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In addition, I1we grant permission to Williams College to provide access to (and therefore copying of) the thesis in electronic format via the Internet or other means of electronic transmission after a period of ___ years. _ I1we grant permission to Williams College to maintain, provide access to, and provide copies of the thesis in hardcopy format only, for as long as I1we retain copyright. Ill' np]!\)fl �dl\l',\,\ (l�l,:l-'>,,; [() YUllf \.\�)lk ill dl( \vork ��l!ch �;Ck;(.�lj (urln . lint iu electronic j'Or1YHd. _ I/we grant permission to Williams College to maintain and to provide access to the thesis in hardcopy format only, for as long as I1we retain copyright. Signatures removed IN FLUE CE AND IMPOTENCE: MULTINATIONAL CORPORATIONS AND THE UNITED STATES GOVERNMENT IN GUATEMALA AND CHILE by ROBERT ALEXANDER DYROFF Roger A. Kittleson, Advisor A thesis submitted in partial ful fillment of the requirements for the Degree of Bachelor of Arts with Honors in History WILLIAMS COLLEGE Williamstown, Massachusetts April 19'", 2010 For my brother, Adam ii Contents Abbreviations ...... v Introduction ...... 1 I. Influence, Intelligence, and the Fall of the United Fruit Empire ...... 9 II. Government, Gossens, and Geneen: ITT and the U.S. Government in Chile ...... 69 III. Cracks in the Barrier, Commies in the South ...... 117 Conclusion: At Atm's Length ...... 132 Bibliography ...... 137 iii Acknowledgements The alleged collusion between two titans of global power, U.S. multinationals and the U.S. government, was the topic of my college entrance essay, and so I suppose it is fitting to end my time in the Purple Valley in the same manner that it began. I had no idea that the inspiration for the few hundred words that I sent to the admissions office would eventually fuel the creation of this work. I thank my advisor, Professor Roger Kittleson, whose faith in me helped to right the ship even as I believed capsize was inevitable. I thank the educators I have come to know in the history field, from Peter Tenney at Crossroads Academy, who captured the imagination of a class full of rowdy elementary students, to William Murphy at Hanover High School, who administered practice quizzes on computers old enough to be history lessons by themselves. I thank my coach, Ed Grees, whose guidance over the past few years has been invaluable. I thank my housemates; particularly Marc Pulde and Nick Daen, who dragged me out of the library, dazed and burntout, to experience the more social side of college life. I thank Zach Miller, a friend and confidante, whose drive and work ethic has inspired me to openly accept each new challenge. This work was one of rhem. Finally, I thank my mother and father, who gave me the chance and the space to explore the world on my own, and supported me when I returned from its corners badly bruised. For their wisdom and insight, and the help of countless others missing from this page, I am truly grateful. R. Alexander Dyroff iv Abbreviations DCI Director of Central Intelligence OPIC Overseas Private Investment Corporation UFCO United Fruit Company lIT International Telephone and Telegraph Company IRCA International Railways of Central America DOS State Department v Introduction 'The incestuolls relationship between government and big business thrives in the dark. " -Jack Anderson Jack Anderson was a muckraking journalist known for his tenacious attempts to expose corruption in Washington. For Anderson, corporations and the government were always in bed with one another, the key was figuring out how to turn on the light, and expose their machinations. There couldn't have been a better time for Anderson to find his . swing as a newspaperman. In the 1970's, the rise of the multinational was on the mind of the American public in the wake of the 1973 Arab oil embargo, as steep increases in oil prices reflected the extent to which corporate policy could supersede the demands of sovereignties!. The new power of multinationals had granted them extraordinary privilege throughout the world, and possibly in Washington. When Anderson published papers suggesting that one of the country's largest conglomerates, International Telephone and Telegtaph, had collaborated with the CIA in the overthrow of the Marxist government of Salvador Allende in 1973, ir was the clarion call for which the public had been waiting.' Public concern quickly turned into federal action, as the Subcommittee on Multinationals was formed to investigate this relationship in 1973. When the trial commenced, "the mystery unfolded like a far-fetched whodunit, with false trails and comic relief.'" Ending without a conviction, the trial left the public with a confusing collection of conflicted accounts and ! Reza Bassiry, Power vs. Profit:Multin ational Corporation-Nation State Interaction (New York: Arno Press, 1980), I. 2 Jack Anderson with George Clifford. The Anderson Papers (New York: Random House, 1973). , Anthony Sampson, The Sovereign State iflIT (New York: Stein and Day, 1973), 269. 1 vague testimony. If the American people were upset, they would later be distracted by another trial: that of the U.S. President, as the alarm and unease for multinationals would be replaced with anger over Watergate. The concerns of the American public in 1973 were not new, nor would they go away in the coming years. Perspectives on the multinational have continually evolved, anxiery waxed in the early 1970's just as it waned in the 1990's. Corporations today are larger, stronger, and more global than they were in the 1970's, and the questions still persist. How close is the relationship between U.S. corporations and the U.S. government' To what extent have corporations and the United States Government been able to fashion a common policy in order ro further both federal and corporate interests? Ground zero for the development of this relationship has been Latin America, which has and continues ro have a troubled affiliation with the United States and multinationals throughout the 20th century. Rising tides of nationalism began in the 1940's immediately conflicted with new Cold War concepts of containment and desire for srabiliry that formed the basis of U.S. fo reign policy. U.S. interventions in Latin America during the period often occurred in countries with large U.S. business interests. These countries were battlegrounds for U.S. multinationals, as they fo ught to preserve their interests, and define their relationship with the U.S. government. Some of the most notable examples of U.S. intervention in Latin America are the overthrow of the Guatemalan government ofJacobo Arbenz Guzman in 1954 and the Chilean government of Salvador Allende Gossens in Chile in 1973. U.S. business interests were at stake in both interventions, as by 1954 the United Fruit Company had long had control of the Guatemalan economy, and in the 1970's International Telephone and Telegraph owned a 70% stake in Chile's telephone company, CHILTELCO. These examples 2 of U.S. intervention are the focus of my study, as I seek to answer the same question that the American public had in 1970. JUSt how close is the relationship between the U.S. government and U.S. multinationals? A comparison between the 1954 Arbenz coup and the 1973 Allende overthrow is particularly fitting. In both cases, the U.S. government relied heavily on clandestine operations undertaken by the Central Intelligence Agency to awaken the winds of tegime change. The CIA Operation in Guatemala, PBSUCCESS is particularly significant because it served as an example for later interventions, most notably in Cuba. Many of the tactics used in Chile were first employed in Guatemala. In both cases, corporations dominated large sectors of the economy, and came to represent a symbol of U.S. imperialism in Chile and Guatemala. While a number of differences might be listed, those that are important, for the intents and purposes of this thesis have a direct bearing on the relationship between corporations and the U.S. government. In Chile, business interests were tied to the government through the Overseas Private Investment Corporation, which protected their assets in the case of expropriation, a link that rlidn't exist in Guatemala. OPIC is significant because the collection or loss of its insurance was in large part due to the character of the company's operations abroad, as any action seen as intervention in the political affairs of the host country might result in the inability of the company to collect insurance. It is important to consider such a constraint when analyzing the behavior of both government officials and company representatives. In addition, United Fruit's operation in Guatemala was the only substantial U.S. enterprise in the country, while in Chile, ITT was a part of a U.S. corporate fraternity that included large copper companies, Kennecott and Anaconda, as well as a number of U.S. banks. Thus while the government could only deal with one U.S. private 3 enterprise in Guatemala, it had a number of options to chose from in Chile. Still, ITf was certainly the most active of these companies, in terms of its efforts to affect change in Chilean politics through the U.S. government. These rlifferences, while significant, do nOt prevent a meaningful comparative analysis of the corporate bond with the U.S. government in Chile and Guatemala. The source material for the two interventions, despite the similarity and temporal proximity of the two events, is bit different. This is primarily due to the availability of the 1973 hearings before the Subcommittee on Multinational Corporations, which informed my analysis of the Allende overthrow' The hearings were a response to the publication of investigative journalist Jack Anderson's eponymous "papers," which exposed what appeared to be a "seven figure" offer from ITf to the White House to stop Allende's presidency.5 Idaho Senator Frank Church chaired the Committee, "an expansive, highly articulate ,, lawyer ... who looked on big corporations with sturlied distrust. 6 The senators, for their part, "spent very little time rambling or justifying themselves," and "none of them was prepared to accept ITf without guestion." It was noted that even Republican Charles Percy of Illinois, the most sympathetic of the five Subcommittee members, asked guestions that were "double-edged.'" The Subcommittee concluded a fo rtnight'S hearings by warning that multinationals must be welcome in the countries where they do business, and fu rther, that the wider the distance between them and the CIA, the better. The hearings were enough for d 4 United States, 93' Congress, 1" Session, Senate, Committee on Foreign Relations, Sub Committee on Multinational Corporations, Hearings Befo re the Subcommittee on Multinational Corporations, MultinationalCorporati'ons and United States Foreign Polity, On the International Telephone and Telegrap h Compal'l} in Chile, 1970-71 (Washington: GPO, 1975). 5 Jack Anderson, The Anderson Papers (New York: Random House, 1973). 6 Sampson, The Sovereign State ofIIT, 266. , Ibid., 268. 4 OPIC to announce that ITIT would be unable to claim its $92 million insurance guarantee, an amount it would later recover. In some measure, the hearings are a historians dream, drawing together as they do hundreds of related documents and internal memoranda that would never otherwise be released, and questioning the authors of such documents about their intentions and motivations. Of course, the allegations involved make such a treasure trove more problematic. The tone of most of the testimony is expectedly accusatory on the part of the Senators, and particularly defensive on the part of the accused, especially company representatives. I always tried to keep the relationship between the accuser and the accused in mind as I constructed my analysis. The bulk of the other fo undational material for my work is more similar for the two cases. To analyze the interventions fr om the U.S. government perspective, I fo cused on State Department and CIA memoranda contained in the Foreign Relations collection as well as similar documents from the CIA's Freedom of Information Act electronic reading room. Memoirs of men like Henry Kissinger and CIA Director Richard Helms were also particularly helpful in assembling the different perspectives on the coup, even within the government. It was a bit more difficult to undertake the same study of the ITT and United Fruit perspective. Through the Multinational hearings I had stronger access to the corporate side of the story using ITT internal memoranda. With the Guatemalan coup, I tried to access this perspective using the memoirs of men like Edward L. Bernays and Thomas McCann, employees of United Fruit who wrote about their experiences during the period of the Guatemalan coup. Though the rypes of sources available in both cases are not perfectly analogous, substantial categorical overlap makes a study of the cases quite meaningful. 5 Other scholarship on the interventions has treated the relationship between the government and corporations as a subsidiary means of establishing motivation for the U.S. interventions in Chile and Guatemala. The most recent work on the two interventions has come to different conclusions concerning corporate influence. Nicholas Cullather used unprecedented access to CIA documents to suggest that United Fruit's interests were subordinate to the security risk associated with a Communist Guatemala.' In her work on the Allende coup, Lubna Qureshi suggests, "national security was not the foremost consideration," and that business interests, along with Nixon and Kissinger's "imperial rlisdain" for Latin America, were the primary motivations for intervention' Can the discrepancy between the arguments of the two authors be explained by changes in U.S. domestic politics, U.S.-Latin American relations, or U.S. foreign policy? John Lewis Gaddis suggests that the interventions in Guatemala in 1954 and in Chile in 1970 are largely a result of the failures of the Eisenhower and Nixon administrations to define Communist threats in Latin America in a manner that was consistent with each administration's dominant U.S. foreign policy.'· The rliscord between such foreign policy and the decision to intervene is the basis upon which other scholars argue that the motivation for such intervention must nOt be within the Cold War framework, but outside, in the business community. Building on Gaddis' analysis and available evidence, my thesis argues that in fa ct, the manner in which each administration defined the threat of Communism in the Western Hemisphere resulted in the intervention, and that business interests were only a secondary concern. As a result, 'Nicholas Cullather, Secret History: The CM 's ClassifiedAccountoflts Operations in Guatemala 1952-1954 (Stanford: Stanford University Press, 1999). 9 Lubna Z. Qureshi, Nixon, Kissinger and Allende: U.S. Involvement in the 1973 Coup in Chile (Lanham, MD: Lexington Books, 2009), xiii. 10 John Lewis Gaddis, Strategies of Containment (New York: Oxford University Ptess, 1982). 6 the relationship between the government and the business communiry (here with United Fruit and ITf as proxy) remained distant in both interventions. Though enormous changes " occurred in the United States and throughout Latin America in the 20 ' century, little changed in the same period between statesmen and businessmen. Though many have argued that U.S. corporations were fo remost in the minds of U.S. policymakers, the evidence suggests otherwise. The relationship between members of the corporate communiry and the United States government were not strong enough to have a direct effect on the scope, development and implementation of the nation's foreign policy in interventions in Latin America. In Guatemala in the early 1950's and Chile in the early 1970's, the threat of Communism provided the primary impetus fo r intervention at every level of the U.S. government. Though their efforts were rarely rewarded, U.S. multinationals attained the greatest degree of success when they could exploit gulfs in the policies of different government departments. Such successes had no bearing on government action however, nor did they ultimately guarantee the good fo rtune of the companies involved; the interventions only an intermediate step on road out of Latin America for ITf and United Fruit. I structure my examination of the government-corporation relationship into 3 chapters. Chapter 1 focuses on the relationship between United Fruit and the government in the overthrow of Jacobo Arbenz Guzman in 1954 Guatemala. It begins with a history of the Fruit Company in Central America, and is organized to examine the company's relationship with each arm of the government separately. Finally, it deals with Eisenhower's decision to intervene, and the determinants of his motivation. 7 Chapter 2 examines the government's relationship with lITin the U.S.-backed Allende coup, and is structurally different from the first chapter. It begins with a brief history of lITin Latin America. It then establishes the individuals and departments that lIT called upon in its efforts to appeal to the government. This section is fo llowed by an examination of the influence of the Communist threat on such individuals and departments. It then scrutinizes the relationship between those individuals and department officials, and lITrepresentatives. It concludes in the same manner as the first chapter, by interrogating the circumstances surrounding Nixon's decision to intervene. Chapter 3 provides a comparative analysis of the two cases. Together, these chapters trace the limits of corporate success in influencing U.S. Government action. Although multinational corporations had the keys to open a number of doors in Washington, rarely were they extended a warm welcome once inside. Multinationals had unique contact with a number of high-ranking movers and shakers in the U.S. Government. This influence, combined with U.S. Government intervention, seemingly on behalf of private interests, produced a smoking gun in Chile and Guatemala. To the disappointment of Hal Geneen of lITand Sam ''Banana Man" Zemurray of United Fruit, the high-powered business leaders held not a smoking gun, but a Quaker gun. 8 I. Influence, Intelligence, and the Fall of the United Fruit Empire " .. The men who believed thai it was possible to convert the miasmic swamps andJungles of Central America into vast plantations ofnodding plants, and who had the courage and fortitude to act on that belief, need notfear that honest and intelligent men will fail to give them credt! when the facts areknown. It was nol solelya desire for profits which caused these men to combat the seen and invisible dangers of the tropical wilderness. Thry did it in response to thai instinctive spirit which ever has urged the American to face and conquer the frontier." - Frederick Upham Adams Frederick Upham Adams took to writing a no-holds-barred celebration of United States capitalism, imperialism, and manifest destiny in his 1914 work entitled Conquest ofthe Tropics, the "story of the Creative Enterprises conducted by the United Fruit Company." Adams builds a case for new expansionism in response to what he considers to be a tathet economically complacent American public, government and business communiry, who "have overcultivated and over-expressed an attitude of self-sufficiency."IInvoking the successes of imperialism by European nations and even the Carthaginian empire, he compliments the American "pioneer" who ventures out into the world to find fo rtune and glory, not only for himself, but also for his nation. For Adams, the early 20,h -century United States public sees not pioneers, as he does, but fo ols and knaves, while the U.S. government fails to ensure the rights of American citizens abroad, giving the pioneet neither "sympathy or support.'" In the years since Adams' writing, a number of historians have expressed the opposite concern - namely that the U.S. government, rather than failing to represent the interests of enterprising pioneers, has supported them to a substantial and oftentimes inappropriate extent. The United Fruit Company has often made efforts to refute allegations of its merciless profit-seeking and heavy-handed monopolistic behavior that sucked dry the I Frederick Upham Adams, Conquest ofthe Tropics (New York and Garden City: Doubleday, Page, and Compaoy, 1914), 3. 2 Ibid., 12. 9 resources of Latin America, and gave little, if anything back. The company has done less to challenge notions of its close connection with the U.S. government. Just how close was the relationship between United Fruit and the U.S. Government? To what extent was UFCO able ro influence the policy decisions in Washington, and what were the methods it employed to do so? During the mid-twentieth century, Latin America was a battleground, not only for the Soviet Union and the United States, but also for the American multinational. Nations long exploited by American businessmen were now establishing and asserting their independence, not only from sovereign colonial powers, but also from foreign economic domination. Foreign capitalists fought to keep land from expropriation, while the U.S. government sought ro keep Communism out of the hands of revolutionaries. One of the most nororious examples of such conflicts was the 1954 U.S.- backed coup that overthrew the democratically elected government of Jacobo Arbenz Guzman in Guatemala, one of the tropical homes of United Fruit. An examination of the situation in Guatemala provides keen insight into the relationship between the U.S. government and the United Fruit Company, and the manner in which members of both parties navigated this changing, conflict-riddled period in Guatemalan-U.S. history. There is substantial scholarship on the Arbenz overthrow in Guatemala that approaches the subject from a number of different angles. Richard Immerman suggests that the intervention is a primary example of the devastating effect that the cold war ethos had on U.S. diplomacy' Alternatively, Kinzer has argued that without the expropriation of United Fruit interests, it is unlikely that the United States would have undertaken the intervention, citing larger Communist factions in Brazil, Chile and Costa Rica against whom J Richard Immerman, The CIAin Guatemala: The Foreign Policy ofIntervention (Austin: University of Texas Press, 1982). 10 the United States did not take action.' Others have refuted this claim, arguing that the Guatemalan paradigm set a precedent for the level of access that Communists had to the presidential office, indicating as well that a more able and informed U.S. State Department understood this reality. Most recently, Nicholas Cullather used unprecedented access to secret CIA documents released under the organization's "openness" initiative, to argue that the United Fruit Company played a minor role in the decision-making process of members of the CIA and the State Department, indicating that the security risk associated with Guatemala was the primaty impetus.' Unlike other scholarship, this chapter will be concerned with U.S. motivation, only in as much as U.S. corporations (specifically United Fruit) provided that motivation. Focusing solely on the nature of communication between the government and the Fruit Company, the concern of this chapter will be the types of access the company had to the government, and the channels through which information traveled between representatives in the company and their federal counterparts. United Fruit attained unique access to many offices in the government by using the talents, abilities and connections of a wide variety of individuals. Early in the Guatemala crisis, the company's most rewarding relationships were with the Central Intelligence Agency and the State Department. Such early success was the result of the company's exploitation of a policy gulf between the two departments, which once resolved, prevented the company from repeating its early achievements. Accordingly, as its influence in these departments diminished, the company, out of frustration, turned to a massive national PR campaign to supplement its lobbying efforts in Congress. While such 4 Stephen Kinzer and Stephen Schlesinger, Bitter Fruit: The Story oj the American Coup in Guatemala (Cambridge: Harvard University Press, 1999). 5 Nicholas Cullather, Secrel History: The CM 's ClassifiedAccount ojllsOperations in Gualemala 1952-1954 (Stanford: Stanford University Press, 1999). 11 actions might have given UFCO the sense that it was not powerless against Arbenz, the U.S. decision to intervene, and the eventual size, scope, and logistics of the operation were developed independently of the company; its access affording it little more than an opportunity to voice its plight in Washington. Though United Fruit's efforts to influence the government were ineffective, the U.S. did intervene in Guatemala. This decision and the resulting covert operation were motivated by anti-Communism and the fear that the Central American nation represented a Soviet beachhead in the Western Hemisphere. While the intervention provided temporary relief for the company, it would soon finditself in the fire once more, as a U.S. antitrust suit forced the UFCO to divest many of its profitable holdings, and led to its eventual departure from Guatemala. The development was a fitting conclusion to the Arbenz episode, and punctuated a period of frustration and anxiety with a reminder of the company's impotence. 12 Dealmakers '1n many wnys, the tropical divisions of United Fruit stillop erated as an extension ofthe personalities and imaginations ofmen lIke Minor C Keith and Lorenzo D. Baker... To visit them was to submity ourfreedom, your self-sufficiency andyour pleasures to the dispositions of abenevolent, all-poweiful host. To be employed as a worker was to submityour lifeand your entirefuture. And onceyou had submitted, no country or ideology or system ofgovernment on earih had more power thanyou. " - Thomas P. McCann The culture of United Fruit is largely a product of the manner in which the company was built. United Fruit's history is in large part based on the independent actions of young men, willing to risk life and limb, eking out an existence in the tropical wilderness. The company's successes are due to the extraordinary abiliry of many of these individuals to take a chance to cut deal with governments of the American Republics in which they were trying to start their enterprises. Particularly notable are the concessions granted to Sam "The Banana Man" Zemurray and Henry and Minot Keith, and their associates, in their respective business ventures throughout Central America. It is easy to retroactively examine the lucrative deals they were given by the governments of both countries, and pass them off as products of the weakness or ignorance of the administrations in power, or the sly actions of wily young Americans. To do so does not acknowledge the great risks taken by both the entrepreneurs and their Central American counterparts. These risks and the profit that came of them fo rmed the basis of an identiry and pattern of behavior for United Fruit. The early banana pioneers often acted independently of the U.S. government, and at times fought its policies in Central America. Accordingly, they showed very little allegiance to the United States, and believed their enterprises were the vanguard of economic expansion and development in the Hemisphere. The behavior of United Fruit in 1954 Guatemala was based on a long history of 13 relationships between United Fruit representatives and Latin American governments. To a large degree this history explains the power of the company in the hemisphere, and the reason for its efforts to influence the political future of Guatemala during the Arbenz years. While its ties and communication with the U.S. Government grew stronger throughout the first half of the 20,h century, the company's history of independent action suggests that UFca rarely viewed itself as subordinate to the government. Zemurray, who had built the company on the strength of his own independent negotiations and had defied U.S. government foreign policy, was still at the helm in 1954. Unfortunately for Zemurray and United Fruit, the increasingly powerful position of the U.S. government in the region dictated a closer relationship. For UFCa, the development was not favorable. The company found it difficult to adapt to the presence of another giant in the region, and its efforts to engage the U.S. government in any kind of collusionary enterprise met with failure. The origin of the United Fruit Company has its earliest roots in two separate areas of the American tropics, specifically in Port Morant, Jamaica and Costa Rica in the early 1870's. Sea captain Lorenzo D. Baker set out in 1870 with a few bunches of bananas given to him by a Jamaican planter and found an ample market in the United States. Baker was an "incorrigible individualist" who "provisioned and rigged his ships and personally inspected every man, cargo ton, pork side, biscuit, or hawser coil that went aboard" in the manner of true "old-style Cape Cod shipping.'" Soon after, Baker made the acquaintance of Andrew Preston, a "soft-spoken diligent young man,'" who with eight other partners, would join in the formation of the Boston Fruit Company, which grew into a handsome enterprise by the 6 Charles Morrow Wilson, Empire in Green and Gold (New Yark: Henry Holt and Company, 1947), 19. 7 Ibid., 22. 14 time it was incorporated in the States in 1890, valued conservatively at $531,000' Back in the United States, Henry Meiggs Keith first began his enterprising exploits began with his part in the '49 Gold Rush and the movement west. While he initially set out for gold, he eventually opened up a chain of trading posts in the valleys around San Francisco. After a few years as a real estate speculator and gambler he built the pioneer Chilean Railway from Santiago to Valparaiso and made a successful venture in the Guano trade in Peru. Building on his successes in Peru, Keith was granted a contract by General Tomas Guardia, the President of Costa Rica, for the construction of a railroad that would connect the four inland cities of the tropical republic.' While Keith would not live to see the completion of the project, the rights to the construction of the railroad were later transferred to his nephew, Minor Keith. Leaving a trail of sickness, toil, and about 4,000 deaths, Minor Keith blazed a railroad through 71 miles of thick Costa Rican jungle. Along the way, Keith experimented with banana cultivation, and his successes ultimately led to the establishment of the Tropical Trading and Transport Company and his control of two other banana companies in Panama and Colombia," Before, his death, Henry Keith had appointed Henry F.W. Nanne superintendent of the railroad. Before his appointment, Nanne was a public works contractor, who like Keith, came to Costa Rica from California. He supervised the construction of the San Jose water works and married the daughter of the vice president. When the president was deposed in 1859, Nanne was condemned to death, but the man known more for his "political connections than his business acumen", eventually converted 8 Charles D. Kepner Jr. and Jay Henry Soothill, The Banana Empire (New York: Russell and Russell, 1963), 33. , Wilson, Empire in Creen and Cold, 41-42. 