Last Saturday, September 11, we observed the anniversary of a terrible terrorist act, inflicted on a free people with a democratically-elected government by multinational conspiratorial forces. The terrorist attack happened on a Tuesday. It resulted in the death of thousands of innocent people and the offenders have never been brought to justice. We should etch that day – Tuesday, September 11, 1973 – in our consciences, especially if you are an American, British or Australian citizen, given the culpability of our respective governments in that despicable coup d’etat. Today, a bit of a different blog post as I remember this historical event and the way it undermined progressive thought for years. The type of economic policies introduced by Pinochet on advice from the ‘Chicago Boys’ became the standard approach for even the traditional social democratic parties in the 1980s and beyond. We still haven’t abandoned the macroeconomic ideology that accompanies this approach. And Chile, 1973, was the live laboratory. Yes, the Blairites and the Delors-types and the American Democrats, etc don’t chuck inconvenient people out of planes in the ocean to get rid of them like Pinochet did on a daily basis, but the macroeconomics invoked is not that different.
The progressive recognition of September 11, 2001
A while ago, I gave a presentation to a definitely Left-wing audience about the way neoliberalism had increased inequality by reconstructing employment in casualised precarity.
It was on September 11 of that year and the news all day had been recalling the Twin Towers attack.
I started my talk in the same way I started this blog post – being ambiguous.
The audience enthusiastically affirmed each statement – about terrorist acts, attacks on freedom, attacks on workers, multinational conspiracies, the need for a response, etc.
If anything, their reaction to each statement I made became more animated and I had clearly hit a nerve.
When I finished the opening, by saying, “Yes, we should never forget what happened on Tuesday, September 11, 1973” – they were shocked and they realised they had been roped into going along with the mainstream media hype.
It illustrated, in my view, how the Left had lost its focus on class struggle and become invested in new narratives that made its susceptible to capture and co-option by mainstream ideology.
That susceptibility has permeated our traditional progressive political forces and has had massive consequences for workers and our planet.
The US obsession with September 11
In recent weeks, the stark, hasty and humiliating retreat from Afghanistan by the Americans has captured the attention of the international press.
There are no good stories to be told.
A ruthless invasion by the US, justified by the flawed assumption that it could bring American-style democracy (a misuse of the word ‘democracy’ if ever there was one) to a nation ruled by warlords with strong ethnic differences, ended with the US fleeing to a deadline and leaving behind chaos.
I have no truck with the Taliban who seem to be like medieval barbarians but after 20-years of occupation by the US, accompanied by massive investment in the most destructive weapons imaginable and related technology, the barbarians outsmarted them.
And in the last week or so, the Western media has gone overboard in reminding us of the Twin Towers attacks on September 11, 2001.
The media has gone crazy observing the 20 anniversary.
And, to be clear, I don’t want anyone to get the wrong idea. The Twin Towers attacks were brutal and indefensible.
But why does the West forget what it did to Chile yet go crazy about the other event that happened on Tuesday, September 11?
Both the US and the UK were implicated in the Coup d’Etat in Chile in 1973.
The US government couldn’t accept that a democratically-elected government in Chile might want to control its own resources, particularly, in that case, the valuable copper industry.
The UK also had invested in the copper extraction and were horrified when Salvador Allende proposed to nationalise the sector for the benefit of the people rather than the multinational owners.
On January 23, 2018, the British historian, Mark Curtis, who specialises in the analysis of declassified government documents to analyse British foreign policy, produced a new archive for our benefit – Chile: Declassified.
He collates public articles and also documents that were previously classified under Government rules.
His file (drawn from the National Archives) – Chile, 1971-3 – provides some stunning revelations that bear on this sordid period in World history.
See also the excellent report from Sputniknews (January 23, 2018) – UK’s Secret Support of Murderous Dictator Pinochet – which goes into more detail than I do here.
The democratically-elected government in Chile was overthrown by a military coup (planes, bombs, murders etc), which was instigated by the US CIA and global financial interests.
