Address to the Third
United Nations Conference on Trade and Development UNCTAD
Santiago, April 13, 1972
This famous speech calls attention to the increasing economic power and corrupting influence of transnational corporations. It deals with trade, debt and related issues in a manner remarkably appropriate for today. Prophetically, Allende warns of the intentions of Japan, the United States, and the European Economic Community to use the General Agreement on Tariffs and Trade (GATT) as a tool for the expansion of their own corporations' economic interests by means of "free trade," wiping out "at a stroke of the pen the advantages of the general system of [tariff] preferences for the developing countries." Foreign debts, he observes, "constitute one of the chief obstacles to the progress of the Third World." They are "largely contracted in order to offset damage done by an unfair trade system, to defray the costs of the establishment of foreign enterprises in our territory, [and] to cope with the speculative exploitation of our reserves." Rejecting Latin America's decades-long strategy of "import-substitution" dependent on foreign investments as one that leads to "recolonization," he urges a new technology development policy that will relate "to our own needs" and will be "prompted by a humanistic philosophy which sets up the human being as its major objective." Noting that moneys gained from disarmament "would be more than enough to start shaping a solidarity world economy," Allende concludes: "Progress and the liberation of the vast underdeveloped world depend on the urgently needed transformation of the world economic structure, on the conscience of countries, on choosing a path of cooperation based on solidarity, justice and respect for human rights."
Ladies and Gentlemen: Let me begin by thanking you, on behalf of the people and the government of Chile, for the great honor you have done us by choosing Santiago as the venue for this third session of the United Nations Conference on Trade and Development. We appreciate it all the more as you will be discussing the world's most serious problem: the sub-human condition of more than half its population. You have been convened to rectify the unfair international division of labor, based on a dehumanized concept of mankind.
The presence of so many leaders of economic affairs from every part of the world, including ministers and high-ranking officials, enhances the significance of this honor. It is encouraging that all the organizations of the United Nations system are represented here, besides the intergovernmental and nongovernmental bodies concerned with development problems, and the information media of all five continents.
With me are the representatives of the Chilean nation: the presidents of the Senate, the Judiciary and the Chamber of Deputies, comrades ministers of state and members of parliament and civil, military and ecclesiastical authorities, accompanied — in representation of the people — by workers and students.
Accordingly, in the name of our people and of its representatives present at this ceremony, I offer our guests a very warm welcome, and wish them a pleasant stay in a country that receives them with cordial friendship and understandable anticipation. I also extend my respectful greetings to the resident diplomatic corps.
To you, Mr. Kurt Waldheim, secretary general of the United Nations, we owe a very special debt of gratitude. In taking the trouble to attend this opening meeting so soon after assuming your high office, your intention has doubtless been to show that you accord this conference the priority it deserves; that for you the development of the Third World and the expansion and improvement of trade are matters of as much urgency and importance as the most explosive political questions; and that you fully realize that economic stability and development are, as established in the charter, essential and interdependent factors of international peace, security and goodwill.
To my good friend, Mr. Manuel Perez-Guerrero, secretary general of UNCTAD, I should like to express our deep appreciation of his selflessness and efficiency in the discharge of his functions, and of the outstanding quality of the preparatory work for the present meeting.
Lastly, to Professor Langman, Minister for Economic and Financial Affairs of the Kingdom of the Netherlands, I would offer the sincere gratitude of the government and people of Chile for his country's generous contribution of the transmitting and amplifying equipment for the conference rooms in this building.
UNCTAD and the future of the Third World
In UNCTAD III, I hail an assembly of the world community of nations — in effect, of almost all mankind. Unfortunately, not yet quite all. For us, the peoples of the Third World, UNCTAD should constitute the chief and most effective of the instruments available for negotiation with the developed countries.
The basic mission of this third session which is starting today is to further the replacement of an outdated and essentially unjust economic and trade order by an equitable one based on a new concept of man and of human dignity, and to promote the reformulation of an international division of labor which the less advanced countries can no longer tolerate, inasmuch as it obstructs their progress while it favors only the affluent nations.
From the standpoint of our countries this is a crucial test. We refuse to go on giving the name of international cooperation for development to a mere travesty of the concept enshrined in the Charter of the United Nations. The results of the conference will show whether the commitments assumed in the International Strategy for the Second Development Decade reflected a genuine political will or were simply delaying tactics.
If the analyses and decisions of UNCTAD III are to be realistic and pertinent, we must face the world as it is, defending ourselves against illusions and mystifications, but at the same time throwing wide the gates of imagination and creativeness to new solutions for our old problems.
