Allende’s Chile and the Inter-American Cold War (22 page)

Foreign Minister Almeyda echoed Allende’s identification with this struggle against “exploitation” when he addressed the UN General Assembly and a G77 conference in Lima in October.
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In response to the U.S. State Department’s explicit warnings that Chilean policies could have “adverse effects” on other developing countries by affecting private investment, Almeyda contended that Third World aspirations were not threatened by Chilean moves but were rather “intimately linked and complemented” by separate countries’ efforts to harness “natural, human, and financial resources” for developmental purposes.
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Chilean spokesmen also made abundant reference to their compliance with constitutional procedures and internationally recognized principles such as those enshrined in the G77 “Charter of Algiers on the Economic Rights of the Third World” (1967) and promoted by the Non-Aligned Movement. Rather than being against international law, Almeyda insisted, Chilean actions were
justified
by it.
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And in this respect, the Unidad Popular pointed to UN resolution 1803 (December 1962), which recognized the “inalienable right of all states to dispose freely of their wealth and natural resources” and stipulated that expropriating countries should determine what compensation they offered.
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The UN General Assembly and the G77 were logical forums in which for Chile to seek collective support by calling for systemic change of international economic and political relations. At least at this point, Santiago’s timing also appeared advantageous. As Almeyda noted, there was already a “growing feeling of frustration and impotence” in Latin America and “grotesque evidence” of the difference “between words and deeds” in the battle against underdevelopment.
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Nixon’s imposition of a 10 percent surcharge on all imports to the United States in August 1971 had added to the Third World’s perception of a “crisis” and the likelihood that Chile would find a receptive audience. When leaders of the G77 met in Lima to formulate a
united position to present at the forthcoming UNCTAD III conference in Santiago, Almeyda therefore used the occasion to call upon delegates to “define … points of attack,” emphasizing that

the fundamental task of developing countries is to work to modify the international political and economic structure that has assigned them the role of servitude…. If this structure does not change this could result in stagnation and violence. Nothing is obtained through postulating, or even by achieving partial solutions … if we do not comprehend that it is the nature of the system of international relations itself that needs to be reformed … the struggle of backward and dependent countries to reach their emancipation and full economic, political and social development … [is] defined by the battle between the forces that sustain and defend the current social and international structure of the world, and those that strive to destroy it.
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However, Almeyda’s call to action did not scare the United States into accepting Allende’s “excess profits” ruling or unite the G77 as a vehicle for providing Santiago with meaningful support. To the contrary, Chile’s senior diplomat, Hernán Santa Cruz, later reported on serious divisions within the G77 between Africans and Latin Americans. Ostensibly, these revolved around the Africans’ desire to “catch up” with Latin American development and the question of how countries were ranked within the group. The Africans refused to accept that Uruguay, Paraguay, and Central American countries were as underdeveloped as sub-Saharan nations, for example, while Brazil, Central America, and Colombia were, in his words, “almost hysterical” in their refusal to grant African nations bigger quotas for producing coffee that had previously been agreed at UNCTAD II. While the Chileans worked hard to bridge the gap, with Algeria’s help, the conference dragged on an extra two days and closed on what Santa Cruz reported to have been a “solemn” note. As he warned Foreign Minister Almeyda, the G77’s platform at UNCTAD depended on “the unity of action and force within proposals,” and he feared that as things stood, the United States and Western powers were in a position to “pulverize” them.
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Chile’s role within the group also appears to have caused problems. Rather than uniting the G77 to “define points of attack,” the tenor of Chilean (and Peruvian) demands seemed to widen Third World divisions regarding how to deal with the global North. When Almeyda demanded equal measures of “negotiation, confrontation, and denunciation,” others
therefore shied away.
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As the British ambassador in Lima observed, the meeting illustrated the polarization between what he termed “extreme,” “aggressive” countries such as Peru and Chile, and more cautious, conservative African and Asian nations. Consequently, in the ambassador’s words, “drawing up a ‘shopping list’” for UNCTAD III had become “arduous and unexpectedly time-consuming.” He also concluded that the “wild men” had been restrained—an outcome that did not bode well for Allende’s chances of rallying the global South to join Chile and take a collective stance vis-à-vis the United States.
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As another British diplomat surmised around the same time, poorer African nations “[appreciated] the no nonsense mood of President Nixon’s administration.”
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Like Chile’s efforts to mobilize the Third World, the results of its foreign policy outreach toward communist countries were mixed. Ideological pluralism—the cornerstone of Allende’s foreign policy—had certainly taken off rapidly. Within a year, it had found expression in Chile’s courtship of conservative regional powers such as Argentina and Colombia, its new commercial relations with North Korea and North Vietnam, and new diplomatic relationships with countries as geographically diverse as China, East Germany, Libya, Tanzania, Guyana, Albania, Hungary, and Equatorial Guinea.
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Allende had also sent delegations to Europe, the Soviet Union, and China in search of trade and economic assistance; Almeyda had spent six weeks touring East and West European capitals in May and June; the Chilean Central Bank’s president spent two and a half months in Eastern Europe; and Soviet, East German, and Romanian trade missions arrived in Santiago. As Almeyda had told Polish leaders when he met them at the end of May, Chile was seeking “dynamic development and diversification of trade” with socialist countries. This was by no means just rhetoric. During his trip, Almeyda explicitly raised the possibility of Chile joining the Soviet bloc’s Council of Mutual Economic Assistance (COMECON).