You can read the declassified CIA documents on their involvement – HERE.
I was always interested in Chile not only because I was deeply angered by the actions of the Right and the brutality that accompanied and followed the Coup.
It was also became a laboratory for Milton Friedman and his goons from the Chicago Economics Department – the so-called – Chicago Boys – to impose their pernicious neoliberal policy regime onto a nation wtih the help of the IMF and the World Bank.
The former institution was in a state of shock as a result of the collapse of the Bretton Woods system, which had defined the IMFs role.
With flexible exchange rates, the IMF no longer served a purpose and so it reinvented itself by becoming a neoliberal attack dog for the corporate and financial elites in the US and elsewhere.
It was able to exert considerable influence on national politics by withdrawing financial support, invoking punitive structural adjustment programs and other more devious means.
The US government also sought help from the World Bank to withdraw financial support from the Chile – to starve it of international funds.
The behaviour of the IMF in Chile in the early 1970s clearly demonstrated its growing neo-liberal credentials. Their role in the Chilean overthrow of democracy was an early manifestation of their willingness to add their name, authority and resources to the development of the neo-liberal attack on the Keynesian orthodoxy.
Chile was the first notable action by capital to attempt to arrest the falling profit rates in the 1960s, which had arisen as income distribution became less skewed towards to the top end and workers enjoyed increasing employment security and prosperity under the full employment framework.
The Chicago Boys were an integral part of the Chilean story.
They were a group of economics students of Milton Friedman at the University of Chicago or at the Pontifical Catholic University in Chile.
They were trained in the extremes of free market, Monetarist thinking and with their fresh PhDs took on senior policy roles across Latin American nations.
They were zealots – advocating deregulation of labour markets, privatisation of government services, scrapping welfare state provisions – the really hard-edged 1970s economic rationalism.
Salvador Allende’s government had rejected their manifesto which is one of the most extreme public documents you will ever read.
You can access it via the National Library of Chile (Biblioteca Nacional de Chile) – “El ladrillo”: bases de la política económica del gobierno militar chileno (“The Brick”: bases of the economic policy of the Chilean military government) – after it was made public in 1992.
This was the dirty work of the Chicago Boys and was completed just before the Coup in September 1973 – conveniently. Pinochet and his henchmen had the blueprint to wreck the Chilean economy and they didn’t waste any time.
In the document, they write that their “libertarian ideals” and the “vision of the leaders of the military forces” to give them the scope to introduce their plan.
They give special credit to “Augusto Pinochet and the Members of the Honorable Government Board”.
The Chicago Boys? “Nosotros fuimos sus colaboradores.” Enouogh said.
There is no doubt that the IMF was also keen to do the bidding of the US government, which was prosecuting the neo-liberal agenda with vehemence on behalf of the large Wall Street firms, which provided massive funding to the Congressional members.
The new regime abandoned so-called fiscal activism (the discretionary use of government spending and taxation policy to fine-tune total spending so as to achieve full employment), and, instead, empowered central banks to disregard mass unemployment and fight inflation first.
Later, absurd notions such as rational expectations and real business cycles were added to the litany of Monetarist myths, which indoctrinated graduate students (who became policy makers) even further in the cause.
Milton Friedman coined the term “shock policy” to describe the assault on Latin American nations by these economists.
The mass unemployment that followed was a direct result of the harsh fiscal austerity that was implemented exacerbated by the decline in world copper prices and the OPEC oil crisis.
David Harvey in his 2007 article – Neoliberalism as Creative Destruction – wrote that “the economic threat to the position of the ruling elites and classes was now becoming palpable”.
He recounts how:
The US had funded training of Chilean economists at the University of Chicago since the 1950s as part of a Cold War programme to counteract left-wing tendencies in Latin American. Chicago-trained economists came to dominate at the private Catholic University of Santiago. During the early 1970s, business elites organized their opposition to Allende through a group called ‘the Monday Club’ and developed a working relationship with these economists, funding their work through research institutes. After General Gustavo Leigh, Pinochet’s rival for power and a Keynesian, was sidelined in 1975, Pinochet brought these economists into the government, where their first job was to negotiate loans with the International Monetary Fund. Working alongside the IMF, they restructured the economy according to their theories.
