Chile: Allende’s foreign policy was a forerunner for today’s Latin America

Salvador Allende.

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By Jorge Magasich, translated for Links International Journal of Socialist Renewal by Richard Fidler

September 10, 2013 – When Salvador Allende took office in November 1970, Chile was aligned with the United States. The foreign policy of his Popular Unity (UP – Unidad Popular) government, a coalition of almost all the left parties,[1] broke sharply from this Cold War bloc.

It was based on self-determination of peoples, non-interference in other countries, disarmament and the adoption of Third World causes such as the struggle against colonialism and the search for an international order with greater justice for “developing” countries. With Allende, Chile joined the Non-Aligned Movement, making it an exception in Latin America, while his government promoted alliances aimed at “advocating our rights and defending raw materials prices through collective action.”[2]

Ideological pluralism

Abandoning Chile’s strict adherence to ideological frontiers, Allende’s government displayed greater pluralism. It traded with all countries irrespective of their internal political regime. And the new government opened diplomatic relations with two Latin American countries, seven in Africa, three in Europe and seven in Asia.[3] It broke with none.

In August 1971, Washington announced an end to the convertibility of the US dollar to gold, increased import taxes by 10%, reduced its foreign aid by 10%, devalued the US dollar and launched major bond issues to finance the war in Vietnam, the space race and investments in Europe, Canada and Japan. These measures damaged many countries in the global South, devaluing their reserve funds held in dollars.

The Latin American countries met the following month in Buenos Aires to analyse the situation. Even the dictatorships participated in this meeting of the Special Committee for Latin American Co-ordination (CECLA).[4] In Buenos Aires, Gonzalo Martner, Chile’s minister of planning, outlined his proposals for a new international monetary system. A first step was to protect national currencies against dollar devaluations by breaking their link to the international monetary system. Second, he proposed that a way be found to engage the developing countries in the major decisions in international monetary policy. Finally, he called for an international conference with representation of all the economic interests on the planet. This conference would undertake to reform the monetary system, and be provided with greater resources for the developing countries that they could use at their discretion.

A new role for the UNCTAD

In his opening speech at the United Nations Conference on Trade and Development (UNCTAD) in Santiago, Chile, in April 1972, Allende — presciently! — warned the 3000 delegates and observers from 131 countries against the policy of the United States, Japan and the European Economic Community (forerunner of today’s European Union) which would gradually dismantle the obstacles to free trade. Free trade, he said, would “at one stroke wipe out the advantages that the system of generalised preferences[5] contributes to the developing countries”.

But the main threat for the Third World, Allende went on to say, lay in the fact “that the three major economic powers claim they are establishing this policy not through the UNCTAD but through the GATT [General Agreement on Tariffs and Trade, forerunner of the World Trade Organization]”. However, the GATT was not subject to the principles of the United Nations, as its composition was not at all representative and the organisation had demonstrated a special concern with protecting the interests of the dominant countries.

Allende launched an appeal for the defence of the UNCTAD, the most representative forum of the international community since it provided for negotiation of economic and trade issues on an equal legal footing: the peoples of the Third World, “unable to speak at Bretton Woods” or in other founding conferences of the international financial system, needed an effective tool to defend their interests, he argued. He therefore proposed to transform the UNCTAD into a permanent institution that could become “the principal and most effective of the instruments that the Third World has to negotiate with the developed nations”.

From this perspective, the UNCTAD would back four major missions. First, to think about “a new monetary system studied, prepared and managed by the international community as a whole, which would look to funding development in the Third World countries as well as expanding international trade”. Second, in view of the fact that the external debt “constitutes one of the principal obstacles to progress”, Allende proposed that the UNCTAD undertake to “audit” it (he spoke of a “critical study of the way in which the Third World has contracted its external debt”).

The third mission would consist of developing media under the supervision of the UN to compensate for the concentration of information and advertising in the hands of consortiums that “simply increase our dependency and are now destroying our cultural values”. Finally, Allende suggested that the UNCTAD study a “disarmament plan that would assign a large percentage of the costs linked to arms production and war to a homogeneous human development fund that, among other things, would grant long-term loans to businesses and countries in the Third World”.

