814.504/12–1947
The Chargé in Guatemala ( Wells ) to the Secretary of State
No. 2770
Sir: I have the honor to refer to the Embassy’s telegram No. 434 of December 18 concerning my interview with President Arévalo with regard to the proposed modification of certain discriminatory clauses of the Guatemalan Labor Code; and to the Department’s instruction No. 898 of November 28, 1947,33 inviting comments in regard to the contradictions between the Guatemalan position as stated in the Foreign Office memorandum delivered to the Department by the Guatemalan Embassy on September 16, and the statements made by President Arévalo in his conversation with Ambassador Kyle on September 20, 1947.
During our conversation on December 18, the President reaffirmed the position taken in his previous talk with Ambassador Kyle, stating that the discriminatory clauses are being studied by the Executive with a view to presenting proposed modifications to Congress in March. While, admittedly, he did not give categoric assurances that such modifications would be satisfactory in every respect, he definitely conveyed the impression of being determined to eliminate from the Labor Code those features which are the cause of legitimate concern to foreign enterprise. He did reserve his position somewhat, however, by calling attention to the conflicting demands from employers and labor for revision of the Code, implying that neither may be satisfied with the compromise which the Government may have to effect. During our talk, I mentioned the report prepared by the Juridical Division of the Guatemalan Foreign Office, remarking that since this document rejected our contention that certain clauses of the Code are discriminatory in character, my Government would be glad to have his renewed assurances that consideration was now being given to their modification. Although I had hoped he would do so, he offered no direct comment (which could mean he was uninformed regarding this Guatemalan [Page 718] memorandum, or at least unfamiliar with its substance), but permitted me to continue the conversation at that point.
It is not unlikely the position stated by the Ministry for Foreign Affairs represents the thinking of many key officials in the Arévalo administration, particularly in the Ministry of Economy and Labor which is under the direction of Sr. Augusto Charnaud MacDonald, whose record identifies him as extremely pro-labor and hostile to foreign enterprises. Many observers believe Charnaud MacDonald’s extremism will be his undoing; that his days as a Cabinet minister are numbered. The more optimistic think that his resignation will be demanded as a result of the FPL victory in the municipal elections. (Charnaud MacDonald is a leader of PAR). Nevertheless, as long as he remains Minister of Economy and Labor, the United Fruit Company and other American enterprises cannot count upon sympathetic consideration in that Ministry.
It must also be borne in mind that the Labor Code (and the question of labor-employer relations in general) is decidedly a hot political issue in Guatemala today. The extremism of labor leadership and the complacency of the Arévalo Administration were considered by competent observers as an important underlying issue in the recent municipal elections. While the results were regarded as a rebuff to labor radicalism and a mandate for moderation, the triumphant political party, Frente Popular Libertador, naturally received much abuse, however unjustified, for having turned its back on labor. It is not unreasonable to expect that this political party, now in the saddle, will be inclined to appease labor to some degree during the forthcoming months when revision of the Labor Code will be debated as a means of demonstrating that it has not gone “reactionary”. Likewise, it must be borne in mind that President Arévalo’s express policy is one of “protecting labor”. He considers himself the maximum champion of the underprivileged; and takes great pride in boasting that he enjoys the full confidence of the masses, and can manage labor. Therefore, while he appears to have a realistic approach to the problem, an inherent sympathy for the laboring classes may sway him at the crucial moments.
In considering the Labor Code as a whole, as well as the discriminatory features thereof, it is important to note that many provisions are subject to Executive interpretation or discretion; and the actual administration thereof is more significant than purely legal concepts.
Having in mind the political pressures that will be brought to bear pro and con when time comes for Congress to consider proposals for modification of the Labor Code, it is likely that a satisfactory solution will be largely contingent upon the President’s personal intervention. [Page 719] In this connection, Mr. Taillon, Manager of United Fruit, is confident that if the matter were left in the President’s hands there would be no difficulty in obtaining congressional modifications to remove the offensive features, but that certain members of the Cabinet and other sub-officials are working at cross purposes.
Therefore, I feel we will have to rely heavily upon the President and that it would be highly advisable for the Ambassador again to discuss the situation with him in mid-February, especially since the President himself has extended the invitation34 (last paragraph my telegram No. 434).
Respectfully yours,