The first point to be recalled is that our community is not homogeneous, but divided up into peoples who have grown rich and peoples who are still poor. Yet more important is it to recognize that among the poor nations themselves there are, unfortunately, some that are even poorer than others; and many that exist under unbearable conditions. Their economy is dominated by foreign powers; outsiders hold all or part of their territory; they still endure the yoke of colonialism; or a majority of their population is exposed to the violence of racial prejudice and of apartheid. Worse still, in many of our countries deep social disparities oppress the masses and benefit only the privileged few.
Secondly, the toil and the resources of the poorer nations subsidize the prosperity of the affluent peoples.
Manifest, too, is the validity of the declaration signed in Lima by the ministers of the Third World. Between 1960 and 1969, our countries' share in world trade dropped from 21.3 percent to 17.6 percent. During the same period, our annual per capita income increased by only $40, while that of the affluent nations rose by $650.
Over the last 20 years, the ebb and flow of foreign capital into and out of the Third World has meant a net loss for us of many hundreds of millions of dollars, besides leaving us in debt to the tune of nearly $70,000 million.
Direct investment of foreign capital, often presented as an instrument for progress, has almost proved negative in its effects. For example, between 1950 and 1967, according to data furnished by the Organization of American States, Latin America received $3.9 million and disbursed $12.8 million. We paid out $4 for every dollar we received.
Thirdly, this economic, financial and trade order, so prejudicial to the Third World precisely because it is so advantageous to the affluent countries, is defended by most of these with bulldog tenacity, through their economic might, through their cultural influence, and, on some occasions, and by some powers, through almost irresistible forms of pressure, through armed interventions which violate all the commitments assumed in the Charter of the United Nations.
Another development of unquestionably vital importance, which cuts across and embraces the present structure of international economic relations, and which in practice makes a mockery of international agreements, is the expansion of the great transnational corporations.
In economic circles, and even at meetings like this, trade and development facts and figures are often bandied to and fro without any real attempt to measure how they affect the human being, how they affect his basic rights, how they strike at the right to life itself, which implies the right to full self-realization. The human being should be the object and the goal of all development policies and of all desirable forms of international cooperation. This is a concept which must be borne in mind in every discussion, in every decision, in every policy measure which aims at fostering progress whether at the national or at the multilateral level.
If the present state of affairs continues, 15 percent of the population of the Third World is doomed to die of starvation. Since, moreover, medical and health services are seriously deficient, the expectation of life is only half as long as in the industrialized countries, and a high proportion of the population can never make any real contribution to the progress of thought and creative activity. Here I may repeat something of which our people are painfully aware. In Chile, a country with about 10 million inhabitants, where levels of diet, health and education have been higher than the average for developing countries, there are 600,000 children who, for want of proteins in the first eight months of their life, will never attain the full mental vigor for which they would have been genetically fitted.
There are more than 700 million illiterates in Asia, Africa and Latin America, and as many millions more have got no farther than the stage of basic education. The housing deficit is so colossal that in Asia alone there are 250 million persons without a proper roof over their heads. Proportional figures are recorded for Africa and Latin America.
Unemployment and underemployment have soared to a terrifying pitch and are still increasing. In Latin America, for example, 50 percent of the economically active population are out of work, or have jobs which are nothing but forms of disguised unemployment, their earnings from which, especially in the rural areas, fall far short of their vital needs.
This is the logical outcome of a well-known fact: the developing countries, in which 60 percent of the world's population is concentrated, have at their disposal only 12 percent of the gross product. There are scores of countries in which annual per capita income does not exceed $100, while in several others it amounts to about $3,000 and in the United States it reaches $4,240.
Some can look forward to a livelihood which will bring everything within their reach. Others are born to starve. And even in the midst of plenty, there are millions who lead a handicapped and poverty-stricken life.
It is incumbent upon us, the underprivileged, to strive unflaggingly to transform an archaic, inequitable and dehumanized economic structure into one which will not only be fairer to all, but will be capable of counteracting the effects of age-old exploitation.
Ways out of underdevelopment
The question is whether we poorer nations can meet this challenge from our present subordinate or dependent positions. First we must acknowledge long-standing weaknesses on our own part which have done much to perpetuate the disparate trade patterns that have led the peoples of the world to develop along equally disparate lines: for example, the connivance of some national ruling groups with the causes of underdevelopment. Their own prosperity was based precisely on their role as agents of foreign exploitation.
No less important has been the alienation of the national consciousness. It has absorbed a view of the world worked out in the great dominant centers and presented in scientific guise as the explanation of our backward state. Such theories ascribed the inevitable stagnation of the developing continents to supposed natural factors such as climate, race or racial mixtures, or attachments to autochthonous cultural traditions. But they paid no heed to the real causes of backwardness, such as foreign colonial and neocolonial exploitation.