There was a massive redistribution of income away from workers towards profits as Pinochet suspended collective bargaining and outlawed trade union activity.
Real wages fell sharply and the top 20 per cent gained an increasing share of national income.
Between 1973 and 1982, the top 1 per cent of the income distribution increased it share of income from just over 11 per cent to around 20 per cent.
Through the 1970s, the repression of the trade unions increased.
Davin Harvey noted that the Chilean coup demonstrated how profit rates could be restored if trade unions were smashed and public assets sold off to the private sector.
Britain and Chile in 1973
Mark Curtis’s work also helps us better understand the role that Britain played in the Chilean coup courtesy of some declassified material.
I won’t go through it in detail but among other things we learn that:
1. Britain was upset that its “major interest in Chile … copper” was under threat because Allende wanted to nationalise the sector.
2. The British Ambassador to Chile at the time wrote to the UK Foreign Office on September 3, 1973 about his “first impressions” on Chile.
He wrote just before the Coup was that “One option for Chile future is a coup”:
If this were followed by a military-guided regime, or subsequently by elections bringing in a moderate, democratic government, I suppose one could look to an eventual revival with the help of American credits and some kind of Marshall Aid. It is on this that the business community are pinning their hopes.
He acknowledges that the “business community” were pushing for a military dictatorship to get rid of Allende.
In the same Memo, he wrote:
… many people in the poorer and depressed sections of the community have, as a result of President Allende’s administration, attained a new status and at least tasted, during its early days, a better standard of living,
On September 14, 1973, three days after the Coup, the British Ambassador wrote:
The coup was carried out efficiently and with a cold-blooded, surgical approach untypical of the Chilean character … It is likely that casualties run into the thousands, certainly it has been far from a bloodless coup”.
But the British government already knew that.
On September 13, 1973, the British Foreign Secretary Alec Douglas-Hume wrote:
Circumstances of Allende’s overthrow and death render this case delicate… Accordingly we consider that it would not be in anyone’s interest to identify too closely with those responsible for the coup … But we still have enough at stake in economic relations with Chile to require good relations with the government in power.
So, never mind the murders and the slaughter. We adopt the ‘blind eye’ approach and get on with business as usual with the dictatorship.
Seven days after the Coup (September 18, 1973), the British Ambassador wrote:
I think I should make clear that, whatever the excesses of the military during the coup, the Allende administration was leading the country into economic ruin, social disorder and political chaos.
Yes, because the poverty was being reduced and the vast majority of people were starting to enjoy a “better standard of living”.
And, next day (September 19, 1973), he showed his true colours:
Most British businessmen, whether they have investments here or are interested simply in exporting to Chile, will be overjoyed at the prospect of consolidation which the new military regime offers … Those British subsidiaries and investments which have emerged from the last three years relatively unscathed – [various including Shell] … – are all breathing deep sighs of relief … One thing does seem certain to me. Now is the time to get in. If we delay too long, while we may not miss the bus, we are likely to have difficulty in finding a comfortable seat”.
The correspondence continued and it was clear that the British government was seeing the new military dictatorship as a major source of export revenue via arms deals.
The UK Ambassador wrote on October 1, 1973:
Circumstances also will push them into directions which British public opinion will deplore. But this regime suits British interests much better than its predecessor …
Various other exchanges between British officials confirms that the British export of arms (Hawker Hunter planes etc) would accelerate to the Dictatorship.
Never mind that:
1. During the Coup, “Chilean Air Force Hawker Hunters were putting on an impressive show of force… the Hawker Hunters dived down at the Moneda Palace and with remarkable accuracy released their aerial rockets. These did much damage and set the Palace on fire. The President’s residence on the outskirts of the city, where resistance was encountered, was similarly attacked”.
