Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 Gon ebuerie +o ME - 6a Copy Nog SECRR SECURITY INFORMATION 296 PROBABLE FUTURE DEVELOPMENTS 1. Ib is ostimated that Communist influence in Guatemala, which has increased at a rapid rate and has reached a level that constitutes a serious danger to US security interests, will continue to grow during the remainder of 1952 unless the governnent and the army change the position which they so far have assumed. Barring this latter contingency the Communists will contime to extend their influence through the dominance of organized labor, RAM, Gi infiltration of the administration ami of the leadership of the pro- & gevernnent particse & 2. Barring a radical deterioration in Guatemala!s economy, the stability of the arbenz administration is not likely to be AL REVENY PFC i threatened in 1952. There is no effectively organized oppositions Moreover, the Govemmentts bread national and social progran, the e : efficacy of its propagenda, the emotional. support engendered by its 2 3 contest with the United Fruit Company, the trend toward unity 4 a among the pro~idministration political forces, including the Comm- nists, and the apolitical position of the Arny together present a 3 e powerful combination of factors favoring the stability of the ee regimes a 3 3 3. The stability of the regime and the direction of the aa S n Revolution during 1952 are largely keyed to the outcome of the s te) dispute with the United Fruit Company. The possibilities ares BRN. Date 24540 9/ (a) @ settlenent with the United Fruit Company which the Arbeng Ms cecum Wpoved fo: Cantcai SECRET SECURITY INFORMATION 43 Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 wre £7-42— RR. |Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 SECRET 30. SHCURETY INFORMATION aiininistration can present ac a substantial victory, (b) 8 contiimation and extension af the present dispute with US business interests, and (c) the breakdom of present negotiations and the withdrawal of the United Fruit Company fran Guatenelas hs Tn the evont that the Arbena aduinistration reaches a successful settlonent with United Fruit, ise. if United Fruit remains in the country on the goverment!s end labor's terms, Arbenz would be immeasurably strengthoned in the country. Under these circumstances, the Governnent should have less difficulty in winning a victory in the congressional elections to be held in the fall and will be better able to sustsin a show of economic and social. reform. : Se In the event of a settlement with the United Fruit Company, ‘the Administration, oven though freer to pursue an independent course, will probably continue collaboration, at least until the forthconing congressional elections, with Commnist-led labor, which will Likewise havo been strengthened. The Goverment would be under pressure to maintain its anti-US position and to continue ite campaign against foroign interests, directing then against other large American interests, with tho INGA as the first targets The Conmmnists would also be able to strengthen their ties with inter- national Communism, particularly through the international Lebor frente It ig not impossible, howevor, that the Goverment may SHORET SECURITY INFORMATION Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 SRORET 31s SECURITY INFORMATION recognize the escontial danger to itself of continued close collaboration with Communists ent nay seize the opportunity of a “victory” ovor the United Fruit Company to begin the separation of labor from its Communist leadership. This possibility could become strongor after the congressionsl elections and owr the longer range. Under such cireunstances foreign enterprises in Guatemala may receive sone respite ani anti-US propaganda may be tempered. Evon in this eventuality, hovevor, it is not likely that the Adminis- tration would survender its position with respect to Noolonialisn' and "denocracy'', nor its position of independence in world councils. To In tho event of continued dispute with the United Fruit Coupany the prosont trend of econonie deterioration and mounting political, tension will be accelerated. There will be an inercase of restlessness among the middle class and porhaps within the army. The financial position of the government will becone weaker; there nay be cutbacks in econonie projects and social services. The government will be loft with Little political support outside of Commnist-Led labor for political support. There will be a carresponding increase of restlessness among tho middle class and perhaps within the amy. 8. Tb 4s not expected, rowever, that, barring eoffee crop failure and a sharp decline in coffee prices, the econumic situation will become so critical as to deprive the govermient of control of the situations As political insceurity increases the pro~hdminis+ SECHED SHCURITY INFORMATION Approved For Release 2001/07/27 : ClA-RDP84-00022R000200030045-1Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 SHORET 32. SHOURITY INVORKATLON tration parties although they ay lose constituents may be expected to act in close accord, and the Adrinistration, if necessary, will supplement its propaganda against tho opposition by suppression or political persecutions 9. Under gradually deteriorating economic conditions the following developments are possible with respect to the position of Communism in Guatemala. as Should tho Arbenz administration not! appreciate the danger of Communist expansion in temala, the Commnists are likely to be sucessful in intensifying domestic propaganda against US interosts and in extending the area of Guatemala! s non-cooperetion and even hostility toward the US. They will develop their local organizations, strengthen their tdos with international Coumunisn, and intensify their velations with Conmmnist organizations in other Central Ancrican countricss be Should the Arbeng administration permit the Commnists to vealize their potontial to onch an extent that they aro able to seize direct or indirect control of the government, the army is likely to withdraw its support from the adminis- tration and Join with opposition forces. c+ Thore is a possibility that the Avbenz administration, recognizing that the Communists are capable of challenging its control, may, with the support of the army launch a SBORET ITY INFOMATION si /A-RDP84-00022R000200030045-4 Approved For Release 2001/07/21Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 SECRET 336 SECURITY INFORKATION nove against the Commnists. 10. While the growth of Communism will produce a widespread reaction it is not possible at present to foresce at what point -- short of Communist seizure of government — opposition to Communist ‘ expansion will become effective. The attitude of the amy would ‘ve tho controlling factor. It is probable that in the early stages of Communist expansicn, since it will be initiated under the guise of nationalism, the emy. will retain its predent posture of non- Anterference in political affairs. However, while the army may continue to tolerate Commnist oxpansion it will at the same tine — ‘becone apprehensive of the outcome of euch a development, especially if the administration shows itself unable to cireumscribe Commnist influence within linits which it regards as safe. It is almost certain that tho amy will tako a nuch more positive stand should it become convinced that tho Communists are on the verge of capturing @ireet or indirect control of tho govornnont. 11, In the evont of a bred« in tho negotiations with the United Frait Company and the withdrawal of the Compary from the country, the stability of the Arbenz administration would be seriously ondangered., Tt would bo confronted with severe economic @islocations such as unemployment, curtailed national income, and Joss of revenue. Drastic social ond economic measuros would then be required to cushion tho shock to the nation's ceononys The degree to which such nozmuros might be effective would determine the SECRET SECURITY INFORMATION Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1 SECRET She SEOURTTY INFORMATION Life of the Aduinistratione 12. Should those measures prove inadequate to cope with severe anl prolonged ccononic crisis, the government will vory quickly lose any middle clase support it now has. Labor would probably turn ageinst both its Commmnist leadership and tho govern mont. Unler those conditions the amy may well estimate that the goverment has lost its populer support and may intervonoe 134 Should the government, however, exploit the Company!s withdrawal as a great nationdl victory, and, with the ontiusiastic support of the Communists, undertake moasures which would shift the ins burden of the econenic crisis upon the woll~to-de groups in Guatemala, tho Administration may succoed in retaining a considerable measure of its popular support, at least until the end of 19525 It is not believed that sharp curtailment of banana production and marketing, or, even a contingency such as IRGA's withdrawal need, in thomselves, prove fatel to the econouy over the short run. Under these eirounstanees the amy may well hesitate to intervene unless it becomes convinced that the Commnists havo ass d control, or even direction, of the goverment. SECRET SBOURITY TivORiATION Approved For Release 2001/07/27 : CIA-RDP84-00022R000200030045-1