With Salvador Allende’s 1970 presidential election victory, Chile “became the first Latin American nation to democratically elect a socialist president”. In the midst of the Détente period of the Cold War and 8 years after the Cuban Missile Crisis, Richard Nixon and his national security advisor Henry Kissinger were right in fearing the rise of a socialist state in Latin America thus making US intervention in Chile inevitable. Despite the fact that Allende’s government posed a strong threat of international communist expansion, the nationalization of assets Allende proposed threatened both American privately-owned companies with over $1 billion invested in Chile, and trade relations between the two countries. However, internal factors within Chile, such as high levels of inflation and shortages of assets also led to Allende’s lack of popularity and created a perfect environment for the rise of a military dictatorship like General Pinochet’s 1973 coup. Many historians have disagreed on what caused Pinochet’s victory. For example, Loveman argues that “American or other outside pressures could not by themselves have ensured this failure”. In contrast, Tharoor states that “The United States’ role was crucial in Pinochet’s empowerment… with priority given to US political and financial interests”. Thus, this investigation will take into consideration the international and economic factors that motivated US intervention in Chile and Allende’s Popular Unity (hereafter UP) government that led to the state’s failure, in order to fully evaluate Pinochet’s rise to power.
After Allende’s 1970 election, Nixon feared a domino effect in Latin America. The building of diplomatic relations with international socialist states such as Cuba, North Korea, China, the USSR, amongst others, meant that Chile was to become a base for socialism in the hemisphere posing a strong threat to the US international position. This was complicated by the fact that Allende’s state had been elected democratically in free elections and was supported by Congress. This meant that (at least at the beginning of his term), people supported him. As stated in Source A, “Chile would become a leader of opposition… and a focal point of support for subversion in the rest of Latin America” showing that previous to Allende’s election, Nixon and Kissinger feared that his state would become a base and an example for other Latin American countries. Watson states that the economy Allende implemented right after his election “would become like Cuba’s” through the nationalization of private enterprise and redistribution of land. Thus, after Allende’s election Nixon and Kissinger feared that Chile was to become a symbol for socialism in its region. As a response, Nixon began to establish positive relations with Chile’s military, especially with General Pinochet. By 1973 these relations were fundamental for the victorious military coup. This shows that American intervention was crucial for the dissolution of Allende and a prompt for the development of Pinochet’s dictatorship.
In addition, large and influential private companies in the US feared the nationalization of assets such as copper, iron, textiles, amongst others that was quickly implemented by the UP. Due to the fact that these large corporations had “over $1 billion invested in Chile” and as they were not bought out after the nationalization of goods, US businesses such as Ford or Anaconda feared that the transfer of private goods to the public ownership would mean a disruption to their income. Thus, the US economy was directly threatened by the UP’s nationalization of assets as the creation of jobs, large international exports and a large portion of US income would be affected. This shows that Allende’s Marxist government was extremely dangerous for the US. Hence, as Loveman states, the threat posed by the nationalization of Chilean goods eventually motivated Nixon and Kissinger (with the aid of the CIA and large US corporations) to lead a plan to “destabilize Chilean economy”. Through implementation of economic sanctions such as delays, credits, cancellations, international pressure, amongst others, by 1973 there was severe weakness in Chile’s economy.
Moreover, the nationalization of copper in Chile meant that trade relations with the US would be heavily compromised. 46% of Chile’s total exports consisted of copper of which 15% went to the US. Also, 21% of the total imports to the US came from Chile. This meant Allende’s government threatened US economy directly as a very high percentage of their imports came from Chile. In addition, in accordance with the bilateral trade imposed on Marxist states with the setting up of the Mutual Economic Assistance Council there was a potential inaccessibility of the Chilean economy to non-communist countries. This largely increased US fears with regards to the direct impact Allende’s UP government would have on them. Despite the fact that economic sanctions were implemented in 1970 with the aim to “prevent Allende’s confirmation by the Chilean congress”, they weighed heavily on Chile’s economy throughout Allende’s rule and set a precedent for the failure of the UP government. Because economic failure is considered one of the main factors that aids the rise of a dictator, it can be argued that Pinochet was able to rise to power due to the economic sanctions the US placed on Chile. These were evidently motivated by self-interest rooting from the nationalization of goods in Chile and the compromising of trade between the two countries.
However, economic factors within Chile also significantly contributed to Pinochet’s rise. Despite the short-term economic policies that Allende quickly implemented such as the nationalization of copper or the agrarian reform, by 1973 Chile suffered of a 500% inflation. Rodríguez states that the handling of the Chilean economic cycle had always been in the hands of the ruling classes which led to a “monopolistic concentration of industrial and financial capital”. Thus, this meant that when Allende tried to implement socialist policies, he “did not break said economic concentration”. Consequently, heavy unemployment, shortages of goods, low rates of production (because of workers going on strike), increase in prices and the development of a very strong black market ensued. These developments are what ultimately triggered the extreme rates of inflation by 1973. The weakened economy, then, served as a foundation for Pinochet’s victory as it resulted in low quality of life amongst the Chilean people. This sparked resentment and a desire for serious change. It also placed Chile in a vulnerable position for an extremist takeover as the government’s low popularity made it an easy target for opposition.
Furthermore, shortages of goods was an economic factor which heavily affected Allende’s position in Chile and ultimately led to Pinochet’s victory. Agricultural imports during the UP’s government decreased significantly (from $468 million dollars yearly in 1972 to $19 dollars yearly in 1973). Along with this, the fact that Allende increased the minimum wage led to an increase in demand for products that no one was able to provide. As a response to shortages, private supply companies (with the support of the UP government) a rationing system, canastas populares, was set up. This not only highlights the monopolistic construction of Chile’s economy, but Loveman argues that the Canastas also led to extreme unemployment and corruption as they threatened the jobs of 125,000 retail merchants and street vendors. That being so, shortages of assets impacted heavily upon the already low quality of life amongst the people in Chile which ultimately led to an increase of demonstrations in which civilians themselves allied with the extreme right and with the military. This is shown in source B as it depicts the close relationship between civilians and Pinochet who was General of Allende’s military before the coup. An example of this is the 1972 unionist movement in which people aimed to shut down the economy. These strikes were significant as as it was clear that people were no longer conforming to his government. This shows that internal opposition was one of the main reasons for the rise of a military dictatorship in 1973.
In conclusion, the fact that Chile’s economy was damaged way before Allende came to power is undoubtable. In accord with Loveman, Allende’s socialist policies exacerbated these issues resulting in heavy inflation, shortages and most importantly, discontent and opposition which left the state vulnerable for an extremist takeover. However, a Marxist state in Chile posed a large threat to the US. This was regarding not only its position in the hemisphere, but Allende’s policies also affected the US’ economy directly. This justified their intervention which exacerbated economic issues already prominent in Chile. Thus, Tharoor was also correct as US intervention eventually catalyzed increasing civil support for the military which led to Allende’s lack of popularity and inevitable overthrow. Because of this, US intervention in Allende’s state was a trigger for the UP’s imminent failure and Pinochet’s victory.