10 Kepner and Soothill, The Banana Empire, 34. 15 his death sentence into a prison sentence." Nanne's tactics in Costa Rica give insight into the way business was done by American entrepreneurs in the tropics, and United Fruit specifically: Much to the enjoyment of the Costa Rican elite, Nanne celebrated the arrival of the first locomotive in Alajuela with a grand ball in ciry hall. He learned that the success of a railroad partly depended on one's abiliry to entertain the politicians who approved, rejected, or regulated railroad concessions." Nanne would later expand his enterprise to Guatemala, with the eventual construction of the Guatemala Central Railroad Company. In Guatemala, Nanne had his first independent success when he signed the Nanne-Herrera contract of 1877, which authorized railroad construction from San Jose to Escuintla, granting him a guaranteed 12 percent annual return and exclusive rights to railway transportation between the two cities for 25 years, as well as the option to head all future railway construction. This set the stage for the next deal Nanne would cut with General Barrios of the Guatemalan government in 1880, by which "once again, Nanne swung a deal whereby he used capital put up by Guatemalans to build a line he or his company would own for ninery-nine years."" The eventual product of such a contract turned into the Central Railroad project. Nanne's career came full circle, when the product of his Guatemala venture was driven into the hands of a Keith. After years of conflict between the Guatemalan government-backed Northern Railroad construction project, and the Central Railroad, financial troubles fo r the fo rmer and the death of the owner of the latter opened up an opportuniry fo r Minor Keith to merge the two ventures." Shortly before in 1899, the amalgamation of Boston Fruit's interests in Cuba, 11 Paul J. Dosal, Doing Business with the Dictators: A PoliticalHistory of the United Fruz1Company in Guatemala 1899-1944 (Wilmington, DE: Scholarly Resources Inc., 1993), 18. 12 Ibid., 21. " Ibid., 21. 14 Ibid., 48. 16 Jamaica, and Santo Domingo, and Keith's interests in Costa Rica and Columbia formed the United Fruit Company. This move represented the newly held notion that "the banana industry could be conducted more efficiently and profitably on a large scale than through comparatively small units."" Later, it was asserted "at the beginning of the twentieth century, over 80 percent of the banana industry was owned or controlled, at least in regard to sale and prices, by this infant corporation."" After the formation of UFCO left him as its founder and largest shareholder, Keith arrived in Guatemala, where in 1900 he fo rmed the Central American Improvement Company, and negotiated for the rights to complete the last 60 miles of the formerly government-backed Northern Railroad, and five thousand acres on which to plant banana trees, the precursor to UFCO's primary holdings in Guatemala "'Keith then fo rmed a partnership with Central Railroad owner General Hubbard, creating a de facto monopoly in 1904, which 8 years later Keith incorporated into International Railways of Central America (IRCA).18 With Keith serving as an intermediary, a relationship between twO nominally independent companies, UFCO and Guatemalan Railway Company Oarer IRCA), flourished. After selling UFCO 50,000 acres of the land he received in the 1904 concessionl', Keith established an agreement that granted UFCO preferential freight rates, right of way and precedence over all other trains and traffic. With the continuous extension of this agreement into 20,h century, UFCO was able to dominate the banana business in Central America, and controlled an estimated 40 percent of the 15 Kepner and Soothill, The Banana Empire, 35. 16 Ibid, 35. 17 Dosal, Doing Business with the Dictators, 21. 18 Ibid., 48. 19 Ibid., 46. 17 Guatemalan economy by the 1930's." Around the time that Keith received his Guatemala concession, Samuel Zemurray arrived in Puerto Cortes, Honduras. Different from the conquistadors who had invaded the area, Zemurray used a small fortune made from banana trade in Mobile Alabama, and a "deep affection and understanding for the people of Central America" as the foundation of a new business venture in 1910. With two hundred thousand dollars, largely comprised of of borrowed funds, he acquired a 5000-acre tract of land on Honduras' Cuyamel River, starting the Cuyamel Company. In order to pay back his creditors, Zemurray needed to capitalize on the investments he made in Honduras. He owned over fifteen thousand acres and was indebted to "most of the major bankers in New Orleans, Mobile, and New York."" Unfortunately, Zemurray ran into a few problems, the most substantial of which was the anti-expansionary policy of his own government. Nicaragua and Honduras were heavily indebted to Europe at the time, and their ability to pay seemed to be on the decline. In an effort to stabilize Honduran finances,then President Manuel Davila negotiated a refinancing agreement with then U.S. Secretary of State Philander Knox. In addition to a revamped plan of repayment, Knox indicated to Zemurray that there was no chance "the Cuyamel Company would get any concessions or incentives with regard to either taxes or duties."" In 1910, Zemurray pleaded with the State Department to throw out the loan package. When his first request was ignored, he asked that the government stay out of a revolutionary movement led by Manuel Bonilla, a Honduran ex-president who was using Zemurray's financial backingin a plot to overthrow Davila. Since the intent of the debt restructuring in 20 Jim Handy, Gift theof Devil(Cambridge, MA: South End Press, 1984), 80. " Thomas P. McCann, An American Company (New York: Crown Publishers, 1976), 19. " Ibid., 19. 18 Honduras was to promote stability, the U.S. government had vety little interest in a potentially destabilizing revolutionary movement.23 It refused to capitulate to Zemurray, who became increasingly fed up with the U.S. disruption of his business. Zemurray decided to take action; he felt that the government was impeding his ability to turn a profit on what he believed to be prohibitive duty on railroad equipment. Despite the desires of the U.S. government, Zemurray went ahead with his plan to undermine the constraining actions of his government. With Zemurray's fu nd, Bonilla purchased a yacht named Hornet, and along with the help of a small army led by General Lee Christmas and Guy "Machine Gun" Malony, mounted an invasion on Honduras that lasted a few weeks. When the dust settled, Davila had been overthrown, and Bonilla was the new president of Honduras." It followed that Zemurray won the concessions he desired, and after he reorganized the lands and renegotiated the concession with Bonilla, creating the Cuyamel Fruit Company in 1912. A conflict soon developed between the new Cuyamel Company and United Fruit. Using his close relationship with Bonilla, Zemurray pressed the Honduran government to assert its claim to banana-growing land in the Rio Motagua area, in an effort to forestall a UFCO takeover of the prime banana territoty. A 15-year conflictemerged, as UFCO pressured the Guatemalan government to take control of the land, and Zemurray vigorously supported the Honduran opposition.25 After a tumultuously competitive relationship with United Fruit in " the country, he later sold Cuyamel to company in 1930 for $31,500,000, but would return as the company's president during the depression. The Cuyamel Company was not the only firm absorbed by United Fruit, and its 23 Dosal, Doing Business with the Dictators, SO. 24 Ibid., SO. 25 Jim Handy, Giftof the Devil, SO-SI. " McCann, An American Company,20. 19 aggressive series of acquisitions soon attracted the attention of the U.S. government for reasons orher than foreign policy disputes. UFCO encountered substantial opposition to growrh, particularly from the Department ofJustice. On April 22, 1908 a hearing took place before the Senate Committee on Interstate Commerce in an attempt to determine if the expansionary path undertaken by United Fruit violated anti-trust legislation." Due to complications with jurisdiction, rhe court never found the company in violation, but the legal action set the stage for continued conflict between the U.S. Government and United Fruit in an era of trust busting and the attempted derhronement of rhe Robber Barrons. After the hearing, the company took action to tolerate a bit more competition, selling its interests in several Caribbean-based fruit companies around the same time that Frederick Adams was trying to convince the public that the company had been "forced into its present leadership in rhe banana industry because of the ignorance and indifference of the investing public" who failed to invest in UFCO because rhe of the competitive nature of the banana industry." Despite rhe divestitures and rhe propagandistic appeals to the public, United Fruit continued to maintain the dominant share of the market into rhe 1950's. The early history of the United Fruit Company gives critical insight into rhe way business was done in the tropics in rhe latter part of rhe 19'" century and well into rhe 20'" century. The founders of the respective arms of what would later be named EI Pulpo, or the octopus, did not rely often on the U.S. government for help in arbitration of disputes or difficulties with contract negotiation. In fact, men like Minor Keith saw themselves as the creators of new sovereign territories, forged in the fires of industrial advancement. Keirh's nephew would later remark that "Keith envisaged the five republics united by steel bonds of " Dosal, Doing Business with the Dictators, 5. 28 Adams, Conquest ofthe Tropics, 88. 20 mutual economic interests upon which might be based an eventual political consolidation, a United States of Central America, much as had been accepted three quarters of a century before."" Men like Zemurray and Keith had no great respect for the government of the United States, staking claims in Central America as independent businessmen, not emissaries of the nation to the North. In addition, the United States didn't have the same powerful negotiation position that it later would in matters of private sector diplomacy, as at the time there were a number of fo reign interests in every corner of Central America. Oftentimes private interests, particularly those of the Fruit Company frontiersmen, were at odds with the desires and goals of Washington policymakers. Keith's aspirations for a new Central American United States, and Zemurray's dispute and defiance of stated U.S. foreign policy suggests that the Fruit Company was created with bootstrapping independence and rugged individualism, as well as the clever but risky negotiation of contracts and concessions with Latin American leaders. United Fruit did not stake out its fortune by relying on the help of the U.S. government, and maintained an independence of action and negotiation throughout its existence in the hemisphere, a level of autonomy it would mostly uphold in its exploits in Guatemala in the 1950's. In many ways, the origins of the company explain the conflict- ridden relationship with the U.S. government, UFCO's impotent influence, and the inability of the two to develop a successfully cooperative venture. " John Keith Hatch, Minor C Keith: Pioneer of the American Tropics, (N.p), 63, quoted in Paul J. Dosal, Doing Business lvith the Dictators, 56. 21 Fortune, Success, and Trouble The story of United Fruit in Guatemala is not only one of courage and concession, built with brick after brick of sacrifice and cooperation. As much as Keith and Zemurray were able ro garner the support of Central American governments, the company's relations with the leaders of these tropical sovereignties were not without conflict. The company's problems with Latin American governments, specificallyin Guatemala, were directly related ro its iron grip on the local economy and its influence in local politics: The prejudicial contracts that that the company was able ro wring from a congress dominated by tyrannical and obsequious (to UFCo) dictators ensured that Guatemala received only limited returns from the golden harvest, while UFCo srockholdrs were continually belessed with remarkable profits from their investment, The UFCo's economic empire held the Guatemalan economic empire in a stranglehold - a noose fashioned securely from the ribbons ofIRCA tracks,30 Between the United Fruit Steamship Company, the IRCA, and United Fruit Itself, the company exerted complete control over the banana trade from the moment the fruit was picked ro its arrival on the docks in the United States. From 1900 to 1930, the company's assets multiplied 14 times, from a book value of$16.9 million ro over $242 million." Up to 1930, United Fruit had enjoyed a relatively placid relationship with regime after regime in Guatemala, but the Guatemalan congress was growing ro resent the company's influence and its ability to enticeleader after leader ro suppOrt its initiatives. Jorge Ubico's election to the presidency in 1931 was the beginning of a change for the company in Guatemala, though Ubico's presidency was business as usual fo r UFCO. Upon election, he stifled opposition in congress to the adoption of a contact for United Fruit's western lands, settled a debt with the IRCA that had been denied by all previous Guatemalan governments and even urged the 30 Dosal, Doing Business with Dictators, 81. 31 Ibid., 81. 22 company to reduce wages. Ubico was overthrown in 1944, after having extended his presidency by rwo terms using heavy-handed, at time murderous tactics.32 For nearly half a century, United Fruit benefited from a succession of Guatemalan presidents who were sympathetic to its interests. It all began to change with the election of Juan Jose Arevalo in 1945. Arevalo was a former schoolteacher who came to power in the wake of the 1944 Revolution in Guatemala, a movement inspired by the post-WWII ideals of democracy and economic modernization. The movement was largely composed of middle class actors: businessmen, student groups, and professionals who viewed Ubico as a fa scist in the mold of the German and Japanese models that the United States fought against. After Arevalo's election, the new president set to work on a number of reforms informed by the ideas of Franklin D. Roosevelt, and promoting a political philosophy based on "spiritual socialism." He instituted a new Guatemalan constitution, embarked on a series of health and social reforms, and established a Labour Code, which granted unions the rights to strike, set minimum wages, and collectively bargain. This was tragedy for United Fruit, which charged that the 1947 Labor Code was discrimination against the company." After the passage of the Code, unions went on strike repeatedly, and were cautiously supported by Arevalo in their struggles with the company. In addition to the Labor Code, Arevalo laid the groundwork for a set of national land reforms that would seek to redistribute land (74 percent of which was controlled by 2 percent of the population a 1950 census showed). After Arevalo's term ended, these rwo initiatives would continue to be the biggest source of conflictberween the Arbenz administration and the United Fruit Company. 32 Ibid., 98. " Ibid., 138. 23 Arevalo's successor, Jacobo Arbenz, assumed the presidency in 1951, and largely continued Arevalo's policy initiatives. The company's troubles began in September of that year, when a windstorm destroyed UFCO's prime banana farms in Guatemala. After suspending 3,742 Guatemalan workers, the company informed Arbenz that the company would not reestablish its plantations unless it was offered stable labor costs and exemption from unfavorable labor laws. A labor court ordered the company to reinstate its workers, giving the company none of its requests. Eventually United Fruit had to settle with the workers." In June of 1952 Arbenz enacted his Agrarian Reform Law, Decree 900, which called for the redistribution of land, much of it belonging to United Fruit. At the same time, the government conducted the first-ever audit of IRCA finances, and impounded IRCA assets for $10.5 million in back taxes." Around the same time, the U.S. government became increasingly wary of Guatemalan politics; particularly the allegedly Communisttone adopted by Arevalo and Arbenz, their sympathy for labor movements and their land redistribution programs. Eventually, building fe ar turned into paranoia and the threat of Soviet influence seemed to taunt policymakers from the shores of Central America, especially Guatemala. In August of 1952 the Director of Central Intelligence, Walter Bedell Smith, gave the green light for an Operation called PBFORTUNE, which was intended to supply several anti-Arbenz revolutionaries with a cache of weapons paid for in part by the Fruit Company. A small group of Latin American leaders, including Anastasio Somoza, President of Nicaragua and Dominican dictator Rafael Trujillo also contributed funds and support. The Operation failed after members of the Nicaraguan camp made careless comments to key officials in the State " Ibid., 138. 35 Ibid., 138. 24 Department, who move shut PBFORTUNE down.36 Despite this failure and the scolding from State, the operation continued, albeit in a more minor capacity. The weapons intended for use were stored in a warehouse, and Castillo Armas, the intended replacement for Arbenz, was kept on the payroll via a monthly retainer, provided by the CIA. Castillo Armas had been involved in the overthrow of Ubi co, but opposed the leftist reforms undertaken by the subsequent two regimes. He waited in the wing, while the CIA garnered support for the intervention under a new Eisenhower administration. In December of 1953, new DCI Allen Dulles approved a plan to overthrow the Arbenz regime, allocating $3 million for the project. The new Operation PBFORTUNE, would combine psychological, economic, diplomatic and paramilitary operations, building on the Agency's successes in Iran earlier in the same year.37 By May of 1954, several of the operation's key initiatives were underway, as Operation SHERWOOD, a radio station built to disperse anti-communist propaganda throughout Guatemala, and later the "advancements" of Armas' liberation troops, began. In addition, the Navy initiated Operation HARDROCK BAKER, a sea blockade of the country. By June, PBFORTUNE was in full force, and sabotage teams were dispatched to their staging areas. Castillo Armas crossed the border into Guatemala, as CIA planes bombed Matamoros Fortress and strafed troop trains."Soon after, Arbenz conceded his presidency to a military junta, and by September of 1954, Castillo Armas had taken office."While Castillo Armas gave the Fruit Company many of its requests, UFCO was a lame duck in the eyes of the U.S. government. Shortly after the coup, the U.S. DOJ initiated a long pending antitrust suit. The company 36 Cullather, Secret Hi,tory, 128-129. 37 Ibid., 129-130. J8 Ibid., 132. 39 Ibid., 132. 25 was forced to pay higher wages to imptove relations with its host countries in Latin America, including Guatemala, and later was fo rced to divest many of the holdings that gave the company its competitive advantage. It would be a long way down for United Fruit, which sold its Guatemalan interest in 1958, ending a lucrative partnership with a long line of Guatemalan leaders, and the nation it helped develop, for better or worse. 26 Bee Stings In a January 1953 CIA memorandum, an undisclosed member of the CIA outlined some of the general concepts that provided the foundation for the CIA's PBSUCCESS initiative by noting the "Utilization of all potential personnel. ..will though organization become 'the thousand bee stings which kill the tiger,' which Mao Tse Tung used so successfully to overthrow superior forces."" This tactic was not only employed by Mao and the CIA however, and the turn of phrase can very accurately describe the efforts of the United Fruit Company to influence the policy of its native government toward the Arbenz administration in Guatemala. In addition to its own attempts to change the Guatemalan political situation (consistent with its history of independent intervention), the Fruit Company attempted to insert itself and its interests into the decision making process of key policymakers and actors in the CIA, the State Department, and the Congress, both directly through lobbying and indirectly through massive public relations campaigns. Such measures, while extensive never translated to action on the part of the U.S. Government. The company's efforts in the State Department were almost entirely tied to the actions of Thomas Gardiner Cotcoran, a prominent Washington lawyer who was appointed a company consultant by Zemurray in the 1930's, a position he would hold into the 1960's. ,, Corcoran was "described by Fortune as a 'purveyor of concentrated influence, 41 and had been essential to much of the administrative otganization and coordination in Roosevelt's New Deal initiatives. Nicknamed "Tommy the Cork" by Roosevelt, he was described as a man who "rose to gteat stature, largely on the strength of what he whispered" to "powerful 40 United States Department of State, Foreign Relations of the United States, 1952-1954: Guatemala (Washington, D.C: U.S. Government Printing Office, 2003), 168. 41 McCann, An American Company, 54. 27 men."" It is conceivable that many in the State Department were on UFCO's side as a result of the company's lobbyists (like Corcoran) even before Arbenz came to power. January 1950 correspondence between then-Ambassador Richard C. Patterson and Samuel Zemurray suggests that the State Department (with the Guatemalan Ambassador serving as proxy here) believed that that support would come not only from State but also the Senate: With the present severe political instability in this country and the persecution of American interests, my suggestions is that there be an all-out barrage in the U.S. Senate on the bad treatment of American capital in Guatemala. This takes the Onus off the UFCO and puts it on the basis of a demand by our Senators that aU American interests be given a fair dea!." Patterson was not the only member of the State Department in touch with the company. Corcoran called several meetings with other DOS representatives. The first of these meetings occurred shortly after the first expropriations of UFCO property, and was held with Thomas Mann, who at the time was Director of the office for Middle American affairs. Mann was already receptive to any UFCO caUs fo r action, as he had himself concluded that Arbenz was a Marxist after Truman dispatched him on a fact-finding mission in the country shortly after Arbenz's inauguration." Corcoran did not take the meeting simply to reguest the State Department's help, and indicated that the "die was already cast" concerning UFCO's relationship with Arbenz. Further, he indicated that he was "turning over in his mind the possibility that the American companies might agree themselves on some method to bring the moderate elements to power in Guatemala." Indeed, he believed that "something ought to be done by American companies to bring a measure of political " Ibid., 54. " Immerman, The CM in Guatema/a, 116. "Immerman, The CM in Guatema/a, 118. 28 stability and social tranquility."" While Mann indicated to Corcoran that the government wouldn't support any company-sponsored effort, he later suggested that the government should, with "our acts rather than words" send a message that urged cooperation with the U.S. government. Corcoran would not end his correspondence with Mann, and later in 1953 sent associate lobbyist Robert La Follette, to meet with the newly appointed Secretary of State for Inter-American affairs. The purpose of La Follette's meeting was to strongly suggest that the Eisenhower administration fo rm an alliance with other Latin nations, as an opponent of Guatemalan agrarian reform and "communist influence" in the country " While La Follette was told poUtely that there would be no commitment fr om Mann at such a juncture, the Secretary inquired as to whether or nOt the UFCO representative thought that the U.S. should keep a military presence in the country, to which La Follette replied affirmatively. Mann was a prime catch for Corcoran: a high-powered official sympathetic to the company's cause, who believed both that Arbenz was a Marxist and that action was necessary. Even with such strategic advantages, Corcoran was not able, even as late as 1953, to get more than an acknowledgement of the situation, and sympathy for the cause. If Mann was not high enough on the political totem pole for Corcoran, he was not out of options. Corcoran also had a long history with Walter Bedell Smith, who in1953 was fresh from his former post as the Director of Central Intelligence. Corcoran knew if he had the ear of the John Foster Dulles, the Secretary of State, United Fruit interests would be protected, and he beUeved the best way to Dulles was through his old friend, "Beetle.""The two gentlemen had a strong bond that was strengthened further by Smith's unhappiness with " Ibid., 119. 46 Kinzer and Schlesinger, Bitler Fruit, 92. " Kinzer and Schlesinger, Bitler Fruit, 92. 29 his new post as Undersecretary for Dulles. Smith saw a post at United Fruit as a potential exit opportuniry, a way to leverage his intelligence background and experience at State to aid the private sector, with a substantial increase in salary. In a 1979 interview, Corcoran indicated that Smith was looking for a post as President of the United Fruit Company, but the company was not receptive: "I took the message to the Fruit Company. I told them: 'you have to have people who can tell you what's going on. He's had a great background with his CIA association. " When the company noted Smith's lack of experience in the banana business, Corcoran responded, "Your problem is not with bananas," rather, "You've got to handle your political problem."" Eventually, Smith would get a position on the board of directors at UFCO, though not until 1955. Smith represented one of the greatest assets the company could acquire, in terms of his connections with the CIA, and in the State Department, and would provide the paradigm for later figures to come, including John McCone, who acted as both director of the CIA and the International Telephone and Telegraph Company. Bedell Smith was useful to Corcoran in another way, however, when the fotmer was involved in the process of new appointments to ambassadorial positions in the region. At the time, certain members of the State Department and particularly the CIA didn't see the character of the sitting ambassadors in places like Honduras and Guatemala conducive to the kind of action they were hoping to inspire in other branches of the government. A September 1953 memorandum from Wisner to then Director Smith displayed their frustration with DOS representatives in the region A study of a recent evaluation of CIA's political and psychological warfare operations indicates that past efforts by the Agency to combat communism 48 Ibid., 93. 30 in Guatemala have been hampered by a policy of extreme caution adhered to by State Department Representatives in the field, As a result of this, existing CIA assets personnel wise and otherwise in respect to psychological warfare and political action within Guatemala are negligible," The CIA harbored aggression in particular towards the ambassadors in Honduras and Guatemala, and felt that stronger, more vigorous anti-Communist personalities would push the policy of action against Arbenz, In a March 1953 Memorandum left for DCI Smith, Allen Dulles indicated his desire to recall "our ambassador fo r consultation and [send) two fisted guys to the general area on a trip of inspection and report to the president, One of these "two fistedguys" was Jack Peurifoy, a pistol-packing "admirer ofJoseph McCarthy," who "shared his taste in politics,"" Later in the memorandum Dulles further stated that then ambassador to Guatemala Rudolf Schoenfeld, was "timid" and that "the whole Embassy should be given a look over." A September 1953 Memorandum between Wisner and Dulles called for more immediate change: I raised the subject of Honduras and said that our point here was that greater strengrh was needed in the Embassy since there will be an important role for Honduras to play, Mr. Berry spoke up saying that the present Ambassador is an 'old fuddy-duddy,' who has served out his period of usefulness and who should be replaced by a younger and more vigorous man, General Smith appeared to be interested in this, and said that he would ask Mr. Lourie to take the appropriate action, 51 The replacement for Honduran Ambassador John D, Irwin came in 1954, with the appointment of Whiting Willaur. Corcoran had a strong connection to Willaur, as Corcoran had provided counsel to a CIA-front airline called the Civil Air Transport Company, which " FRUS, 1952-1954, Guatemala, 104, 50 Cullather, SecretHIstory, 45, 51 FRUS, 1952-1954, Guatemala, 111. 31 was organized by General Claire Chennault and Willaur.52 Despite the familiarity of the two men, the appointment must have taken a considerable amount of lobbying effort, as at the time such posts were being saved for "career officers" and not "political appointees." Further, Smith indicated to Wisner that Willaur would have to "scratch his own gravel and ring his own doorbells." It is conceivable that the scratching and ringing responsibilities were in some capacity taken up by "The Cork" himself. Although Willaur was a great appointment from the standpoint of Corcoran and therefore UFCO, the company's influence with Smith was not limitless. In the same memorandum, Smith told Wisner that he "did not make diplomatic appointments; and that he did not propose to push for the appointment ofWillaur to any particular diplomatic post."" Despite the challenges to his appointment, Willaur's position as ambassador in 1954 was not only of great use to the CIA, who relied on his experience with secret air assaults during PBSUCCESS, but also to Corcoran, who most likely used his political connection to provide UFCO with the best influence and intelligence money could buy. At the very least, the United Fruit Company was kept abreast of the State Department's development of policy throughout the company's confrontation with the Arbenz regime. Through direct correspondence between State Department representatives and fruit company movers and shakers, UFCO was able to push an agenda of action and intervention that appealed to the McCarthyist anti-communist sentiment harbored by many of the company's targets. At times the company was able to use its influence to provide fu rther support for initiatives undertaken by the CIA and the DOS to alter the makeup of 52 William M. Leary. Perilous Missions: Civil Air Transportand CIA Covert Op erations in Asia (University, AL: University of Alabama Press, 1984), 110-112. " FRUS, 1952-1954, Guatemala, 112. 