The Chilean Road to Socialism


CHAPTER 2

U. S. Policy in the Making: Chile, to Accommodate or Crush

THE LOW PROFILE SWINGS A BIG STICK

DAVID EISENHOWER WITH DALE L. JOHNSON

An original article for this volume based upon work by the Chile Research Group of Rutgers University.
David Eisenhower is a graduate student in sociology at Rutgers University.

United States relations with Chile since the assumption of power by the Popular Unity government provide a convenient opportunity to analyze the content and institutional forces behind the proclaimed "low profile" approach which the Nixon administration has adopted as the main component of U.S.-Latin American policy.

United States policy toward Chile since September 1970 has developed through three distinct stages. From September 1970 to July 1971 the government officially pursued a "wait and see" approach. A second stage, from roughly July 1971 to December 1971, consisted of a gradual tightening of the economic screws in an effort to coerce Chile and create economic difficulties for the country. The third stage, the "big stick," still prevails and was symbolized by President Nixon's "no nonsense" policy on nationalization of properties of U.S. corporations operating abroad, proclaimed in January 1972 and concretized with stiff economic sanctions against Chile.

All three stages are consistent with the Nixon administration's general "low profile" approach to U.S.-Latin American relations. The low profile is based on a conception of a "mature partnership" between the United States and its southern good neighbors, a limited tolerance for Latin American nationalism, a shifting of some of the panoply of coercive powers underlying international relations from the U.S. Government to international institutions, and an avoidance of the military interventions that the United States has historically relied on to impose its will upon Latin American dependencies. Our analysis of Chilean-U.S. relations from September 1970 to May 1972 leads us to conclude that the "low profile" in the end is based on a "big stick" exercised through economic and diplomatic sanctions and covert subversive operations against nations that pursue their economic independence. In the case of Chile, the Nixon administration and the constellation of corporate interests behind U.S. policy have adopted a course of action that may have the short-run consequence of creating grave economic difficulties and political turmoil within Chile. The ultimate consequence of this policy may be to precipitate civil war in Chile.

The first "wait and see" stage actually had two thrusts. At the level of official government policy, a cool but "correct" diplomacy prevailed, with the exception of a few veiled threats and diplomatic affronts apparently meant to show disapproval of the direction of the new government and to warn Chile that relations could go downhill if the country did not behave properly in the eyes of the United States. The veiled threats consisted of Nixon's denunciation of Chile's early diplomatic recognition of Cuba as a "challenge to the Inter-American System" and the government's Export-Import Bank classification of Chile as a "poor risk." The diplomatic affronts consisted of such measures as Nixon's failure to send Allende the customary congratulatory message upon his election and Henry Kissinger's cancellation of a scheduled visit to Valparaiso by the nuclear carrier Enterprise.

A second thrust to the low profile, however, developed immediately upon receiving news of Salvador Allende's plurality in the September 4, 1970, election. This consisted of covert activities by the CIA and behind-the-scenes efforts by one U.S. corporation, ITT, to pressure the U.S. Government and other American corporations operating in Chile to prevent Allende from taking office on November 3, 1970. There is evidence that the CIA was in contact with elements within the Chilean right wing and Armed Forces who evolved plans to maneuver Allende out of this electoral victory, even to plunge the country into economic chaos and create a situation propitious for a military intervention. The weight of the evidence indicates that the State Department, Henry Kissinger, and President Nixon politely listened to ITT's concerns but were somewhat resistant to the corporation's pressures for immediate strong action. Nevertheless the CIA continued its operations, and the State Department has not denied sending September 17, 1970, instructions to Ambassador Korry "to do all possible—short of a Dominican Republic-type action—to keep Allende from taking power."

The second stage, consisting of suspension of economic aid and credits, was anticipated as early as March 1971 with the cutoff of shipments of foodstuffs under the previous aid program and the holding up of credits for "review," while officially denying that Chile's loan requests had been disapproved. The economic pressures became serious, however, after Chile nationalized the Anaconda and Kennecott copper mines, in July 1971. Shortly thereafter the Export-Import Bank held up credits to Chile to purchase three Boeing commercial jets "pending a clarification in policies toward foreign investment." No credits have since been granted, or are likely to be granted, by the Export-Import Bank to Chile to finance imports of U.S. goods. With measures applied subsequently by the U.S. Government, private banks, and international lenders, this amounts to a de facto embargo on the import of U.S. goods. (Chile's industrial economy is highly dependent upon U.S. technology and replacement parts.)

During this period, economic sanctions included such measures as the closure of credit from private U.S. banks and the blocking of loans for petrochemical and agricultural development, as well as the denial of a $50-million request for earthquake aid, by the Inter-American Development Bank. By October 1971 all U.S. aid programs (except military), which had previously been held up for review, were officially suspended. Also in October the newly appointed ambassador, Nathaniel Davis, arrived in Santiago. Davis is ex-ambassador to Guatemala, where he oversaw all forms of assistance to Guatemala's repressive, right-wing regime. One suspects that the appointment of an ambassador with experience in dealing with and strengthening counterrevolutionary regimes is one indication of what the Nixon administration anticipates for Chile.

By the end of 1971 a state of virtual economic warfare existed between the United States and Chile. Chle is determined to gain economic independence and maintain its national sovereignty, while the strategy of the United States is to attempt to paralyze the Chilean economy through external pressures. Apparently the government believes that the economic difficulties in Chile will become so overwhelming that the Allende government will be overthrown. In December 1971 presidential aides Robert Finch and Herbert Klein returned from a tour of Latin America to comment that "Allende won't last long."

As long as the Allende government remains in power we can anticipate a close co-ordination between the U.S. Government, private corporate interests, and the World Bank, International Monetary Fund, and Inter-American Development Bank to effect a policy of the "big stick." Minimally, this will involve application of constant diplomatic pressures and maximum feasible economic sanctions, such as efforts, already in motion, to undermine Chile's position as a leading world producer of copper (see our previous analysis of copper nationalization).

This paper will examine the development of U.S.-Chilean policy through these three stages in terms of the institutional means, which we term "official conspiracies," by which "multinational" corporations shape the working assumptions and give concrete direction to U.S. foreign policy. Throughout each stage of the "low profile" there have been two general policy lines pursued by different actors in the political drama. On the one hand, a "hard fine" has been consistently pushed by certain corporations with immediate vested interests at stake such as ITT, and certain government agencies, specifically the CIA and the Department of the Treasury. On the other hand, a "softer line" has been pushed by corporate interests with a broader vision (IBEC, for example), the U.S. press, and the Department of State. The policies actively pursued during the first two stages seemed to be a compromise between these two positions. In the process of consensus formation among the concerned parties, the third stage of U.S.-Chile policy evolved to represent a commitment closer to the hard-line position. The emergent policy can only be considered "low profile" in that an embargo or a blockade has not been mandated or troops dispatched.

We begin with an analysis of the reactions to Chilean nationalism and socialism by U.S. corporations with substantial investments in the country.

Corporate Reaction

The "ITT-Chile papers," staff memos [1] that escaped the busy teeth of International Telephone & Telegraph paper shredders to find their way into the syndicated column of Jack Anderson, reveal the details of abortive plans to prevent the Marxist government of Salvador Allende from taking office in Chile. The principals involved in the scheming were ITT, the CIA, the American ambassador, and rightist elements of the Chilean upper class and the Army, with Eduardo Frei, ex-President of Chile, and White House and State Department people also implicated.

—That the CIA plotted with "select members of the Chilean Armed Forces in an attempt to have them lead some sort of uprising" [2] is not in itself very shocking, since the CIA with past operations in Cuba, the Congo, Indonesia, Guatemala, Laos, and Brazil, among other places, is commonly known, or justifiably suspected, to be involved in such clandestine activities.

