Making the Economy Scream
'Declassified CIA documents,' National Security Archives, 1970-73.
Within the first year of Allende's presidency, many of the campaign promises he had made, such as nationalizing health care and establishing a program distributing free milk to children, were in legislation. Angered by Allende’s prospering socialist economy, Nixon’s administration established a plan to destabilize Chile’s financial state as it became increasingly clear the Chilean military had no intent to remove Allende from power.
“Keep stalling… we are going to make the economy scream.” ~ President Richard Nixon
The US government manipulated foreign aid and American private investment away from Allende’s administration. Pressured by withdrawal of support from the US, the World Bank and Intra-American Development Bank refused to allow loans to Chile. In spite of this, and with unanimous support from the Chilean congress, Allende nationalized copper in Chile. His government took control of the mines and refused to compensate the American and foreign owners who had been exploiting Chile’s resources and workers. This further angered the US government and international companies, who withdrew all investments from Chile, amounting over the next two years to the economic downturn Nixon wanted. As Allende’s third year in office approached, shortages had become a recurrence and Chile was increasingly divided along political and socio-economic lines.
Rudiger Dornbusch, Sebastian Edwards, 'The Movement of Real Wages,' National Bureau of Economic Research, 1989.
"As the various congressional investigations unfolded the story during the mid-1970s, offical distortion and lies about Chile reached a point equaled by only one other issue in Nixon's first term: the June 1972 Watergate break in with its subsequent cover-up. With Chile, as with Watergate, cover-up payments were sought for CIA contacts and associates who were caught in acts of crime. With Chile, as with Watergate, records were destroyed and documents distorted. With Chile, as with Watergate, much of the testimony provided to congressional investigators had perjury. With Chile, as with Watergate, the White House was in league with unscrupulous and violent men."
~ Seymour M. Hersh, (With Chile as With Watergate)