32 the region's ambassadorial personnel structure. It is important to note however that its influencehad limits, and that many of the ultimate decisions wete left to State and CIA. But while the appointments of Peurifoy and Willaur were a direct result of the CIA's initiative to cultivate an environment of anti-communism and coordinate its actions with those of the DOS, it is likely that United Fruit profited from these appointments as well. The distant relationship between the Fruit Company and the State Department was in large part due to the increase in the ability of the DOS to accurately report on Guatemala in an informed manner, such that they did not have to rely on the Fruit Company for informational support. For example, the department reports of the late fo rties display "arrogance and ethnocentrism" as well as "immense ignorance," which "bear no relationship to the reality of Guatemala" and "inhabit a deranged world of nightmares"" These reportS are in direct contrast with those of the 1950's, which "reveal a grasp of the country and the siruation."" Changes in the State Department were responsible for this improvement: A core of Guatemala hands had emerged in the Office oflntelligence and Research of the State Department, in the Directorate of Intelligence of the CIA, and in the embassy in Guatemala. Very often, when people pointed to cases of communist influence, they were right. This shift from an embassy that knew nothing to an embassy that was reasonably informed reduced UFCO's power to influence the picture of Guatemala.56 UFCO was no longer an "interpreter of matters Guatemalan" in the 1950's, and the role of the company in the development of State Department policy was reduced to something more minor than it had once been. Since Corcoran's experience with the company had begun in the 1930's this new independent and informed State Department must have been 54 Piero Gleijeses, Shattered Hope: The Guatemalan Revolution and the United States, 1944·1954 (princeton: Princeton University Press, 1991), 363. 55 Ibid., 363. 56 Ibid., 363. 33 an annoyance. Where formerly UFCO represented the government's primary source of information, it now was reduced to requests for consideration in the large decisions made by Srate. Ultimately, United Fruit was not powerless to push its agenda to officialsin the State Department. In fact, several of the Department's decisions aided the company indirectly by providing exposure for their cause through the appointment and support given to individuals with an anti-communist agenda. The company was able to lead a horse to water, but it could not make it drink. Even Bedell Smith, a close friend of Corcoran's, refused to extend official support to a Fruit Company-friendly political appointee like Willaur. While it is certain that Corcoran fo und his way into State Department offices,it is less clear ifhis methods were effective. The interests of the company and the staunch anti-communist sentiment that existed at State and throughout the government, make it difficult to separate pro-company policy with anti-Communist policy. Regardless of the true motivation behind the DOS actions, it is ass ured that the company's opinion was heard. Thomas Corcoran's network of political heavy hitters rose to the occasion, and experienced limited success. Such achievement s were tempered by the new strength of State and its increased access to information, as well the unwillingness of representatives like Bedell Smith to go the full distance for Corcoran or the company. 34 Selling the Spooks The State Department was not only the avenue through which United Fruit could push its agenda. In addition to attempts to influencethe minds of State Department officials, the company got involved directly with the Central Intelligence Agency. The two parties were natural allies. At the time, the Agency's Director was Allen Dulles, who already had connections with the Fruit Company. Before becoming Director of the CIA, Dulles was a partner in the law firm Sullivan and Cromwell, which had represented a number of U.S. businesses with dealing in Latin America. He was later a director of the J. Henry Shroeder Banking Corporation, which had acquired a large interest (through indirect investment) in International Railways of Central America, directly tying him to the fruit company." During World War II, he was head of the Bern office of the Office of Strategic Services, and directed American espionage in Europe, where he found "a consuming passion for the secret world of covert operations."" Dulles and the CIA were just what the company needed when the State Department couldn't be goaded into action. Close personal connections and anti-Communist sentiment aside, the Fruit Company and the CIA also shared a feeling of disdain for the State Department's impotency with regard to Guatemala. Throughout the period, the CIA begrudgingly involved members of the State Department in the fo rmulation of activities, despite their efforts to coordinate action between the twO entities. One of the firstexamples of CIA-attempted circumvention of State Department approval to the benefit of United Fruit came with the arrival of Operation PBFORTUNE. Using Corcoran as an intermediary between the two entities, the plan was transport arms into the waiting hands of ardent Arbenz opponents using Fruit Company boats and 57 Immerman, The CIA in Guatemala, 124. " Gleijeses, Shattered Hope, 236. 35 financing." The project began shortly after a visit from Nicaraguan President, Anastasio Somoza to the White House, where he had a meeting with President Truman. He had previously indicated to a few members of the State Department that he was more than willing to "clean up Guatemala" for them. 60 Shortly after, Truman dispatched an aide to see if a Somoza-backed coup was plausible. Upon hearing that it was, he "bypassed the Bureau of Inter-American Affairs and, without any consultation, approved the report and sent it to ..,,61 DirectOr General Walter Bedell Smith . Around the same time, on March 12, 1952, Corcoran approached Stewart Hadden, the Agency's Inspector General, and "asked for assistance to Castillo Armas ...movement."" The Director at the time, Bedell Smith was "much interested in the movement" and sent someone to find out the particulars." Despite Truman's deliberate exclusion of State from his decision-making process, the Agency did not keep State in the dark completely during the planning. In fa ct, a meeting was held in the office of Assistant Secretary of State Edward G. Miller Jr., along with Thomas Mann, Dulles and a few others. Dulles discussed the situation in Guatemala with the group and asked specifically whether the DOS would like to see a new government in Guatemala, if it would oppose a new government to be established by fo rce, and if it wanted the CIA to "take steps to bring about a change of government."" According a CIA memorandum recalling the meeting, the State Department wanted to see a new government, was agreeable to that government being established by force. The third " Schlesinger and Kinzer, Bitter Frulf, 93. 60 Gleijeses, Shattered Hope, 120. 61 Ibid., 120. " FRUS, 1952- 1954, Guatemala, 29. " Ibid., 29-30. 64 Ibid., 31. 36 guestion, however, "was not answered clearly, but by implication, positively."" Dulles had thus danced around the issue with the members of State, and got his go-ahead. Bedell Smith was nOt convinced however and called Undersecretary of State Bruce fo r confirmation, which he received Oater Bruce would not recall "having said anything that could be interpreted as approval")." Operation PBFORTUNE got Director Smith's official stamp on September 9, 1952, as ]C King went ahead with the weaponry shipment, which was scheduled to depart New Orleans in early October, repackaged as "agricultural machinery." Unfortunately, the Agency's Nicaraguan and Honduran counterparts displayed an inability to keep their "mouths shut." In October, Secretary Miller was approached by Somoza's son and asked about the arrival date of the "machinery," an inguiry later echoed by the both the Guatemalan and Nicaraguan ambassadors. These inguiries were enough to alert key members of the State Department. In a flash, the State Department realized that the operation's cover was blown, and was called off by Secretary of State Dean Acheson on October 8"'.67 In effect, throughout the planning Operation PBFORTUNE, the Agency tried to avoid official approval fr om State, capitalizing on vague statements by DOS officials, and finding approval for action when none existed. This guestionable activity was augmented and encouraged by the actions of President Truman, who ignored the State Department and worked directly with DCI Smith on the project. PBFORTUNE provides an example of the direct coordination of the activities of the CIA and UFCO through Corcoran, who had been the mastermind behind the plot in the first place, using his CIA connection to make it a 65 Ibid., 31. 66 Ibid., 34. 67 Cull.ther, Secret History, 31. 37 reality. The operation was to be the closest the Agency and the Fruit Company would be for the remaining period of the confrontation with Arbenz. This close relationship was necessitated by the fact the CIA wanted to play a minor role in the Operation, which was largely led by United Fruit, in conjunction with its Latin American allies. While one might conclude that this represents joint action on the part of the CIA and UFCO, CIA documents tell a different story. In a January 1952 CIA memorandum entitled "Estimates of Situation in Guatemala," communism is the primary subject of discussion, and only peripheral mention is made of the Fruit Company's woes. The document concludes: Communist influence in the Guatemalan government continues to be serious. Rumors persist in Guatemala that President Arbenz is ill with leukemia ... In the event that Arbenz were fo rced to leave his office, Roberto Alvenado Fuentes ...could constitutionally assume presidency. Such eventuality would further aggravate the situation in Guatemala because 68 Alvendo Fuentes is a strong Communist supporter . . . This memorandum is consistent with CIA documents before and after PBFORTUNE. The Fruit Company is seen by the agency as uniquely tied to the Communist presence in Guatemala, as any increase in the power of the Communist faction represents a greater threat to UFCO's interests. There is little to suggest that the agency's motivation was anything but the desire to repel the threat of Communism in Guatemala and the hemisphere. Indeed, "The threat to American business was a minor part of the larger danger to the United State's overall security."" The Agency's contact with the Fruit Company and Corcoran during PBFORTUNE had more to do with the company's operational capability and control of assets within the borders of Guatemala (like the boats and docks slated to be used if PBFORTUNE was successfully carried out), and never indicated a concern for the 68 FRUS, 1952-1954, Guatemala, 3. " Cullather, SecretHisto ry, 37. 38 company's property or future. Corcoran and the Fruit Company were able to successfully supply operational support to a CIA that lacked the capability to offer backing necessary for a successful operation. In addition, the company provided (in some measure) support and reinforcement for plans of action against Arbenz initiated by President Truman. The company's success was in part due to the ability of the CIA and the President to circumvent the watchful eye of the State Department, who, upon hearing of the operation, quickly moved to have it shut down. UFCO was able to strengthen its relationship to the CIA by appealing to its anti Communist inclinations, its desire to exclude an action-stifling Srate Department, and irs need for operational aid. Despite its efforts, the company was unable to overcome a number of obstacles that would have made PBFORTUNE a reality. For the CIA, the company was simply a means to an operational end, as the Agency used UFCO and its assets as a tool to undertake an operation to eliminate the Communist threat in Guatemala. The company was relatively lucky to have encountered the Agency during a period of non-disclosure vis-a-vis the State Department. Despite its unique access and good fortune, as well as its intrinsic ties to CIA's anti-Communist action, the company's efforts were foiled by a State Department operating under a policy of non-intervention in Latin American affairs. In the end, the company would be fo rced to hand over the reigns to the CIA, and PBFORTUNE would remain the closest the company would get to the operations of the Agency or any other arm of the government. Efforts against Arbenz did not die with the demise of PBFORTUNE, and in a number of ways the operation provided the foundation for a new initiative that began developing in mid-1953. CIA memoranda indicated that the government's opinion of 39 Guatemala hardened, suggesting that it had "become the leading base of operation fo r ,, Moscow influenced communism in Central America. 70 The new operation, PBSUCCESS, had the official blessing from State, and drew directly from Eisenhower's "New Look" strategy and the successful covert operation to overthrow the democratically elected government of Mohammed Mossadegh in August of 1953. The primary difference for the Fruit Company however, was its complete absence in the operation. Some members of the CIA, who had been involved in PBFORTUNE, could not envision the new operation without the Fruit Company. Shortly after CIA Deputy Direcror of Plans Frank Wisner chose Albert Haney as field commander for the operation (deliberately passing over JC King), King called Haney into his office to suggest that the get in touch with Corcoran. He indicated that the weapons slated for use during PBFORTUNE were still available and that he should hammer out the details with Corcoran. When Haney declined his advice, King became angry and lashed out, yelling, "If you think you can run this operation without United Fruit, you're crazy!"" During the same period, the Agency struggled with the transition from PBFORTUNE to PBSUCCESS, without the company's involvement. An unidentified field agent ("KS") indicated that any operation with Castillo Armas ("PIA" and " (R)" ) would have to confront the problems inherent in the benefactor switch: It was evident that KS's thinking, planning, and liaison with the PIA, (R) have so far been based on estimates of relatively limited support, primarily on the part of "the Company ...Consider ing that the operation will be Government (U.S.) sponsored rater than supported by 'the Company' as heretofore, KS would assist in devising a mean of evaluating, at least to a degree, the PIA's capabilities particularly inside the target country. 72 Despite Haney's aversion to the inclusion of the Fruit Company, it still maintained 70 FRUS, 1952-1954, Guatemala, 102. " Schlesinger and Kinzer, Bitter Fruit, 110. 72 FRUS, 1952-1954, Guatemala, 94. Here, "PI A" here is Political Asset, 40 some level of access. During the invasion's planning period, a member of the company met with Allen Dulles, who encouraged them to "take a role in the search for the expedition's commander."" The company lobbied for the Agency to pick two candidates, neither of which was eventually chosen. The first, General Miguel Y digoras Fuentes, was a fo rmer member of the Ubico administration, who had lost by a large margin to Arbenz in the 1950 election. In his autobiography, My War with Communism, Fuentes claims that he received a visit fr om two CIA men and Walter Turnbull, the United Fruit executive who was the company's point man for the first series of labor negotiations with the government." According to Fuentes, the group told him that he was "a popular figure" in Guatemala, and that they wanted to finance an overthrow of Arbenz. The caveat was that he "was ro promise to favor the United Fruit Company and the International Railways of Central America; to destroy the railroad workers labor union" and "to establish a strong arm ,, government on the style of Ubico. 75 The CIA passed over Fuentes fo r a variety of reasons, including allegations that he was too much of a "right wing reactionary."" Despite the fa ct that UFCO fa vored Fuentes' candidacy, it was certainly not the first time the Agency had considered him as a potential asset in Guatemala. In a January 1952 memorandum he is listed as one of 3 political exiles (including Castillo Armas, who was listed as the strongest)." The Agency's decision to settle on CastillIo Armas, however, was entirely unrelated to any lobbying efforts on the part of the Fruit Company, and CIA documents do not suggest that the company's interests were favored in any way. Castillo Armas was primarily chosen " Schlesinger and Kinzer, BitterFruit, 120. 74 Cullather, 5eere! History, 18. 75 Miguel Ydigoras Fuentes, My War With Communism (Englewood Cliffs , N.j.: Prentice Hall, 1963), 49-50. " E. Howard Hunt, Give Us This Day(New Rochelle, N.Y.: Arlingron House, 1973), 117. " FRUS, 1952-1954, Guatemala, 3. 41 because he was the strongest out of all of the candidates and "definitely pro-American," as he had "cooperated with U,S, mission and the Militaty Attache," The agency viewed him as "well-known for his integrity and patriotism" and admired his refusal to "accept any position offered by Arbenz," and his "opposition to the present moral corruption of those in power."" His strength, militaty experience and his histoty of pro-U,S, action were the primaty reasons for his victoty over other candidates in the eyes of the Agency, Certainly, Castillo Armas' "pro-American" sentiments were favorable to the company, but his ascension to power in the eyes of key decision makers was related to the Fruit Company's interests only to the extent that his anti-Arbenz, and anti-Communist ideology was more compatible with their agenda, If the CIA was humoring United Fruit by allowing it to be involved in a decision- making process that was not ultimately colored by its interests, that tolerance later gave way to annoyance and fru stration, Corcoran, who was instrumental in gaining access to the CIA during evety step of irs involvement in Guatemala, soon wore out his welcome in the agency, Most likely fed up with the company's role a second or third fiddle in the intervention, his tactics turned heavy-handed, resorting to threats against the Agency, A record of a PBSUCCESS meeting on June 9' 1954, inrlicates the Agency's souring relationship with Corcoran: Discussion was had of the latest Corcoran attacks against the agency and his efforts to penetrate PBSUCCESS and bring pressures to bear, using only slightly veiled threats of stirring up trouble for CIA on the Hill, Messrs, Barnes and [name not declassified] were requested to pass the word down the line at LINC to the effect that no one should have any conversation with or pass any word to Corcoran without prior approval of DCI. This is the Agency line as a whole, Messrs, [name nOt declassified] and Barnes said that they know of no one at or connected with LINC who had any contact with " Ibid" 16, 42 or passed word to Corcoran." Whatever access Corcoran had to PBSUCCESS prior to the June meeting was lost for the remaining months of the operation. Dulles was left to tend to Cor coran , as he had in the period of planning for the operation. It is a poignant stage in the period of declining status fo r the Fruit Company, in the eyes of the CIA, the State Department, and the Government as a whole. Shortly after PBSUCCESS, the government initiated its anti-trust suit against the company, action that went unopposed by "pro-business" Eisenhowet and two prominent "insiders," the Dulles brothers, even with their substantial "interest" in the company: Both Secretary Dulles and President Eisenhower saw no reason not to proceed. Dulles added: 'on balance it might be positively advantageous to U.S. Policy in Latin America if the suit were instituted. Many of the Central American countries were convinced that the sole objective of United States foreign policy was to protect the fruit company. It might be a good idea to go ahead and show them that this was not the case, by instituting the suit.' The Secretary was, however, concerned that the suit might 'interfere with certain 8 activities of the Central intelligence Agency. 0 Despite Allen Dulles' concern, he agreed, but "advised a delay of one month 'by which time the situation in Guatemala would have been clarified."" Both Eisenhower's and the Dulles brothers' casual agreement with the initiation of a major antitrust suit against United Fruit suggests that the CIA, State Department, and the Office of the President were unconcerned with the finan cial stability of the company (particularly as it relates to their own ties to the company though stock). Their interest in the company extended only to its role as major landowner and operational asset in a country that was considered to be ground zero for the battle between capitalism and communism. UFCO's relationship with the CIA represented the company's greatest opportunity " Ibid., 321. 80 Ibid., 342. 81 Ibid., 342. 43 to change the character of the U.S. intervention. While it was granted unique access to CIA activities, particularly during the early years of the Guatemalan situation, this influence was quickly diminished when its operational assets were no longer needed by the agency. The company saw a steady decline in its influence with the CIA, which eventually culminated in the Agency's barring Corcoran from correspondence with its agents, and ultimately an Allen Dulles green-light on anti-trust action. To the extent that its interests were aligned with the CIA's anti-communist agenda, the company was able to capitalize on its relationship with the Agency. Oversight by the State Department, as well as an increase in the operational capability of the CIA, made the company's role in the intervention relatively minor. 44 Friends in High Places While a bit bizarre, it is signi ficant that in threatening the CIA, Thomas Corcoran would reference his willingness to "stir up trouble on the Hill." Corcoran's strength lied in his long time experience as a Washington lawyer and his Rolodex of contacts on Capitol Hill, not the small list of connections he had with the CIA. It is fitting then, that after he became disillusioned and frustrated with the failed efforts to coerce State Department and CIA officials to act on behalf of the company, he turned to what he knew best, Congress, albeit with equally regretrable results. It was through this avenue that Corcoran mounted a massive attack in the interest of the Fruit Company. Despite the "dominant view in Washington" that "congressional opinion would have favored UFCO's position without these eminent lobbyists,"" the company maintained several of them on the payroll. Among them were Corcoran, Robert La Follette Jr., and Assistant Secretary Spruille Braden. La Follette was a fo rmer fo ur-term senator from Wisconsin, the son of a Senator and Representative from the same state, who lost the seat in 1947 to Joseph McCarthy. Spruille Braden was the former ambassador of Colombia, Cuba, and Argentina, and was known for his public clashes, and disdain for subtlery. His reckless sryle was captured in the term "Bradenism," which referred to "undiplomatic negotiations with Larin American ,, dignitaries. 83 Berween Braden, Corcoran and La Follette, United Fruit had quite a bit of sway on the Hill. The team set their sights on individuals who would be most likely to identify with their interests. An indication of the rype of action undertaken by the company to bring Senators and Representatives into UFCO's ring in later years is found in a UFCO memorandum written 82 Immerman, CL4 in Guatemala, 116. 83 Ibid., 126. 45 by then head of PR, Ed Whitman, detailing a brief meeting with Cotcoran. At the time in 1954, the issue of anti-trust loomed large in the minds of men like Corcoran, as he vowed to fight the ] ustice Department: "[Corcoran] believes we should fight and fight hard fo r the basic principles involved. To that end he says that our friends, Herter and Saltonstall should be stirred into action in behalf of our New England Company - strong action . ..T.e. is actively pursuing and recommending that the Company pursue the line of coddling the liberals ..."" At the time, Herter and Saltonstall had just won their respective election campaigns and were beginning their terms as Governor of Massachusetts and third-term U.S. Senator." The company had found fre shly appointed operatives, contacts they could hopefully use ease the pain of trust busting. Like many of the company's potential allies in the government, Herter and Saltonstall never came to the aid of United Fruit, and the DO] forced the company to terminate its monopoly. The company fo und more receptive candidates in Senator Henry Cabot Lodge and Representative John McCormack, both of Massachusetts, the home state of United Fruit. While their connections to the company were strong (the Lodge family had held UFCO stock for years), the two possessed an established record of "acceptance of cold war axioms," and were ideologically primed for any communist attack on U.S. Interests." They used United Fruit in a number of speeches, identifying the company's woes with regional and state-related economic concerns. Lodge would suggest in 1949 that Arevalo's labor code was implemented by the Communist to incite a "serious economic breakdown."S7 Both Lodge and McCormack would continue to champion the cause of United Fruit, but always 84 McCann, An Amencan Company, 53. " "Saltonstall, Herter Are Victorious," The Miami Daily News, sec. A, Nov. 3, 1954. " Immerman, The CL4 in Guatemala, 116. 87 Ibid." 117. 46 associated it with the communist threat. In 1951, McCormack would remark that the threat was now a reality and that the government of Guatemala would soon be "all but subservient to the Kremlin's design fo r world conquest," 88 while in a 1952 New York Times article, he suggested that Arbenz' expropriation of UFCO property indicated the "growth of a Soviet Beachhead."" The appeals of Lodge and McCormack themselves did not result in any legislative action on the part of Congress to initiate intervention in Guatemala, nor did they seem to be motivated by the company's holdings alone. Rather, the twO men appealed to the Congress's fear of Communism at the exact time that Joseph McCarthy reached the height of his influence in the Senate. Even when playing to his strong suit on the Hill, Corcoran was simply preaching to the choir. After the intervention was already underway, minority leader Lyndon Johnson addressed a Senate characterized by its "impressive bipartisan harmony" on the Soviet issue.'o The Soviet Union had just supported Guatemala's request that the United Nations, rather than OAS handle the developing crisis in the country. Johnson suggested that this "was an open, flagrant nice that the Communists are reserving the power to penetrate the Western Hemisphere by every means - espionage, sabotage, subversion, and ultimately open aggression." With that, Johnson introduced Senate Concurrent Resolution 91, which stipulated (once again) that the United States had ro "prevent interference in the Western Hemisphere by Soviet Communists." The resolution was passed 1 vote short of unanimity and received no opposition in rhe House." Despite Congress' deep commitment ro the protection of the hemisphere from Soviet influence, the scope, size and nature of the U.S. 88 Ibid., 117. 8 9 Ibid., 117. 90 Gleijeses, ShatteredHope, 367. " Ibid., 367. 47 intervention never depended on the stance or opinion of the legislative body. Speeches like those given by McCormack and Lodge, as well as resolutions like the one Johnson passed, while drawing attention to the United Fruit cause, did not have any connection to the eventual operation. Corcoran's threat to "make trouble for the CIA" on Capitol Hill, indicates the level of frustration he had with the operation at the time and illustrates the gulf in knowledge between Congress and the CIA concerning the U.S. role in Guatemala. Increasingly irritated by his declining level of influence in the CIA, Corcoran's fr ustration was compounded by what he must have seen as a Johnny-corne-lately resolution in the Senate. While Corcoran's efforts may have resulted in a few anti-Communist speeches by prominent statesmen, the voices of men like McCormack and Lodge were just a few in the established bipartisan choir of a Congress that had not called for any restraint on U.S. policy toward Guatemala from when the attacks on Arevalo began in 1949 to Johnson's June 22, 1954 resolution." Corcoran efforts in Congress and threat to the CIA speak more to his frustration with what he must have seen as the closing door of UFCO influence. The company's complement to Corcoran was Spruille Braden, most known during the period for his incendiary speeches, in which he made special use of rhetorical flourishes and turns of phrase to link the Fruit Company with the Communist threat. But while these speeches constituted what Braden was known for publicly, it is his more private dealings that display his influence. Braden was intimately linked with the powerful Council on Foreign Relations, and chaired a series of six study groups beginning in 1952 entitled "Political Unrest in Latin America."" Braden appointed John McClintock, of the United Fruit 92 Ibid., 367. "Laurence H. Shoup and William Minter, Imperial Brain Trust (New York: Monthly Review Press, 1977), 196. 48 Company as the discussion leader, and made it clear to the Council members that the time for action was upon them. A council member who shared McClintock's view was Adolph Berle, a fo rmer ambassador and Assistant Secretary of State who maintained a number of contacts in Latin America. On October 17, 1952, Berle held a meeting with Miguel A. Magana, a representative of the Democratic Revolutionary party in Guatemala. Berle wrote that Magana believed that "an attempt to overthrow the present government in Guatemala might be made as early as December," and that he "wanted at least a sympathetic attitude by the United States Government." Berle noted that the siruation in Guatemala was a clear case of "intervention ...by the Soviet Union." He went on to characterize what would be U.S. policy in the coming years: [Guatemala's local neighbors] are planning direct action. They rather hope that we will welcome it. I think we should welcome it, and if possible guide it into a reasonably sound channel. Certain the Council on Foreign Relations the other night agreed generally that the Guatemalan Government was Communist and that it was merely carrying out a plan laid out for it ...94 Not only did Berle giving Magana the sense that the government would be in support of such a movement, but he also took further steps to try to make the overthrow a reality. He later contacted Jose Figueres, the soon to be president-elect of Costa Rica. The rwo decided that while immediate military intervention was not possible, steps should be taken to initiate a large propaganda campaign to "encourage" the Guatemalans. Despite the conversation and the apparent agreement, Figures would not figure in PBSUCCESS. Berle's most notable effort was through his contact with Eisenhower by way of the Jackson Committee, also known as the International Information Activities Committee, 94 October, 17, 1952 entry, "Diary 1952" Berle Papers, published in Beatrice Bishop Berle and Travis Beal Jacobs, ed., Navigating the Rap ids (New York: Harcourt Brace Jovanovich Inc., 1973), 611. 