—That the American ambassador, Edward Korry, received a message from the State Department giving him a "green light," that is, "maximum authority to do all possible—short of a Dominican Republic-type action—to keep Allende from taking power," [3] does make one pause, but mainly to ask why the military solution to troublesome situations (Lebanon, Vietnam, Cambodia, Laos, Dominican Republic, etc.) was ruled out.

—That ITT personnel were so actively engaged in attempts to both influence U.S. policy and shape Chilean events, however, is a different matter, raising some serious and far-reaching questions about the nature of corporate influence on policy in general which, in the process of being raised, immediately cast doubt on the officially held distinction between the private and public sectors.

As the following examples of ITT's activities demonstrate, both the questions and the doubt are well founded. ITT:

1) contacted Henry Kissinger's staff to convey "deep concern" about the developing situation in Chile "not only from the standpoint of our [ITT] heavy investment but also because of the threat to the entire hemisphere";

2) sent a letter to Henry Kissinger advising him that after "serious consideration" of the implications of events in Chile, particularly their potential impact on foreign investment, it was ITT's conviction that "the present moment [represented] a most expedient time to reappraise and strengthen U.S. policy in Latin America";

3) made direct contact with clandestine CIA operatives in Chile concerning the Agency's plans to prevent Allende from taking office;

4) made it known that the company was "prepared to assist financially in sums up to seven figures" in any plan the government might have to deal with the Chilean situation;

5) tried to "get other American companies aroused over the fate of their investments and join [ITT] in pre-election efforts"—efforts that included attempts to persuade "American business to cooperate in some way to bring on economic chaos" in Chile, producing the conditions that would then trigger the military coup the CIA was apparently working on;

6) presented the company's case to "friends in Congress" and directly to President Nixon and Secretary of State Rogers to arouse their sympathy and support for a "tough" response.

Thanks to Jack Anderson and his informant(s), then, we not only have a suggestion of what initial U.S. reaction and intentions were vis a vis Chile's nationalism and incipient socialism, but we also have a rare peek at the behind-the-scenes maneuverings of a powerful corporate interest. This certainly lends substance to the thesis that U.S. private enterprise with government support engages in what the Washington Post, after reviewing the ITT-Chile papers, conceded to be "aggressive economic imperialism abroad. . . ."

The ITT-Chile papers also reveal that consensus and concerted action among the different corporations concerned and government agencies was not entirely present. ITT did not work from behind a united front of U.S. investors in 1970. GM, Ford, Bank of America, and other U.S. corporations apparently refused at the time to go along with ITT's plan to induce "economic chaos" in Chile. Not that ITT was alone in acting. Anaconda is said to have helped finance a pre-election "campaign of terror" and undertook, with Kennecott, actions amounting to sabotage in the copper mines. Both Anaconda and Kennecott issued sternly worded "white papers" stating their positions on nationalization. Ralston Purina sharply cut back production at its plant, and the U.S. firm NIBSA shut down its operation the day preceding Allende's inauguration. A representative of NIBCO, parent company of NIBSA, was accused of suggesting an "Indonesian solution" (killing of all Communists) for Chile. Ford shut down in May 1972, throwing six hundred workers off the job until the state intervened to reopen the plant. A consulting firm for business information/intelligence, World Wide Information Service, prepared a report on Chile for its clients in early 1971. The report gave accurate information on the Allende government's progress, then concluded that Chile was on its way toward becoming a Communist state that would experience great problems. [4]

Just as among the various corporate interests, there was dissension among elements of government officialdom concerning the appropriate official response. Assistant Secretary of State for Latin American Affairs Charles Meyer and National Security Adviser to the President Henry Kissinger were officially cool to ITT-CIA maneuvers, while Treasury Secretary Connolly was said to be pushing for an immediate hard-line response.

Nevertheless, by the end of 1971 a consensus among private corporate interests had apparently been reached and the U.S. Government had shifted its official policy from "wait and see" to the "big stick." To understand what lies behind this achieved consensus and policy shift it is necessary to understand established interconnections between private interests and public policy. Analysis of the content and sponsors of policy can proceed fruitfully by focusing on "official conspiracies," that is, on the formal, open, routine, institutionalized arrangements linking business to government.

Such arrangements have been found to proceed from organizational forums within which various policy alternatives and directions are debated, developed, and disseminated to concerned parties in business and government. The result is that a semblance of policy consensus among the nominally competing corporate interests has an opportunity to emerge, with the further result that united actions may then be undertaken.

Official Conspiracies

"Official conspiracies" are those institutionalized ways in which corporate interests shape and guide policies of the U.S. Government. They exist to formulate and disseminate general definitions of policy; that is, they deal with the underlying concepts, which have in the past given birth to such programs and institutions as the Marshall Plan, the World Bank, foreign-aid programs, international banking and monetary policy, "containment" policy, and more recently the "low profile" approach to Latin American policy. Stated yet another way, they furnish the ideological background that in turn provides those directly in the actual policy-making apparatus (the National Security Council, the Council on International Economic Policy, the Departments of State, Treasury, and Commerce, etc.) with the critical assumptions that help guide major as well as day-to-day decisions.

The main apparatus of official conspiracies consists of organizations controlled by members of the corporate elite class that sponsor research, commission studies, publish influential journals, issue reports, engage in formal and informal dialogues with government officials, formulate policy guidelines, see that their men are appointed to key government posts, etc. [5] Such organizations dealing with foreign policy include:

— Corporate-controlled research-planning, advising, and report-issuing public affairs groups: the Council on Foreign Relations (CFR), the Committee for Economic Development (CED), and the National Planning Association (NPA).

Businessmen's organizations: the Chamber of Commerce (both domestic and international), the Council of the Americas, the National Foreign Trade Council (NFTC), the Emergency Committee for American Trade (ECAT), the Agribusiness Council, Inc., the International Economic Policy Association (IEPA).

Executively commissioned task forces, committees, and missions: Recent ones include the Commerce Committee for the Alliance for Progress (The Grace Report, 1963; Chairman, W. R. Grace); The Task Force on International Development (Peterson Report, 1970, chaired by former President of Bank of America); the Committee to Strengthen the Security of the Free World (Clay Report, 1963); the Advisory Committee on Private Enterprise in Foreign Aid (the Watson Report, 1965, chaired by Chairman of IBM); the Commission on International Trade and Investment Policy (Williams Report, 1971, chaired by head of the Finance Committee, IBM); and the U.S. Presidential Mission for the Western Hemisphere (Rockefeller Report, 1969).

Citizen (read business) advisory councils and committees: Those are associated with such agencies as the Export-Import Bank, the Agency for International Development, the Overseas Private Investment Corp., the Inter-American Development Bank, Treasury, State, Commerce, etc.

U.S. Representatives to U.N.-sponsored panels: the 1969 panel on Foreign Investment in Developing Countries, which included Emilio Collado (Standard Oil), David Rockefeller (Chase Manhattan), and David Meads (IBEC).

Research Institutes: the RAND Corporation, the Twentieth Century Fund, the Brookings Institution, the Hudson Institute, and various university "think tanks" at places such as Harvard, MIT, Stanford, and Columbia.

Foundations: Ford, Rockefeller, Carnegie, and others.

"Official conspiracies" are taken for granted. That is, they appear to be very natural phenomena. And in fact, what could be more natural than a chairman, president, or vice-president from a large corporation or partner from a corporate law firm taking some time off from his business duties to perform his "civic duty." In the context of American society nothing is more natural. However, the upshot of such a common practice is that almost all official conspiracies are engaged in by men who share essentially the same "life-space" and "world view," the former generally restricted to corporate structures (multinational corporate structures especially) and the latter restricted to the ideology of corporate private enterprise. Hence the perspective brought into their civic duties is overwhelmingly one that consciously or unconsciously considers the world in dire need and desirous (except where there are "irrational" strains of nationalism) of American corporate investment and technology. Their frame of reference allows them to assume that their own private interests are the national interest.