Another respect in which we are to blame is that the Third World has not yet achieved full unity, unconditionally backed by every single one of our countries.
The correction of these mistakes must be accorded priority. The same view is expressed in the Charter of Algiers and in the Declaration of Lima drawn up by the Group of 77.
The internal effort of the developing countries themselves
The governments of the countries of the Third World have now formulated a philosophy much more consciously in keeping with the realities of today. For example, the Declaration of Lima, besides endorsing the emphatic assertion in the Charter of Algiers that the primary responsibility for our development is incumbent upon ourselves, pledged its signatories to carry out the reforms in their economic and social structures required to ensure the full mobilization of their basic resources and to guarantee their people's participation in the process of development and in its benefits. The declaration likewise condemned dependence in any shape or form which may help to aggravate underdevelopment.
Not only do we support this philosophy in Chile but we are putting it fully into practice. We are doing so with profound conviction, consistently with our socio-economic and political situation.
The people and the government are committed to a historical process designed to bring about fundamental and revolutionary changes in the structure of Chilean society. We want to lay the foundations for a new society which will offer all its members social equality, welfare, freedom and dignity.
Experience, often a hard task-master, has taught us that in order to meet our people's needs and provide each one with the means of full self-realization, it was essential to leave behind the capitalist regime of dependence and forge ahead along a new road. This new road is the socialism we are starting to build.
In line with our history and tradition, we are conducting this process of revolutionary change while taking steps to make the system more truly democratic, with due respect for the pluralism of our political organization, within the legal order and using the legal instruments with which the country has equipped itself; not only maintaining but extending the civic and social, individual and collective liberties. In Chile there is not a single political prisoner, nor the least restriction on oral or written freedom of speech. All creeds and forms of worship are
unconditionally permitted and are treated with the greatest respect.
In this country the forces of the opposition can exercise the right granted them by the law and the constitution to voice their protests and organize marches; and it is precisely on its legal substantiation that this attitude is based. Moreover, the government guarantees the right in question through the security forces dependent upon it.
Chile's process of change has been launched under a multiparty regime, with a highly developed body of law and judicial system that is absolutely independent of the other state powers. The opposition holds the majority in parliament.
By releasing pent-up dynamic forces in the economic system, we propose to do away with the traditional growth model which was based almost entirely on the expansion of exports and on import substitution. Our strategy implies assigning priority to popular consumption and relying upon domestic market prospects. We do not advocate economic self-sufficiency, but utilization of the immense potential represented by our people and our resources as active agents of development.
One of the primary objectives of the People's Government is the recovery of the country's basic sources of wealth for its own use.
We have nationalized iron, steel, coal and nitrates, which now belong to the Chilean people. We are nationalizing copper through a constitutional reform that has been unanimously approved by a parliament in which the government does not hold the majority. We have taken charge of the copper industry and have achieved a high production figure, overcoming immense technical and administrative difficulties, and remedying serious deficiencies imputable to those who were drawing the profits of these mines.
The recovery of our basic resources will now enable us to use for our own benefit the surpluses formerly sent abroad by the foreign companies. Thus we shall improve our balance of payments.
The nationalization of copper was an inevitable step which could brook no delay. To assess the harm that was being done to our economy, suffice it to quote only a few figures: according to their book values, the copper-mining companies made a net initial investment of $30 million in Chile 42 years ago, and since then, without having subsequently brought in any fresh capital, have withdrawn the enormous sum of over $4,000 million — an amount almost the equivalent of our current external debt. They have also bequeathed us credit commitments totaling over $700 million, which the state will have to pay off. According to the 1968 balance sheet, the Anaconda Company had placed only 17 percent of its total world investment in our country. Yet it obtained 79 percent of its profits from Chile.
I will refer to only two other aspects of my government's socioeconomic action: one is its policy of broad and radical income redistribution, and the other the speeding-up of the agrarian reform, with the aim of ensuring that by the end of this year not a single latifundio will be left in Chile. This reform includes a dynamic and realistic agricultural development strategy. Thus, in but a few years we hope to make up the food deficit which nowadays compels us to import food-stuffs to a value of over $300 million, a sum out of proportion to our resources.
The regional effort
All that has been done at the national level has been complemented by a determined policy of economic integration with the Latin American countries. In particular, the Andean Pact (whose members are Bolivia, Chile, Colombia, Ecuador and Perú) is a living example of the immense possibilities that exist for cooperation between underdeveloped countries, when there is a firm political will to take action.
