US, Department of State, Intelligence Report Prepared in the Office of Intelligence Research, "Agrarian Reform in Guatemala," Washington, March 5, 1953 /1/


No. 6001

Washington, March 5, 1953.

/1/Source: Central Intelligence Agency, Job 79-01025A, Box 7, Folder 1. Confidential. According to a typed note, this report was prepared by the Division of Research for American Republics. A cover sheet and table of contents are not printed.

ABSTRACT

On June 17, 1952, a comprehensive agrarian reform program became law in Guatemala./2/ Its professed objective is the development of a capitalistic agricultural economy through the abolition of semi-feudal owner-worker relationships, the redistribution of land, and the improvement with state assistance of cultivation methods. The implications of the legislation, however, go beyond agrarian reform inasmuch as its provisions furnish a basis for the strengthening of political and Communist control over the rural population.

/2/On February 26 President Arbenz signed an order issued by the Guatemalan National Agrarian Council calling for the expropriation, under provisions of the Agrarian Reform Law of June 17, 1952, of approximately 234,000 acres of United Fruit Company property near Tiquisate on the Pacific side of Guatemala, and offering the company government bonds as compensation. See Foreign Relations, 1952-1954, vol. IV, pp. 1056-1057 (Document 13).

Full implementation of the law would free thousands of agrarian workers from a centuries-old dependence upon the privileged landholding class, but would subject the majority, in all probability, to close control by the state. This would be exercised through a virtually autonomous National Agrarian Department. Certain limitations, also, would be incumbent upon those using redistributed land. Since the great bulk of the land expropriated would be incorporated into the imprescriptible public domain, holdings could be acquired only on the basis of a life grant or by rental. Private title, however, would be possible by the direct transfer to the peasant of land expropriated from private estates. Another feature of the law facilitating state control is provision for the concentration of agrarian workers on each private plantation into a single village.

Administration forces undoubtedly envisage political benefits from the legislation. They are presumably anxious to break the control of the conservative anti-administration large landholders over the farm labor force in order to organize it behind the government. Advantages to the Communists are likely to be enhanced by the opportunity to extend the influence in farm areas through infiltration of the National Agrarian Department, through their expanded control over Guatemalan labor organization, and through greater opportunities to attack the United Fruit Company. The deepening cleavage between moderates and left caused by government sponsorship of the agrarian program will benefit the Communists.

Full and rapid implementation of the land distribution program would be likely to produce serious economic repercussions. Already nervousness has depressed business activity. Thus far, however, agricultural production, which provides the basis of Guatemala's economy, apparently has not been affected.

Implementation of the law will be difficult and politically dangerous. Although an abundance of land is made available for redistribution, only a small part of it is desirably located. The extent to which land controlled by foreign agricultural corporations--the greater part of United Fruit Company holdings are possibly subject to expropriation--may be made available for redistribution is largely a matter of speculation. As far as can be ascertained, these enterprises have no special protection under their operating concessions. While they may appeal decisions affecting their interests to the National Agrarian Department, this agency and the civil courts, which probably could not be utilized, are closely subjected to the will of an administration determined to accelerate the agrarian program. Also difficult for the administration to overcome will be the long-standing living habits and prejudices of the largely Indian agrarian population. Most significant of all will be the perfecting of a competent administrative organization. The strong probability exists that too rapid acceleration of the agrarian program coupled with increasing Communist strength and influence may lead to violence difficult for the Arbenz administration to contain.

AGRARIAN REFORM IN GUATEMALA

1. Background. The Agrarian Reform Law which was adopted on June 17, 1952, is rooted in the Guatemalan revolutionary program which since 1944 has been a vital force in the formulation of governmental policy. As groundwork for such legislation, the framers of the Constitution adopted in 1945 provided for state direction of the national economy, for the expropriation of unused private lands with prior compensation, for the incorporation of such lands into the national patrimony, for both the rental and granting of nationalized lands, for the formation of agricultural communities, for collective farming, for the protection of ejido and communal lands, and for state technical and other assistance to agricultural communities. These provisions were the product of several influences. Probably foremost was the socialistic and nationalistic philosophy of Juan Jose Arevalo, spiritual lender of the Revolution, whose ideas paralleled but apparently owed little to Marxist ideology. Also evident was the Mexican experience in land reform, implanted in the Constitution in all probability chiefly by Jorge Garc’a Granados, President of the Constituent Assembly, who for many years prior to the Revolution had been resident in Mexico.

