Guatemala's Forgotten Coup

6/8/2026

During my service trip to Guatemala in April last year, I observed parts of the country riddled with poverty. Houses made of scrap metal and unpaved streets were everywhere as I ventured outside of Guatemala City. Ever since that visit, one question has been on my mind: How did parts of this country become so impoverished? I did some research and believe the answer lies in a historical and extractive business practice. 

Throughout the 20th century, a large portion of the US economy centered around profits from business in Latin America. One of the biggest profiteers is the United Fruit Company, today known as Chiquita Brands International. While the company helped build infrastructure and expand exports throughout Central America, its immense economic influence often allowed it to shape political outcomes in ways that primarily served its own interests. In the earlier part of the 20th century, United Fruit heavily relied on inexpensive, local labor and abusive labor practice. It owned 3.5 million acres of land in the Caribbean and Latin America, which included being the single largest landowner in Guatemala. United Fruit created expansive banana plantations that often held more economic power than the nations in which they operated, giving rise to the term "Banana Republic," which, before researching this topic, I mostly associated with the clothing store. United Fruit reportedly had a habit of bribing government officials and pushing for US government intervention to protect its interests. This led to a lesser known CIA-sponsored coup in Guatemala in 1954. 

A brief history….

From 1931-1944 President Jorge Ubico ruled Guatemala and, like all his predecessors, heavily supported United Fruit. He reportedly did so quite brutally, with heavy handed labor practices that forced marginalized groups to work for large companies like United Fruit. These actions were ignored by the US government so long as US investments in the nation flourished. However, in 1944, a population of middle-class Guatemalans rose up and launched a democracy movement. The movement gained so much traction that Ubico was forced to resign. From 1945-1951, Guatemalan democracy stayed steady. 

Jacob Arbenz Guzman was elected in 1951 and vowed to redistribute land to the peasants. At the time, 2% of landowners owned 72% of land and most of the land wasn’t even in use. This led to Decree 900, a law that ordered the seizing of all land over 600 acres and not in cultivation. To United Fruit’s shock, Arbenz enforced the decree and confiscated a large chunk of the company’s land, only offering $1.2 million in compensation. United Fruit, together with the support of the US state department, wanted $16 million, but Arbenz refused. As a result, the CIA convinced President Eisenhower that Arbenz should be removed, and in the name of national security in the form of a claimed possible Soviet influence in Guatemala, Eisenhower authorized “Operation Success” to stage a coup.

In 1954, the CIA acted. First, they set up a radio station called “Voice of Liberation” to broadcast ideas that created fear and negatively impacted the morale of Guatemalan citizens and the Guatemalan military. Next, they ordered CIA trained rebels led by Carlos Castillo Armas to invade from Honduras, and they supported the rebels through aircraft bombing. The invasion, coupled with military disloyalty planted by the CIA led to Arbenz resigning and fleeing in June of 1954. Castillo replaced Arbenz as leader and he received instant recognition and foreign aid from the US government. Castillo immediately outlawed trade unions and reversed Arbenz’s land reforms, returning 1.5 million acres to United Fruit and the nation’s other large landowners. However, the coup led to a long period of unrest in Guatemala, including almost 40 years of civil war and government oppression.

Today, Chiquita Brands International has largely improved on its predecessor’s exploitative business practices. In 1992, Chiquita became the first company to partner with the Rainforest Alliance and required all of its farms to be certified. They later adapted the Social Accountability International labor standard and established strong relationships with international trade unions. 

While United Fruit may have improved, their impact on Guatemala still remains. Guatemala’s history and current state continuously reminds me of the core themes of Why Nations Fail. Before the democratic revolution in 1944, Guatemala was the victim of an extractive institution: large corporations like United Fruit, backed by the government of a foreign country (the U.S.) influencing local land, labor practices and the economy, and causing the standards of living in Guatemala to suffer. Between 1945 and 1954, democracy was stable, and Arbenz’s policies were empowering more citizens and reducing the power of the small elite class. But due to CIA intervention, Guatemala returned to being subject to extractive policies again under the rule of Castillo, which led to civil unrest and a lack of stability for decades. While other nations grew and thrived in peaceful times in those 40 years, Guatemala did not, leading to the impoverished areas that I witnessed on my service trip.