Chile, September 11, 1973

Hits: 1930

“Workers of my country, I have faith in Chile and its destiny.

Other men will overcome this dark and bitter moment when treason seeks to prevail.

Keep in mind that, much sooner than later, the great avenues will again be opened through which will pass free men to construct a better society.

Long live Chile! 

Long live the people! Long live the workers!”  President Salvador Allende’s farewell speech, 11 September 1973.

“It’s hard to find someone with the fighting spirit, courage and the story of Allende. He was a man who actually had the branded name in history: democratically the left came to power, and by bombs he was removed from government.” Senador Pedro Simon

Chile: “Shock Treatment” and the Mechanisms of Economic Repression

Immediately following Allende’s election in September 1970 and prior to his inauguration in November 1970:

“Kissinger initiated discussion on the telephone with CIA director Richard Helm’s about a preemptive coup in Chile. “We will not let Chile go down the drain,” Kissinger declared. “I am with you,” Helms responded. Their conversation took place three days before President Nixon, in a 15-minute meeting that included Kissinger, ordered the CIA to “make the economy scream,” and named Kissinger as the supervisor of the covert efforts to keep Allende from being inaugurated. (National Security Archive)

The CIA was the lead organization behind the imposition of a neoliberal economic agenda in Chile. In August 1972, a year prior to the coup, the CIA funded a 300-page economic blueprint to be implemented in the wake of the overthrow of the Allende  government.

The ultimate objective of the September 11, 1973 military coup in Chile was the imposition of the neoliberal agenda (aka deadly “economic medicine”) leading to the impoverishment of an entire nation.

Wall Street was behind the coup, working hand in glove with the CIA, the US State Department and Chile’s economic elites. Henry Kissinger was the Go-Between.

After Allende’s election in November Wall Street’s major commercial banks (including Chase Manhattan, Chemical, First National City, Manufacturers Hanover, and Morgan Guaranty), cancelled credits to Chile. In turn,  in 1972, Kennecott Corporation “tied up Chilean copper exports with lawsuits in France, Sweden, Italy, and Germany”. (See  John M. Swomley, Jr. “The Political Power of Multinational Corporations,” Christian Century, 91 (25 September 1974), p. 881.

“Regime change” was enforced  through a covert CIA military intelligence operation, which laid the groundwork for the military takeover, the assassination of president Allende as well as the macro-economic reforms to be adopted in the wake of the military coup.

At the time of the September 11, 1973 military coup, I was Visiting Professor of Economics at the Catholic University of Chile. In the hours following the bombing of the Presidential Palace of La Moneda, the new military rulers imposed a 72-hour curfew.

When the university reopened several days later, I started patching together the history of the coup from written notes. I had lived through the September 11, 1973 coup as well as the failed June 29th coup. Several of my students at the Universidad Catolica had been arrested by the military Junta.

Chicago Economics, Chilean Style

Sweeping macro-economic reforms (including privatization, price liberalization and the freeze of wages) were implemented in early October 1973.

Barely a few weeks after the military takeover, the military Junta headed by General Augusto Pinochet ordered a hike in the price of bread from 11 to 40 escudos, a hefty overnight increase of 264%. This “economic shock treatment” had been designed by a group of economists called the “Chicago Boys,” many of whom were my colleagues at the Institute of Economics of the Catholic University.

These deadly macro-economic reforms were largely dictated by Wall Street in liaison with the CIA, with “Chicago Economics” providing an ideological “free market” paradigm and justification. Professors Milton Friedman and Arnold Harberger of Chicago University were by no means the driving force behind these reforms.

While food prices had skyrocketed, wages had been frozen to ensure “economic stability and stave off inflationary pressures.” From one day to the next, an entire country had been precipitated into abysmal poverty; in less than a year the price of bread in Chile increased thirty-six fold (3700%). Eighty-five percent of the Chilean population had been driven below the poverty line.

In November 1973, following the dramatic hikes in the price of food,  I drafted in Spanish an initial “technical” assessment of the Junta’s deadly macro-economic reforms.

