Commentary Magazine


Why Allende Fell

Americans, it is said, will do anything for Latin America but read about it. And until recently, Chile was no exception to this rule. Certainly publishers thought so: between 1938 and 1970 fewer than a dozen books in English were published on that country for the general reader, and except for a few anxious Anaconda corporation wives, it is difficult to imagine anyone reading them. Today the problem is just the reverse—namely, how to see the country at all, now that our view is obstructed by a fast-growing thicket of books and hortatory pamphlets.

This is all the more remarkable since Chile is a small and really not very interesting place. It is not “colorful” in the way that North Americans or sun-starved Northern Europeans imagine South America to be. Chileans lack the literature, music, and style of the Brazilians, the abundant cuisine and ideological exotica of the Argentines, the good weather and historic architecture of the Mexicans, and they lack above all that highly developed sense of the ridiculous which is one of the most endearing qualities of Latin Americans generally.

Then why the sudden outpouring of interest? The answer, of course, is that “Chile” is no longer just a place on the map, but a state of mind—a code-word for an entire cluster of issues relating to the problem of social change in underdeveloped countries, and the relationship between primary-producing nations and the capitalist world, particularly the United States. Chile itself probably remains as intrinsically uninteresting as ever to Americans, even to left-wing Americans, but the Chilean drama is understood to be, at least in symbolic terms, uniquely central to our times. In fact, it has become a kind of political passion play whose script even the mundane know by heart.

Let me try to summarize the argument of the drama, very much a grosso modo, as it appears in nearly all the recently published books on Chile. In 1970 a popularly-elected Marxist physician, Dr. Salvador Allende, was inaugurated as President of Chile. Allende had been chosen on a platform committed both to nationalization of his country’s mineral resources (largely in the hands of American corporations), and a redress of social grievances within Chilean society. Operating scrupulously within the framework of democratic politics, Allende made an excellent start, but quickly encountered serious difficulties. These were due largely to an international conspiracy led by the United States, first to strangle the government economically through an “invisible blockade,” and then, when that appeared to be failing, to encourage and perhaps even order the Chilean army to destroy not only Allende’s government but the entire fabric of Chilean democracy. There are plenty of shreds and pieces of evidence to support this view, and new (and embarrassingly larger) fragments are being uncovered every day. The evidence does not do credit to the United States, whatever final responsibility is established. Those who are interested merely in scoring points against capitalism or this country’s foreign policy may do so, and move on to other, pressing issues elsewhere. But those seriously interested in Chile, and also in the problems of analysis posed by its tragedy should stay a bit longer, it seems to me, and read more critically into the materials offered for our consideration.

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II

All revolutionary regimes seem inevitable in power and impossible in defeat—that, after all, is what used to be called the Whig interpretation of history, and we have scarcely emancipated ourselves from it whatever ideologies we currently profess. The Allende regime had a short life, yet it generated a score of books in every modern language recounting its origins in terms of an irreversible dialectic of Chilean history.1 Now, it is certainly true, as former American Ambassador Edward Korry has recently said, that “the Communist party of Chile was the largest, best-led, influential, seemingly, Communist party in the hemisphere,”2 and that many of the themes of Allende’s presidential campaign had been adumbrated for years before his actual assumption of power. But, as H. E. Bicheno suggests, a fascist Chile in 1973 was at least as logical a historical outcome as a Marxist dispensation, to judge not only from the country’s social structure, but the number of groups and movements which have existed under the fascist rubric over the past fifty years.3 The right-wing ultras of Patria y Libertad were no invention of the Central Intelligence Agency; Bicheno shows that they had dozens, perhaps scores, of Chilean precursors. Thus if Chile was a South American country with a well-established tradition of democracy—as Chilean publicists were wont to boast—it was a democracy which had long displayed pathological symptoms.

Nor can it be repeated often enough that Jorge Alessandri Rodriguez, the candidate of the establishment Right, obtained only one and four-tenths of a percentage point fewer votes than the victorious Allende! It is true that Christian Democrat Radomiro Tomic, campaigning on a platform hardly less “revolutionary” than Allende’s, obtained the remaining 28 per cent of the vote; at the time this encouraged many sympathetic observers to suggest that when combined with Allende’s 36 per cent, this “proved” that a substantial majority of Chileans had voted for radical change. But subsequent developments suggest rather that the Christian Democratic constituency was deeply divided between Centrists with right-wing inclinations and Centrists who favored “an opening to the Left.” Thus, Chile in 1970 should be seen as a society ripe not so much for revolution as for civil war. Allende’s social policies simply succeeded in splitting this “floating middle” in two, and converting the potential for polarization into a chilling and lethal reality.

