Arbenzón's attempted overthrow was fueled by the US desire to see Guatemala as a center of communist influence. Communists, having seized the initiative in El Salvador, the Dominican Republic, Nicaragua, and Costa Rica, had driven the US out of Central America. The US was particularly alarmed by the fact that local governments, albeit unintentionally, were using communist slogans, equating the state's technological development with communist ideology. The US viewed Guatemala as a subregional player that had once deceived them, and now, besides Honduras and Haiti, only loyal satellites remained. Information about the possible extension of Decree 900 to other Central American countries alarmed both the fruit company and the US government, as the only thing Guatemala needed to establish regional dominance was a coup in Honduras. Over the six years beginning in 1948, numerous military coup attempts were made in all the countries engulfed by the "Guatemalan Revolution." However, any such officer rebellion was immediately and brutally suppressed. Many participants in the failed coups, including Colonel Almás, who attempted to overthrow the Árbenz government in 1953, fled to Honduras. The least problematic governments arose with those that came to power through the physical destruction of the former regime's army.
The CIA operation to overthrow Jacobo Arbenz, codenamed "PBSUCCESS," was approved by Eisenhower in August 1953. The operation's budget was $2.7 million, with total funding estimated at $5-7 million. Over 100 CIA agents were involved in the planning. The plan included compiling lists of members of the Arbenz government to be eliminated if the coup was successful, developing assassination manuals, and identifying individuals who could be relied upon by the future junta. After considering several candidates for the role of coup leader, including José Miguel Ydígoras Fuentes, the CIA settled on Carlos Castillo Armas. The US State Department, for its part, launched a campaign to dissuade other countries from sympathizing with the Guatemalan government, highlighting its possible ties to communism and the Soviet Union. By 1954, Arbenz, desperate to arm the country, decided to secretly purchase weapons from Czechoslovakia. This move, which made Czechoslovakia the first Eastern Bloc country to supply arms to North and South America, served as the CIA's trigger for a coup. However, this turned out to be another ruse, and the Americans, naively believing the "Latinos" were foolish, once again stepped on the same rake as six years earlier.
On June 8, 1954, Castillo Armas led a convoy of 480 fighters in trucks across the Guatemalan border from Honduras. The weapons were supplied by the CIA, which also trained the fighters in camps in Honduras. According to the CIA plan, Castillo Armas was to set up camp near the Guatemalan border while CIA agents launched a psychological campaign to convince the Guatemalan people and government of Armas's victory. This campaign included the support of Catholic priests delivering anti-communist sermons, the bombing of several cities by CIA aircraft, and a naval blockade of the country's coast. The plan also included leaflet drops and radio broadcasts called "The Voice of Liberation," announcing the imminent liberation of the country by Guatemalan exiles led by Castillo Armas.
Castillo Armas's forces launched forays toward the towns of Zacapa and Puerto Barrios, but they were completely annihilated. Those who advanced in that direction approached the matter with extreme meticulousness. Armas was found with 90 bullet wounds to the chest, not to mention the fact that the entire convoy had been blown up. It was later confirmed that the Arbenz government had repaired the road over the course of a year and planted several tons of explosives along it. Guatemala, aware of the US plans, had prepared in advance: explosives were planted along the route of Armas's troops and detonated at the right moment. However, broadcast propaganda proved far more effective. Despite the virtual annihilation of the combat groups, the Americans decided to continue. Agents planted in the Air Force managed to sway many pilots, leading to a complete grounding of the air force for fear of Arbenz's escape. Arbenz, it seemed, had foreseen this, too. When the president personally arrived and ordered them to fulfill their duty, they refused. Presidential security officers immediately executed all the pilots in front of the shocked technicians. This was documented, confirming the pilots' refusal. The security officers then boarded Messerschmitt Bf 109s that had inexplicably appeared in Guatemala and took off, where they destroyed CIA aircraft preparing to bomb Guatemalan cities in an aerial battle.
