“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
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.
Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.
Read our Disclaimer/Legal Statement!
Donate to Support Us
We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.
The sad reality about the United States of America is that in a matter of a few hundreds years it managed to rewrite its own history into a mythological fantasy.The concepts of liberty, freedom and free enterprise in the “land of the free, home of the brave” are a mere spin. The US was founded and became prosperous based on two original sins: firstly, on the mass murder of Native Americans and theft of their land by European colonialists; secondly, on slavery.This grim reality is far removed from the fairy tale version of a nation that views itself in its ...
Sultan Abdul Hamid II, in the face of a rising secular nationalism in the late 1800s, that culminated in the Young Turk movement, tried to restore the influence of the Ottoman Empire among Islamic nations and the Empire’s many peoples by stressing the importance of Islam and the Ottoman Caliphate, of the role of the Ottomans as the protectors of Islam and, in the modern world, a bulwark against western colonialism.Over a hundred years after he left power, after the Empire was broken up by the western powers after the First World War, after the Turkish nationalists under Mustafa Kemal, ...
There is an astounding double standard being applied to the US presidential election result.A few weeks ago the corporate media were appalled that Donald Trump demurred on whether he would accept the vote if it went against him. It was proof of his anti-democratic, authoritarian instincts.But now he has won, the same media outlets are cheerleading the establishment’s full-frontal assault on the legitimacy of a Trump presidency. That campaign is being headed by the failed candidate, Hillary Clinton, after a lengthy softening-up operation by US intelligence agencies, led by the CIA.According to the prevailing claim, Russian president Vladimir Putin stole the election on ...
With American military personnel now entering service who were not even alive on 9/11, this seems an appropriate time to reexamine the events of September 11, 2001 – the opaque motives for the attacks, the equally opaque motives for the counter-offensive by the United States and its allies known as the Global War on Terror, and the domestic fall-out for Americans concerned about the erosion of their civil liberties on the homefront.Before venturing further, it’s worth noting that our appraisal is not among the most common explanations. Osama bin Laden, his lieutenants at Al-Qaeda, and the men who carried out ...
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 ...
I am now convinced that the Oligarchy that rules America intends to steal the presidential election. In the past, the oligarchs have not cared which candidate won as the oligarchs owned both. But they do not own Trump.Most likely you are unaware of what Trump is telling people as the media does not report it. A person who speaks like this:- is not endeared to the oligarchs.Who are the oligarchs?— Wall Street and the mega-banks too big to fail and their agent the Federal Reserve, a federal agency that put 5 banks ahead of millions of troubled American homeowners who ...
Imperialism and colonialismOne of the focal historical features of the western (West European) civilization was and is imperialistic colonization followed by the brutal social, economic, political, financial, etc. exploitation of the local peoples and their cultures.By some academic understanding and formal definition, imperialism is a process of extending a nation-state’s power by territorial occupation or by forming political, financial, economic, etc., hegemony (rule) over other people. In more simple words, imperialism is defined as the cases when one state (nation-state) controls the inhabitants and territory of another state (neighboring or overseas). In any case, the cardinal feature of imperialism is ...
TerminologyA meaning of the term Great Power(s) (GP) in global politics from the beginning of the 16th century onward refers to the most power and therefore top influential states within the system of the international relations (IR). In other words, the GP are those and only those states who are modelling global politics like Portugal, Spain, Sweden, France, the United Kingdom, united Germany, the USA, the USSR, Russia or China. During the time of the Cold War (1949−1989) there were superpowers[1] as the American and the Soviet administrations refered to their own countries and even a hyperpower state – the ...
Fifty-one years ago today Israeli fighter aircraft and torpedo boats tried to sink the USS Liberty, a surveillance ship stationed off the coast of Egypt during Israel’s attack on Egypt and Syria. Israel was unable to sink the USS Liberty, but did manage to kill or wound almost the entire crew. Thirty-four Americans were killed and 174 were wounded.There are two explanations for the attack. As Washington has blocked every attempt at an investigation, we do not know which one is correct. Perhaps both are the reasons for the attack.One is that Israel, which was committing a war crime by ...
40 yrs after Prez Teddy Roosevelt gave Korea to brutal Jap Empire in return for its recognition of Philippines as US Territory, US invaded Korea long AFTER Jap surrender, overthrowing its Korean gov., cutting it in two parts, installing a US dictatorship in its south now documented to have murdered 100,000 of its own citizens.What Western media calls ‘Communist China,’ is a China governed by its Communist Party since 1949, and lying just across the Yalu River from a Korea, which between 1950 and 1953, was merciless bombed by the US, both north and south, all cities and towns of ...
