of State Bulletin, Apr. 26, 1954, pp. 638-639.

/4/Not found in Department of State files.

I propose that between now and time of conference we carefully work out program designed to create situation in which non-Communists whether now supporting or opposing government would feel forced to coordinate their organizations and take action against government and I suggest Department and Embassy give special attention to determination feasibility and manner and time of application of following steps as part of an overall program:

/5/A memorandum of conversation at the Secretary's staff meeting, held in the Secretary's office, Nov. 20, 1953, 9:15 a.m., by Director of the Executive Secretariat Scott, reads in part as follows:

"8. Guatemala

"The Under Secretary stated that he is getting a paper from Mr. Wisner today concerning CIA's recommendation as to whether or not we should remove our military mission from Guatemala. It was his own personal belief at the present time that it served no useful purpose in keeping a military mission to a government that was Communist dominated and in which the Army was evidently loyal to that government." (Secretary's Staff Meetings, lot 63 D 75)

The Secretary of State's staff meetings were attended usually by the Under Secretary of State, the Deputy Under Secretary of State, Assistant Secretaries of State, and certain office directors. The Secretary of State presided at these meetings.

2. Announcement of withdrawal, effective June 30 of FOA personnel from construction of Roosevelt Hospital and from agricultural mission, not including those on Entrerios Rubber Experiment Project which is important to us.

3. Announcement of cancellation within six months of RFC's contract with UFCO for growing abaca in Guatemala.

/6/Reference is to the Reciprocal Trade Agreement, signed at Guatemala City, Apr. 24, 1936, and entered into force, June 15, 1936; for text, see Department of State Executive Agreement Series (EAS) No. 92, or 49 Stat. (pt. 2) 3989.

5. Campaign through columnists and radio commentators for voluntary refusal by American coffee importers to buy Guatemalan coffee. Even though purchases did not decrease, campaign would give local growers increased sense of urgency and stimulate their willingness to aid anti-government movement.

6. Placing of impediments in way of issuance of export licenses on shipments of goods from US to Guatemala. Form of these impediments must be determined in light of attitudes shown at Caracas conference, and could range from general refusal of licenses to consistent delays in their issuance, particularly for road and port building equipment on which Guatemalan Government is especially interested.

7. Final or partial suspension gasoline shipments to Guatemala.

With these proposals as starting point for study, and without necessarily approving all of them or excluding others, Department and Embassy should be able to work out program which while flexible enough to allow for adjustments to developments at Caracas, should be concrete enough to permit its implementation promptly upon closing of conference. Program should be applied in progressive steps which would build up increasing sense of urgency among non-Communist Guatemala.

Program should be undertaken with full realization it could provoke Guatemalan Government to swing sharply to left, to assume dictatorial power, to seek to win mass support through strongly nationalistic stand, and to expropriate or take other extreme reprisals against American companies in Guatemala. Guatemalan Government could be expected to make international issue of intervention, might ask my recall or even break off diplomatic relations with United States. It is quite conceivable it would lead to considerable bloodshed.

Nevertheless, implementation some such plan should not be deterred by these possible unpleasant consequences since continuance of present regime would also lead to most of them though at a slower pace and at the convenience of the Communists.

Peurifoy

Washington, January 16, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 611.14/1-1654. Confidential.

/2/ In a briefing memorandum for the President concerning Ambassador Toriello's visit, dated Jan. 15, 1954, Under Secretary of State Smith stated in part the following:

"Last month President Arbenz told Ambassador Peurifoy Guatemalan Communists are 'honest', follow Guatemalan not Soviet interests, and visit Moscow to study Marxism, not to get instructions. Guatemalan Communists are in fact disciplined agents of international Communism, preaching authentic Soviet-dictated doctrine and openly affiliated with numerous international Communist labor and front groups.

"We have repeatedly expressed deep concern to the Guatemalan Government because it plays the Communist game. Our relations are further disturbed because of the merciless hounding of American companies there by tax and labor demands, strikes, and, in the case of the United Fruit Company, inadequately compensated seizures of land under a Communist-administered Agrarian Reform Law." (Eisenhower Library, Eisenhower Papers, Whitman File, International Series, "Guatemala")

PARTICIPANTS
The President
Se?or Dr. Don Guillermo Toriello, Ambassador of Guatemala
Mr. John M. Cabot, Assistant Secretary

The Guatemalan Ambassador called on the President to say farewell before returning to Guatemala to become Foreign Minister.

Following an exchange of courtesies, the President made a reference to relations between the United States and Guatemala. The Ambassador seized on this to peddle to the President his oft-told tale of how Guatemala is a victim of "calumny". He said there were communists in Guatemala but they occupied only a few insignificant positions in the Government. Guatemala had always suffered from dictators but since 1944 it had had a democratic government which was undertaking much needed reforms, notably the agrarian reform.

The President said we had no wish to dominate any country. We regarded our Latin neighbors as sovereign equals, and did not try to interfere in their affairs. In consequence they had always been independent. We hated communism. The President contrasted the status of our neighbors with that of Poland and Czechoslovakia and the Baltic states. Soviet communism was the worst dictatorship the world had ever known, and we were determined to block the international communist conspiracy. We certainly had the impression that the Guatemalan Government was infiltrated with communists, and we couldn't cooperate with a Government which openly favored communists.

The Guatemalan Ambassador pleaded for greater cooperation. The armed forces had not been infiltrated, yet they couldn't get ammunition. The Guatemalan airline couldn't get a permanent contract. The effect of all this was to help the communists. If we helped the Guatemalans more, they would soon get rid of the communists.

The President said that we really couldn't help a government which was openly playing ball with communists. The people of the United States hated communism and if we helped them there would be a coup against him (this laughingly).

The Ambassador said that the real question was not that of communists in the Guatemalan Government, but of the monopolistic position of the United Fruit in the country. The Ambassador brought out a little map of Guatemala to show the United Fruit's stranglehold on ports, railways, etc. He went into his usual discreetly distorted indictment of the United Fruit and insisted that this, and not communism in the Government, was the source of the difficulties in relations between the United States and Guatemala. He also brought out two scrapbooks of anti-Guatemalan articles published in the U.S. press.

The President said that we certainly wanted no more than justice for any American companies operating in Guatemala. We would be agreeable to having an international tribunal decide what the rights of the controversy were. Moreover, we realized that contracts made many years ago were subject to revision under changing circumstances.

The Ambassador continued to harp on the line that the United Fruit, and not the few Guatemalan communists, were the source of our difficulties in relations. Mr. Cabot interjected that avowed communists occupied key positions in the National Agrarian Department, the official press and radio, and other government agencies, and that the highest officials of the Guatemalan Government were openly supporting them and listening to their advice.

The Ambassador continued to press his argument with skill. He particularly mentioned that Sullivan & Cromwell, the Secretary of State's former firm, represented the United Fruit. The President by this point had risen to indicate the interview was ended. Mr. Cabot, thinking the Ambassador had charged that he had stock in the United Fruit, pointed out that this was untrue.

The President asked about the charges against the United Fruit. Mr. Cabot said there were certainly two sides to that question. The Ambassador said that they paid no taxes, just one cent per stem on bananas. He also mentioned that no immediate compensation had been given for the United Fruit lands seized. The President suggested that perhaps this could be settled by an international judgment, perhaps headed by a Latin American. Mr. Cabot pointed out that we had proposed action along these lines, but Guatemala considered this a matter of sovereignty.