Together with a medical doctor, colleague and lifelong friend who was teaching at the Faculty of Medicine of the University of Chile,  I estimated the impacts of  the economic reforms on the levels of undernourishment, which had resulted from the collapse of the standard of living.

In the wake of the military coup and following the engineered hike in food prices, I estimated that approximately 85% of the Chilean population did not meet minimum calorie and protein requirements as defined by the World Health Organization (WHO).

In October 1973, the “official” food price index had increased by 82.3 percent (in relation to September), according to the Instituto Nacional de Estadistica, which had been taken over by the Junta.

The INE figures on the price of food commodities, however, had been falsified. In November, I  proceeded to collect and tabulate the actual rate of increase in food prices from directly observed prices in the Santiago Metropolitan area. I  discovered a substantial discrepancy in relation to the official statistics.

Food prices had increased by 211.1 percent in October and November 1973 in relation to September, according to my estimates of 31 food categories. (The official November figures pointed to an increase of 88.6 percent in relation to September). And thereafter, it was on the basis of these official (fake) statistics that the movement in real purchasing power was estimated and official wage adjustments were implemented.

Fearing censorship by the Junta led by General Augusto Pinochet, I limited my analysis to the collapse of living standards in the wake of the Junta’s reforms, resulting from the price hikes of food and fuel, focussing on statistical estimates, without making any kind of political analysis.

The Economics Institute of the Catholic University was initially reluctant to publish the report. They sent it to the Military Junta prior to its release.

The opinions expressed in this report are those of the author. Therefore, they are of the author’s responsibility and do not compromise the Institute of Economics

(This was first time that the Institute chose to publish a disclaimer)

I left Chile for Peru  in December 1973. The report was released as a working paper (200 copies) by the Catholic University a few days before my departure. In Peru, where I joined the Economics Department of the Catholic University of Peru, I was able to write up a more detailed study of the Junta’s neoliberal reforms and their ideological underpinnings. This study was published in 1974-75 in English and Spanish.

Economic Repression

By March 1974, food prices in Chile (according to my estimates) had increased by 505.5 percent (since September 1973). Real wages had collapsed.

Chile: The movement of real wages (1970-77) based on official statistics

Source: Rudiger Dornbusch, Sebastian Edwards. Macroeconomic Populism in Latin America http://www.nber.org/papers/w2986 (p20)

The above graph (based on official statistics) shows that real wages collapsed by close to 70 percent in relation to the base period (1970), which also corresponds to the beginning of the Unidad Popular (UP) government of Salvador Allende. The collapse in real wages was greater than that indicated by the official statistics.

It is worth noting that in 1971, the Allende government increased real wages by 20%. The collapse from its 1971 level to early 1974 was of the order of 75% based on official statistics of the cost of living.  A wage increase was implemented by the Junta in early March of 1974 (see graph above).

The Destruction of Economic Life

The events of September 11 1973 marked me profoundly in my work as an economist. Through the tampering of prices, wages and interest rates, people’s lives had been destroyed; an entire national economy had been destabilized. Macro-economic reform was neither “neutral” –as claimed by the academic mainstream– nor separate from the broader process of social and political transformation.

I also started to understand the role of military-intelligence operations in support of what is usually described as a process of “economic restructuring”. In my earlier writings on the Chilean military Junta, I looked upon so-called “free market” reforms as well-organized instruments of “economic repression.”

Macro-Economics and Geopolitics are intertwined. The economic dimensions of US led wars must be understood. The destruction of economic life in Afghanistan, Iraq, Syria and Libya constitutes a crime against humanity, i.e. an “Economic Genocide” which consists in destabilizing and deliberately sabotaging a national economy.

  • Today, wars are being fought in the Middle East. Several Latin American countries are the object of  US dirty tricks with a view to implementing regime change.
  • Poverty is engineered by the IMF’s debt conditionalities.
  • The prices of food and energy are deliberately manipulated through speculative trade, e.g. on the Chicago and New York mercantile exchanges.
  • Currency devaluations are engineered through speculative operations on the foreign exchange markets.