49 which Eisenhower charged with producing a "dynamic plan" to "push the Russians back nearer their original quarters"," In his March 31, 1953 Memorandum to the Jackson Committee, Berle addressed the problem of "clearing out the Communists," Ruling military intervention out, Berle's plan was eerily similar to the one adopted by the Eisenhower administration and carried out through PBSUCCESS, His proposal was to "[organize] a counter-movement, capable of using force if necessary, based on a cooperative neighboring republic,"" Berle called for a restructuring of the group of American ambassadors in the region, as well as a propaganda campaign, a coalition built with Central American allies, including Honduras and Nicaragua, and the backing of a "powerful Central American figure " ,encouraged to take leadership,"" It is not known whether Berle's memo was really a source of inspiration for PBSUCCESS, What is certain is the striking resemblance between Berle's plan, and the eventual nature of the operation, Berle's suggestions did differ from the operation in several key ways, suggesting that while his plan may have been strong, it was discordant with the feelings of the Eisenhower administration," Berle's understanding and assessment of the situation in Guatemala provide a window through which can be viewed the thinking of some of the most informed policy makers of the time, His conclusions represented the opinions of an individual with a long history in the region, and it should be no surprise that PBSUCCESS was structurally similar, " November 17, 1952, Berle Diary, in Berle and Jacobs, Navigating the Rapids, 613, " "Memorandum: The Guatemalan Problem in Central America, " March 31, 1953, Berle Diary, in Berle and Jacobs, Navigating the Raptds, 613, " Ibid" 613, 98 Figueres was an extremely unlikely figure in the eventual operation, as he possessed an outward hostility for one of its key players, Anastasio Somoza, Foster Dulles also saw Figures as a "pretty rotten fellow," His plan naively suggested that the government of Honduras and El Salvador would back Figures, whom both openly loathed, as suggested in Gleijeses, Shattered Hope, 242, 50 planned as it was by men with similar backgrounds, experiences, and inclinations. Of course, Berle's correspondence and recommendation to the Committee also indicates the lengrhs to which United Fruit was willing to go to make its influence felt. With Spruille Braden on the payroll, the company could reach out to influential men like Berle, and with any luck reach Eisenhower by way of the Jackson Committee. While Braden might have looked back and seen Berle's memorandum as a triumph, the former Undersecretary of State's views largely reflected his experience in the region and his own personal fear of Communism, and he gave the company the same weight it had been accorded by a dearth of contemporaneously-issued federal documents. In his memorandum, Berle describes the attack on United Fruit as a "pretext" fo r the Communists, and throughout his diary makes numerous references to the threat of Communism and the imminent Soviet problem in Guatemala as the primary motivation for action. His treatment of the company is peripheral, and suggests that its place in his understanding of Guatemala mirrored that of the State Department and CIA. Even with Berle, whose exposure to United Fruit's plight through Braden was certain, it was Communism that saved the day for the company. Through Corcoran, La Follette, and Braden, United Fruit had a list of politicians who they could "stir into action" on the part of the company. They could "coddle" coerce and coax these men of Washington to take the floor on behalf of the anti-Communist cause and United Fruit's troubles, but such action was simply a re-expression of the dominant view in Congress. Berle, Lodge, and McCormack used the Communist threat to fr ame the problem in Guatemala, never speaking for the company's interests in and of themselves. While a lot of hot air was expended on the Senate floor on behalf of the company's plight at the hands of Communists, Congress' actions had nothing to do with the proposal and 51 implementation of intervention in Guatemala. Fittingly therefore, Johnson passed his resolution at the conclusion of PBSUCCESS. And while Bede's memorandum to the Jackson Committee did resemble many of the initiatives taken during the operation, its creation was motivated by his fear of Soviet influence and long history of experience in Central America. Despite the sheer number of contacts that the company possessed in the Senate, House, and other state and fe deral offices, "too much should not be made of UFCO's lobby or its other connections on Capitol Hill."" Such connections were little more than how Thomas Corcoran probably viewed them, as an effort to get his old friends in Washington on his side, and compensate for his failure to achieve the company's goals with State and the CIA. For Congress, the remarkable concordance of opinion regarding the Guatemala situation, reflected in the thinking of the Truman and Eisenhower administrations, was substantial enough that "even without the lobby, a government response was predictable."loo " Immerman, The CL4 in Guatemala, 118. 100 Ibid., 118. 52 An Invisible Government We an governed, our minds are molded, our tastes fo rmed, our ideas suggested, /a 'l5e/y bymen Ive have never heard of. -Edward L Bernays Throughout the early part the Arbenz years, United Fruit was not able to accomplish its goals. Beginning with the failure of PBFORTUNE, doors were shut on the company, its efforts to induce the government to intervene largely ineffecrual. Out of fru stration, the company resorted to a large public relations campaign. The idea of public relations and the power of public opinion was relatively new, but coincided with the official adoption of psychological warfare by the CIA and the belief in the power of winning over the "hearts and minds." Often referred to as the fa ther of public relations, Edward Bernays called PR men, "those who manipulate the unseen mechanism of society" who "constitute and ,, invisible government which is the ruling power of our country. '01 While the company's public relations initiatives garnered much notoriety and attention, particularly after memoirs published by some of its officials, United Fruit made little use of such methods to rally support for its agenda in Guatemala. For the company, the wielding of public opinion was a nebulous concept adopted and implemented cautiously and slowly by a conservative Boston office known for resistance to change. In the early Arbenz years the company used its PR outfits sporadically, with the intention of increasing public acceptance of bananas in the United States. In 1952, UFCO began to rely on PR heavily as the crisis in Guatemala deepened, fr ustrated that its efforts to spur intervention in the offices of the CIA, State Department and Congress did not appear to be producing results. In a last ditch attempt to 101 Edward L. Bernays, Propaganda (Brooklyn, NY: Ig Publishing, 2005), 9. 53 remedy heretofore unsuccessful efforrs, the company's PR endeavor involved the efforrs of twOinfluential men, Edward L. Bemays and John Clements. Bemays joined United Fruit in the 1940's in order to revamp the company's public image in the United States. At the time, the Good Neighbor Policy had just been adopted, the Latin American tide was rising, and the company wanted to cast off its old role of "colonial exporter," an image it felt was outdated, according to Bemays.102 To Bemays, the company's problem was with the American public's conception of countries like Guatemala as banana republics, "components of revolutions, dictators, and marines, and not much else." To remedy this, Bemays proposed that the company educate the public about the social, economic, and general purposes UFCO served in the countries in which it operated. Like Corcoran, he possessed a long list of contacts, though his could be fo und in the editor's offices of some of the nation's most prestigious sources of news, from the New York Times and Atlantic Monthly to the Chicago Tribune. Despite his abilities, the company did not rely toO heavily on Zemurray, a fa ct that fru strated the visionary PR man. His first effort to engage and educate the American public was the establishment of the "Middle America Information Bureau" at the company, through which he corresponded "actively with 25,000 Americans, group leaders and opinion molders"]O) in order to generate interest in region. Despite the success of the campaign, changes in the company's administration resulted in its termination. When Zemurray stepped up as chairman of the board, Thomas D. Cabot was named president. Bemays believed Cabot to be a man "narrow in outlook and secure in his ,, feelings of correctirude. '04 Cabot epitomized the culrure of the Boston office: a Cambridge- 02 1 Edward L. Bemays, Biography ofan Idea (New York: Simon and Schuster, 1965), 749. 103 Ibid., 749. 104 Ibid., 750. 54 bom Boston Brahmin, stiff in demeanor and myopic in vision. Upon his arrival at the company, he immediately shut down the MIB, because he could not see the connection between the creative abstraction of Bemays PR campaign and the Company's bottom line. Despite this setback, Bemays continued with his initiatives, but many of them were either ignored or terminated in much the same way as the Bureau had been. After the company refused to accept his proposal to generate awareness by celebrating its 75'" anniversary, Bernays remarked "Boston had not yet been sufficiently indoctrinated to accept my .. recommendation . 105 Bemays possessed a rather remarkable awareness of the company's real problems, not with the expropriations, but some of the deep-seated problems that had plagued it from the beginning. He was surprised at the racism of the company's (often Southern) employees in the tropics, as well as its complete ignorance of the culture and traditions of the people whom the company employed, and from whose lands it profited. After visiting the Fruit Company operations in Honduras and Guatemala, Bernays noted that "the native agricultural workers were treated as human machines rather than as human beings and without regard to their fo lkways or culture patterns." This visit inspired an exhaustive memorandum that urged initiatives to address these problems, as well as a whole host of issues facing the company in the tropics. Again his memorandum went unrecognized. Bemays would later comment: ...a company does not break from tradition easily. The people in the tropics were remOte from Boston; they produced their banana quotas and that was what counted. Fruit Company executives in the tropics were tough characters who had come up through the ranks; they were action related men. What I proposed must have seemed like mollycoddling.'06 05 1 Ibid., 751. 106 Ibid., 755. 55 Even Zemurray, whom Bernays respected as a forward-looking executive, failed to employ his suggestions. When in 1950 he suggested that the expanding gulf between rich and poor in Guatemala would make the company ripe fo r revolution, Zemurray "pooh-poohed" his warning. Indeed, the president "disbelieved that any eventuality of this kind might arise, despite the company's knowledge that Communists had established the first national labor organization in 1945 and that in September 1947 Guatemala's first Communist Party had been established."J07 Despite the developments that for Bernays represented such a threat, his services were not employed to address this threat until 1952. Bernays finally received the go ahead to address the company's plight in Guatemala, shortly after a Labor Court ruled that United Fruit had to resume its operations at Tiquisate and pay 3,742 employees back wages. It was the first effort on the part of Arbenz to combat the company's iron grip on the country, and UFCa executives must have felt pressured to act, after a failed effort with the CIA, and mounting fr ustration with a gun-shy State Department. Bernays addressed the Guatemala situation in much the same manner that he did the company's broader public image problem. He believed that "if the people of the United States and our government understood the dangers of political and social instability in Latin America, they might take steps to improve the situation."IO' In addition to meetings with some of the major newsmen, including Arthur Hays Sulzberger, publisher of the New York Times, Bernays organized a trip fo r "newspaper editors and publishers" to go to Guatemala and report the happenings in the country to the American people. For Bernays, the 1952 trip was less of a propaganda effort on the part of PR sensationalism, and more of 07 1 Ibid., 758. 108 Ibid., 758. 56 an opportunity for U.S. journalists to do real reporting. The journalists were free to go where they wanted and talk to whomever they wanted, and report as they saw fit. Bernays did little more than place the journalists in a convenient place for the company; the act of reporting was up to them. Bemays' approach was gold for the company, and "public interest in the Caribbean skyrocketed."'oo Naturally, it would be extremely naive to believe that there wasn't some amount of coercion on the part of the company, even if it was just situational. A trip paid for by United Fruit and travels largely aided by its officials was bound to have some effect on truly "objective" reporting. Still, the press's preoccupation with Communism was guided in some measure by the popularity of the subject throughout the country at the time, and later reporting unaffiliated with the company trip would express alarm at the developing Communist threat in Guatemala. For the press, Communists in Guatemala were the "cancer" responsible for the souring of relations between the country and the United States."O While Fruit Company officials might have provided the press with enough fodder to light the fire of anti-Communist sentiment in the American public, one cannot discount even the most objective reporters occupation with the desire to appeal to his readers. Bernays himself later stated that he believed the "Communists wanted to take over Guatemala as a beachhead on this continent," pointing to Foreign Relations Committee speech that linked Guatrnalan Communists with Moscow Communists. Fortunately for United Fruit, every page that illustrated the Communist threat in Guatemala was a page that advanced the company's agenda. Bemays believed that when wielded correctly, public opinion could give the 1 09 Ibid., 761. 11 0 Immerman, The CL4 in Gllalemala, 114. 57 company the outcome it desired in Guatemala and refurbish its public image in the United States. While it is possible that Bemays' PR campaign had an effect on the American public and their elected representatives, it is clear that the company did not put the same stock in its influentialabilities as Bemays did. In frustration, the company only tumed to the Father of Public Relations when it had exhausted its other connections, and despite what Bemays perceived to be Zemurray's forward-looking view, it "drifted into the Guatemala situation , without awareness., 111 In addition to Bemays, Zemurray hired John Clements associates as supplementary help in the PR war. Clements was an ex-marine, and a zealous disciple of Jospeh McCarthy. Where Bemays' had contacts in the liberal establishment, Clements had sway on the right. Like with Bemays, the company only adopted Clements services later in the crisis, when it became increasingly clear that Arbenz would not capitulate to UFCa demands. While Bemays was concemed about fa cts and providing the truth, both to the American people and to company executives, Clements operated under no such pretenses. It is a testament to the company's desperation and utter frustration that it tumed to the jingoist Hearst newspaper vice president, as it represented a deliberate departure from the Bemays realist approach. While Bemays let the press gather the facts themselves, Clements would take no such chances. For the company, Clements was the UFCa attack dog that it didn't want anyone to know about. UFCa never openly associated with Clements, and any documents that emanated from ills office were anonymously authored. More tellingly, neither Corcoran 2 nor Bemays knew of Clements relationsillp with the company.11 The biggest of Clements' initiatives was the creation of a document entitled "Report III Edward L. Bemays, Biographyof an Idea, 762. 112 Schlesinger and Kinzer, Bitter Frud, 94. 58 on Guatemala," a 235-page study, which he sent to members of Congress and his list of ,, "800 key decision -makers. '!3 The language of the report was rhetorical and fervently anti- Communist. It opens, "A Moscow-directed Communist conspiracy in Central America is one of the Soviet Union's most successful operations of infiltration outside of the Iron ,, Curtain. !!4 Reflecting the staunch McCarthyism of the Clements outfit, the document goes on to call on any nationalist Guatemalan to protest the presence of the Kremlin. He fo llowed up the first report with a similarly inspired, "Report on Central America 1954," which charged that Guatemala was ruled by Communists who wished to take over Central America and the Panama Cana!."5 In many ways, the company's employment of Clements represented how far it was willing to go in the later years of the crisis to affect change, any change at all in Guatemala. Clements was known for his dislike and hostility toward reformers of any kind, and hiring him as a PR man was likened to "renting a war machine." At the time, he was acquainted with a variety of Central American strongmen, and retained a post as editor of The American Murcuty, a right wing publication with strong ties Joseph McCarthy. The United Fruit Company knew that Clements would be the paranoid anti-Communist bull in a china shop, but in 1953, in the wake of failure after failure of direct appeals to the U.S. government and facing the an increasingly defiant Arbenz, the company could justify any action, even careless action to save its interests. The PR initiative undertaken by United Fruit was a hastily assembled attempt to remedy the failure of the company to coax the U.S. government into action or cooperative 113 Ibid., 94-95. 114 McCann, An American Compa'!}, 49. ! 15 Schlesinger and Kinzer, Bitter Fruit, 95. 59 enterprise. Men like Bernays, whose ideas had been largely ignored by the company for the greater part of a decade, were called upon as a last resort to mobilize "an invisible government" of which the conservative Boston office had long been skeptical. While Bernays's efforts were met with some measure of success, the company's desperation was so acute that it employed John Clements, whose war-mongering anti-Communist reports went unacknowledged by the Company, even to employees like Corcoran and Bernays. Both Clements and Bernays were fortunate in their ability to gather support for the company through an ancillaty channel, by appealing to the public's paranoia, fear of the Soviets and the spread of Communism. It is unlikely that a campaign of that nature would have found such a receptive audience even just a few years later. While much has been made of UFCO 's public relations campaign, it was little more than a frantic search fo r success after a string of failures to induce the government to intervene. Bernays and his invisible government would go on to other ventures. He would describe the time that followed by noting that "Guatemala figured little into our work during the next few years." Would that United Fruit had been as forrunate. 60 Ike's Intervention Despite all of the resources the company invested to spur the government into action, the endless piles of memoranda and correspondence, and the immense fr ustration and anxiety traveling through the halls of its Boston headquarters, it took one meeting of the National Security Council to illuminate the green light of intervention. While a specific catalyst has never been identified for Eisenhower's decision to intervene, many have advanced theories to explain his motivation and thought process. Some point to the Council on Foreign Relations, and a confidential report that it gave to Eisenhower as primary source ofinfluence'160thers have suggested that council member Adolf Berle's memorandum and meetings with Jose Figueres, and Miguel Magana are evidence of the influence he had over Eisenhower through the Jackson Committee, and his role in the preservation of the plan of covert intervention in Guatemala in the transition fr om Truman to Eisenhower. While his plan certainly shared many of the characteristics of PBSUCCESS, it differed in significant ways.'l7 Still others have argued that Eisenhower's role in the decision making process was either brief' 18 or non-existent.' 19U1timately, it matters little whether the President was present when the green light was given. All of the pivotal moments cited in the lead-up to the 116 "The Guatemalan situation ...is quite simply the penetration of Central America by a franldy Russian-dominated Communist group ...There should be no hesitation in tackling diplomatic exchanges with surrounding governments, in quite overtly working with the fo rces opposed to Communism, and eventually backing a political tide which will fo rce the Guatemalan government to exclude its Communists or to change."I16 quoted in Immerman, The CUI in Guatemala, 128. 117 As previously discussed with respect to Spruille Braden's lobbying efforts. 1 18 Schlesinger and Kinzerin Bitter Fmit, suggest that once Eisenhower was told that the odds of success in Guatemala were 40 percent, he immediately agreed to the initiate the process, but reserved the final decision for later. 11 'William R. Corson, The Armies ofIg norance (New York: The Dial Press/] ames Wade Books, 1977), 354. Corson suggests that PBSUCCESS was "carried out without specific signoff approval or authority by the NSC/OCB mechanism for dealing with cover operations", and only approved by the White House after the fa ct. 61 decision involve United Fruit or its representatives with three to four degrees of separation. Eisenhower had full knowledge of the intervention, and its character reflected the new administrations approach to U.S. -Central American affairs. Eisenhower entered office as President of the first Republican administration in eight years, while his party assumed control of Congress. He appointed John Foster Dulles as his Secretary of State, who knew that he "Eisenhower administration could not act much more fo rcefully than its predecessor; the facts of nuclear life dictated caution. But the administration could, and through Dulles it would, speak more forcefully."l21'Dulles "viewed the world in stark black and white; those countries not for him were against him. No distinctions among variants of neutralism, nationalism, socialism, or Communism ever entered his head.,,121 Dulles promised greater effectiveness in foreign policy at less cost, particularly when it came to containing the Soviets, grounded in the concept of asymmetrical strategic deterrence, or "massive retaliation." In addition, Dulles and Eisenhower defined national interest in part by perceived threat, a threat that was not simply a hostile industrial- military power as Kennan had envisioned, but any country that went communist, "regardless of its geographic location or strategic potential.,,122 Indeed the Eisenhower administration took a deep interest in national liberation movements, as they were seen as particularly susceptible to Moscow's Communists. Dulles would remark in 1953: "Stalin, in his classic lecture on the Foundations of Leninism, says that, 'the road to victory of the revolution in the West lies through the revolutionary alliance with the liberation movement of the colonies 0 12 H.W. Brands, Cold Warn'ors: Eisenhower's Generation and American Foreign Policy (New Yark: Columbia University Press, 1988), 14, guo ted in Gleijeses, Shattered Hope, 236. 121 Schlesinger and Kinzer, Bitter Fruit, 101. 1 22 John Lewis Gaddis, Strategies of Containment (New York: Oxford University Press, 1982), 137. 62 and dependent colonies."'" Despite Dulles' evidence of the Soviet fo cus on national �beration movements in the third world, the Eisenhower administration defined communism as a general threat, not simply emanating from the Soviet Union. This inabi�ty to distinguish between Communism and nationa�sm mostly likely contributed toward the administrations decision to intervene in Guatemala. The available State Department and CIA documents provide a clear sense of the Eisenhower administrations fears, perceptions and goals in Guatemala. A Nation Security Council teport on Guatemala drafted on August 19'" 1953, shortly after PBSUCCESS was initiated, provides insight into the motivation behind intervention. For the Council, "In Guatemala, Communism had achieved its strongest position in Latin America," and threatened to "endanger the unity of the Western Hemisphere against Soviet aggression, and the security of our strategic position in the Caribbean, including the Panama Canal."I24 While the document mentions that the immediate Communist objective is the elimination of American business interests, it suggests that their underlying objectives are to "prevent collaboration of [Guatemala] with the United States ...to disrupt hemispheric solidarity and weaken the United States position."I" The document notes that while Guatemala itself did not pose an immediate threat, it could endanger U.S. security because of its proximity to the country and its capacityto harbor saboteurs and propagandists, as well as provide support to the enemy with airfield and military installations. The prime importance of Guatemala to the U.S. at the time was because of its "having provided the leading example of Communist 2 1 3 John Foster Dulles, CIa speech, November, 18, 1953, quoted in Gaddis, Strategies of Containment, 176. 1 4 2 U.S. Department of State, Foreign Relations oj the United States, 1952-1954, Volume IV; The American Republics, Guatemala (Washington, D.C.: U.S. Government Printing Office, 1983), 1074. 1 25 Ibid., 1074. 63 penetration in the American Republics."I26 The NSC paper suggests that the "subsidiary problem" facing the United States was the treatment of private U.S. interests. Because of the Communist influx in the government, the Council believed that the Guatemalan expropriations threatened U.S. "commercial , interests elsewhere in the hemisphere. ,\27 The Council recognized however, that certain problems would remain for the U.S. corporations even if the Communists were removed. Therefore, it was suggested that United Fruit, IRCA and others negotiate with the Guatemalan Government "with a view to revising their concession contracts ...to diminish nationalist prejudices against the companies and ...obtain ...satisf actory assurances of reasonable treatment. \28" Clearly, the government viewed corporate interests as part of the broader U.S. commercial interests throughout the hemisphere, and while citing Communism as the perpetrator of the expropriations, acknowledged that problems would persist in their absence, problems the companies would have to resolve themselves. Clearly, the Eisenhower administrations decision to intervene, whether spurred by a Jackson Committee memorandum or National Security Council meeting, was primarily motivated by a desire to pull Communism up by the root in Guatemala. Communist influence represented a threat to the fu ture security of the United States, while providing the "leading example" of its penetration in the hemisphere. For the U.S. government, U.S. business interests in Guatemala were simply the immediate targets of the Communists, who were ultimately interested in preventing further U.S. Guatemala relations, encourage the growth of Communism elsewhere and goad the U.S. to take action which would run 126 Ibid., 1079. 127 Ibid., 1086. 1 28 Ibid., 1086. 64 contrary to its policy and commitments in the hemisphere. With these motivations, a National Security Council Operations Coordinating Board meeting was held on August 12, 1953. In a September 16'h Memorandum from Frank Wisner to Director Allen Dulles notes that: "It was my h understanding that [the August 12' meeting] was the meeting which flashed the 'green light' to us ...and ...I have already taken up ...the matter of having a suitably sterilized entry made in the records of this particular meeting." Notable sections of the same Wisner memorandum suggested that the operation was to be CIA run and operated, and that the CIA was "directed to have no direct dealings with the State Department area division; but rather to deal with [Bedell Smith] or with two specific individuals he has named."'" The memorandum stated that the operation was to be "closely held" within the government's departments, and was allocated roughly $3 million for the initiative. With that covert operations commenced in Guatemala, owing little to the efforts of Corcoran, Clements or any other United Fruit representative. 129 FRUS, 1952-1954, Guatemala, 86. 65 The Alignment of Interest, the Advantage of Influence The United Fruit Empire was built by entrepreneurial pioneers like Minor Keith, who "earned the respect of his men by sweating it out on the front lines."'''Taking large financial risks and at times putting their own lives in jeopardy, they cut deals with Central American leaders for substantial concessions and favorable treatment. Men like Zemurray and Keith were rugged individualists whose early enterprises remained largely unaided by the hand of the U,S. government, and at times were in direct conflict with its policies and goals. As the influence of the United Stares grew throughout Central America, the distance between the company and the government narrowed, as evidenced by federal antirrust action and the increasing involvement of the U.S. in the affairs of United Fruit. The bold self reliance of the company's earlier enterprises contrast sharply with the image of Thomas Corcoran pleading with and later threatening the CIA while peddling the company's agenda door-to-door in the State Department and on the Hill. Even UFCO officials must have been surprised at the lengths to which they felt they had to go to attain the influence they so desperately desired. While Bernays asserted that the company drifted into the Guatemalan situation unaware, it is more probable that it was simply dazed. While United Fruit mobilized a wide variety of assets and individuals to influence the actions of the U.S. government with respect to its position in Guatemala, the company had little success with such ventures. The company's biggest triumph was its early access to the CIA during PBFORTUNE. UFCO took advantage of divisions in the government and the inability of the major federal departments to establish solidarity of policy by offering the CIA operational and intelligence support fo r its operations, exploiting the Corcoran-Smith 130 Dosal, Doing Business with the Dictators, 55. 