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Finally, few recent commentators have devoted sufficient attention to the complex (and even contradictory) nature of Allende’s governing coalition. This is particularly unfortunate, for few factors tell us more about the causes of his historic failure. Allende was elected with the votes of Socialists, Communists, and left-wing schismatics from Christian Democracy—all united by a common program but sharply divided by divergent philosophies of power. The Communist party had long participated in the banalities of the Chilean parliamentary process, and as a fraternal affiliate of the Communist party of the Soviet Union it strongly adhered to the notion of peaceful coexistence in international relations and legalistic approaches to reform at home. Precisely because of its long experience in Chilean politics, it understood perhaps better than any other party—Left or Right—the difficulties and obstacles confronting rapid transformation of that society. Contrary to a widely held misconception in both the United States and Europe, Allende’s Socialists were not social democrats but a party whose complex origins lay in anarchism, Trotskyism, and other forms of revolutionary Marxism, and which regarded the Communists (perhaps rightly) as stuffy, conservative, and lacking in revolutionary nerve (as well as not quite authentically national).

In his relations with these two parties Allende sometimes resembled Dr. Juan Negrín, the last prime minister of Republican Spain. Both men were Socialists who felt more comfortable with disciplined, realistic Communist allies than with the avanzados of their own party. Carrying the analogy of Republican Spain a bit further, we might suggest that the Chilean Communists were far more sensitive than either Allende or the Socialists to the disastrous consequences which might follow in the wake of social polarization at home and confrontation with great powers abroad. Thus, from the beginning, the Communists preached consolidation, a deal with the Christian Democrats, veiled conciliation with Washington, while the Socialists, apparently oblivious of consequences, called for “advance with compromise.” It was a replay, allowing for variations of time and place, of the dramatic events chronicled in George Orwell’s Homage to Catalonia (1938).

In part, of course, the Socialists were victims of their own world view and their own propaganda, which ascribed to their party and their nation far greater room for maneuver than, as it turned out, either possessed. But in part, also, they were bound by promises made by Allende not only in 1970 but in three preceding presidential campaigns stretching back a full generation. And perhaps, above all, they were fearful of being outflanked by competing revolutionary forces who constantly questioned the government’s bona fides, especially the Movimiento de la Izquierda Revolucionaria (MIR). The miristas, middle-class university students who took their Marxism with their morning coffee, encouraged factory workers and landless peasants to occupy their estates and plants in order to embarrass the government into carrying out its program more expeditiously. At some point, perhaps as early as late 1972, perhaps as late as mid-1973, the regime lost control of the process it had unleashed, and found itself compelled to return to the precedent of so many conservative Latin American governments of times past—inviting military men to form a ministry. From there to the tragic events of September 1973, the path was short and unswerving.

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III

Now that Allende is gone, foreign Marxists are quick to affirm “what should have been, and to many was, obvious all along, that there is no such thing as a peaceful road to socialism.”4 Yet they were far from certain at the time. True, not many thought Allende would be elected, or that if elected, he would be allowed to take power, or that if allowed to take power, he would carry out his program. But once he proved them wrong on all three counts they flocked into Chile, a new class of South American tourist, determined to find strengths in a government whose weaknesses they had so eloquently forecast. The most exalted of these tourists, of course, was Cuban Premier Fidel Castro. Now that the original Marxist-Leninist assumptions have been validated by experience, some are succumbing to the temptation to write off the Allende regime as a phantasm from the very beginning.5The ambiguities of the situation seem to have been grasped only by the American Marxists at the Monthly Review, whose work appears in Revolution and Counterrevolution in Chile.

This volume consists largely of articles published in that magazine between 1970 and 1973. For the most part, these pieces read exceptionally well after the event; unlike many left-wing visitors to Allende’s Chile (including Régis Debray), their authors were never much impressed with the sheer size or fervor of the crowds at government rallies. They looked instead at the military, at the foreign-trade situation, at divisions within the government, at the relatively greater resources of its enemies, and they were deeply troubled. Above all they reserved a strong dose of skepticism for the loyalty of the Chilean army, even in those days when Allende himself was pleased to regard it as a pillar of the socialist state. The Monthly Review group consistently argued that Allende’s revolution could only be begun within the norms and forms of bourgeois democracy. To be completed, indeed to survive at all, it would have to make a decisive break with that system and impose an authoritarian regime, a dictatorship of the proletariat. To do anything else was to postpone inevitable disaster.

