DEPARTMENT OF HISTORY

A Corporate Conspiracy?

Multinational Corporations and US Intervention in

Chile, 1964-73

Academic Year: 2013 – 2014

Submitted in support of the degree of

UHISHIS

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Contents

List of Abbreviations ----------------------------------------------------------------------------------------------- 2

Introduction ---------------------------------------------------------------------------------------------------------- 3

The 1964 Presidential Election ------------------------------------------------------------------------------------ 7

Allende’s Election and Inauguration ----------------------------------------------------------------------------- 10

Spoiling Campaigns and Opposition Funding ---------------------------------------------------------- 10

Coup Plotting -------------------------------------------------------------------------------------------- 13

The Allende Doctrine ----------------------------------------------------------------------------------------------- 20

The Chile Ad Hoc Committee -------------------------------------------------------------------------- 20

Expropriation ------------------------------------------------------------------------------------------- 25

Conclusion ------------------------------------------------------------------------------------------------------------ 32

Bibliography ---------------------------------------------------------------------------------------------------------- 35

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List of Abbreviations

CCS – Chilean Co-operative Society.

Chiltelco – The Chilean Telephone Company.

CIA – Central Intelligence Agency, USA.

FRAP – Frente de Acción Popular (Popular Action Front), Chile.

GM – General Motors, USA.

IPC – International Petroleum Company, USA.

ITT – The International Telephone and Telegraph Company, USA.

NSDM – National Security Decision Memorandum.

PDC – Partido Demócrata Cristiano (Christian Democrat Party), Chile.

PN – Partido Nacional (National Party), Chile.

UP – Unidad Popular (Popular Unity), Chile.

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Introduction

The events of 11 September 1973 are well known to historians of Chile, and of US foreign policy and

the Cold War more generally. Two Chilean Hawker Hunter jets bombed the Chilean presidential palace,

which contained the president Salvador Allende and a group of his armed supporters. Under the cover

of artillery fire, infantry units of the Chilean military advanced upon the burning palace and overran the

beleaguered defenders. Allende was found dead inside – the work of his own hand using a Kalashnikov

rifle given to him as a gift by Fidel Castro.1 This was the bloody culmination of years of US intervention

in the country – an attempt to keep Communism out of South America which resulted in the overthrow

of Chile’s democratically elected president and the installation of a brutal military dictatorship under

General Augusto Pinochet which lasted until 1990. It is the classic case study of the United States’

compulsion to stop the spread of Communism overriding its commitment to democracy and the principle

of self-determination.

Debate still rages over who or what was responsible for the determination of US policy towards Chile

during the period 1964-1973. While some historians argue that geopolitical concerns and the context of

the Cold War were paramount, others maintain that US corporations with holdings in Chile were decisive

in persuading the government to become involved in Chile and together they conspired to bring down

Allende. Of the former group, Tanya Harmer argues that the role of Nixon has been underplayed and

that ‘economic concerns were less of a worry’ to him than political ones.2 Kristian Gustafson states

outright that ‘U.S. corporate interest in Chile…had very little direct influence on the determination of

U.S. policy when it came to Chile,’ rather, it was the context of the Cold War which provided the

motivation.3 Oscar Guardiola-Rivera, while acknowledging the importance of national security and

1 Stephen Kinzer, Overthrow: America’s Century of Regime Change from Hawaii to Iraq (New York: Times Books, 2007), pp. 193-194. 2 Tanya Harmer, Allende’s Chile and the Inter-American Cold War (Chapel Hill: The University of North Carolina Press, 2011), pp. 8, 60. 3 Kristian Gustafson, Hostile Intent: U.S. Covert Operations in Chile, 1964-1974 (Washington, D.C.: Potomac Books, 2007), pp. 8, 200.

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economic concerns, contends that the most serious threat presented by Allende was that ‘he could show

the possibility of the coexistence of socialism and democracy,’ which the US could not tolerate.4 Of the

latter group, Stephen Kinzer writes that ‘powerful businesses played just as great a role in pushing the

United States to intervene abroad during the Cold War as they did during the first burst of American

imperialism,’ and that business executives and government officials conspired to overthrow Allende.5

Seymour Hersh argues that ‘Nixon’s tough stance against Allende in 1970 was principally shaped by his

concern for the future of the American corporations whose assets, he believed, would be seized by an

Allende government.’6 Christopher Hitchens, and Oliver Stone and Peter Kuznick emphasise the

importance of the personal influence of important businessmen such as Donald Kendall, David

Rockefeller, and John McCone in prompting the US decision to intervene.7 Others, such as Peter

Kornbluh and Jonathan Haslam, do not fall neatly into either of these categories but argue that US

corporations were used as willing tools by the US government in their plot to bring down Allende.8

The sections of these historians’ works which are focused on the role of multinational corporations in

US intervention in Chile seem to be based on a selective or incomplete reading of the extremely rich

source base on this subject, including the declassified government documents released as part of the Chile

Declassification Project, and the internal memoranda of several of the companies involved which were

made public in the wake of the Church Committee hearings. It is widely implied that US corporations

with investments in Chile were a kind of homogeneous force, unanimous in their wish for Allende not

to hold power in Chile. The historiographical debate is focused on who provided the decisive push to

intervene in Chile – business interests or members of the US government. Little thought is given to the

fact that individual corporations were independent actors whose wishes did not always align with each

4 Oscar Guardiola-Rivera, Story of a Death Foretold: The Coup against Salvador Allende, 11 September 1973 (London: Bloomsbury, 2013), p. 150. 5 Kinzer, Overthrow, pp. 215, 170. 6 Seymour M. Hersh, The Price of Power: Kissinger in the Nixon White House (New York: Summit Books, 1983), p. 271. 7 Christopher Hitchens, The Trial of Henry Kissinger (London and New York: Verso, 2001), p. 56; Oliver Stone and Peter Kuznick, The Untold History of the United States (London: Ebury Press, 2013), p. 372. 8 Peter Kornbluh, The Pinochet File: A Declassified Dossier on Atrocity and Accountability (New York and London: The New Press, 2004), p. 17; Jonathan Haslam, The Nixon Administration and the Death of Allende’s Chile: A Case of Assisted Suicide (London and New York: Verso, 2005), p 60.

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other or the government. Rather than it being a case of corporations either being influential or ignored

within the US government, individual corporations attempted – with varying degrees of success – to

influence both fellow corporations and the government to their point of view, while the government

similarly tried to enlist the help of corporations during the period in question. Furthermore, corporate

attempts to influence the US government did not end once the decision to intervene in Chile had been

made. The period 1964-1973 saw two different US administrations in power, and policy towards Chile

under the Nixon administration was far from constant. US policy was continuously changing, and

multinational corporations made every effort to make sure that it changed to follow their best interests.

As multinational corporations become an ever more important and powerful part of our world, their

history is bound to come under greater scrutiny, and it is important that perceptions of this history are

based upon a correct reading of the facts rather than assumptions or conspiracy theories. However, an

in-depth study of the role of multinational corporations in US intervention in Chile during the candidacy

and presidency of Allende, using the multitude of revealing documents declassified since 2000, is

profoundly lacking.

What follows is an attempt to rectify the lack of such an in-depth study, in the form of an examination

of the relationships between the various US corporations with investments in Chile, and between these

corporations and the US government. By the term ‘US government’, I refer to the executive and

legislative branches of government, including the CIA which although it could be argued acted semi-

autonomously was after all a federal agency and was overseen by government. I intend to examine

attempts by multinational corporations and the US government to influence each other and the extent to

which these attempts were successful. In order to do this I shall be focusing on three main periods when

US government and corporate desire to intervene in Chilean politics peaked: the 1964 Chilean presidential

election, the 1970 Chilean presidential election and subsequent congressional run-off election, and the

period surrounding Allende’s nationalisation of Chilean copper mines and the announcement of his

‘excess profits’ concept 1971. As for the corporations which were involved, the main focus will be on

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three of the largest US corporations active in Chile: the Anaconda Copper Mining Company, the

Kennecott Copper Corporation, and the International Telephone and Telegraph Company (ITT).

Anaconda and Kennecott between them owned the largest copper mines in Chile, while ITT owned 70

per cent of the Chilean telephone network (Chiltelco). Their operations in Chile were highly lucrative; in

1969 Anaconda had 16.6 per cent of its global investments in Chile yet made 79.2 per cent of its profits

there. The 1969 figures for Kennecott were 13.2 per cent and 21.3 per cent respectively.9 As for ITT, in

1970 the total value of their holdings in Chile was estimated at 150 million US dollars.10 With such

valuable investments at stake it is no wonder that these corporations wished to protect their assets in

Chile from expropriation. It was this wish to escape expropriation which led these corporations into

contact with the US government during the candidacy and presidency of Salvador Allende.