66 connection. This early success was followed by a succession of relative failures. The company's involvement in the State Department was limited to little more than information exchange and minor consideration for the company's interests when the department implemented major initiatives. The CIA kept United Fruit out of Operation PBSUCCESS, and would later implement an Agency-wide moratorium on communications with Corcoran. While the Guatemala crisis displayed the company's ability to gain access to many of the highest offices in Washington, it also established the limits of such access. Even Walter Bedell Smith, whose leadership during PBFORTUNE and close personal connection with Tommy the Cork resulted in his eventual employment with the company, was unwilling to go aU the way to indulge the machinations of eIpulpo. Frustration with its own powerlessness led the Fruit Company to search for other options. After having neglected Bernays for the better part of his time with the company, UFCO allowed him to implement strategies he had developed years earlier, in order to garner support from the American public and Congress. While PR appeals to the anti Communist sentiment of the American public were seen as relatively successful, such success was more indicative of the paranoia and intrigue that gripped the nation at the height of the second Red Scare, rather than any brilliant coercion on the part of Bernays. More tellingly, the company's willingness to employ an obvious political liability in John Clements represents the extent to which the company believed the ship to be on the verge of sinking it in 1952. Eventually the ship clid indeed sink. The U.S. government's unwillingness to work with the company throughout the crisis was punctuated by the initiation of an antitrust suit that in 1958 that required the company to clivest many of its holclings, and ultimately led to 67 the departure of the Fruit Company from Guatemala. With repeated but unheeded calls for intervention and involvement, United Fruit displayed its ability to open doors to empty tooms in the government. It had the means and the connections to gain access to strategically important offices in Washington, but a sequence of failures, each more crushing than the last, displayed the company's ineffi cacy. Without the threat of Communism and the Eisenhower administrations' anti-Communist foreign policy agenda, United Fruit would never have witnessed the action it so desperately desired. Indeed, the government felt that after the elimination of Communist influence, United Fruit would have to revise it concessions and negotiate in good fa ith with the Guatemalan government. With or without bananas, Guatemala was a threat to U.S. national security and interests, as the Eisenhower administration had defined them. While the intervention must have seemed to be a lucky break for the company, it only helped defy, fo r a brief moment, the decline and fall of the United Fruit Empire. 68 II. Government, Gossens, and Geneen: ITT and the U.S. Government in Chile "I don't care about the lIT. I don't even know what it is. "I When he took the helm at International Telephone and Telegraph in June of 1959, Harold Geneen was called "basically the best professional manager we've had in this generation." Business Week applauded him fo r "giving the staid old empire" of ITT "a vigorous shaking up and tightening." Throughout the 1970's "Hal" Geneen was one of the most well-known figures in the United States corporate community. The International Telephone and Telegraph president was a hard-nosed businessman with a penchant for a scientific level of organization born of his love fo r numbers and his proficiency in accounting. Like Alfred Sloan at GM and Lee Iacocca at Chrysler, he was a one of a group of capable chief executives who arrived "to find the corporation in ruins and proceed to revive it, to provide the firm with new and more appropriate goals, and then to show the way toward their realization.'" His plan for ITT was rooted in his desire bring the ingenuity of American companies overseas. Through a series of acqwsitions, Geneen hoped to repeat the success of ITT's global strucrure many times over. ITT's new policy was powerful: "For in swallowing a succession of companies, and imposing his ingenious system of control he helped to create a new kind of industrial animal, a conglomerate that was also multinational; d I United States, 93,d Congress, 2" Session, House of Representatives, Committee on the Judiciary, Hearings Beforethe Committee on the Judiciary, pursuant to H. Res 803, A Resolution Authori'lfng and Directing the Committee on the Judiciary to Investig ate Whether Sufficient Grounds Exist jo r the House of Representatives to Exercise Its Constitutional Power to Impeach Richard M. Nixon, PresIdent ofthe United States (Washington, D.C.: Government Printing Office, 1974), Book V, Part 1, 142. , Robert Sobel, ITT: The Management of0pp 0riunity (NewYork: Truman Talley Books, 1982), 162. 69 a company that could make anything anywhere.'" Making anything anywhere meant that Geneen, with an accountant's eye on all of lIT's operations and expectation of uno surprises", had to have a working knowledge of everywhere that lTf made anything. Unfortunately for Geneen in the 1970's, one of these places was Chile. At the time, a deep concern had developed for the conflict between nationalism, as represented by the sovereign state, and globalism, as manifested in the multinational corporation. The conflict appeared so problematic that in 1969 Charles Kindleberger suggested, "the nation state is just about through as an economic unit." Geneen's ITf perfectly exemplified the multinational's new power and ability, so much so that the Senate Subcommittee on Multinationals chose the company as the focus of its investigation into the new relationship between sovereignty and corporation. The focus of the Subcommittee's investigation was the company's fun ction in the1973 coup d'etat that removed Salvador Allende Gossens from office and resulted in the rule of a military General Augusto Pinochet. The same year, Anthony Sampson published The Sovereign State ojJTT, the first account of the company's role in the overthrow. Critics began to suggest that the new size and ability of multinationals had made them powerful enough to necessitate the U.S. government's cooperation in their exploits abroad. They suggested the rise of U.S. multinationals had granted them a special relationship with the U.S. government. Sampson's central questions mirrored those of the public and the Subcommittee: "How much deeper does this relationship go?'" Despite these questions, allegations and conspiracy theories, ITf did not possess the access or influence to manipulate government policy. Meetings between Geneen's men and J Anthony Sampson, The Sovereign Stale ojJTT(New York: Stein and Day, 1973), 77. , Ibid., 287. 70 Nixon Administration officials rarelyproduced anything more than exchanges of information, despite a pile of memoranda between the two parties that read "like parts of a spy thriller." Partly because of the colorful correspondence, it appeared that ITf successfully lobbied the U.S. government to take action to fo ment a military coup, and preserve the company's interests from expropriation. In fact, the Nixon Administration was motivated by the desire to preserve U.S. interests and its position in the global balance of power by preventing the potentially humiliating victory of Communism, and the establishment of a Soviet beachhead in the Western Hemisphere. ITf's interests were intertwined with the government's concern for such a threat, as the new leftist regime called for expropriation of the business' assets; assets that also shared a bond with the U.S. government, through the Overseas Private Investment Corporation. Despite the connection, such concerns represented but a fraction of the government's primary motivation fo r intervention. Though Geneen would get his intervention, he had the Communist threat, and not ITf's lobbyists, to thank fo r it. 71 nT's Domestic Operations lIT's relationship with Washington throughout its time in Chile had much to do with the company's long history in the nation's capital, and its developed lobbying enterprise. Geneen relied on an extensive network of individuals with a vast array of COntacts in the government, all of whom worked out of the company's Washington office: If the brains of lIT were in New York City in the late sixties, the heart of the company was in the nations capital. The lIT Washington office was staffed by a colorful lot of lobbyists, technical specialists, marketeers, consultants, and sales representatives, all living in a loose confederation of cliques and tribes.. . With representatives and experts in a broad spectrum of technologies, the cumulative clout of the lIT Washington organization was awesome indeed.5 The Washington office was an anarchic organization characterized by a power vacuum that existed "partly because lIT top management did not want to be involved in the necessary but odious byplay which was the politicking way of life in the nation's capital.'" Bill Merriam, head of the lIT Washington Office, controlled an army of "corporate people" who were chosen "for a special talent or skill and usually had connections with either the Democratic or Republican party.'" Out of this office, lIT implemented a particular surveillance system for politicians, whereby each "senator congtessman, governor, and important state official was assignee to a senior lIT manager for cognizance on a geogtaphical basis ... The system was worked out ...to be sure that that an lIT political 'button man' who could be activated on short notice whenever and wherever needed."s Dita Beard, one of the most notorious of lIT's lobbyists, particularly for her role in the Hartford insurance-Anderson Paper scandal, was uniquely forceful when it came to relationships with Washington: "Most lobbyists were 5 Thomas S. Burns, Tales ojlIT(Boston: Houghton Mifflin, 1974), 25. 6 Burns, Tales ojlIT, 27. 7 Ibid., 27. 8 Ibid., 27. 72 happy to keep congress in a pro-business mood. Dita insisted that Congress, to a man, be pro-I1T. To this end she was willing to wheel, deal and negotiate. She simply considered it the American Way.'" ITT built its relationships with Washington in what would eventually be considered the "good old fashioned way," with seats at the Super Bowl, tickets to Broadway shows, baseballs games, and tee times at the nation's top courses. And so, when it came to addressing the "situation in Chile," ITT looked to use the same tactics, leveraging personal relationships and calling in favors. But if the Washington office had come to expect the full cooperation of the government domestically, when it came to Chile, it had vastly miscalculated. , Ibid., 108. 73 A Brief Hist0O' ofIIT in LatinAmerica The development of the company's involvement in Latin America informs and explains its actions and understanding of the situation in 1970's Chile. In the 1920's Sosthenes Behn, the president of lIT before Geneen, had the expanded the company's interests substantially in the region to include Puerto Rico, Cuba, and others until he had eventually built or acquired telephone companies in cooperation or with the consent of many different types of government. Like the founding fathers of United Fruit, Behn played the part of politician and businessman, and knew well the customs of presidents and dictators alike. The company acquired its Chilean interest, Chili Telephone Company from dictator General Carlos Ibanez, who awarded lIT with rich concessions shortly after he led a coup against the Emiliano Figuera government in 1927. JO Eventually, resentment built in the American republics for foreign ownership of vital national utilities in their nation, and the company was forced to make adjustments in order to keep their operations in order throughout the region. When Fidel Castro assumed power in Cuba after the Cuban Revolution in 1959, he took advantage of World Bank reportS on the nation that criticized the telephone company fo r poor service. Just before Geneen took the helm at lIT, Castro expropriated lIT's interest in the region, an event that would serve to be one of the prime contributors to Geneen's fear of communism, leftism, populism, and revolution in world politics. From that point on, Geneen saw every investment overseas as a potential loss due to expropriation, and looked at government as a threat to profit. He saw Europe as particularly unfriendly to business venture, with anti-American sentiment in France, a new labor movement in JO Sobel, Management ojOpporttinity, 55. 74 ,, England, and an Italian government that was "committed to a semi-Leftist approach. 11 As a result, he believed that in five years, ITT should have 55 percent of its earnings coming from America, rather than the 18 percent it had in the mid 1950's.12 Expropriations continued, but in many cases the company was compensated for its interests. The company dealt with each case in different ways. In Brazil they were paid $7.3 million for their operations in 1963, and $12.2 million in 1967, and in Peru they were compensated $17.9 million for their company, given that they reinvest $8 million.13 ITT did this by constructing a Sheraton hotel in Lima, a move that represented their diversification strategy and their ability to pull up a limb in one area simply to rest, pivot and plant in another. The nationalization in Peru left ITT with operating telephone systems in just three locations in Latin America- Puerto Rico, the Virgin Islands, and Chile. Compared to the others, ITT operations in Chile were a large stake, both economically and politically, as by 1970 CHILTELCO was valued at $150 million and employed over 6000 people. Amidst the maelstrom of nationalism that had gripped the region at the time, Chile seemed to be a bastion of stability. Geneen believed that such stability would continue under the Christian Democrat administration of Eduardo Frei, who was running for president in 1964 and promised reform but was friendly to large corporations and multinationals. As a result, Geneen and host of American businessmen approached CIA through then then-director John McCone, offering a campaign fund to support the candidate. McCone turned the funds down, but $3 million was approved by the Special Group to ensure his election, an election II Sampson, The Sovereign State ofITT, 73. 12 Ibid., 73. 13 Ibid., 261. 75 in which he garnered a commanding 55.7% of the vote.l4 lIT had a particularly good relationship wirh Frei, and when rhe Ericsson company came in ro make a bid for a contract in rhe country by submirting a detailed list of the shortcomings of lIT's operations there, the Chilean government awarded lIT the contract, even though the company's bid was much higher than Ericsson's. 15 This advantageous relationship would not last long for the company. Partially because of his relationship with foreign interests, Frei was not enough of a reformer in the eyes of the Chilean people, who were undergoing a rapid process of political polarization. There were three primary candidates in the 1970 elections: former president Jorge Alessandri, Marxist Salvador Allende, and Christian Democrat Radomiro Tomic. Allende was vicrorious, but not by a large margin, as he gained a mere 36% of the vote, less than he had obtained in the 1964 elections. The Chilean constitution stipulated rhat in such a situation congress had to choose the president several weeks after the initial elections, and it was widely known that the candidate with who won the popular vote, no matter the margin was usually selected. U.S. government officials were determined ro see that this congressional tradition did not continue. Shortly after Allende election's, on September 15, President Nixon instructed CIA Director Richard Helms to initiate a plan to foment a military coup against Allende, referred two as Track II. The U.S. also implemented another plan, Track I, which was designed to "induce Allende's political opponents to prevent his assumption of power, either through political or military means."" The two tracks overlapped, and though conceived independently, worked towards the same end. l4United States, 94'h Congress, 1" sess., Senate, Select Committee on Intelligence Activities, CovertAction in Chile, 1963-1973: StaffReport (Washington D. C: GPO, 1975) . 15 Sampson, The Sovereign State ojlTT, 263. 16 Cover Action in Chile, 23. 76 Unfortunately for U.S., both plans had another thing in common, they ended in fa ilure. Salvador Allende was confirmed as President on October 4'" and inaugurated on November The fo llowing period was particularly rough for the company. Jack Anderson, considered one of the fa thers of investigative journalism, revealed the plotting and corrupt practices of the company just as ITT was hammering a compensation scheme for Chiltelco with Allende. Allende assumed control of the telephone company on September 29, 1971, and from that position put the value of the company at $24 million, roughly 1 /7'h of the value that ITTbrought to the negotiating table. The Chileans proposed that the issue could be resolved by bringing in the International Telecommunications Union who would evaluate Chiltelco's facilities, while ITT wanted to bring in an international auditing firm. In March of 1972, Ambassador Narhaniel Davis struck an agreement with Ambassador Lerelier, as the two sides agreed to bring in technical experts named by both sides to settle the valuation dispute." Then the famous Anderson papers were released. Jack Anderson announced that ...secret ITT documents ...showed that ITT had plotted in 1970 to stop rhe general election of Chile's Marxist president, Salvador Allende, that ITT had dealt regularly with the Central Intelligence Agency to try to create economic chaos in Chile and to encourage a military coup; and that Harold Geneen had offered to contribute 'up to seven figures' to the White House to stop Allende 18 Allende seized this opportunity, and shortly after the Chilean Congress investigated the past dealings of ITT, he addressed the United Nations General Assembly in December 1972, accusing the company of "attempting to bring about civil war."" Repercussions in the 17 Nathaniel Davis, The Last Two Years ofSalvado r Allende (Ithaca: Cornell University Press , 1985), 70. 18 Sampson, The Sovereign State of ITT, 259. 19 Ibid., 265. 77 United States were not particularly notable until the Senate Foreign Relations Committee formed a subcommittee, the Multinationals Subcommittee, to investigate the role of multinational corporations in Chile, with a special focus on ITT. Of particular interest to the Subcommittee was ITT's $92 million Overseas Private Investment Corporation insurance claim, to which the company felt it was entitled as a result of its expropriated Chilean property. OPIC ultimately concluded that ITT had had enough of a hand in the development of the unfavorable economic and political conditions in Chile to be ineligible for OPIC funds. The Church Committee recommended that ITT and U.S. corporations should stay as afar away from CIA and other government agencies as possible in the future.20 Despite these setbacks, the company would eventually triumph, and was later compensated after an arbitration hearing overturned the ruling and a new pro-American government in Chile reimbursed OPIC.21 20 Ibid., 273. 21 Brent Fisse and John Braithwaite, The Impact ojPublicity on Corporate Offe nders (Albany: State University of New Yotk Press, 1983), 131. 78 "Best Men We Have" In his September 15'h meeting with Nixon to initiate Track II, Helms jotted a few notes down with a pen and paper, as he always did for Agency-related work. Among other demands, Helms recorded that Nixon wanted the "best men we have" to be assigned to " Chile. Deeply concerned about the developing crisis, Nixon did nOt want to waste resources and precious time by relying on amateurs. Geneen and ITT shared this sentiment. To properly position itself to resolve the Chilean crisis with the help of the government, the company quickly identified the individuals and departments with the greatest access to accurate and up-to-date information, and more importantly, those who were calling the shots on the ground. The primary actors with the strongest connections to ITT were the Central Intelligence Agency and the office of National Security Advisor Henry Kissinger. 23 Because ITT viewed them as either weak or operationally incapable or uninformed, key representatives from the State Department, and members of Congress all had considerably little interaction with the company during the crisis period. Despite a well staffed and what many in the company believed to be an overfunded Washington office, very little was done by ITT to influence Congress. This had primarily to do with the fact that the power to intervene in Chilean matters within the time frame available did not rest with the Congress, as its members were rarely informed of any operation, covert or otherwise, until after action had been taken, even if then: 22 Richard Helms, A Look Over My Shoulder.' A Lifein the CentralIntell igenceAg en')' (NewYork: Random House, 2003), 404. 23 During the Chile crisis, Kissinger served as both Secretary of State and National Security Advisor to Nixon. Kissinget was National Security advisor from January 20, 1969 until November 3, 1975, fo llowing Walt Rostow. He was the 56'h Secretary of State, taking office on September 22, 1973 and holding it until January 20, 1977. 79 CIA records note a number of briefings of Congressional committees about covert action in Chile. Those records however, do not reveal the timelines of the level of detail of these briefings. Indeed, the record suggests that the briefings were often after the fact and incomplete.24 Indeed, to say that there were holes in the reporting to Congress is an understatement. The CIA's pattern of reporting to Congress was far fr om reliable, and it is a wonder that the Agency even bothered reporting anything at all. Though a little more than half of the CIA's total budget was presented on the Hill, the Agency never granted oversight to any committee and only partially informed the 40 committee of its actions: Of the total of over thirteen million dollars actually spent by the CIA on covert action operations in Chile between 1963 and 1974, Congress received some kind of briefing (sometimes before, sometimes after the fact) on projects totalizing about 7.1 million dollars. Further, Congressional oversight committees were not consulted about projects, which were not reviewed by the full 40 Committee. One of these was the Track II attempt to fo ment a military coup in 1970.25 From ITT's perspective, even if a lobbying effort were made, it was unlikely that the congressmen were informed to the extent that they were effective at implementing a pro- ITT policy, and even if they were up to date concerning operations in Chile, it was even more unlikely that they would have a hand in shaping those operations. Still, ITT did keep their friends in Congress up to date with their position and problems with Chile. A February 12, 1971 ITT memorandum written by ITT executive vice president FT. Dunleavy to Hal Geneen indicated that "the congressional staff set up a task fo rce to keep their friends on the Hill advised of the day-to-day happenings in Chile."" One of Geneen's personal friends, Dr. 24 CovertAction in Chile, 53. 25 CovertAction in Chile, 25. 26 United States, 93'd Congress, 1" Session, Senate, Committee on Foreign Relations, Sub Committee on Multinational Corporations, Heatings Before the Subcommittee on Multinational Corporations, MultinationalCorporations and United States Foreign Policy, On the International Telephone and Telegraph Company in Chile, 1970-71 (Washington: GPO, 1975), Part II, 802. 80 Noobar Danielian was also primed in the same memo: "Bill Merriam put Dr. Dan and his IEPA in immediate notice to concentrate on the dangers in Chile and to fo rmulate policies which could stimulate Congress and the Administration to give protection to private ,, industry. 27 Danielian was an Armenian economist who had fo unded the International Economic Policy Association, which "pressed governments to drop aid programs." He was also a "fervent admirer of Geneen and had very good contacts on Capitol Hill"" By using contacts like Dr. Danielian, ITT kept Congress abreast of its position and plight in Chile, so that if and when the issue was raised, their interests were represented. As before mentioned, rhe company had an alternate agenda that was aimed at more immediate progress and action, action it knew that congress was too uninformed, flat-footed, and divided to implement. While it is standard corporate practice for U.S. corporations overseas to rely on State Department's embassy in their country of operation, ITT spent very little time with either Ambassador Edward Korry or Nathaniel Davis. This was primarily due to the company's rather lowly opinion of Korry, and its fe eling that the embassy, like Congress, was a step removed from Chilean internal action. An ITT memorandum from Hal Hendrix, the Public Relations Director of ITT Latin America to his associate and PR VP Bob Berrellez detailed this particularly negative view of Korry: Korry alienated Chilean friends, antagonized his Chilean critics, and embarrassed many Americans with his petulance in the final days of the Frei Government. Korry estranged himself from the State Department over the Chilean issue and was dealing directly with Nixon on policy and straregy ...The Ambassador became a hard liner (economic reprisals, etc., against Chile) after Allende registered a plurality in the Sept. 4 elections while State chose to play it indifferently. Because of this Korry's diplomatic career certmn. 1y seems at an end .29 27 Ibid., 802. " Sampson, The Sovereign State ofITT, 262. 29 Multinational Hearings, Part II, 757. 81 At the end of the memo, Hendrix indicated that Korry's "usefulness as a diplomat in Latin America has been destroyed. And his usefulness in a business capacity in this same area now ,, becomes, I believe, questionable. 30 In another memo, Hendrix describes him as a "dead ,, duck at State. 31 Hendrix was a Pulitzer prize-winning right wing journalist, who had developed a number of CIA contacts during his reporting on the Cuban Missile Crisis, for which he received the award. Mexican reporter Bob Berrellez and Hendrix were the team responsible for almost all information flows to Geneen and other top executives. These harsh words, coming from ITT's top correspondent in Latin America, paint a picture of a man and an embassy that had lost function, not only in the capacity for which the government intended it, but also in its ability to serve as an intermediary between state and corporation. Regardless of his actual performance as a U.S. ambassador, the top minds at ITT felt he wasn't very helpful in any respect. The company's weak relationship with Korry directly related to his uselessness to ITT as an information source. U.S. corporarions abroad normally rely on ambassadors fo r conrinuous informational updares, including CIA intelligence with regard to the host country. In ITT's case, Bertellez and Hendrix themselves had a variety of CIA contacts, and carried on a long ITT tradition of in-house intelligence gathering. This ITT operation built upon the company's strength and expertise in communications, and it "had special access to ,, all kinds of information - often more quickly and effectively than governments. 32 This special "access" in Hendrix's case was a CIA contact named David Arlee Phillips, who was responsible for giving Hendrix access to a cable that indicated that Ambassador Korry had 30 Ibid., 759. .11 Ibid., 757. 32 Sampson, The SovereignState vfITT, 136. 82 received a "green light" from the Nixon white house "giving him maximum authority to do aU possible - short of a Dominican Republic type action - to keep Allende fr om taking power."" Phillips was also the man who was put in charge of the radio propaganda initiative, Operation SHERWOOD, in Gu atemala during Arbenz overthrow. Hendrix and Berrellez had little use for a man like Korry, who garnered little respect (in their opinion) from the Chilean press or Chilean politicians, and who had more limited access to information than they had themselves. When Nathaniel Davis became the new Chilean Ambassador he had relatively little impact, except as a final negotiator in the AIlende-I1Texpropriation debate. The Anderson papers quickly rendered his services unnecessary. His involvement in the negotiations was the deepest he would ever venture down the road with ITT. The company also held very little regard for others in the State Department, in particular, Charles Meyer , Assistant Secretary of Inter-American Affairs. A Hendrix-Gerrity memorandum indicated that Meyer "ranks very highly as the weakest Assistant Secretary in recent times,"" further that "he has only secondary or tertiary relations with the President, for example, who from the beginning had relied on the National Security Council, Henry Kissinger, and Latin American specialist Viron Vaky for top guidance on the Latin Area."" The Hendrix-Berrellez team quickly identified the chain of command with respect to operations in Chile. While other companies might balk at a casual suggestion to get in touch with the National Security Advisor, for ITT it was just another day in Washington. ITT officials in La tin America were very quick learners when it came to identifying who wielded the power in the federal arena. From Hendrix's quick dismissal of Meyer and " Multinational Hearings, Part I, 286. " Multinational Hearings, Part II, 745. " Ibid., 745. 83 Korry, it is clear that ITT wasted no time with those who could not affect change, or were simply steps on the way to intelligence gathering and operational decision-making in the region. Geneen once said, "Facts from paper are not the same as facts from people. The reliability of the people giving you the fa cts is as important as the facts themselves." ITT selected such people carefully, quickly separating the winners from the losers, or those who could help the company in its quest to preserve its interests, and those who couldn't. While the company made sure to keep a finger on each of the arms of the government at all times, they also knew where to apply pressure, and in the spirit of economic rationalism, where to allocate resources most efficiently. Acutely aware of the impotence of Congress and the State Department, ITT took to leveraging more personal relationships with the CIA and the office of Henry Kissinger. 84 The Agency, Kissinger . and the Red Menace ITT communicated primarily with the CIA and Henty Kissinger's office, ttying at all times to maintain a relationship only with those individuals who possessed what the company perceived to be game-changing ability and power. The company had an advantage in these departments, not only because of their officials' proximity to ground operations in Chile, and their role as the creators of policy, but also because of the widespread fear in both departments ofMarxist government at the helm in Chile. This fear was part and parcel of the United State's evolving national security policy that began with George F. Kennan's long telegram, which asserted that the Soviet regime was inherently expansionist, wielded an influence that had to be "contained" in regions of the world where the United States possessed or desired strategic interests. The Nixon Administration implemented what came to be referred to as "Detente," which was "another. ..attempt to 'contain' the power and influence of the Soviet Union ...based on a new combination ofpressures and inducement , that would ...convince the Russians that it was in their best interest to be 'contained" 36 While the policy was comprised of a number of different concepts, two are particularly relevant to the U.S. action in Chile. First, it had always been the policy of the United States to oppose communism, "not just because it was revolutionary, but because it denied freedom of choice."" It fo llowed that if a Marxist government were ever democratically elected, the U.S. Government would be inclined to respect that development. With Chile, Nixon outwardly fo llowed this policy in public statements, but secretly planned cover action to unseat the democratically-elected Marxist Allende. Second, in the wake of the 36 John Lewis Gaddis, Strategies of Containment (New York: Oxford University Press, 1982), 289. " Ibid., 338. 