The entire conversation, which lasted half an hour, was in personally friendly terms. The Ambassador presented his case very persuasively-with skillful emphasis and suppression. The President made a very able and convincing exposition of our thesis that the issue is communism in the Guatemalan Government, not the United Fruit question, and that the latter can be decided by international decision.

Washington, February 20, 1954, 7:46 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 714.00/2-954. Confidential; Priority. Drafted and signed by Mr. Leddy.

/2/The referenced telegram, from Ambassador Peurifoy, reads in part as follows:

"Toriello said he had made suggestion to President Eisenhower which he hoped I would help to carry forward. This was that a neutral commission be appointed to investigate whether contracts between American companies and Guatemalan Government were in line with modem concepts of such relationships and whether companies were making adequate contribution to government and national economy. He said the President had received idea favorably and that Arbenz had subsequently approved it." (Ibid., 714.00/2-954)

/3/In telegram 345, from Guatemala City, dated Feb. 23, 1954, Ambassador Peurifoy reported that he had suggested to Foreign Minister Toriello that his proposal to refer problems of American companies to a neutral commission be reduced to writing, and that the Foreign Minister had replied that he would consider the matter further upon his return to Guatemala from the Caracas Conference. (Ibid., 714.00/2-2354).

Dulles

Washington, April 14, 1954-7:45 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 414.118/4-1454. Secret. Drafted and signed by Mr. Leddy, with the assistance of Orray Taft of the Office of Munitions Control; sent also to Madrid, Paris, Rome, Bern, Brussels, The Hague, Stockholm, London, HICOG at Bonn, and USPOLAD at Trieste.

323. In view sustained frantic efforts Guatemalan emissaries procure arms, ammunition or implements of war including airplanes, half-tracks and artillery from Western Europe, as already reported by Department to various missions, Department increasingly concerned possibility Guatemala can evade strict U.S. embargo exports of arms through procurement from European sources. Reports storage of arms by political groups or communist cells indicate arms intended to counterbalance anti-communist elements in Guatemalan Armed Forces or for use against other countries. Current tension Central America due attempted assassination Somoza may create communist opportunity suppress anti-communist Guatemalan forces or by infiltration attempt overthrow anti-communist Central American governments.

In view desirability our position previously notified in individual cases be understood by other governments as a general application, inform appropriate officials government to which you are accredited Department's concern this danger to free world and solicit their suggestions for measures to be taken promptly (such as alerting port authorities) to tighten arms export and transit controls in order eliminate possibility clandestine or concealed shipments. Stress that we would greatly value their active cooperation in view current instability Central American area and preponderance of Guatemalan strength if supported by adequate materiel. Department would appreciate Govt. reaction soonest.

Smith

Washington, April 19, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 714.00/4-1954. Secret.

SUBJECT
Briefing on Guatemala

/2/Not found with the source text; reference is to NIE-84, May 19, 1953, Document 15.

During the past year, Communist strength and influence in Guatemala has continued to grow without effective opposition. Party membership is now estimated at between 2,000 and 3,000. Communist leaders have strengthened their control over organized labor, causing destruction of a fledgling anti-Communist labor group and drawing the large Communist-influenced peasant federation closer to the Communist-run labor federation. They continue to be ascendant in the Administration political coalition, supplying four of the ten party delegates who regularly advise Arbenz on national policy. The other six delegates either support or tolerate the Communists. (The Cabinet, which Government propagandists frequently claim contains no Communists, has an insignificant role in policy making.) Arbenz defended the Guatemalan Communists so strongly in his March 1 speech to the Congress that his alliance with them appears irrevocable, so far as he is concerned. The predominant influence of the Communists in Agrarian Reform, the central program of the Administration, has further increased their political strength and laid the basis for development of a Communist-led peasant faction, inured to violence, which could give persistent trouble to any future government disliked by the Communists.

The Guatemalan political opposition, both at home and in exile, is numerous but hopelessly disorganized and demoralized. In itself it does not constitute a significant threat to the Arbenz regime, but will continue to be persecuted by the Government as long as it retains any potential for action.

Although Arbenz is only halfway through his six-year term of office, maneuvering has already begun among Administration figures who hope to succeed him, with some potentially unsettling effect.

Despite numerous expressions of irritation by Guatemalan Army officers over U.S. refusal to supply them arms because of the Communist situation, there is no evidence that this discontent is being focused on Arbenz, who retains the loyalty of the most influential elements of the Army as well as the power to purge any officers found to be disloyal.

The adoption of the anti-Communist resolution did not weaken Arbenz' position with respect to the Army or to any other politically important group.

/3/Not found with the source text.

Washington, April 20, 1954.

/1/Source: National Archives and Records Administration, RG 59, S/S-OCB Files: Lot 62 D 430, "Guatemala". Confidential. Drafted by Mr. Woodward.

SUBJECT
Possible Congressional Inquiry into Communism in Guatemala

/2/No attachments were found with the source text.

/3/In a memorandum to Under Secretary Smith, dated May 6, 1954, Robert Cutler, Special Assistant to the President, stated in part the following:

"This morning I have had a very good talk with Congressman Kersten, who was, as always, most understanding and cooperative.

"We discussed the Caracas Conference, the position taken by the Secretary, and the general situation in Central America, and related matters. He accepted my suggestion that his Sub-Committee defer any announcement relative to Guatemala until the Members of the Sub-Committee return from a proposed trip through Europe. At the present time, their expectation is to return from this trip in July. I suggested that when Congressman Kersten had returned, he might get in touch with me again, and we would take a fresh reading with you, Allen Dulles, and the OCB, on this situation." (National Archives and Records Administration, RG 59, S/S-OCB Files: Lot 62 D 430, "Guatemala")

Washington, April 26, 1954.

/1/Source: Eisenhower Library, Hagerty Papers.

Monday, April 26-Legislative leaders meeting at 8:30-V.P., Knowland, Ferguson, Millikin, Bridges; Speaker, Halleck, Arends, Allet; staff. The President started the meeting with a discussion of Gutemala and Indo China-On Guatemala the President said that it was the usual Red penetration with a small minority which is gradually taking over the country. He said that he gave the present Foreign Minister, when he was Ambassador here "unshirted hell, but he's playing along with the Communists". He said that the Caracas decision had been helpful in stopping Communism in this hemisphere and that consequently we would have all Latin and South American countries helping us "whenever the Reds make a move"-he said that we have a good man in Guatemala and that he is watching the situation very closely and giving us constant reports-In Guatemala, however, the Reds are in control and they are trying to spread their influence to San Salvador as a first step of the breaking out in Guatemala to other South American countries.

[Here follows discussion concerning Indochina.]

/1/Source: National Archives and Records Administration, RG 59, Central File 7/1/4.00/5-/1/054. Top Secret. Drafted by Mr. Leddy.

1. Mr. Holland called a meeting in his office at 5:30 p.m. at which the following were present with him:

E. G. Cale, Director, AR

R. S. Atwood, Director OSA C. R. Burrows, Director MID Ambassador John Dreier, OAS E. A. Jamison, Deputy Director, AR R. G. Leddy, Officer in Charge MID/P

/2/Apparent reference to Resolution XCIII; see footnote 3, Document 21.

1. Take straw vote on resolution condemning Guatemala and applying sanctions.

(a) Handle this approach so that if we abandon the project there will be no loss of prestige.

(b) Beginning with Brazil and the more important countries approach each one informally, submitting summary of evidence.

(c) Try to conclude this stronghold within ten days.

II. If straw vote indicates we might succeed at OAS meeting, call in Walter Donnelly to take charge of preparations and of meeting.

(a) First guarantee any doubtful votes that are necessary to complete requisite two-thirds majority.