The impact of official conspiracies can be illustrated by examining the composition and influence of a recent presidentially appointed commission, the Task Force on International Development (the Peterson Report). [6]

The Task Force was appointed by President Nixon in 1969 and submitted its report and policy recommendations in March 1970. Rudolf Peterson, former President of the Bank of America, chaired the Task Force. He was joined by top corporate officials such as David Rockefeller of Chase Manhattan Bank (who is also an official of a host of other corporations and policy-making organizations); presidents or board chairmen of corporations such as H. J. Heinz, Levi Strauss, Deere & Company, and Encyclopaedia Britannica; and partners in key corporate law firms. The Task Force was filled in by such persons as Terence Cardinal Cooke, Archbishop of New York; a past president of the American Bar Association; a retired general now with Research Analysis Corporation; and two experts on foreign affairs from Harvard University.

The major themes of the Peterson Report revolved around the "depoliticization" and "multilateralization" of foreign assistance. It recommended the establishment of quasi-public agencies similar in structure to the Overseas Private Investment Corporation (OPIC was established in early 1970 at the bidding of big business' Senator Jacob Javits in order to promote and insure U.S. private foreign investment). These agencies are to replace the Agency for International Development's machinery, over which Congress exercised some control. The idea behind the quasi-public agencies advocated—the International Development Bank, the International Development Institute, OPIC—is that their businesslike operations, which would include corporate-dominated boards of directors and advisory councils, would make them relatively autonomous and outside the purview of Congress, thus supposedly depoliticizing foreign assistance. Regarding the "multilateralization" of aid, the report urged that steps be taken calculated to lessen the identification of assistance exclusively with the United States, thus lowering its profile, and to spread the risk, costs, and responsibility for aid, which is so often political in nature, lessening in the process the chances of the United States being charged with intervention. Intervention, of course, would still take place, but now behind the multilateral coloration of international agencies. In reality, this multilateralization does not alter U.S. hegemony over the direction and intent of aid (as this paper will demonstrate); it simply gives the appearance of doing so. [7]

Departures from particular policies normally involve studies and discussion among corporate officials in different policy organizations over a period of several years. This was the case in the shift on foreign-aid policies recommended by the Peterson Report. In the Preface, Peterson gratefully acknowledged the influence of reports dealing with aid issued by other corporate-elite missions and organizations: the Rockefeller Mission on the Americas, the Perkins Committee, the Committee for Economic Development, and the National Planning Association reports.

Policy recommendations contained in such reports normally end up as U.S. policy. President Nixon said of the Peterson Task Force:

The Task Force on International Development . . . undertook a comprehensive assessment of the conditions affecting our foreign assistance program and proposed new and creative approaches for the years ahead. Its report provides the basis for proposals which I am making today. [8]

While Congress did not implement the Administration's aid program in 1971, it will again be pushed and implemented unless Congress takes the nearly unprecedented step of resisting corporate programs strongly backed by the Executive. Aid programs are unusual in the foreign-relations field in that Congress usually has little or no say in foreign affairs. Normally policies proceed from corporate policy organizations directly to the highest levels of the Executive branch, where corporate interests have their carefully selected agents. Henry Kissinger was groomed for his present job as national security adviser, for example, by the Rockefeller family and through active membership in a principal corporate policy organization, the Council on Foreign Relations; Secretary of State Rogers has a long history of involvement with corporate policy organizations; Charles Meyer came to his present job as Assistant Secretary of State for Latin American Affairs from Sears Roebuck, United Fruit Company, and other multinational corporations with extensive Latin American operations.

The new corporate strategy on aid bears on U.S.-Chilean relations in two interrelated ways. The Task Force recommendations on multilateralizing aid fit into the "low profile" strategy, while U.S. aid and control of international sources of financing are the principal means by which the big stick is brought down on Chile's head. For Chile and Latin America generally, the low profile in fact is an effort to make the big stick heavier, at least in matters that do not require a military solution. This is to be accomplished by transferring the power inherent in control of credit and dollar flows from the U.S. Government to international agencies controlled by U.S. corporations and their European business allies.

Multilateralizing aid is one aspect of an attempt by U.S. corporations to maneuver the government into a posture in which it is not so readily apparent that U.S. foreign relations are a direct function of corporate desires for a "free world" (e.g., a world safe from the forces of nationalism and socialism), in which the corporations can expand their operations. The virtue of this is that the U.S. business interests that control the international institutions charged with funneling aid and credits to Third World nations on a businesslike basis would have tighter control of American taxpayers' money than ever before and could use it to pursue their ends as they define them, while the American government would be freer of charges of paternalism, attaching "political strings" to offers of aid, and using foreign assistance to bully other nations.

Chile became fully enmeshed in this multilateralization of credit and aid just as the new pattern was emerging. The Popular Unity government inherited a debt contracted by previous governments (part of it to finance U.S. investments there) of about $3 billion, divided between loans from the U.S. Agency for International Development, Export-Import Bank and other U.S. public and private lenders, the Inter-American Development Bank, and international agencies such as the World Bank and the International Monetary Fund, as well as European creditors.

This huge foreign debt, one of the highest on a per-capita basis in the world, came about as a consequence of two interrelated factors: 1) United States willingness to extend loans year after year because aid finances exports of U.S. goods, facilitates U.S. private overseas investment, provides economic and political support for a friendly government, and gives the United States a certain leverage over the international and internal policies of another nation; 2) the inability of previous Chilean governments to finance imports and development projects in any other way, due in turn to their inability or unwillingness to make the necessary structural changes to raise the level of internal investment. A 1966 U.S. Senate study of aid to Chile reported that "in recent years foreign credit has financed as much as 40% of official investment." [9] Service on the gradually accumulating foreign debt had already become unmanageable when Eduardo Frei was elected President in 1964. Frei renegotiated the debt in order to avoid paying 40 per cent of foreign-exchange earnings from copper exports for debt service, and then proceeded to borrow even more heavily. Repayment of the debt necessarily came out of state investment funds, and the state therefore had to borrow still more investment capital abroad in the vain hope that additional resources would be generated through development to eventually pay off the debt. In 1965-66, AID was financing 14 per cent of the entire Chilean budget. Throughout the years of the Frei regime, a substantial proportion of Chilean investment was from foreign loans, and up to 30 per cent of available foreign exchange went to servicing the debt. Foreign aid turned out to be a vicious cycle of dependency. The Alessandri and Frei governments mortgaged the nation's future to foreign creditors, and Chileans today must pay the consequences.

A substantial piece of Chile's debt falls due during 1972-74, so the Allende government, faced with dwindling foreign exchange from declining copper prices and an ambitious investment program, asked for a three-year moratorium and rescheduling of the debt. Facing the power of the bankers composing the "Paris Club" of creditors, the compromise finally reached was agreed upon with an implicit understanding that if the creditors pushed too hard, Chile's only recourse might be default. Part of the agreement extracted from Chile a "stand-by" arrangement that would permit International Monetary Fund "surveillance of Chilean economic measures." [10] At the present time, all U.S. aid and credits are suspended, and Chile finds new international credits extremely scarce. The point seems very clear: governments that pursue policies of reclaiming their national resources from foreign control and adopt policies of fomenting economic independence will have to depend upon internal resources or credits from the socialist countries.

The Peterson Task Force's warm endorsement of the Overseas Private Investment Corporation also bears directly on the Chilean case. OPIC insures American investment against losses due to expropriation, revolution, or currency inconvertibility and provides loans and pre-investment information to American corporations. OPIC now insists upon multinational participation in its underwriting activities. "This will tell the world," Bradford Mills, President of OPIC, says, "that seizure of U.S. property won't affect only the U.S., it will damage the expropriator's credit worthiness worldwide." [11]

OPIC holds the insurance for $631.8 million in U.S. investments in Chile, including Kennecott, Ford, ITT, and others. (OPIC rejected Anaconda's insurance claim for $159 million on the grounds that the company failed to keep up its premiums.) This insurance was taken out during the Frei regime, when Chile's economy experienced a rapid process of de-Chileanization; $452.8 million in insurance was issued to U.S. corporations in Chile during 1968. OPIC has insufficient reserves to meet its claims from Chilean nationalizations and has turned to Congress, asking for authorization to increase its reserves from taxpayers' money. This insurance automatically makes any dispute over the amount of compensation for nationalized investment a conflict between an agency of the U.S. Government and the government of another country. This opens the possibility for the government to use its power to act as a collection agency for those investors who believe they have been unjustly compensated by their former hosts.