This is the kind of advice that Allende must have been getting from foreign Marxists (and perhaps not a few Chileans) from the moment of his election. Régis Debray hovers on the verge of suggesting it to the Chilean President in his rather thin “conversations,” but dazzled and tongue-tied in the presence of raw power, he holds back.6Sweezy and his associates move quickly to the point. Allende, they believe, should have broken with the Chilean democratic system (such as it was) at the peak of his strength, which they identify as April 1971. In that month the government coalition received 50.9 per cent in municipal elections held throughout Chile, the largest figure it was ever to obtain at the ballot box. But Allende might well have been answering Sweezy when he assured a reverent Debray that he knew far better than anyone else exactly how far and how fast to push the Chilean political system—and when to stop. His government, he continued, could only survive by not provoking counterrevolution; hence judicious compromises were essential. Those who urged a more radical course of action were inviting him not to permanent revolution, but to suicide.

Surveying the ruins of his government, one can easily and comfortably suggest now that Allende should have broken with a system which subsequently proved that it had no intention of keeping its promises. But who is to say that if the Chilean President had followed Sweezy’s prescription he would have escaped his tragic fate? At best he might have plunged his country into a civil war in which the victory of his supporters would be extremely problematic. Or perhaps the military coup of September 1973 would have taken place two years earlier. Allende surely thought so, or acted as if he thought so, and as he was a seasoned professional politician of some thirty years’ standing, we must give some credence to his judgment.

This brings us to the subject of the Chilean military. Superficially at least, the most impressive aspect of the Sweezy-Magdoff book is its critical evaluation of the armed forces. Now that General Pinochet and his colleagues have created a fascist regime of astounding barbarity, how prophetic all the warning passages sound! One is compelled to ask: how could Salvador Allende—surely the most experienced Marxist politician in the Western hemisphere—have ignored the obvious danger signals? I would answer that the Monthly Review was right—but in the wrong way and for the wrong reasons.

Whatever else one can say about President Allende, he was no fool. If he thought and acted as if the army were loyal to his regime, it was because, for most of the time, it was. We still have Latin American literati like Gabriel Garcia Márquez to see in every Latin American officer a toady of the Pentagon,7 but the facts are otherwise. The Chilean military operated on a long-standing tradition of respect for civilian authority, and nearly to the final hours of his Presidency Allende was the beneficiary of that tradition. Let not the realities of the present distort the nature of the past: the Chilean military served Allende long, faithfully, and well. It failed to respond to several right-wing provocations (the assassination, for example, of Army Commander General René Schneider shortly before Allende was to take office); it reestablished order when the regime was attacked in the streets; in the penultimate phase Army Commander General Carlos Prats became Minister of Interior-in effect, Prime Minister of Chile.

If an army has done all of this (and more) for a socialist regime, it does not suddenly turn around and overthrow it for a fistful of Yanqui gold. The fact is that Latin American armies, and the Chilean is no exception, do not like to spend their time and their prestige propping up an embattled civilian government, any civilian government. When called upon continually to do so, they almost invariably end up deposing that regime altogether. After all, if they must discipline their fellow-citizens (and bear the brunt of the unpopularity which follows) they ought at least to have the decisive voice in the conduct of government itself. Furthermore, no Latin American army will yield an inch of its weapons monopoly, and the merest suggestion of a “people’s militia” is normally sufficient to place the strongest of civilian leaders (Perón, for example) in mortal peril.

Of course Allende had broad popular support, but he was also intensely opposed by perhaps as much as a third of the Chilean population, a third willing and able to resort to violent attacks on his government. There is little evidence, Admiral Huerta to the contrary,8 that Allende was planning a coup against the constitutional regime before his ouster. But it seems probable, as the domestic conflict moved increasingly outside of the halls of Congress and into the streets, that Allende’s only means of continued authority was to rule through the military; and this his service chiefs ultimately denied him, as indeed they would have denied it to any civilian, chief of state.