9 Guardiola-Rivera, Story of a Death Foretold, p. 367. 10 Guardiola-Rivera, Story of a Death Foretold, p. 164.

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The 1964 Presidential Election

The 1964 Chilean presidential election was an important prelude to the 1970 election since, to a large

extent, it set the precedent for US policy towards corporate assistance in covert action, and also saw

efforts by US corporations to organise in order to protect their assets in Chile. As part of a wider effort

to stave off Communism in Latin America by supporting moderate reformist parties, the Johnson

Administration decided to financially support the election campaign of Eduardo Frei, leader of the

Christian Democrat Party (PDC).11 The CIA spent approximately 2.6 million dollars – over half of the

cost of the PDC’s election campaign – in order to assist Frei in securing a majority in the election, which

he did.12 US corporations with interests in Chile were just as keen to keep Communism, in the form of

the Marxist leader of the left-wing Popular Action Front (FRAP) coalition Salvador Allende, out of Chile

for fear that if a Marxist candidate won the election their assets would be nationalised and they would

therefore lose their investments. What steps did these corporations take in order to prevent the election

of Allende in 1964, and were they in any way involved with the CIA funding of Frei’s campaign?

The previous year, at the request of President Kennedy, David Rockefeller of Chase Manhattan Bank

had organised over thirty US corporations into a group known as the Business Group for Latin America,

with the primary purpose of fighting Castro.13 Among its members were the company chairmen of

Anaconda, ITT, and Pepsi Cola. In 1964 the group were active in providing financial support to the Frei

campaign.14 At the same time another group of US corporations, which included Kennecott, formed the

Chilean Cooperative Society (CCS) in order to transfer funds to Chileans who were organising an anti-

Allende propaganda campaign.15 In 1970 the US ambassador to Chile Edward Korry called the CCS ‘one

11 Kornbluh, The Pinochet File, p. xiii. 12 United States Senate, Covert Action in Chile, 1963-1973: Staff Report of the Select Committee to Study Governmental Operations with respect to Intelligence Activities (Washington: US Government Printing Office, 1975), p. 9. 13 John Prados, Safe for Democracy: The Secret Wars of the CIA (Chicago: Ivan R. Dee, 2006), p. 398. 14 Hersh, The Price of Power, p. 260. 15 Ambassador Korry to Ambassador Crimmins Re: Chile, June 22 1970, ‘December 9, 2010 Materials Release,’ Nixon Presidential Library and Museum, <http://www.nixonlibrary.gov/virtuallibrary/documents/dec10.php#selection> (20 December 2013).

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of the significant instrumentalities in the 1964 effort to elect Frei.’16 The formation of these two groups

demonstrates the emergence of co-operation between US corporations in order to protect their foreign

assets from potential expropriation. Furthermore, Korry’s comment and President Kennedy’s role in the

formation of the Business Group for Latin America suggest a close relationship between corporations

and the US government at this time. However, since in his 1970 memorandum Korry was attempting to

laud the abilities of the CCS – which were in contact with him alone – to his peers, his comment regarding

their role in the 1964 effort cannot be taken entirely at face value.17 Moreover, as shall now be seen, US

policy under the Johnson Administration was far less accommodating of the involvement of US private

businesses in covert action than under his predecessor.

Initially, private businesses were to be included in the US support of Frei and there was to be co-operation

between the CIA and the Business Group for Latin America. In May the CIA had been tasked with

‘Assisting U.S. business groups with information and advice through David Rockefeller’s Business Group

for Latin America…in their support of a Chilean business group helping Frei…’18 However, this policy

was subsequently reversed. After meeting with several of the companies with which the CIA was to be

co-operating, Assistant Secretary of State for Inter-American Affairs Thomas Mann voiced his concern

that ‘there was already too much open talk in these circles which was filtering back to Chile,’ and that

working alongside private businesses would involve serious security risks.19 Tight security was paramount

in this kind of operation, since public discovery of the fact that the US was interfering in the democratic

process of a foreign country would not only result in extremely bad press for the USA, the self-proclaimed

champion of democracy, but would also in all likelihood erode the popularity of the candidate they were

supporting, therefore having the opposite effect to that which was intended. In addition to concern about

security risks, Director of Central Intelligence John McCone was uneasy at the prospect of the CIA acting

16 Ambassador Korry to Ambassador Crimmins Re: Chile, June 22 1970, ‘December 9, 2010 Materials Release.’ 17 Ambassador Korry to Ambassador Crimmins Re: Chile, June 22 1970, ‘December 9, 2010 Materials Release.’ 18 Memorandum from Thomas C. Mann to Dean Rusk, ‘Presidential Election in Chile,’ 1 May 1964, United States Department of State, Foreign Relations of the United States, 1964-1968, Volume XXXI, South and Central America; Mexico (Washington: US Government Printing Office, 2004), Document 253. 19 Memorandum for the Record, ‘Minutes of the Meeting of the Special Group,’ 12 May 1964, United States Department of State, Foreign Relations of the United States, 1964-1968, Volume XXXI, South and Central America; Mexico, Document 257.

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as ‘an agent, in effect, of U.S. capital,’ showing that far from being an instrument of US corporations, the

CIA was actively trying to avoid becoming one.20 A decision was reached that the CIA was ‘not to become

a partner with business interests in covert political action…’21 Hence, when several US corporations

active in Chile, including ITT, offered to give the US government 1.5 million dollars to fund anti-Allende

groups, the offer was rejected.22 It is significant that the CIA made a definitive decision not to involve

corporations in covert political action. In this way, the 1964 Chilean presidential election set the precedent

for US government responses to offers of corporate assistance. To a large extent this policy was adhered

to for the entirety of the period 1964-73.

20 Memorandum for the Record, ‘Minutes of the Meeting of the Special Group,’ 12 May 1964, United States Department of State, Foreign Relations of the United States, 1964-1968, Volume XXXI, South and Central America; Mexico, Document 257. 21 Memorandum for the Record, ‘Minutes of the Meeting of the Special Group,’ 12 May 1964, United States Department of State, Foreign Relations of the United States, 1964-1968, Volume XXXI, South and Central America; Mexico, Document 257. 22 United States Senate, Covert Action in Chile, p. 16; William V. Broe, Memorandum for the Record, ‘Discussion with Mr. Harold S. Geneen, Chairman and President of ITT, Concerning Financial Support to Chile Election,’ 17 July, 1970, ‘Chile Declassification Project Virtual Reading Room,’ US Department of State Freedom of Information Act, <http://foia.state.gov/Search /Results.aspx?collection=CHILE&searchText=*> (18 December 2013).

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Allende’s Election and Inauguration

Spoiling Campaigns and Opposition Funding

The 1970 presidential election was a three-way contest between the right-wing National Party (PN) led

by Jorge Alessandri, Allende’s new left-wing coalition Popular Unity (UP), and the PDC. Since, according

to the Chilean constitution, a president could not hold office for two consecutive terms, the less popular

Radomiro Tomic had replaced Frei as the PDC candidate. The USA again interfered in Chilean

democracy, though on a much less extensive scale than in 1964. This was due to the State Department’s

new ‘low profile’ towards Latin America, the relatively low priority given to Chilean matters in the White

House at this time, and the emergence of public allegations of CIA involvement in the 1964 election.23

Corporate interest in preventing the election of a Marxist in Chile remained as high as it had been in 1964

and so several US multinational corporations set about trying to persuade the US government to become

more involved in the Chilean election.

The first recorded contact between the US government and a US corporation with regards to the

upcoming election was on 10 April when the Chairman of the Board of Anaconda, C. Jay Parkinson,

made an appeal to Charles Meyer, Assistant Secretary of State for Inter-American Affairs, for the US

government to join them in a large-scale effort to support the campaign of Jorge Alessandri. The appeal

was denied, and according to Korry’s summary Anaconda were given ‘no encouragement.’24

ITT was the next corporation to try the same approach. In a meeting with William Broe, Chief of the

CIA’s Western Hemisphere Division on 16 July, the Chairman and President of ITT Harold Geneen

declared his view that Alessandri was in need of financial support and asked Broe if the CIA would act

23 Harmer, Allende’s Chile and the Inter-American Cold War, p. 48; United States Senate, Covert Action in Chile, p. 17. 24 Ambassador Korry to Henry A. Kissinger Re: Chile, November 1970, ‘December 9, 2010 Materials Release.’