In less than three years we have trebled our reciprocal trade, and we are applying instruments for coordinating the economic strategies of the individual countries. To this end, we have agreed upon a Common Treatment for Foreign Investment, which puts an end to our suicidal competition to tap external resources and corrects unfair practices that have long been in current use. We are fully convinced that integration among countries like ours cannot derive solely from the mechanical interplay of market forces; joint planning must be undertaken for the key sectors of the economy, with a view to determining the lines of production that each country will be called upon to undertake.
The Andean Pact — authentically Latin American — is of vital importance not only because of the technical pragmatism with which we are tackling problems as they arise, but also because we are conducting an autochthonous experiment in integration, based on the most absolute respect for ideological pluralism and for each country's legitimate right to adopt whatever internal structures it may deem most appropriate.
The structure of international economic relations and underdevelopment
The task assigned to the third session of UNCTAD is to design new economic and trade structures, precisely because those established in the postwar period, which are seriously prejudicial to the developing countries, are on the verge of complete collapse.
The concepts formulated at Bretton Woods and Havana, which brought into being the International Bank for Reconstruction and Development (IBRD), the International Monetary Fund (IMF) and the General Agreement on Tariffs and Trade (GATT), were characterized by exchange, trade and development financing systems based on the interests of a few dominant countries. They evolved at a time when war between the industrial countries of the West and the socialist world was deemed inevitable. As always, economic interests and political interests joined forces to overbear the countries of the Third World.
The systems in question established the rules of the trade game. They closed markets to the products of the Third World through the establishment of tariff and non-tariff barriers, through their own anti-economic and unfair production and distribution structures. They set up pernicious financing systems. Furthermore, they determined shipping practices and norms, fixed freight rates and thus secured a virtual monopoly of cargo. They also left the Third World countries to watch the march of science as outsiders, and exported to us technical know-how which in many cases simply constituted an instrument of cultural alienation and of increased dependence. We poorer countries cannot allow this situation to continue.
Moreover, the systems conceived at Bretton Woods and Havana have proved incapable of raising the level of living of more than half the human race, or even of maintaining the economic and monetary stability of their own creators and administrators, as has been demonstrated by the dollar crisis which precipitated a collapse.
New world conditions facilitating the work of UNCTAD III
Since the second session of UNCTAD at New Delhi, which was so great a disappointment to the developing countries, world events themselves have transformed the whole political and economic scene, and today there are better possibilities for UNCTAD III to take important steps in the direction proposed.
It is clear to all that the financial conceptions of the postwar period are tottering; that the new or strengthened centers of political and economic power are generating striking changes among the industrialized countries themselves. Peaceful coexistence between the capitalist and socialist countries has finally carried the day. After 20 years of injustice and violation of international law, the exclusion of the People's Republic of China from the world community has come to an end.
Furthermore, in our countries the growing resistance to imperialist supremacy and likewise to internal class domination is daily increasing in strength; a healthy nationalism is gaining renewed vigor. Possibilities are opening up, embryonic as yet although promising, for the less developed countries to make their efforts at self-improvement under a milder degree of external pressure and at a less heavy social cost. Among these hopeful signs is the awareness which the poorer nations are acquiring of the factors responsible for their backwardness. On occasion, their conviction is so profound that no foreign power and no native privileged group can sway it, as is shown by the invincible heroism of Vietnam. Few still dare to expect all the countries of the world to adopt the same socio-economic models. What is compulsory, on the other hand, is the mutual respect which makes it possible for nations with different socio-political systems to live side by side and trade with one another. The present time is witnessing the emergence of specific possibilities for constructing new international trade patterns, which may at last open up prospects of equitable cooperation between rich and poor nations.
These prospects rest upon two bases. Firstly, the decisions which substantially affect the destiny of mankind are increasingly influenced by world opinion, including that of the countries which uphold the status quo. Secondly, conditions are arising which make it advantageous for the central countries themselves (although not for all their enterprises) to establish new patterns for their specifically economic relations with the peripheral countries.
Obviously, the forces of restriction are not yet beating a general retreat. The new hopes that promise liberation may lead only to new forms of colonialism. They will crystallize in one shape or the other according to our clarity of thought and capacity for action. Hence, the exceptional importance and timeliness of this third session of UNCTAD.
Just as in the last century the forces unleashed by the Industrial Revolution metamorphosed the customs, ways of life and modes of thought of all countries, so today the world is being swept by a tide of new technical and scientific discoveries which have the power to bring about still more radical changes, in conflict with preexisting social systems.
