stood down. Perhaps the junta’s most unusual
action, given the Latin American context, was to
abolish the army. Still, by Western standards,
Costa Rican constitutionalism had decided de-
fects. Organised labour was harshly repressed,
reforms would be granted from above rather than
negotiated with workers and peasant organisations
from below. As in most of Latin America, stan-
dards of living in the early 1990s remained tied to
agricultural prices and the cost of manufactured
imports. Despite diversification of the economy,
coffee and bananas were still the backbone of
exports. The problems of the 1970s and 1980s
burdened Costa Rica with a huge foreign debt.
Meanwhile internationally, Costa Rica, which
aided the Sandinistas in the overthrow of the
Somoza dictatorship in neighbouring Nicaragua,
was drawn into the struggle between the Nicara-
guan Marxist regime and the US. It became the
far from enthusiastic host to the Contra bases
along its borders. Its president, Oscar Arias
Sánchez, was a leading proponent of attempts to
mediate peace in the region. The end of the civil
war in Nicaragua and the electoral defeat of the
Marxist regime in 1990 lessened tension and
promised a better future as the presidency
changed hands and Arias Sánchez left office.
Honduras
Honduras, in contrast to Costa Rica, is the poor-
est of Central American states, and its high birth
rate impedes efforts to raise living standards
substantially. The income per head of population
in 2000 was less than $1,000. Look up Honduras
in the index of a Latin American history and the
first subheading is ‘bananas’, yet the miserable
returns from the foreign-dominated banana plan-
tations kept the country poor and underdevel-
oped. Honduras is the most apt example of a
‘banana republic’, practically speaking under US
economic control because Americans own most of
the agricultural sector and much else besides. US
administrations wanted to see progress towards
constitutional democratic government and rising
living standards, especially during the years of the
Kennedy Alliance for Progress, but this would
have necessitated agrarian reform, the raising of
agricultural wages, and the acceptance of some of
the demands made by labour organisations which,
in turn, would have damaged the interests of
American investors. Official Washington had its
own set of priorities. Foremost among them was a
wish to halt the growth of the left. The authori-
tarian military rulers were regarded as safer allies,
as well as providing a better guarantee of security
for investors.
The policies adopted by Washington from
Kennedy to Reagan varied, but ideological and
security concerns in the last resort predominated.
In 1954, a successful strike by the banana workers
against the United Fruit Company ushered in a
period of unexpected change in this most back-
ward of republics. After a period of political
turmoil Villeda Morales became president and
attempted, like Arbenz in Guatemala and
Figueres in Costa Rica, to reform Honduras’s
rigid social structure and to transform society
from above. But when land reforms threatened to
hurt the interests of the United Fruit Company,
Washington forced a retreat. In 1963 a vicious
and bloody military coup overthrew Morales.
Although Honduras gradually returned to civilian
rule in 1981, the army with its American-trained
officers remains, behind the constitutional façade,
the real power in the nation. The economy
cannot free itself from foreign domination, and
progress has been slow, while corruption is rife.
In the conflict with Nicaragua, however, Hon-
duras was the most important ally of the US and
was host to the principal Contra bases.GuatemalaThe problems besetting Guatemala are those of a
nation half of whose population, the 4 million
Mayan Indians, do not share any sense of iden-
tity with the other, white Spanish-American half.
The gross income per head of population in 1987
was only $870. Power resided with the army and
the coffee-growing elite. For a century, from the
mid-nineteenth to the mid-twentieth, four caudil-
los ruled the country. The first hope for the poor
and illiterate majority came in 1944 with a small