While the contemporary mechanisms of intervention (“color revolutions”, “war on terrorism”, economic destabilization, sanctions, etc) are different to those of the 1970s, the ultimate objective is the derogation of national sovereignty and the imposition of neoliberalism:

  • corporate control, privatization,
  • the “free market” pillage of natural resources,
  • deadly economic medicine, austerity measures,
  • the repeal of social programs,
  • the deregulation of trade
  • the collapse of wages,
  • the instatement of a cheap labor  economy,
  • the transformation of countries into territories.

I recall that  in the months leading up to the September 1973 coup in Chile, the distribution of basic consumer goods and food had been deliberately disrupted through market manipulation. No bread, no milk, no sugar were available at government regulated prices. Chile’s escudo was worthless. The black market prevailed.

A similar situation is now unfolding in Venezuela where the national currency has collapsed. Black market prices for food and essential commodities have spiralled.   Reminiscent of Chile in 1973, foreign exchange (Forex) market manipulation in Venezuela coupled with sabotage triggers food shortages, poverty and political instability. Concurrent with the engineered collapse of the Bolivar, real purchasing power has plummeted. (see below)

Source: Los Angeles Times, May 31, 2016


Originally published on 2016-09-17

Author: Michel Chossudovsky

Sources:

Michel Chossudovsky, La medicion del ingreso minimo de subsistencia y la politica de ingresos para 1974, Documentos de Trabajo no. 18, Noviembre de 1973.

Michel Chossudovsky, The Neo-liberal Model and the Mechanisms of Economic Repression, The Chilean Case, Research Paper No. 7411, Department of Economics, University of Ottawa, 1974, published in Co-Existence, Vol 12, 1975

Michel Chossudovsky, Hacia el nuevo modelo economico chileno : inflación y redistribución del ingreso,  El trimestre económico.  Mexico, Vol. 42. 1975, 2, p. 311-347.