A few months later, addressing the General Assembly of the United Nations in December 1972, Allende warned against the increasing power of the multinational corporations that evade democratic control: “We are faced with a veritable frontal conflict between multinational corporations and states. Their fundamental decisions — political, economic and military — are influenced by global organisations not dependent on any state and with none of their activities accountable to any parliament.”

Latin American integration

Between 1970 and 1973 the Latin American political landscape was rather adverse to the UP government. Brazil, Argentina and Bolivia (after August 1971) were under the yoke of military dictatorships, soon to be joined by Uruguay. Colombia was governed by a conservative, Misael Pastrana, and Venezuela by a social Christian, Rafael Caldera. Only the “reformist” Peruvian military officers looked with sympathy on the Chilean socialist experiment, as did the president of Mexico, Luis Echeverría.

Allende’s Chile engaged in careful diplomacy. It managed to submit the delicate border disputes with Argentina to British arbitration. And prior to the 1971 coup in Bolivia, it negotiated reestablishment of diplomatic relations with La Paz, taking a favourable approach to Bolivia’s demand for access to the Pacific.[6] At the same time, Chile granted asylum to thousands of political exiles from the countries of the Latin American dictatorships.

Allende’s government rejected Pan-Americanism — a bloc of the whole of America, with the United States pre-eminent — and its political arm, the Organization of American States (OAS), headquartered in Washington. A community of interests between weak economies and the major power is impossible, said Allende, and he proposed that the OAS become a place of dialogue between the United States and Latin America.

The UP’s diplomacy advocated the formation of a “Latin American system” that would “integrate and complement our economies in the framework of the Latin American free-trade association and the common market of the Andean countries”.[7] It encouraged the development of the common market between the countries of the “Andean Pact”[8] [now the Andean Community] and strongly supported its “Decision 24” which regulated foreign investments, limited competition between its member countries, and established a 14% ceiling on repatriation of capital by foreign firms.

These ideas were spelled out in the Latin American Economic and Social Council, meeting in Panama in September 1971. Gonzalo Martner made four proposals of an integrationist nature: (1) to ask the United States for a moratorium on the external debt for a decade, in order to assign these sums to development policies; (2) create a Latin American central bank to “invest Latin America’s reserves, 70% of which are in the United States,” to receive “the region’s deposits and assets” and coordinate the operations of the central banks in order to protect the region from financial turbulence; (3) promote the creation of a world technologies fund for development that would be financed from mandatory contributions in licences, industrial procedures and other funds slated for research so as to limit the abuses associated with technological property; and (4) and create a Latin American organisation for the development of science and technology appropriate to the region.

Six weeks before the coup of September 11, 1973, the minister of foreign affairs Orlando Letelier[9] noted that the use of the US dollar was an important obstacle to trade among the countries of the Andean Pact. He proposed to avoid it by looking for other instruments of exchange: “It may be necessary to design a special independent means of payment.”[10]

Although almost none of these ideas, articulated 40 years ago, could actually be implemented, they continue to be of striking actuality. The re-establishment of relations between Chile and Bolivia still entails consideration of Bolivia’s request for access to the sea. Most of the Latin American governments have rejected a new version of pan-Americanism, presented by Washington in the form of a free-trade area from Alaska to Tierra del Fuego,[11] opting instead for their own organisation that excludes the United States: the Community of Latin American and Caribbean States (CELAC). And the idea of a regional financial system funded with the reserves of the central banks is gradually gaining ground,[12] as is the thinking about the political weight of the media,[13] the economic weight of the dollar or the legitimacy of the external debt burden.[14]

[A French version of this articles appeared in the September 2013 issue of Le Monde Diplomatique, http://www.monde-diplomatique.fr/2013/09/MAGASICH/49664. Jorge Magasich is a historian, lecturer at L’Institut des hautes études des communications in Brussels and author of Los que dijeron No: Historia del movimiento de los marinos antigolpistas de 1973 (Santiago, Chile: LOM, 2008).]