We should make sure that the march of pure and applied science is not so conditioned by inflexible social and political structures — both national and international — as to militate against the liberation of mankind. We know that the Industrial Revolution and the wave of change it brought represented for many countries a mere transition from colonial to neocolonial status, and for others, direct colonization. For example, in the international telecommunications system a formidable danger is implicit: 75 percent of it is in the hands of the developed countries of the West, and of this proportion more than 60 percent is controlled by the big United States private corporations. Both to you, Mr. Secretary General, and to the delegations present, I wish to point out that in less than 10 years our community institutions and our homes will be flooded by information and publicity which will be directed from abroad by means of satellites of high transmission power, and which, unless counteracted by timely measures, will serve only to increase our dependence and destroy our cultural values. This danger must be averted by the international community, which should demand that control be exercised by the United Nations.
Another factor that should be regarded as more favorable stems from the increasingly obvious conflicts between the interests of the wealthy nations (those which are of real benefit to their peoples) and the private interests of their great international corporations. The overall cost (military, economic, social and political) of operating through transnational enterprises exceeds their contribution to the central economies and becomes more and more burdensome to the taxpayer.
We should also take into account the depredations of these consortia, and their powerful corruptive influence on public institutions in rich and poor countries alike. The peoples affected oppose such exploitation, and demand that the governments concerned should cease to leave part of their external economic policy in the hands of private enterprises, which arrogate to themselves the role of agents promoting the progress of the poorer countries, and have become a supranational force that is threatening to get completely out of control.
This undeniable fact has profound implications for the proceedings of the present conference. There is a serious risk that even if we arrive at satisfactory understandings among the representatives of sovereign states, the measures upon which we agree may have no real impact, inasmuch as de facto these companies handle quietly the practical application of the agreements in conformity with their own interests.
We spend our time at international meetings discussing the visible features of the Third World's structure of dependence, while its deep-lying determinants slip by us unseen, like the submerged three-quarters of an iceberg.
UNCTAD should look very carefully into this threat. This flagrant intervention in the internal affairs of states is more serious, more subtle and more dangerous than that of governments themselves, which is condemned in the Charter of the United Nations. The corporations actually seek to upset the normal functioning of the governments and institutions of other nations, to start worldwide campaigns against the prestige of a government, to make it the victim of an international boycott and to sabotage its economic relations with the rest of the world. Recent and well-known cases, which have shocked the world, and by which we are directly affected, sound the alarm for the international community, which is under an imperative obligation to react with the utmost vigor.
Reflections on some crucial problems
I now want to turn to other problems. It is for the delegations attending this conference to put forward whatever solutions they may deem appropriate. Not only is there abundant documentation prepared by the United Nations, but also — and of particular importance — the Lima Declaration, Principles and Program of Action. This document constitutes "the unified expression of the shared hopes and aspirations of mankind, as expressed by the ministers of 96 developing countries, who represent the vast majority of mankind," which should "go a long way in evoking favorable response from the international community and, in particular, from the peoples and governments of the developed world." It is for you to meet all the legitimate demands which the Action Program embodies.
They are all of vital importance. I would stress the problems relating to primary commodities because they are of basic interest to the great majority of the participants.
For my own part, I only want to place before the meeting some of the points that concern me, as chief of state of one of the Third World countries, with respect to certain items on the agenda.
It is impossible for all the industrialized countries to respond alike. Their resources and means of action are different, nor have they all had the same share of responsibility in the creation and maintenance of the existing international order. For example, neither the socialist countries nor all the small and medium-sized countries have contributed to the generation of this irrational division of labor.
Reforms of the monetary and trade systems
The first of my anxieties relates to the danger that the restructuring of the international monetary and trade systems may once again be carried out without the full and effective participation of the countries of the Third World.
In connection with the monetary system, and particularly since the crisis of last August, the developing countries have recorded their protest in all world and regional meetings. They had no responsibility whatever for the breakdown of monetary and trade machinery in whose management they had taken no part. Time and again they have urged that a monetary reform must be jointly prepared by all the countries of the world; that it must be based on a more dynamic concept of world trade; that it must recognize the new requirements of the developing countries and that never again must it be handled exclusively by some few privileged countries.
It is of vital importance that the conference should unhesitatingly and unreservedly reaffirm these objectives.
True, the details of a new system can be completed in other more specialized gatherings. But so close is the connection between monetary problems and trade relations, as the crisis of last August testified, that it is the duty of UNCTAD to discuss the subject in depth and to see that the new monetary system, studied, prepared and administered by the whole of the international community, will also serve to finance the development of the Third World countries, alongside the expansion of world trade.
In respect of the indispensable trade reform there are some grounds for alarm. A few weeks ago the United States and Japan, on the one hand, and the United States and the European Economic Community, on the other, sent respective memoranda to GATT. These two almost identical documents declare that the sponsors pledge themselves to launch and actively support the conclusions and implementation of integral agreements under GATT as from 1973, with a view to the expansion and liberalization of international trade. They add that, furthermore, their aim is to improve the level of living of all peoples, and that ways of achieving this include, among others, the progressive lowering of trade barriers, and endeavors to improve the international framework within which trade is carried on.