During the seven-year interval between the adoption of the Constitution and the enactment of the Agrarian Reform Law a number of land reform proposals were advanced. Some of these were quite radical and several Communist-sponsored. Almost all advocated the expropriation and division of large privately-owned estates. Except for the passage of compulsory land rental legislation in 1950, no positive action was taken by the Arevalo Administration (1945-51). President Jacobo Arbenz, however, firmly committed himself to agrarian reform and in repeated speeches stressed the inequity of land ownership, the semi-feudal nature of tenancy and laboring arrangements, and the antiquated cultivation methods employed on small holdings. On May 10, 1952, he submitted to the National Congress the draft legislation which became law the following month. In the final preparation and enactment of this program Communists played a prominent role.

2. Redistribution of Land. Under the provisions of the law certain land is specifically designated for redistribution. This includes uncultivated land, land not cultivated directly by or for the owner, land rented in any form, land needed to establish rural farm settlements, state farms and certain other national lands, certain municipal lands, and excesses resulting from new surveys prior to expropriation. Excluded, however, are farms of less than 221 acres whether or not cultivated, farms of from 221 to 664 acres if a least two-thirds of this land is cultivated, land belonging to Indian or farm communities, land of agricultural enterprises producing essential crops except land not directly used by the enterprise or exploited by systems established by this law, lands used for cattle raising, lands in the immediate vicinity of Guatemala City and other municipalities, and all legal forest reserves.

Of the land available for redistribution under the law, only a small part is desirably located. In the most productive and populous sections of the country, principally the highlands, the privately-owned farms are generally small and exempt from expropriation. Those that are larger are situated almost entirely in the undesirable lowland regions or in inaccessible parts of the highlands. Much of the suitably located and available land is that comprised in the state farms. This situation and the reluctance of the largely Indian agrarian population to migrate to the unhealthful lowlands probably influenced the administration during August and September 1952, in accordance with a previously announced policy, to make the first actual distributions of land from a national plantation and other holdings. In November 1952 arrangements were being completed for the breakup of 110 state farms, and several have since been distributed. Effective December 29, 1952, the Department of National Farms was legally dissolved and its affairs and properties transferred to a liquidating commission pending distribution of the land under the Agrarian Reform Law.

The extent to which land controlled by foreign agriculture corporations may be made available for redistribution is largely a matter of speculation. Largest of these enterprises is the United Fruit Company which owns or leases some 450,000 acres possibly subject to expropriation. As far as can be ascertained, special protection to property of the Company appears not to be afforded either by the Agrarian Law or by the clauses of contracts, including land lease arrangements, between the Company and the Guatemalan Government. Article 12 of the Agrarian Reform Law provides that "there will be no difference between natural and juridical persons who own or rent land in this country, even though they may have signed contracts with the state prior to the date of promulgation of this law insofar as the lands affected are concerned." This article indicates clearly that the Communist-guided framers of the Agrarian Law intended to apply its provisions to foreign enterprises such as the United Fruit Company.

The first moves to apply the law to United Fruit Company holdings were made in December 1952 when workers at both the Tiquisate and Bananera subsidiaries filed expropriation applications with the National Agrarian Department. In protesting these proceedings before the Departmental Agrarian Commissions, representatives of the Company pointed out what they regarded as irregularities in the petitions, presented evidence that much of its acreage was exempt from expropriation because it was forested, was pasture, or was producing "technical crops", and contended that uncultivated lands were needed as a reserve for replacing acreage in bananas forced out of production by plant diseases. The Company also argued that such compensation as might be made would be inadequate if it were based as prescribed by this law upon the tax book value, especially in view of the fact that the Company had sought from 1948 to 1951 to have its land revalued. Moreover, payment in agrarian bonds would be unsatisfactory since they were subject to heavy discounting if cashed soon after issue. Both commissions overruled these arguments and approved the expropriation of the Company's uncultivated lands. In the Tiquisate case, the commission based its decision on the Company's inability to show that it was financially able to increase its cultivated acreage, and its failure to sustain with testimony by technical experts the contentions that all uncultivated holdings were required for agricultural purposes. Appeals in both cases were immediately filed by the Company with the National Agrarian Council. This body, in January, reversed the decision of the commission which had handled the Tiquisate case on the grounds that it had failed to specify the right of the Company to contest the commission's ruling within five days. The ruling, however, gave the Company only a temporary respite, for new petitions were immediately filed which have been approved by the National Agrarian Department and President Arbenz. This action, which would expropriate approximately two-thirds of the Company's Tiquisate holdings, has been appealed to the Guatemalan Supreme Court.

Meanwhile, the Company is faced with problem of numerous persons entering its Tiquisate property, staking out claims to unused lands, and making preparations for settling without legal authorization. In that part of the company subsidiary lying in the Department of Suchitepequez, the Governor witnessed the "invasion" and sent soldiers to protect the intruders. On the other hand, the Governor of the Department of Escuintla ordered squatters off the Company's lands.