It was precisely at that point, of course, that the Socialists, the MIR, and other supporters began in earnest to stockpile arms in preparation for what was believed to be an imminent civil war. The contributors to the Sweezy-Magdoff volume express considerable wonderment at the alacrity with which Allende permitted the Chilean armed forces to make humiliating searches of factories and trade-union offices for arms, but Allende himself seems to have regarded this as the necessary currency with which to buy continued military acquiescence. What the Chilean President failed to see was that there was no price at which the military could be compelled permanently to assure public order—save at the cost of ceding total power itself. In the first truckers’ strike in 1972, General Prats had assumed the post of Interior Minister and used the prestige of the armed forces to persuade the strikers to return to work. The second time around, in mid-1973, Prats had lost the support of his colleagues. He was forced to resign, and with him went hundreds, perhaps as many as two thousand, officers known to be sympathetic to the regime. It was at this point, it seems to me, rather than before, that the military became the “enemy within the gates” prefigured in the Sweezy-Magdoff book.

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IV

To discuss opposition to the regime, and the relationship of the military to it, invariably raises the issue of United States involvement in the overthrow of Allende. To deal adequately with this theme would require an article several times the length of this one, but at the outside several points are worth making. Firstly, the United States government was clearly dismayed by Allende’s election, and regarded the existence of his government as a threat (real or imagined) to its hemispheric and global interests. Secondly, Washington ill disguised its joy at the savage overthrow of President Allende, and it and its embassy in Santiago displayed remarkable insensitivity to the wave of assassinations, tortures, and inhumanity visited thereafter on supporters of the fallen government. Thirdly, the domestic opposition in Allende’s Chile owed much of its vigor, if not its continued life, to subventions from the United States government or its agencies. Much of this can be inferred, at any rate, from the documents assembled by Lawrence Birns in The End of Chilean Democracy.9 What Birns’s materials do not tell us, however, is the actual content of American policy, and consequently the precise pattern of American action against the Allende regime.

Did Washington order General Pinochet to overthrow Allende? There are many who think so. A brilliant young American historian of Chile present in Santiago during the events of September has even assured me that the planes which attacked the Moneda palace, though bearing Chilean air-force markings, were piloted by Americans, using “smart” bombs which we do not readily sell even to allies. There is some circumstantial evidence to support this line of interpretation, but it is by no means overwhelming. And there is also some evidence to the contrary—namely, that American policy was far more complex, and far less successful, than events would have it.

Of the depth of official American hostility to the Allende government there can be no doubt. As former Ambassador Korry has put it: “I was dead-set against Dr. Allende as a candidate. And everything he stood for. . . . I would have welcomed . . . the Chilean Congress voting to keep him out of office, or the Chilean people doing whatever they wished” to prevent him from assuming the Presidency. But, he adds, “I was against the United States doing it.”10 In the same interview he reveals that the International Telephone and Telegraph Company offered on two occasions to finance a coup to prevent Allende from taking office in 1970—and was turned down by Washington both times. He concedes that U.S. government funds were authorized to bribe members of the Chilean Senate to vote against Allende—but never spent. For his part, Jack Kubisch, Assistant Secretary of State for Inter-American Affairs, insists that “it was not in our interests to have the military take over in Chile. It would have been better had Allende served his entire term, taking the nation and the Chilean people into complete and total ruin. Only then would the full discrediting of socialism have taken place. Only then would people have gotten the message that socialism doesn’t work. What has happened,” he laments, “has confused this lesson.”11

All of these statements suggest an American policy aimed not toward achieving Allende’s immediate ouster, but toward discrediting him over an extended period of time—in point of fact, to 1976. In that year Christian Democrat Eduardo Frei would be eligible to run for another presidential term, and his restoration to power through free elections would constitute a blow far more devastating to the cause of socialism in Latin America than the martyrdom of Allende and some thousands of his followers.

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Does this attribute an unwonted degree of cynical brilliance to Washington officialdom? One might think so on the face of it, but Professor Paul Sigmund has assembled some recent materials suggesting that it does not. Reviewing the evidence for the alleged “invisible blockade” of Chile by foreign sources of credit,12 he points out that if American officials were intent upon shutting off Chile’s economic life-line, they were amazingly slow about their business; “pipeline credits” approved during the final months of the Frei regime were expedited without difficulty.13 And he shows that during the first three months of Allende’s administration (September-December 1970), private American banks extended Chile an additional $80 million in new lines of credit.