READ MORE!
Depleted Uranium Haunts Kosovo and Iraq
Iraq and Kosovo may be thousands of miles apart, but they share the dubious distinction of contamination with radioactive residue from depleted uranium (DU) bullets used in American air strikes. After several years of silence, US officials finally admitted that 340 tons of DU were fired during the Gulf war. In Kosovo, American delays in providing details of quantities and target points have frustrated international efforts to assess health risks. Despite repeated requests, NATO waited almost a full year after the start of bombing in March 1999 to say that 31,000 DU bullets–a fraction of the number fired in Iraq–were ...
READ MORE
Taboo Subject in NATO Media: Refugees, America’s Gift to Europe
In the latest episode in the never-ending series of indignities, calamities, and disasters to be visited upon the heads of the world’s millions of suffering and desperate refugees, they are now being stabbed in the back by the one leader of an affluent NATO country who had risked any political capital to help a substantial number of them, German Chancellor Angela Merkel.At the height of the refugee wave from NATO war zones into Turkey and Europe a couple of years ago, Merkel opened the borders and allowed nearly a million refugees into Germany. Although she is a conservative woman and ...
READ MORE
BBC Fake News
The British Broadcasting Corporation (BBC) has been slammed for mistakenly using a photo taken in Iraq in 2003 to illustrate the Syria 2012 massacre, in which over 100 people, including 32 children, were brutally killed.The picture, taken on March 27, 2003, showed a young Iraqi child jumping over dozens of white body bags containing skeletons found in a desert south of Baghdad.It was posted on the BBC news website under the heading “Syria massacre in Houla condemned as outrage grows”.According to The Telegraph, the caption stated the photograph was provided by an activist and cannot be independently verified, but said ...
READ MORE
Why do They Hate Russia?
The fundamental and justifiable reasons of a Russophobic hysteria around the world by liberal-democratic governments, politicians, academics and political parties/movements are:Constant Russian global imperialism.Russian policy to transform world into Pax Russiana.Russian war crimes across the globe.Russian military presence across the globe.Russian occupation of foreign countries.Russian installation of puppet regimes across the globe.Russian collaboration with the terrorists.Corruption of Russian government.Etc.See below images as proves of justifiable reasons of a Russophobic hysteria around the world:SaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveSaveOrigins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to ...
READ MORE
America’s Benevolent Bombing of Serbia
Twenty years ago, President Bill Clinton commenced bombing Serbia in the name of human rights, justice, and ethnic tolerance. Approximately 1,500 Serb civilians were killed by NATO bombing in one of the biggest sham morality plays of the modern era. As British professor Philip Hammond recently noted, the 78-day bombing campaign “was not a purely military operation: NATO also destroyed what it called ‘dual-use’ targets, such as factories, city bridges, and even the main television building in downtown Belgrade, in an attempt to terrorise the country into surrender.”Clinton’s unprovoked attack on Serbia, intended to help ethnic Albanians seize control of ...
READ MORE
Vietnam War and Yemen False Flags
The missile attack on a US ship off the coast of Yemen was a major news event, but the subsequent follow up story, that it may never have happened, was either ignored by mainstream media or intentionally covered up. The whole thing has the same odor as the Gulf of Tonkin incident that never occurred.Does history repeat itself?  Sure does seem like it. That is if you compare America’s entry into the Vietnam civil war, with America’s latest entry into the war in Yemen.Don’t be mistaken, we have been at war with Yemen for a year now. America sided with ...
READ MORE
Have You been Brainwashed about Gaza?
It’s frightening. Unprincipled psychologists, in the service of a malignant regime, use sophisticated techniques in order to control the mind of a person from afar. The term “brainwashing” was born in 1950. It is a Chinese word (“xinao”, literally wash brain). Originally it served to describe a technique used – so it was claimed – by Chinese masterminds to manipulate the minds of American prisoners in the Korean War. They changed their unconscious mental processes and turned them into agents of sinister forces. Many books and movies purported to show how this works. For example, the classic film “The Manchurian Candidate” shows ...
READ MORE
The Cold War and Its Origins: History of the Soviet Union (1950-1960)
The Russian Revolution of 1917 terrified the capitalist world. In my last article based on the first volume of D.F. Fleming’s classic “The Cold War and It’s Origins 1917-1960” I traced the story of the attempt to destroy the world’s first communist revolution. 14 Nations attacked the Soviet Union attempting to carve out territory and crush the revolution. They also launched a massive wave of repression at home. Then they attempted to isolate the USSR while they built up Hitler’s Germany as a bulwark against Communism. This lead to World War 2 and an alliance between the USSR, Britain and ...