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as a conduit for ITT funds to the Alessandri campaign. As with the request in 1964 for the CIA to channel

funds to the Frei campaign, the response was negative. Broe explained that since US policy was not to

support any candidate in the Chilean presidential election but instead to conduct a spoiling campaign

against Allende, the CIA could not pass funds to Alessandri but he was willing to contact the CIA

Santiago station to find out if they knew of any funding channels which ITT could use instead.25 The

unwillingness of the CIA to act as a channel for ITT funds was further highlighted in a memorandum

written by Broe on 6 August. In the memorandum, he wrote of his concerns regarding the lax security

measures of the company’s election operation and spoke of the potential security problems of working

with company executives who are ‘inclined to sit around country clubs and discuss (perhaps even brag

about) their contributions…,’ before he crossed out the quoted section and replaced it with a more tactful

version.26

Shortly after Broe’s meeting with Geneen, a meeting was arranged by John McCone – former Director

of Central Intelligence and ongoing ITT board member – between Geneen and President Nixon.27

Kristian Gustafson – confusingly, given his central argument that corporate interest was not a factor –

argues that during this meeting, Geneen ‘persuaded the pliable president that channelling extra money to

Alessandri’s campaign was a matter for the CIA.’28 Was Geneen able appeal above Broe’s head to secure

funding for Alessandri? This seems unlikely. Firstly, the CIA memorandum cited by Gustafson to support

this claim makes no mention of Nixon approving CIA funding of the Alessandri campaign, only that ITT

mentioned Alessandri was ‘broke’ and that they were ‘seriously considering remedying this.’29 Secondly,

a telephone conversation in 1973 between Nixon and Henry Kissinger during which they were discussing

the possibility of a military coup in Chile clearly demonstrates the regard in which they held ITT:

25 William V. Broe, Memorandum for the Record, ‘Discussion with Mr. Harold S. Geneen, Chairman and President of ITT, Concerning Financial Support to Chile Election,’ 17 July, 1970, ‘Chile Declassification Project Virtual Reading Room.’ 26 William Broe, Secret Memo to Santiago Station, ‘We have weighed the merits of your proposals,’ 6 August, 1970, ‘Chile Declassification Project Virtual Reading Room.’ 27 Gustafson, Hostile Intent, p. 184. 28 Gustafson, Hostile Intent, pp. 184-185. 29 Confidential CIA memorandum for the files, ‘Allende’s campaign being funded by USSR through Cuba’s Prensa Latina,’ 23 July, 1970, ‘Chile Declassification Project Virtual Reading Room.’

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Nixon: Well, we won’t have to send the ITT down to help, will we?

Kissinger: (Laughs) That’s another one of these absurdities. Because whenever the ITT came to us we turned

them off. I mean we never did anything for them.

N: I never even knew they came.

K: They came once because Flanigan had set it up. You didn’t know it. I didn’t tell you because it required

no action and I listened to them and said “thank you very much” and that was that.30

Not only does Kissinger state that they did nothing to help ITT, but surely if the meeting between Geneen

and Nixon had persuaded the president to change the US policy towards the funding of Alessandri, he

would have remembered this meeting three years later, and he and Kissinger would have demonstrated

a much higher opinion of the corporation than that shown in this conversation. It is of course possible

that Nixon and Kissinger were consciously censoring the record. However, since in a subsequent phone

call regarding the military overthrow of Allende in September 1973 Kissinger was willing to state to Nixon

that ‘we helped them [referring to the members of the Chilean military who overthrew Allende]. [Deleted]

created the conditions as great as possible…,’ it seems that Nixon and Kissinger regarded this as a secure

line through which they could, and did, speak candidly.31

These three interactions between corporations and the US government demonstrate the inability of

corporations to influence foreign policy before the election of Allende. The policy of not supporting any

individual candidate but instead conducting a spoiling operation against Allende had been approved by

the 40 Committee (the body responsible for approving US covert action) in March and corporations were

unable to persuade the government to change it.32 At this stage, US corporate intervention in Chile was

30 Transcript of telephone conversation between Richard Nixon and Henry Kissinger, 4 July 1973, 11:00am, ‘New Kissinger ‘Telcons’ Reveal Chile Plotting at Highest Levels of U.S. Government,’ The National Security Archive, <http://www2.gwu.edu/ ~nsarchiv/NSAEBB/NSAEBB255/index.htm> (4 January, 2014). 31 Transcript of telephone conversation between Richard Nixon and Henry Kissinger, 16 September 1973, 11:50am, ‘New Kissinger ‘Telcons’ Reveal Chile Plotting at Highest Levels of U.S. Government.’ 32 Background of 40 Committee Deliberations on the Chilean Presidential Elections, no date, ‘December 9, 2010 Materials Release.’

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limited to independent passage of funds, with ITT passing around 350,000 dollars to Alessandri and

several other unknown US companies passing a similar amount in total.33

Kennecott, unlike Anaconda and ITT, did not approach the US government seeking to pass funds to the

Alessandri campaign, but instead spearheaded the revival of the CCS. The CCS, which did not include

Anaconda and most likely did not include ITT since they were using a CIA-approved funding channel,

enabled US businesses to deposit money into bank accounts in the Bahamas which was then passed to

groups of Chileans who were conducting their own anti-Allende spoiling campaign, similar to the 1964

effort.34 After approaching the headquarters of National City Bank, Dow Chemical, Bank of America,

and other US corporations active in Chile, the CCS passed a total of 250,000 dollars to fund the

propaganda campaign.35 It is interesting to note that David Rockefeller’s Council for Latin America (the

renamed Business Group for Latin America) was purposefully kept in the dark about CCS activities since

it had a ‘reputation for indiscretion.’36 The example of the CCS demonstrates that a degree of cooperation

existed between US corporations with holdings in Chile in order to help protect their assets, though there

was also mistrust and suspicion between them. While Anaconda and ITT wished to fund the Alessandri

campaign, Kennecott and the CCS financed an anti-Allende spoiling campaign, showing that at this stage

the corporations were not unified in their methods to stop Allende.

Coup Plotting

The spoiling campaigns against Allende and the independent corporate funding of Alessandri were

ultimately unsuccessful since Allende achieved a majority in the presidential election on 4 September.

However, since no candidate received over fifty per cent of the vote a congressional run-off election was

33 United States Senate, Covert Action in Chile, p. 13. 34 Ambassador Korry to Ambassador Crimmins Re: Chile, 22 June 1970, ‘December 9, 2010 Materials Release.’ 35 Ambassador Korry to Ambassador Crimmins Re: Chile, 22 June 1970, ‘December 9, 2010 Materials Release;’ Ambassador Korry to Richard Helms Re: Chile, 22 June 1970, ‘December 9, 2010 Materials Release.’ 36 Ambassador Korry to Richard Helms Re: Chile, 22 June 1970, ‘December 9, 2010 Materials Release.’

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to be called on 24 October which would determine who would be president. The period between 4

September and 24 October was when US covert intervention in Chile reached its peak.37 A plan was

hatched to use funds from US multinationals to bribe Chilean congressmen to vote against Allende.38

However, when the CIA found out that Tomic intended to deliver the PDC vote to Allende, the plan fell

through and instead the CIA ‘was directed to undertake an effort to promote a military coup in Chile…’

in order to prevent Allende assuming the presidency.39 Were representatives of US corporations able to

bring about this change in policy? Stephen Kinzer seems to think so, arguing that ‘directors of large

companies were the first to wish…Allende overthrown. They persuaded leaders in Washington, who had

somewhat different interests, to depose [him].’40 However, from the available evidence it seems highly

doubtful that they possessed that level of influence.

As previously seen, Nixon and Kissinger held ITT in low regard so it seems very unlikely that any

representative of ITT could have been able to influence such a radical change in policy. Moreover, in a

meeting with the State Department in September, McCone and Geneen had tried and failed to secure

two million dollars from the US government for Alessandri, showing that ITT plans were still focused

on the passage of funds to Allende’s opposition rather than coup plotting.41 At around the same time,

McCone had approached Kissinger and Director of Central Intelligence Richard Helms and told them

that Geneen was offering one million dollars to the US government to help stop Allende, but Kissinger

did not take him up on the offer.42 This casts further doubt upon the idea that a conspiratorial relationship

existed between the US government and ITT. If ITT, the most vehemently anti-Allende of US

multinational corporations, was not involved in pushing for a coup it seems very unlikely that any other

corporation was. A CIA memorandum dated 10 September demonstrates that the CIA still viewed

37 United States Senate, Covert Action in Chile, p. 10. 38 Haslam, The Nixon Administration and the Death of Allende’s Chile, p. 67. 39 Haslam, The Nixon Administration and the Death of Allende’s Chile, p. 67; United States Senate, Covert Action in Chile, p. 10. 40 Kinzer, Overthrow, p. 216. 41 Secret Contact Report, ‘Meeting with [deleted] ITT, New York – 17 September 1970,’ 23 September, 1970, ‘Chile Declassification Project Virtual Reading Room.’ 42 United States Senate, The International Telephone and Telegraph Company and Chile, 1970-1971: Report to the Committee on Foreign Relations United States Senate by the Subcommittee on Multinational Corporations (Washington: US Government Printing Office, 1973) pp. 4-5.