It is certainly true that later on, in 1971 and 1972, Chile found U.S. money markets utterly un-receptive, but this was after (November 1971) her government had declared a moratorium on most of the nation’s foreign debts, and, more to the point, had expropriated vast numbers of American enterprises—for what their owners regarded as token compensation (and in the case of the copper companies, no compensation whatever).14President Nixon’s insistence upon adequate compensation to expropriated concerns as the prerequisite to further U.S. aid, and the Gonzalez Amendment, by which the United States Congress in effect instructed American representatives on the great multinational lending agencies to vote against Chilean credit applications, may seem actions both illiberal and ungenerous, as by some lights they doubtless were. But to refuse a defaulted debtor additional credit is not prima facie an act of internal subversion—it is a rather ordinary, humdrum business practice.15

By this I am not attempting to argue—it would be disingenuous to do so—that the refusal of additional credit to Chile by the United States government in 1971 and 1972 was a decision inspired purely by business considerations. It was nothing of the sort. By withholding funds from the Allende regime Washington hoped to add significantly to its bag of troubles, and to make life more unpleasant for the Chilean people under a socialist government. We now know as well that concurrently American sources were covertly channeling funds to opposition newspapers16 and political groups in Chile. But at its most extreme, this proves nothing more than an intent to make the Allende experiment a dismal failure, not to achieve its violent overthrow before—to borrow the macabre phrase of Undersecretary Kubisch—“the lesson had been learned.”

Moreover, unless one accepts the alibi of the current ruling junta—namely, that Allende was planning a coup of his own shortly before his overthrow—one must wonder why Washington would have thought a military revolution was necessary in Chile. For by mid-1973 copper prices and copper production (now in nationalized mines) had declined. The nation’s foreign-exchange reserves were utterly exhausted. Chile had ceased to pay on virtually all of her international obligations. The annual rate of inflation had risen from 33 per cent to 200 or 250 per cent—perhaps even more. There was an incipient crisis in agriculture, the rationing of articles of prime necessity, and a steady breakdown of public order. By no means all of this could have been achieved by American policymakers, no matter how deft. But if their purpose was to prepare the way for a thumping defeat of Chilean socialism at the polls in 1976, the situation in September 1973 was remarkably consonant with that policy. Unfortunately for the United States government, however, the Chilean military declined to play the role envisaged in Washington’s script, and embarked instead upon a drastic and violent course which deprived the Chilean people of the valuable political lesson Mr. Kubisch intended to teach them.

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V

It is readily conceded that the above analysis may not be correct, for governments, like individual men and women, do not always act rationally. But for those many who believe that governments operate in strict accordance with ineluctable economic laws, there can be only one satisfactory explanation for the fall of Allende—the machinations of U.S. imperialism. Specifically, a government which nationalized American holdings in so strategic a raw material as copper could not be allowed to survive, for to permit Chile to recover control of this basic national resource boded ill for the future of the U.S. “system” as a whole. This, or something very like it, is the perspective which nowadays informs much of the literature on Chile. For people who believe this, or write as if they do, Theodore H. Moran’s Multinational Corporations and the Politics of Dependence: Copper in Chile17 will be exceedingly bad news. For it systematically demolishes most of the notions upon which Marxist or neo-Marxist theories of economic imperialism are based, at least insofar as Chile is concerned.

Nowhere does Moran deny that Chile and its copper have been good to American investors; quite the contrary. What he does say—and demonstrate—is that the picture of a pliant Chilean elite obsequiously fattening the corporate purses of Wall Street for more than fifty years, until Allende came along to right all wrongs, is a monstrous distortion. Most treatments of this subject are but snapshots; Moran instead provides a slow-motion study of several evolving phases in the complex history of an industry.

During the first phase, stretching roughly from World War I to World War II, the times were halcyon indeed for American investors. In the 20′s, for example, paying practically no taxes at all, they collected between 14 (Anaconda) and 20 to 40 (Kennecott) per cent a year on their initial investments, while the Chilean parliament and press showered them with hosannas for rescuing the nation from an earlier collapse of the world nitrate market.

The period immediately after World War II was no less profitable to the foreign corporations, and somewhat more advantageous to the Chilean government, since by then taxes absorbed 60 per cent of the companies’ earnings. Yet paradoxically, the political climate in which they had to operate began to deteriorate rapidly. They found themselves blamed by Chilean politicians (by no means exclusively from the Left) for the falling world price of the metal, and a rising chorus of domestic criticism led the Chilean government to take over foreign marketing of copper in 1951.