READ MORE
The Balkans and American Gangsters
“The earthly Kingdom is for earthly people, but the heavenly Kingdom is forever” Serbian national epic about the Kosovo Battle against the Ottoman Turks in 1389[1]The American gangsters and the destruction of ex-YugoslaviaSouth-East Europe, and especially the Balkan Peninsula as the main part of it, have traditionally been the object of numerous geopolitical, geostrategic and publicist analyses, as well as the subject of debates among the Balkan, European and global experts in international relations. The new Iron Curtain between western and eastern Europe was not the end of the Balkan’s importance for the US administration and the NATO as well. At ...
READ MORE
The Problem is Washington, not North Korea
Washington has never made any effort to conceal its contempt for North Korea. In the 64 years since the war ended, the US has done everything in its power to punish, humiliate and inflict pain on the Communist country. Washington has subjected the DPRK to starvation,  prevented its government from accessing foreign capital and markets, strangled its economy with crippling economic sanctions, and installed lethal missile systems and military bases on their doorstep. Negotiations aren’t possible because Washington refuses to sit down with a country which it sees as its inferior.  Instead, the US has strong-armed China to do its bidding by using their diplomats as interlocutors who are expected to convey Washington’s ultimatums as threateningly as possible.  The ...
READ MORE
America’s Worst President Ever
If you wanted to identify, with confidence, the very worst president in American history, how would you go about it? One approach would be to consult the various academic polls on presidential rankings that have been conducted from time to time since Harvard’s Arthur M. Schlesinger Sr. pioneered this particular survey scholarship in 1948. Bad idea. Most of those surveys identify Warren G. Harding of Ohio as the worst ever. This is ridiculous. Harding presided over very robust economic times. Not only that, but he inherited a devastating economic recession when he was elected in 1920 and quickly turned bad times ...
READ MORE
Why would US Transform Afghanistan into a Drug Empire?
For a total of sixteen years the US has been occupying Afghanistan after invading immediately after the 9/11 attacks. This act of aggression has already become the longest war in American history, overtaking the “record” that was held by the Vietnam War that lasted from 1964 to 1975. During this period, Washington would spend over 800 billion dollars on the so-called reconstruction of the Afghan nation. As a result of this “reconstruction”, the Taliban has been regaining control over the country, which has resulted in this group controlling over 40% of Afghan territory. Additionally, opium production rates have overtaken the ...
READ MORE
How Ukraine Turned into An Arms Dealer? Supplying Weapons to Al Qaeda and ISIS-Daesh
The Organized Crime and Corruption Reporting Project (OCCRP) together with the Balkan Investigative Reporting Network revealed a scheme of weapons supply to the terrorists of ISIS and Jabhat al-Nusra.There is no secret that the U.S. provides the so-called moderate opposition and Kurdish militia in Syria with arms and ammunition most of which are the weapons remained after the Soviet-led Warsaw Pact disbanded.The U.S. DOD, through U.S. SOCOM, MacDill Air Force Base, Florida, as well as Picatinny Arsenal, American military research, and manufacturing facility located in Dover, New Jersey, acquired arms in some Eastern European countries including Ukraine for their further ...
READ MORE
The USA has been at War 93% of the Time (222 out of 239 Years – since 1776 to 2015)
The U.S. Has Only Been At Peace For 21 Years Total Since Its Birth In 2011, Danios wrote: Below, I have reproduced a year-by-year timeline of America’s wars, which reveals something quite interesting: since the United States was founded in 1776, she has been at war during 214 out of her 235 calendar years of existence.  In other words, there were only 21 calendar years in which the U.S. did not wage any wars. To put this in perspective: * Pick any year since 1776 and there is about a 91% chance that America was involved in some war during that calendar year. * No U.S. president truly qualifies as a ...
READ MORE
Serbian Patriarchate of Peć in the Ottoman Empire: The First Phase (1557−1594)
IntroductionThe goals of this article are: 1) to investigate the role of the revived Patriarchate of Peć in Serbian and Balkan history?; and 2) to explore and present the results of investigation of the problems with respect to: a) the role of the Serbian Church during the first decades of the Ottoman occupation of Serbian lands in the process of the creation of a Serbian national identity; b) Serbian-Turkish relations in the second half of the 16th century; and c) the reasons for Serbian disloyalty towards the Ottoman government at the turn of the 17th century.The article addresses the reasons ...
READ MORE
Turkey’s Political Agenda in the Balkans: Erdogan’s Islamic Influence in Bosnia