In his latest interview for Serbia’s National Public Service Radio, Srdja Trifkovic discusses the geopolitical significance of the Balkan Peninsula, through the centuries, in the context of today’s complex strategic equation in Southeastern Europe.Q: The Balkan Peninsula is an area where empires, cultures and religions have clashed for centuries. For starters, can we define the geostrategic significance of the Balkans, or at least to outline some of its permanent features?ST: Those permanent features are primarily geographic. The peninsula is the land bridge between Central Europe and the Middle East. At the same time, it is the point of encounter and ...
If the Trump phenomena showed anything, it showed the consensus reality the mainstream media attempted to create concerning Hillary’s certain victory, as well as the consensus reality erected for decades, is not omnipotent.In fact, the earliest days of mass print media were erected on a famous fraud known as the “Great Moon Hoax” of 1835 – something researcher Chris Kendall has long called attention to – wherein the “educated,” “elite” widely accepted the mainstream publications’ claim bat people inhabited the lunar surface.In our day, a similar hoax still reigns, as mainstream media is literally as credible as Weekly World News’ Bat Boy ...
Why has Barack Obama airdropped 50 tons of ammunition into areas that “moderate rebels” in Syria supposedly control? This is essentially the equivalent of poking the Russians directly in the eyes. Much of this ammunition will end up in the hands of those that the Russians are attempting to bomb into oblivion, and so to Russia it appears that we are attempting to make their job much harder. And of course the truth is that there aren’t really any “moderate rebels” in Syria at all. Nearly all of the groups that are fighting are made up primarily of radical jihadists ...
As a matter of historical fact, a separate Macedonian ethnonational identity did not exist until the second half of the 19th century. This is partly due to the fact that Macedonia was ruled by Ottoman Empire for a longer period of time: from 1371 to 1912. It is known that Ottoman authorities did not recognize any kind of ethnonational or ethnolinguistic identities but rather only the confessional (millet-system). Therefore, the Christians of Macedonia were not differentiated between themselves on the ethnic bases. Furthermore, Macedonian territories were inhabited by different ethnic, linguistic and religious groups (Slavic- and Greek-speaking Christians, Turkish- and ...
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 ...
It is now clear that on 14 April 2018, the three Governments of U.S., UK, and France, fired over a hundred missiles against Syria, on no more 'justification' than staged videos that had been done by those regimes' own proxy boots-on-the-ground fighters in Syria, who are trying to overthrow Syria's existing, non-sectarian Government and replace it by a Sharia-law regime that would be selected by agents of Saudi Arabia's ruling family. In other words: the fighters whom the U.S., UK, and France, had been arming and training, had themselves created this pretext of a faked 'gas attack' having been perpetrated ...
The Concept & The Origin Of The TermThe term „humanitarian intervention“ is the American political neologism (newly coined word) to morally cover a new format of Washington's global imperialism at the time of the post-Cold War's „New World Order“ in which the USA feel very comfortable to play a role of a global policeman. Theoretically, according to the Western conception of „humanitarian intervention“, one or more states (the USA and the NATO) have a moral (quasi) obligation and/or right to intervene into the internal affairs of other state, if this state (according to the self-evaluation by Washington) does not respect ...
IntroductionBelow are TENC's October 1999 interviews with three Serbian women from the Kosovo town of Orahovac. They recount how, prior to the June 1999 NATO-UN takeover of Kosovo, they believed NATO's promise that it would institute multi-ethnic harmony. They discovered too late that for NATO multi-ethnic meant rule by the Kosovo Liberation Army (KLA).In September, TENC had published its first interview with an eye-witness to the NATO-UN Kosovo takeover: Cedomir Prlincevic, President of the Jewish community and Chief Archivist in Pristina, capital of Kosovo.Mr. Prlincevic described how he and the rest of the small Jewish community were driven from their ...
The U.S. military base in Kosovo was constructed in 1999 without consulting with the government of Serbia and is the largest U.S. military base built outside of the U.S. since the Vietnam War. The site was apparently used for extraordinary renditions and has been referred to as a “little Guantanamo”. This is a very little known fact as NATO, the U.S., the European Union and the West are in the process of forcing Serbia to effectively give up Kosovo, and indicates the real motive for the West’s support of the Kosovo Liberation Army which it had deemed a terrorist organization ...
There are many definitions and/or understandings of war. However, from the very academic point of view, war can be understood as an armed conflict between at least two sides usually but not necessarily states fought usually for some (geo)political goals. The focal conceptual idea of war is the use of force between large-scale political subjects like states, empires, or coalitions. Historically, wars have been fought mainly for the control of certain land for different reasons ranging from a purely political one to a purely economic one or a combination of several of them.Many types of war and warfare can be ...
Source: Los Angeles Times, May 31, 2016