This situation also makes it possible for corporations to use their insurance to strengthen their bargaining position. This was precisely the tactic of ITT when Chile indicated its interest in transforming the Chile Telephone Company into a public enterprise by purchasing ITT's 70 per cent share of the company.

In March and April of 1971, ITT representatives met with President Allende to discuss the transfer and Chile's offer to create a joint venture with ITT's Standard Electric Co., in which the government of Chile would own 51 per cent of the shares.

Negotiations took a turn for the worse in June 1971, when ITT asked for payment according to the book value of the company. Chilean negotiators pointed out that the book value was highly overstated, citing the value of telephone lines in Chile in relation to averages in other countries (in Chile the value of a line was placed at twice the world average) and other data. Chile asked that international experts, appointed with the consent of both parties, undertake an assessment of the properties of the Chile Telephone Company. ITT refused. The value of its property in Chile was highly overstated by ITT due to the corporation's privilege, accorded by previous Chilean governments, of repatriating a 10 per cent return on its investment. During the negotiations, ITT insisted that Chile accept all the corporation's conditions, repeatedly pointing out "the problem" that would be created for Chile if ITT were to collect from OPIC insurance of $108.5 million contracted for its Chile Telephone Company investment.

In September 1971 the Chilean Government appointed an "intervenor" to the telephone company, which meant that the state took over management while recognizing the property rights of ITT. Negotiations to purchase continued until the March 1972 sensational disclosures of ITT's interference in Chile's internal affairs caused President Allende to send a nationalization bill to Congress.

The Rockefeller Mission and the "Low Profile"

The low-profile policy of the Nixon administration on U.S.-Latin American relations also has its origin in the recommendations of another presidential commission, the Rockefeller Mission to Latin America of 1969.

Nelson Rockefeller, Governor of New York and founder of the Latin America-based International Basic Economy Corp. (IBEC), headed the mission. He was joined by such businessmen as William Butler (vice-president of the Rockefellers' Chase Manhattan Bank), Augustine Marusi (chairman, the Borden Company), Arthur K. Watson (chairman, IBM), and George Woods (consultant, First Boston Corp. and former president of the World Bank).

Following their rather turbulent tour of Latin America, the mission issued the Rockefeller Report on the Americas, which contained a number of findings and policy guidelines. The mission reported that:

The forces of nationalization are creating increasing pressures against foreign private investment. The impetus for independence from the U.S. is leading toward rising pressures for nationalization of U.S. industry, local control, or participation with U.S. firms. . . .

Thus the rising drive for self-identification is naturally and inevitably leading many nations to seek greater independence from U.S. influence and power. . . .

However, the mission suggested that:

The U.S. cannot allow disagreement with the forces of the domestic policies of other American governments to jeopardize its basic objective of working with and for their people to our mutual benefit.

Thus the President should issue a policy statement enumerating

the principle that the U.S. national interest must supersede those of any domestic special-interest group in the conduct of Western relations.

In addition, the statement should

convey a new character and style to our western hemisphere relations—one based on partnership, not dominance. [12]

The Rockefeller report is not, however, without teeth. Significantly it strongly recommends increased U.S. military and police aid. The underlying idea here is to strengthen forces resistant to the pressures for change, thus shifting some of the burden of the policeman's role from the United States to internal forces of law and order (see Chapter 5).

In October 1969 Nixon acknowledged before the annual meeting of the Inter-American Press Association that the "new approaches" that made up the emerging "mature partnership" between the United States and Latin America had "been substantially shaped by the report of Governor Rockefeller." [13]

The most novel of the "new approaches," as spelled out later in a statement on foreign policy to Congress, dealt with the appropriate U.S. policy in light of the mission's findings on the trend toward rising nationalism. The statement reads:

And we shall avoid actions which foster or reinforce anti-U.S. nationalism. [14]

This is also the same sentiment expressed at a March 1971 Council on Foreign Relations Latin America strategy session by academic expert John Plank of the corporate-controlled Brookings Institution, who acknowledged it also to be the current thinking of Henry Kissinger. Plank told the discussion group:

that direct confrontations with Latin American governments are to be avoided . . . that such confrontations would serve the interests of those fanatically ideological, or cynically opposed to the U.S., more than they would serve our interests, and that the cost to us, domestic and international, of such confrontation would far outweigh any conceivable benefits. [15]

Indeed, so widely held was this new-found sensitivity to nationalistic feelings that even conservative ideologue William Buckley sided with liberal academicians and the establishment press to counsel that any belligerent act on the part of the United States directed at Chile's new socialist regime would only "serve the purposes of the Allende government which can count on Chilean nationalism above all things." [16]

Thus, one of the basic assumptions growing out of the Rockefeller report, subsequently elaborated on in elite-controlled "public affairs" groups, publicized in the press, and incorporated into policy, was the notion that the United States must eschew blatant retaliation in defense of particular "special-interest groups," since such would only heighten "anti-American nationalism." It is such a notion that helps explain both ITT's inability to rally the support needed "to stop Allende" and at least the appearance of the "correct" approach the United States assumed toward Chile in the first months of the Allende government. In fact this is precisely the explanation that was put forward in an October 1970 ITT memo. To wit:

In retrospect Meyer [Assistant Secretary of State] may ... be the victim of the new Latin area straight jacket called the "low profile of the U.S. in Latin America," which when applied to Chile today could be a salient reason why the United States failed even to head off in 1970 that which it so successfully and energetically aided Chileans to avoid in 1964—the emergence of a Marxist president. [17]

Emerging Reality of U.S. Chilean Policy

Reconciling the sentiments underlying a U.S.-to-Latin America low profile with the vested interests of particular U.S. corporations abroad and a spirited defense of international capitalism increasingly became the concern of the American corporate-elite class as nationalism built up in Chile and to a lesser extent in Peru, Bolivia, Ecuador, and Colombia. Events made it clear that Salvador Allende was really serious about making good on his campaign pledges "to socialize the heart of the Chilean economy" and to "liberate Chile from her subordination to foreign capital," and the official low profile was gradually revealed to be covert conspiracy and stiff economic sanctions against Chile.

Essentially what transpired was that in the process of nationalizing the "heart" of the Chilean economy, the very core of American corporate power was touched, affecting not only the immediate interests involved but an entire network of U.S. interests maintained through a series of close corporate interconnections.

As was pointed out in Chapter 1, Chile's economic nationalism strikes directly at the established corporate-interest groups, the Rockefeller empire, the Morgan and Grace interests, and an array of who's who among multinational giants: Ford, GM, ITT, Dow, Du Pont—in total, twenty-four of the top thirty U.S.-based multinationals.

