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

Executive Oirectors until March, member governments could not have been aware of its exístence until the proposal was well into Ihe loan consíderalion process. Ouring 1972 and 1973, Ihe U.S. Government had índicated thal it could nol support loans lo Chile so long as the queslion of uneompensated expropriatíon remained unresolved. There has nol yet been any indication Iha! -al Ihe lime !his loan lirst came under consideralion- Ihe Chilean government had made any firm offieial pledge Iha! their eountry would provide Ihe prompt, adequale and effective compensation required by both President Nixon's January 1972 slatement on exproprialíon and by Ihe 1972 González amendment lo the Inler-American Oevelopmenl Bank .Acl.(71) II is worth noting. Ihal Ihe Allende governmenl made inquiries lo the IOB during 1972 concerning agrículluralloans similar to the one awarded in March 1973 bul was discoura– ged from makíng formal applicalíon. At the tíme when the IOB began active consíderation of the application bythe current government, Chílean official polieies had been substantially changed in a number of respects (partícularly with regard to prícíng of food commodílies and the val ue of Ihe escudo in inlernational markets). Nonetheless, rural conditions remai– ned unsettled and problemalical. Consideralíon of the Antuco hydroelectric loan also seems lo have been expedited after the change 01 government. Though basic agreement seems to have been reached on technical and financial aspects 01 the loan proposal in July 1973, the Bank's stall did not send the proposal to the Loan Committee lor íts assessment until early November. Conside– ration of the loan then had to be delayed whíle major details 01 the proposal were changed or adjusted in order lo account for changes that had taken place in Chile since September. It is no! clear why the IOB stalf would think this proposal lo be sufficienlly prepared as to merit consideration by the Loan Committee in November when many relevant conditions -íncludíng comparative prices, internal Chilean organization and financial systems- had been changed during the previous months and no assessments olor adjustments lor those changes were íncluded in the propo~als. II !he IOB was in lact beíng extremely carelul concerning the details 01 its loans and if thís was the reason why proposals had not gone to the Board previously, then presumably the Bank staff should not have sent the Antuco hydroelectríc project proposal to Committee as soon as it did. The lacl Ihat thís proposal had lo be subse~uently delayed by IOB top management lor overhaul suggests Ihal in íts loan preparation process the Bank was being something less than scrupulously exacting concerning loan details (al least for Chilean loans) belore November 1973. To be lair, it must be noted that the IOB did take several actions to assist Chile in a number of ways duríng Ihe Allende periodo In a White Paper on relations between the Bank and Chile during the Allende period (a copy 01 which is enelosed as an appendix to this paper), the IOB indíeated Ihal during the Allende period jt províded subslantial financial assistance lo Chile or signíficantly improved loan terms lor Chilean borrowers. Following Ihe 1971 Chilean earthquake. the IOB provided a substantial amount 01 humanítarian and reconstruction assistance to Chile, and sizeable sums were d isbursed in 1971 and 1972 as Ihe Bank sought lo make lunds available lor the emergency elfort. The Bank moved very rapidly lo converl níne old loans which had encountered problems and delays into a reeonstruclion loan that would meet some 01 the country's most pressing needs. Laler in 1971, the IOB raised (Irom 10% to 450/.) the percentage 01 funds lrom another earlier loan tha! could be made available to companies in whích the Chílean governmenl or a state (71)ln his January 19. 1972 Policy Statement on Economic A$sislance and Investment Security. Mr. Nixon indicated that the U.S. Government would bring economic pressure lo bear on countries which did not provide prompt. adequate. and eftective compensation lor expropriated assets. This would include termination 01 new bilateral economic aid and withholding of U.S. support lor loans under consideration lorsuch a country in multilateral development banks. The González Amendment makes it a requirement 01 U.S. law that "The President shall instruct the United States Executive Director 01 the Inter-Amerícan Development Bank lo vole against any loan or other utilization 01 the lunds 01 the Bank lor Ihe benelit 01 any country which has... nationalized or expropriated or seized property owned by any United States citízen..... seco 21. The Inter-American Development Bank Act (Publíc Law 86-147), as amended by Public Law 92-246,86 Stal 59. approved March 10, 1972. 139