168 Political games of Latin America



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168 Political games of Latin America
Chile and Venezuela

Chile and Venezuela have much in common. Both have relatively small populations (11 and 15 million, respectively, in 1980), most of their people live in close proximity to each other, both depend heavily on mineral exports for their welfare (copper in Chile and petroleum in Venezuela), and both were governed by sophisticated, well-organized democratic reform parties during the 1960s (Christian Democrats [PDC] in Chile and the Accion Democratica (A D] party in Venezuela).

But there the similarities stop. Their political histories are quite different. Constitutional democracy prevailed in Chile after 1931, giv­ing it one of the region's longest experiences with democratic politics by the time the Christian Democrats took office in the mid-1960s. Venezuela, in contrast, was ruled by autocrats until 1958. The only exception, an abortive three-year try at constitutional democracy after World War II, merely illustrated how strong the Venezuelan elite's hold on politics was. But, paradoxically, once established, democratic reformism has survived much longer in Venezuela than in Chile, where it was brought to an abrupt and brutal halt in 1973 by a military that tightly controlled the nation for over a decade thereafter.

These contrasting histories invite a host of questions. Why, for


The democratic reform game 169
example, was the democratic game brought to a halt in one country but not in the other? Are the answers found in the strategies of the players, their relative strengths, or the conditions under which the game was played? And what did the democratic reformers actually accomplish in Chile and Venezuela? Did they achieve any of their reform objectives? Finally, what about democracy and reform: Were they compatible given the distribution of economic power in Chile and Venezuela, or was the struggle an unwinnable one from the outset, as critics on the Right and the Left contend? It is to the search for answers to these and similar questions that we shall now turn.

Democratic reform in Chile

Chile escaped the caudillo wars that plagued most Latin American countries after Independence because of the unusual unity of its small political elite and the loyalty of the military to it. The strong execu­tive-dominated governments that ruled Chile throughout most of the nineteenth century were replaced in 1891 after a brief civil war by a "parliamentary" regime dominated by an elite-controlled national con­gress. The latter, torn from the outset by interparty conflict that manifested itself in continual cabinet instability, collapsed in 1924, and after a succession of brief military governments was replaced in 1932 by a constitutional regime that governed Chile without interrup­tion until 1973. Not only did the Chileans enjoy greater political stability than most Latin American countries after 1932, but they did so using an unusually sophisticated multiparty system and a stubborn commitment to competitive electoral politics. It was a system, how­ever, that was controlled effectively by upper-class and middle-sector parties, which tolerated working-class opposition only as long as their interests were not threatened. When working-class parties occasion­ally did get out of line, thev were outlawed, as was the Communist party between 1947 and 1958.

The Christian Democratic party did not have to fight for admission against ruling autocrats as did the Venezuelans and most other reform parties. W hat they needed at the outset was not a plan of political reconstruction but an election strategy that could generate a large enough following to defeat its conservative, moderate, and radical rivals. Two decades after they commenced their uphill struggle, they



170 Political games of Latin America

succeeded. Under the leadership of Eduardo Frei, they won the presi­dency in 1964 and spent the next six years implementing their pro­gram of economic and social reform.



The Christian Democrats

The rise of Chile's Christian Democrats from a small faction within the Conservative party in the late 1930s to the presidency in 1964 is an impressive, though unspectacular, story. Its origins can be traced back to a group of law students at the Catholic University of Chile in the late 1920s. Sons of conservative families, Eduardo Frei, Radomiro Tornic, Bcrnardo Leighton, and Rafael Agustin Gumucio took their inspiration from philosophers who had sought to revitalize Roman Catholicism as an agent of social change. T hey had become disillu­sioned with conservatism, but they wanted no part of the Marxist or anticlerical Liberal parties then active in Chile. For them social Catholicism offered an alternative to the excessive individualism and economic exploitation fostered by nineteenth-century liberalism and the atheism and collectivism of communism. There was, however, no Chilean party ready to embrace their new ideology during the 1930s. The Conservative and Liberal parties sought only to preserve the power and privileges of urban and rural elites and foreign investors, the middle-sector Radicals were anticlerical and little concerned with social justice in the countryside, and the Socialists and Communists rejected Christian theology. The only option, it became clear in 1937, was to organize a party of their own able to challenge the others.

The conversion of a small, obscure political party into an organiza­tion that attracted a majority of the Chilean electorate in the 1964 presidential elections involved a long campaign that did not generate concrete results until the mid-1950s. The young Falangists, as the Christian Democrats were first known, played the game according to the conventional rules of Chilean politics, winning an occasional seat in the legislature and from time to time accepting cabinet posts in coalition governments. Their breakthrough came in 1957 when Edu­ardo Frei, the party s leader, was elected senator from Santiago, the nation's capital, and a year later polled 21 percent of the popular vote in the national presidential election. From that election it became clear that by doubting their popular support they could win the presidency in a three-way contest with the Socialist-Communist coalition on the


171



Table 7.1.