In view of the proceedings involving the United Fruit Company which have already taken place and the stipulation in the Agrarian Law that no difference exists between "natural and juridical persons", the Company and other foreign enterprises would appear to be entitled to some legal recourse in case of expropriation. The value of this privilege, however, would be limited by two factors. In the first place, the Agrarian Law provides the cases arising as a result of its implementation may be appealed through the various divisions of the National Agrarian Department to the President, but may not be taken to the civil courts. This limitation, therefore, bars full legal recourse. Secondly, were a constitutional or other loophole to be found for using the civil courts, the appeal, if it reached the Supreme Court, would stand little chance at present of being favorably reviewed since that tribunal is packed with pro-administration judges. Moreover, a Supreme Court decision would be subject to congressional review. The packing of the Court took place in February 1953 when four of the five former justices were replaced after ruling against the expropriation of uncultivated lands belonging to a private landowner who had unsuccessfully appealed his case through the National Agrarian Department to the President of the Republic. The Supreme Court had accepted the case under a constitutional provision which grants a person the right to ask protection or aid (amparo) in a case where he believes the "law, regulation or other order by an authority is not applicable."

If the Agrarian Law is fully implemented, the impact upon private landholders would be borne chiefly by a minority group. The Guatemalan General Directorate of Statistics estimates that of 341,191 private agricultural holdings only 1,710 would be affected. These 1,710 holdings, however, comprise more than half of the total private acreage. Their owners would not suffer a drastic loss of cultivated land, but would be prevented from expanding future operations were their uncultivated acreage expropriated. For owners whose property is condemned provision exists for indemnification based upon the generally low tax valuations as of May 9, 1952. Compensation, for which the administration has made initial provision, is to be in bonds bearing 3 percent interest redeemable in 25 years or less. Although the National Agrarian Department planned in late 1952 to begin distributions from private farms, this phase of the agrarian program was not placed in operation until January 1953 when President Arbenz signed a resolution ordering the first expropriation of four farms in various parts of the country. Financial arrangements for such expropriations had been completed the preceding month with the deposit by the National Agrarian Department in the Bank of Guatemala of $2,500,000 in Agrarian bonds to reimburse landowners.

Meanwhile, the failure of the Government to proceed more rapidly with private expropriations led to increasing pressure, part of it Communist-inspired, to bring this about. Petitions were sent to the agrarian authorities and to the President, and after the beginning of 1953 the seizure of private lands by farm workers gained impetus throughout the country. The official press warned that only the state could apply the law, but the Administration showed signs of yielding to the pressure by moving to authorize squatters to stay on the land under the compulsory rental laws, by refusing generally to use the police power to protect the private properties involved, and by accelerating the rate of private expropriations.

3. Social and Political Implications. Envisaged by the law is the far-reaching social change of freeing thousands of agrarian workers from a centuries-old dependence upon the privileged large landholding class. Prohibited are existing forms of servitude such as the lending by one landowner to another of the personal services of farm laborers, the forced distribution of Indians, and the payment of rental for land in labor. A provision for the placing of land rental on an almost exclusively cash basis, and the limiting of payment whether in cash or kind to 5 percent of the value of the crop produced is one designed to free the Indian peasant from his dependent economic status.

Under the agrarian program, however, the rural classes would be subjected to rather close control by the state. This would be exercised through a virtually autonomous National Agrarian Department--headed nominally by the President of the Republic and having national, departmental and local subdivisions--whose influence is enhanced by its responsibility for rendering technical and other assistance. Certain limitations would be incumbent upon those using redistributed land. If the holding were acquired from the imprescriptible public domain, use would be on the basis of a life grant or by rental as long as adequate cultivation were maintained. Private title would be possibly only by the direct transfer to the applicant of land expropriated from private estates. Such holdings would be restricted to 43 acres and would not be transferable to another owner for 25 years. Another feature of the law facilitating state control is provision for the concentration of agrarian workers on each private plantation into a single village and for the nationalization of private roads connecting such communities with other centers of population.

4. Communist Participation. Although the Agrarian Law does not provide for the complete breakup of large privately-owned estates, it otherwise harmonizes generally with the program of the Guatemalan Communist Party, which purports to favor "peasant-middle-class agrarian reforms" bringing "the destruction of feudalism and the opening of the way to capitalism, or rather, industrialization." The Party has accepted the law as "the least that can be done" and with the admission that it is not feasible to go further at the present time. Rapid implementation of the law, however, was urged at a Party Congress held in December 1952.

Under the law the Communists have an excellent opportunity to extend their influence over the rural population. One method of accomplishing this is through the representation in the various subdivisions of the National Agrarian Department to which the two major labor confederations are entitled. The Communist-controlled General Confederation of Workers (Confederacion General de Trabajadores de Guatemala, CGTG) and the Communist-influenced National Confederation of Farm Workers (Confederacion Nacional Campesina de Guatemala, CNCG) have 60 percent of the seats in the local agrarian commissions, 40 percent in the departmental commissions, and one-third in the national commission. Already Communists and their sympathizers have infiltrated the National Agrarian Department so extensively that they exert an important voice in both policy making and in the implementation of the law.