A low profile based on a certain tolerance for nationalism, or shifting some responsibility to international institutions, and on the "soft" policy responses by the U.S. Government recommended by the Rockefeller Report and implied in the Peterson Report and other guidelines of corporate-controlled policy organizations can be adopted only in cases in which one or a few multinational interests are adversely affected (as in Peru and Ecuador). When economic nationalism proceeds beyond this point, the class interests of the multinational complex as a whole are affected. In the case of Chile these class interests include:

The potential loss to the United States of Chile's mineral resources;

The loss of sizable investments in industry and, more seriously, the closure of opportunity for continued multinational investment in the most dynamic sectors of Chile's economy;

The potential for "ideological infection"—Chile's notions of socialism possibly permeating the consciousness of its neighbors, thus affecting the "climate for private investment" elsewhere;

The potential "demonstration effect" of Chile's nationalization; that is, if Chile "gets away" with its "expropriations," other countries might follow the pattern, conceivably endangering U.S. investment throughout the region if not the world. [18]

And finally, the potential threat to the survival of American-dominated world capitalism posed by the combination of the above—since an increasing percentage of earnings are derived from foreign operations and since the greatest potential for growth and absorption of surplus lies abroad. [19]

Throughout 1971, then, different tendencies, "hard" and "soft," "vested interests" and "enlightened interests," among different corporations were coming together under the impact and implications of nationalizations. In the process a consensus among the various corporate interests was produced, thereby insuring their relatively active support for and participation in a policy designed to protect their threatened class interest. This consensus formation and its dissemination were provided by such groups as the Council of the Americas (which regularly holds "meetings with State, AID, IBRD, IDB, CIAP and other government agencies whose work may affect U.S. business interests in Latin America" [20] ); the International Economic Policy Association (whose Latin American Committee met early on in the Chilean situation to see what pressures it could "drum up to make the State Department stiffen its attitude" [21] ); and the Council on Foreign Relations (which offers both a "confidential" environment for frank and open discussion and easy access to governmental officials [22] ). Each helped to forge a framework within which a consensually arrived-at policy regarding Chile could emerge.

Next, all that was required was some sort of pretext that would guarantee a semblance of public support for the policy that was soon to surface.

This was provided in late September 1971, by the refusal on the part of Chile to compensate Anaconda and Kennecott for their mining interests on the basis that the two copper companies had reaped profits in excess of that permitted by Chilean law. "Serious departure from accepted standards of international law" became the official U.S. reaction. It was a response clearly calculated to legitimate the actions the United States had taken, was taking, and would take against Chile.

In October 1971, shortly before executives from Anaconda, ITT, First National City Bank, Bank of America, Ford, and Ralston Purina met with Secretary of State Rogers to discuss the "possible response by the government" and presumably the respective role each of the companies could play in that response, [23] Murray Rossant, director of the Twentieth Century Fund, outlined a policy that he understood as appropriate but "not ruthless retaliation." Rossant rationalized the appropriate strategy as one that "would consist of encouraging Congressional sanctions, withholding all aid and assistance to Chile and exerting maximum leverage in international lending agencies ... to follow suit." Assessing the impact of such an approach, Rossant went on to write, "If further private and governmental credit is cut off by a combination of American sanctions and pressures on international sources, commercial banks and corporations, the Allende government would be paralyzed." [24]

It is impossible to be unaware that a policy intent on producing paralysis, if successful, would provoke internal crisis, possibly civil war within Chile, given the intense divisions there. Therefore the only adequate explanation for such a policy is one that assumes that it was (and is) the intention of U.S. business and government to try to create sufficient pressures for internal opposition forces to bring down the Allende regime.

This explanation is similar to the one offered by James Petras and Robert La Porte in their analysis of "U.S. Response to Economic Nationalism in Chile":

The overall purpose of U.S. policy is to create economic disorder and provide a domestic social crisis that could lead to . . . the overthrow of the Allende government by a civil-military coalition made up of the Army, the Christian Democrats and the extreme right-wing National Party. [25]

With the big stick turned economic, policy "formation" and execution tended to shift from the Department of State to the Treasury Department. Secretary Connolly is notoriously "tough" in promotion of corporate interests. There the secretary chairs the National Advisory Council on International Monetary and Trade Policy, which is responsible for co-ordinating the policies and operations of the representatives of the United States to the International Monetary Fund, International Development Bank, Inter-American Development Bank, Asia Development Bank, Export-Import Bank, and any other agency of the government that participates in making foreign loans or engages in foreign monetary transactions. As chairman of this council, the secretary easily co-ordinates the sanctions, both bilateral and multilateral, imposed against "wayward" nations. In addition, the secretary is in a good position to influence world markets, say of copper, if he were ever so inclined. Aiding the secretary in formulating instructions going to the various U.S. representatives to multilateral institutions are a number of business advisory groups, for example the Treasury Liaison Committee of the Business Council, whose 1970 members included such notables as the chairman of Morgan Guaranty Trust, Deere & Co., and American Express, former chairmen of Mobil Oil and Burlington Industries, the presidents of Kennecott Copper and Eli Lilly, and the inevitable David Rockefeller, chairman of the Chase Manhattan Bank.

The essence of Rossant's article, in which he rationalized the policy the Secretary of the Treasury had been unofficially following with increasing hardness throughout 1971, became official in February 1972, when the "economic big stick" was officially certified. This was accomplished in a presidential statement on the protection of U.S. private investment overseas, delivered in a report to Congress. Nixon said:

Henceforth, should an American firm be expropriated without reasonable steps to provide prompt, adequate and effective compensation, there is a presumption that the expropriating country would receive no new bilateral economic benefits. . . . Similarly we would withhold our support for loans to that country in multilateral development institutions . . . and, because expropriation is a concern of many countries, we are placing greater emphasis on the use of multilateral mechanisms for dealing with this problem.

Later on, with specific reference to Chile, Nixon declared:

We and other public and private sources of development investment will take account of whether or not the Chilean government meets its international obligations. [26]

Thus did the low profile come to swing the big stick in the case of Chile.


Notes:

1. The papers obtained from ITT confidential files and released by Jack Anderson are available in their entirety from the North American Congress on Latin America (NACLA): "Secret Memos from ITT," NACLA's Latin America and Empire Report, VI, April 1972. ITT board and executive committee member John McCone, former director of the CIA, has substantiated the authenticity of the memos in question, calling them routine "staff" memos (Business Week, April 1, 1972, p. 23).

2. Memo dated October 9, 1970, from William Merriam, ITT vice-president, to John McCone; See NACLA, op. cit.

3. Memo dated September 17, 1970, to ITT vice-president E. J. Gerrity from two ITT operatives in Santiago. The substance of this memo has not been denied by the State Department (New York Times, March 24, 1972, p. 7).

4. World Wide Information Service, Inc., Chile 1971 (660 First Ave., New York); for more details on the activities of other U.S. firms, see Chapter 5.

5. See William Domhoff's two works The Higher Circles (New York: Vintage Books, 1970) and Who Rules America? (Englewood Cliffs, N.J.: Prentice-Hall, 1967), and David Horowitz (ed.), Corporations and the Cold War (New York: Monthly Review Press, 1969).

6. U.S. International Economic Policy in an Interdependent World. Report to the President by the Commission on International Trade and Investment Policy (Washington D.C.: Government Printing Office, July 1971).

7. See also Michael Hudson, "The Political Economy of Foreign Aid," in Hudson and Dennis Goulet, The Myth of Aid (New York: IDOC, 1971).

8. "Foreign Assistance Act of 1971," Weekly Compilation of Presidential Documents (Washington, D.C.: U.S. Government Printing Office, February 9, 1972).

9. U.S. Senate, Committee on Government Operations, Subcommittee on Foreign Aid Expenditures, Report by Sen. Ernest Gruening, United States Foreign Aid in Action: A Case Study (Washington, D.C.: U.S. Government Printing Office, 1966), p. 2.

10. New York Times, April 20, 1972.

11. Forbes Magazine, March 1, 1972, p. 59.

12. The Rockefeller Report on the Americas (Chicago: Quadrangle Books, 1969), pp. 29, 59, 144, and 61, respectively.

13. Public Papers of President Richard Nixon, 1969 (Washington, D.C.: U.S. Government Printing Office, October 31, 1969), p. 424. "Mature partnership" was defined as dealing "realistically with governments in the inter-American system as they were."

14. U.S. Foreign Policy Report to Congress (Washington, D.C.: U.S. Government Printing Office, February 25, 1971).

15. "Liberated Documents: New Imperial Strategy for Latin America," NACLA's Latin America and Empire Report, VII, November 1971, p. 20.

