The combination of President Árbenz Guzmán’s political toleration of the Guatemalan Party of Labour (PGT) and other leftist politicians, prompted the CIA to prepare the contingency plan Operation PBFORTUNE in 1951, for overthrowing his liberal government, when the CIA could definitively determine that he and his regime were a Communist threat to the Western Hemisphere. The United Fruit Company, a U.S. corporation, was also threatened by the Decree 900 Agrarian Reform of the Árbenz Government. The United Fruit Company was Guatemala's largest landowner, with 85 percent of its lands idle and uncultivated, thus vulnerable to the land-reform laws of Decree 900. In calculating its tax obligations, the UFC had consistently and greatly undervalued the worth of the lands. In its 1952 tax returns, the UFC claimed the land was worth $3.00 per acre. Yet later, when, in accordance with United Fruit Company's tax claims, the Árbenz Government offered to pay the UFC at the misrepresentative $3-per-acre rate, the United Fruit Company claimed that the true value of their land was $75 per acre, but refused to explain the increase of the financial-worth determination of the agricultural land.
In 1952, the Guatemalan Party of Labour was legalized, and Communist politicians subsequently gained considerable minority influence over peasant organizations and labor unions, but not over the governing political party; in an election, the Guatemalan Labour Party (PGT) won only 4 seats in the 58-member senate of Guatemala, the governing body of the country. The CIA, having drafted Operation PBFORTUNE, was concerned about the potential Communist puppet-state ties to the Soviet Union, of President Árbenz Guzmán. The United Fruit Company had been lobbying the CIA to oust reformist governments in the Republic of Guatemala since the time of the Government (1945–51) of President Juan José Arévalo Bermejo; but it was not until the Eisenhower Administration (1953–61) that the CIA received attention from the White House. In 1954, the Eisenhower Administration was flushed with victory, from the 1953 Iranian coup d'état that deposed the Government of PM Mossadegh. On 19 February 1954, the CIA began Operation WASHTUB, the planting of a false Soviet arms-cache in Nicaragua, to publicly demonstrate Guatemalan Government ties to the Soviet Union.
Operation WASHTUB proved unnecessary; in May 1954, surplus Wehrmacht weapons, from Czechoslovakia, secretly arrived to Guatemala, delivered by the Swedish ship Alfhem. The cargo manifest of the ship’s cargo were false, and misrepresented the nature of the cargo it transported to Guatemala. The CIA intelligence analysts interpreted that subterfuge as proof of the Árbenz Government's links to the Soviet Union. In the Guatemalan–Czechoslovak arms deal, for cash money, the Communists supplied obsolete, barely functional German WWII-model weapons to Guatemala. The arms purchase was a response to the US arms embargo; the Árbenz Government resupplied the Guatemalan armed forces, because it was convinced that a U.S.–sponsored paramilitary invasion was imminent. Previously, Guatemala had published White Paper accounts of the CIA’s Operation PBFORTUNE, and of perceived U.S. sabotage actions, at the 1954 Organization of American States convention, in Caracas, presented as the preparations for US intervention to the internal politics of Guatemala. The Eisenhower Administration ordered the CIA to effect Operation PBSUCCESS, the coup d'état to depose the Árbenz Government of Guatemala. Afterwards, President Jacobo Árbenz Guzmán resigned on 27 June 1954, and the installed military government (1954–57) of Colonel Carlos Castillo Armas allowed him, and others, to seek political asylum in the Mexican embassy, en route to leaving Guatemala.
After the 1954 Guatemalan coup d'état, CIA case officer Frank Wisner organised Operation PBHistory, meant to find and secure Árbenz government documents that might prove that the Soviet Union controlled Guatemala; and, in so doing, PBHistory meant to provide usable intelligence regarding other Soviet connections and Communist personnel in Latin America. Wisner sent two teams of document analysts who gathered 150,000 documents with the help of the Guatemalan Army and the junta of Colonel Carlos Castillo Armas, whom the U.S. installed as President of Guatemala. Ronald M. Schneider, an outside researcher who examined the PBHistory documents, reported that the documents did not indicate that the Republic of Guatemala was controlled by the USSR, and found substantial evidence that Guatemalan Communists acted independently, without orders or support from the Communist Party of the Soviet Union, in Moscow. The contacts between the Soviet Union and the Árbenz government consisted of a Soviet diplomat negotiating an exchange of bananas for agricultural machinery; the business deal failed because neither party had refrigerated freight ships with which to transport the perishable fruit. The other evidence of Soviet–Guatemalan contact, found by the CIA after the 1954 Guatemalan coup d'etat were two invoices, for a total of $22.95, to the Guatemalan Party of Labour, from a book shop in Moscow.
Read more about this topic: Jacobo Árbenz