(b) Then try to get as many additional votes as possible.

(c) By June 15 determine, if possible, whether we are strong enough to call an OAS meeting.

III. During next ten days I should make strong speech on Guatemalan communism. We should get other speeches on the Hill and in other areas of the Government to demonstrate that United States determination to remedy problem extends throughout the Government. Point Three above is undecided.

/3/Not found with source text.

/4/Reference is to a memorandum by Assistant Secretary Holland to the Secretary, drafted by Mr. Leddy and dated May 11, 1954, not printed (National Archives and Records Administration, RG 59, Central File 714.001/5-1054).

4. Mr. Atwood said that Venezuela would be classified doubtful because of the attitude of Foreign Minister Ota?ez. Brazil will have to be "sold".

/5/Reference is to telegram 289, to Caracas, dated May 10, 1954, not printed. (Ibid., 363/5-1054)

/6/Reference is to telegram 852, to Guatemala City, dated May 10, 1954, not printed. (Ibid., 110.24/5-1054) Mr. Hill was detailed to the Department of State for two weeks; he departed from Guatemala on May 11.

7. Mr. Holland discussed the situation in Honduras, pointing out that present developments are a key to the case against Guatemala, citing the expulsion of the three Guatemalan Consuls. A complaint against Guatemala in the OAS would best come from Honduras. We need more information from Honduras.

8. In addition to the action with Brazil, it was decided that inquiries should go to our Ambassadors in Bogota, Lima, Santiago de Chile, and Buenos Aires, asking their advice on how the Department should best proceed with these Governments. While Mr. Holland was temporarily called from the room, it was decided that this cable should await the outcome of the visit of Ambassador Muniz on the following afternoon.

/7/Not identified.

/8/The meetings, of which this was the first, were held frequently during May, June, and early July for the purpose of discussing and implementing on a daily basis strategy relating to possible OAS action against Guatemala. The group, known in the Department as the "Guatemalan Group," was gradually enlarged to include additional officers from within the Bureau of Inter-American Affairs, former Ambassadors Donnelly and Pawley, and a representative from the CIA. Mr. Holland presided at the meetings.

11. In reply to several points of difficulty to be encountered in obtaining the votes and in making the action of the OAS effective, Mr. Holland said that the Department would not, of course, proceed until it was sure of a two-thirds vote and would handle the matter in such a way that it could withdraw should it prove impossible to obtain such two-thirds vote.

/9/For text of the UN Charter, signed at San Francisco, June 26, 1945, and entered into force for the United States, Oct. 24, 1945, see Department of State Treaty Series (TS), No. 993; or 59 Stat. (pt. 2) 1031.

13. Mr. Leddy mentioned once the United States takes Guatemala before the OAS it is quite likely that the Guatemalan Government will move to nationalize all American property in Guatemala; this is chiefly owned by three companies, United Fruit, American and Foreign Power and the IRCA. After pointing out that their property stands to be nationalized in any case, Mr. Holland said that it would be good to inform these companies in advance of our action.

/10/Minutes of the referenced meeting, drafted by Mr. Leddy and dated May 11, 1954, are not printed. (National Archives and Records Administration, RG 59, Central File 714.00/5-1154)

In a memorandum to the President, dated May 11, 1954, Secretary Dulles commented on unsettled labor conditions in Honduras, reports of suspicious movements of planes and men from Guatemala to Honduras, and the preparation of a plan for providing direct military assistance to Honduras, in the event that the Honduran Government requested such assistance under the provisions of the Rio Treaty. The memorandum is printed in Foreign Relations, 1951-1954, volume IV, page 1303.

Washington, May 11, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 714.0015-1/1/54. Secret. Drafted by Assistant Secretary Holland.

SUBJECT
Situation in Guatemala

PARTICIPANTS
The Secretary
Ambassador Jo?o Carlos Muniz of Brazil
Mr. Holland, ARA

/2/Vicente R?o.

/3/Get?lio Dornelles Vargas.

The Secretary said that we must realize that it will be impossible to produce evidence clearly tying the Guatemalan Government to Moscow; that the decision must be a political one and based on our deep conviction that such a tie must exist.

/4/Apparent reference to a paper, entitled "Soviet Communism in Guatemala," drafted by Mr. Hill, dated May 14, 1954, and handed to Ambassador Muniz on that date, not printed; a copy is attached to the National Archives and Records Administration, RG 59, Central File 714.001/5-1854.

Washington, May 14, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 7/1/4.00/5-/1/454. Secret. Drafted by Mr. Holland.

/2/On May 12, 1954, Edward A. Jamison, Deputy Director of the Office of Regional American Affairs, forwarded to Assistant Secretary Holland a memorandum prepared by Marjorie Whiteman of the Office of the Legal Adviser, commenting in detail on the authority of the Executive Branch to take action against Guatemala under the Rio Treaty, and a covering memorandum discussing enforcement action under the treaty's provisions. (Ibid., 362/ 5-1154) Additional documentation on the legal aspects of implementing the Rio Treaty with respect to Guatemala is ibid., Central File 362.

It is recommended that promptly the United States invoke the Organ of Consultation specified in Article VI of the Rio Treaty to consider the problem of the penetration of Guatemala by International Communism.

From time to time around the world frontal tests of strength between the force of the free nations and that of the Communist organization arise. One occurred in Korea. Another is in progress in Indochina. A less publicized collision is now reaching its crisis in Guatemala.

In this last situation the test is whether the world Communist organization has the strength to establish a satellite nation in this hemisphere and, conversely, whether the free nations have the power to resist that attempt.

This contest is of crucial importance in the global struggle between free nations and the Communist forces. The reason is twofold.

1. It has been asserted that Moscow cannot establish a satellite state save where the weight of the Red Army can be brought to bear directly or indirectly. Obviously, Russia recognizes, therefore, that establishment of a satellite state in this hemisphere would mark a victory which would strengthen the power of Communist forces in every free nation of the world. Establishment of a satellite state in this hemisphere, and particularly so close to the United States, would enable Russia to claim throughout the world that the power of Communism lies in its appeal to men's minds and not in fear or force.

2. The greatest significance of the Guatemalan test lies in its effect on all regional organizations similar to the Organization of American States.

Because of the Soviet veto in the United Nations free states have had to rely upon such regional organizations as the vehicles for their fight against Communism.

Free states throughout the world are relying in their fight against International Communism upon the collective security afforded by these regional organizations. This grand strategy gives small nations exposed to invasion the courage to resist. By combining the individual strength of separate states into a massive aggregate it becomes possible to match and surpass the force which Russia can bring to bear at any time and at any point in the world. Obviously, a major policy of this Government is to bring all of the free states of the world into strong and determined regional organizations, contributing to them the maximum force and purpose of which we are capable.

Russian leaders see clearly the effectiveness of collective effort through regional organizations. For years, therefore, a major purpose of Moscow has been to weaken and destroy the Organization of American States, the oldest and one of the most effective of the regional organizations.

A reiterated and fundamental purpose of the Organization of American States is to defend this hemisphere, and particularly at this time to defend it against International Communism. Soviet leaders know that establishment here of a satellite state will demonstrate that the world's oldest regional organization is helpless to stop Communist expansion. If it can be demonstrated that the Organization of American States cannot achieve its most basic purpose then the Organization will become progressively discredited and useless.

For this reason the world Communist organization has expended fantastic effort and wealth in its attempts to establish a satellite state in the Western Hemisphere.