16. Los Angeles Times, February 16, 1971, editorial page.

17. October 30, 1970, memo from Hendrix to Gerrity, NACLA, op. cit., note 1. The 1964 reference is to the financial and other forms of support given to Eduardo Frei and the Christian Democrats to help defeat Allende in the election of that year.

18. Businessmen are very worried about the "demonstration effect"; see the comments, by Alphonso de Rosso of Standard Oil at the December 1970 CFR meeting, in NACLA, "Liberated Documents . . . ," p. 11, and the October 21, 1970, ITT memo in NACLA, op. cit., note 1.

19. Solid theoretical works on the forces pushing corporate expansionism are Paul Baran and Paul Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966) and Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969).

20. Membership of the Council of the Americas represents 90 per cent of the U.S. investors in the region. The quote is from Jerome Levinson and Juan de Onis, The Alliance That Lost Its Way (Chicago: Quadrangle, 1970), pp. 159-60.

21. October 22, 1970, ITT memo from Merriam to Gerrity, NACLA, op. cit., note 1.

22. See NACLA, op. cit., note 1, and Domhoff, op. cit., for analysis of CFR influence.

23. Wall Street Journal, October 25, 1971. Kennecott was not at the meeting. Their executives were busy courting Eduardo Frei, Chile's opposition leader, at a New York luncheon.

24. Murray Rossant, "The Big Stick Is Now Economic," New York Times, October 10, 1971.

25. James Petras and Robert La Porte, "U.S. Responses to Economic Nationalism in Chile" (unpublished, Penn State University, 1972), p. 14.

26. U.S. Foreign Policy for the 1970s, pp. 70 and 96.


THE NEW COLD WAR IN LATIN AMERICA:
THE U. S. PRESS AND CHILE

An original article for this volume by members of the Chile Research Group.
The authors wish to thank Henry Frundt for his invaluable assistance on an earlier draft of this paper.

JOHN C. POLLOCK WITH DAVID EISENHOWER

The press performs an important political role when it structures issues for public discussion. It is especially potent in shaping opinions on foreign policy, for citizens have few alternative sources of information on foreign affairs. The role of the press has been especially noticeable in reports on the programs and aims of the Allende government in Chile, for U.S. newspapers clearly reflect the hostility manifested by the U. S. Government and some U.S. corporations toward the first elected socialist government in our hemisphere, a phenomenon evident in certain key "themes" emphasized by the press. This analysis identifies and documents these "hostile" themes, evaluates their accuracy, and suggests which explanations best account for their presence. Specifically, we examine the way the Allende government's actions and intentions are covered in several U.S. newspapers: the Christian Science Monitor (CSM), the Wall Street Journal (WSJ), the New York Times (NYT), the Washington Post (WP), the Miami Herald (MH), and the Los Angeles Times (LAT). Our analysis will cover the period beginning just before the September 1970 election of Dr. Salvador Allende as President of Chile to January 1972. [1]

A. FIVE THEMES

Imbedded in U.S. press coverage of Chilean politics are five themes, which, although they do not necessarily dominate such coverage at all times, reappear frequently and form patterns that merit attention. They are evident in every newspaper in varying degrees, not only in editorials and opinion columns but also in news reports from the papers' own journalists and Associated Press and United Press International reporters. The themes are the following: (1) Allende is isolated from the vast majority of Chileans in his actions and goals; (2) almost all threats to political stability and continuity are leftist in origin; (3) the middle and upper classes are the chief repositories of political wisdom and virtue; (4) resentment of U.S. multinational corporations operating in Chile is essentially irrational (and their nationalization is bound to engender production difficulties as key technical personnel leave); and (5) Allende's political and economic problems are of "crisis" proportions, his successes being rarely if ever mentioned. The use of each of these themes can be documented.

1. Chile's socialist President is isolated.

U.S. press coverage suggests that Allende is isolated in at least two ways. First, acts are attributed to Allende alone that are actually acts of the Chilean Congress as well as the Executive branch. For example, the nationalization of copper companies and other U.S.-based multinational corporations is often attributed to Allende's implacable zeal for expropriation.

A second way Allende is given an isolated image is through the use of language suggesting that he is not to be taken seriously; that he is a "clever" fox deceiving everyone, and like a "light-tripping fox" must eventually be trapped (Sulzberger, NYT, July 2, 1971). Metaphors such as "acrobat" and "adroit juggler" (Sulzberger, ibid.) are ripe with the suggestion that the acrobat must one day fall and that the juggler will one day slip up. All these innuendos convey, if not in substance, then in tone, that Allende is: a) an individual performer without a team act or audience support; b) somehow deceiving everyone with his "tricks" and therefore certain to be unmasked or ordered to stop his deception; and c) by extension, a historical aberration, a side show or bad turn in Chile's political history, bearing little relation to long-term political trends there and not to be taken seriously by those who have the patience to wait until the show is over. The "plump little doctor" {Newsweek, January 31, 1972, p. 33), a "former county coroner" (MH, December 16, 1970), is considered an amusement.

2. Threats to the political system come exclusively from the Left.

Evident in the U.S. press in early reporting on Allende's victory after September 1970, especially since U.S. copper companies began protesting Chile's compensation terms in September 1971 and notably again during Cuban Prime Minister Castro's visit to Chile in November 1971, is a flagrant pandering to Cold War stereotypes. Socialism and democracy have been treated as mutually exclusive. For example, "the Chileans voted themselves into the state of affairs which now threatens [emphasis added] their free institutions and by the nature of things it is going to be largely up to them to work their way out of it" (WP, October 26, 1970).

To its almost reflexive Cold War caricatures of the Allende regime the press has added exhaustive studies of a left-wing group, the Left Revolutionary Movement (Movimiento de Izquierda Revolucionaria, or MIR). This group is given considerable attention by means of interviews of prominent right-wing and right-of-center politicians and businessmen, who offer opinions about the ideological debates and activities of the MIR. Almost nowhere is there to be found mention, much less investigative study, of the right-wing groups active in Chile.

A third example of the news media's preoccupation with threats from the Left is found in efforts to depict Allende's legal position as essentially "manipulative." Allende's widely publicized devotion to legal methods has earned him adjectives such as "calculated," "relentless" (MH, February 19, 1971), someone who is obviously trying to "debilitate" opponents through legal methods.

3. The middle and upper classes are repositories of political wisdom.

Almost all the reporting on citizen reaction to the Allende regime is based on interviews with national business leaders (e.g. MH, January 21, 1971) or owners of small and medium-sized firms (NYT Magazine, October 17, 1971). Such people and such interviews are presented as typical of Chilean popular reaction to Allende, and almost all those interviewed by the U.S. press are reported opposed to Allende in varying degrees. By contrast, almost no interviews are reported with organized labor, and virtually never with unorganized labor, the underemployed, the unemployed, or farmers on small and medium-sized plots of land. Those groups the U.S. press fails to interview comprise about three quarters of the Chilean population.

4. Chile's effort to diminish foreign corporate influence is irrational.

The U.S. press often portrays nationalization measures as basically irrational, in that a major source of capital is ousted, future investment is clouded, and key foreign engineers and technicians leave. Also evident in the U.S. press, especially in reports by Juan de Onis in the New York Times, is a diversion of public attention from recent evidence suggesting that ITT and the CIA plotted to prevent Allende from taking office. Reporting in the Times has generally focused not on the veracity of the "ITT-Chile papers" or on the appropriateness of corporate intervention in Chilean politics, but rather on whether the conspiracy documents have helped Allende, and on the way Chile's Popular Unity government has "irrationally" employed the documents to draw attention to a right-wing threat (cf. NYT, March 24, March 26 [editorial], and April 2, 1972).