Four years of a nationalized market mechanism did not remedy the problem—far from it. Between 1951 and 1954 prices did not improve, and in fact Chile’s share of the world market actually dropped a percentage point. It was a thumping defeat for proponents of what might be called conservative economic nationalism; the only solution seemed to be increased productivity (hence, new investment) to compensate for the depressed price of copper. In 1955 the Chilean government did a complete turnabout: new laws (the so-called Nuevo Trato) offered foreign mining companies a lower tax rate, special depreciation schedules on new investments, free import rights on equipment, and renewed control over pricing and marketing.

Yet this capitulation to foreign capital failed to yield its promised fruits. Anaconda and Kennecott took advantage of the benevolent new laws to rake in bumper profits (sometimes twice or three times the rate of their earnings elsewhere), but made few new investments in the country. Consequently, it cannot be surprising that by 1964 both Eduardo Frei and Salvador Allende in their presidential campaigns were advocating some form of nationalization of the copper industry.

Frei’s proposal, the more conservative of the two, was the one which the Chilean electorate chose to try first. Although exceptionally complex, in general it envisioned a greatly augmented productivity and an equally significant increase in Chilean participation in the ownership and management of the industry. For the companies, the payoff was to be continued (and presumably profitable) operation in Chile under a virtual guarantee against precipitous and punitive expropriation. Frei’s program, widely touted as the “Chileanization” of the industry, was extremely successful, above all in terms of sheer dollars and cents. From 1966 to 1970 the nation’s revenues from expanded production more than doubled, and for the first time in many years, thanks largely to the Vietnam war, Chile found itself in a position to dictate international pricing policy. The American corporations shared in the bonanza, of course, but far from placating their Chilean critics, the success of the Frei program “seemed to prove,” Moran writes, “the wisdom of carrying out what the country had wanted to do all along—ditch the corporate producers’ price system and go for all the market could bear.” Thus, in 1970 Salvador Allende came to power committed not to partnership with, but full expropriation of, the foreign mining concerns in Chile.

Moran, in sum, demonstrates three important points often ignored in the literature on Chile: first, that the dissatisfaction with American copper concerns was long-standing and shared by a wide spectrum of Chilean opinion—in fact, the Right, far from being a toady of the American corporate community, often used the companies as a whipping boy to divert attention from the basic social inequalities of Chilean society itself; second, that the deteriorating political position of the copper companies, far from responding to increased exploitation, actually paralleled an augmented contribution to Chilean society through corporate and other taxes; and third, that previous (conservative) Chilean regimes had seriously tried, without success, to take over phases of the industry long before the Presidency of Allende. It is in the reasons for that failure that Moran makes his greatest contribution. For in a lengthy discussion of the technical problems of the copper industry, he reveals for the first time why the Allende regime encountered such serious difficulty in the repatriation of the nation’s mineral resources.

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By 1970 the impact of copper on Chilean life was enormous; in some years it amounted to as much as 20 per cent of the gross national product and 40 per cent of Chilean tax revenues; exports of the metal could constitute anywhere from 30 to 80 per cent of all hard-currency earnings in a country which had to import a great variety of its necessities, including much of its food. Therefore it was logical for the Chileans to assume that copper loomed no less large in the national life of its principal customer, the United States, and that if Chile chose to reassert her sovereignty over this metal, we would have no choice but to make our peace with the new order of things.

However, this attitude (and the concrete acts which it inspired) was based, as Moran shows, on a pathetically incomplete knowledge of the industry. The rise of copper coincides with a great expansion in electrical power, beginning around the turn of the century. But since World War II, other metals, notably aluminum, have presented copper with serious competition. The companies in recent years have responded by diversifying into aluminum itself, or into coal, iron, even petroleum. They have also made serious efforts to keep prices low, so that copper will not be priced out of the market altogether. This, not corporate greed as such, explains the situation which even the Nuevo Trato legislation of 1955 could not remedy.

Furthermore, stockholders in the major copper companies have for years been urging their managements to get out of Chile altogether—to go back to the U. S. and Canada, where operating costs might seem initially higher, and quality of ore lower, but proximity to marketplace is frequently greater, and the political and labor climate decidedly more favorable. New technology has made it possible for ores far less rich than those of Chile to be mined in North America at a rate which has made them nearly competitive, and when the political risk is factored in, very competitive indeed. As Moran puts it, long-term stability and security are frequently more attractive than risky bonanzas of interminate date. Further:

The classical model of the simple firm maximizing its marginal return on one product in one country—investing in new production until marginal cost equals marginal price—cannot by itself account for the behavior of large, diversified, multinational companies, or provide a guide for the host country policy. . . .

