A shorter version of this article was published in The New York Daily News on Feb 7, 2017.
To many (most) it has come as a surprise that the United States has no laws instructing the president to de-conflict his business ventures that overlap his duties as commander-in-chief. No laws mandate the selling off of foreign investments. No laws demand the transformation of companies into blind trusts. As President-elect Donald J. Trump explained to a boardroom full of New York Times editors, with a more than a touch of Nixonian flare, if he’s the president, he “can’t have a conflict of interest.”
More recently, Trump has tweeted that he will “take” himself “completely out of [his] business operations.” Yet it remains completely unclear what he means. Will he sell off all of his assets? Has he really handed over the reigns for his children to run the show? If he were to convert his assets into a blind trust, how blind could a blind trust be when he knows exactly the properties he owns? Many a liberal and anti-Trump Republican have been horrified at the prospects. The Washington Post’s E. J. Dionne railed against the problems Trump’s “business dealings would pose to his independence and trustworthiness.” Commentary editor John Podhoretz declared Trump’s business conflicts his “most serious political problem.” Even the Wall Street Journal slammed Trump for not liquidating his assets.
And yet, it all begs the question, so what? What kind of petty corruption can really come from foreign emissaries staying in Trump hotels? So what if there ends up being a few fewer wind farms in Scotland? Will an extra call to Taiwan to shore up a business deal really upset the delicate trio played with China? We certainly do not want to become a kleptocracy, a banana republic in which the president acts as both chief executive and businessman, enriching himself on a large scale at the expense of his people. Former Treasury Secretary Larry Summers has critically termed this practice “deals-based capitalism” (as opposed to rules-based capitalism). The ad hoc practice of “deals-based capitalism” that Summers fears trades consistency, predictability, impartial law and the governing by rules for an economy of inconsistent action, partiality, “corruption, abuse of power, favoritism and selective enforcement” of regulations.
But is Trump really going to go to war over the building of a few hotels? The answer is, it’s happened before. In 1954, in Guatemala, in a now too-much forgotten episode of the Cold War, the United States went to war not over hotels but over the business of bananas.
After a popular uprising in 1944 that became known as the October Revolution and overthrew the previously American-backed dictator and bloody fascist Jorge Ubico, Guatemala began what appeared to be an attempt to transform the Central American nation into a liberal and capitalist democracy. The new state provided its people near-universal suffrage, stricter labor laws, more spending on public education and a minimum wage.
In 1950 the Defense Minister Jacobo Arbenz was popularly elected Guatemala’s second post-revolution president. He furthered the expansion of government reforms. He challenged the American-controlled monopoly on electricity by constructing a hydroelectric plant that could offer his people a cheaper option. Most notably Arbenz confiscated and redistributed some of the unused banana farmland of United Fruit Company (the world’s largest exporter of the fruit) to near-destitute workers.
To maximize profits, the Boston-based UFC had imposed serf-like conditions on its peasant workers. They were paid a pittance. There were electricity and clean water s
hortages in company housing as well as a lack of adequate screens and security. Workers could not afford basic goods in their farm commissaries. They complained about massive unpaid overtime. At the same time, the banana corporation operated hand-in-hand with the previous Guatemalan dictators. The government prohibited unions from forming, even banning the use of the word sindicato for its allegedly Communist connotation. Meanwhile the UFC paid nearly no taxes while becoming not only the nation’s largest landowner but also its biggest employer (nearly 40,000 Guatemalans). The company bought up “shares of the railroad, electric utility, and telegraph.” So entrenched was UFC, Guatemalans called the American enterprise el Pulpo, the Octopus. By 1954, UFC exported 84% of the nation’s bananas. It was a monopoly. And it was thus a monumental shift when the Arbenz government enacted Decree 900, redistributing 1.4 million acres of unused UFC land to 500,000 of his citizens (one-sixth of all Guatemalans) while legalizing the right for workers to strike against unfair labor practices.
The UFC was furious. And, as the historian Gabriel Kolko found, “there was an intricate web of personal and political relations between United Fruit and many of the Republican and Democrat officials dealing with the Guatemalan issue.” Relentlessly the UFC lobbied for American intervention and what today we call regime change. Finally, the US acted with bipartisan support. After an aborted operation by President Harry Truman, President Dwight D. Eisenhower launched operation PBSUCCESS in August 1953. His efforts were
buoyed by his Defense Secretary, John Foster Dulles, and his brother, the head of the CIA, Allen Dulles. The brothers just happened to have a conflict of interest with UFC. They had monetary holdings in the company. Allen Dulles had been on the UFC board of directors.