Chile: historicalbackground

1817 Independence from Spain


1830 Autocratic republic created under President Diego Portales

1871 Liberal republic created through efforts of Liberal, Radical, and National parties

1891 Parliamentary republic organized to reduce power of strong executive and give supremacy to Congress

1921 Liberal reformer, Arturo Alessandri, elected president

1924 Military closes Congress and installs Alessandri as president with decree powers to implement constitutional reforms, including proportional represen­tation and strengthening of executive

1927 Colonel Carlos Ibañez seizes power and creates personal dictatorship

1931 Colonel Marmaduke Grove creates "socialist republic," which lasts six months

1932 Republican government restored and Arturo Alessandri elected president


1938 Popular Front government of Radicals, Democrats, Communists, and Social­ists elected


1952 Carlos Ibanez elected president on populist-type platform

1957 Christian Democratic party created from Falange Nacional (organized in late 1930s) and Social Christian wing of Conservative party

Communist and Socialist parties form coalition from F'rente de Acci6n Popu­lar (I RAP)

1958 Conservative-Liberal candidate Jorge Alessandri elected president

1964 Christian Democratic leader Eduardo Frei elected president

1965 Christian Democrats win majority in Chamber of Deputies

1970 Socialist leader of Unidad Popular coalition, Salvador Allende, elected presi­dent

1973 Unidad Popular government overthrown by military, ending forty-one years of uninterrupted constitutional government



  1. General Augusto Pinochet celebrated his tenth anniversary as supreme ruler of Chile

______________________________________________________________________________________________________________________

left and the Conservatives on the right. It was to that objective that they devoted their energies over the next six years.

The Christian Democrats had relied on candidate-based, local con­stituency organizations during their formative years, but after 1958 they accelerated efforts to build mass organizations to which they recruited the so-called marginals— urban slum dwellers, campesinos, and the unemployed who had been effectively excluded from the


172 Political games of Latin America

political process in the past. In doing so they hoped to weaken parties on the Left by denying them their natural constituencies. Chile's Socialist and Communist parties, whose coalition received 30 percent of the vote in 1958, had strong organizations that drew their support primarily from organized labor and intellectuals. In the mid-1950s they became as interested as the Christian Democrats in expanding their tanks by recruiting the rural poor. Io neutralize their efforts as well as recruit thousands to its ranks the PDC organized neighbor­hood associations with the help of the clergy and university students and promoted the creation of campesino organizations and farm worker unions.

Especially helpful to the PDC (as well as the Communists and Socialists) were electoral reforms adopted in 1962. In 1932 Chilean Conservatives had designed a constitutional order that restricted par­ticipation in elections to middle- and upper-class males. In 1949 they were forced to extend the franchise to women, and finally, in 1962 their congressional opponents secured passage of legislation that ex­tended the vote to nearly all Chileans. Attracting these new voters to their party became the primary objective of the PDC during the next two years.

The support of new voters was, by itself, not enough to catapult the Christian Democrats to victory. I hey also needed the votes of thou­sands of citizens who had opposed them in 1958. As we can see from Table 7.2, only 21 percent of the electorate had voted for the Chris­tian Democrats in 1958, whereas almost 30 percent had supported the Socialist-Communist coalition, FRAP, led by Socialist Senator Salva­dor Allende. 1 he likelihood of the Christian Democrats' taking votes from the Left was remote, for the Marxist parties had, since the 1920s, developed a hard core of supporters, especially in the labor movement. I his dictated that the PDC seek some support among those who had supported the Conservatives or Liberals in 1958.

But how does a political party that campaigns on a platform of social and economic reform attract conservative and middle-sector voters? It does so, Frei and his colleagues decided, by convincing Conservatives that the Christian Democrats offered them their only hope for preventing a dreaded Marxist victory in the 1964 elections. The logic of their argument was simple. In 1964 Chileans were locked in a three-way electoral battle involving parties of the Left, Center, and Right, with each standing a cliance of victory. Thus, if the con-

The democratic reform game

I Table 7.2. Chilean presidential elections, 1958 and 1964 (%}

Party 1958 Party 1964

Conservati\ve-Liberal parties


Jorge Alessandri 31.6 Christian Democratic party , (FIX:)

Fduardn Frei 20.7 Popular Action Front (FRAP) I Salvador Allende 28.9

Others 18.9

Democratic Front 5


Christian Democratic party


(PDC)

Eduardo Frei 55.7 Popular Action Front (FRAP) Salvador Allende 38.6



servativcs, Liberals, and Christian Democrats competed with each other, dividing slightly less than two-thirds of the electorate equally among them, they would make possible the election of Marxist Salvador Allende. To avert such a fate, the Conservatives should throw their support to the Christian Democrats, according to this logic. If the Christian Democrats needed some assistance in persuading Conservatives to support their candidates, they received it in March 1964, six months before the presidential election, when a Conservative was upset by the FRAP candidate in a special congressional election for a minor rural seat. I hey also received it from the United States government, which helped finance the PDC campaign and worked hard to persuade Conservatives to join in the PDC's anti-Marxist coalition, arguing that without it a FRAP victory was certain. Consequently, the threat of a t Marxist victory suddenly seemed likely, and, exploiting it to the fullest, Christian Democratic candidate Eduardo Frei secured enough Conservative and Liberal party support at the last minute to block Salvador Allende's path to the presidency. With the assistance of his allies on the Right, Frei, who had received only 21 percent in 1958, polled an amazing 56 percent of the popular vote in the September 1964 election. Thua, playing by the Chilean rules and turning them to his personal |advantage, Eduardo Frei concluded a thirty-five-year uphill struggle, with one of Chile's most impressive presidential victories.
Reform politics
|Election victories open the door to public office, but they give the winner no assurance of success in governing the nation, as reformist

174 Political games of Latin America

presidents everywhere will testify. Exceptional skill and substantial good fortune are required to prevail in democratic societies. Unlike the authoritarian who can command obedience, securing compliance using force, the democratic leader must always deal with competitors whom the rules allow substantial latitude for obstruction.