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multinational corporations in Chile as a liability rather than fellow conspirators. The author of the

memorandum doubted that the corporations could be ‘coordinated or channelled,’ and believed that

there was no way of preventing them from acting independently to protect their assets: ‘Short of telling

them what is being done, …arguments would carry little weight.’43 The way this last part is phrased

indicates that the CIA was hesitant to share operational information about their covert activities in Chile

with private corporations. It therefore seems improbable that private corporations were responsible for

initiating these covert activities in the first place.

Christopher Hitchens has argued that Nixon was ‘personally beholden to Donald Kendall, the President

of Pepsi Cola…’ and that after discussions between Kendall, David Rockefeller of Chase Manhattan

Bank, Richard Helms, and Henry Kissinger, Kissinger and Helms had been so persuaded that a coup in

Chile was necessary that they met with Nixon on 15 September 1970 and persuaded him to foster a

military coup to prevent Allende’s inauguration.44 However, Kendall had previously visited the White

House, the CIA, and elsewhere in government circles in June, asking for the US to financially support

the Alessandri campaign.45 As has been mentioned previously, no such funding was approved, and the

only action prompted by news of Alessandri’s slippage in the polls was an expansion of the spoiling

campaign, not funding of Alessandri.46 If Nixon was indeed ‘personally beholden’ to Kendall, and Kendall

was able to persuade Helms and Kissinger to advocate Chilean coup plotting, is it not likely that he would

also have been able to change US policy towards the much less potentially damaging action of funding

the Alessandri campaign?

Because neither the Chilean military nor President Frei were willing to instigate a coup, a new plan was

created whereby the CIA, with the assistance of the embassy and the White House, would create a ‘coup

43 Secret CIA memorandum, ‘800 million dollars of investments are at stake,’ 10 September 1970, ‘Chile Declassification Project Virtual Reading Room.’ 44 Hitchens, The Trial of Henry Kissinger, p. 56. 45 Background of 40 Committee Deliberations on the Chilean Presidential Elections, no date, ‘December 9, 2010 Materials Release.’ 46 Background of 40 Committee Deliberations on the Chilean Presidential Elections, no date, ‘December 9, 2010 Materials Release.’

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climate’ – an atmosphere of such economic and political turmoil that either Frei or the military would

feel compelled to act.47 In the atmosphere of desperation due to the short time-frame given to them, the

CIA temporarily disregarded its previous concerns about working with private corporations and began

to ‘determine what direct steps could be taken by the U.S. business firms represented in Chile to apply

economic pressure.’48 Oliver Stone and Peter Kuznick write that ‘U.S. business interests in Chile helped

Washington destabilize the government,’ and Peter Kornbluh writes that ‘Both CIA and State

Department officials enlisted the support and help of U.S. businesses with interests in Chile.’49 Are these

views accurate? Was the US government able to recruit US multinationals to help create a coup climate

in Chile?

On 24 September Korry sent a list of proposals to Kissinger as to how US businesses could promote

economic chaos in Chile, including such measures as US banks not renewing credits to Chile, companies

foot-dragging as much as possible with regards to sending money and delivering orders and spare parts,

and putting ‘pressure’ on Chilean building and loan associations in such a way that they would have to

shut their doors.50 In a meeting with Edward Gerrity, Senior Vice-President of ITT, on 29 September,

Broe conveyed a shortened list of Korry’s proposals to him, adding that ‘certain steps were being taken

but that he was looking for additional help aimed at inducing economic collapse.’ Broe gave him a list of

companies and enquired if ITT could approach them to ask if they would be interested in helping with

the proposed action plan.51 The results were not promising. Bill Merriam, ITT Vice-President in charge

of their Washington office, complained to Gerrity that ‘repeated calls to firms such as GM, Ford, and

banks in California and New York have drawn no offers of help. All have some sort of excuse,’ and to

McCone that ‘practically no progress has been made in trying to get American businesses to cooperate

47 Kornbluh, The Pinochet File, pp. 16-17. 48 Secret CIA report, ‘[Deleted] Situation Report #1,’ 17 September 1970, ‘Chile Declassification Project Virtual Reading Room.’ 49 Stone and Kuznick, The Untold History of the United States, p. 375; Kornbluh, The Pinochet File, p. 17. 50 Secret memorandum from Thomas Karamessines to Alexander Haig, ‘Messages from Ambassador Korry to Dr. Kissinger,’ 29 September 1970, ‘Chile Declassification Project Virtual Reading Room.’ 51 ITT internal memorandum from Edward Gerrity to Harold Geneen, no subject, 29 September 1970, Subversion in Chile: A Case Study in U.S. Corporate Intrigue in the Third World (Nottingham: Bertrand Russell Peace Foundation, 1972), pp. 39-41.

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in some way so as to bring on economic chaos.’52 Both Gerrity and McCone were doubtful that the plan

would work and Geneen decided that ITT would not be involved, leading the 40 Committee to declare

on 14 October that ‘efforts to convince U.S. businesses with economic interest in Chile to assist inducing

a downswing in the Chilean economy have not been successful.’53 In a meeting held by Secretary of State

William Rogers with US corporations active in Chile on 20 October, when Rogers proposed an informal

embargo on spare parts and materials to Chile in order to harm the Chilean economy, the response was

‘quite mixed,’ with only ITT supporting strong measures against Allende.54 This shows that there was a

lack of unanimity amongst US corporations as to what action should be taken, and that the US

government was unable to convince a majority of corporations to support even this significantly less

drastic action plan.

Although ITT was the most fervently anti-Allende of corporations at this time, their main goal seems not

to have been trying to oust Allende before he had even assumed the presidency. Rather, ITT’s focus

appears to have been on lobbying the US government to take a firm public stance against Allende and

discourage him from fulfilling his campaign promises of nationalising US-owned industries. In a letter to

Kissinger dated 23 October, Merriam called for the US government to ‘confront the new president

[Allende] on what the resultant action of the United States Government will be in the event he carries

out his threats,’ meaning his planned nationalisations, and to ‘inform him that in the event speedy

compensation [for expropriation] is not forthcoming there will be immediate repercussions in official

and private circles. This would mean a stoppage of all loans by international banks and U.S. private

banks.’55 What ITT envisaged was a reversal of the State Department’s low profile policy towards Latin

America. They believed what needed to be done was to firmly warn Allende of what the consequences

would be if he took expropriatory action towards US corporations, not engage in covert action while

52 ITT internal memorandum from Bill Merriam to Edward Gerrity, ‘Chile,’ 7 October 1970, Subversion in Chile, p. 51; ITT memorandum from Bill Merriam to John McCone, no subject, 9 October 1970, Subversion in Chile, p. 52. 53 United States Senate, The International Telephone and Telegraph Company and Chile, p. 10; Secret memorandum, ‘Talking Paper for 40 Committee – 14 October 1970,’ 14 October 1970, ‘Chile Declassification Project Virtual Reading Room.’ 54 Paul E. Sigmund, The Overthrow of Allende and the Politics of Chile, 1964-1976 (University of Pittsburgh Press, 1977), pp. 155-156. 55 Letter from Bill Merriam to Henry Kissinger, 23 October 1970, Subversion in Chile, pp. 95-100.

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keeping up a friendly façade. Although the attempt by the CIA to recruit US businesses to cause economic

chaos in Chile was in itself highly inappropriate, the evidence strongly suggests that it was an unsuccessful

attempt, and that rather than conspiring to bring down Allende, US corporations and government had

very different ideas of what action should be taken.

Even though the attempt to persuade US corporations to help bring about an economic crisis in Chile

failed, the CIA nonetheless made contact small with groups within the Chilean military willing to launch

a coup before Allende’s inauguration, and gave them assurances of strong US support both before and

after the coup took place.56 The first step in the coup plot, which the CIA knew about, was to kidnap the

Commander-in-Chief of the Chilean Army General René Schneider, whose belief in strict adherence to

the constitution was discouraging large sections of the Chilean military from advocating any coup

attempt.57 It was hoped that with Schneider removed, once a coup was launched it would be supported

by the Chilean military rather than quelled.58 This led to a botched kidnap attempt on 22 October during

which Schneider was killed.59 An ITT internal memorandum discussing Schneider’s assassination makes

no mention of CIA support and demonstrates no knowledge of who was responsible, instead speculating

that it was most likely extreme rightist or leftist groups.60 This lack of knowledge on the part of ITT

further suggests that the corporation was in no way involved in the coup plotting process.