85 Sino-Soviet split, it was apparent that to the Nixon Administration that "international ,, Communist unity had been shattered. 38 The importance the Administration placed on global equilibrium, rather than ideological consistency, meant that it could tolerate states with antipathetic ideologies like Chile, as long as they didn't represent a major change in the global balance of power." Chile itself could not represent a substantial change in the balance of the multipolar world that the Nixon administration had defined. Instead, a Marxist Chile would represent the appearance of a shift in the balance of power. Kissinger would note in 1974 that "the appearance of inferiority - whatever its actual significance - can have serious ,, political consequences. 40Accordingly, the Administration could not tolerate Allende's Chile, as it would make the United States appear to have lost ground to the Soviets. The Soviets opportunity for victory in Chile was a direct result of the regions decline in stability: "The preponderant position of the US is eroding, and at an accelerating pace, for complex reasons rooted in economic developments, social pressures, and history. Conversely, the Soviet Union [is] more looked to by nationalistic elements as a balance to American preponderance, often for purely opportunistic reasons."'! For the United States, "the spread of nationalism ...provides the USSR with an opening for policies and actions designed to speed the erosion of U.S. influence and to increase its own."" Consistent with the Administration's concerns, the fear throughout the State Department and the CIA was that Allende's Chile would be a threatening, democratically-elected Marxist paradigm in the 38 Gaddis, Strategies ofContain ment, 284. 39 Ibid., 287. '0 Henry Kissinger, Amerzcan FOreign Policy (NewYork: W.W. Norton, 1969), 160. 4! National Intelligence Estimate, submitted by CIA Director Richard Helms. "The Soviet Role in Latin America," April 29, 1971. Freedom of Information Act website, U.S. State Department, www.foia.state.gov. "Ibid., 7. 86 region of Latin America: "If [Allende] makes some progress towards alleviating Chile's massive social and economic problems, this would further bolster the cause of Marxist parties in Latin America and prospects for popular fronts."" The perceived threat of a Marxist government in Chile is quite evident throughout the pages of CIA correspondence during the Allende years. As early as 1968, the Agency published an intelligence memorandum detailing efforts made by the soviets to "provide academic training for students from the Less Developed Countries." The memo indicated that the Kremlin had already "trained an elite cadre of Communist symparhizers" and were using the program as a means to penetrate the region. A 1969 CIA assessment of Chile and the congressional elections in 1969 as well as the presidential elections in 1970 proposes that "An administration elected with Communist support almost certainly would take steps aimed at moving Chile away from the U.S. and closer to the Communist countries."" Further, it suggests "Allende ...has frequently demonstrated his admiration for Castro and the Cuban Revolution,"" the source of inspiration for the Chilean presidential candidate that u.s. policymakers fe ared the most. The Agency's preoccupation with the Marxist threat did not mean that business interests were not a part of its considerations in the country. To the extent that they were part of the broader national interest, and that they had direct financial ties to the U.S. government through guarantees made by the Overseas Private Investment Corporation (OPIC), business interests were certainly a part of the CIA's concerns. OPIC offered compensation to u.s. business whose assets were expropriated abroad, and covered the " Ibid., 8. " Ibid., 6. 45 National Intelligence Estimate, submitted by CIA Director Richard Helms, January 28, 1969, 22, Freedom of Information Act website, U.S. State Department, www.foia.state.gov. 87 interests of any corporations in Chile. While a 1971 National Intelligence Estimate noted that "Allende would almost certainly take measures against U.S. business interests,"" it viewed copper company investments in terms of their position as "insured by the U.S. investment guarantee program, under which copper companies would received indemnification from the U.S. government in the event of expropriation without compensation."" Like the copper companies, lIT's investments in the region were also guaranteed by OPIC, and therefore their interests, if expropriated would also be covered by the government. To a large extent, CIA references to business interests draw both upon the role of the loss of such interests as a potential financial loss fo r the U.S, government. Additionally, this loss represents is a portion of the broader umbrella of U.S. interests, to which Allende posed a direct threat, as his efforts to drive out U.S. interests were directly correlated with a welcoming of Soviet influence: ...an Allende victory would be hailed by anti-U.S. fo rces and other as a setback for U.S. interests, not only in Chile but throughout the hemisphere ...When key issues in the UN or in world affairs generally, involved any kind of East-West confrontation, an Allende administration would be openly hostile to the United States." For the intelligence community, Allende represented a dangerous contagion whose victory would certainly result in a loss of U.S. power in the hemisphere and throughout the world. Business interests were inherently tied to the actions he took against such interests, both in their role as part of the broader U.S. national interest, and through OPIC, and therefore benefited from the government's preoccupation with the decline in U.S influence at the hands of Communism and the Soviets. lIT was no exception. "National Intelligence Estimate, July 30, 1970, 6. FOIA Website. 47 National Intelligence Estimate, January 28, 1969, 11. FOIA Website. 48 National Intelligence Estimate,July 30, 1970, 22. FOIA Website. 88 Despite his Administration's fo rmal fo reign policy, Kissinger viewed Chile as serious threat for several reasons. Kissinger's now infamous remark regarding the Chilean crisis was, "I don't see why we need to stand by and watch a country go communist due to the irresponsibility of its own people."" The issues are much too important for the Chilean voters to be left to decide themselves."" For Kissinger, Chile was the last democratic stronghold in Latin America: In a major Latin American country you would have a Communist government, joining fo r example, Argentina, which is already deeply divided, along a frontier, joining Peru, which has already been heading in directions that have been difficult to deal with, and joining Bolivia, which has also gone in a more leftist, anti-U.S. direction ...So I do not think we should delude ourselves that an Allende take-over in Chile would not present massive problems for us, and for democratic fo rces in Latin America, and indeed to the whole Western Hemisphere." Kissinger fe ared that a Marxist regime in Chile would initiate a domino effect in the Western Hemisphere. Consistent with Nixon administration foreign policy, he was also petrified that Chile could serve as evidence that Communists could actively participate in democratic elections, accepting defeat or celebrating victory peacefully, and as a result reveal the fe asibility of leftist politics in the international arena. The corporate community, and lIT in particular, largely shared his fear of Communism. Geneen was an ardent nationalist, who fr om his boarding school days in Suffield, Connecticut, felt a sense of pride in the fo undations of the United States: He looked back at Suffieldnosta lgically as the school that turned him "into an American, where he unconsciously absorbed the 'values and principles that were still fu ndamental and pretty 49 Gaddis, Strategies ofContainment, 338. " Seymour Hersh, The Priceof Power �ew York: Summit Books, 1984), 270. 51 Ibid., 270. 89 close to those which have made this country."'" This nationalist ideology continued throughout his business career, and later developed adjacent to his contempt for Communism. In his testimony before the Committee on Multinationals he made fr equent references to the threat of Marxism and "Communist Takeovers." He positioned himself as opposed to Communism: "they are not interested in private investment, they are not seeking private investment, it is an expendable area, so what happened in Chile and what happened ,, in Cuba is entirely consistent with what we expect. 53 Geneen's opposition to Communism had everything to do with what Communism meant for his bottom line. Even at the time ITT was experiencing the most problems with the government in Chile, it was a few months away from expanding its business substantially in Russia in the middle of the Cold War. Geneen asserted, in his testimony, that he was "not standing on any general or ideological ,, objection to Marxism. 54 This aligned his views with the general fo reign policy of Nixon and Kissinger, who attempted to divorce the action of the U.S. from ideology. For Geneen, if there were dollars in his pocket, it didn't matter whether the man who handed it to him was Breshnev or Nixon. ITT memos tell a r1ifferent story however, and are riddled with turns of phrase such as "Freedom is already dying in Chile,"" and other flowery quips about the Communist situation in Chile. If Geneen was unconcerned about Communism as an ideology, others did not differentiate between that and its threat to the company's profits. A striking memo from Gerrity to Merriam laments the victory of Allende: "And we can expect the same kind of repression of the human spirit which the doctrinaire Marxist always imposes - - a repression " Sampson, The Soveregi n State ofITT, 71. 53 Multinational Hearings, Part I, 463. 54 Ibid., 498. " Multinational Hearings, Part II, 714. 90 sometimes ...enforced with raw power plays, sometimes with bumbling bureaucratic idealism."" He goes on, expressing sadness that the candle of freedom will be "light for a while and then will be smothered leaving only a little black smoke."" Certainly, anti- Communist sentiment had worked its way into the personal statements of many in the ITT camp. Whether they simply wielded anti-Communist rhetoric for the purpose of pushing a profit-seeking agenda, or whether they actually possessed a fear of what globally was regarded to be a strengthening of the Soviet system and viral spread of communist influence in the post-Cuban revolution days is not clear. For the company and Geneen, Cold War ideology, used as a tool or deeply held belief, meant that Marxist Chile was intimately linked to expropriation and the expropriation of the company's interests. The CIA, ITT, and Henry Kissinger were all to varying degrees working within the Cold War fr amework. The Nixon Administrations belief in the threat posed by a Marxist Chile, was echoed in the memoranda of the CIA and in the thoughts and words of one of its foremost foteign policy architects. Business interests were certainly linked to this threat, as a subsidiary problem. Certainly the CIA gave them no undue consideration. Indeed, in his discussion of the Allende crisis in his memoirs, Henry Kissinger makes a single reference to ITT in his recollection of the Chile crisis in his memoirs in a fo otnote, asserting his belief that "covert action ....was not a field fro private enterprise."" The CIA and Kissinger were already primed for intervention in Latin America, and needed no further urging from the company. ITT would not rest on its laurels however. The company would tepeatedly " Ibid., 711. " Ibid., 714. " Henry Kissinger, White House Years (Boston: Little, Brown, and Company, 1979), 667. 91 approach the CIA and Kissinger, using strategic contacts and influence in attempts to affect policy and action. 92 A Failed Courtship Nathaniel Davis, in recounting his years as the Ambassador to Chile under Allende recalled the relationship between ITT and the U.S. government as a "courtship between two giants [that] seemed always to find the responding flame was flickering out when the suitor's ardor burned most brightly."" Others have painted the relationship as closer, claiming that policymakers and the U.S. corporations were able "fashion a common policy" that reflected their "common interests" ,,60 The government and ITT were never able to actively fa shion "a common policy" as James Petras and Morris Morley have suggested. The company condensed its contacts into a shortlist of movers and shakets in the CIA and the State Department. Despite the company's immense outpouring of resources and scientifically orchestrated application of pressure, communication with the government was limited to informational exchanges, and several rebuffed offets of financing. These efforts produced little in the way of any type of cooperative enterprise, much less unilateral action of any kind. The company had a numbet of contacts in the CIA, in addition to the Hendrix- Berrelez team's connection with David Atlee Phillips. The most notable and unique figure in this cotrespondence was John McCone, who fo rmerly occupied a post as Director of the CIA a year earlier, and who was now, in 1970, a director of ITT. McCone had substantial experience with Latin America in general and Chile in particular. In 1964, a group of businessmen approached McCone, indicating that they had raised an election fund with the express purpose of influencing the Chilean Presidential Election.6! The offer was turned down by McCone and the 303 Committee, as they indicated that "offers from American 59 Davis, The Last Two Years ofSalvador Allende, 13. 60 James Petras and Morris Morley, The United States and Chile: Impenalism and the Overthrow of the Allende Government (New York and London: Monthly Review Press, 1975), 42. 6! CoveltAc tion in Chile, 58. 93 business could no be accepted," because they were "neither a secure way nor an honorable way of doing business." 62 Interestingly then, in 1970 McCone called Richard Helms, the Director of the CIA whom Nixon had charged with implementing Track II, and suggested that someone on Helms' staff meet with Hal Geneen who was to again offer the CIA a funding opportunity. Helms set up a meeting berween Geneen and William V. Brae on July 16'", 1970 at the Sheraton Carlton Hotel in Washington D.C. At the time, Brae was CIA's clandestine services chief. At the meeting Geneen and Brae discussed the political situation in Chile, as Geneen "requested information on the electoral situation, such as the status and potential of the candidates and their parties and the campaign as of that date." Geneen went on to offer Brae and CIA a "substantial election ,, fund for one of the Chilean Ptesidential Candidates, Mr. Jotge E. Alessandri. 63 While Brae turned down the offer, consistent with the policy McCone had established 6 yeats earlier, ITT was advised of an intermediary thraugh whom they were able to channel about $350,000 to support the Alessandri campaign. 64Broe continued as the company's main CIA contact, and met with Bill Merriam, Vice President of ITTand Head of the ITT Washington office and Edward Gerrity, a Senior Vice President of Corporate Relations at the company several times over the next few months. On September 22, 1970 Brae met with Merriam at the Metrapolitan Club in Washington. What appears to have been the fo cus of the conversation was a set of recommendations sent to Merriam from the Hendrix/Berrellez team, in lieu of the CIA's acceptance of direct financial assistance. It included steps such an extension of funds to El Murcurio, (a conservative Chilean newspaper) a radio-propaganda 62 Ibid., 16. 63 Multinational Hearings, Part I, 246. 64 CovertAc tion in Chtfe, 58. 94 campaign, and an effort to put pressure on US IS to distribute Murcurio editorials "around ,, Latin America, 65 Broe looked over the material and gave it his seal of approval. Helms' decision to call on Broe as the CIA's representative to ITT indicates something about the nature of the contact between the two entities, Broe was not simply an intelligence analyst, and his usual day-to-day responsibilities did not include briefing United States corporations on the political situation in Chile, Broe was CIA's clandestine services ,, chief in Latin America, which meant that he was an "operational man, 66 who was in large part in charge of CIA's covert action in Chile, Even McCone indicated that he was surprised that Broe was picked as the company's contact, as he felt like someone like] ,c. King "would have been sent to talk to Mr. Merriam,"" J.c. King was a former Chief of the Western Hemisphere division for the CIA, who came back to the organization after retirement in the 60's as a consultant, King seemed much more of an appropriate choice for minor briefings, and the facilitation of information flow to third parties, Presumably, the CIA was not in the business of assigning individuals tasks for which they were vastly overqualified, and therefore Mr. Broe was chosen most likely for the purpose of providing the most efficient connection between CIA's operations on the ground and ITT's hopes, desires and support back in Washington, This is, of course, in line with the way in which ITTdid business, Rather than wasting time with individuals like J.c. King, a retired CIA man, ITT used the personal connection between McCone and Helms to go straight to the man who was calling 6; Multinational Hearings, Part I, 250, 66 Ibid" 257, 67 Ibid" 257, 95 the shots on the ground, with "the knowledge and in accordance with instructions given him by his superiors at CIA, specifically including Mr. Helms."" Of note then, is the manner in which lIT either failed or was unable to take advantage of this access. According to Broe, the meetings with Merriam were not " operational discussions, rather a series of lunches during which Merriam would try to find out from (Broe] what was the cutrent situation in Chile."" Bro provided little more to the company through Merriam than a collection of "facts on the ground" briefings. The high- point of the rather banal meetings between the two was Broe's "approval" of a Hendrix- Berrelez memorandum that detailed a few of the company's ideas for initiatives to make trouble for Allende. Broe looked at a 5-point list that included the company's planned funding of conservative paper El Murcutio and its radio propaganda initiative in Santiago, and said that it "seemed all right." Broe suggested that the discussion of the memo was so btief that he believed Merriam didn't know very much about the memo's contents. Indeed, Merriam's level of knowledge concerning the situation in Chile made any type of useful exchange difficult. Broe indicated that Merriam "lacked competence to fully discuss the subject"" and that he "was not prepared to discuss it at the level that (Broe could]" Broe ,, concluded by saying that Merriam "did not know anything about Chile. 71 In effect, the Merriam-Broe meetings were a set of information exchanges at best, and did little more to align the interest of the two beyond the simple facilitation of information flow. lIT paid for a series of meetings between a man who was vastly overqualified to discuss the situation in 68 Ibid., 261. 69 Ibid., 254. 70 Ibid., 254. 71 Ibid., 255. 96 Chile, and a man who whose knowledge of the developments and the company's problems in the country were cursoty at best. ITT's contact with the CIA was not only limited to inconsequential informational meetings. When the siruation in Chile began to look dire for ITT, the company had Broe meet with Ned Gerrity, as opposed to Merriam. On September 29'h, 1970, Broe met with Gerrity, known to be the ITT propaganda minister. Broe "explored the feasibility of possible actions to apply some economic pressure on Chile ..." and provided Gerrity with a list of companies doing business in Chile that he might contact in conjunction with those actions. Gerrity indicated to Broe that he did not think that the Agency's suggestions were feasible, and that they would not work operationally. From a memorandum sent from Gerrity to Geneen shortly after the meeting with Broe, it is clear that the corporate community, from ITT's perspective, was anything but cohesive in its opinions: A list of companies was provided and it was suggested rhat we approach them as indicated. I was told that all of the companies involved our alone had been responsive and understood the problem. The visitor added that money was not a problem. He indicated that certain steps were being taken and that he was looking for additional help aimed at inducing economic collapse. I discussed suggestions with Guilfoyle. He contacted a couple of companies who said they had been given advice, which is directly contraty to the suggestions I received. Realistically I do not see how we can induce others involved to follow the plan suggested. We can contact key companies for their reactions and make suggestion in hope that they might cooperate. Information received today from other sources indicates that there is a growing economic crisis in any case. 72 The CIA did not appear to be particularly concerned that ITT was not on board with the strategy. Gerrity indicated in the memorandum that the "economic crisis was growing in 72 Multinational Hearings, Part II, 627. 97 any case." Indeed the plan was not discussed in any great detail, and Gerrity did little more than send a memo around with details of Broe's suggestions. The suggestions themselves were not broad sweeping changes in the private sector's operations; rather they were small steps to hasten (in whatever way, no matter how slight) the economic problems in the countty. One of the steps Broe suggested was that "companies drag their feet in sending money, making deliveries, shipping spare parts, etc."" The tame nature of these suggestions show that the Agency simply wanted to give ITT a list of measures that might keep the company busy, and indulge its desire to aid the CIA in its activities in the region. Broe was not offering ITT a chance to be directly involved in its operations, nor was it given the chance to contribute financially. He simply gave the company a short list of suggestions, which he must have known ran contrary to the positions of many in the government and the corporate community, who still felt that there was hope and promise in preserving a relationship with Allende. The fact that ITT was the only company to respond to the CIA in the manner that they did, suggests that the company's frustration with the country's strategy in Chile was either not shared, or not shared to the extent that any action was taken to change government policy. In short, through Broe and Merriam, the CIA did what it felt it had to do, given the close connection and respect the agency had for fo rmer Director McCone. Instead of a simple briefingagent, the CIA appointed Broe, whose position and command of operations gave the company the connection to the government that it's position and influence deserved. Ultimately, however, the CIA was unwilling to provide ITTwith more than a fu nd channel without the reguisite financial cooperation to affect change, a bit of intelligence, a " Ibid., 626. 98 brief assessment of their planned action in Chile, and a rather weak and indirect proposal to accelerate a deteriorating economic situation in the country, a plan whose infeasibility made it completely unworkable for ITT. If ITT felt that its direct line to CIA was not as valuable as it had hoped, it was also aware that its options did not end with Agency. The company knew that while the Agency was responsible for Latin American operations, those operations were in large paft dictated by Henry Kissinger.74 During the period surrounding Allende's election, the company was particularly frustrated with what it considered to be a "soft" policy toward Latin America, after a long history of increasing efforts (through aid and otherwise) to help the country remain democratic Why should the U.S. try to be so pious and sanctimonious in September and October of 1970 when over the past few years it has been pouring taxpayers' money into Chile, admittedly to defeat Marxism? Why can't the fight be continued now that the battle is in the homestretch and the enemy is more clearly identifiable?75 This portion of a memo fr om Merriam to Jack Neal, ITT's InternationalRelations Director, paints a picture of ITT as company that had become all too familiar with reaping the benefits of the government's anti-Communsit initiatives, and now felt a sense of frustration and impotence without the fe deral firepower of the past. In light of this frustration, on September 9, 1970, Geneen told John McCone at an ITT Board of Directors meeting that he was prepared to put up as much as $1 million fo r the purpose of assisting any government plan designed to form a coalition in the Chilean Congress to stop Allende. A few days later, McCone met with both Richard Helms and Henry Kissinger in order to relay 74 As noted previously in a Henrix-Berrellez memorandum. ITT believed that Nixon relied on Henry K.issinger, and Latin American specialist Viron Vaky for guidance. 75 Multinational Hearings, Part II, 739. 99 Geneen's message and offer of support. This time, McCone was not given the same consideration he had previously received fr om the Agency, and "never received a response from either man."" This offer occurred after the Chilean popular elections but before the congressional decision, and was intended to fo rm "a coalition of votes [against Allende] in the Chilean Congress"" The offer was never given a thought by Kissinger and the coalition, whatever there was of it, failed to stop Allende's assumption of the ptesidency. After this, the next communication between ITT and Kissinger's office came in the fo rm of a phone call between Jack Neal and Viron Vaky, then Kissinger's Latin Ametican advisot on September 11, 1970. Neal reminded Vaky of Geneen's ptevious offer to "assist financially in the sums up to seven figures,"" and discussed with him the fact that ITT's concerns in Chile had been mounting, and that they the company had been "trying unsuccessfully to get other American companies aroused over the fate of their investments, and join us in our pre-election efforts."" Instead of relaying a sizable offer to Kissinger, Vaky chose to stop the information flow at his end, indicating that he believed the offer to be inappropriate to pass on to the Secretary of State: I did not for two reasons: I did not think the substance was WOtth fu rther consideration, and I didn't think it was worth bringing to his attention. I also had the impression, and I must explain that this came out of the blue, so to speak, as fat as I'm concerned. I had known Jack Neal previously, and I had the general impression that this was Jack Neal talking in terms of what I suppose one might call a normal lobbying effort to establish a position, to establish a view of things. It was my determination that I didn't see anything we ought to pursue, and so I didn't pass it on.80 76 CovertAction in Chile, 58. " Multinational Hearings, Part I, 102. 78 Multinational Hearings, Part II, 599. " Ibid., 599-600. 8 0 Multinational Hearings, Part I, 436. 100 Vaky told Neal that Kissinger's office had done "'lots of thinking' about the Chile situation and it is a 'real tough one' for the U.S." Vaky later suggested that he humored Neal, and told him that he would pass the message along, but that he never ended up doing so. Vaky's treatment of the offer in many ways reflects the position that Kissinger took with respect to business, and his insistence that private interests be kept out of government policy. This was part of Vaky's responsibility to "sift and assess," in effect "protecting Dr. Kissinger."sl It was just as well, considering that Vaky was most likely aware of Kissinger's feelings about the U.S. private sector. Through the Department, it was known that Kissinger was openly contemptuous of the business community: ...Early in Ki ssinger's tenure, when he became upset with yet another request from Haldeman's office for favorable treatment for a multinational corporation. Haig was peremptorily ordered to go upstairs to Haldeman and warn the chief of staff that if his interference with Kissinger's operations did not end, Kissinger would resign.82 Kissinger'S justification for action in Chile, like the Agency's, was only tangentially concerned with business interests. Despite the protection given him by Vaky, Kissinger would remark in his memoirs: I learned later that some representatives of the CIA had informally advised some American business interests in ate July and August where to channel fu nds during the election. This was not known at the White House or in the State Department; at any rate, it also was too late. My own attitude was that any covert action in Chile should be carried out exclusively by our government; this was not a field for private enterprise. Accordingly, I turned down ITT's offer of $1 million to help influence the election. I may have agreed with the objective, but certainly not the vehicle.83 Regardless of the protection he received fr om Vaky, Kissinger did not see a need to include private interests in matters of State, a policy that was reflected by members of his staff. 1 8 Multinational Hearings, Part I, 436. 82 Seymour Hersh, The Price ofPower, 270. 83 Kissinger, White House Years, 667. 101 Despite repeated badgering by the highest office at ITT, Kissinger felt no allegiance to the company, despite ITT's influence and their common interest in seeing Allende defeated. The company's final communication with Kissinger's office came on October 23, 1971. After the September 1971 Chilean government takeover of Chiltelco, Merriam sent a hastily drafted letter to Kissinger that made a number of recommendations concerning how his office might deal with the problem in Chile. These recommendations included open threats to Allende with respect to the United States' ability to make the Chilean economic situation particularly difficult (in the form of withheld international loans, e.g.), a brazen clarion call on behalf of U.S. private enterprise and an openly hostile demand for proper compensation of their interests, and a demand to increase the number of State Department staff involved and informed of the Chilean situation. There was quite a bit of internal strife surrounding the Merriam letter, particularly from the company's legal department, who viewed the message presented to Kissinger as "naive and unrealistic" and argued that it was "clear enough that D.O.5. will not commit itself in writing to firm policy stances for the sole purpose of satisfying ITT."" The lawyers were particularly concerned with the fact that such recommendations on the part of the company would disqualify the company for the AID guarantees promised it through OPIC. They asserted, "identifying ourselves as being opposed to well-defined State Department policy at a time when it is imperative that we have the full confidence of our opposite numbers in State and at AID's successor seems to me possibly to jeopardize efforts which will be made to collect on the AID guarantee insurance."" Indeed ITT's legal department might have correctly assessed PR man Merriam's hasty and brash finger-pointing and whiny censure. Kissinger responded to 84 Multinational Hearings, Part II,728. 