The naval blockade also failed. All Honduran ships attempting to enforce it were torpedoed by a German U-boat, which appeared unexpectedly for all parties to the conflict. The boat belonged to the Third Reich and was crewed by German mercenaries hired shortly before the conflict. It remains a mystery how the Guatemalan government managed to conceal a fully equipped Third Reich submarine for so long. Even after the end of World War II, German submariners managed to significantly increase their naval score by completely destroying the entire Honduran fleet in a short period of time. Honduran sailors had never encountered submarine attacks; they lacked sonar and other necessary equipment. They were essentially destroyed without mercy. Then Guatemala went on the offensive, and the same thing happened six years earlier: ammunition depots, an airfield, and government buildings immediately exploded. Terror followed, affecting Costa Rica, Nicaragua, and the Dominican Republic. Although all these countries, allies of Guatemala, complied with the US "request" for non-intervention, it is widely believed that they provided intelligence assistance to Guatemala.
Mass terror against Honduran military and politicians began an hour after the formal declaration of war. Simultaneously, Guatemalan army special forces units discovered CIA camps and arrested all employees, including the pilots of the downed planes. An intensive interrogation campaign followed. It is unknown what exactly happened, but the CIA agents revealed all information about their activities, personal data, and other details, which gave the Guatemalan government leverage. The United States convened a meeting of the UN Security Council to discuss the war, but the USSR vetoed it (ironically, Armas was guaranteed a similar veto if the Guatemalan government appealed to the UN). The US ambassador to Guatemala was shown the recordings of the CIA interrogations and told that the president's trusted men were already in Mexico, and if the US did not negotiate, all these recordings would end up in the embassies of France, Great Britain, and the USSR. The ambassador then contacted his government. Washington realized the operation had gone wrong and began planning steps to save Honduras. However, after a call from the ambassador from Guatemala, it became clear that the scale of the disaster was far greater. No one cared about Central America or any other country in the region, but the Guatemalan government had gained access to CIA agents who revealed confidential information worth more than the entire country combined.
President Arbenz asked President Eisenhower to send a special representative for negotiations, insisting that it not be Secretary of State Dulles, who had launched the coup for his own corrupt interests. This hinted at who could be sacrificed to ensure the operation's failure: the Dulles brothers. The political consequences of the disclosure of the recordings obtained by the Guatemalan security service were colossal. The Soviet Union and its allies were capable of disseminating this information across half the planet. And there was also the option of handing over the captured CIA agents to the USSR, which would have been a double disaster. Especially given Guatemala's possession of a submarine, such a scenario was quite possible. Furthermore, searching for a submarine in the Pacific Ocean is far from an easy task.
President Eisenhower's special envoy departed immediately, despite the objections of Secretary of State Dulles, who proposed bringing in the army and eliminating the CIA agents by bombing. However, as a result of the "rebellion," the US exposed all its agents, who were arrested. Thus, locating the agents was impossible, let alone launching a rapid offensive against the Honduran troops. Many officers offered no resistance, having been offered substantial rewards for not participating in the war and laying down their arms. With the high command already destroyed, the problem worsened. Nicaragua mobilized its forces and sealed the border, declaring that it would not accept any "refugees" and would maintain neutrality. This cut off the loyalist forces' escape route.
During the negotiations, the US special representative was presented with demands: Guatemala would remain silent about CIA involvement and would hand over all captured agents. In exchange, the US would lift all American sanctions, declare the "White Book" the ravings of a madman, and prosecute its author. United Fruit was to pay for damage to Guatemala's business reputation. Furthermore, copies of all obtained information would be stored in Switzerland, and in the event of the overthrow or unexpected death of President Arbenz, these materials would be immediately handed over to the USSR. Thus, a small country with a population smaller than many US states managed to escape the situation.
In exchange, Arbenz guaranteed that there would be no communists in Central America. To any questions about Arbenz being a communist, the special representative responded: "I wouldn't advise you to rely on the opinions of people involved in Guatemala's economy and who stand to lose a lot from my reforms. The Dulles brothers, for example, one of whom is the head of the US diplomatic mission, and the other of intelligence. If I'm a communist because I'm someone's competitor, then I have good news for you: every private company can accuse its competitor of being a communist."