This desperate, ill-conceived, and poorly executed plan to prevent Allende’s accession to the presidency

was a failure. As had been expected, the Chilean congress voted in favour of Allende and he was

inaugurated as president of Chile on 3 November. The US government, however, did not give up on the

possibility of removing Allende from office, but rather switched tactics from short-term coup plotting to

56 United States Senate, Alleged Assassination Plots Involving Foreign Leaders: An Interim Report of the Select Committee to Study Governmental Operations with respect to Intelligence Activities (Washington: US Government Printing Office, 1975), p. 225. 57 Secret CIA memorandum, ‘Schneider Kidnapping,’ 14 October 1970, ‘Chile Declassification Project Virtual Reading Room;’ United States Senate, Alleged Assassination Plots Involving Foreign Leaders, p. 240. 58 Guardiola-Rivera, Story of a Death Foretold, p. 171. 59 Guardiola-Rivera, Story of a Death Foretold, p. 174. 60 ITT internal memorandum from Hal Hendrix to Edward Gerrity, ‘Chile,’ 22 October 1970, Subversion in Chile, p. 73.

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long-term political and economic pressure.61 The US plan was to publicly maintain a ‘correct but cool’

stance towards Chile while covertly engaging in operations designed to destabilise its government.62 In

order to increase political pressure against Allende, the 40 Committee authorised 7 million dollars for the

CIA to spend on supporting Chilean opposition groups – mostly the PDC and PN – and to fund a

widespread anti-Allende propaganda campaign.63 As for economic pressure, NSDM 93 set out a list of

actions which were to be taken, including bringing ‘maximum feasible influence to bear in international

financial institutions to limit credit or other financing assistance to Chile,’ and making sure that ‘no new

bilateral economic aid commitments [would] be undertaken with the Government of Chile…’ The

memorandum indicates that the US government did not intend to repeat its attempt to involve private

corporations in covert action. US businesses with investments in Chile were to be ‘made aware of the

concern with which the U.S. Government views the Government of Chile and the restrictive nature of

the policies which the U.S. Government intends to follow,’ but they were not invited to take part in the

application of economic pressure.64 There could be no public knowledge of the US effort to weaken the

Allende government otherwise he could use this to consolidate domestic and international support for

his regime by blaming any failings of his government on hostile US action. As had been stated in the

1964 and 1970 election operations, the involvement of private corporations brought with it a significant

security risk, and therefore it is no surprise that they were not invited to participate. However, the events

of the following year would increase the desperation of US multinationals to embroil themselves with

the US government.

61 Kornbluh, The Pinochet File, p. 79. 62 National Security Council, National Security Decision Memorandum 93, ‘Policy Towards Chile,’ 9 November 1970, Kornbluh, The Pinochet File, p. 129. 63 United States Senate, Covert Action in Chile, p. 27. 64 National Security Council, National Security Decision Memorandum 93, ‘Policy Towards Chile,’ 9 November 1970, Kornbluh, The Pinochet File, p. 130.

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The Allende Doctrine

The Chile Ad Hoc Committee

Copper dominated the Chilean economy. The copper industry alone accounted for 80 per cent of all

Chilean export earnings.65 Despite the vital importance of the copper industry for the health of the

Chilean economy, before Frei’s election in 1964 it was not owned by Chileans but was controlled by two

US corporations – Anaconda and Kennecott – which between them controlled 80 per cent of the

industry.66 This situation made the Chilean economy heavily dependent on the USA, with two thirds of

foreign investment in Chile coming from US businesses.67 The issue of dependency had long been a key

feature of Chilean politics, and one of Allende’s main campaign promises had been to reduce the

dependence of the Chilean economy on US capital by nationalising the vital copper industry, along with

other important foreign-owned industries.68 Nationalisation was not a new development brought to Chile

with the election of Allende; in fact the nationalisation of US-owned copper mines had been initiated

under the Frei government, which as has previously been seen was helped into power by both the US

government and US corporations.69 During Frei’s presidency, Kennecott had – on their own initiative –

sold a 51 per cent share of their Chilean subsidiary to the Chilean government. It is worth noting that

this was not due to any sort of goodwill on the part of Kennecott. Selling 51 per cent would reduce the

tax rate from over 80 per cent to 40 per cent, and also allowed the company to get the Chilean government

to partially finance a necessary expansion of their mine at El Teniente which would increase its output

by almost two thirds. This meant that overall they would actually make more money.70 After this

perceived success, Frei pushed for a similar agreement with Anaconda. However, fearing that once they

65 Kornbluh, The Pinochet File, p. 83. 66 Kornbluh, The Pinochet File, p. 83. 67 Kornbluh, The Pinochet File, p. 83. 68 Theodore H. Moran, Multinational Corporations and the Politics of Dependence: Copper in Chile (Princeton and London: Princeton University Press, 1974), pp. 3-4. 69 Moran, Multinational Corporations and the Politics of Dependence, p. 119. 70 Moran, Multinational Corporations and the Politics of Dependence, pp. 128, 134.

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started selling shares to the Chilean government it was only a matter of time before they assumed full

control, the corporation decided to cut their losses and asked to be nationalised. An agreement was

reached whereby 51 per cent of Anaconda was nationalised immediately with compensation, with the

rest to be bought in subsequent years at an undetermined price.71 What was novel about nationalisation

under Allende was his concept of ‘excess profits’, later known as the Allende Doctrine, which first began

to be articulated in early 1971.72

In February 1971, ITT became aware of proposals being put before the Chilean congress which would

allow all US-owned copper mines to be nationalised. More importantly, according to the proposals ‘the

government would be empowered to determine amounts to be paid which would be lessened by whatever

amount is considered to be excessive profits since 1955.’73 This preliminary articulation of the concept

of excess profits was enough to greatly alarm the corporation since the previous year Allende had

announced that Chiltelco was among the companies which were to be nationalised as part of his

expropriation program.74 If such a concept was to be applied to expropriated copper mines, there was no

reason why it would not also be applied to the other companies which Allende planned to nationalise.

Anaconda, quite understandably, was likewise concerned when it got word of the proposals going before

the Chilean congress. Anaconda had largely ignored attempts by ITT to ‘rouse them’ during the 1970

election operation, but now Ralph Mecham, Anaconda’s Vice President for Federal Government

Relations, initiated a series of meetings between the Washington representatives of US corporations

active in Chile, before asking Bill Merriam of ITT to take up the reins.75 This group of corporate

71 Moran, Multinational Corporations and the Politics of Dependence, p. 146. 72 Guardiola-Rivera, Story of a Death Foretold, p. 128. 73 ITT internal memorandum from Jack Guilfoyle to Harold Geneen, ‘Board Note – Chile,’ 4 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy: Hearings before the Subcommittee on Multinational Corporations of the Committee on Foreign Relations United States Senate Ninety-Third Congress on the International Telephone and Telegraph Company and Chile, 1970-71 (Washington: US Government Printing Office, 1973), p. 769. 74 ITT internal memorandum from Holmes Chiltelco Santiago to Stinson Intelco New York, ‘Chiltelco Weekly Report,’ 2 September 1970, United States Senate, Multinational Corporations and United States Foreign Policy, p. 570. 75 ITT internal memorandum from Hal Hendrix to Edward Gerrity, ‘Chile – Latin America – HSG,’ 20 November 1970, United States Senate, Multinational Corporations and United States Foreign Policy, p. 761; Anaconda internal memorandum from Ralph Mecham to C. Jay Parkinson, 10 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1009.

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representatives, known as the Chile Ad Hoc Committee, could be seen as the beginning of a corporate

conspiracy to bring down Allende. Stephen Kinzer certainly seems to think that this is the case, writing

that ‘its members set out on a quiet destabilization campaign of their own that included office closings,

delayed payments, slow deliveries, and credit denial.’76 However, from the minutes of the first meeting

of the Chile Ad Hoc Committee it appears that its purpose was very different. At the first meeting – held

on 9 February and attended by ten corporations including Anaconda, Kennecott, and ITT – no mention

was made of embarking on a ‘quiet destabilization campaign,’ but instead the action which its members

were urged to take was to get in contact with the White House and the State Department and lobby them

to take a firm public stance against Allende’s planned expropriation campaign.77 The representative of

Bank of America, after attending a second meeting of the Committee on 5 March, reported to his superior

that ‘again the thrust of the meeting was for the application of pressure wherever in the U.S.

government.’78 Ralph Mecham, whose brainchild the Committee was, reported to the Chairman of the

Board of Anaconda that its purpose was ‘to keep the pressure on Kissinger and the White House and to

get frequent speeches in the Congressional Record, calling attention to the seriousness of the problem in

Chile and in Latin America generally.’79 [Emphasis in original]. The pressure to be exerted by the members

of the Chile Ad Hoc Committee was to be kept within Washington, directed at the US government rather

than Allende.