Their efforts to achieve this goal have been strengthened by the fact that this is the only area in the world in which the United States has formally renounced the right to take unilateral measures to resist Communism. While the Red Army cannot support Russia's effort to convert Guatemala into a Communist state, the United States Army cannot oppose it. Russia can bring to bear the force and the violence of its trained agents, but the United States in resisting that effort must respect its treaty obligations against intervention. This creates a serious test of the efficacy of the Organization of American States.

The selection of Guatemala as the place for Moscow's major effort to establish a satellite state was partly fortuitous. For years Russia has, as you know, been carefully probing in the American states. For a time these efforts were concentrated on larger states such as Brazil and Chile. There, they achieved considerable initial success but were finally defeated because, as here, the governments and economies they sought to dominate were strong. Russia's efforts then became concentrated on the Central American and Caribbean states. The reasons are obvious. Their size and comparative weakness made them particularly susceptible. Because of their proximity to the Panama Canal domination of any one would give Russia an important military gain.

Guatemala afforded peculiar advantages because there the Communists could disguise their efforts as a genuinely national effort directed against the United Fruit Company and other large United States interests in the country. Actually, the United States would go no further in defending the interests of United States enterprises in Guatemala than it has gone and will always go anywhere in the world. This Government's efforts on behalf of United States interests in Guatemala have been limited to conventional representations to the governments asking that United States interests be granted due process of law and adequate compensation for expropriated properties. Nevertheless, the Communist organization has done a rather effective job of persuading public opinion that the real purpose of our efforts to prevent their penetration is the defense of United States enterprises there.

In any analysis of the situation in Guatemala it must be recognized at the outset that evidence that the Communist program in Guatemala has been organized and directed in the world capitals of Communism, and that Communism in Guatemala is a part of the world apparatus, must be largely circumstantial. I doubt very much that there is in this hemisphere any writing which would demonstrate these conclusions. On the other hand, to our students of the international Communist organization it is abundantly clear that what has happened in Guatemala is a part of Moscow's global strategy.

All of the signs which have identified similar occurrences elsewhere in the world are apparent in Guatemala. The methods of achieving initial penetration and of enlarging and strengthening those first footholds are the same. The training of leaders and the development of programs through exchanges of persons in strategic positions is identical. The extensive use of popular front organizations effectively controlled by a handful of experts is the same. We also have the reliable evidence of a blind unwavering adherence to the Communist Party line as enunciated in Moscow. As elsewhere in the world the agents of Communism in Guatemala have immediately adopted every public attitude. announced from Moscow, regardless of the inconsistencies and local embarrassments which have resulted. As always in these stages of the program the Communist organization has been careful to preserve the appearance of minority representation in the Congress and other comparable organizations. At the same time, they have here, as elsewhere, succeeded in substituting small informal Communist controlled councils for the lawful policy-making bodies.

/3/No attachment was found with the source text.

The people of Guatemala are overwhelmingly Catholic and anti-Communist. However, they are unorganized and entirely helpless to resist the well-planned and executed campaign directed against them from Moscow. It was precisely for the protection of a small nation in such a situation that the policy of collective security through regional organizations was devised.

The three most obvious courses of action for this Government are the following:

1. We can continue to express our concern about the rapid expansion of international Communism in Guatemala. This course has been entirely ineffective thus far, and it seems certain that it will continue to be.

2. We can notify the other American States of our intention to move unilaterally in Guatemala to defeat Moscow's purpose there. Such a course of action would be inconsistent with our treaty obligations and the firm policy which we have followed in this hemisphere for more than 20 years.

3. We can attack the problem through the Organization of American States, utilizing the mechanisms specifically designed for problems of this nature. In my judgment the latter course is clearly that which we must follow.

It is my conclusion and that of the experts who are following this problem that, while there are some anti-Communist elements left in Guatemalan political institutions, they have lost their independence of action. These anti-Communist elements can be eliminated by the Communists whenever they consider it desirable. Therefore, we must recognized that the political institutions of that American State are now dominated and controlled by the international Communist organization.

/4/Secretary Dulles apparently took no action on Assistant Secretary Holland's recommendation at this time; however, see the notes of the meeting of the Guatemalan Group held at the Department of State, June 25, 1954, Document 78.

On May 17, 1954, Assistant Secretary Holland forwarded a memorandum to Secretary Dulles recommending that the Secretary request "Congressional authorization enabling the President to put into effect any or all of the measures specified in Article 8 [of the Rio Treaty] which are approved by the Organ of Consultation and with respect to which he may not now have authorization." A handwritten notation on this memorandum, evidently by the Secretary, reads as follows: "Approve of drafting the bill-Then decide". (National Archives and Records Administration, RG 59, Central File 362/5-1154)

On June 8, however, in another memorandum to the Secretary, Assistant Secretary Holland stated the following: "Even though such authorization apparently is no longer necessitated by the Guatemala problem, it seems highly desirable that legislation under which the U.S. could act promptly to comply with OAS action under the Rio Treaty be obtained, in order that there will be no doubt of our ability to carry out decisions important to the maintenance of peace and security of the Hemisphere under the regional security system." He recommended that the Secretary approve submission to the National Security Council of a draft Congressional joint resolution containing an authorization similar to that in the earlier draft bill, for review prior to its presentation in Congress. (Ibid., 362/5-1154)

In a memorandum responding to the Assistant Secretary, dated June 11, Secretary Dulles stated that he did "not feel that a case can be made out for the necessity of Article 2 authorizing the United States" to employ its armed forces pursuant to Article 3 of the Rio Treaty, he doubted whether NSC action was required, and believed the question of timing was important, especially if the proposed joint resolution was presented in Congress before the OAS meeting. "If so," Dulles commented, "may it not be construed as taking for granted the results of this meeting? If we wait until the meeting is over, the time for Congressional action is pretty short. This is a certain dilemma we face." (Ibid., 362/5-1154) Assistant Secretary Holland pursued the question of Congressional authorization for action under the Rio Treaty through June and July, but Department of State files contain no record indicating that the Secretary ever approved submission of a bill or joint resolution requesting such authorization.

Washington, May 18, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 4/1/4.498/5-/1/854. Secret. The source text bears the following handwritten notation initialed by Assistant Secretary Holland: "Discussed orally with Sec'y on 5-18-54."

SUBJECT
Action to Prevent Delivery of Czech Arms to Guatemala

The S.S. Alfhem, a Swedish-owned and Swedish flag vessel, arrived at Puerto Barrios, Guatemala on May 15, 1954 from Stettin with 2,000 tons of Czechoslovak arms for delivery to the Guatemalan Government. Unloading (estimated at five to ten days) was commenced on Saturday and renewed on Monday, the 17th; 1800 tons being still aboard last night. The dock area was heavily guarded by

/2/Apparent reference to Col. Jose Angel Sanchez, Guatemalan Minister for National Defense.

/3/Mr. Cabot was appointed Ambassador to Sweden on Mar. l, 1954; he arrived in Stockholm on Apr. 29, and presented his credentials on May 6.

/4/W. Walton Butterworth, U.S. Minister, London.

/5/British Ambassador to the United States.

I have again asked our Embassy in Stockholm to get the Swedish Government to get the captain to stop unloading, and meanwhile to have the insurance cancelled as a means of getting the ship out of port. Christensen has stated his bill of lading was for "laboratory equipment and optical supplies" and that he did not know of any arms cargo. I have also asked Acting Defense Secretary Anderson to institute action to identify the two additional ships.

Washington, May 18, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 714.00/5-/1/854. Secret.

/2/Brackets in the source text.