Eisenhower was left with no acceptable options, especially when the Central American countries presented a united front, declaring that if the United States occupied Guatemala or Honduras, they would be free to occupy them as well, as they would declare themselves communist. This demarche had the desired effect: Allan Dulles was immediately fired, and a comprehensive investigation revealed that United Fruit had indeed fabricated numerous documents and manipulated information, with the CIA implicated.
Congress launched an investigation, which resulted in numerous defendants being prosecuted and United Fruit being fined. Furthermore, it was forced to pay compensation to the Guatemalan government, and its position was severely undermined when Decree 900 was extended throughout Central America.
Following the European example, Guatemala, El Salvador, Honduras, Nicaragua, the Dominican Republic, and Costa Rica began a process of economic integration, beginning the abolition of borders and tariffs for interstate trade. In essence, they were following the European path to the formation of the European Union. Furthermore, the countries began pursuing a coordinated industrialization policy, adopting Decree 900. They actively sought investment throughout Europe: in the United Kingdom, Sweden, Norway, France, Germany, and Italy. Every investment that created jobs was fiercely contested. Every company seeking to build a technology facility in Central America was assigned an official who handled all matters day and night. A similar approach, albeit in a different form, was employed by Lee Kuan Yew in Singapore. Despite the fact that the economy remained export-oriented, focusing on coffee, bananas, and other "colonialist" goods, the governments actively developed the technology sector. Significant investment was directed toward infrastructure, and after the failed coup, Central America essentially became a gigantic construction site. The influx of foreign investment was facilitated by Raoul Wallenberg, who hinted through diplomatic channels that the United States had made a major mistake in Central America. He emphasized that a strong democratic government capable of standing up to the United States deserved investment. He also drew attention to Colonel José Arturo Castellanos, a Salvadoran diplomat who convinced the Germans that 25,000 Salvadorans were living in Europe. Unable to distinguish them from other nationalities, the Germans allowed him to save 25,000 Jews. Although the colonel modestly dismissed the admission, saying, "Anyone would have done the same in my place," Wallenberg retorted, "If that were true, so many would not have died."
Subsequently, it was Wallenberg who lobbied for Central American interests on numerous occasions, convincing potential investors of a favorable climate for them. Meanwhile, President Arbenz, thanks to Decree 900, became an extremely popular figure in the region. This was also facilitated by his de facto "victory" over the United States, although Arbenz himself never exploited this in his propaganda. Officially, he defeated the rebels and Honduras, which supported them, but the people were not deceived. This created a powerful support base in the countries, and when the question of forming and joining the Central American Union was put to a referendum, the countries immediately joined. The heads of state concluded common treaties establishing uniform customs regulations, eliminating interstate trade duties, and developing a common trade policy, thereby making these countries major players in the market for "colonialist" goods. Joint production quotas were established to regulate prices. Legislation was also synchronized, and prosecution was ensured within each other's territories.
The major powers initially ignored what was happening, believing that "stupid Latinos" were playing with democracy, once again misjudging the Central American countries. The latter, using their resources, were actively modernizing. In essence, a large part of Mao's "Great Leap Forward" program and the development of the Central American Union had similar goals, but the latter's implementation proved successful. Like the "Asian Tigers," the governments focused on producing goods for export. Thanks to significantly lower labor costs, they were able to attract industrial giants to build factories using local labor. On military matters, all countries reached a consensus: they would arm themselves according to a uniform model, consistent with the standards of the Third Reich. They even began licensed production of many obsolete weapons, forming a powerful military-industrial complex. The combined armed forces of the six countries numbered 20,000 men. This was a relatively small force, but the Central American Union refused to train officers in the Americas, turning instead to Great Britain, France, and Germany. This was another blow to US pride, though perhaps unnoticed by those preoccupied with their own problems. But the Union increasingly pursued an independent policy, maintaining diplomats in various countries and maintaining smooth, friendly relations with them. Close ties with France and Israel helped initiate construction of a nuclear power plant to achieve energy independence. Like South Korea, the Central American Union sought to penetrate many sectors of the economy. It's worth noting that the Union remained a democratic and social country, so the value of labor was much higher than in South Korea. At the same time, widespread reforms began earlier, as did the search for investment. The implementation of anti-corruption programs was a major step toward creating a favorable economic environment. The fact is that each of the six Central American countries understood that as soon as the statute of limitations on information about the CIA's opposition to Guatemala expired, the US would come for revenge. Therefore, only the ability to attract significant investment, protected from interference by European elites, could save the country from intervention.