The Chile Ad Hoc Committee is another instance of US corporations coming together in an attempt to

protect their interests in Chile, and the first such group which Anaconda, Kennecott, and ITT were all

part of. However, self-interest ran deeper than cooperation and the Committee did not represent a unified

effort by these companies to follow an established and mutually beneficial plan, but rather an occasional

get-together to swap tips and information while they pursued separate tracks. Two of the original ten

76 Kinzer, Overthrow, p. 186. 77 Minutes of Chile Ad Hoc Committee Meeting, 9 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, pp. 794-796. 78 Bank of America internal memorandum from Ronald R. Raddatz to Robert L. James, 10 March 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 528. 79 Anaconda internal memorandum from Ralph Mecham to C. Jay Parkinson, 10 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1009.

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companies, Ralston Purina and Bank of America, left the Committee after two meetings because they

felt that they had gained sufficient information and that the furtherance of their membership may harm

their ability to negotiate with the Allende government, should it become public knowledge.80 Even while

championing the merits of corporations co-operating to achieve their aims, ITT was readily working to

undermine the companies it was collaborating with in order to secure preferential treatment. On 11

February, only two days after the first meeting of the Chile Ad Hoc Committee, Gerrity wrote to Geneen

that ‘perhaps we are near the time when we should approach Allende directly on the same basis we

handled the situation in Peru in the wake of the IPC problem.’81 In 1968 when the Velasco regime in

Peru nationalised without compensation the International Petroleum Company (IPC), a subsidiary of the

Exxon Corporation, and ITT feared its assets would suffer the same fate, they managed to secure an

agreement whereby the Peruvian government purchased ITT’s holdings rather than nationalising them.

They achieved this by persuading the Peruvian government that by entering into a reasonable agreement

with ITT they could argue that the nationalisation of IPC was a special case and not a sign of ‘general

financial irresponsibility.’82 By February 1971 it appears that ITT had decided to pursue a similar strategy

in Chile, whereby a reasonable negotiation with ITT could be used by Allende to nationalise the other

US corporate holdings in Chile while avoiding an international backlash.83 The meeting with Allende went

ahead on 10 March and initiated a long and drawn out process of negotiation over the price to be paid

by the Chilean government for Chiltelco.84 Perhaps more than any other example, this episode

demonstrates that ‘corporate interest’ cannot be seen as a homogeneous force. In the world of business

where profit is sovereign and competition is the order of the day, corporations must be expected to act

above all in their own self-interest, which in many cases does not align with the interests of other

corporations.

80 United States Senate, The International Telephone and Telegraph Company and Chile, p. 13. 81 ITT internal memorandum from Edward Gerrity to Harold Geneen, ‘Chile,’ 11 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 799. 82 United States Senate, The International Telephone and Telegraph Company and Chile, p. 14. 83 ITT internal memorandum from Edward Gerrity to Harold Geneen, ‘Chile,’ 11 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 799. 84 ITT internal memorandum from Hal Hendrix to K. M. Perkins, ‘Meeting with Allende 3-10-71 Santiago,’ 12 March 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 824.

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What was the relationship between multinational corporations and the US government during this

period? Contact between the two mostly appears to have been unidirectional, taking the form of

corporate lobbying of areas of the government demanding that they take a firm stance against any

possible expropriation without proper compensation. Both ITT and Anaconda saturated various

government departments with their representatives during the lobbying campaign. ITT representatives

met with Charles Meyer’s deputy, John Crimmins, and informed him that ‘ITT wants the U.S. to take the

strongest measures to see that just payment is made to the copper companies because this will set the

example for other possible expropriations.’85 As well as meeting with other, less influential members of

the State Department, ITT officials initiated contact with Congressmen, particularly those on foreign

affairs committees, and ‘prepared draft letters to be sent by appropriate Congressmen and Senators to

Administration officials.’86 Anaconda followed a similar line, sending Mecham on a one-man lobbying

campaign. He met with Meyer, Crimmins, another official from the State Department, various members

of the Senate Foreign Relations Committee and the International Economic Policy Association, Secretary

of the Treasury David Kennedy, and his designate John Connally in order to discuss Anaconda’s position

in Chile.87 In addition, Mecham arranged a meeting with Kissinger’s chief aide for Latin American affairs,

Arnold Nachmanoff. In his letter requesting the meeting, Mecham protested that ‘the fact that we were

soft in Peru and Bolivia, and now we are apparently soft in Chile, can only whet the appetites of the

nationalist extremists in every underdeveloped country on the globe. … Our government must take a

strong stand, quite apart from the economic interests of Anaconda in such firmness.’88 The lobbying

campaigns appear to have had some success in increasing the profile of the corporations’ plight in Chile.

The CIA’s 1971 national intelligence estimate for Chile declared that ‘at the moment US-Chilean relations

85 ITT internal memorandum from Jack Neal to Bill Merriam, ‘Chile, Peru, Ecuador and Argentina – Discussion with State Department,’ 17 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 807. 86 ITT internal memorandum, ‘Chile – Activity by Washington Office,’ no date, United States Senate, Multinational Corporations and United States Foreign Policy, pp. 801-802. 87 Anaconda internal memorandum from Ralph Mecham to C. Jay Parkinson, 15 January 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1052. 88 Letter from Ralph Mecham to Arnold Nachmanoff, 4 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1063.

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are dominated by the problems of nationalization.’89 However, there was as yet no change in the ‘correct

but cool’ US public stance towards Allende. The same concern which had prevented the CIA involving

corporations in its operations in Chile prohibited any public criticism of Allende. As Mecham bemoaned

after his meeting with Nachmanoff, ‘Nachmanoff shares the common concern that I have run into

everywhere in the Administration -- mainly that it is important to avoid open challenge to Allende which

could have the effect, in the Administration’s view, of strengthening him.’90

Expropriation

In July 1971, the Chilean Congress unanimously passed a constitutional amendment which permitted the

immediate nationalisation of the Chilean subsidiaries of Anaconda, Kennecott, and the significantly

smaller Cerro Mining Corporation.91 Even at this point, ITT still believed that its negotiations with

Allende could pay off and it might be able to receive compensation at the expense of its fellow

corporations.92 They were simultaneously badgering Anaconda and Kennecott to follow ITT’s lead and

step up their lobbying of the US government. In a letter to Ralph Mecham of Anaconda and Lyle Mercer,

Director of Kennecott’s Washington office, Merriam wrote:

As you know, ITT doesn’t sit still when its future is being jeopardized. All of us are surprised that Kennecott

and Anaconda aren’t raising more hell publicly about the hosing they are about to get in Chile. We have

started an all-out educational campaign with the press to carry our points forward, and we are beginning to

mount a letter-writing campaign from selected members of Congress to various members of the

Administration to strengthen their backs on Latin American matters.93

89 CIA memorandum, ‘Special National Intelligence Estimate: The Outlook for Chile under Allende,’ 4 August 1971, ‘Chile Declassification Project Virtual Reading Room.’ 90 Anaconda internal memorandum from Ralph Mecham to C. Jay Parkinson, 10 February 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1009. 91 Moran, Multinational Corporation and the Politics of Dependence, p. 147. 92 ITT internal memorandum from Jack Guilfoyle to Harold Geneen, ‘Chile Board Notice,’ 9 July 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 868. 93 Letter from Bill Merriam (ITT) to Ralph Mecham (Anaconda) and Lyle Mercer (Kennecott), 22 July 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 1037.

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On 28 September the nationalisation of copper mines in Chile was followed up by the long awaited legal

enshrinement of the Allende Doctrine, which declared that excess profits – defined as profits exceeding

twelve per cent of a company’s book value between 1955 and 1970 – would be deducted from the

compensation due to be paid to the nationalised copper companies. In the case of Anaconda and

Kennecott, this ruling resulted in the companies actually owing the Chilean government money, rather

than the other way round.94 ITT had become greatly alarmed a few days before the ruling, when the Vice

Chairman of Anaconda Bill Quigley had warned Jack Guilfoyle – ITT’s Vice President in New York and

President of its business empire in Latin America – of the methods being used by the Chilean government

to calculate excess profits, and that similar methods would probably be used when it came to Chiltelco.95

Thus, a meeting was organised on 28 September between ITT and several state department officials,

including Meyer, Crimmins, and the new US ambassador to Chile Nathaniel Davis. When asked what the

State Department’s policy towards Chile was, and whether they would act on behalf of the companies

whose assets were being expropriated, Meyer replied that ‘there was as yet no published policy: that the

whole matter of Chilean relationships and expropriations of American investments was under review.’96

The lack of any published policy towards the expropriation of corporate assets in Chile suggests that the

corporate lobbying of the US government up to this point had been largely ineffectual in altering US

policy.