I am inclined to think that the matter of procuring legislation with respect to vessels carrying elements of atomic or hydrogen bombs should be most carefully considered before recommending its enactment. While legally, it might be justified on grounds of the national security, it is to be borne in mind that such legislation would create a precedent for similar action by other Powers with respect to shipments which might be made by the United States at least to some of the NATO or other countries.

If the present shipments of implements of war bound for a Central American country, constitute an imminent threat to the security of the United States, the United States could seize or detain the vessels, taking the consequences of charges of violation of the freedom of the seas, violation of the sovereignty of the country in whose port they might be found, and even of a risk of war.

If the present shipments of implements of war constitute merely a threat to the peace of the Hemisphere, affecting the sovereignty or political independence of an American State, the pertinent provisions (Arts. 6 and 8) of the Rio Treaty of 1947 should be invoked.

Washington, May 19, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 414.008/5-1954. Secret. Drafted by the Assistant Legal Adviser for Economic Affairs, Stanley D. Metzger.

SUBJECT
Controls Over Foreign Ships Carrying Munitions to Guatemala

You have asked whether there is existing legal authority pursuant to which the Executive could take action respecting foreign ships which carry munitions to Guatemala. Particularly you have asked if there is any legal authority pursuant to which the Executive could deny United States port privileges to such foreign vessels, and prevent the use of the Panama Canal to such vessels.

Section 5(b) of the Trading With the Enemy Act, as amended (Title 50, app. U.S.C.) provides as follows:

"(b) (1) During the time of war or during any other period of national emergency declared by the President, the President may, through any agency that he may designate, or otherwise, and under such rules and regulations as he may prescribe, by means of instruction, licenses, or otherwise--

(A) investigate, regulate, or prohibit, any transactions in foreign exchange, transfers of credit or payments between, by, through, or to any banking institution, and the importing, exporting, hoarding, melting, or earmarking of gold or silver coin or bullion, currency or securities, and

(B) investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest,

by any person, or with respect to any property, subject to the jurisdiction of the United States . . ."

The United States is presently in a "period of national emergency declared by the President"; the President declared such an emergency on December 16, 1950. Consequently, at the present time the President possesses the authority set forth in the section. Since under this section the President through any agency designated may prohibit . . . transactions involving any property in which any foreign country or national thereof has any interest by any person, or with respect to any property subject to the jurisdiction of the United States", he is authorized to prohibit any person subject to the jurisdiction of the United States from leasing docking space, bunkering, or dealing in any other manner with a foreign national or any property of such foreign national within United States jurisdiction. Hence, an order issued pursuant to the authority of this section could prohibit persons subject to the jurisdiction of the United States from having any transactions with a foreign ship which comes within United States territorial waters; this could effectively prevent the use of United States port facilities. Criminal penalties for violation of the section or orders issued pursuant thereto are provided for in the Act. Such action would not be effective to prevent foreign vessels from plying munitions to Guatemala since it is not necessary to touch United States ports or the Canal in order to do so.

Apart from the technical legal situation summarized above, there are important policy problems involved in such a use of Section 5(b) of the Trading With the Enemy Act. It is my understanding that the Treasury Department, which currently exercises the President's authority under Section 5(b), has exercised it in the international field only in situations involving actual hostilities with the exception of the blocking of the Czech Steel Mill in 1952; and that Treasury Department has been reluctant to utilize the section in other than a most serious type of situation, particularly because the authority granted by the section is extremely broad and use of it otherwise might result in curtailment of the authority itself. In the instant situation, a finding by the President that the shipment of arms to Guatemala is injurious to the security of the United States, and a directive to the Secretary of the Treasury to take action such as that set forth above, would in all likelihood be deemed necessary before the action could be taken.

In addition to the authority available to the Executive under Section 5(b) of the Trading With the Enemy Act, Section 191 of Title 50, U.S.C., provides broad authority to regulate anchorage and movement of vessels in the territorial waters of the United States and within the territory and waters of the Canal Zone during a declared national emergency. That section reads as follows:

"Whenever the President by proclamation or Executive order declares a national emergency to exist by reason of actual or threatened war, insurrection, or invasion, or disturbance or threatened disturbance of the international relations of the United States, the Secretary of the Treasury may make, subject to the approval of the President, rules and regulations governing the anchorage and movement of any vessel, foreign or domestic, in the territorial waters of the United States, may inspect such vessel at any time, place guards thereon, and, if necessary in his opinion in order to secure such vessels from damage or injury, or to prevent damage or injury to any harbor or waters of the United States, or to secure the observance of the rights and obligations of the United States, may take, by and with the consent of the President, for such purposes, full possession and control of such vessel and remove therefrom the officers and crew thereof and all other persons not specially authorized by him to go or remain on board thereof.

"Within the territory and waters of the Canal Zone the Governor of the Canal Zone, with the approval of the President, shall exercise all the powers conferred by this section on the Secretary of the Treasury.

"Whenever the President finds that the security of the United States is endangered by reason of actual or threatened war, or invasion, or insurrection, or subversive activity, or of disturbances or threatened disturbances of the international relations of the United States, the President is authorized to institute such measures and issue such rules and regulations--

(a) to govern the anchorage and movement of any foreign-flag vessels in the territorial waters of the United States, to inspect such vessels at any time, to place guards thereon, and, if necessary in his opinion in order to secure such vessels from damage or injury, or to prevent damage or injury to any harbor or waters of the United States, or to secure the observance of rights and obligations of the United States, may take for such purposes full possession and control of such vessels and remove therefrom the officers and crew thereof, and all other persons not especially authorized by him to go or remain on board thereof,

(b) to safeguard against destruction, loss, or injury from sabotage or other subversive acts, accidents, or other causes of similar nature, vessels, harbors, ports, and waterfront facilities in the United States, the Canal Zone, and all territory and water, continental or insular, subject to the jurisdiction of the United States. Any appropriation available to any of the Executive Departments shall be available to carry out the provisions of this chapter."

Washington, May 19, 1954.

/1/ Source: Eisenhower Library, Dulles Papers, "Memoranda of Conversation". Top Secret; Personal and Private. This conversation took place in the White House between 9:30 and 10 a.m. Mr. Hagerty joined the President and the Secretary at 10 a.m.

I said that we took a very serious view of the arms shipments from Soviet-controlled territory to Guatemala. I said that it might require a revision of U.S. planning. In view of the gravity of the situation, the State Department had already contemplated setting up a special committee to advise with it informally with respect to procedures, particularly as to invoking the Caracas Resolution at a meeting of the Organization of American States. I suggested that this committee should consist of Dr. Milton Eisenhower, Walter Donnelly and Bill Pawley. The President agreed to the last two names. He said he doubted very much whether Dr. Eisenhower would be able to give any appreciable amount of time and he did not want us to ask him to do this. I said perhaps an hour or so a month would enable him to give the necessary counsel, and the President said that under these circumstances, he might be asked to serve. He had no question at all as to the propriety of his serving but merely as to the time involved.

[Here follows extensive discussion concerning Indochina.]

J[ohn] F[oster] D[ulles]

/2/In a diary entry for May 19, Press Secretary Hagerty noted that the President, Secretary Dulles, and he discussed foreign policy questions anticipated to arise at the 10:30 press conference. "On Guatemala," he stated, "Dulles suggested and President agreed that the President say the shipment of Communist arms was disturbing and that that was one of the reasons the Resolution was passed at Caracas." (Eisenhower Library, Hagerty Papers, Diary Series) The record of the President's press conference is printed in the Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1954 (Washington, 1960), pp. 489-497.