Chile's Christian Democrats worked hard to make democratic re­form work despite the odds against them. Once in office a rhetoric developed during three decades in the opposition was not enough. Suddenly they had to deliver on their promises of agrarian reform, increased national control over the nation's resources, improved social welfare, and accelerated industrial development. Unfortunately for Frei, Chile's was not a parliamentary system in which party victory meant control over the government but a presidential one in which Frei faced a legislature controlled by the opposition. Consequently, like other presidents his success depended, at a minimum, on his ability to do three things: create and maintain effective legislative coalitions, keep hi$ own party united, and help his party win subse­quent congressional and presidential elections.

First came the need for a coalition supportive of reform legislation. Frei had won the 1964 election by attracting conservative voters to his party. But once the Conservatives had accomplished their objective of denying Socialist Salvador Allende the presidency, the coalition dis­solved. Consequently, until congresssional elections were held in March 1965, Frei could count only on the support of his own party which held 23 of 147 House and 4 of 45 Senate seats, hardly enough to secure the passage of his program against the combined opposition of Communist, Socialist, Radical, Conservative, and Liberal party legislators. So instead of seeking a coalition with one of these parties, the Cbi-istian Democrats put all their effort into the 1965 elections, asking Chileans to sustain the mandate they had given in September 1964. The strategy was in large part successful, for the PDC increased its hold on the [louse by taking 81 seats; however, it gained only 13 scats in a Senate election in which only half the seats were contested. Consequently, throughout the remainder of his term Frei had to work with a divided Congress in which the parties of the Left and the Right could unite to block PDC measures in the Senate.

Frei also faced serious divisions within Ills own party. Throughout his presidency the PDC was divided into three factions: one that supported Frei's moderate course, a second that demanded a more socialistic program, and a third that sought a compromise between the

The democratic reform game 175

other two. Disputes over the government's program were common, but serious conflicts were initially avoided through the distribution of cabinet posts among members of all three factions. Gradually, how» ever, frustration with the slow rate of reform increased, and disputes among the three wings of the party became more intense, especially during the 1967 party conference. Just as Frei was preparing to intro­duce austerity measures to deal with rising inflation, he was met with demands for the acceleration of reform through the adoption of the Plan Chonchol, a proposal prepared by agrarian reform minister Jacques Chonchol, advocating greater state control over the economy' and more rapid land expropriation. The battle was eventually won by Frei and his supporters in the moderate faction, but their victory came at the expense of the loss of Chonchol and his followers, who left the PDC in 1969 to form their own party, the United Popular Action Movement (MAPU), which allied itself with the Marxist coalition that supported the candidacy of Salvador Allende in the 1970 election.

The real test of the Christian Democrats’ political power came in the 1970 presidential elections. Since F^rei was prohibited by Chilean law from succeeding himself, the party nominated Radomiro Tomic, a long-time party leader to the left of Frei ideologically. Like the previous one, the 1970 election w-as a three-way contest among the National party (formed by the merger of the Conservative and Liberal parties in 1966), which nominated elder statesman Jorge Alessandri who had been president between 1958 and 1964, the Christian Demo­crats led by Tomie; and a coalition on the Left, led again by Socialist Salvador Allende, this time called Popular Unity (UP). Alessandri promised to link the reformism begun by the PDC, Tomic offered a more radical reformist program than Frei's, and Allende proposed a peaceful socialist revolution. I he Conservatives once again held the trump card, for if they supported the PDC, it would undoubtedly win, but if they supported Alessandri, the election would be close, with any one of the three the possible winner.

This time both the National party and the Christian Democrats chose to gamble for victory by going it alone. National party leaders were convinced they stood to gain little from the accelerated reform­ism of another PDC administration. Bolstered by preelection polls that predicted Alessandri’s victory, they fully expected to win a three-way race. Tomic believed that another alliance with the Conservatives would retard reform and make a mockery of his promise of radical change. Yet, because the leadership of the PDC refused to allow him



176 Political games of Latin America

to pursue a coalition with the Marxist parties, as he desired, he was forced to adopt an electoral strategy that sought to undercut Allcnde’s support by appealing again to the urban and rural poor as well as to the middle sectors. :j

When the ballots were counted, Salvador Allende the Socialist, not Tomic or Alessandri, had won. In the weeks that followed the Na tional and Christian Democratic parties had to make some of the hardest strategic decisions ever to face Chilean party leaders. Because Salvador Allende had received less than a majority of the popular vote (36.6 percent), lie could not be inaugurated without confirmation by the majority of the Congress. And for that he needed the support of parties outside his coalition because they still controlled two-thirds of the ecats.