The “dictatorial regimes of El Salvador, Honduras, Nicaragua, and the Dominican Republic” joined in by planting a propaganda campaign of their own, warning the Guatemalan people of the peril of Arbenz’s “communist” reforms. Even with American logistical support, Colonel Carlos Castillo Armas and his Liberation Army, a ragtag collection of a few hundred peasants, stumbled in their invasion from Honduras. But the Eisenhower administration picked up the torch. While blocking the official Guatemalan radio signals, the CIA’s Radio Liberation broadcast reported on “nonexistent civilian uprisings, military defections and bogus incidents of sabotage,” posing this propaganda as arising from legitimate stations, even “cop[ying] the [signature] music and bells of the government station.”
With his push for swift reform in all areas of Guatemalan society, including the military, Arbenz had alienated his officer corps. He turned to the Soviet Union for support, but Soviet leaders refused what they deemed a “bourgeoisdemocratic” leader in the shadow of the United States. The Assistant Secretary of State for Inter-American Affairs Henry F. Holland announced that “the people of Guatemala rose and dispersed the little group of traitors who had tried to subvert their government into another communist satellite.” Yet, in the end, it was not the shoddy army of anti-Arbenz Guatemalan ex-patriots, organized by the CIA, that made the difference but the dissolution of Guatemala forces and a show of American aerial force. American bombers sent Guatemala City into a panic. It was the forbearer of “shock and awe.”
And so, under extreme psychological propaganda ($2.7 million of “psychological warfare” and “subversion”), in fear of the great US menace, harboring an embittered officer corps who resented many of his aggressive military reforms, Arbenz failed to gather the military into a fighting force. Fearing an escalation, the Guatemalan high command forced an “exhausted, confused and cornered” Arbenz to resign. “Our crime,” he declared in announcing his resignation, “is having enacted an agrarian reform which affected the interests of the United Fruit Company.”
With US backing, Col. Armas was installed as the next president of Guatemala. Finally, the US had a leader made of putty. “Tell me what you want me to do,” Armas told Vice President Richard Nixon. “And I will do it.” Guatemalan exiles accused the new dictator of being a Wall Street pawn. He took to his role with relish. Promptly following the coup, Armas ordered the slaughtering of at least 1,000 UFC workers on one plantation. He reneged on the social reforms of the post 1944-democratically elected governments and returned the expropriated plantation land to the banana conglomerate. He eliminated rival political parties and unleashed what the historian Stephen G. Rabe has called “a ghastly cycle of violence, assassination and torture.”
Within just a few years a guerilla war raged against the newly installed dictatorship. Armas arrested so many opposition forces that the prisons overflowed, and it was necessary to erect concentration camps to hold all of the new dictator’s enemies. The rest of his foes simply “disappeared”. Meanwhile, in the US, the Eisenhower administration orchestrated a campaign of sensationalist news stories and anticommunist academic experts to paint the new Guatemalan regime as democratic liberators from the “Red” Arbenz. The final nail was the American intelligence’s uncovering of Czech arms secretly sent to aid the Arbenz regime aboard the Swedish ship Alfhem. It was not until the 1960s and 1970s that PBSUCCESS became widely known to Americans.
With the aid of the Guatemalan officer corps, the United States overthrew a popularly elected leader, installing a cruel but pliant dictator. Arbenz doomed his regime by alienating the armed forces, guaranteeing their “diluted” support at key turns in the US-Guatemalan conflict. Did the Dulles brothers’ financial interests in the UFC serve as the motivation to go to war? Was it a classic case of “Yankee imperialism”? Of a corporatized, Cold War “intervention lobby” fueled by a “broad network of power on Wall Street and in Washington” as a score of scholars like the political scientist Suzanne Jonas or the historian William Appleman Williams and Gabriel Kolko have argued? It is impossible to prove but impossible to deny. The conflict generated a pall of corruption over the affair which demands that the brothers could not be impartial actors to judge the merits of war and peace. They had skin in the game that went beyond American national interest.
Yet to understand the Guatemalan coup we must still complicate the matter. Through the Cold War, some on the Left as well as revisionist historians of the 1960s and 1970s lost credibility by trying to explain American foreign policy as solely a matter of American greed. They discredited their campaigns by turning their causes into one-dimensional anti-business screeds, blaming government action on business interests alone and slipping into a Marxist determinism in which money was the only concern for high-ranking officials.
The interests of the UFC and the Dulles brothers’ conflicts of interest did not play the only role in convincing first the Truman then the Eisenhower administration to go to war against Arbenz. Crystalizing the American crusade was an aversion against Communism, growing throughout the American government, that would not allow for Arbenz’s socialist-like land reform in their hemisphere. As a classified CIA review concluded years later, “in the context of the growing global Cold War struggle with the Soviet Union… [, the Truman and Eisenhower administrations] feared that Guatemala could become a client state from which the Soviets could project power and influence throughout the Western Hemisphere.” The State Department stated that its explicit plan was to “to remove…the menace of the present Communist-controlled government” in Guatemala and “roll-up” Communist sympathizers. In one popular iteration of this interpretation, published to wide appeal in and out of the academy, the journalists Stephen Schlesinger and Stephen Kinzer tied the monetary and ideological motivations into a slick international con job in which the UFC executed the “decisive” part by overplaying Arbenz’s Communist leanings, “redbaiting” the Eisenhower administration into action.