The basic asymmetry in the strategies of the foreign copper companies in Chile—namely, that the companies were interested in maximizing returns to their global corporate systems while the country was interested in maximizing returns in one country and at one stage of operations—meant that the invisible hand that harmonizes interests in classical theory was much too invisible.

This explains, at any rate, why the Frei government found Kennecott so eager to sell their El Teniente mine to the Chilean state in 1965, and it also sheds much light on what happened to Chilean copper after Allende’s nationalization decrees in 1970 and 1971.18 The copper companies and Chile simply were not operating in the same cognitive universe; unfortunately for Allende, the realities of the world market rather than the imperatives of Marxist theory, made it entirely possible for the capitalist world to do without Chilean copper—but Chile, it was found, could not quite survive without massive infusions of aid from the hated exploiters. In point of fact, even with more than half a billion dollars’ worth of loans factored into the Chilean economy in three short years, the regime collapsed with a loud and tragic thud.

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VI

The purpose of these observations is not to excuse the United States government for its actions in Chile, but to insist that the area of Chilean responsibility for events in that unhappy country is rather greater than most of the recent literature is willing to admit. Granted, Washington’s policies in Chile (as, during the Nixon years, frequently at home) were mean-spirited, vindictive, and destructive—yet had Allende’s regime rested on a broader and deeper base of popular support, it might well have survived its six-year mandate.

Furthermore, to criticize American policy in Chile in the present context is to concede, at least implicitly, that a different policy was both possible and feasible. Moran alone of the authors here discussed provides some evidence that a socialist transformation in Chile was not a serious threat to the welfare of the United States; all of the others seem to suggest that, yes, the Allende regime was a serious threat to American power and therefore had to be destroyed—and then turn around and express shock and surprise that Washington acted exactly the way it had to act, given those premises. Put another way, if one is going to apply Marxist categories of analysis, then one cannot escape a gloomy Marxist outcome. If one wants the United States to act intelligently, generously, and humanely in world affairs, then one must begin by assuming that such conduct is possible, let me repeat, within the present context. (To predicate foreign-policy reform on a social revolution in the United States is to postpone matters to the Second Coming, and therefore not a serious proposal.)

Finally, the case of Chile suggests a curious irony—that the most serious practitioners of Chilean Marxism were the American government and the American business community, who frequently acted as if the security and well-being of Western civilization depended upon an unremitting and unlimited hostility to a socialist regime in a far-off South American country. Therefore, those who would reshape our relations with underdeveloped countries would best begin at home, by convincing both the business and foreign-policy establishments that there is a possible middle ground between total hostility and total capitulation to Third World nationalism. Professor Moran’s book is an excellent start. However, the best of these efforts will fail if leaders in the primary-producing nations do not likewise lower the ideological temperature of their foreign-policy pronouncements. Otherwise both developed and underdeveloped nations will continue to lurch toward an increasingly chaotic and hostile world order very much of their own making.


Footnotes

1 In English, for example, there is David J. Morris, We Must Make Haste Slowly (Random House, 1973); Richard Feinberg, The Triumph of Allende (New American Library. 1972); and Dale L. Johnson, ed., The Chilean Road to Socialism (Doubleday/Anchor, 1973).

2 Interview with William F. Buckley, Jr., broadcast on Firing Line (PBS), September 29, 1974; published as The Truth About Chile (Dinex Minirel, Santiago de Chile, 1974).

3 “Anti-Parliamentary Themes in Chilean History,” in Kenneth Medhurst, ed., Allende’s Chile (Hart-Davis Mac-Gibbon, London, 1972).

4 Paul M. Sweezy, “Chile: The Question of Power,” in Paul M. Sweezy and Harry Magdoff, eds., Revolution and Counterrevolution in Chile (Monthly Review Press, 1974).

5 Les Evans, ed., Disaster in Chile: Allende’s Strategy and Why It Failed (Pathfinder Press, 1974).

6 The Chilean Revolution: Conversations with Allende (Pantheon, 1971).

7 See his “The Death of Salvador Allende,” Harper’s, March 1974.

8 Ismael Huerta, “In Defense of the Junta,” in Lawrence Birns, ed., The End of Chilean Democracy (Seabury Press, 1974).

9 Op. cit.

10 The Truth About Chile. Ambassador Korry adds that in late September 1970, he reported to Washington that “there was no possibility of any kind that Dr. Allende would not be confirmed as President and I further warned gratuitously that if anyone in Washington were to be thinking of a United States intervention, direct or indirect, to bar Allende from the Presidency, they should be fully aware that the consequences would be worse than the Bay of Pigs, both in Chile and in the United States.”

