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

CONCLUSIONS: THE BANKS AND AI.LENDE'S CHILE In light of this discussion of multilateral bank lending to Chile and local economic conditions during the 1960s and this account of recent multilateral bank loans approved for Chile, several observations can be made concern ing the allegation that the banks stopped lending to Chile between 1971 and 1973 because of the policies of the Allende goverment rather than because of economic conditions in Chile and Chile's general lack of credit– worthiness. WORLD BANK: The World Bank seems to have maintained a relatively consistent approach towards Chile during'the entire 1961-1974 timespan. Ouring the Frei government, this Bank was reluctant (as it has been in other cases) to provide loans to Chile because of the inflation and economic instability which the country experienced late in the decade; economic conditions in Chile during the Allende period were also sufficiently problematic as to justify some hesitation. While the World Bank has approved three small loans to Chile since the 1973 coup, it is noteworthy that they all were originally scheduled for Board consideration before the Allende government fell and that none involves new inputs into Chile. (As noted earlier, the $8.3 million loan amendments essentially finance the $8.1 mili ion in unpaid interest which Chile owed the IBRO, and the $5.25 mili ion technical assistance loan is tor studies and reports on future projects rather than for any current expenditures on existing or planned operations.) None of these loans touches on the question of Chile's credit– worthiness or her ability to effectively utilize foreign resources. This is not to say that the World Bank has been totally oblivious to political conditions and considerations in the course of its Chilean loan operations. On at least two recent occasions, the ínstitution has clearly míxed political realism with economíc utílíty in shaping its Chilean lending policy. Ouring the first halfof 1970, for example, the World Bank made several loans to Chile (totallíng $19.3 millíon). At that time, the Chilean inflationary situation was deteriorating rather than improving (reaching an annual rate of 33 (';. by the end of 1970). and the World Bank had made but one smallloan to Chile since January1967. There are grounds to suspect that the Bank was no! oblivious to the fact that 1970 was a crucial election year and that the non-socialist parties would gain some credit for new Bank lending.(61) Likewise, in 1973 the World Bank was quite sensitive to charges that it had politicized its loan operations because Chile was not receiving new Bank loans, and much effort was devoted to making some sort of substantive loan before the Allende government collapsed. Sigmund says that the Bank moved very rapidly in considering a fruit and vineyard development program tor Chile and that it was nearly ready tor Board considera– tion by September 1973.(62) Sources in the Bank indicate that the Bank staft worked • somewhat unusual. The Chilean government was unwilling lo raise electrical rates as much as would be necessary lo conlorm lo Ihe IBRO lending rules in this regard, and so in a sense Ihe application to the IOB was an effort lo obtain financing withoul subslanlially chariging Chilean electrical price policíes, The World Bank apparently urged the IOB very slrongly not lO accepl ENOESA's contemplated continued pursuit 01 what the IBRO considered unsound' and unwise electrical pricing sChedules, and the IDB was apparently moved to give some emphasis lo the IBRO view in its negotiations with the Chileans on the Antuco loan, In the pas!. the IOB has usually been less concerned with this type 01 question, In any case. the IDB and ENOESA reached a mutually satislactory agreement during July 1973 concerning luture adjustment 01 ENOESA's rate sChedules, World Bank sources indicate that probably neither the electrical tariffs agreed to in July 1973 bl'the Allende government or those subsequentiy announced after September 1973 by the new government would have satislied the requirements 01 thal sítuatiOn, (61)1t may also be that the World Bank wished lo agree belore the change 01 government on loans which could probably be awarded at some dale soon Ihereafter. In other circumstances 01 governmental change. the Bank and an administration lound it desirable to clearly establish loan terms and project pOlicies so that these would continue after the government leadership changed in the borrower country, (62)Sigmund. The Fall 01 Allende. p. 328. 136