The Alliance for Progress (Part Two)
Honduran politics had grown dominated by the wildly popular Ramón Villeda Morales since his election in 1957. Implementing generous programs of worker protection, land reform, universal healthcare, and universal education (funded partly with American funds), the traditional landlord ruling class of Honduras grew increasingly incensed with his rule, viewing him as a dangerous populist. Although a liberal, Villeda was a strong opponent of Marxism, and thus could draw on generous American support. With the leftist coup in El Salvador, right-wing elements in the military decided to make their move, calling Villeda a crypto-Marxist. They viewed him as an existential threat - as he had distrusted the military since a failed 1959 coup attempt, and his successor (who was so left-wing as to denounce Villeda) was heading towards a landslide victory in the 1963 elections. The Americans warned of severe repercussions if the military were to overthrow Villeda - with President Kennedy directly warning the military. They disregarded his warnings. In October, 1963, a week before the planned election, military troops stormed the Presidential Palace and launched attacks on members of the Civil Guard (a pro-Villeda paramilitary guard). During an evening and night of killings, they had seized control of the capital.
In Washington DC, President Kennedy was furious. President Kennedy was known for his backpains and the White House Doctor he had brought into him in 1957, Max Jacobson, was known for giving him highly rejuvenating "vitamin shots" in order to relieve his pain and increase his energy. As Kennedy's government centralized more and more power in the Executive Office of the President of the United States, Kennedy had longer and longer working-days, until he was regularly working up to 140 hours per week, micromanaging mostly foreign and military affairs in his bid to roll back Communist power. The primary active ingredient in Kennedy's "vitamin shots" was Methamphetamine. Although President Kennedy made sure to keep up appearances in public, in private, he had become increasingly dependent on "vitamin shots", which led to severe mood swings. In particular, Kennedy became significantly more hawkish when plowing through late-nights with his Vitamin Shots, and the Chairman of the Joint Chiefs of Staff was rather surprised when President Kennedy called him at 3 A.M., immediately telling him "Get ready, we're invading Honduras." When asked why, Kennedy told him that he had warned the coup planners to not try to overthrow the government - and it was the new junta in Honduras who had made the decision to "fuck around and find out."
Under American orders, the Organization of American States demanded that the military restore the constitutional government. American paratroopers soon parachuted over Tegucigalpa. The Honduran military, not expecting the Americans to actually call their bluff, almost immediately collapsed. Villeda, with the Americans whispering into his year, announced that there would be a general amnesty. Soon, almost all except the most hardline elements would give up (the hardliners would flee abroad, primarily to Nicaragua). In the end, 19 Americans and 45 Hondurans would be killed either in brief fighting over several radio stations or in various accidents.
The military part had proved an overwhelming success, but now America had inherited a dangerous situation. Both the radical right and far-left denounced "American imperialism." Elections would be delayed for two months and in what was widely believed now to be an election "influenced" by American "election observers" (who were generally not suspected by the center-left), center-right candidate Ramón Ernesto Cruz Uclés was elected in an surprise upset. Although American foul play was likely involved, Cruz also benefited from the revulsion by many middle-class liberals to the leftist coup in El Salvador. Much to the outright of the radical right, Cruz generally decided to not roll back any of Villeda's programs, and much to the delight of America, he continued Hondura's relations with the USA.
In Guatemala, President Jacobo Arbenz deftly promoted populist policies and had originally sought to stay nonaligned in the burgeoning Cold War, primarily focused on amassing more centralized power for himself. Although he had fancied himself a socialist, he had turned on most of the left after the Americans acquiesced to the seizure of United Fruit Company land - and offered Alliance for Progress funding in exchange. A military crackdown on leftist students sent hundreds of students and professionals fleeing abroad, such as the doctor Ernesto Guevara (who fled to Nicaragua). Abroad, Arbenz tilted closely towards a network of similiarly minded, vaguely-pro-American but pragmatic strongmen, such as Gustavo Rojas Pinilla of Colombia, Juan Peron of Argentina, and Ramón Castro Jijón of Ecuador - though this crew had shrunk after the departures of Jose Mario Lemus Lopez of El Salvador, Manuel Odria of Peru, and Jimenez of Venezuela. They had hoped Rene Barrientos would lead Bolivia into a similar direction, but Bolivia would go into a very different direction.
Finally, the giant of Latin America was very much the odd man out in all of these political developments. Brazil, under the social democrat Joao Goulart, had the closest relations of any Western-aligned state with the Social Camp. Joao Goulart's reform policies (not so different from Villeda's) had made him quite popular - but his willingness to accept aid from both the Western and Eastern bloc soon sparked Western paranoia. In particular, President Kennedy grew to distrust the wily left-leaning Brazilian President. Not for the substance of his domestic policies, but his unwillingness to denounce the Communists in Parliament, a few of which had joined his cabinet. Goulart won a landslide re-election in 1960, much to the distress of the Kennedy administration. Although the Americans were preoccupied in Venezuela, Indonesia, and Oman - once they had extricated themselves from those wars, American eyes soon turned on Brazil. A fellow Catholic, John Kennedy eventually brokered close relations between the United States government and Plinio Corrêa de Oliveira, who would use American funding to found the organization Tradition, Family and Property, which rallied traditionalist Catholics against the left-leaning Goulart. Amusingly, many beneficiaries of Goulart's land reform would join this organization - middle-class peasants often rallied behind religiosity instead of economic reform once they had become small self-sufficient farmers - a profound irony since the original raison d'etre of TFP was to oppose Goulart's land reform.
The Alliance for Progress cut off all funding for Brazil, while the Kennedy Administration steered American businesses away from Brazil. The Brazilian economy almost immediately struggled, as the IMF and the World Bank rejected any kind of bailout or debt negotiation for Brazil. The hope was to drive Brazil into economic decline and set the stage for a violent change in government. However, much to the outrage of Kennedy, one of his allies abroad reneged on their agreements. In 1963, a consortium of international lenders brokered a debt refinancing agreement with the Brazilian government in exchange for a share in Brazil's new state-owned oil corporation, Petrobras. The vast majority of those companies were Italian, with the influence of Prime Minister Enrico Mattei all over the project. The Ente Nazionale Idrocarburi took a significant share of Brazil's Petrobras. When an outraged Kennedy called him and demanded why he broke their previous agreement to align foreign and financial policies - Mattei simply stated that the oil crisis of 1963 meant that every country was for itself. Arthur Schlesinger, who was listening to the call, would write later that "President Kennedy made the same great mistake that every epochal ruler, from Kaiser Wilhelm to Hitler to Tito had made - he trusted the Italians." The Brazilian economy pulled back from the brink - and plans for a coup were thus scrapped.