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

by Chilean payments of amortization and ¡nterest charges on loans contracted by previous governments, even allowing for the cessation of such payments after November 1971.(10) In addition to disbursements under earlier loans, Chile continued to receive technical assistance grants averaging about $800,000 ayear, between -26 and 50 Peace Corps people continued to work there, and the Food for Peace Program distributed $10 million worth of food between November 1970 and September 1973. Total food shipments under the Program actually rose during the Allende period (40;051,000 pounds in 1973 against 37,875,000 pounds in 1971). Ironically a partofthis assistance was used to fulfill an Allende campaign promise: 10,738,000 pounds of powdered milk, delivered in 1971, helped Presiden! Allende to carry out his pledge to give a daily free pint of milk to every school child. In January 1973, El Mercurio of Santiago carried a report of the ceremonies accom– panying the arrival of the billionth pound of food shipments to Chile from the United States under the Food for Peace Program.(ll) Finally, U.S. aid to the Chilean military forces, under the Milítary Assistance Program in operation since the early 1950s, continued throughout the Allende regime. In june 1971 a new$5 mili ion credi! forthe purchase of C-130 transport planes and paratrooper equipment was approved. U.S. military advisers remained in Chile, the Chilean navy continued lO lease U.S. naval vessels, and Chile continued to participate in the Inter-American Defense Board. In May 1972, well after the Nixon statement, another $10 mili ion loan to the Chilean military was approved. Critics have noted the inconsistency of the continuation of military aid after the announcement of a policy against new bilateral and multilateral economic assistance, and have attributed this to an American effortto strengthen a group which was known to be out of sympathy with Allende. The fact that the Chilean military had made it .clear that it would oppose any·effort by Allende or his supporters to impose a Marxist dictatorship must certainly have been in the minds of U.S. government policy-makers. But what alternative policy would the critics have recommended? The loans had the full support of the Allende government, which from the'outset had been careful not to alienate the military (a policy which was successful until late 1972, and in the case of the top commanders of the army and the national políce until just before the September 1973 coup), and the loans were certain to be repaid since Chilean legislation specifically earmarked a percentage of foreign-exchange earnings from Chílean copper for use by the mil itary, sothat payments for past military loans were not affected by the November 1971 debt moratorium. VI By early 1972, it was clear that Chile was indeed no longer credit-worthy. In a little over ayear she had run through most of the substantial foreign exchange reserves builtup at the end of the Freí regime. Inflationary pressures were building up, and finally exploded in the period from July to September when the officíal inflation rate since the beginning ofthe year clímbed from 33 to 99.8 percent. Chile had stopped paying most of her international debts, copper production and prices were falling, and there was an incipient cri$is in agriculture. Yet despíte all this a total collapse of Chilean international credit was somehow avoided. In January 1972 the Chilean Central Bank arrived at a refinancing agreement with private banks, covering all of Chile's outstanding debts to the banks and providing for what the Chilean Finance Minister called a "symbolic payment" of 5 percent in 1972 and 1973 and higher payments thereafter-most of them after the Allende regime was to go out 'Of office in 1976. And in April Chile arrived at an agreement with the members of the "Club of Paris" (the United States, Canada, Japan and the Western European countries to which Chile owed money). That agreement provided that 70 percen! of the debt payments due between November 1, 1971 and December 31, 1972 wou Id be postponed until 1975, and (10)Hearings. p. 533. (11 )Food lor Peace figures were provided by the Santiago AtO office. Juty 18, 1973. 118