Washington, May 20, 1954, 7:50 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 414.608/5-2054. Secret. Drafted by Deputy Director of the Office of Regional American Affairs Jamison and Mr. Fisher; cleared by Assistant Secretary Holland, Ambassador Dreier, and Director of the Office of South American Affairs Atwood. Sent for action to the Embassies at Asunci?n, Bogot?, Buenos Aires, Caracas, Ciudad Trujillo, Habana, La Paz, Lima, Managua, Mexico, Montevideo, Panama, Port-au-Prince, Quito, Rio de Janeiro, San Jos?, Santiago, and San Salvador; repeated for information to Guatemala City and Tegucigalpa.

416. Inform Foreign Minister orally we take extremely serious view of (1) reliable information on arrival in Guatemala on May 15 of important shipment armament transported from behind Iron Curtain and (2) paralysis of northern Honduras by sudden wave strikes which since May 3 have closed down ports, transportation, public services and essential economic activities in expanding area and which erupted in absence of an existing labor conflict and without gesture to seek demands through negotiation.

Point out in your discretion that sudden and significant reinforcement of Guatemalan military power by Communist-supplied armament at this moment is especially disturbing in view its evident effect strengthening international communist link with Guatemalan regime and since current unrest in Honduras does not appear to be entirely a domestic matter. We are impressed with coincidence that strikes have occurred in an area where three Guatemalan consuls, two of whom were only recently assigned there, have been declared personae non gratae by the Government of Honduras. Information reaching Department for many months has suggested infiltration of Guatemalan Communists into Honduras, and there are reports of Communist designs to provoke sympathy strikes in neighboring countries directed against stability their governments.

In close consultation with Honduran Government we are following situation in that country carefully. Department also studying problem posed by arms shipment to Guatemala from Iron Curtain in context Communist aims in this hemisphere and means available to Communists to accomplish them.

If queried re press reports of suggestion possible OAS action concerning this situation you should confine your reply to statement of genuine and serious nature our concern and our view that problem should be carefully reviewed by each government in light such inter-American commitments as may be involved.

Emphasize especially present concern US is regard extra continental (Communist) character of problems posed by events and conditions described which raises doubt independent. character Guatemala Government actions.

Dulles

Washington, May 21, 1954, 11:30 a.m.

/1/ Source: National Archives and Records Administration, RG 59, State-JCS Meetings, Lot 61 D 417. Top Secret. Attendees at this meeting included 14 representatives from the Department of Defense (all of the Joint Chiefs were present), 8 from the Department of State, 2 from the Central Intelligence Agency, and Mr. Gleason from the National Security Council. Deputy Under Secretary Murphy headed the State group, which also included Messrs. MacArthur, Bowie, Woodward, Landon, Hoey, Anschuetz, and Linebaugh.

[Here follow a list of those present (25) and discussion of matters unrelated to Guatemala.]

Mr. Murphy then said the next question for discussion was the situation in Guatemala. He asked Mr. Woodward to outline the Department's views.

/2/In a memorandum to Assistant Secretary Holland, dated May 21, 1954, summarizing the meeting with the Joint Chiefs, Deputy Assistant Secretary Woodward stated in part the following: "I did not mention to the Joint Chiefs on this occasion the advisability of our increasing the amount of military assistance that we are giving to other Central American countries, because when I mentioned this to Mr. Murphy he suggested that we take it up with Mr. Nolting. In any event, Mr. Murphy did not believe there would be any difficulty on this score if there should be a sudden need for assistance to the Central American countries." (Ibid., Central File714.00/5-2154) Frederick E. Nolting, Jr. was Special Assistant to the Secretary for Mutual Security Affairs.

/3/At its 197th meeting on May 13, 1954, the NSC had noted a statement by the Secretary of State that "if Guatemala makes an armed attack upon Honduras, the United States should be prepared to respond, under the Rio Pact, to a possible request by Honduras for U.S. armed assistance." (NSC Action No. 1122-b) The Council had also noted President Eisenhower's statement that Congressional leaders should be briefed on the Honduras situation on a bipartisan basis. (NSC Action No. 1 122-c) The memorandum of discussion at the NSC's 197th meeting, including Action No. 1122, is in the Eisenhower Library, Whitman File, NSC Records.

General Ridgway inquired if the State Department had considered the desirability of Nicaraguan troops being sent to Honduras to augment the latter's strength as an alternative to the use of U.S. troops. He felt that if any U.S. force landed in Honduras there was bound to be trouble and we would end up killing a few Hondurans.

Mr. Murphy replied that the Department was considering this possibility but that it was felt if we tried to use straw men no one would believe we were not the instigators.

General Ridgway said that Nicaragua under the Rio Pact was as qualified as we were to come to the aid of Honduras and he seemed to feel this would be preferable.

Mr. Murphy raised the question of President Somoza's attitude. Mr. Woodward said Somoza would probably be willing to aid Honduras if he felt his troops could handle the situation. However, he has told us in confidence that he feels his military force is incompetent and one of the purposes of the military evaluation of the Central American republics referred to earlier would be to gain an accurate assessment of Nicaragua's strength.

Mr. Murphy said President Somoza would doubtless expect us to participate in any action if we called upon him to contribute force.

Admiral Radford stated that regardless of how the situation might develop the Joint Chiefs were going ahead with plans so that they would be in a position to carry out any orders they might get.

Mr. Murphy then referred to a New York Times article this morning which reported statements emanating from the U.S. were uniting Guatemala opinion against us.

/4/A telegram from Guatemala, dated May 20, 1954, reported that information from available sources indicated that many Guatemalan army officers were pleased to have the newly delivered arms, but they also had misgivings about the shipment for the following reasons: 1) it demonstrated the closeness of the Arbenz government to the Soviet Union, 2) it raised the possibility of the replacement of the U. S. Military Mission by Soviet or satellite military instructors, 3) it provided evidence that the Communists intended to take over Guatemala completely, and, 4) it would motivate the United States to take drastic action resulting in "terrible consequences" for Guatemala.

Admiral Carney stated that they were carrying out air surveillance in the general area and watching shipping operations.

General Cabell said in response to Admiral Radford's question that it is not yet known what the recent 2,000 ton equipment consisted of although it did include mortars, artillery and small arms. CIA is not certain whether ammunition was in the shipment. This may be on the way.

[Here follows additional discussion of matters unrelated to Guatemala.]

Washington, May 21, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 414.608/5-2154. Secret.

SUBJECT
Detention of Foreign Flagships Transporting Arms to Guatemala.

The Second Mate of the Alfhem, Swedish ship now discharging arms in Puerto Barrios, stated to the U.S. Naval Attach? that two Finnish ships had loaded arms at Stettin for Guatemala at about the same time that the Alfhem was loaded. He stated that one of these ships left Stettin three weeks before the Alfhem and that he saw it off Puerto Barrios on the night of May 14. Our Naval Attach? conjectures that it may be waiting until the Alfhem is unloaded before coming into port itself.

We are advised that the Navy is now carrying out an aerial reconnaissance of the sealanes leading to Puerto Barrios and that it will report any vessels which might be suspected of carrying further arms. The policy which this Government will pursue in the event that such vessels are sighted should be determined now.

/2/The handwritten words "on the high seas" were inserted in the source text, apparently by Mr. Holland.

1. If time permits we should attempt without detaining the ship to persuade its Flag state to order it to divert to Panama for inspection.

2. If time does not permit the preceding step our naval vessels should detain the ship, using force as a last resort, while we attempt to persuade its Flag state to divert it to Panama for inspection.

3. If neither of the two preceding steps is successful then our Navy should, using force as a last resort, escort the vessel to Panama for inspection.