At the same time, the Communists are tightening their grip on the rural classes by using the law in other ways. Working chiefly through the CGTG and the CNCG, they are propagandizing in behalf of the law, are stimulating farm workers to petition for the redistribution of land, and are helping applicants in their negotiations with the National Agrarian Department. Communist leaders also are taking the initiative resisting the efforts of private landowners to appeal their cases from the National Agrarian Department to the civil courts. Virtually no opposition exists to these activities. A basic reason for this is that the Agrarian Law provides severe penalties for interference with its implementation. Other factors redounding to the advantage of the Communists are an expansion of organizational activities in farm areas by both the CGTG and the CNCG, and the deepened cleavage between moderates and left produced by government sponsorship of the law.

5. Implementation. President Arbenz and his leftist administration forces, particularly the Communists, envisage political benefits from the legislation. They are presumably anxious to eliminate all control of the conservative, anti-administration large landholders over the farm labor force. With this accomplished, agrarian workers could be unionized under auspices and with benefits which would virtually assure their support of the administration. Aside from these broad political advantages, administration leaders will find in the agrarian reform program a greatly enlarged field for graft and patronage. Already the President has moved to keep implementation of the law in his hands by appointing as Chief of the National Agrarian Department the unscrupulous, corrupt, and shrewd Major Alfonso Mart’nez Estevez, his confidant and former private secretary. Next to the presidency, direction of the agrarian program is potentially the most important civilian position in the Guatemalan Government. To finance the operations of the National Agrarian Department, a budget of $404,470 for fiscal 1952-53 was approved in November 1952 by the National Congress.

During 1952, implementation of the Agrarian Law proceeded slowly and produced some confusion and controversy. Many misinformed rural workers evidenced keen disappointment when informed that lands exempt from expropriation could not be distributed to them. Under Communist inspiration, pressure mounted for more rapid distribution. The acceleration of the program became the central issue of the 1952-53 congressional electoral campaign and has been officially marked as the primary government objective for 1953. In the course of the accelerated land distribution program, "squatting" and forced seizures by the peasantry have taken place and have been upheld by the government.

6. Economic Repercussions. Thus far, a serious business recession, particularly affecting Guatemala City, has been the major economic repercussion of the implementation of the reform program. The government has been forced to deny reports that private property in general will come under attack. Rapid and immoderate implementation of the law may well affect agricultural production, the basis of Guatemala's economy, but this has not yet taken place. Dangers predicted locally include labor shortages, loss of land, the depreciation of land values, and a decline in credit.

Conclusion

The adoption on June 17, 1952 of a comprehensive agrarian reform program presages significant sociological, economic and political changes in Guatemala. Full implementation of the law would free thousands of agrarian workers from a centuries-old dependence upon the privileged landholding class, but would subject the majority, in all probability, to close control by the state through supervision by a virtually autonomous National Agrarian Department, through limitation upon land usage, through population concentrations, and through the extension of technical and other assistance.

Full and rapid implementation of the land distribution program would be likely to produce serious economic repercussions. Already nervousness has depressed business activity. Thus far, however, agricultural production, which provides the basis of Guatemala's economy, apparently has not been affected.

Administration forces in all probability will use the law to eliminate all control of the conservative, large landholding classes over farm workers. With the assistance of the Communists, who will take advantage of the opportunity to extend their influence over the rural classes, a stronger backing for the government should result. Advantages to the Communists also are likely to be enhanced by greater opportunities to attack the United Fruit Company, and by the deepening cleavage between moderates and left resulting from government sponsorship of the reform program.

Foreign agricultural enterprises, especially the United Fruit Company, will probably have their uncultivated holdings expropriated since they appear to have no special protection under their operating concessions. While they may appeal decisions affecting their interests to the National Agrarian Department, this agency and the civil courts, which probably could not be utilized, are so closely subjected to the will of the administration that such recourse would avail little.

Implementation of the law will be difficult because of the unavailability of suitably located land, because of the long-standing living habits and prejudices of the largely Indian agrarian population, and because of the likelihood that a competent administrative organization cannot be perfected. The strong probability exists that too rapid acceleration of the agrarian program coupled with increasing Communist strength and influence may lead to violence difficult for the Arbenz Administration to contain.


Source: US, Department of State, Office of the Historian, Foreign Relations, Guatemala, 1952-1954. Accessed on 21 March 2008 at: http://www.state.gov/r/pa/ho/frus/ike/guat/20195.htm


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