2. “There are lots of stories of deliberate killings and brutalities … There were reports of summary executions of some of those who resisted the Armed Forces, and the large-scale round-up of government supporters and sympathisers, particularly foreigners. Several thousand were held in the football stadium where some received very rough treatment.”
3. “As to the ruthlessness of the coup, the military would argue that half-measures or a ‘soft’ coup would not only have been ineffective but would have led to prolonged civil war.”
But “the current regime has infinitely more to offer British interests than the one which preceded it. The new leaders are unequivocally on our side and want to do business, in its widest sense, with us. I hope that Her Majesty’s Government will respond”.
And so it goes.
This was a case where a nation that was ‘reclaiming its state’ to enhance the lives of normal people was invaded by foreign capital using the military. It set a scary precedent.
Australian government and the CIA
In the book (and subsequent movie) – Falcon and the Snowman – we encountered – Christopher John Boyce – and we learned about the role he played in the defense industry in the US and his discovery of “misrouted cables from the” CIA, which showed the CIA was actively undermining the Australian Labor government of Gough Whitlan in the early 1970s.
Whitlam wanted to close the US military bases in Australia (especially Pine Gap) and withdraw from Vietnam.
The CIA pressured the Governor-general of Australia to dismiss the twice, democratically-elected Whitlam government in 1975.
Christopher Boyce also discovered that tundermining democratic governments of its allies was routine for the CIA, if the US didn’t like their political flavour.
He had previously learned of the CIA’s part in the fall of the Allende government in Chile.
He started to smuggle classified documents and sold them to the Soviet Union through an intermediary. He was caught and served 25 years in prison.
But he knew how venal the US government and its agencies were in trying to manipulate political systems around the world.
In the case of Australia’s coup, it was engineered via the head of state (who was a conservative lackey) and there was no military involvement.
But in the case of Chile, it was clear that a different, more lethal approach had to be taken. And it was.
We also now have more information about the Australian government involvement in the Chilean coup.
An Australian academic has recently won access via the Administrative Appeals Tribunal to previously classified documents that categorically show the role played by the Australian Secret Intelligence Service (our equivalent of the CIA) has opened an office in Santiago in December 1970 with the express mission to help the CIA destabilise Salvador Allende’s government.
That office was opened by the Conservative government in Australia and it spied on the Chilean government, facilitated CIA operations and regularly reported to CIA HQ in the US.
When Gough Whitlam was elected as the first Labor Prime Minister in December 1972 (after 23 years of conservative government) he ordered the spy agency to close its operations in Santiagio.
But the documents show that Whitlam was however torn, which this memo from the boss of ASIS and the staff in Santiago attests (Source):
… he was most concerned that CIA should not interpret this decision as being an unfriendly gesture towards the US in general or towards CIA in particular … The Prime Minister said that now that he had made his decision he wanted us to cease our clandestine activity as soon as possible …
The current conservative federal government has fought hard to stop the academic getting access to the documents.
They don’t want the people to know what their forebears were up to.
Some hope though
This article (September 10, 2021) – Chile: from 9/11 to the end of neoliberalism – is worth reading.
It reports of the recent struggle against the neoliberalism installed by the Pinochet regime – the campaign by the citizens to change the constitution, and the push-back from the elites, who benefit from the inequities built into the Pinochet framework.
There is renewed political instability in Chile as social democratic sentiments become increasingly organised and the traditional political forces (both centre-right and left), who have operated within the Pinochet constitution, face political oblivion.
As the author notes:
Chile has become a case study in alienation between the establishment and civil society; and while a large part of the population now sees the establishment as illegitimate, civil society has proven able to organise and exert pressure to demand nothing less than a new social contract.
So there is hope.
And Chile might just “become a blueprint for other countries” in Latin America to reject the US-imposed neoliberalism and address the serious issues of inequality, poverty, unemployment and environmental pillage.
But then what will the CIA do?
Remember Chile – Pressure Drop
Here is my band – Pressure Drop – recalling the event (I wrote this song in 1978, this version was recorded live in May 2011).
Play it loud and get angry.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.