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Although much still remains to be known about the details of Chile’s economic relationships with the countries of the Soviet bloc, the Chileans clearly achieved far less than they had hoped for (and certainly never joined COMECON). The reason, in part, was that the Soviet bloc was wary about backing a project that had not yet proved itself as being viable. During consultations between representatives of COMECON countries in Santiago in April 1971, general “disquiet” had been voiced about the UP’s record. To be sure, these diplomats recognized that Allende’s government had been focusing on gaining political control and doing well in the April elections and that it had been in power for only five months when they
met. But they also observed “organizational paralysis” within government ministries when it came to economic policy. As a Polish report sent back to Warsaw at the time had stressed, the UP’s parties had still not mapped out the basic principles of how to go about institutionalizing control of the economy and ensure growth of the government sector.
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The other major problem with Santiago’s outreach to the East was that the Chileans overestimated what they could hope to gain when they approached socialist bloc countries for assistance. In October and November 1971, the UP made a new request for assistance from Soviet bloc countries. Specifically, UP representatives said that Chile wanted raw materials and food supplies, that it wished to sell its copper to Eastern Europe (as long as this would not then be sold off to make a profit), and that it needed credits for consumer goods on the basis of deferred repayment. Chilean representatives also appear to have battled to bring down interest rates on hypothetical future credits (from 4 percent to 2.5 percent), something that the Polish ambassador in Santiago warned Warsaw about on the eve of a visiting Polish delegation to Chile led by Minister of Foreign Trade Olczewski. As Poland’s ambassador wrote home to Warsaw in late October, the Chileans’ proposals were “unacceptable” and the list of goods that the Chileans had asked for to cover 1972 and 1973 was “premature.” At the same time, he privately did his best to explain Poland’s own economic difficulties to Allende in person.
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Even so, by the end of 1971, Poland, Hungary, Bulgaria, and Romania had pledged credits for industrial projects and Allende had secured Soviet credits amounting to $95 million—just under $40 million more than those granted to Frei but never taken up—for machinery, equipment, and industrial development.
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Building on an initial arrangement made by Frei’s government to export 1,000 tons of unrefined copper to East Germany, Berlin had also agreed to a new deal worth $2.2 million to raise this amount to 2,400 tons in 1971.
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Chile’s economic ties with the People’s Republic of China (PRC) also grew, ending in a three-year agreement for copper exports worth $70 million annually until 1975, a $2 million loan after Chile’s earthquake in July 1971, and an arrangement for Beijing to import nitrates.
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Overall, however, the Chileans faced the logistical problems of swapping U.S.-modeled industry, transportation, and supply routes for Chinese and Soviet bloc alternatives. When the secret military delegation that Allende had sent to Eastern Europe and France returned to Santiago, its members advised against purchasing military equipment from the Soviet
bloc for this reason as well as warning that there were “implicit psychological” implications involved in such a shift to the East.
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And yet beyond the Soviet bloc there were no obvious alternatives. In late October 1971, Javier Urrutia, Chile’s financial representative in New York, firmly concluded that European banks would not be able to satisfy Chile’s needs if the United States banking sector closed its doors. As he explained in a lengthy memorandum to the Chilean Foreign Ministry, Chile’s historic economic relationship with European banks had been modest and the Europeans were not usually predisposed to granting credits unless they were linked to specific purchases.
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Given the limitations of substituting European and Soviet bloc credits for disappearing U.S. assistance, Allende clung to the hope that he might be able to avoid a confrontation with the United States. For the time being, the international environment remained a positive sign that this might be possible notwithstanding evidence of hostility. Certainly, when the White House had announced Nixon’s trip to China, Letelier wrote of a definitive “end of the Cold War.”
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As a result of a “new world reality,” a new “Latin American reality,” and the United States’ declining position in the region, Letelier suggested, the Nixon administration was “playing a policy of equilibrium” and shying away from “excessively hard actions” that could make the United States’ position more “fragile.”
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He also again suggested that the United States lacked a “coherent” policy toward Latin America and that the Nixon administration’s attitude toward Chile was still relatively undefined.
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Moreover, Allende told a visiting U.S. academic that Nixon’s dealings with China, the Soviet Union, and Yugoslavia were clear indications that the United States could work with Chile. Unlike those communist states, Allende insisted, Chile’s brand of socialism was constitutional, and it was in these circumstances that Allende had appealed to Nixon’s moral conscience in the letter he wrote to his U.S. counterpart in September 1971.
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Would U.S. policy makers be swayed by Chile’s ambitious diplomacy and Allende’s constitutional methods at home to give up their hostility toward his government? The Chileans’ effort to redefine their country’s international position and assert its independence worldwide in late 1971 was ambitious and far-reaching. Increasingly, however, it was evolving out of necessity rather than design. Overcoming the constraints of traditional economic dependency on the United States meant expanding Chile’s foreign contacts and working out how they might be able to help defend La
Vía Chilena either through direct assistance or by putting pressure on the United States to accept Allende’s road to socialism. In this respect, Santiago’s leaders now realized that they faced an uphill struggle and predicted that what they defined as Allende’s anti-imperialistic policies would make it steeper. Even so, the Chileans were still relatively optimistic that they would at least be able to keep climbing, especially given indications that the Nixon administration did not want a confrontation.
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While it is easy to dismiss this optimism as naive, Chile’s foreign policy tactics did present Washington with a very real challenge in late 1971. In fact, what Santiago had regarded as U.S. evasion on the Eximbank affair turns out to have been the result of indecision and disagreement within the Nixon administration when it came to dealing with Allende. The issue at stake was not the United States’ overall objective toward Chile; at no stage did Washington try to “understand” Chilean reasoning, contemplate abandoning its destabilization policies in Chile, or forgo its counterrevolutionary offensive in the Southern Cone, especially given Santiago’s overtures to the Soviet bloc, Chile’s relationship with Cuba, and Allende’s Third World appeal. However, U.S. tactics toward Chile were increasingly called into question as the Nixon administration adapted to what some within Washington saw as an evolving popularity contest between the United States and Chile at a domestic, regional, and international level.