Few judgments could have been more troublesome for a democratic reform party than the one made by the Christian Democrats in De­cember 1970. If they confirmed Allende's election, they were gam­bling that he would respect the country's democratic traditions long enough to allow the PDC to regain the presidency in the 1976 elec­tions. If they voted against confirmation, they would break the rules and invite others to do likewise, eventually perhaps undermining (he whole system. Thus, in the face of clandestine efforts by the United States government and Chilean conservatives to prevent Allende's in­auguration, the PDC legislators confirmed Allende's victory and their own electoral defeat, thereby upholding the democratic rules of the Chilean game.



Reform policy

Frei intended to use popular reform policies to attract the masses to the PDC, making it strong enough electorally to withstand future competition with Conservative and Marxist parties. But the party's constituency changed little under Frei, and in 1970 no more than one-third of the Chilean electorate preferred it to its rivals. What Frei did achieve with his reform politics, however, was the alienation of the Conservatives who had supported him over Allende in 1964. Thus, like so many who start from a position between the two ex­tremes, Frei succeeded in hardening their opposition without drawing many constituents from either one.

T he government's development program combined tax and regula-


177



The democratic reform game

tory measures aimed at increasing mass consumption and national pro­duction with agrarian reform. Fret's progressive tax reforms and liberal wage policies raised consumption as intended, but with rising demand for goods came the threat of rising inflation. When revenues from the new taxes and foreign credits leveled off in 1967 and unions became more militant in their wage demands. Frei was forced to cut buck on his popular expansionary measures. The decision was an especially bitter pill for his party to swallow, for not only did it threaten its chances in (lie forthcoming national elections, but it also raised concern within the party about the ability of its leaders to overcome the nation's produc­tion and inflation problems. In their own defense, party leaders claimed that the fault was not theirs but belonged to their opponents who delayed their programs in Congress and obstructed their imple­mentation using their influence within an unresponsive bureaucracy and the labor movement. But whatever the cause, the result was the same: Few Chileans were convinced that the Christian Democrats had solutions to the nation's fundamental problems.

Reform involves much more than new solutions to inflation and production problems, of course. At the heart of the progressive mod­ernization strategy is agrarian reform. Even though it was blessed with fertile lands, Chile had to import substantial food. In the 1950s, moreover, it suffered from a constant exodus of the rural poor to already overcrowded cities because of the impossibility of economic survival on the land. The causes of low production and rural-to-urban migration were the same: the maldistribution of property and its inef­ficient use by landowners. By the time Frei had come to power, Chile's rural economies had been extensively analyzed and their defi­ciencies were well known. I he only question that remained was whether the government could do anything about them.

Frei was not the first Chilean president to sign an agrarian reform bill, but he was the first to implement one. In 1962, under the pres­sure of his coalition partners in the Radical party, Conservative Presi­dent Jorge Alessandri had secured the passage of a weak agrarian reform law. But like so many other agrarian measures adopted throughout the hemisphere at the time, it had very limited applica­tion, having defined eligible property as only that which had been abandoned or was used inefficiently. It is no wondcr, then, that Frei made agrarian reform a campaign issue in 1964 and a central part of his legislative program in 1965. Nevertheless, despite its compelling


178 Political games of Latin America

nature, Frei's bill did not become law until 1967 because of the oppo­sition of Conservative and Marxist legislators, the former because thev stood to lose property and power under the law and the latter because they did not want the Christian Democrats to be credited with allevi­ating the land tenure problem through their modest reforms.

The new law contained several innovative measures. First, size rather than use would determine expropriation. Large estates, regard­less of how they were farmed, would be broken up. Second, the land would be purchased by the government at its declared tax value rather than its current market value. Because Chilean landowners habitually imderdeclared their land value at tax time, this approach would penal­ize them for such practices as well as save government funds by lowering the cost of expropriation. Third, the landowner would be paid only 10 percent of the price in cash with the other 90 percent in twentv-five-year bonds. Finally, the expropriated estate would be turned over to the peasants who had worked it or lived in (lie immedi­ate area and then organized into an asentamiento under the direction of an elected peasant committee and experts from CORA, the govern­ment agrarian reform agency. I lie actual administration varied from one asentamiento to another, with some dividing property into private plots, others formed into cooperatives, and a few farmed collectively. Frei’s rural reforms were not, however, limited to the reallocation of property. He also encouraged the organization of farm workers' unions and their use to raise rural wages. At the same time, new incentives were given to farmers to raise production, and self-help projects were encouraged in rural villages to build schools, roads, and health care facilities.