The following day, the Chilean government assumed management control of Chiltelco. Negotiations

between ITT and the Chilean government to determine the amount of compensation were still ongoing,

but this new development was enough to encourage ITT to change tack and appeal directly to the White

House for immediate covert action designed to remove Allende from office. On 1 October, Merriam

94 Harmer, Allende’s Chile and the Inter-American Cold War, pp. 112-113. 95 ITT internal memorandum from Jack Guilfoyle to Harold Geneen and F. J. Dunleavy, ‘Chile/Anaconda,’ 24 September 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 937. 96 ITT internal memorandum, ‘Chile – State Department Visit, September 28, 1971,’ 15 October 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 964.

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sent a letter to Peter Peterson, Assistant to the President for International Economic Affairs, containing

an eighteen-point action plan, to be carried out ‘quietly but effectively to see that Allende does not get

through the crucial next six months.’ Measures to be carried out included loan restriction, embargoing

Chilean goods especially copper, cutting off vital US exports to Chile, involving the CIA in some

unspecified way, and establishing contact with the Chilean military.97 It is important to note that legal

action was not an option available to the expropriated companies since the Allende Doctrine was not

technically illegal, which explains why ITT leapt to covert action rather than simply encouraging

Anaconda and Kennecott to sue the Chilean government in an international court. A resolution had been

passed by the United Nations General Assembly in 1962 on ‘Permanent Sovereignty over Natural

Resources’ which, in the event of the nationalisation of foreign-owned extractive industries, allowed ‘for

compensation rules to be set in accordance with the laws of the state making the nationalisation, and

establish[ed] the courts of that country as the appropriate place in which to settle any resulting conflict.’98

Since the Allende Doctrine had successfully passed through the Chilean congress, the copper

nationalisations were carried out in accordance with this resolution.

What was the US government’s response to ITT’s eighteen-point action plan? They seem to have taken

very little notice of it. There is no mention of the plan in any of the CIA’s résumés of their contact with

ITT, and during the entirety of 1971 the CIA only held five luncheon meetings with ITT at irregular

intervals – the same number as that held between July and October 1970.99 This seems hardly sufficient

for a conspiratorial relationship. At these luncheon meetings, according to a CIA summary,

‘discussions…did not involve any Chilean proposals, but were devoted mainly to the general situation in

Latin America at the time.’100 Can this statement be trusted? This is the same summary which recounts

that ‘during the period between the election and inauguration of Allende (September-November 1970),

97 Letter from Bill Merriam to Peter G. Peterson, 1 October 1971, United States Senate, Multinational Corporations and United States Foreign Policy, pp. 945-953. 98 Guardiola-Rivera, Story of a Death Foretold, p. 218. 99 Secret CIA memorandum, ‘CIA Relations with ITT,’ 7 March 1973, ‘Chile Declassification Project Virtual Reading Room.’ 100 Secret CIA memorandum, ‘Resume of Contacts with ITT Officials Regarding Chile,’ 19 March 1972, ‘Chile Declassification Project Virtual Reading Room.’

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a strong effort was made [deleted.]’ Although most of the statement has fallen victim to the black

permanent marker of censorship, it is quite obvious that this is referring to the CIA coup plotting after

Allende’s election. The fact that the CIA were willing to write this in the summary suggests that any

censorship of the facts occurred after the document had been written, rather than at the time of writing,

so its contents can by and large be trusted. It therefore appears that no action was taken on ITT’s vague

wish to involve the CIA in Chile. There is no further mention of the plan within ITT’s internal

memoranda, and at the end of November the Nixon Administration’s policy towards Latin America was

still being called ‘soft’, which presumably it would not have been if the plan had been implemented.101

Furthermore, Peter Peterson testified before the Church Committee that ‘he took no action to implement

the Merriam plan.’102 It seems likely that Peterson was telling the truth, since as has previously been seen

the US government was extremely wary of involving private corporations in covert operations. Moreover,

at three strategy review meetings held between June and November 1971, Kissinger and strategists from

both the State Department and CIA had all agreed that defending economic interests at all costs – as

advocated by Treasury officials – would be ‘too risky for the United States’ prestige in Latin America and

the Third World.’103 It seems unlikely that ITT would have been able to reverse this stance when officials

from the US Treasury were unable to do so.

Anaconda and Kennecott both took different paths to ITT following the announcement that their copper

mines were to be nationalised without any compensation. Anaconda continued along the government

lobbying track, enlisting two Senators and several Congressmen to speak on their behalf at the Foreign

Relations and Finance Committees, and visiting the White House, State Department, and National

Security Council in order to ‘demand that the U.S. take a positive stand on the expropriation in Chile.’104

Bill Quigley of Anaconda informed ITT’s Jack Guilfoyle that ‘Kennecott [was] also moving somewhat

101 ITT internal memorandum from Jack Neal to Bill Merriam, ‘Chile – Question of Embargo of Chilean Funds in the U.S.,’ 30 November 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 985. 102 United States Senate, The International Telephone and Telegraph Company and Chile, p. 15. 103 Harmer, Allende’s Chile and the Inter-American Cold War, p. 119. 104 ITT internal memorandum from Jack Guilfoyle to Harold Geneen, ‘Anaconda – Chile,’ 14 October 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 954.

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along the same lines but separately.’105 In addition to this, Kennecott initiated a series of intense legal

battles which would last until Allende’s agreement to compensate the corporation in February 1972.

Kennecott announced to all potential buyers of Chilean copper that it had rights of ownership over the

copper extracted from its expropriated mine at El Teniente and therefore it, rather than the Chilean

government, deserved payment for such copper.106 On 30 September, the corporation attempted to

secure payment from a French company which had bought a consignment of Chilean copper, and

following the success of this action they attempted to do the same in Sweden, Germany, and Italy.107

Furthermore, in the US Federal Court they tried to secure writs of attachment to any Chilean property

within the state of New York – including the aeroplanes of the Chilean national airline when they landed

– using the unconditional guarantees of payment for the remaining 49 per cent of Kennecott’s holdings

which had been given to them under Frei.108 The divergent activities of ITT, Anaconda, and Kennecott

demonstrate that even at this stage – after attempts to unite them through the Chile Ad Hoc Committee

and ongoing contact between the three corporations – they were not unified in what they wanted to

achieve or the methods they wished to use. Rather than pooling their resources or conspiring to bring

about the downfall of Allende, they were pushing in different directions for different things.

On 13 October, Secretary of State Rogers issued a public statement criticising Allende’s expropriations,

declaring that ‘The United States Government is deeply disappointed and disturbed at this serious

departure from accepted standards of international law. … The unprecedented retroactive application of

the excess profits concept…is particularly disquieting.’109 This was the first time a representative of the

US government had spoken publicly on the issue, and although no retaliatory policy was announced at

this stage, this statement can be seen as the beginnings of a reappraisal of the State Department’s low

profile policy towards Latin America. It is unclear whether this policy shift was influenced by the

105 ITT internal memorandum from Jack Guilfoyle to Harold Geneen, ‘Anaconda – Chile,’ 14 October 1971, United States Senate, Multinational Corporations and United States Foreign Policy, p. 955. 106 Sigmund, The Overthrow of Allende and the Politics of Chile, p. 184. 107 Sigmund, The Overthrow of Allende and the Politics of Chile, p. 184. 108 Moran, Multinational Corporations and the Politics of Dependence, p. 148. 109 United States Senate, Multinational Corporations and United States Foreign Policy, p. 957; Benjamin Welless, ‘Rogers Reproves Chile on Seizures,’ New York Times, 14 October 1971, p. 1.

