Chile: the balanced view : a recopilation of articles about the Allende years and after

ted that nthe door is open" for this and other loans if Chile demonstrated her credit– worthiness. Referring to the Export-Import Bank's earlier guarantees of loans by the copper companies to Chile under the preceding administration, he added, nlf and when Chile assures us it has assumed the obligations of the companies it has taken over, we may be able to justify new extensions of credit." Oisbursements under existing loans continued until June 1972, but after the moratorium of November 1971 Chilewas notified that no new loans or guarantees would be made. In defense of its actions, the Bank could perhaps appeal to its own concern about the status of earlier loans it had guaranteed, but as the Times story indicates, its response on the Boeing loan seems to have been related to a broader governmental review of policy toward the expropriation of American interests, In March 1969, in the case of Peru, the Nixon administration had decided not to invoke the Hickenlooper Amendment to cut off U.S. aid after that country nationalízed a subsidiary of Standard Oil. However, in July 1971 the copper nationalization, the balance-of-payments crisis, and not least the strong influence of John Connally as Secretary of the Treasure seem to have stimulated an intense policy debate which culminated in the January 1972 policy statement on expropriation. The exact wordíng of the statementwas the subject of lengthy negotíations between the Treasury and State Oepartments.(5) Its net effect was a clear-cut new American position, framed in general terms but obviously aimed directly at Chile. By the time the presidential statement was made, Chile had announced a payments moratorium, so that the arguments against her as a credit risk were by then valid. However, credil-worthiness would have to be defined broadly enough to include willingness to pay all claims by foreign companies, if the August decision by the Export-Import Bank is lo be defended on those grounds. Moreover, the question of pressing Chile still harder, in fact of engaging in government-directed economíc warfare. came up in October 1971 after the intervention of the Telephone Company and the announcement of the copper compensation decision. Two days after the Chilean announcement on October 11 that most of the expropríated copper mines would notbe paid for, Secretary of State Rogers issued a statement criticizing the excess-profits deduction and warning that "should Chile fail to meet its ínternational obligations, It could jeopardíze the flow of private funds and erode the base of support for foreign assistance."(6) A few days later, when Rogers held a meeting to discuss the sítuation with the principal U.S. companies with investments in Chile, ITI submitted to the State Oepartment what it described as a Chile White Paper. This proposed a seven-point program which .included anembargo on Chilean exports to the United States. a half to al! AIO assistance in "pipeline", a veto on Chilean loan projects before the Inter-American Oevelopment Bank (ITI memo-writers noted with dismay that afterthe July 1971 earthquake the Allende government had received additionallOB assistance from previously approved projects). theuse of "a U.S. veto or pressure" to shut off pending orfuture World Bank loans, and advice to the U.S. banking community and "if possible" to international banking circles to refrain from extending any further credits to Chile.(7) The ITT memo on the meeting reports that the reaction to íts proposals both on the part of the other participants and of the State Oepartment was mixed if not negative. Secretary Rogers responded to ITT's suggestion for curtailment of 10B loans by saving that the United States does not have veto power on loans (a statement actually not accurate, as already noted, for certain loans by the 10B). When Rogers raised the question of an embargo on spare parts, the ITT memo reports that "the consensus of the group was quite mixed." The Ford Motor Company representative indicated that Ford would con!inue to supply spare parts "with firm letters of credit on reputable banks." When Rogers asked for comments on the Export-Import Bank refusal to finance aircraft purchases. "the view tha! !he Ex-1m loan (5)See articles by Dom Bonafede and Mark Chadwin in The National Joumal. November 13. 1971. January 15, 1972, and January 22. 1972. (6)Hearings, p. 957. (7)Hearings, pp. 946, 971. 116