Throughout his campaign and during his first year as president, Frei had promised to transfer land to 100,000 of the country's ap­proximately 200,000 landless peasant families. It was a promise he could not complete. In fact, only 21,000 peasant families had received land by the time Frei left office in 1970. Legislative opposition, bu­reaucratic delays, technical problems, and obstruction by landowners turned a noble promise into a bitter disappointment and give Marxist opponents a campaign issue they could use to attract peasant support in 1970. The Frei government did raise the income of rural workers by an estimated 70 percent and increased rural production by an average of 3.8 percent a year, but it became clear in 1970 that despite their bold initiatives, the Christian Democrats had not solved their



The democratic reform game 179

country's rural problems. They had made a beginning, but in the process they had raised hopes they could not fulfill and alienated a conservative elite that was prepared to risk defeat by the Marxists rather than lend further support to the Christian Democrats in 1970.

The "Chileanization" of the foreign-owned copper industry was more easily achieved. Like most Latin American countries, Chile was heavily dependent on the export of a single commodity to finance its development. When copper prices dropped, so did the performance of the nation's economy. Naturally Chileans resented their vulnerability;

what made it worse was that foreigners, not Chileans, owned and operated most of the mines. The Christian Democrats and the Marx­ists had responded to popular sentiments in their presidential cam­paigns, promising to put the mines under national control. But whereas Allende called for their complete nationalization, Frei pro­posed a less drastic solution, one he labeled "Chileanization." Rather than evict the Braden, Anaconda, and Kennicott corporations, the Chileanization law, which gained legislative approval with Conserva­tive party support, only authorized the Chilean government's pur­chase of 51 percent of the shares in the largest mine (owned by the Braden Company). The deal, which was supported by moderates within the PDC and tolerated by foreign investors, was severely criti­cized by Socialists and Communists as a sellout to foreign interests. Frei nevertheless held firm to his moderate course, arguing that any­thing more radical would drive foreign investors from the country and severely damage the economy. The issue became one of the most controversial the Christian Democrats faced during Frei's tenure be­cause it forced them to confront directly the costs of compromising with the foreigners whose control over the Chilean economy they were trying to reduce. It divided the party during the 1970 presiden­tial campaign and gave the Marxists another popular issue to use against the PDC.


The limits of democracy, the Allende years

Under what condition does the democratic game work in Latin Amer­ica? And under what conditions does it fail? Clearly we are better able to answer the second question than the first, since experience with failures is much greater than with successes. In most instances the democratic game is insecure from the outset because some players


180



Political games of Latin America

simply refuse to live by its rules. But there have been some outstand­ing exceptions, and none greater than Chile, where for forty years all players seemed to tolerate each other and abide by constitutional rules. But even the Chilean democracy did not endure, as the world discovered one September day in 1973 when the Chilean military seized control.

We are left to speculate about why the constitutional rules were broken in Chile. Was it because constitutional government and Social­ist politics were incompatible, as some contend? Should they be? After all, Socialists have governed recently in Greece, Spain, and France without meeting the Chilean fate. And what about foreign involvement? Was the United States government responsible for Allende’s downfall, adding him to jts list of deposed leftists it found intolerable? Clearly, the abrupt termination of constitutional democ­racy in Chile raises a host of challenging questions about the nature of class conflict, foreign intervention, and the strength of democratic institutions. It also offers insights into political tolerance and how it is shaped by economic and political self-interest.

Salvador Allende was not supposed to win the 1970 elections. In fact, his Marxist coalition barely made it to the polls. Many Socialists wanted to boycott the elections to protest Chile's bourgeois democ­racy, which they claimed had always been rigged against them. Only when half of the members of the Socialist party's central committee agreed to abstain from its endorsement vote did Allende secure the party's nomination. But even then their Popular Unity coalition of Socialists, Communists, and three minor parties had no chance of victory if the Conservatives agreed to support the Christian Demo­cratic candidate as they had done in 1964. Of course, they did not support the PDC in 1970, but ran their own candidate and in doing so gave the UP the opportunity it needed.

Once in office Allende still faced divisions within his own ranks. The collaboration of the Socialists and the Communists had been motivated more by political necessity than mutual affection. The So­cialists were the most doctrinaire of the two, eager to achieve the immediate creation of a socialist economy, whereas the Communists were pragmatic, more willing to compromise with opponents in order to avoid provoking military intervention. Although the two parties agreed on most of their ultimate goals, their debates over legislative strategy, economic policy, and the mobilization of the masses placed



The democratic reform game 181

1Table 7.3. Chilean presidential election 1970

Party Male voters female voters Total Percent


National party (PN)

Jorge Alcssandri

Christian Democratic party (PDC)


479,104 557,174 1,036,278 35.3


Radomiro Tomic

Popular Unity


392,736 432,113 824,849 28.1
party (UP)

Salvador Allende

631,863 443,753 1,075,616 36.6

constraints on Allende that would never have been tolerated by Marx­ists like Fidel Castro in Cuba.

Instead of viewing Salvador Allende as the leader of a typical Marx­ist party-state, we should see him for what he was: an elected presi­dent who was plagued by problems common to the leaders of minor­ity coalitions who face stiff legislative opposition. 1 he radical char­acter of his program merely made his job harder by threatening Chil­ean entrepreneurs and causing the United States government to do what it could to prevent Chile from becoming a Marxist success.