/3/Assistant Secretary Holland had outlined the policy recommended in this memorandum at the Secretary of State's staff meeting held at the Department of State at 9:15 a.m. on the previous morning. The notes of the meeting, dated May 20 and designated SM N-230, read in part as follows: "Mr. MacArthur asked whether it would be feasible to secure the action of some other western hemisphere government in making the moves against the shipment of arms. Mr. Holland said that his inclination was to assert the responsibility of the accepted position the US holds in this hemisphere. Any other procedure he felt would fool no one and cause the US to look weak and ridiculous. He agreed that his feelings in the matter would not preclude the possibility of joint action." (National Archives and Records Administration, RG 59, Secretary's Staff Meetings: Lot 63 D 75)

/4/Ellipses in the quotation appear in the source text of the memorandum.

This legal justification rests upon the conclusion that repeated and clandestine shipments of arms from Iron Curtain origin to a destination in this hemisphere amounts to armed aggression at least against the state of destination if not against every American state including ourselves.

While the steps outlined above should suffice to prevent the arrival of another arms-laden ship in Puerto Barrios, we should resolve that additional steps will be taken, if essential, to prevent such an occurrence.

/5/The source text bears the initials of Secretary Dulles, indicating his approval of the policy recommended by Assistant Secretary Holland, and also the following handwritten notation by the Secretary: "Cleared with President May 22, 1954, at conference with Secy. Anderson[,] Admir Radford[,] Allen Dulles[,] and Bobby Cutler." See Document 40.

If this recommendation is there accepted, we shall undertake to furnish all necessary information to the proper naval authorities so that the operation may be put into effect at once.

Washington, May 22, 1954.

/1/Source: Eisenhower Library, Dulles Papers. Top Secret; Personal and Private. The source text indicates that this conversation took place in the White House at 9:15 a.m. The President's daily appointment book, however, records that it occurred at 9:55 a.m., and as requested by the Secretary of State. A copy of this memorandum was forwarded to Secretary Dulles under cover of a memorandum from Mr. Cutler, dated May 24, not printed.

PRESENT
J. F. Dulles, A. W. Dulles, Anderson, Radford, and Cutler

[Here follows discussion relating to the defense of Formosa and other islands bordering the China Coast between Formosa and the mainland.]

The Secretary of State raised the question of what should be done to prevent further shipments of war munitions from the Soviets to Guatemala. He pointed out that a Swedish ship had already landed two thousand tons of munitions in Guatemala. (The US erroneously took to Puerto Rico and unloaded a decoy ship, and missed the munitions carrier.) The Secretary thought that we should act promptly, in order to avoid the importation of such a great amount of arms that a major military effort would be required by the US to handle the developing situation. The basic request made by State was that the Navy be authorized to halt suspicious vessels on the high seas off the Guatemalan coast, voluntarily if possible, but by force, if necessary, and if such vessels refused permission to inspect their cargoes, to take them to Panama for inspection; the US being prepared to pay any damage or demurrage.

In answer to the President's inquiry as to the effect of this action on our friends, and on the other American Republics, the Secretary made these points:

(1) Honduras and Nicaragua have already asked the US for help. El Salvador probably will so ask. Costa Rica is beginning to worry a little about being so close to the Communists.

(2) Article 51 of the UN Charter provides the right to members of collective and individual defense. What is going on in Guatemala, since the Russians never furnish arms to a country without a bad motive, is a direct threat to the security of the US (via Panama Canal).

(3) Machinery has been set in action to call a meeting of the Organization of American States, but this will take a couple of weeks.

(4) The Caracas Resolution recognizes that the control of an American State by Communists was a threat to the security of the US (17 votes for, 1 vote against, 2 abstentions).

(5) Assistant Secretary Holland would go to Mexico City to keep the Mexican Government advised.

Under these circumstances, the President agreed to the proposed action, suggesting only that we should give notification to friendly countries of what we are proposing to do.

Washington, May 22, 1954.

/1/Source: National Archives and Records Administration, RG 59, Central File 714.56/5-2254. Top Secret.

/2/ Not found with the source text.

John Foster Dulles

Washington, May 22, 1954.

/1/ Source: National Archives and Records Administration, RG 59, Central File 414.608/5-2254. Secret. Drafted by Mr. Leddy

Dear Mr. Anderson: As the Department of Defense is aware, a large quantity of arms originating behind the Iron Curtain has arrived at Guatemala on May 15, 1954 aboard the S.S. Alfhem, a Swedish flag vessel. Cables to the Department of State, all of which have been distributed to the Department of Defense, have given details concerning this shipment of arms and efforts made to prevent their final delivery, inasmuch as predominant military power in the hands of the pro-Communist Guatemalan Government would create a situation dangerous to the peace and security of this hemisphere.

Information has also been received by this Department, and promptly furnished to the Department of Defense, that two other ships bearing arms are believed coming from the same port, Stettin, to Guatemala, and that their arrival is anticipated in the very near future; these ships may fly the Finnish flag, and one of them was reported to have been seen outside Puerto Barrios on the night of May 14, 1954. In addition to these two ships, the American Consulate at Kingston, Jamaica reported on May 19, 1954 that a German vessel, S.S. Sajma, was sighted off the coast of Cuba on the morning of May 18, 1954, bound for Belize, British Honduras, and carrying twelve crates of arms or explosives, according to a . . . source; this latter information was sent to the Department of Defense on the same night, and the request made that immediate steps be instituted to locate and identify this vessel. On May 20, 1954, the office of the United States High Commissioner for Germany reported that this ship is probably the Finnish M/S Sajmaa, and this information was sent to the Department of the Navy.

In order that effective steps may be taken to prevent delivery of arms of Soviet or Iron Curtain origin to Guatemala, it is necessary that the Department of State have information as far as possible in advance of the arrival of any such shipments. Confirming our telephone conversation and the previous data furnished to the Department of Defense, it is therefore requested that action be instituted to make available to the Department of State the following information:

a) The identity and location of the two ships reported to be bound for Guatemala from Stettin, carrying arms and ammunition for Guatemala;

b) The identity and location of the vessel reported to have left Stettin and to have been sighted outside of Puerto Barrios on May 14, 1954;

c) The identity and location of the M/S Sajmaa;

d) The identity and location of all ships leaving European ports bound for Puerto Barrios, Guatemala;

/2/No reply to this letter was found in Department of State files.

Sincerely yours,

Henry F. Holland

Washington, May 22, 1954, 9:29 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 414.608/5-2254. Top Secret; Priority. Drafted and signed by Mr. Leddy; cleared with the Secretary. Sent also to Managua, San Jose, Panama, and Tegucigalpa; repeated for information to Guatemala City.

/2/In telegram 1592 to Mexico City, dated May 26, 1954, Secretary Dulles stated in part that El Salvador, Honduras, and Nicaragua had made "clearcut" requests for U.S. cooperation to prevent further arms from reaching Guatemala, and that Costa Rica and Panama were considering making similar requests. (Ibid., 414.608/5-2654)

Dulles

Washington, May 24, 1954.

/1/ Source: National Archives and Records Administration, RG 59, MID Files, Lot 57 D 95. Secret. Drafted by Mr. Leddy.

SUBJECT
Arms for Guatemala from Europe

/2/Reference is to Department's telegram 323, dated Apr. 14, 1954, Document 24.

Individual Western European countries have thus far taken effective action on specific request of arms export brought to their attention. We do not yet have clear evidence of what general measures they have adopted to catch individual exports that we do not bring to their attention, although several have cordially agreed to cooperate. On our broad request to prevent large shipments moving in international trade, there is yet no answer, but the Dutch have already indicated their disagreements.

