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

refusal was hel pful to the U. S. position was shared by two or three and was 'questionab/e' on the part of the others." The ITT memo concludes that despite Secretary Roger's repeated statements that "the Nixon administration was a business administration," Roger's "is pretty much going along withthe... soft-line low profile policyfor Latin America" of Assistant Secretary Meyer.(8) v On this record, the term "invisible blockade" appears somethingof an exaggeration when applied to the policies adopted by the U.S. government in the last half of 1971. Pipeline credits and aid from multilaterallenders were not cut off; only new projects were "deferred."lf the ITT memo is to be believed, at least by October 1971 the U.S. government had not made any effort to influence the decisions of private banks. As the prívate bankers later described it to the Senate investigators, credits were in fact gradually suspended in response to the worsening Chilean economic situation. The Bank of America representativa testified that short-term credits remained at approximately their 1970 level until Oecember 1971, when following the debt moratorium announcement al/ such cred íts were suspended, to be resumed later "on a lower level with selected borrowers." Chase Manhattan testified that "the Chileans made an honest effort to pay American banks in the year or so following the election" (i.e. between September 1970 and September 1971), but that "because ofour own appraisal of the deteriorating economic conditiohs in Chile" lines of credit were reduced from $31.9 mil/ion in the first quarter of 1971 to $5 million in the last quarter. Manufacturers Hanover testified that: "We cancelled lines or withdrew /ittle by liUle over a period of ayear and a half... The first cancellation occurred in early 1971'and the last ones in early 1973.(9) As described in November 1972 by Chile's Finance Minister, Orlando Millas, Chile's lines of short-term credit from American banks had been reduced by that time from $219 million to $32 million. It appears, however, that this was the result not of a coordinated strategy but of many individual responses to an increasingly cloudy economic out/ook in Chile. The lack of short-term credits plus the exhaustion ofthe dollar reserves built up at the end ofthe Frei regime, the nearly totallack of new foreign investment coming into Chile after Allende's election, and the drop in the price of copperon the world market in 1971 and 1972 (in early 1973 it rose again to record leve/s of over $1 a pound) meant a serious dollar shortage for Chile. But none of these factors appear attributable to a U.S. government– initiated "invisible blockade." "Blockade" is also the wrong term to use with reference to U.S. bilateral assistance in the Allende periodo It is true that the U.S. reaction to Allende's election was quite different from its response to the election of Eduardo Frei in 1964. A month after Frei took office, an $80 mili ion program loan for general budget support was signed. Additional program loans for $80 mili ion and $20 miliion were signed in 1966 and 1968, as well as $130 mili ion in loan agreements for specific purposes between 1965 and 1969. (The considerable foreign reserves built up at the end of the Frei regime made new loans unnecessary in the last part of the Frei regime.) No new assistance projects were requested or developed by the Chileans after AI/ende's accession to power, and of course it was clear after President Nixon's January 1972 statement that there was no possibility of new bilateralloans. In his November 1972 budget message, theChilean Finance Minister mentioned $45 mil/ion in pending AIO projects, but he seems to have been referring to projects under previously negotiated loans. According to a State Oepartment report submitted to the Senate ITI hearings, a total of $5.5 mil/ion in AIO loan disbursements from previously negotiated loan agreements went to Chile in 1971 and 1972, although this was more than counterbalanced (8)Hearings. oo. 975-979. (9)Hearings, pp. 387, 367, 360, 364. 117