It is, of course, satisfactory that three great centers of power should decide to subject their international economic relations to a through overhaul, taking into account the improvement of the levels of living of all peoples. It is also laudable that they should mention the need to reorient trade policy through international or regional agreements making for market organization. But it does not escape our observation that the liberalization of trade among the industrialized countries of the West wipes out at a stroke of the pen the advantages of the general system of preferences for the developing countries.
And what we find most disquieting is that the three great economic powers are proposing to implement this policy not through UNCTAD but through GATT. The General Agreement on Tariffs and Trade has always been essentially concerned with the interests of the powerful countries; it has no reliable linkage with the United Nations and is not obliged to adhere to its principles, and its membership is at odds with the concept of universal participation.
I think that the developed countries should put an end to these continual onslaughts against UNCTAD, which is the world community's most representative body in this field, and affords exceptional opportunities for negotiating major economic and trade questions on a footing of legal equality. The developing countries, in contrast, wish to perfect the existing institution and broaden its authority. It is essential that UNCTAD should acquire full autonomy and become a specialized agency of the United Nations system, so that it can exercise greater freedom of action, greater influence, greater capacity to solve those crucial problems which fall within its province. We peoples of the Third World, who did not speak out at Bretton Woods or at the later meetings where the financial system now in force was drawn up, who do not participate today in the decisions of the Ten on the financial strategy of the great Western powers; we who have no voice in discussions on the restructuring of the world monetary system; we need an efficacious instrument to defend our threatened interests. At the present time, this instrument can only be UNCTAD itself, converted into a permanent organization.
The overburdening of the developing countries by debt
My second concern relates to the external debt. We developing countries already owe more than $70,000 million, although we have contributed to the prosperity of the wealthy peoples from time immemorial, and more particularly in recent decades.
External debts, largely contracted in order to offset the damage done by an unfair trade system, to defray the costs of the establishment of foreign enterprises in our territory, to cope with the speculative exploitation of our reserves, constitute one of the chief obstacles to the progress of the Third World. The Lima document and Resolution 2,807 of the most recent General Assembly of the United Nations dealt with the question of indebtedness. The latter resolution took into consideration, inter alia, the increasingly heavy burdens imposed by debt servicing on the countries of the Third World, the weakening of gross transfers of resources to the developing countries and the deterioration of the terms of trade. It emphatically requested the competent financial institutions and the creditor countries concerned to give sympathetic consideration to requests for rescheduling or consolidation of their debts with appropriate periods of grace and amortization, and reasonable rates of interest. It also invited the same countries and institutions to examine more rational ways of financing the economic development of the Third World. All this is highly satisfactory for us.
I believe it is indispensable to make a critical study of the way in which the Third World's external debt has been contracted and the conditions required to rescue it from this position without impairing its efforts to combat underdevelopment. Such a study might be undertaken by the secretary general of UNCTAD and presented to the General Assembly of the United Nations.
At the present time Chile exemplifies the seriousness of the situation. Our total annual income is $1.2 billion. This year we are due to pay $408 million. It is inconceivable that out of every $100 that flow into its coffers a country should have to earmark $34 for the servicing of its external debt.
Pressures to prevent the exercise of the right to dispose freely of natural resources
My third concern is directly connected with the second. It relates to the real and potential pressure exerted to restrict the sovereign right of peoples to dispose of their natural resources for their own benefit. This right has been proclaimed in the Covenants on Human Rights, in several resolutions of the General Assembly and in the First General Principle adopted at the first session of UNCTAD.
In the Lima Declaration the Group of 77 very clearly formulates an additional principle for the defense of our countries against threats of this kind. We need to raise it from the status of a principle to that of a ruling economic practice. It reads as follows: "The recognition that every country has the sovereign right freely to dispose of its natural resources in the interests of the economic development and well-being of its own people; any external, political or economic measure or pressure brought to bear on the exercise of this right is a flagrant violation of the principles of self-determination of peoples and of nonintervention, as set forth in the United Nations Charter, and, if pursued, could constitute a threat to international peace and security."
Why did the developing countries wish to be so explicit? The history of the past 50 years abounds in examples of direct or indirect coercion, military or economic — cruel for those who suffer it and degrading for those who inflict it — designed to prevent the underdeveloped countries from making free use of their basic resources which represent the daily bread of their inhabitants. Mexico, Central America and the Caribbean have known it. The case of Peru, in 1968, elicited an uncompromising retort from the Latin American countries at a meeting of the special Committee on Latin American Coordination (CECLA) — witness the Consensus of Viña del Mar.
