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

agency held capital stock. This loan amendmenl allowed loans lo be made to important lirms in which the Chilean government's development agency (CORFO) had obtained principal ownership belore or during the Allende administration Both 01 these IOB aclions indicate a continuing awareness on the parl 01 the Bank 01 Chilean needs and rellect favorably on the instilution's willingness lo remain Ilexible in its operations. Neither is indicative of ihe IOB attitude loward the Allende governmenl, however, or of Its willin9ness to enterlain new loan request from that country 1971. The IOB had made humanitarian and reconstruction assistance available before to member countries in response lo natural disasters, and in this case the lunds provided were not new lunds but rather portions 01 previously authorized loans which had encounlered difficultíes and had disbursements suspended. Whether the IOB would have ultimately terminated the availability 01 those lunds (as claimed) is debatable and hypothetícal. In any case, the ingenuity ofthe Chilean adminístration in finding ways to obtaín use 01 those lunds had not yet been fully exhausted in 1971. The IOB actíon to widen Ihe percentage 01 lunds avaílable to Chilean corporations Irom the other loan was 01 assistance to Chile, but it represents lítlle more than a realistic response to the growth during this period 01 state participation in most important sectors 01 the Chilean economy. Loan amendments are common in the operatíons of all the multilate– ral developments banks, and IOB sources indicate that the Executive Oirectors do not devote much attention lo each 01 the several amendments they usually consider during each Board 01 Executive Oirectors meeting. Ouring the Allende period the IOB also had under consideration a Chilean proposal lor education loans to the Catholic University 01 Valparaíso and the Universidad del Norte, and there is some indication that Ihe Bank was making an elforl lO lind a means lo finance Ihese. Sigmund indicates thal while it was not possible to lund Ihe loans through the Fund lor Special Operation (due to the U.S. veto on that Fund). plans were well advanced at Ihe time 01 the coup to finance them out 01 Norwegian special funds resources. and that substantial pressures were developing Irom other Latin American countries to make some sort of a loan to Chile by March 1974.(72) (Chile was scheduled to host the IOB's 1974 annual meeting, and it was traditional that the host would receive a loan during the annual meeting.) Illhe IOB was moving towards some small Chilean loan during the end of 1973, then perhaps it is not lair to conclude that the Bank did not make loans to Chile during the bulk of Allfilnde's tenure in office because of political bias against his government. The fact that the Bank lound it necessary to consider using Norwegian resources to linance an education loan does suggest, however, that IOB management was aClively avoiding a policy confrontatíon with Ihe United States (and perhaps also with conservative Latín American governments such as that 01 Brazil) and that U.S. inlluence on the Board 01 Executive Directors was sulficient to preclude IOB lending lo Chile so long as the United States (and perhaps other countries) desired to dissuade such lending. The IOB management seemed more willing to risk the dissatislaction 01 severa I major Latin America member countries than to lace a situation 01 direct policy conll ict wíth the institution's major contríbutor. GENERAL REMARKS: Considering the material presented by this study, a lew addítíonal remarks mighl' be justilied. First, it seems that during both the Frei and Allende administrations Chile expe– rienced considerable inllation, much 01 it atlributable to the governments' income redistri– bution and agrarian relorm programs. While there were major differences between the policy detaíls, both adminístrations followed policíe's of questionable macroeconomic wisdom and saw their programs stimulate ínllatíon and inhibit agricultural prciduction.(73) (72)Sigmund, The Fall 01 Allende. p. 327. (,73)Thoughof similar magnitude. Allende's ¡ncome hikasdid haya a grealer inflationary consequence Ihanthose introduced by Freí. however. and the illegalland seizures tolerated by h!s agricultural nrogram did inhibíl agricultural oulpu! more Ihan was the case duríng the earlier administratíon. 140