As a political strategist, Allende was actually quite cautious. He knew that his electoral triumph had been slim and that lie lacked majority support in Congress. Although he was eager to achieve his economic revolution, he did not want to antagonize his Christian Democratic opponents. Consequently, he sought to deprive the eco­nomic elite of its wealth and power without harming the middle sec­tors. In practice, this meant a gradual nationalization of large enter­prises accompanied by a prohibition on measures that might deprive the middle sectors of their wealth and property. Separating the two sets of interests proved quite difficult in practice, however, since most professionals, technicians, and \\ bite-collar workers depended on pri­vate enterprise for their livelihood. As Allende’s critics within his own coalition warned him, nationalization, even if carried out in a gradual manner, would sooner or later threaten all members of the Chilean bourgeoisie, making the cultivation of their support a hopeless and self-defeating endeavor. Nevertheless, Allende held firm to his origi­nal strategy, guided by the belief that his revolution would be



182 Political games of Latin America

achieved only if he avoided a direct confrontation with potential middle-sector opponents.

Allende's development program had two primary goals: the gradual socialization of the means of production and an immediate increase in mass consumption to build a working-class-middle-sector alliance. 'I he first was essential if the state was to reallocate society's resources in a more equitable manner; the second was prompted by Allende's determination to secure a majority of the popular vote in future elec­tions as well as protect his government from its upper-class and for­eign enemies.

During 1971 and 1972, the government moved swiftly toward the socialization of Chile's capitalist economy. Its immediate objective was the creation of a mixed economy that included three sectors: one controlled entirely by the state, another composed of mixed public-private enterprises where the state was dependent on the private sec­tor's supply of technology, and a third consisting of small private firms involved in retail sales. 1 he government requisitioned some private firms without compensation, using an old law that permitted the seizure of firms that refused to produce at capacity. The local plants of multinational enterprises like Ford, General Motors, and Dow Chemical were among those taken in this manner. Others-for example, all banks, Coca-Cola, Dupont, and Bethlehem Steel-were purchased at book value. And a few, most notably the Kennicott, Braden, and Anaconda copper mines, were nationalized with congres­sional approval but denied compensation because, according to Popu­lar Unity officials, they were guilty of extracting excess profits and therefore had already taken their compensation. Many foreign firms, however, were left untouched in the initial round because they pro­vided essential goods and services; among these were IBM, Xerox, Mobil, Texaco, Exxon, and RCA. In fact, Allende never went as far with nationalization as his more militant supporters would have pre­ferred or his enemies had feared. Nevertheless, the nationalizations eventually alienated many Christian Democrats who were initially disposed to cooperate with the government; equally important, they also imposed an immense fiscal burden on the Chilean state that heavily taxed its limited resources.

As a Marxist Allende believed that the proletariat would continue to be exploited as long as it was denied control over the means of pro­duction. And as an experienced campaigner and party leader, who


183



The democratic reform game

had received less than 40 percent of the popular vote in 1970, he knew his hope of electoral victory in the March 1973 congressional elections rested with the mobilization of the urban and rural poor and many in the middle sectors. Accordingly, he decreed across-the-board wage increases during 1971, expanded public works programs giving jobs to the unemployed, and to the distribution of scarce foodstuffs to retail outlets that served the urban poor. As a consequence, 1971 was a boom year for Chilean workers, whose real income rose by an average of 40 percent during that year alone.

Popular Unity also had a plan for rural development. IThe Marxists had blamed Chile's failure to feed itself on the inefficient use of farm­land by latifundistass. Moreover, the plight of the Chilean poor could be traced, they argued, to the antiquated class structure that prevailed in the countryside. Accordingly, Allende pledged himself to the speedy completion of Frei's agrarian reform program to improve the lot of the campesinos and foster a higher level of production. Prompted by a wave of land seizures by impatient campesinos, Allende moved fast, expropri­ating and redistributing twice as much land in his first two years as Frei had done in his last three. In 1965, 55 percent of Chile's farmland was held by owners of farms that exceeded 200 acres in size, but by the end of 1972 only 2.9 percent was still left in such large privately owned units. Expropriated lands were reorganized in several different ways, with some turned into agrarian reform centers or large produc­tion units controlled by the campesinos who worked them, and others, especially those of a more agro-industrial type such as cattle breeding, run as state farms by government administrators.

Four conditions had to be met for Allende's economic program to succeed. First, economic expansion had to be sustained in order to satisfy the demands of working-class and middle-sector consumers simultaneously. If it was not, shortages would develop, inflation in­crease, social tensions rise, and support for the government, especially among the middle sectors, decline. Second, the government had to gain enough control over the economy through its nationalizations to capture industrial and financial profits for the treasury and pay for its expansion of public works and other job-creating programs. Without substantially increased revenues, it would be forced to borrow heavily abroad or resort to inflationary Central Bank financing of the deficit. Third, exports, especially high foreign exchange producers like cop­per, had to be increased to pay for capital and consumer goods im-


184 Political games of Latin America

ports. This was especially important because Chile could expect little financial assistance from capitalist nations and international agencies who opposed its economic revolution. Finally, a rapid decline in agri­cultural production due to land expropriation had to he avoided. A drop in food production at a time of rising consumption would lead cither to food shortages or increased imports to cover the deficit, neither of which Allende could afford. Obviously, the Allende pro­gram was plagued by hazards. If any one of these conditions was not met, serious problems could arise that might undermine the entire effort. Moreover, any failure could be easily exploited by enemies in the elite or from abroad who were determined to stop Allende's social­ist revolution.

