The story of the 1954 coup in Guatemala, which led to the overthrow of the democratically elected government of President Jacobo Árbenz, is a deeply disturbing, textbook example of multinational corporations misusing America’s power to subvert the politics and economy of developing countries. In the twentieth century, and perhaps in the twenty-first as well, many of these multinationals were operating like the East India Company.
The United Fruit Company, and two other multinationals—Electric Bond & Share and International Railways of Central America—had founded colonial empires in Guatemala and a few other Latin American states. In 1951, when Árbenz was elected as the president, and he announced his sweeping land reforms and industrial reforms to modernize Guatemala, the multinationals were worried. The executives of these companies lobbied with the American government and pleaded for the overthrow of Árbenz’s government.
They found support from secretary of state John Foster Dulles, who had spent decades working for the world's most powerful corporations, including United Fruit. In 1953, Dulles ordered a coup in Iran to overthrow the government of Prime Minister Mosaddegh and save the profits of American oil companies. A year later, he ordered a coup in Guatemala. In both cases, Dulles used the bogey of communism—in 1953, Mosaddegh was accused of being a communist, and, in 1954, the same accusation was leveled against Árbenz.
There was no evidence that Árbenz was leading Guatemala towards communism. Even if he was, Guatemalans had the right to choose any type of government. In the 1950s, Guatemala did not have any military and economic ties, or even diplomatic ties, with the Soviet Union. In fact, Árbenz was aiming to bring capitalism to his country. In his inaugural address in 1951, he said that the fundamental objective of his government was to convert Guatemala “from a country bound by predominantly feudal economy into a modern capitalist state.”
In the spring of 1954, Dulles accepted that it was “impossible to produce evidence clearly tying the Guatemalan government to Moscow,” and he insisted that the American leaders were acting against the Guatemalan government “based on our deep conviction that such a tie must exist.” This is such an absurd argument from Dulles—it is shocking that a man who used to operate on things like “deep conviction” could become America’s secretary of state and wield the power to overthrow foreign governments.
The only sin that Árbenz had committed was that he was trying to modernize Guatemala. Most of his policies were a continuation of the initiatives taken by his predecessor Juan José Arévalo, Guatemala’s first democratically elected president. Árbenz was trying to stop the multinationals from treating Guatemala as their colony. He said that the Guatemalan government, not the multinationals, should be in control of his country’s natural resources. He was demanding that the multinationals should fulfill their promise of investing in infrastructure projects.
In the end, the multinationals and the American political establishment had their way. They crushed the democratic movement that held great promise for South America. In June 1954, Árbenz’s government was overthrown and a rightist military regime (a puppet of the American multinationals) came into power.