As Turkey’s President Erdogan runs out of money, he is now, more than any time before, using religion to exploit the Balkans, especially the states that are more susceptible to Islamic influence. Bosnia is at the fore of Erdogan’s ambitious Islamic agenda, where he is sparing no political capital or financial resources, even under his current economic hardship, to assert his influence and distance the country away from the EU’s reach. Obviously, the Bosnians cannot survive simply on being devout Muslims, with the youth unemployment rate at almost 60 percent. Turkey is unlikely to economically recover anytime soon, and Erdogan’s ...
READ MORE
The Kosovo “Powder Keg”
While all eyes have been on the U.S. presidential campaign, such foreign-policy hot spots as Syria, Iran and Pakistan, and the increasingly frosty relations between the United States and China, a simmering problem in the Balkans threatens to come to a boil. The most serious clashes to date involving angry Serb inhabitants of the northern portion of Kosovo and international Kosovo Force (KFOR) peacekeeping personnel erupted on November 28. Thirty German and Austrian soldiers were injured, some by small-arms fire and Molotov cocktails, when KFOR troops tried to remove roadblocks that Serb residents had erected. Those barricades have been the most ...
READ MORE
Totalitarian Rule in America
Every day signs are looming larger than life as we know it in the wealthiest nation on earth that it’s about to crash and burn, forever changing not for the better. The latest wake-up call arrived in a Guardian article earlier this week. The story features a secret prison not unlike the CIA torture detention centers all over the world whereby the Chicago police hold rounded up US citizens for hours or days at a time for interrogation. The same internationally illegal roundups of suspected “potential terrorists” (which by latest Gestapo America standards can easily be you or me) that the CIA ...
READ MORE
Hillary Clinton Wants to Do this Again — Now to Syria
Secretary of State Hillary Clinton (and President Obama — and some NATO partners) did it previously to Libya, and here was the result (as discussed by the retired British career diplomat Craig Murray, at his craigmurray.org.uk, who has kindly allowed me to distribute it to other newsmedia) [and I as editor will add a few clarifiers and questions in brackets] (and then afterward, I shall add my own comments); so, here is Craig Murray:This is the result of NATO bombing of Sirte to “enforce the no-fly zone” in Libya.When the neo-cons in the UK parliament and the serial warmonger Hillary Clinton call for a ...
READ MORE
The Croatian National Revival Movement (1830–1847) and the Serbs (II)
A Greater Croatia according to the advocates of Illyrian Movement's ideologyPart IThe Illyrian  Movement until the creation of political parties (1841)Certainly, publishing of Lj. Gaj’s Kratka osnova horvatsko-slavenskoga pravopisanja/Die Kleine Kroatische-Slavischen Orthographie in 1830 marked the beginning of the Croatian national revival movement and made Ljudevit Gaj to be a leading figure of it. The essential political-national value of the book was that Gaj proposed the creation of one literal language for all Croats. It was a revolutionary act at that time, which was done, according to Gaj and other leaders of the movement, for the ultimate political-national purpose to ...
READ MORE
Depleted Uranium Haunts Kosovo and Iraq
Taboo Subject in NATO Media: Refugees, America’s Gift to Europe
BBC Fake News
Why do They Hate Russia?
America’s Benevolent Bombing of Serbia
Vietnam War and Yemen False Flags
Have You been Brainwashed about Gaza?
The Cold War and Its Origins: History of the Soviet Union (1950-1960)
The Balkans and American Gangsters
The Problem is Washington, not North Korea
America’s Worst President Ever
Why would US Transform Afghanistan into a Drug Empire?
How Ukraine Turned into An Arms Dealer? Supplying Weapons to Al Qaeda and ISIS-Daesh
The USA has been at War 93% of the Time (222 out of 239 Years – since 1776 to 2015)
Serbian Patriarchate of Peć in the Ottoman Empire: The First Phase (1557−1594)
Turkey’s Political Agenda in the Balkans: Erdogan’s Islamic Influence in Bosnia
The Kosovo “Powder Keg”
Totalitarian Rule in America
Hillary Clinton Wants to Do this Again — Now to Syria
The Croatian National Revival Movement (1830–1847) and the Serbs (II)

Written by Policraticus

SHORT LEGAL DISCLAIMER: The website’s owner & editor-in-chief has no official position on any issue published at this website. The views of the authors presented at this website do not necessarily coincide with the opinion of the owner & editor-in-chief of the website. The contents of all material (articles, books, photos, videos…) are of sole responsibility of the authors. The owner & editor-in-chief of this website is not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the contents of all material found on this website. The owner & editor-in-chief of this website is not responsible for the content of external internet sites. No advertising, government or corporate funding for the functioning of this website. The owner & editor-in-chief and authors are not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the text and material found on the website www.global-politics.eu

Website: http://www.global-politics.eu

One comment to “Chile, September 11, 1973”

Comments are closed.