At first the program did quite well. In 1971 unemployment was reduced to nearly zero, the gross national product grew by nearly 9 percent, and prices rose by only 20 percent, slightly below the annual average of the Frei years. Despite expropriation and the controversy it caused, copper production also rose slightly. By taking a pragmatic approach to the Chilean economy rather than the more doctrinaire one recommended by radicals within his coalition, Allende had, it seemed, achieved the kind of economic growth and reallocation of income that would boost his political fortunes without inducing a violent reaction from his opponents.

But Allende's policies, it soon became apparent, were neither as bountiful nor as moderate as they first seemed. Cracks in his eco­nomic edifice, which began to appear in 1972, widened rapidly during the first half of 1973. Some were of his own making; others were helped by his foreign and domestic opponents. Hidden from view in 1971 were several disturbing facts. Although consumption rose, gross domestic investment declined by 5 percent as private firms responded negatively to the threat of expropriation, and the state, already heavily involved in spending to increase consumption, did little investing. Moreover, the fiscal and monetary policies followed at the end of 1971 differed substantially from those proposed by Allende after his inau­guration. First, public revenues were much less than intended (owing in part to the refusal of opponents in Congress to authorize tax in­creases), and expenditures were much greater. This forced Allende to increase the money supply by 100 percent to cover a fiscal deficit that was 71 percent larger than planned. Second, the balance of payments took a turn for the worse, accumulating a $315 million deficit in 1971

The democratic reform game 185

'Fable 7.4. Chilean economic performance^ 1971-3 (annual growth rates)

Gross

product





National

At constant prices



1971 8.9


1972 1.0


1973 -5.0


1960-73 3.5


Gross do




Domestic

at








investment







-5.0


1.6


-5.5


3.6


Retail price


index


20.0


77.5


353.5


43.5


Source: World Bank, World Tables 1976. Washington, D.C., 1976, pp. 74-5.

after a $91 million surplus in 1970. An overvalued exchange rate, increased imports to meet consumer demand, the accelerated flight of financial capital, and a 30 percent drop in copper prices all contrib­uted to the deficit. To make matters worse on the supply side, agri­cultural production began to fall during the 1972-3 harvest as the effects of low prices, a lack of seed and fertilizer, and administrative bottlenecks began to be felt. Finally, although the government man­aged to contain the inflationary effects of its programs in 1971 with price controls, prices began to rise rapidly in late 1972 and continued into 1973, increasing 190 percent during the first nine months of the year alone.

Inflation and shortages were not new to Chile, and governments had survived such conditions in the past. What made Allende's situa­tion different was both the severity of the economic problems he faced in 1973 and the determination of his enemies to exploit them. Prominent among the latter were the United States government and the multinational firms with investments in Chile.

The administration of Richard Nixon was opposed to Chile's Marx­ist government and was determined to secure its demise through any means short of direct military intervention. One tactic was to limit the flow of financial assistance to Chile. Allende had been careful to make payments on Chile's foreign debt in order to keep his country's good credit rating. The United States government was, however, deter­mined to undermine that rating by cutting off new credit to Chile and forcing Allende to request moratoriums on the payment of Chile's debt, something he reluctantly did in late 1971. As part of its cam­paign to isolate Chile financially, the United States disbursed only $15.5 million in previously authorized loans in 1971, while Chile was


186

Political games of Latin America

Table 7.5. Distribution of seats in Chilean Chamber of Deputies and Senate before and after 1973 elections



Party


Chamber


Senate


Before 1973 Elections CODE (PDC-PN alliance)


93


32


UP (Socialists, Communists,


Radicals, et al.)


57


18


After 1973 elections






CODE


87


30


UP


63


20


repaying $51.3 million in old debts. At the same time, the United States maintained a generous program of aid to the Chilean military as well as an estimated $8 million in covert assistance to several opposi­tion groups. Pressure was also exerted by the American-owned copper companies, which, displeased with Allende's refusal to compensate them for their expropriated enterprises, tried to block the delivery of Chilean copper in United States and European ports. The Chileans succeeded in bypassing some of the foreign embargoes and locating other sources of credit; nevertheless, the American blockade reduced Allende's policy options considerably.

The Popular Unity government might have survived the impedi­ments placed in its path by President Nixon, but it could not overcome those imposed by an increasingly intractable and effective opposition within Chile that went to the streets to stop Allende. In September 1973, almost three years to the day after his election, they succeeded, but only after sacrificing Chile's democratic government to military wolves.

Allende had hoped to fortify his government by winning congres­sional elections in March 1973. As we can see from Table 7.5 the UP needed to gain nineteen seats in the Chamber of Deputies and eight in the Senate to gain majority control. Socialist and Communist party organizers had worked hard after Allende's inauguration to enlist new voters, hoping that his initial populistic wage and price policies would attract many^ to their ranks. Recognizing this, the Conservatives and the Christian Democrats joined ranks once again, merging their con­



187

The democratic reform game

gressional campaigns to maximize their gains and prevent a UP vic­tory in 1973. When the votes were counted it was apparent that Allende had been blocked once again, for the UP had secured only 44 percent of the popular vote and was still short of a majority in either house.