8 S Multinational Hearings, Part I, 37. 102 Merriam in a brief note, thanking him for his thoughts, and indicating that those thoughts ((would be taken into account."M If lIT's position in Washington gave it a powerful but ultimately inconsequential inside man in CIA, the same direct line it had to Kissinger gave the company little more than a pat on the head and a thank you note. Certainly, Merriam's uninformed and gruff censure of the State Department's past and current action contributed to the inability of the company to achieve any sort of cooperation on the part of Kissinger. Even before this gaff, however, Kissinger had turned down the company's offer of assistance, and found no role for the company in matters that, in his opinion, could only concern the government. Even acknowledging that his office was on the same page in terms of intent, the interaction between DOS and lITwas inappropriate and in his eyes, impossible. As was the case with the CIA, lIT's influence and connections were enough to get it a personal meeting with Helms and Kissinger, but its efforts to fo llow up on those meetings in order to affect any change in State Department policy or action were rebuffed time and again by government officials. While lIT's interests in Chile were of note to the United States, the company was shown little favored treatment; its fa te tied to the larger policy goals of the White House. About the same time as Merriam sent his letter to the Kissinger's office, he was also communicating with Peter G. Peterson, who is now perhaps most prominently known as the former chairman of the Blackstone Group, but was then operating in his capacity as Secretary of Commerce in September and October of 1970. Merriam submitted to Peterson an 18-point plan designed to assure that "Allende does not get through the next six 86 Multinational Hearings, Part II, 730. 103 months."" Peterson testified that the plan had been so unmemorable that he had to review it to understand the thrust and nature of the document. Once he had given it a look over, he remarked, "this action plan, if indeed we did receive it, did not affect top policy of the United States administration." He went on, "finally if one reads what actually came out of this policy work on January 19, 1972, there certainly is no relationship that I can see between ,, the recommendations of ITT and the administration's decision. 88 While the IS-point plan was not given much thought by Peterson or the White House in general, it was enough to get Geneen a personal meeting with Peterson and Deputy Assistant to the President for National Security Affairs, Alexander Haig, through John Erlichman, who was then counsel and Assistant ro President Nixon for Domestic Affairs. Geneen understood at this point that the White House's position was unlikely to be changed by his efforts alone. He proceeded to air ITT's grievances to Peterson and Haig, who noted that there was "no mention ...of any action proposals or what specifically he thought we should do about it."" Merriam's correspondence with Peterson and Kissinger is evidence that ITT did not always move as cohesive unir, and even during the short period of the Allende crisis the company revealed its internal divisions and discrepancies. While Merriam was pushing a hard-line agenda backed by censure and frustration, Geneen presented a cooler image of the company to Peterson, Haig, and Kissinger. In meetings and communication with these men, he appeared to be the humble American businessman, the victim of leftist appropriation, who simply wanted to help the government in whatever way was appropriate. If Merriam and Geneen were trying to play "good cop-bad cop" or were simply out of sync when it came to 87 CovertAction in Chile, 60. 88 Multinational Hearings, Part I, 431. " Ibid., 430. 104 company policy, the result was the same. The company received no cooperation from Peterson and Haig, who barely remembered the company's passionate appeals for help. Despite the efforts made by ITT executives, the Commerce Department showed the company even less interest and cooperation then Kissinger and the CIA. The company's influence and access had brought it meetings and hot air, not action and unilateral policy. ITT was frustrated after being turned away from office after office in Washington with nothing to show for its efforts. In a final display of desperation, the company called together an Ad-Hoc committee, which "brought together other large American companies , with Chilean interests in a unified lobbying team. ,90 Records of the meeting indicate that ITT's reception from its fellow private sector members was as cold as that of its government contacts. ITT representatives suggested that the companies apply pressure, where the ,, company by itself had failed, "through the office of Henry Kissinger. 91 Members of the business community expressed reservations about communicating with individuals from other companies through the Ad-Hoc committee. William C. Foster of Ralston Purina, a company with a sizable interest in Chile, mentioned that after attending a few Ad-Hoc committee meetings, he was told by his higher-ups that should not continue, because it ran counter to the friendly stance the company was showing to the Allende government and the U.S. State Department: Mr. Cornel sen pointed out that [purina] had been and was continuing to negotiate in good faith with the Chilean officials and he hoped Chile would recognize its obligations under international law on expropriation and that there should be no criticism of the State Department's reaction to the situation in Chile." 90 Sobel, ITT:Mana gement of Opportunity, 319. 91 Multinational Hearings, Part I, 44. " Ibid., 375. 105 Even Kennecott Copper's Lyle Mercer, whose company was under the knife of expropriation at the time, fe lt that rhe meetings weren't particularly helpful: "From rhe standpoint of my knowledge of Kennecott's problem in Chile, I concluded after a couple meetings that there was no particular value to us for continued participation in these group discussions nor did I feel that I was making a worthwhile contribution to the committee."" He correctly asserted that his problems were "more legal problems having to do with international law and the various agreements and contracts that Kennecott had with Chile"" Whatever common interest members of the corporate communiry had, rhose common interests were not enough to make rhe Ad-Hoc committee anything more than an information session and social gathering. Most companies, aside from ITT, felt that their policies prevented them from putting pressure on rhe U.S. government, as ITT suggested that they do at rhe meetings Mercer told the Subcommittee on Multinationals that he did in no way fo llow up on the "three pressure points in Government"" that ITT suggested, and that he did not have any contact wirh CIA. While the copper companies and orher businesses lobbied in rhe traditional fashion in Washingron, coercion from ITT did not compel them to step outside rheir traditional relationship with the government and initiate pressure on CIA. Additionally, rhe creation of the Ad-Hoc Committee did not augment ITT's clout in Washingron in any way. Like most of ITT's efforts to mobilize rhe government itself, this ancillary channel was little more than a series of informational meetings, during which certain companies were given rhe chance to air their grievances. The company did not gain much as a result of rhese " Ibid., 320. ,. Ibid., 320. " Ibid., 320. 106 meetings, except the knowledge that many other foreign enterprises in Chile, like Kennecott and Purina, tlid not share their views on intervention, and were hoping to make the most of an Allende presidency. Indeed, even as Geneen arranged contact and set up meetings with government officials in the White House, CIA, and Treasury he was unable to get so much as a nibble on the line of action and intervention. He exercised his political clout, using government connections to communicate directly with the highest powers and decision-makers in Washington. Despite the extensive use of personal relationships and political influence, ITT was unable to successfully coerce any arm of the government to adopt an overtly pro-ITT policy, and was lucky if government officials even remembered anything the company representatives had to say. The company's fru strated effort to build a coalition of companies with substantial assets in Chile met with little success. As its Chilean interests were set to go up in the flames of expropriation, it appeared that Geneen and ITT could do little but sit by and watch. 107 Nixon's Surprise According to Kissinger's memoirs, Nixon began taking a personal interest and "personal role" in the Chile situation on September 14, 1970, 10 days after Allende won the popular election. On that day, Augustin Edwards, the publisher of EI Murcurio (the conservative Chilean newspaper that received a substantial amount of CIA fu nding throughout the crisis) had a meeting with Nixon. Edwards was "the principal contact in Chile fo r the CIA as well as fo r the American corporations,""'as the Agency and business leaders used his connections within the country to channel money into the 1964 campaign, a tradition that was continued into the late 1960's and early 1970's.97 Some have suggested that whatever was exchanged between Edwards and Nixon sparked the President into action.98 Noting the bond between Edwards and many of the U.S. corporations in Chile, many have connected the dots, and proposed that Nixon's decided to intervene out of his eagerness to please U.S. private interests in Chile. It is highly unlikely, howeverm that this was the case. While the Nixon Administration and the Republican President himself were generally considered to be "pro-business," an overwhelming amount of evidence indicates that concern for the business community figured little into his decision. The Edwards meeting was not the first time that Nixon had heard of the developing crisis in Chile, did it represent the beginning of covert operations against Allende. Even before the Edwards meeting, on March 25, 1970, the 40 Committee had approved a "spoiling operation" against Allende's Popular Unity Coalition, and in June allocated $300, 000 for anti-Allende propaganda 96 Seymour Hersh, The Pn'ce ofPower, 260. 97 Ibid., 260. 98 Kissinger, White House Years, 673. 108 operations " The President's rationale was rooted in his assessment of the threat a Marxist Chile posed, both as the potential source of a viral Communist contagion in the Western Hemisphere, and as an "appearance" of a shift in the balance of power that would strengthen its Soviet enemy. A day after his meeting with Edwards, on September 15, Nixon met with Helms, Kissinger, and Attorney General Mitchell, and told them that he wanted a majot effort to see what could be done to prevent Allende's succession to power: If there were one chance in ten of getting rid of Allende we should try it; if Helms needed $10 million he would approve it. Aid programs to Chile should be cut; its economy should be squeezed until it 'screamed.' Helms should bypass Korry and report directly to the White House, which would make the final decisions lOo Helms was frustrated with Nixon's sudden decision to act, as he and the Agency had warned the Nixon administration several times that an Allende victory was imminent, and that if action was desired by the White House, it should be decided well in advance of the elections. Helms' first fo rmal alert came in an April 1969 40-committee meeting, and, after having received no response from the White House, the CIA Director reiterated the warning one year later. In Helms' mind, Nixon's bumbling epiphany was consistent both with his history of antagonism and distrust vis-a-vis the CIA and the fact that "no American president in a hundred years had but a slight idea of how clandestine operations are conceived and run." 101Por Helms, the September 15'h meeting was significant for a several reasons. At the Oval Office gathering (comprised of Kissinger, Attorney General John Mitchell, Nixon and Helms) the CIA Director noted that President "instructed us three to keep all knowledge of " Covert Action in Chile, 58. 100 Henry Kissinger, White House Years, 673. 101 Helms, A Look Over My Shouider, 401. 109 this directive from the secretary of state, the secretary of defense, Ambassador Korry, and the CIA chief in Chile." It was the most restrictive security hold-down that Helms could remember since World War II.l02 Helms saw Nixon's demeanor in the meeting and his approach to the Allende crisis as reckless, an opinion consistent with Kissinger's assessment: "Nixon was given to grandiloquent statements on which he did not insist once their implications became clear to him. The fear that unwary visitors would take the President literally was, indeed, one of the 1 reasons why [Chief of Staffj Haldeman controlled access to him so solicitously. 0) Kissinger's and Helms' sentiments were confirmed by other members of the CIA, who were surprised with his actions. In his 1980 autobiography, Cord Meyer, one of Helm's agents, commented on a September 15'" Agency meeting shortly after the president had given his orders: "'We were surprised by what were bring ordered to do, since, much as we fe ared an Allende presidency,' Meyer wrote, 'the idea of a military overthrow had not occurred to us as a fe asible solution.'" The fe eling was pervasive throughout the Agency, and Helms would later comment, "no one present thought there was any reasonable chance to keep Allende fr om the presidency."lO' He was right. The Agency Director would see the failure of the operation as a learning experience. It is fitting that fo r Helms, one of the primary lessons of the Allende crisis was that "an intelligence service should try to avoid being saddled with the ,,,1 cornmand , 'd0 some th·lng, lor" Heaven ' s sak e, d 0 a'!)'/;h mg.' 05 Nixon's orders initiated a covert action plan in Chile to fo ment a military coup, a plan later referred to as Track II. Track I was the CIA's plan to persuade the Chilean 1 02 Ibid., 402. 103 Henry Kissinger, White House Years, 674. 1 04 Helms, A Llok Over My Shoulder, 406. 1 5 0 Ibid., 408. 110 congress to confirm conservative Alessandri as president, after which he would resign, rendering the fo rmer president and U,S,-friendly Frei eligible to run in what the U.S, 1 6 believed would be an easy election for him, 0 Track II, as implemented by CIA, was a plan to provide military officers, who were in favor of a coup, support to overthrow Allende, Track II was intended to have the same effect as Track I, a "new election that was to test in a two-man race whether the Chilean people wanted a democratic President or an avowedly ,, Leninst one, 107 Unfortunately, Track II was badly botched, as a plan to kidnap one of the anti-coup generals ended in his death, Instead of another election, the Chilean people fo und themselves under the heavy hand of General Augusto Pinochet, whose reign of terror left a ,, trail of dead and "disappeared, lo, Some have pointed to Nixon's close association with the business community as rhe primary motivation for the intervention in Chile, It is probable that Nixon was receptive to the complaints of the U.S, private sector, and he had taken an interest in ITT before, Lubna Qureshi points out that ITT was a corporate client of Nixon's law firm before Nixon took office, after which the President "maintained a cordial relationship with the corporation [and) even treated Harold S, Geneen, , ,to a meal on the Sequoia, the presidential yacht," In 1971, Nixon "sided with ITT" ,against antitrust suits brought by Assistant Attorney General Richard McLaren," Qureshi cites the President's comments on the antitrust suits during a conversation with Nixon and Deputy Attorney Richard Kleindienst: "I don't want McLaren to run around prosecuting people, raising hell about conglomerates, stirring up things at this 106 Track I was referred to by some as the "Alessandri Formula" and by others as the "Frei Gambit." 107 Henry Kissinger, White House Years, 677, 108 Ibid" 677, 111 point ...Now you keep him the hell out of that. ,,109 In the same conversation, however, Nixon makes it clear that Geneen had no special place in the heart of the President: "Well, Geneen, hell, he's no contributor. He's nothing to us. I don't care about him. So you can - I've only met him once, twice - uh we've, I'm just, uh - I can't understand what the trouble 110 is.'' Even with a trip on the President's yacht, Geneen didn't solidify the company's standing in Nixon's good graces, or even, in his memory. Nixon would later remark: "I don't 11 care about the lIT. I don't even know what it is."l In light of these comments it is difficult to accept arguments like that of Seymour Hersh, who suggests that Nixon intervened out of anger at "failing his corporate benefactors," Geneen among them ."2 The President was known for being a pro-business Republican, but it is wholly unlikely that this alone is what brought him to act, or even that his association with men like Geneen provided the primary impetus for his decision. If Geneen the access he wanted to the President or any other office of influence in Washington, lIT's continuous efforts to influence the government at every step of the way suggest that he did not put much stock in it. Peddling a million dollar offer at a number of diffe rent prominent Washington offices hardly seems like the behavior of a man who had an ace up his sleeve. It must have taken much more than the business community to push Nixon into action. More likely, it was his Cold War view of the international system, the fo undation of which was Kennan's containment strategy that motivated Nixon's decision. He remarked in 1971 that "The United States, the Soviet Union, Western Europe, Japan, and Communist 109 Lubna Z. Qureshi, Nixon, Kissinger and Allende: U.S. Involvement in the 1973 Coup in Chile (Lanham, MD: Lexington Books, 2009), Kindle Version. Location 1004-7. 11 0 Impeachement Hearings, Book V, Part I, 348. 111 Ibid., 376. 11 2 Hersh, The Price of Power, 270. 112 China ...will determine the economic future and, because economic power will be the key to other kinds of power, the future of the world in other ways in the last third of this century.",13 Later Nixon would say, "I think it will be a safer world and a better world if we have a stronger healthier United States, Europe, Soviet Union, China, Japan, each balancing the other, not playing one against the other, an even balance."" 4 The combination of the two quotes demonstrates Nixon's commitment to Kennan's ideology, in a nod to his concept of the five centers of industrial military power. They also demonstrate the link between economic might and other kinds of power, an ideological bond that ties the economic interests of the United States, with its political interests (a link institutionalized by the OPIC guarantees). His concern for the business communitywas primarily related to this concept, a belief echoed by Kissinger. The two men felt that the Allende regime was an e!ected "socialist State", and a threat to regional stability."5 It was also seen as a potential major blow to the Nixon legacy. Helms put it in more simple terms: "Truman had lost China. ,, Kennedy had lost Cuba. Nixon was not about to lose Chile. "6 Nixon's response to Chile ran directly contrary to his administration's efforts to "eliminate ideology as the chief criterion by which to identify threats." Chile was not a part of this new strategy, and represented an aberration, the product of Nixon's "perceptual lag," his approach a testament to the fact that his motivations were a result of the "outdated ,, 1 reflexes of the Cold War. ' 7 Despite the changing conception of Communist influence throughout the world in the wake of Sino-Soviet antagonism, "Nixon and his administration 11 3 Gaddis, Strategies ofContai nment, 280. 11 4 Ibid., 280. 115 Jeremi Suri, Henry Kissinger and the American Century (Cambridge: The Belknap Press of Harvard University Press, 2007), 238. 116 Helms, A Look Over My Shoulder, 404. 117 Gaddis, Strategies of Containment, 287. 113 looked at Latin American Communist parties as [following] the Soviet lead in foreign policy without significant exceptions,"It8 Radical politics throughout the world constituted a 11 "network of sympathetic organizations and groups that cover the globe," 9 While Nixon was willing to deal with the ideological differences of countries valuable to the balance of power equation, new victories for Communism, like Allende's Chile threatened to humiliate the United States, Nixon suggested, "If when the chips are down, rhe world's most powerful nation, the United States of America, acts like a pitiful, helpless giant, the fo rces of totalitarianism and anarchy will threaten the free nations and institutions rhroughout rhe ,, world, I20 His motivation was directly linked to the perceived strength of the U,S, on the international stage, Like Kissinger, Nixon also fe lt that domino theory applied in Latin America, He remarked in his now famous series of interviews with David Frost: I remember months before [Allende] even came to power in 1970, that when it was rhought he might run again" , an Italian businessman came to call on me in the Oval Office and said 'if Allende should win rhe election in Chile and then you have Castro in Cuba, what you will in effect have in Latin America is a red sandwich, And eventually it will all be red,l21 It was not rhe only time he expressed such a concern, three years earlier in 1970, he stated: If Chile moves as we expect and is able to get away wirh it - our public posture is important here - it gives courage to others who are sitting on the fe nce in Latin America ..,No impression should be permitted in Latin America that they can get away with rhis, that it's safe to go this way, All over rhe world it's too much the fa shion to kick us around. We are not sensitive bur our reactions must be coldly proper. We cannot fail to show our displeasure, We can't put up with "Give Americans hell but pray they don't 118 Ibid" 287, 119 Ibid" 287, 12 0 Ibid., 289, 121 Sir David Frost with Bob Zelnick, Frost/Nixon: Behind the Scenes ofthe N,xon Interviews (New York: Harper Perrenial, 2007), 287-288, 114 go away," There must be times when we should and must react, not because 2 we want to hurt them but to show we can't be kicked around.12 Her in informal language, Nixon echoed what the concept that Kissinger had penned in his memoirs. Throughout his career these were the terms with which Nixon justified and described his intervention. While business interests were certainly a concern for the President, his repeated use of modified concepts of containment to frame the Allende threat in Chile is strong evidence of the true source of his anxiety with respect to Chile and the hemisphere. The President voiced his opinion, both privately and publicly, that he saw Chile as a potential loss that would upset the balance of power, deal a blow to U.S. pride and economic interests, and thereby result in an increasingly red Western Hemisphere and an increasingly confident Soviet enemy. All of this probably paled in comparison to Nixon's fear of the prospect of Chile becoming his administration's Cuba, a devastating blow delt by the Soviet menace to his legacy. These considerations, and the realization that he had neglected the problem long enough for Communism to be at his doorstep, most likely far outweighed any casual plea by a Chilean newspaperman like Edwards. 122 NSC Meeting with Nixon, Kissinger, et aI., November 6, 1970, reprinted in Peter Kornbluh, The Pinochet File: A Declassified Dossier on Atrocity and AccountabzJity (New York: New Press, 2003), 119. 115 Cashing In Off the Record Each effort by Geneen and the company at large to initiate contact and fa shion a common policy with government organizations was met with either limited cooperation or little more than brief acknowledgement. What is recorded in the congressional publications and the memoirs of people like Kjssinger and Helms gives no indication that ITT had the kind of access it needed to manipulate government policy. Rather than an American corporatocracy, the picture painted by the Chilean paradigm suggests a government that maintained relative independence fr om the business community in making policy and implementing a plan of action. Its decision to intervene and the character of that intervention had more to do witll Cold War ideology and fear of the spread of Soviet power. On the surface it appears that ITT successfully lobbied the government, and coerced it into undertaking a plan of covert action that spared the company's interests fr om expropriation. In reality, the CIA, Kissinger, and President were motivated by a desire to preserve the U.S.'s position in the global balance of power by preventing the humiliating victories of new Communist regimes by squashing the spark for the Red spread across Latin America. Business interests were intimately tied to Marxist threat through expropriation (and the resultant U.S. government payout through OPIC) but constituted only a part of the broader rationale for intervention. In the end, it was Communism that won the day for ITT. Despite the impotence of the efforts of his company, Geneen got his regime change, and his money. 116 III. Cracks in the Barrier, Commies in the South 'The inevitable end ofmu ltip le chiefs is that theyfa de and disappearfo r lack ofunity " -Napoleon Bonaparte Weakness and Opportunity In Guatemala and Chile, U.S. multinationals did not enjoy the kind of access and influence that many have either assumed or argued they weilded. In both countries, the Communist rhrear and associated risk to regional stability was reason enough for government action, action supported but not created or substantially altered by the efforts of urco and lIT. Despite the inefficacy of the companies' efforts, their methods and occasional successful inroads give insight into the character and scope of the interaction between U.S. multinationals and the government. Specifically, MNCs and the U.S. government adopted parallel agendas when a shared interest existed (here, hemispheric stability and the conflict with and threat of Communism). Despite their parallel agendas, the two fo rces maintained a distance and level of interaction that was normally limited to information exchange, but was threatened at times by the unique personal connections of public and private sector officials, as well as weaknesses in the operational capability and interdepartmental cooperation of the U.S. government. In both Guatemala and Chile, there were only brief instances of direct cooperation between the U.S. government and U.S. multinationals. While ultimately inconsequential, together produce a common set of characteristics that typify the breakdown of the professional distance and autonomous policymaking common to the relationship throughout the course of both periods of intervention. The first, in Guatemala, occurred before the 117 eventual, full-scale covert Operation PBSUCCESS, and in many ways provided the fo undation for the later operation. Operation PBFORTUNE, as it was called, involved the transportation of arms to hemispheric opponents of the Arbenz regime, and relied on the cooperation of United Fruit, both financially and operationally, as the CIA wanted to maintain a minor role in the operation. The Agency's "minor role" was initially necessitated by the fact thar it was trying to maneuver the process of the operation so that it would take place with the minimal involvement and knowledge of the State Department. The order to maintain departmental autonomy in the planning of PBFORTUNE came directly from the top, as it was Truman who bypassed the State Department at first. The president had a 1952 meeting with Anastasio Somoza, who claimed that he and Castillo Armas could" clean up Guatemala for you in no time."1 Mostly likely, the simplicity of the plan appealed to Truman, and his bypassing the State Department and the Bureau of Inter-American affairs was intended to fa cilitate a quick, easy fix to the Guatemalan problem. Despite Truman's wishes, the CIA did eventually include the State Department. Allen Dulles met with acting Assistant Secretary of State Edward Miller, Thomas Mann, and a few others, but they reached no clear as to CIA involvement in the intervention, and the meeting adjourned without a direct blessing for a CIA clandestine operation. Using the vague conclusion to his advantage, Dulles told Bedell Smith he had the green light. Edward Miller was responsible for shutting down the operation after a few careless inquiries fr om Somoza's party concerning the weapons made him anxious about the operation's secrecy. In the end, the State Department probably helped to avoid a rather haphazard and disorganized 1 Richard Immerman, CIA in Gualemala: The Foreign Policyojlnleroention (Austin: University of Texas Press, 1982),120. 118 operation that involved too many parties and relied on too many unproven actors. In a meeting shortly after with the Nicaraguan Ambassador to discuss plans for organizing a Central American states· backed Arbenz coup, Mann later said: The United States has subscribed to principles in the UN and the OAS which are inconsistent with military adventures of this kinds, and we could find it difficult to fight aggression in Korea and be a party to it in this hemisphere ...Furthetmore, the proposal was as a practical matter, reckless since it would not be possible to maintain secrecy as is illustrated by the fa ct that the Deparrrnentalready had received vague press inquiries concerning the plan.' While the desire to avoid State had dictated the scope of the operation in the beginning, the eventual involvement of the deparrrnent did more to squeeze the Agency's capabilities. As Mann indicated, the Deparrrnent's primary concern with the operation was its inconsistency with publicly stated U.S. foreign policy, and possible conflictit represented for the international alliances on which the U.S. was to rely for its global policies at the U.N., specifically the OAS, or Organization of American States. Indeed, "the appearance that the United States was supporting the invasion of an OAS member state in retaliation for expropriating U.S. property would set U.S. policy back 20 years.'" Once it became clear that the operation could not happen in secrecy, or at least without the obvious involvement of the U.S., it had to be terminated. In addition, the Agency's need fo r a minimal role meant that it could not expend the resources to undertake a fu ll· scale operation. The Agency therefore relied on the company for support, particularly in the early parts of the intervention. The Agency relied on the Fruit Company's supply of boats to transport the , Deparrrnent of State. Foreign Relations 0/the United States, 1952·1954, Guatemala, 28. , Nicholas Cullather, Secret History: The CL4 's ClassifiedAccount 0/the Amencan Coup in Guatemala (Cambridge: Harvard University Press, 1999), 31. 