How the US made Chile's Economy scream?

[RadioRaheem84]

Does anyone have any info on how the US made Chile's economy scream? An article I read not too long ago cited four "Marxist" scholars that believed that Allende's downfall was due to his own incompetence and supreme violations of the Chilean Constitution. Of course the Church Committee report cited numerous contacts with the CIA and the business community and their manipulation of the media by printing misleading articles in the press via El Mercurio.

Supposedly economic aid was cut, Nixon halted IMF and World Bank loans, and promoted a scorched earth policy for the Chilean business community to execute.

Does anyone have anything else? Any links to good sources? Books?

[Red Commissar]

I don't have a source, but if I'm not mistaken one of the vital points of Chile's economy was its copper industry. Copper export prices had fallen, and this was bad for Chile as it depended on copper for half its income and to use for importing food.

The question is whether the US had motivated that economic trend. The Nixon administration was very much against Allende, unsurprisingly, and it's no secret that American-Chilean relations were very cold then. The US had even weighed the possibility of a coup in 1970 in the event of Allende's victory (Project FULBELT).

We do know that the US significantly reduced its trade with Chile and cut its credit, and manipulated dissent from within. But did the US manipulate copper prices?

Most of that information would lie with the CIA, and much of those documents are still classified.

An important note is to remember that Chile had happened as Operation Condor began to take place across South America and institute dictatorships, which were American backed.

Take a look at these two declassified documents which discussed potential problems for Allende's government and how the US should respond in dealing with Allende's Marxist nature.

http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB8/ch24-01.htm (http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB8/ch24-01.htm)

And the plan the US adopted in dealing with Chile.

http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB8/ch09-01.htm (http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB8/ch09-01.htm)

Some highlights,


The president has decided that (1) the public posture of the United States will be correct but cool, to avoid giving the Allende government a basis on which to rally domestic and international support for consolidation of the regime, but that (2) the United States will seek to maximize pressures on the Allende government to prevent its consolidation and limit its ability to implement policies contrary to U.S. and hemisphere interests. And parts C and D of the document,


C.
bring maximum feasible influence to bear international financial institutions to limit credit or other financing assistance to Chile (in this connection, efforts should be made to coordinate with and gain maximum support for this policy from other friendly nations, particularly those in Latin America, with the objective of lessening unilateral US exposure): and

D.
assure that U.S. private business interests having investments or operations in Chile are made aware of the concern which the US Government views the Government of Chile and the restrictive nature of the policies which the US government intends to follow.

--No new bilateral economic aid commitments be undertaken with the Government of Chile...

The President has directed that the Director of the Office of Emergency Preparedness prepare a study which sets forth the implications of possible developments in world copper markets, stockpile disposal actions, and other factors as they may affect the marketing of Chilean copper and our relationships with Chile

From that it's obvious that the US had planned to engineer a bad economic climate to create dissent and ultimately provide the conditions for the military coup. Documents from when they were actually putting this into play, however, is harder to find.

We do have this bit from Kissenger from a transcript between him and Nixon though.
http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB123/Box%2022,%20File%203,%20Telcon,%209-16-73%2011,50%20Mr.%20Kissinger-The%20Pres%202.pdf (http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB123/Box%2022,%20File%203,%20Telcon,%209-16-73%2011,50%20Mr.%20Kissinger-The%20Pres%202.pdf)

P: Well we didn't - as you know - our hand doesn't show on this one though.
K: We didn't do it. I mean we helped them. ____ created the conditions as great as possible (??)

There is a bit censored out there.

And this bit here where the US jumped very quickly to support the junta

http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB212/19730913%20Attitude%20toward%20Junta.pdf (http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB212/19730913%20Attitude%20toward%20Junta.pdf)

The stance that the military had been preventing a constitutional crisis merely acts as an apologist stance to vindicate Pinochet's dictatorship.

I got most of the documents from here, if you want to read other ones,

http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB8/nsaebb8.htm (http://www.gwu.edu/%7Ensarchiv/NSAEBB/NSAEBB8/nsaebb8.htm)

A good book about this is "The Pinochet File" by Peter Kornbluh, which analyzes declassified documents which implicates US interest and involvement in the events leading up to the coup.

[leninwasarightwingnutcase]

I'm certain there is massive evidence that the US was responsible for the overwhelming majority of the economic dislocations under Allende - which were much less severe than those under the following regime. I don't have time to do a lot of research. However I have some quotes by US government officials to hand:

Edward Korry, the US ambassador to Chile said the following:
“not a nut or bolt will be allowed to reach Chile under Allende. Once Allende comes to power we shall do all within our power to condemn Chile and the Chileans to utmost deprivation and poverty, a policy designed for a long time to come to accelerate the hard features of a Communist society in Chile”. (Quoted, Chomsky, Year 501 - The Conquest Continues, South End Press, 1993, p.36)

CIA director William Colby described the campaign as a “prototype laboratory experiment to test the techniques of heavy financial investment in an effort to discredit and bring down a government”. (Quoted, Mark Curtis, The Ambiguities of Power, Zed Books, 1995, p.129)

As for US manipulation of the Chilean media, historian (and former CIA man who had an attack of conscience) William Blum has the following to say:
“The propaganda campaign was enormous. During the first week of intensive propaganda activity, a CIA-funded propaganda group produced twenty radio spots per day in Santiago and on 44 provincial stations; twelve-minute news broadcasts five times daily on three Santiago stations and 24 provisional outlets, and much paid press advertising. By the end of June, the group produced 24 daily newscasts in Santiago and the provinces, 26 weekly ‘commentary’ programs, and distributed 3,000 posters daily.” (Quoted, William Blum, Killing Hope, Common Courage Press, 1995, p.207)

It is extremely depressing when 'marxists' take the US propaganda line in order to discredit leftists of slightly different stripes. I hope this helps.

[Red Commissar]

I agree with how some were quick to jump on Allende due to his perceived reformist attitude. There is a comment somewhere in the reports I posted where they say something along those lines, where Allende would have problems from which left-wing elements would support him.

However the question I believe is how exactly the US went about doing this. It says that they will go about manipulating the copper prices and the economy, but there is nothing I can find that shows exactly how they did that and a report when it was in action (those can still be classified, however). There is a small note scrawling by a Nixon aide which basically says "make the economy scream". http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB8/ch26-01.htm (second to last line)

I think it is without a doubt the US had obvious interest and action in Chile. Most of the documents I linked to up there clearly show they were concerned about the presence of a socialist government in Chile.

[Guerrilla22]

Pinochet impelemented numerous neoliberal reformsafter taking over. He brought in a group of Chilean economists that had graduated from the University of Chicago (nicknamed the chicago boys) to make economic policies and decisions. Of course after intial success the economy started tanking and he was forced to get rid of them.