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multinational corporations’ lobbying campaign, though it seems more likely that Nixon pushed this

through as a result of his sympathy for Secretary of the Treasury John Connally’s concern that a lax

response to Allende’s expropriations would encourage other countries in Latin America to do the same,

and that this could potentially cost the Treasury a significant amount of money in overseas private

investment insurance payouts to the expropriated companies.110 A tough US public stance against Allende

became firm policy on 19 January 1972 when Nixon announced that should any country expropriate US

holdings without adequate compensation, the United States would end all aid to that country, and vote

against any motions by international lending institutions to loan money to that country.111 This statement

was quite obviously aimed at Chile, and in accordance with it when Allende approached the Paris Club

to re-negotiate Chile’s 800 million dollar foreign debts, Nixon fought for the Club to demand that Chile

pay full compensation to expropriated foreign companies before it would consider such action; however

in this Nixon was unsuccessful.112

This new, tough stance against expropriation indicated a closer alignment between US government policy

and that of ITT, Anaconda, and Kennecott, and could have potentially initiated a period of co-operation

between the government and these corporations. However, barely two months after Nixon’s

announcement, Jack Anderson published an article in the Washington Post which revealed the contact

between the CIA and ITT in 1970, in particular Broe’s request that ITT help the CIA create economic

chaos in Chile, based on leaked ITT memoranda.113 In response to this revelation, Allende publicly

condemned the corporation and immediately broke off compensation negotiations, and the United States

Senate Foreign Relations Committee created a Subcommittee on Multinational Corporations to launch

an investigation into Anderson’s claims.114 At this point, any subsequent discovery of close contact

110 Transcript of conversation between Richard Nixon, H.R. Haldeman, and Henry Kissinger, 11 June 1971, 9:37-10:36am, Richard A. Moss, Luke Nichter, and Anand Toprani, ‘“[W]e’re going to give Allende the hook”: The Nixon Administration’s Response to Salvador Allende and Chilean Expropriation,’ Nixontapes.org, <http://nixontapeaudio.org/chile/chile.pdf> (23 March 2014), p. 17. 111 Robert B. Semple Jr, ‘Nixon Announces Tough U.S. Stand on Expropriation,’ New York Times, 20 January 1972, p. 1; ‘Allende, Criticizing Nixon, Says Chile Can Dictate Her Own Laws,’ New York Times, 20 January 1972, p. 4. 112 United States Senate, Covert Action in Chile, p. 32; Moran, Multinational Corporations and the Politics of Dependence, p. 151. 113 Jack Anderson, ‘Memos Bare ITT Try for Chile Coup,’ Washington Post, 21 March 1972, p. B13. 114 Kornbluh, The Pinochet File, p. 98; United States Senate, The International Telephone and Telegraph Company and Chile, p. 1.

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between the government and a private corporation would have been politically disastrous for the Nixon

Administration, especially given the upcoming presidential election, and thus any contemplation of

further co-operation between the government and multinational corporations was out of the question.

Furthermore, in February Allende had made an agreement to compensate Kennecott, removing one of

the key corporate players from the equation and reducing Congressional support for sanctions against

Chile since the potential insurance payout to expropriated companies had been significantly reduced.115

More revelations followed Anderson’s initial article, including news of ITT’s eighteen point action plan

which became public knowledge in July and which Allende announced to the world in a speech to the

United Nations on 4 December, gaining him widespread sympathy.116 From the publication of

Anderson’s article until Allende’s overthrow in September 1973, there is no evidence of any contact

between the US government and ITT, Anaconda, or Kennecott. Nor is there any evidence that the

corporations pursued any further action to ensure that they would be compensated or to remove Allende

from office. Of course it must be said that many documents pertaining to this period still remain wholly

or partly classified and thus it is impossible to know definitively whether or not any further contact or

action occurred. Ultimately, only Kennecott managed to obtain compensation from Allende, and this

was due to its own legal action rather than any collaboration with the US government or other

corporations. All three corporations got their own way in the end when Pinochet agreed to compensate

them in full in 1974.117

115 Moran, Multinational Corporations and the Politics of Dependence, pp. 148-149. 116 Salvador Allende, Speech to the United Nations, 4 December 1972, <https://www.marxists.org/archive/allende/1972/ december/04.htm> (24 March 2014); Harmer, Allende’s Chile and the Inter-American Cold War, p. 202. 117 Kinzer, Overthrow, p. 211.

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Conclusion

Based on the available evidence, corporate concern about the potential expropriation of assets in Chile

seems not to have been the prime motivation for US intervention. Representatives of corporations did

not possess the level of influence necessary to alter US foreign policy, and the government did not even

have a published policy on expropriations until after they had actually taken place, let alone a policy which

would have led to covert action in Chile to prevent such expropriation. Rather than corporate concerns,

geopolitical concerns about the spread of Communism appear to have been decisive in prompting the

US decision to intervene. Contrary to what some have claimed, no conspiratorial relationship existed

between multinational corporations and the US government with relation to Chile during the period

1964-1973. Both multinational corporations and the US government did engage in covert action in Chile

intended to prevent the election of Salvador Allende, but these efforts were carried out in parallel rather

than as a united effort. Instead of embracing their co-operation, the US government was generally

unsympathetic to approaches by these corporations, and was deeply concerned by the security risks which

collaboration with these corporations would entail. At no point were these corporations used as tools –

willing or otherwise – by the US government in their plot to bring down Allende. The corporations

displayed remarkably little knowledge of the ongoing US covert action against Allende, and contact

between corporations and the government was too infrequent for a conspiratorial relationship to have

been in place. There were attempts by corporations to contribute to US intervention in Chile, such as

offers of financial assistance during the 1964 and 1970 election operations, and ITT’s proposed eighteen-

point action plan. There was also a short-lived attempt in 1970 by the CIA to involve multinational

corporations in their effort to induce economic collapse in Chile. However, all of these attempts at covert

collaboration were unsuccessful. In addition, the CIA’s attempt to work with multinational corporations

was driven by desperation due to the impossibly short time-frame it was given, not by any long-standing

wish of the Agency to conspire with business interests.

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Several writers, including Stephen Kinzer, Christopher Hitchens, and Oliver Stone and Peter Kuznick

contend that US intervention in Chile occurred because US multinational corporations with interests in

Chile were able to persuade their government to become involved to protect their investments from

potential expropriation. The implication here is that because the corporations wished to protect their

investments they automatically wanted rid of Allende. However, there is no evidence that they were hell-

bent on Allende’s removal. During the 1964 and 1970 elections, multinational corporations contributed

financially to Allende’s opposition or anti-Allende propaganda campaigns because these were relatively

low-risk operations so it was worth trying to prevent a Marxist candidate from taking power. However,

once Allende was elected, the corporations changed tack and put their best efforts into lobbying the US

government to alter its public stance towards Chile and firmly warn Allende against taking any

expropriatory action. Despite the attention often given to ITT’s eighteen-point plan, even ITT devoted

far more time and effort to lobbying the US government than plotting covert action. Moreover, ITT was

more than willing to enter into negotiation with the Allende government; as long as it was given adequate

compensation for its nationalised subsidiary the corporation was not too interested in Allende’s fate. It

was only when it seemed that obtaining such compensation would be impossible that ITT encouraged

the US government to remove Allende. The goals of US multinational corporations and the US

government rarely aligned during this period; the major focus of the government was on Allende’s

removal whereas the corporations were focused on the prevention of or compensation for expropriation.

When the goals of multinational corporations and the government did align – as they did during the 1964

and 1970 election operations or in early 1972 – differences in operational tactics, security concerns, or

the political toxicity of public discovery of collaboration meant that this was not acted upon.

It would be a mistake to assume that because multinational corporations with holdings in Chile wished

to protect their investments, their policies inevitably aligned with one another. Corporations certainly did

co-operate with each other, as demonstrated by the formation of groups such as the CCS, Business

Group for Latin America, and Chile Ad Hoc Committee. However, different corporations were also

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mistrustful of one another and at times were willing to double-cross their fellow corporations in order to

secure a preferential deal for themselves, as ITT attempted to do in 1971. Different corporations had

different plans as to how to achieve their goals; for example in late September 1971 ITT, Anaconda, and

Kennecott, even after repeated attempts to unify their policies, each believed respectively that covert

action, lobbying the US government, and independent legal action were the best ways to go about

securing compensation for themselves.

Much of the historiography on this topic, whether arguing that corporate influence was or was not a

factor, has implied that multinational corporations and the US government were essentially moving along

the same path – they all wished for the removal of Allende – and that the only issue is the extent to which

corporations and the government collaborated with each other. However, it is clear from my research

that individual corporations and the US government had different goals and followed separate paths. At

times these paths converged, but for the most part they remained distinct, despite the various efforts by

all of these actors to bring them closer together at one time or another. The story of US intervention in

Chile between 1964 and 1973 is not a simplistic tale of conspiracy between corporations and the

government; nor is it an equally simplistic tale of the complete separation of corporation and state. The

degree of collaboration between multinational corporations and the US government with regards to Chile

has certainly been overplayed, but at the same time efforts by corporations to influence their government

and the attempts at collaboration should not be overlooked. The importance and complexity of this topic

calls for detail and nuance, rather than over-simplification.

Word count: 9,957

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BIBLIOGRAPHY

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