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Absurd Alhazred
Mar 27, 2010

by Athanatos

wateroverfire posted:

On the topic of the "economic blockade", Paul Sigmund wrote an essay for the January edition of Foreign Affairs that investigates the question of Washington's roll in the disappearance of credit toward Chile by looking at the timing of credit decisions, notes from the senate hearings after the coup, corporate memos from ITT (AT&T) and interviews with sources at various foreign institutions. Whole article reproduced below because it's worth reading in full and because at FA you have to register (though it's free).

tldr - poo poo was kind of complicated. When you look at the timing and statements by the principals, it's apparent that international loan and bank credit reductions were made in response to worsening economic conditions and a political environment that implied increased repayment risk. It's also clear that Washington applied pressure to block some financing - sometimes successfully and sometimes not - to force Chile to the bargaining table after the copper expropriations, and that the rhetoric surrounding the 1970 election had a lot of people nervous about the ideology of Allende. Chile obtained a lot of funding from non-US sources despite Washington's eventual opposition.

This article did, indeed, come out in January; but this is January of 1974. Keep in mind that this is before the Church Committee, before a lot of the documents we've seen here were declassified, etc. It is much easier now to ascribe motive to certain actors, and it was, indeed, malicious. For example, the statement "make the economy scream" seems pretty indicative of motive of a very important actor.

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wateroverfire
Jul 3, 2010

Absurd Alhazred posted:

This article did, indeed, come out in January; but this is January of 1974. Keep in mind that this is before the Church Committee, before a lot of the documents we've seen here were declassified, etc. It is much easier now to ascribe motive to certain actors, and it was, indeed, malicious. For example, the statement "make the economy scream" seems pretty indicative of motive of a very important actor.

Ok. Now...

How do you parse out what happened because of Nixon's desire to pressure Chile because Communists from what happened as a reaction to Chile's deteriorating credit worthiness and an environment in which it was increasingly risky to loan money?

The long essay I posted lays out the timing of various financing moves and the contexts, what loans were pending, how much was requested later, what became unavailable, when, etc. After reading all of that, could you come to the conclusion that Chile was being economically blockaded? Would you have risked millions of dollars in Chile at say the end of 1971?

edit:

I mean, let me ask the question in another way. There's a record of how economic and political crisis were going down in Chile, of how businesses were being expropriated, of how Chile burned through its forex and racked up debts that it then walked away from. There's a record of what financing decisions were on the table and when they were made, their magnitudes, and ostensibly their motivations. How much of that should we discount based on later documents, and which documents and why?

wateroverfire fucked around with this message at 16:27 on Jul 30, 2014

Absurd Alhazred
Mar 27, 2010

by Athanatos

wateroverfire posted:

I mean, let me ask the question in another way. There's a record of how economic and political crisis were going down in Chile, of how businesses were being expropriated, of how Chile burned through its forex and racked up debts that it then walked away from. There's a record of what financing decisions were on the table and when they were made, their magnitudes, and ostensibly their motivations. How much of that should we discount based on later documents, and which documents and why?

This article includes a lot of arguments that hinge on testimony from members of the Nixon Administration. At the time the level of mendacity of that administration was not widely known. I would be a lot more interested in seeing something that came out after the Nixon Tapes had been published. For example, from a collection about Chile:
---
022-006 3/23/72 P, RLZ clip1 (1.1m; 1:07)

The Administration was forced into damage-control mode following revelations of collusion between the CIA and International Telephone & Telegraph (IT&T) Company to prevent the election of Allende in 1970.[xiii] Over the course of brief telephone conversation with Press Secretary Ronald Ziegler, Nixon confirmed that Ambassador Korry “had received instructions to do anything short of a Dominican-type [intervention].”[xiv] Korry’s great sin, in Nixon’s mind, was that, “he just failed, the son-of-a-bitch. That’s his main problem; he should have kept Allende from getting in.”

