Salvador Allende And The War Against Developmentalism

"We shall squeeze you empty, and then we shall fill you with ourselves."

- George Orwell

Despite the fact that Eisenhower was a strong right wing president he recognized that it would be foolhardy to challenge Keynianism's domestic reign, however he had no such qualms against fighting developmentalism abroad. In 1953 Iran has a developmentalist leader who had already nationalized their oil, Mohammad Mossadegh, and Indonesia was being led by Achmed Sukarno who had a dream of uniting the third worlds into a new world superpower on par with the United States and Russia. Between America's loss of Iran's oil, the talk of unification from Indonesia and the booming success in Latin America the United States was becoming very nervous.

The rich land and factory owners in South America were pissed off that their governments were keeping the price of crops low - making food readily affordable, their crowds of impoverished workers were demanding land redistribution and their profits being taxed to invest in other sectors. Similarly Western corporations were bitching to their governments that their products were being blocked at the borders in South America, their workers were demanding higher wages and most terrible of all there was talk of nationalizing the banks and mines of Latin America in order to further lift themselves out of their despondency.Due to the corporate pressure John Foster Dulles, Eisenhower's Secretary of State, and his brother, Allen Dulles, head of the newly created CIA - both former employees of a major New York law firm that had represented J.P. Morgan, United Fruit Company and other major conglomerates - decided that they needed to put a new spin on developmentalism in order to bring it down. They formed a propaganda campaign which named developmentalism as a step on the road to communism. They followed up in 1953-54 with two CIA coups d'etat against third world governments that were both distinctly more Keynian than communist.

The first coup was in 1953 when the CIA overthrew democratically elected Prime Minister Mohammed Mosaddeq, a beloved leader in Iran who had made bitter enemies when he nationalized his countries oil supplies. With Mosaddeq out of the way a monarchy was put into place under Mohammed Pahlavi who would rule with an iron fist for 26 years, until the Iranian people usurped him under accusations of oppression, murdering protesters, and being a puppet to the West.
The second coup took place in 1954 in Guatemala and was a direct result of the pressure applied by the United Fruit Company, a corporation in which both Dulles brothers were share holders. Democratically elected President Jacobo Arbenz Guzman had retaken unused, undeveloped land, with full compensation, and given it to peasants to farm. In the 11 days following Guzman's fall from power five different juntas occupied the leadership position, finally resting on the West's bitch, formerly exiled Colonel Carlos Armas, a leader so inept that his reign created civil unrest unseen since the revolution of 1944.

To plot the downfall of developmentalism in the southern cone two men held a secret meeting in Santiago, Chile in 1953. Albion Patterson, director of USAID, and Theodore Schultz, the chairman of the Department of Economics at the University of Chicago. Recognizing that developmentalism was deeply entrenched and believing that the United States was not fighting strongly enough against Marxism Schultz suggested that they needed to convince poor countries that the only true way to economic success was to follow the path blazed by the United States.

In order to do this they launched what would be known as the "Chile Project" in which 100 Chilean students were sent to the University of Chicago to study economics, all expenses paid by US tax dollars. The following year the project was expanded to include students from all over Latin America, most specifically Brazil and Argentina, with their expenses covered by grants from the Ford Foundation. In essence Chile became Milton Friedman's wet dream: a country in which to test his economic theories. Basically the Chile Project found the brightest economic students and brought them to the University of Chicago to be indoctrinated into Friedman's champions in Latin America. In the words of Mario Zanartu, an economist at Santiago's Catholic University, the returning Chilean students were "even more Friedmanite than Friedman himself."
By the year 1963 12 of the 13 full time faculty members at Catholic University's economics department were graduates of the Chile Project, including the department chair. Soon Chilean students could study Friedman's theories without ever leaving the country.
Graduates of the two schools were known as "los Chicago Boys" and under grants from USAID they began to spread about into different universities in Latin America converting their economics programs to the Chicago School way of thinking.
Despite this intellectual imperialism none of the Chicago Boys had taken seats of political power and by the 1970 Chilean presidential elections all three candidates were strong supporters of nationalizing the countries copper mines - a resource controlled by American mining companies. In fact every Latin American country was turning even harder left than ever before. The Chile Project was an expensive dud, but the Chicago Boys were saved from obscurity by the election of US President Richard Nixon. Of Nixon Milton Friedman said he "had an imaginative, and on the whole effective, foreign policy." This could not be any more true in regards to Chile, while the Chicago Boys had failed under democratic leaders their luck would change under a dictatorship.
In 1970 Salvador Allende won the presidential seat under a platform of nationalizing everything that was run by foreign corporations. A powerful speaker he believed that socialistic change should not be forced upon them but needed to come by the vote of the people. When Nixon learned of Allende's election he was quoted as ordering the CIA director to "make their economy scream." The University of Chicago deemed the election a tragedy and believed that a military takeover might be the best approach. Although Allende planned to compensate businesses that would loose investments they were unwilling to let go of the profits they were receiving as a result of raping the Chileans - the copper mining industry had invested $1 billion and had received a return of over $7 billion.

Before his inauguration corporate America declared war on Allende, bringing together the American mining companies, the International Telephone and Telegraph company - whose 70% control of Chilean phones was going to be nationalized, as well as Pfizer Chemical, Purina and Bank of America. Their mission was to strong arm Allende into backing off by threatening to destroy their economy. They would do this by stopping all trade with Chile and by convincing foreign banks to refuse to lend the Chilean government money.
Allende sent his trusted friend, Orlando Letelier, to Washington to negotiate with the same corporations who were plotting the leaders downfall. These negotiations went nowhere as corporate America had plans of their own in place. In March of '72, during the negotiations, news was broken that ITT had secretly plotted with the State Department and CIA to block Allende from being inaugurated. The US Senate launched an investigation and uncovered multiple conspiracies, including that ITT had spent $1 million in bribes to rebellious groups in Chile to kill Allende, as well as an attempt to convince the CIA to rig the 1970 elections. Since neither plan had worked it was ITT's plan to ensure that he would not last beyond his first six months in office. The scheming even went so far as ITT making strategies for dealing with Chile and sending them to the president, calling for a military coup.

Despite putting $8 million into overthrowing Salvador Allende by 1973 his party gained more power and his popularity had grown tremendously. Finally the decision was made that in order to dethrone Allende a more radical puppet would need to take over the government and no candidate was more radical than General Augusto Pinochet.