Chile has nationalized copper, the basic resource which accounts for over 70 percent of its exports. Little weight has been carried, however, by the fact that the nationalization process, with all its implications and consequences, has been the clearest and most categorical expression of the will of its people, and has been conducted in full accordance with the exact dictates of provisions established in the nation's constitution. Little weight has been carried by the fact that the foreign companies which exploited the mines have drawn profits many times greater than the value of their investments. These companies, which amassed huge fortunes at our expense, and assumed that they had the right to burden us indefinitely with their presence and their abuses, have stirred up forces of every kind, including those of their own state institutions, in their country and elsewhere, to attack and injure Chile and its economy.
I am unwilling to leave this unpleasant subject without singling out, among the forms of pressure to which we have been subjected, two whose impact transcends the violation of the principle of nonintervention.
One is designed to prevent Chile from obtaining new terms and new time limits for the payment of its external debt. I imagine our creditors will not countenance it. Friendly countries are not likely to lend themselves to forcing down still farther our people's low level of living. It would be an injustice, a tragic injustice.
The other type of pressure seeks, by virtue of a law on foreign aid adopted by one of the biggest contributors to the International Bank for Reconstruction and Development (IBRD) and to the Inter-American Development Bank (IDB), to make those banks' financial assistance to Chile conditional upon our applying policies which would infringe constitutional principles governing the nationalization of copper. Of these two banks, one is linked to the United Nations and the other to the Organization of American States, whose official principles and objectives forbid them to accept terms such as these.
If policies like these were implemented, they would deal a deathblow to international cooperation for development and would destroy the very basis of the multilateral financing systems to which many countries, in a cooperative effort contribute as far as they can. Such policies imply the downfall of conceptions which embodied a sense of worldwide solidarity, and spotlight the naked fact of ulterior motives of a strictly commercial order. This would set the clock back 100 years.
Remarks on access to technology
I would also draw the attention of this meeting to the urgent need for the Third World to have access to modern science and technology. The obstacles we have encountered hitherto are determinants of our underdevelopment.
Industrialization, as an essential part of the overall development process, is closely related to a country's scientific and technical creative capacity, whereby industrial development can be adjusted to the real characteristics of each region, whatever its present stage of economic growth.
Today, our capacity for the creation of technology is far from adequate, as the result of our history of dependence. For example, our research projects follow the theoretical models of the industrialized world. They are inspired more by the real conditions and needs of the developed countries than by those of our own. And with steadily increasing frequency, thousands of scientists and professionals leave their native lands to work in the affluent countries. We export ideas and skilled personnel; we import technology and dependence.
To find a solution for this basic problem that would enable us to finish with technological subordination is a difficult, slow and costly process. We are faced with two possibilities.
On the one hand, we can continue to base our industrial development on foreign investment and technology, intensifying more and more the dependence which is threatening to turn us back into
colonies. Latin America has enjoyed a long period of buoyant optimism deriving from the policy of industrial development through import substitution. In other words, the installation of factories for local production of what had formerly been imported, an operation which was subsidized with costly fringe benefits: exchange facilities, customs protection, loans in local currency and government guarantees for financing from abroad. Experience has shown that this type of industrialization — promoted mainly by international corporations — has proved to be a new instrument of recolonization. Its harmful effects include the establishment of a technician-manager stratum which has grown increasingly influential, and has become a defender of the foreign interests which it has identified with its own. Still more serious have been the social effects. The big industrial plants, using advanced techniques, give rise to serious unemployment and underemployment problems, and bankrupt small- and medium-scale domestic industries. We should also mention the tendency to concentrate on industries producing consumer goods which are of use to only a limited group of privileged persons, and indirectly create conspicuous consumption tastes and patterns to the detriment of the values characteristic of our culture.
The other possibility consists in creating or strengthening our own scientific and technological capacity, resorting in the meantime to a transfer of knowledge and methods firmly supported by the international community, and prompted by a humanistic philosophy which sets up the human being as its major objective.
At present, this transfer takes the form of trade in a merchandise which appears under different guises: technical assistance, equipment, production processes, etc. This commerce is conducted on certain explicit and implicit terms which are extremely unfavorable to the buyer country, especially if it happens to be underdeveloped. In 1968, for instance, Latin America disbursed over $500 million under the head of purchase of technology alone.
These conditions must be abolished. We must be able to select technology in relation to our own needs and our own development plans.
Towards solidarity in the world economy
What can be done in these circumstances? The world as it is, with all its injustice towards the underdeveloped countries, cannot be changed overnight. We have no choice but to continue the struggle to mitigate the negative effects of this state of affairs and lay the foundations for constructing what I would call a solidarity world economy.