119 "agricultural machinery" to the intended recipients. While in the planning stages of the operation, its In a July 15'h memorandum, it was indicated that the Agency ...could not be of any help in providing either leadership or manpower because we did not have the people available, but we thought we could be helpful in pointing out where the principals might buy the goods they needed We further stated that if time were of the essence, we had friends who had inventory which we could induce them to turn over on the assurance of his clients that it would be repaid in money or in kind when the business became established.' CIA memoranda suggest that the later transition from company support to government support would most likely have a discernable effe ct on operational capability of Castillo Armas, the Agency's asset in the country .' It was noted that the company's support was "relatively limited" in terms of what the CIA could produce for the operation, a deficiency that might have been partially responsible for the Operation's palatable weaknesses to State. In the planning period, the operation's size and scope were limited by the Presidential decision and decree to keep the State Department out of the know, while the department's later involvement further shrunk the operational and financial capabilities of the Agency, gaps which the United Fruit company filled rather imperfectly. Further, the Agency's ability to communicate effectively with the company relied on the personal connection between Thomas Corcoran and Walter Bedell Smith, then the Director of the CIA. Corcoran and Smith were good friends, and their correspondence did not start with the initiation of PBFORTUNE. Corcoran had a major hand in getting Smith a post on the company's board of directors in 1955. Corcoran told the story of this process in 1979: 4 Immerman, CUJ in Guatemala, 121. 5 FRUS, 1952-1954, Guatemala, 22-23. 6 FRUS, 1952-54, Guatemala, 94. 120 Right after he became Undersecretary of State, Beetle told me of his desire to assume the presidency of the United Fruit Company. He told me he always liked to watch those pretty sailing ships on the Atlantic - the Great White Fleet. I took the message to the Fruit Company. I told them: 'You have to have people who can tell you what's going on. He's had a great background with his CIA association.' Their answer was: 'he doesn't know anything about the banana business He'd have to take a subsidiary position.' I told them: 'For Chrissakes, your problem is not bananas, but you've got to handle your political problem." Corcoran noted "the last thing I did for the Fruit Company" was "to get Beetle on board." The manner in which Corcoran pulled for Smith at UFCO, after the latter had become fr ustrated with his new position as Undersecretary, suggests a relationship that was based on loyalty and friendship. Corcoran's contact with Smith throughout PBFORTUNE must have had a hand in facilitating the company's involvement in the operation and its later close contact with the Agency, as it was his presence that jump-started the initial operation. An agency report on October 8'", 1952, provides evidence of this direct contact. On March 12'h, 1952, the memorandum states that the "project" (PBFORTUNE) started when Thomas Corcoran "approached the Dir" (Smith) with another who "asked fo r assistance to Castillo Armas and Cordova Cerna movement.'" Naturally Smith inrlicated his interest. PBFORTUNE represented the closest the company would ever come to meaningful rlifect cooperation with the government, a success only facilitated by a lack of interdepartmental cooperation and a limited operational capability dictated by the DOS's broader policy goals and commitments. The CIA was forced to rely on the company when its operation and intelligence capabilities were limited due at first to the President's desire to keep the operation from the State Department, and later because of the DOS's fo reign 'Thomas G. Corcoran. Interview. Washington, Oct. 6' 1 979, quoted in Stephen Schlesinger and Stephen Kinzer, Bitler Fruit (Cambridge: Harvard University Press, 1999), 93. ' FRUS, 1952-1954, Guatemala, 29. 121 policy obligations and its stated policy of non-intervention. These weaknesses, combined with the close personal relationship between Corcoran and Bedell Smith, served to undermine the professional distance that was normally maintained between the two parties. A similar situation characterized the break in the distant relationship between lIT and the U.S. government in the Allende intervention. The closest interaction between the company and the government occurred shortly before the decision to intervene, during the period Geneen was peddling his million-dollar offer at different federal departments, and the threat of expropriation without compensation was looming larger and larger. As the 40 Committee ramped up its own efforts to stop Allende, funds were approved for anti-Allende fu nctions. In March of 1970 the organization approved $125,000 for a "spoiling operation" against Allende's Popular Uniry coalition, and on June 27 approved $300,000 for additional anti-Allende propaganda actions. On July 16'h,John McCone, lIT's director and ex-director of the CIA, arranged for William Btoe, the CIA clandestine services chief for the CIA, to meet Harold Geneen, where the head of lIT first offered his seven-figure sum ' In mid to late 1970, the State Department, the CIA, and the 40 Committee were all in a holding pattern operationally, as they waited for the outcome of the Chilean presidential election. The U.S. had not defined its objective with respect to a new regime in Chile in plain terms. The CIA had projected scenarios based on different possible election outcomes, but the end result was still in question. Accordingly, the objective had been defined in mid 1970 by the outcome that the United States wished to prevent, rather than the outcome that it favored. A March 23 CIA memorandum indicates that the Agency's program is "limited" and includes a "spoiling operation aimed at Allende." It is noted also "the question of more 9 United States. 94'h Congress. 1" Session. Senate. Select Committee on Intelligence Activities. Covert Action in Chde, 1963-1973: StaffRe port r,:\lIashington: GPO, 1975), 58. 122 extensive involvement, including possible support to a specific candidate was also discussed," but that "no definitive position was taken." 10 Later, in 40 Commjttee minutes, William Broe begins the meeting with a briefing: " ...the joint State/CIA consensus is that the U.S. should not provide direct support to any presidential candidate. Rather, the covert effort should be confined to spoiling operations undertaken against the Popular Unity (UP) electoral front, a coalition of Communists, Socialists and leftists supporting Allende."" This stance was echoed in Broe's conversation with Geneen, as his testimony before the Senate Committee reveals: "I told [Geneen) that we could not absorb the fu nds and serve as a funding channel. I also told him that the U.S. government was not supporting and candidate in the Chilean election."" What is glossed over in the senate hearings however, is the fact that despite Broe's rejection of Geneen's offer, he offered to advise ITT on how to channel money to candidate Jorge Allessandri. ITT would later transfer about $350,000 to the candidate through an intermediary, a dummy corporation called the Lucky Star Shipping U.S. policy during the pre-election phase of Chilean internal politics was anti- Allende, and only coincidentally pro-Alessandri. While Alessandri was certainly the favored candidate, the DOS, CIA, and the 40 Committee had not decided to support the candidate. Even going so far as to agree on involvement was a substantial move towards a consensus in JO CIA, "Approval ofProgram Against Allende," March 27, 1970, Freedom ofInformation Act website, U.S. State Department, www.foia.state.gov. " Frank Chapin, "Memorandum for Dr. Kissinger: Agenda Items for the 40 Committee Meeting, 25 March 1970." The White House, Washington. State Department Collection. FOJA website. 12 United States, 93'd Congress, 1" Session, Senate, Committee on Foreign Relations, Sub Committee on Multinational Corporations, Hearings Before the Subcommittee on Multinational Corporations, MultinationalCorporations and United States Foreign Polity, On the International Telephone and Telegraph Company in Chile, 1970-71 (Washington: GPO, 1975), Part I, 246. 1.1 Robert Sobel, ITT:Mana gement oj Opporluni(y (NewYork: Truman Talley Books, 1982), 310. 123 what was a very divided U.S. government, from department to department. Wirh regard to the Chilean election, the State Department and the 40 Committee did not see eye to eye, rather, "Undersecretary Alexis Johnson indicated rhat rhe Department remained lukewarm to any involvement in the election and informed the 40 committee that the Department would be quite cool to a more positive approach."14 The division between State and the Committee fo reshadowed the fissure between the 40 Committee and rhe CIA, which was most eager to cast off the constraint. As a result of rhis restriction on rheir capability, they most likely believed that the rather trivial suml5 rhat lIT contributed to rhe campaign could not hurt, and would buttress the $350,000 rhat Allende received from Cuba, and the undetermined amount from the Soviet Union.16 1t was also not without precedent, as the business communiry had made contributions to Chilean politicians in the 1964 election, after the CTA turned down an offer similar to that of 1970. The difference in 1970 was that rhe CIA directly specified two channels through which the company might fund the Alessandri campaign, a reliable contact in the country, as well as a direct line to Alessandri's National Party.17 The Agency was fo rced to conduct business in such as manner as a result of U.S. policy, policy that it did get in rhe way of a chance to hedge its bets. It rherefore went behind rhe back of rhe 40 Committee and the State Department in advising lITwhere to channel the funds. As in Guatemala, restrictions 14 Covert Actionin Chile, 43. 15 For reference, the CIA had contributed about $3 million to ensure the election of Eduardo Frei in 1964, so $350,000, while most likely helpful, would not have represented the kind of fu nding that would make rhe kind of impact the government or rhe company wanted on rhe election (even with the "roughly equal" amount passed by other companies, and safely including the $425,000 in anti-Allende 40 Committee fu nds), as evidenced in Covert Action in Chde, 57. 16 Sobel, ITT: Management ojOpporttlnity, 306-307. 17 CovertAc tion in Chile, 21. 124 on the limitation of its operations induced the CIA to look to the private sector, here lIT, to do some of its dirty work. This dirty work could not have been undertaken without John McCone's strong connection to the CIA. On the surface, not much had changed berween the 1964 election and the 1970 election; the list of candidates was largely the same, and the btoad goals of the United States with regard to the election weren't substantially different. So why, aside from the fa ct that its operations were significantly pared down by U.S. policy, did the CIA allow lIT toutilize a CIA-sanctioned direct channel to Allessandri? McCone seems the logical answer. His call to Helms was directly responsible for the Broe-Geneen meeting, which provided the groundwork for the company's election contributions. McCone had been on the other end of the deal in the 1964 elections, and knew of the offer of assistance made by the U.S. businesses then. He also knew that whatever channels the CIA had made use of then, it most likely had access to 4 years later." This in some measure explains why Broe was appointed the contact for lIT, rather than someone like J.c. King. Broe's involvement in the Western Hemisphere operations gave him a knowledge of secure financial channels that a fo rmer DCI like McCone would be able to leverage in his quest for the appropriate deposit for lIT's offer. In Chile, as in Guatemala, breaches in the barrier berween lIT and the U.S. Government were caused by the inability of the various federal departments to fa shion a common policy. This led to the implementation of independent and conflicting policies on the part of the CIA and the State Department. The breaches were also directly related to the restrained operational capability of the CIA as a result of the U.S. policy of non-support for " CovertAction in Chile, 12. 125 specific canclidates, a policy the Agency was able to skirt by providing lIT with a direct funding channel. This channel was made possible and facilitated by the close personal relationship between John McCone and Richard Helms, formed during McCone's CIA days. In both Guatemala and Chile, neither UFCO nor lIT fe atured prominently in the development of policy or plan of action. The government's interdepartmental disagreements, as well as the limited operational capability of the CIA made cracks in the barrier between government and corporation. These cracks were exploited by personal connections between men with strong ties to both entities. This is significant for several reasons. Primarily, it indicates that weakness in the U.S. Government's capabilities and interdepartmental disagreement and inefficiency lead to inapptopriate collaboration with the private sector. It is true that the government's ability to develop a clear cohesive policy to which all departments ascribed was not exemplary. Its role and actions only became problematic, however, when a department (here rhe CIA) set a course that ran contrary to rhe understanding of and track laid out by rhe orher government arms. As a result of the rift created by the policy break, the Agency was forced not only keep its operations secret from outside viewers, but ftom fe llow insiders as well. For a relatively new government agency that was establishing its role in the fe deral structure in the mid 20,h century, this was a tough task. This difficulty led to a policy development process that failed to utilize the assets of the U.S. government to the fullest extent. Adclitonally, and at times related, the Agency's need to keep its policy from other departments led to its use of corporate assets to shore up operational gaps, or apply pressure in areas designated off limits by State or the 40 Committee. When rhey could, business representatives like McCone, Corcoran, and Bedell Smirh used these weaknesses to their advantage, wirh offers of funding and operational assistance. 126 The Red Menace: Invisible Influence If corporate influence on Capitol Hill and in the Oval office had a negligible, direct effect on the U.s. government's course of action in Latin America, it would logically follow that the its autonomous pursuit of policies would undoubtedly have mixed effects on corporate interests in Latin America. This was not the case, however, as in both Guatemala and Chile, both UFCO and ITT eventually witnessed the result they hoped so much to bring about through their substantial lobbying efforts and communication with government officials. The companies achieved such favorable outcomes because both had an invisible ally in the Communist threat. As a wave of nationalism overtook many nations in the Third World, the U.S. government was all too willing to see such nationalism and the changing face of Latin American governments as increasingly sympathetic to the Communist cause. While the fo reign policy of Nixon and Eisenhower administrations differed slightly with respect to Communism, they were increasingly concerned with the threat it posed to American interests, both in Latin America and at home and used the threat as justification for action and intervention in Latin American affairs. Without such a threat, the U.S. government would not have adopted the anti-Allende/Arbenz strategy that it did. Of course, the two administrations had different strains of anti-Communism, and justified their action in different ways. The Eisenhower administration believed that Communists under Soviet control would take over otherwise independent liberation movements: Nationalism is on the march and world Communism is taking advantage of that spirit of nationalism to cause dissention in the free world. Moscow leads many misguided people to believe that they can count on Communist help to achieve and sustain nationalistic ambitions. Actually, what is going on is that the Communists are hoping to take advantage of the confusion resulting fro the destruction of existing relationships and in the difficulties and 127 uncertainties of disrupted trade, security and understandings, to further the aims of world revolution and the Kremlin's domination of all people,19 While the administration was sympathetic to independence movements in principle, it had a difficult time channeling such movements in the direction of anti-communism, Dulles defined the threatof communism broadly, and did not confine it to communism with Soviet blessing: "International communism is on the prowl to capture those nations who leaders feel that newly acquired sovereign rights have to be displayed by flouting other ,, independent nations, That kind of sovereignty is suicidal sovereignty, 2Q Therefore the administration saw Arbenz as a threat, even without significant evidence of influence on the part of the Soviet Union, The administration also had little faith in the strength of independence movements that were of the non-communist variety, This lack of faith, combined with the failure to make the distinction berween the threats of communism generally and the communism of the Soviet variety, led the administration to move against Guatemala, even though the smoking gun of Soviet influence was not readily apparent, In Chile, the motivation for action was different. In theory, the rationale fo r action by the U.S, government in Guatemala (the view of communism as a general threat, rather than an extension of Soviet expansionist influence) had changed with the Nixon-Kissinger administration, Their brand of anti-Communism was defined by the elimination of Communism as a broad ideological threat, and by the identification of the Soviet Union as in itself a threat, because of its predisposition for expansionism and empire, The Nixon administration policy therefore indicated that it was willing to work with Communist 19 Eisenhower diary note, January 6, 1953 reprinted in Gaddis, Strategies of Containment, 176, 0 2 John Lewis Gaddis, Strategies of Containment (New Yark: Oxford University Press, 1982), 181. 128 administrations on a case-by-case basis, but it failed to operate according to this new position in Chile, where Allende's government displayed extremely minor ties to the USSR. For the Nixon administration, Chile represented a situation in which a victory for Marxism, while acceptable from real balance of power standpoint, would represent a change in the status quo that would appear to be a shift in the balance of power." It was the administrations belief in the importance of not only real changes in the balance of power, but also the appearance of shifts in such a balance that led it to intervene in Chile. Because of the lack of real Soviet power in both Guatemala and Chile, scholars have pointed to corporate influence as one of the primary, if not the primary motivating fa ctor for intervention. From the evidence, it is clear that this simply was not true. Though the level of Soviet influence in Guatemala and Chile was relatively small, the ways in which each administration defined the communist threat Cas general enough to intervene in Guatemala, and as potentially representing enough of a perceived shift in the balance of power to warrant intervention in Chile) dictated the manner in which they acted. The government's limited cooperation with the business community, as mediated by ITT and UFCO, combined with both administrations' unique development of anti-Communist foreign policy, suggest that Communist threat, though not always defined in the same manner, led both the Nixon and Eisenhower administrations to undertake a plan of covert action that was associated with a favorable outcome for both U.S. multinationals. 21 Gaddis, Strategies ojContainment, 286-288. 129 In the Black Ultimately, despite their inability to influence the government's policy or operations, ITf and UFCO saw anti-business regimes topple, and the preservation of their interests in Latin America. The multinationals benefited from the U.S. government's concern fo r the threat of Communism and the manipulation of related policy to justify intervention, despite the lack of real power and influence wielded by the Soviets in Guatemala and Chile. Corporations capitalized on the advantage granted them by the Communist threat by exploiting lapses in the government's interdepartmental unity and operational capability, and using unique personal contacts to offer funding and assistance. The benefits that accrued to both ITf and UFCO as a result were such that unilateral action on the part of government and corporation seemed plausible, even probable. The evidence throughout both the Allende and Arbenz years suggests that this was not the case. Further, the short-term benefit each corporation experienced as a result of the regime change was eclipsed by the substantial decline they encountered in their respective host countries afterwards. Just a few weeks after the Arbenz overthrow the Department of Justice initiated action against the Fruit Company for alleged violations of antitrust laws. It was fo rced to pay higher wages to improve relations with its host countries, and divest many of the holdings that gave it a competitive advantage. In 1958, it was stipulated that the company must carve out a competitor that was to be one third of its 1958 size by 1970. The Fruit Company also sold its Guatemala holdings to Standard Fruit and Guatemalan entrepreneurs, and its Meloripe and Banana Selling Corpora ton to private banana jobbing firms, marking the beginning of the end for 130 the great banana empire." lIT's Chiltelco holdings were expropriated in Chile on September 29, 1971, and despite its collection of the OPIC insurance to the tune of approximately $125 million over a 10-year period, much of this was to be reinvested in the country." lIT's compensation was well above what Allende would have paid, but the company's presence in Chile had effectively ended, as subsequent heads of lIT would break up the house that Geneen built. The two companies, United Fruit and lIT had for a moment avoided the inevitable. The U.S. government interventions allowed the companies to teeter on the precipice for but a moment longer, before they plunged into the depths of divestiture and expropriation. 22 Marcel Bucheli and Ian Read, "United Fruit Company Chronology," United Fruit Historical Society, www.unitedfruit.org. " Sobel, ITT: Management ofOp portunity, 334. 131 Conclusion: At Arm's Length ",4 friend in need IS a friend to be avoided" -Lord Samuel Representatives fr om the U.S. Government and the U.S. corporate community can learn much from the Chilean and Guatemalan debacles. The role of U.S. fe ars of Communism in these notorious events, demonstrates the extent to which ideological determinations of foreign policy can result in disaster. It is heartening, however, that in many ways that the two cases of intervention display just how effectively the U.S. Government can operate. Interdepartmental checks and balances were in large measure responsible for the inability of corporations to alter U.S. policy. The U.S. Government continued to navigate its relationship with corporations carefully, for it was - and continues to be - in the best interest of the U.S. multinational to undertake investment in foreign countries under the assumption that it alone will be responsible for its interests. Edward Bernays, early on in the histoty of the Fruit Company, begged those at the helm of the corporation to be more sympathetic to the culrural context and sociopolitical strife of the country and people on whom it depended for its business. Warnings of deep class separation and bitter resentment for the "imperialist" corporations fo und their way to the ears ofITT and UFCO directors on multiple occasions. Yet for all their innovation and courageous enterprising, they made no effort to better integrate themselves into the societies and political environments that made up the base for their Latin American operations. Even in the context of nationalist movements in Latin America, it is likely that the companies would have received better treatment at the hands of Latin American leaders had they fo llowed the practices of their pioneering predecessors. Men like Henry Keith became 132 part of the society from which he profited, rather than exist apart from it. He was, of course, always a foreigner, but his acceptance and care for the culture of the tropics gave him the tools to cooperate successfully, finding both power and profit in integration. Despite the sometimes anational identity of MNCs, they must operate in accordance with and recognition of the power of nationalism and the support for the nation state. Simple separation between the U.S. government and U.S. corporations, as Frank Church suggested,' defines the U.S. government-U.S. multinational bond with brush strokes too broad to provide guidance for the fu ture. Multinationals and the United States are natural allies, and it is no secret that as corporate citizens of the nation, U.S. businesses are aided in many ways by a number of different offices on Capitol Hill. The State Department itself declares that "U.S. Embassy officers are the eyes, ears, and in-country advocates for U.S. business interests throughout the world.'" Despite this alignment of interest, U.S. corporations as well as the U.S. government must act with relative autonomy. The U.S. multinational does not have enough influence through its various channels to take the benevolent intervention of its government as a fo rgone conclusion. Accordingly, it cannot afford to be flat-footed and insensitive overseas, and must take steps to address problems abroad as quickly as it addresses domestic troubles. Additionally, the U.S. government must not seek to make up for its weaknesses by filling in the gaps in its intelligence or operations with corporate mortar. Certainly, the exchange of information is essential to the corporation-government relationship as national allies in a foreign land. As soon as that alliance through inappropriate collusion compromises , Multinational Hearings, Part II, 520-521. 2 "Doing Business in International Markets" (2010). Available fr om: US Department of State Website government must keep at arms length the U.S. multinational, communicating and cooperating to the extent that the multinational's rights as a U.S. corporate citizen allow, but no further. Certainly, it is a difficult line to walk, particularly when strong bonds are fr equently forged between statesmen and businessmen. As Lord Samuel proposed, these friendly relations only become problematic when there is a need on the part of one that might be filled by the other. It was this phenomenon that led to improper collusion in Chile and Guatemala. Today, the relationship between the U.S., its multinationals,and foreign governments is evolving, but many of the same issues and conflicts fa cing ITT and United Fruit persist for firms today. One of the most notable recent examples is in the confrontation between Google Inc. and the People's Republic of China. China's censorship of the internet has been so deliberate, extensive and heavy-handed that people have named it "the gteat firewall of China." Google has always branded itself as a company that stands for ethics and the greater good of the world society. A logical extension of this policy therefore was to stand up against censorship in China, championing the cause of equal access to information for people around the world. In light of the situations in Guatemala and Chile, Google's case is notable. Despite the differences between China and the Latin American nations, several parallels exist. First, the relationship between the company and the U.S. government has made critics uncomfortable, as several Google officials have joined the Obama administration in many capacities. Second, the company has encountered a situation in which its interests are compromised as a result of a nation-state's assertion of the power of its sovereignty (its right 134 to censorship). Third, the United States and Google's interests are aligned, as both want to see censorship lifted in China. There are obviously substantial differences, but the questions stiU remain. How closely is the U.S. government working with Google concerning the lifting of censorship in China? To what extent should the U.S. government adopt pro-Google policies, as the company has expressed its desire fo r the U.S. to treat Internet censorship as a trade barrier that influences decisions on fo reign aid? These are stiU questions that policymakers, titans of business and the American public want to answer. Despite the numerous parallels, the influence ofCommunism and the Communist threat seems almost to be an anachronism in the era of Google. In such a time, when a fe ar of Communism no longer dictates the foreign policy of the U.S. Government, can the support of freedom of speech and access to information provide the new banner under which government and corporation march, hand-in-hand, clearing the dense flora of Chinese censorship to make way fo r the industry of American business? Communism may have died out, but the interests of multinationals and the U.S. government will always find periods of deep alignment. And as always, the conflictbetween multinationals and nationalism and associated expressions of sovereignty still persist. Wh at has changed is how corporations see themselves in an increasingly global world, still facing such 20'" century problems. Though Google has chosen to stand up against censorship, other companies have not followed suit, notably Microsoft. Clay Shirky, an NYU professor who writes on the internet's social effects, suggests that this it is "no accident," "that Microsoft was founded during the cold war while Google was fo und after the cold war." Indeed, "While Microsoft had a mentality in which national sovereignty stiU trumps ethical arguments, Google is trying 135 to balance the rights of sovereignty against its own evolving set of values.'" It is a dangerous phenomenon when abstract concepts like values and Communism dictate the foreign policy of corporations, particularly when those values coincide with popular conceptions of American national identity. 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