/4/The source text contains no indication of the Secretary's action on this recommendation

Guatemala City, May 24, 1954, 8 p.m.

/1/Source: National Archives and Records Administration, RG 59, Central File 611.14/5-2454. Confidential; Priority.

/2/In the referenced telegram, Ambassador Peurifoy reported that in an effort to secure foreign support for Guatemala in the arms shipment controversy, Foreign Minister Toriello on the previous day had explained to all Chiefs of Mission, except Ambassador Peurifoy, Guatemala's views on the issue, and that the Foreign Minister had allegedly stated that Guatemala would attend and defend its position if a meeting of the OAS were called, but that he would appeal to the United Nations Security Council if attacks against Guatemala did not cease. (Ibid., 414.608/5-2254)

Relations with US: Toriello expressed concern over Guatemala's relations with US which he said were getting worse; he knew consultations were now taking place regarding calling an OAS meeting and if one were called, Guatemala would attend and defend itself; Guatemala had strong case and would command respect of other American Republics for not tolerating intervention; he doubted meeting would do either Guatemala US much good.

/3/Not printed.

/4/In telegram 772, Ambassador Peurifoy reported that in the Guatemalan Government's memorandum, dated May 24, 1954, Foreign Minister Toriello rejected UFCO's claim for damages, refused to consider the subject an appropriate one for international discussion, and described the action of the U.S. Government in presenting the claim as intervention in the internal affairs of Guatemala (National Archives and Records Administration, RG 59, Central File 214.1141 UFCO/5-2454)

/5/Not printed (Ibid., 814.062/5-2154).

Arms shipment: Toriello confirmed that Guatemala had received arms shipment but denied categorically that arms were manufactured in any country which US regarded as Soviet satellite. When I asked if he could state arms were not purchased in satellite country, he replied negatively. He emphasized refusal of US to sell arms left Guatemala no alternative and assured me arms were for protection, since UFCO was financially backing Castillo Armas plot against Guatemalan Government. He said arms were not for aggression.

Communism: I told Toriello that for US problem of Communism was of greatest concern and that until that was solved I feared we would continue to have difficulties, he replied with standard line that Commies few and of no importance. I said I could not agree with him on this.

After his talk with me Toriello held press conference at which he announced that he and I would hold conversations looking toward solution of outstanding problems and expressed optimism that tension could be diminished.

My feeling is that Guatemalans are seriously worried over possibility of OAS meeting and are making desperate effort to induce us to defer or drop plans for international action. They either believe or wish to make Latin America believe that our real concern over Guatemala stems from UFCO's problems and hope that discussions on this issue can be drawn out until moment for action has passed. There is no indication that they have any intention of modifying their attitude towards Commies. I therefore suggest Department play down fruit company problem for present and concentrate on Commie issue.

Peurifoy

NSC 5419

Washington, May 24, 1954.

/1/ Source: National Archives and Records Administration, RG 59, S/P-NSC Files: Lot 62 D 1, NSC 5419. Top Secret. This paper was based on a memorandum drafted in the Bureau of Inter-American Affairs (ARA) by Mr. Jamison and Mr. Leddy on May 12, 1954, not printed, and submitted to Director of the Policy Planning Staff Bowie by Assistant Secretary Holland on May 13. That draft was subsequently returned to ARA and revised after consultation between officers in ARA and Louis J. Halle of the Policy Planning Staff. The revised draft was resubmitted to Mr. Bowie on May 19, and forwarded to the NSC Planning Board on the following day. In a memorandum to Mr. Bowie, dated May 20, not printed, Mr. Halle commented that he had doubts about the reliability of some of the factual statements contained in ARA's draft memorandum (PPS Files: Lot 65 D 101, "Guatemala"). The NSC Planning Board amended the revised draft at its meeting on May 24, and also approved submission of the amended draft as NSC 5419 to the NSC for consideration (record of the meeting of the NSC Planning Board, S/P-NSC Files: Lot 62 D 1).

Under a covering note dated May 24, not printed, NSC Executive Secretary Lay transmitted the draft statement of policy to the NSC for consideration at its meeting on May 27, 1954; see Document 47.

U. S. POLICY IN THE EVENT OF GUATEMALAN AGGRESSION
IN LATIN AMERICA

General Considerations

l. The Inter-American Treaty of Reciprocal Assistance, to which the United States is a party, provides as follows:

"Article 3

"1. The High Contracting Parties agree that an armed attack by any State against an American State shall be considered as an attack against all the American States and, consequently, each one of the said Contracting Parties undertakes to assist in meeting the attack in the exercise of the inherent right of individual or collective self-defense recognized by Article 51 of the Charter of the United Nations.

"2. On the request of the State or States directly attacked and until the decision of the Organ of Consultation of the Inter-American System, each one of the Contracting Parties may determine the immediate measures which it may individually take in fulfillment of the obligation contained in the preceding paragraph and in accordance with the principle of continental solidarity. The Organ of Consultation shall meet without delay for the purpose of examining those measures and agreeing upon the measures of a collective character that should be taken.

"Article 6

"If the inviolability or the integrity of the territory or the sovereignty or political independence of any American State should be affected by an aggression which is not an armed attack or by an extra-continental or intra-continental conflict, or by any other fact or situation that might endanger the peace of America, the Organ of Consultation shall meet immediately in order to agree on the measures which must be taken in case of aggression to assist the victim of the aggression or, in any case, the measures which should be taken for the common defense and for the maintenance of the peace and security of the Continent."

2. Since May 1, a strike situation has developed in Honduras in which the entire north coast area has been paralyzed. There is reason to believe that the strike may have had inspiration and support from the Guatemalan side of the Honduran boundary. The situation has prompted the Honduran government to send much of the weakly organized and poorly equipped Honduran army to the strike area and to stand guard on the Guatemalan border, thus stripping the capital at Tegucigalpa of military forces.

/2/In his memorandum to Mr. Bowie, dated May 20, Mr. Halle stated that he believed a Guatemalan attack on Honduras was unlikely.

4. Any successor government which arose in Honduras as the result of a successful Guatemalan attack might well have the same leaning toward Communism that distinguishes the present government of Guatemala. This would pose a most serious threat to the ability of the other governments of Central America to withstand Communist penetration or control. It would thus constitute a serious threat to the security of the area and, correspondingly, to United States security interests there.

Recommendations

5. If the government of any member of the Organization of American States should, under Article 3, paragraph 2 of the Rio Treaty, request the assistance of the United States to meet an armed attack by Guatemala, and if the President should be satisfied that such an attack has occurred, it is recommended that the President:

a. Determine that such Guatemalan armed attack is considered by the United States as an armed attack against all American states under Article 3, paragraph 1 of the Rio Treaty, and constitutes an imminent threat to the security of the United States.

b. Direct that under Article 3, paragraph 2 of the Rio Treaty and to protect the security of the United States, the armed forces of the United States, in collaboration with the armed forces of other members of the Organization of American States to the extent feasible, take military action to the extent necessary to counteract the attack and eliminate the danger to the state attacked.

6. The United States should encourage any member of the Organization of American States which requests the United States to come to its assistance, also to request such action by other members of the Organization of American States pending a decision by the Organ of Consultation.

7. The United States should take all practicable steps to ensure that the other members of Organization of American States are prepared for collective action under the Rio Treaty to assist any member of Organization of American States threatened by aggression or internal subversion inspired by Guatemala.

8. The Chairmen of appropriate congressional committees should be immediately informed of the above policy.

9. The timing of public disclosure of the above policy should be determined by the Secretary of State.