The present international conjuncture is favorable for endeavoring to change the economic order. Perhaps this is an over-optimistic appraisal, but the truth is that international events in the last few decades have resulted in a gradual accumulation of factors which have finally crystallized into a new opportunity. The most striking feature is the possibility offered to the world of more self-respecting international relations, free from submission and despotism alike. There is understanding between the capitalist world powers; there is coexistence and dialogue between these and the socialist countries.
Could something similar develop between the former colonizing and imperialist countries on the one hand, and the dependent peoples on the other? The future will tell whether we peoples of the Third World will gain recognition for our rights through the restructuring of international trade and the establishment of relations that are fair to each and all. The latter, it must be emphasized, may be the more delicate and thorny question.
It is for the delegations present at the third session of UNCTAD to ask themselves on what bases it would be possible to organize a new form of human coexistence, founded at last on solidarity, after the long-drawn-out history of oppression we have lived and still are living through.
Let me say, however, that in my own opinion one of these bases might be disarmament on lines that would lay the foundations for a solidarity economy on a world scale, although some believe that this is beyond the bounds of possibility.
For the socialist economies, the prospect of peaceful development is their fundamental historical aspiration. Once peace has been firmly established, they will be able to play a more active part in multilateral cooperation and to supply the world market with technical and productive resources which would play a decisive role in their own prosperity and would make an effective contribution to the success of the Third World in overcoming the distorting effects of centuries of exploitation.
In view of the experience of recent years, I do not think that the capitalist countries should seek to perpetuate such ideas as colonialism and neocolonialism, and to persist in the maintenance of an economy for war in order to ensure full employment. Only the Third World, with its immense needs, can constitute a new economic frontier for the developed countries. Only such a new frontier is capable — more so than a war economy — of absorbing the production capacity of the large companies and giving employment opportunities to the whole of the labor force. I should like to believe that enlightened leaders, aware of the radical changes that lie ahead, are beginning to give serious thought to new solutions, in which the Third World and the socialist countries will participate fully.
Fund for homogeneous human development
It is essential to make a determined search for an economically viable equation between the vast needs of the poorer nations and the immense production capacity of the richer countries. The solution might be found in a strategy of pacification, through a disarmament plan under which a high percentage of the expenditure hitherto allocated to munitions and warfare would be assigned to a fund for homogeneous human development. This fund could be available primarily for long-term loans to enterprises in the same countries that set it up.
As the amount spent every year on war and armaments nowadays exceeds $220,000 million, potential resources exist that would be more than enough to start shaping a solidarity world economy.
The objectives pursued would be to turn a war economy back into a peace economy and, concurrently, to contribute to the development of the Third World. The fund would finance major projects and programs for these countries, of a kind such as would absorb the manpower released by the reduction of expenditure on armaments, would produce enough to cover their costs, and, above all, would be set up as autonomous national companies capable of sustained growth. At the same time, it would launch a new era of continuing economic development; of full employment of the factors of production, including the whole of the labor force; and, above all, of progressive bridging of the gulf between the prosperous nations and the despoiled peoples.
This is not a utopia. In the world of today, which must cooperate or perish, new ideas, prompted not only by justice but invariably by reason, may result in worthwhile solutions for the human race.
To the delegations here present I would say that I wish them every success in their work. Chile will do all it can to contribute to that end, taking advantage of all the opportunities afforded it by its position as host to facilitate contacts and create a climate favorable to understanding. Its delegates will not seek unnecessary clashes of opinion, but fruitful agreements.
The passionate fervor that an entire people has put into the construction of this building is a symbol of the passionate fervor with which Chile desires to contribute to the construction of a new humanity, so that in this and in the other continents, hardship, poverty and fear may cease to be.
I dare to believe that this conference will give positive answers to the anguished questionings of millions of human beings. Not in vain has the long journey to this distant country been made by the most distinguished economic leaders of almost all the countries of the world, including those that have most power to turn the course of events.
Of one thing at least you can be certain: as was said at Lima, the peoples of the world will not allow poverty and affluence to exist indefinitely side by side. They will not accept an international order which will perpetuate their backward state. They will seek and they will obtain their economic independence and will conquer underdevelopment. Nothing can prevent it: neither threats, nor corruption, nor force. Progress and the liberation of the vast underdeveloped world depend on the urgently needed transformation of the world economic structure, on the conscience of countries, on choosing a path of cooperation based on solidarity, justice, and respect for human rights. Otherwise, on the contrary, people will be forced to take the road of conflict, violence, and suffering precisely in order to impose the principles of the Charter of the United Nations.