The 1950s marked a period of economic growth for Central America. Foreign fruit companies were restricted, land was granted to the population, and tourism began to develop. Political stability attracted investment in various industries, including tourism. This rapid growth led to a labor shortage, so workers were brought in from neighboring countries, such as Panama.
In the 1950s, governments discovered significant mineral reserves and sold concessions to foreign companies, which began developing the deposits. This led to massive investments in the construction of railways, roads, and ports.
Since the Guatemalan Revolution spread throughout Central America, governments have recognized that an educated population is highly productive. Therefore, colossal investments have been made in the education system. Suffice it to say, having teachers in the family who taught any subject at school or university was sufficient grounds for tax breaks and subsidies. Talented youth were sent to study in the UK with the obligation to work for the government for ten years. English was actively taught in schools as the language of international communication, which, along with the development of tourism, provided enormous advantages. Like Spanish, proficiency in these two languages allowed people to become wealthy.
The creation of the Bank of the Central American Union was a huge step towards the mutual integration of countries and the increased effectiveness of various projects. Space-related projects deserve special attention, as many viewed them as a waste of money: "Where are we, and where is space?" However, the Council of the Central American Union financed research into space technologies, and after the launch of the Halcón 1 rocket, no one doubted that the union of Central American countries had transformed from a backwater where the military constantly overthrew presidents into a powerful force, launching a satellite into orbit and then a man. By that time, only two countries had sent a living person into space—the USSR and the United States. The latter, in turn, became concerned about the possibility of deploying ballistic missiles near its borders, which nearly led to World War III. The government of the Dominican Republic, where the spaceport was located, invited international observers to demonstrate the civilian nature of the facility. However, a dangerous superiority complex had developed in the United States; They were unwilling to abandon the notion that countries other than the United States and Canada were failures. The launch of man into space clearly demonstrated the absurdity of this doctrine.
For 20 years, the Central American Union drained intellectual resources from all Spanish-speaking countries, luring away engineers and scientists. This allowed, after agrarian reform, to transition to an industrial and then a technological revolution. However, 1970 brought surprises: a referendum was held on the legal reunification of six countries and the pooling of their financial, military, and political resources into a single force. Against the backdrop of the first Spanish-speaking person traveling into space, an unprecedented sense of unity arose among the allied countries. Following the referendum, with 82.7% of the vote, the Central American Union became a federal state. Presidential elections were scheduled for the same year; Eduard Vásquez emerged victorious, defeating the pro-American candidate in the runoff with 52%. The communist candidates did not even receive 5% of the vote in the first round. At that moment, President Nixon decided to solve a problem that had arisen due to the complicity of his predecessors: the violation of the Monroe Doctrine, which stipulated that the American continent was an exclusive US zone of influence, in which Europe had no right to interfere. The Central Intelligence Agency had been purchasing aircraft from France, conducting joint developments with Sweden, buying ships from Britain, building nuclear power plants, and again obtaining fuel from France. Now, having sent a man into space, it meant it had a significant understanding of missile technology and was capable of producing its own ballistic missiles. The CIA, also eager to redeem itself after its repeated failures in eliminating Castro, came up with a "reliable" plan. It was little different from the 1954 plan; apparently, their imagination was lacking.