5. The metaphor of crisis.

Reports about both political and economic issues are replete with dark hints of impending disaster for Chile's incumbent government. Tales of food shortages, unemployment, the flight abroad of key technicians, agricultural turmoil, inflation, and the scarcity of foreign exchange are all reported as though economic ruin were just around the corner. These Cassandralike accounts often imply, either directly or through juxtaposition of a "happy" past and the "dismal" present, that Chile's troubles began essentially after it a) elected a socialist government; b) began nationalizing foreign multinational corporations (thus "irrationally" prompting technicians to leave); and c) endangered the subhemisphere by raising the possibility of a "ripple effect" (the latest of domino theories, evoked especially for Latin America), which threatens, through Chile's example, to promote socialism south of Panama.

B. AVAILABLE EVIDENCE CONTRADICTS THE THEMES

If these five themes were viewed as the best possible estimate of the political situation in Chile, then reports about the Allende government in the U.S. press could not be considered hostile. But the themes contradict a substantial body of information available on events in Chile, as informed study of foreign newspapers and even our own press reveals. To note that the U.S. press provides evidence contradicting the themes is not to suggest that the press denies its own point of emphasis. Contradictory information is given less space or attention than information substantiating the themes, and when mentioned, is often put in contexts that minimize, or encourage skepticism about, its significance.

To imply that Allende's nationalization policies are not popular is to ignore both the constitutional amendment authorizing nationalization of copper, which passed a Congress controlled by opposition Christian Democrats by a unanimous vote and the fact that both Allende and Christian Democratic candidate Tomic, who together received about two thirds of the presidential vote in 1970, made the nationalization of copper and other U.S. companies central issues in their presidential campaigns. Although 1972 elections for two deputies, one senator, and the President of the National University in Santiago all resulted in narrow defeats for pro-Allende candidates, those defeated won between 41 and 48 per cent of the vote, better than Allende's presidential plurality of 36 per cent of the popular vote in 1970. These results do not necessarily reflect sentiment in the nation as a whole, but even were they considered as such, it is clear that Allende has a substantial amount of support, perhaps the most support of any coalition led by a single man. When some U.S. papers imply that Allende is isolated on the Left, they ignore both his considerable following and what several reputable foreign newspapers regard as his role as mediator or middleman between forces on both the Left and the Right.

It is also essential to understand that Allende is a serious politician whose entire career has been anything but a charade. The President, a founder of the Socialist Party in Chile, has long championed working-class and women's rights, a broader distribution of medical services and housing, and nationalization of key industries, as well as various measures to redistribute a larger share of national income to Chile's working classes. He ran for the presidency as a Socialist four times over a period of eighteen years, giving the voters substantial opportunity to evaluate his position on issues. To insist, therefore, that Allende is some sort of cunning magician who duped the Chilean people to support him against its own interests is to make charges that are historically spurious.

With regard to the threat from the extreme Left emphasized in the U.S. press, little effort is made to give readers a sense of the spectrum of political opinion in Chile. The Left is analyzed in some detail, typically by means of interviews with members of the upper and upper-middle classes, citizens who almost invariably voted against Allende. The Left is never asked how it views the Right, nor does the U.S. press even mention or seriously speculate about the role of the right wing in Chile. Yet rightists have engaged in a variety of disruptions, especially in efforts to prevent President-elect Allende's ratification by the Chilean Congress, in the period September-October 1970, during which General René Schneider, Commander of Chile's army, who vowed to uphold Allende's election, was assassinated.

A good example of this unwillingness to mention right-wing activities is found in reporting on the "March of the Empty Pots," in December 1971, in which about five thousand women from the upper-middle and upper classes (see CSM, December 8, 1971; Le Monde, December 3, 1971) marched through downtown Santiago protesting food shortages. Highly respected foreign newspapers such as the French Le Monde and the Mexican equivalent of the New York Times, Excelsior, reported the event as a right-wing attack on President Allende (he, Prime Minister Castro, and the presidential palace were stoned) in which rightist and racist placards were openly carried by the marching women.

Le Monde and Excelsior both described the massive demonstration as a right-wing riot and reported it broken up by the police when the President and his palace were stoned. (Refer to issues of December 26 in each.) Both Le Monde and Excelsior mentioned in passing some confrontation between the women (and the helmeted, club-carrying men marching with them) and left-wing counter-protestors, but this incident was given little importance.

The U.S. press, by contrast, chose to present the women's march as "peaceful" and disrupted not by the police but by "hard-hatted brigades of leftist youths" (LAT, December 1, 1971; MH, December 3, 1971) who "threw stones at the women" (MH, December 3, 1971; LAT, December 2, 1971). Such militant terms were not used to describe the rightist men marching with the women. They were described as a "group" (rather than a brigade) of about eighty men with "safety helmets" (rather than hard hats) "escorting and guarding the women." (See, for example, the LAT, December 2, 1971; NYT, December 2, 1971.)

The U.S. press also presents upper and upper-middle class opinion as representative of Chile's popular will. While Le Monde and Excelsior stated that the marching women were clearly from the upper classes and elegant sections of Santiago, the U.S. press presented the march as a protest against the Allende government by a cross section of all Chilean women. The U.S. press, in addition, curiously dodged all mention of the social origin of the women (with the exception of the Christian Science Monitor, December 8, 1971, which agreed that the women were clearly from the wealthier sections of Santiago). Juan de Onis of the New York Times even hinted in one article that "there appeared to be a significant number of women from working-class neighborhoods" (NYT, December 2, 1971). Such selective exclusion of information, especially in reporting by De Onis, has been misleading. In these and similar ways the U.S. press has presented protests by a few as harbingers of ominous polarization, volatility, and political collapse in Chile.

The assumption that Chile is irrational in wishing to minimize U.S. control of corporate activity there is contradicted in a variety of evidence contexts, especially in reports available on the performance of the U.S. copper companies. [2] But the assumption can be challenged without a wealth of illustrative examples. As foreign investment in Chile grew, decision making in both the economic and the political realms increasingly passed out of the purview of Chilean nationals. That some Chileans have participated in foreign ventures has not diminished the export of decision making to more-industrialized countries, notably those which influence industrial as well as copper markets. If development is defined as an increase in a nation's ability to make decisions that govern its destiny, then development has clearly been hindered in the Chilean case. The U.S. press contains countless examples of sympathy for the desire for more autonomous decision making on the part of former European colonies in Africa and South Asia. Yet a similar desire for development is not awarded similar sympathy when the region involved is one where the United States has more substantial investments: Latin America.

Like the other themes, that of political and economic crisis in Chile is also vastly overblown. The Christian Science Monitor and the Wall Street Journal, contrary to other newspapers, have reported on two occasions each that Chile is having no special difficulty replacing technicians in nationalized industries (WSJ: March 15, July 19, 1971; CSM: July 16, 17, 1971). The Journal and the Monitor also mention that the major problem confronting the mines is replacing worn-out equipment with new, indirectly noting that the U.S. companies left the mines' machines in a condition of disrepair.

Also contrary to U.S. reports, there is considerable evidence that Allende's economic performance is superior to that of his predecessor, President Frei. In his first year in office Allende reduced the rise in consumer prices by one half, contrary to U.S. press reports picturing Allende as a unique source of inflation, and unemployment was also halved. What food shortages do exist are due not so much to any food austerity policy of the Allende government, but to the increased purchasing power of Chile's working classes. Scarce foodstuffs are now equitably distributed under Allende. The upper classes are not protesting a shortage of food per se, but rather its more equitable distribution, and hence its relatively reduced availability for the upper sectors.

In fact, agricultural production increased by 5.2 per cent in 1971, Allende's first year in office, almost doubling the growth rate of the Frei government. And total consumption has predictably increased. Although upper-class women were protesting "meatless days," something not uncommon under the previous president, beef consumption increased 15 per cent. The Inter-American Committee on the Alliance for Progress released a twelve-page document showing that the rate of growth of Chile's GNP during 1971 was the second highest in Latin America, 8.5 per cent. There were substantial increases in industrial production (14.6 per cent) and housing (12.2 per cent). Unemployment was down from 8.3 per cent in 1970 to 3.8 per cent in 1971, the lowest rate ever recorded in Chile. Medical and educational services rose sharply. [3]

C. CONCLUSIONS

In reporting political events in Chile, several themes emphasized by the press have skewed reader perception through two significant failures:

1. The failure to place events in historical context. The press has often attributed economic and political problems arising in Chile since Allende's incumbency almost entirely to the mismanagement of the new President. The press has also suggested that unless these issues (e.g., inflation, unemployment) are resolved, the government is headed for disaster. A less hostile press would compare Allende's problems and performance with those of his predecessors and might even mention his successes, something the U.S. press rarely does.