According to a more recent CIA-sponsored study, the historian Nick Cullather concluded that it was the CIA and not UFC who did the key anticommunist convincing. Fresh off the success of the CIA-backed coup (its first) overthrowing the Iranian Prime Minister Mohammad Mossadegh and installing the Shah, Mohammad Reza Shah Pahlavi, after Mossadegh nationalized the Anglo-Iranian Oil Company, the Eisenhower administration looked to contain the threat of world Communism through covert means. The Guatemalan Revolution was seen as the latest in Communist coups, its government reforms the latest in socialist plots. In this way, aside from the Dulles brothers’ conflict of interest and the lobbying influence yielded by the UFC, we can see the overthrowing of Arbenz as following the Cold War policy of the containment of world-wide Communism. And with a wider lens, we can see the overthrowing of Arbenz as a continuation of the Monroe Doctrine, an operation to ensure pro-US regimes up and down the western hemisphere.
And so we return to Trump. In the Guatemalan war, the Dulles brothers’ financial conflict of interest was but one factor in driving the Americans into war. And just so, the fear is not that Trump’s every move will be fueled by an avarice to enrich himself, but that his business interests will be one factor tipping the scales of policy decision-making away from American national interest. This multi-determinative view is key to instruct us on the question of Trump’s financial conflicts of interests. His business dealings may not play the sole consideration in his foreign policy. Yet they may be, along with his pro-business ideology and like the UFC in Guatemala, a key consideration in tipping his decisions for issues as large as war to peace or peace to war.
From Brazil to Scotland, Turkey to the Philippines, “the globe is dotted” with Trump business ventures, the New York Times reported. “Trump’s companies have business operations in at least 20 countries, with a particular focus on the developing world, including outposts in nations like India, Indonesia and Uruguay.” No doubt some of these unsteady regimes will stagger and sway as they attempt to develop into modern, first-world democracies. No doubt some of Trump’s holdings will be threatened by insecure even explosive conditions. If Trump retains his business holdings, there is no doubt that situations will arise in which Trump will not be able to act as an impartial observer while deciding whether the United States will intervene.
The former George W. Bush speechwriter David Frum went so far as to explicitly accuse Trump of pursuing the presidency in order to advance his business interests. “Pay attention to the money, that is the story of the next four years,” Frum warned on CNN’s “New Day”. The claim is intriguing but far from proven. Yet even if Trump cannot be understood as solely fueled by his business interests—just as the Guatemalan coup was more complicated than a story of the whims of a large American business—we must be vigilant. As Trump’s Chief-of-Staff Reince Priebus warned (ironically) against the corruption charges surrounding Secretary Hillary Clinton, “when that 3 a.m. phone call comes, Americans deserve to have a president on the line who is not compromised” by foreign business operations.
Fifty-seven years later, nearly 200,000 dead in an endless civil war, “in a muted ceremony” carried out in Guatemala City’s National Palace, Guatemala’s President Alvaro Colom spoke of the “great crime” committed in 1954. To Arbenz’s son Juan Jacobo Arbenz, the president apologized, proclaiming that “that day changed Guatemala and we have not recuperated from it yet…It was a crime to Guatemalan society and it was an act of aggression to a government starting its democratic spring.” Arbenz, argues Schlesinger and Kinzer, was no “crypto-communist” but redistributed UFC land in order to “create a middle class in a country riven by extremes of wealth and poverty and racism.” On the other hand, several close to Arbenz, including his widow, have stated that Arbenz “became highly influenced” by the ideas of Communism.
And so we circle back. Was it Communism or nationalism that fueled Arbenz’s commitment to land reform? Did it matter? Had his economic reforms failed would Arbenz have turned toward more resolutely socialist even Communist solutions? Would he have nationalized more land? Hawkish, anti-Communists in the United States believed that Arbenz was maturing into the kind of Communist Soviet satellite that Fidel Castro would become half-a-decade later. The scholar Piero Gleijeses revealed that the Guatemalan Communist Party saw the nationalization of land as laying the “groundwork for the eventual radicalization of the peasantry.” And that Arbenz concurred, committing his government to aiding in “foster[ing] control of the reform from below” in order to plant the “seeds of a more collective society.”
According to fearful forecasts, Arbenz would eventually oust the UFC if they continued to make threats against his rule. If his economic reforms faltered and his re-election were threatened, he would sharpen his rule into an unlawful dictatorship. He would turn to the USSR for aid and, if worst came to worst, pull a near-cataclysmic stunt like the Cuban Missile Crisis. And yet it is impossible to say what would have happened. For the US, spurred on by anti-Communist concern, swayed by business interest, never gave the Guatemalan Revolution and Arbenz’s democratic reformation a chance to develop into an independent and free nation of self-governing people.