---

So, for example the section where this FA articles says:

'When questioned by the Senators, Charles Meyer, Assistant Secretary of State for Inter-American Affairs at the time, insisted that U.S. policy had been strict nonintervention and described the Broe conversations as merely an exploration of "the possibility or a series of possibilities which might have been inputs to changed policy but were not." The only contrary evidence in the papers and hearings is a report on October 15 to the ITT Washington office by its Chilean representative that the American ambassador, Edward Korry, had indicated that he was reducing the amount of U.S. aid "already in the pipeline" as much as he could. The report added: "The ambassador said that he had difficulty in convincing Washington of the need to cut off every possible assistance to Chile."'

is an example of lies by the Nixon administration and at least one company closely involved with it, which would not be easy to ascertain at the time. They paint a false picture of Amb. Korry as a maverick working his own agenda, and ITT acting on their interests and getting rebuffed by a responsible Executive. This is why the tapes are essential. There is no reason to ignore the fact that we have so much more relevant information than anyone outside the government would in 1974.

joepinetree
Apr 5, 2012

wateroverfire posted:

Ok. Now...

How do you parse out what happened because of Nixon's desire to pressure Chile because Communists from what happened as a reaction to Chile's deteriorating credit worthiness and an environment in which it was increasingly risky to loan money?

The long essay I posted lays out the timing of various financing moves and the contexts, what loans were pending, how much was requested later, what became unavailable, when, etc. After reading all of that, could you come to the conclusion that Chile was being economically blockaded? Would you have risked millions of dollars in Chile at say the end of 1971?

edit:

I mean, let me ask the question in another way. There's a record of how economic and political crisis were going down in Chile, of how businesses were being expropriated, of how Chile burned through its forex and racked up debts that it then walked away from. There's a record of what financing decisions were on the table and when they were made, their magnitudes, and ostensibly their motivations. How much of that should we discount based on later documents, and which documents and why?

As already mentioned, the article you posted is from 1974. It is entirely legitimate on the author's part to speculate that US actions were simple reactions. But then we had the documents declassified, which conclusively show that the economic blockade was planned when Allende's government was less than a month old. I mean, it is ridiculous that this is even under discussion anymore.

We have clear data that loans, credit, aid, etc. were sharply cut during Allende's presidency. We have clear evidence that the Nixon administration planned that before Allende even took over. The fact that Sigmund wrote in 1974 that "hey, it looks damning but maybe there is a legitimate reason for this" means nothing.

Traveller
Jan 6, 2012

WHIM AND FOPPERY

Bones were found at Las Brisas, near Santo Domingo.

Santo Domingo is also where the Tejas Verdes Engineering Regiment base can be found. Said base was, in the bad old days, the stronghold of Manuel Contreras, head of DINA.

I'm not old, but they'll be finding bones even after I'm gone. The bones of people that died in the most horrible of ways at the hands of those who swore to protect them. People who died so that the few could become richer beyond their wildest dreams. People who were shot, stabbed, electrocuted, raped, burned, tied to rails and thrown over the ocean. No, wait, they won't find the latter. The torturers were well trained.

I think of my uncle. He lives in Canada. He doesn't speak much with us. He has a life of his own there, a good life, far away from the country that put electrodes to his testicles because he made the mistake of having the wrong beliefs. I don't blame him much.

I'm sorry, this is the Chile thread. Let's go back to its Miracle.

SirKibbles
Feb 27, 2011

I didn't like your old red text so here's some dancing cash. :10bux:

wateroverfire posted:

Working on this. Don't have a ton of time.

The TLDR -

Bachelet is making a lot of (business) people nervous.

She proposed a tax reform that would have eliminated the corporate veil WRT taxation and passed retained earnings (money taxed at the corporate rate but left in the company) through to the owners as personal income. This would have raised the corporate rate, effectively, from 20% to 35% and utterly hosed the shareholders of public companies with detrimental effects in Chile's stock market, for pension funds, etc. That did not happen, thankfully, and the compromise that seems set to pass raises the corporate rate from 20% to 27% among a bunch of other more technical things.