11 Tad Szulc, “The View from Langley,” Washington Post, October 21, 1973; reproduced in Birns, op. cit., pp. 153-64.

12 “The ‘Invisible Blockade’ and the Overthrow of Allende,” Foreign Affairs, January 1974.

13 Lest the full significance of these credits be underestimated, they should be enumerated here. Between 1971 and 1972 the Agency for International Development dispersed S5.5 million from previously authorized loans; technical-assistance loans of $800,000 a year continued uninterruptedly, as did the Peace Corps, Food for Peace, and $15 million in aid to the army which at the time was considered (by Allende) a pillar of his regime.

14 The basis of this denial was a Chilean claim that these companies had in the past repatriated profits in excess of the 14 per cent which the Andean Pact (1969) subsequently determined was the fair share which such concerns should be allowed. Allende worked back to 1955, when accurate records were beginning to be kept.

15 Nor can it be unreservedly claimed—as friends of the expired regime are wont to do these days—that by their actions American banks and credit agencies achieved by “slow strangulation” what otherwise might have been necessary by more violent and manifest means. For what Chile could not obtain from Washington and New York proved forthcoming from what can only be regarded as a remarkable diversity of sources, to wit: between July 1970 and June 1973 the World Bank loaned Chile $46 million, and at the time of Allende’s overthrow was prepared to disperse an additional $22 million subsequently approved. During the same period the International Monetary Fund extended Chile $83 million to compensate her for exchange losses suffered through the falling world price of copper, and S250 million in short-term credits were obtained from Mexico, Canada, Australia, and Western European nations, all eager to replace American suppliers in the Chilean market. The socialist world dutifully came up with nearly half a billion scarce dollars—$446 million from the USSR, China, and Eastern Europe. Further, $70 million in longer-term loans were obtained from other Latin American countries, and between November 1971 and December 1972, an additional $200 million was obtained from Great Britain, Spain, France, Holland, Belgium, Sweden, and Finland. True, the Inter-American Development Bank turned a deaf ear to new Chilean applications, but still properly dispersed $54 million authorized during the Frei years (1964-70). The Export-Import Bank of Washington, D.C., was more unbending; in August 1971 (a month after a major credit moratorium was declared by the Chilean government) it deferred judgment on a proposed loan for $21 million; this decision was apparently the brainchild (if such a term is appropriate) of Treasury Secretary Connally. It is difficult to see whom this hurt except the United States, and especially the state of Washington, whose ailing economy could have used the business—for, alas, the Chileans were planning to spend the money re-equipping their national airline with Boeing jets! Instead, the money, if they found it, must have been spent in England or France. (Cf Sigmund.)

16 In his interview with William F. Buckley, Jr., Korry reveals that many opposition newspapers, particularly El Mercurio of Santiago, could not have survived the Allende years without continual (if covert) American subventions. True, the Ambassador says, the government did not close down opposition newspapers, but Allende “had just about eliminated all sources of advertising for” them. “He controlled all their credits [Allende had long since nationalized private banking in Chile], and he was not going to give them credit unless they gave him political support. We knew that for a fact.” Korry thus raises an interesting ethical question about socialist regimes of the Allende type. Can they be regarded as truly tolerant of a critical press if they nationalize sources of advertising revenue and credit, and utilize those sources for political means? In this light Allende seems retrospectively somewhat less tolerant of dissent than many—including this writer—had been inclined to believe.

17 Princeton University Press, 1974.

18 The Allende regime also encountered other difficulties in managing a fully nationalized industry having nothing to do with the conditions of the world market. Moran identifies them as (a) a serious breakdown of labor discipline and an increase in featherbedding; (b) “sectarian struggles” in the supervision of the mining sector—fights among Communists and Socialist managers and labor leaders; (c) a more effective retaliation on the part of expropriated companies than had been anticipated. Korry reveals that Allende and the Communists began to realize the enormity of this threat a bit late, but their efforts to remedy matters by conciliating the companies were sabotaged by the Socialist party.

About the Author

Mark Falcoff is resident scholar emeritus at the American Enterprise Institute in Washington.




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