2. The failure to place events in comparative context. The Allende government should not be expected to topple if it fails to solve problems that other Latin American countries have been largely unable to solve. Chile does not have the highest rate of inflation in Latin America or necessarily the greatest "brain drain" of skilled professionals migrating elsewhere. Chile is also unlike two of the largest countries in Latin America, Brazil and Argentina, both military dictatorships, from which reports on the torture of political prisoners emanate frequently. Yet Chile is painted with the brush of crisis, said to be "hanging by a thread for months as an incipient dictatorship" (MH, December 28, 1971). A less hostile press might compare Chile's record as one of Latin America's most stable and flexible political systems with the performance records of other countries in the southern hemisphere. [4]

What accounts for the failure to place events in historical and comparative context? What accounts for the hostility manifested in reports on the Allende government? Is the press endeavoring to confirm what the Nixon government wants to see? Is it perhaps the presence of historically determined cultural blinders that prevents the press from witnessing Allende's successes or noticing that his performance compares favorably with his predecessors'? Or is the press structuring issues and events in ways that satisfy U.S. multinational corporate interests?

The newspapers have not necessarily followed President Nixon's lead and have differed sharply with his tactics when he refused to send diplomatically routine congratulations upon Allende's election, encouraged the postponement of an Export-Import Bank loan requested by Chile to purchase U.S. commercial Boeing jets, and refused to allow a Navy-authorized stopover of the U.S. aircraft carrier Enterprise in Chile. These exhibitions and "get tough" statements by Secretary Rogers and White House adviser Klein have met with the following critical press responses: "Boorish rebuff to Chile" (NYT, March 2, 1971), "Fat-headed diplomacy" (MH, March 2, 1971), "High Noon showdown not diplomacy" (MH, August 14, 1971), "Bullying Chile" (WP, September 14, 1971), and "U. S. Big Stick Boomerangs" (MH, September 16, 1971).

Nor are cultural blinders wholly adequate in accounting for changes in the way the press structures reporting in Chile at different points in time. Cold War stereotypes are pervasive, but their use varies markedly. Reporting has changed its emphasis several times since Allende's election in September 1970, but cultural assumptions fail to explain such changes. Although cultural assumptions may explain relatively stable, enduring perceptions, they account less well for dynamic ones.

How, then, do we explain variations in reporting? There is considerable evidence that shifts in reporting correlate with related shifts in U.S. corporate fortunes and policies. All the papers agreed initially, after Allende's election in September 1970, that his government would pose some sort of "problem" for the United States. The press abounded with scare stories about "Marxist Allende" putting Chile on the "Road to Socialism" until July 1971, when Congress passed Allende's constitutional amendment authorizing nationalization by a unanimous vote. That amendment, along with Allende's scrupulously legal behavior, belied most predictions of imminent dictatorship and political chaos touted in the U.S. press, and Cold War reporting gave way to a major debate over the best means to deal with the "problem." Rough-edged snubs such as those practiced by President Nixon were criticized as too flagrant and really unnecessary. Besides, the newspapers counseled (with some justification, as publicity of the ITT-Chile papers later demonstrated), a policy of "provocation" has a tendency to boomerang and rally support around Allende. From January through September 1971 the papers suggested, in effect, that flagrant provocation only endangered the other myriad investments in Chile solely in order to prevent the nationalization of a few.

After a period of considerable debate in the U.S. press, the news media decided to view as a viable course of action a low-profile policy of economic reprisals. [5] But the process of co-operating with corporate interests did not stop with the articulation of a program of economic strangulation for Chile. In late September 1971 the press set about reporting events as though the strangulation policy were being successfully implemented, and renewed its themes of political crisis and perfidious socialism. Renewed alarmism was evident especially at the time Messrs. Finch, Klein, and Rogers criticized Chile and cast doubts on the government's ability to survive during Prime Minister Castro's visit to Chile in November 1971 and during the "March of the Empty Pots" in early December 1971. The press has continued to exhibit those themes up to the present writing.

This chronology of shifts in U.S. press reports on Chile suggests that certain assumptions pervade those reports which parallel the goals or decisions of major U.S. multinational corporations. The language and themes of the Cold War are prominent when U.S. businesses consider themselves threatened (during Allende's election and after nationalization negotiations stalemated). The themes are still evident, yet less prominent, during periods when U.S. multinationals are engaged in negotiations (e.g., January through August 1971). The five themes can be considered "cultural assumptions," because they are persistent over time and homogeneously present across a wide range of news sources. Yet the extent to which the assumptions are displayed and the extent of press coverage given Chilean politics generally has paralleled the variations in attention given Chile by U.S. corporate interests.

Perhaps the suggestion that cultural assumptions and favoritism toward corporate interests are divergent explanations for U.S. press reports is a spurious distinction. The charge of favoritism toward business clearly raises a variety of questions for further research: Which multinationals and corporate spinoff groups have close links with the major sources of news? How closely do multinationals and the press co-operate? What are the consequences of corporation/news-media co-operation for the formation of U.S. foreign policy? But whatever the answers to any of these questions, it is important to notice that effective co-operation between U.S. corporations and the press requires no "conspiracy," no series of interlocking directorates, no careful recruitment of "acceptable" journalists for top positions. There is some evidence that these mechanisms of control exist, and their use merits documentation. But the basis for co-operation may rest less on formal control mechanisms than on a culturally derived perception of common interests, especially the widely shared, historical U.S. assumption that private property is sacrosanct.

As the United States became more inextricably involved in the war in Southeast Asia in the early 1960s, the U.S. press generally reported the war "dutifully," accepting the government's thesis that U.S. interests were endangered there. Perhaps when the U. S. Government and corporate interests declare themselves endangered, the press considers itself endangered, too. If someone raises the heresy of "socialism," and U.S. corporate interests are involved, the press seems likely to take up the cudgel to do holy battle with the infidels. In this respect the press acts not as a watchdog of the activities of big government and big business, but rather as their agreeable colleague, functioning as a "voluntary arm of established power." [6]

This tendency and the assumptions described in this analysis are indicators of the way the press structures the formation of "climates" of opinion on specific issues. It is important to explore this process of climate formation if we are to learn more about the role of the press in our political system.


Notes:

1. News clippings on Chile and other Latin American countries are available from Information Service on Latin America, which provides photocopies of news on Latin America printed in the mentioned newspapers. It is located at P.O. Box 4267, Berkeley, California 94704.

2. See Chapter 1, and Victor Edward Wallis, "Foreign Investment and Chilean Politics" (Ph.D. dissertation, Columbia University, 1970).

3. A review of the performance of the Chilean economy is also available from the Oficina de Planificación Nacional, "Analysis of the Economy in 1971" (Santiago: ODEPLAN, April 1972, Document #4).

4. For a more considered account of the progress and problems of the Allende government, refer to Eric Hobsbawm, "Chile: Year One," The New York Review of Books, 17:4 (September 1971), pp. 22-33.

5. The clearest statement is by Murray Rossant of the Twentieth Century Fund, "The Big Stick Is Now Economic," New York Times, October 1, 1971.

6. The record of co-operation between the government and the press (especially the New York Times) in foreign affairs has been documented by former Times correspondent James Aronson in The Cold War and the Press (New York: Bobbs-Merrill, 1970). Of special interest are descriptions of the treatment by the New York Times of the Russian Revolution in 1917 and the Bay of Pigs invasion.


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