She is committed to education reforms that, partly because of the tax compromise and partly because the original tax proposal was total fantasy anyway, there is no way to pay for. Free higher education for all Chilean students would cost approximately 9 billion dollars, or about 3% of Chilean GDP. Her education minister had talked about buying all the hybrid public-private institutions and making them fully public. Depending on whose estimates you take on the value of those concerns the cost could be 5 billion or 17 billion. Either way the money isn't there. Education is a big sexy issue competing right now with issues like public health spending (very underfunded) and Chile's growing energy needs.

*Axes Hydro Aysen. Declares victory for SOCIAL JUSTICE. Pays highest rates for energy in Latin America and wonders why poo poo is so expensive to make here*

And in general there's a populist vibe that reminds many people uncomfortably of the bad old days.

That said, Bachelet enjoys wide support in general despite approval having come down from the stratospheric heights it attained during the primaries.

To be fair to her it's really easy to make business people nervous,taxes are literally the lowest they've ever been in American history on the rich and like a removal of a 3% tax cut flips them the gently caress out meanwhile they've got no problem getting rid of whole blocks of tax cuts for the poor. My point being if you've got no problem pointing out how leftists can be selfish because of "human nature" or whatever you have to admit that of course the business community is going to claim to be nervous if it's something that's will dilute their power.

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rolosaavedra
Aug 15, 2014

wateroverfire posted:

*Axes Hydro Aysen. Declares victory for SOCIAL JUSTICE. Pays highest rates for energy in Latin America and wonders why poo poo is so expensive to make here*

Yeah, what is she planning on doing to deal with the energy crisis?
I sort of understand why HydroAysen was axed, given that it was widely perceived as being the pet big business project of a big business (and exceedingly unpopular) president, as well as having severe (and more importantly, very readily apparent) environmental consequences.

But what are the alternatives currently on the table?

A little background into why this is an issue:

quote:

"In the Chilean power generation industry, approximately 65% of the electricity output is based on fossil fuels. Renewable sources such as hydroelectricity (34%), solar and wind (1%) are the only ones that can be considered domestic. Chile imports virtually 100% of the raw fossil fuels it requires to power the country. In 2011, of total imports of $70 billion, Chile spent $14 billion in fossil fuels such as crude, gas and coal. With almost no domestic fossil fuels extraction, Chile is highly exposed to both international prices’ volatility and trade agreements with supplying countries. It is understandable that Chile fears this dependency after the so-called Argentinean gas crisis. During the 90’s Chile entered into natural gas long-term purchase agreements with Argentina and consequently based its power generation matrix on the presumed long-term availability and accessibility to Argentinean gas. Numerous pipelines and gas-fired power generation units were constructed and operated for several years until the Argentinean government, starting in 2002,
decided to rationalize the gas supply, and in 2007 definitely cut it. The cost of generating a unit of energy(MWh) jumped from $40 to $300 in just a couple of years, forcing several power generation companies to enter bankruptcy, mining companies to stop production, blackouts, and to the virtual rupture of the Chilean power generation industry."

Source: https://faculty.fuqua.duke.edu/~charvey/Teaching/663_2014/Treeni/Hidroaysen_case.pdf
(it's a homework assignment for an american business school, but it contains all the relevant data)

From what I understand, the alternatives are dealing with Argentina again or trying to get cheap gas from Bolivia, but the Argentinian government is famously unreliable (not to mention currently saddled with hedge fund debt) and the latter will probably want to enforce their maritime demands before any deal can be discussed.

To me this seems like an interesting problem because if whatever solution they come up with can be generalized, other small countries lacking the capital or right conditions to go nuclear, or the geopolitical power to "liberate" oil-rich countries, might learn a lot from it.

As for Bachelet wanting to tax the decadently rich chilean upper crust, boo-loving-hoo. With a GINI that ranks 15 world-wide, there shouldn't even be a discussion about its necessity.

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