Elections were only one means of the opposition attack. Even more effective in the long run was their mobilization of protests that virtually shut down the Chilean economy in mid-1973. After searching for vul­nerable points in Allende's armor, the PDC and Conservatives, with financial help from the United States and Christian Democrats in Eu­rope, decided to concentrate on the copper and trucking industries.

In April 1973, miners and technicians at the El Teniente copper mine went on strike. Despite their ideological sympathy for the Popu­lar Unity Government, they initially refused to accept its decision to reduce the amount of a promised wage increase to fight inflation. A month later a settlement was reached and most of the miners returned to work. However, a hard core of white-collar workers and techni­cians, encouraged by the PDC, remained on strike until July and did substantial damage to the production of copper. But the critical blow was struck by the trucking industry from June through August. Chile's truckers, most of whom were small, independent operators, had gone on strike once before in October 1972 to protest a government proposal to absorb them into a state trucking company. Backed by a sympathy strike of retailers, they had forced Allende to declare a state of siege, admit military officers to his cabinet, and eventually with­draw- the proposal. When they went on strike again in June 1973 they were acting as part of a well-conceived opposition campaign to force the government to halt its program of nationalization, admit Christian Democrats to the cabinet, and chart a more gradual course. There is general agreement that the truckers' strike, which lasted until the coup of September 11, w-as the single most important factor in paralyzing the Chilean economy and fomenting political chaos during July and August 1973.

In the end, it was the military, emboldened by Conservative and Christian Democratic protests and provoked by rising civil strife and economic chaos, that abruptly brought Chile's brief socialist experi­ment to a close. The Chilean military, known since the 1930s for its restraint in political matters, had been divided in its assessment of the Popular Unity government and its program since Allendc's inaugura-



188 Political games of Latin America

tion. Some officers were willing to give the government their support as long as it carried out its revolution in a constitutional manner;

members of this group, whose support Allende deliberately cultivated and whom he trusted until the day of the coup, went so far as to join Allende's cabinet in order to help him deal with the civil violence encouraged by his opponents. Others in the military opposed Allende and his attack on Chilean capitalism from the outset, but did not undertake to overthrow him until 1973, when increasing civil unrest and the encouragement of the Christian Democrats gave them the political support they wanted. By then, Allendc's frantic last-minute efforts to deal with his collapsing economy and work out a compro­mise with his opponents were not enough to stop officers determined not only to evict Marxists from the government but also to end consti­tutional democracy in Chile.

What can we learn from the Chilean tragedy? First, it reminds us of the tentative and precarious nature of the democratic game. As we learned at the beginning of this chapter, there is no way of guarantee­ing that democracy will work, for its survival hinges on the willing­ness of society's most powerful citizens to live by its rules. Although minor lawbreakers can be punished by the democratic state, the defi­ance of the mighty will always undermine it. Liberal democratic poli­tics is, to be sure, sustained by something more than the narrow self-interests of players. Constitutional rules arc also derived from beliefs in values like liberty and legality. But there is always tension between the maintenance of these values for society as a whole and individual self-interests, and Chile serves to remind us how vulnerable the former is when the vital interests of powerful players arc seriously threatened.

Democracy works best when the stakes in the game are not great. 1 lie less one stands to lose, the less threatened one is by possible defeat. Conversely, the greater the stakes, the greater the threat and the harder it becomes to achieve peaceful conflict resolution. Political conflicts had always been intense in Chile's democracy but their reso­lution had exacted few sacrifices by the powerful until the 1960s. The middle sectors and the elite of organized labor gradually gained admis­sion to the game after 1930 and, in exchange for their moderation, were given some of the spoils. The Christian Democrats raised the stakes somewhat in 1964 when they tried to reduce foreign control over the Chilean economy, increase workers' rights, and redistribute

The democratic reform game 189

some rural property. That is why the Conservatives decided to fight back in the 1970 elections. Then Allende and the UP raised the stakes even more when they attacked the resources on which the Chilean bourgeoisie and its foreign allies had relied for their power and its maintenance.

Rather than ask why Chilean democracy failed to withstand this kind of test, a more appropriate question is why anyone should have expected it to survive. Should not Allende have understood the im­possibility of his task at the outset, given the apparent incompatibility between liberal democracy and radical socialism? Perhaps, but it was not hard for Allende to convince himself that Chile would be differ­ent. He was, after all, an experienced politician who knew his country and its politics intimately. And by living by its rules all of his life he was rewarded with an opportunity to govern the nation. Allende had rejected armed insurrection as a political strategy long before, eschew­ing violence in favor of the democratic rules of the game. Conse­quently, when blocked by the opposition, he relied on what he knew best: political dexterity and the authority of his office, neither of which was enough.

Today Allende's former colleagues, most of whom still live in exile, continue to debate the wisdom of his strategy. Some insist that arm­ing the masses was the only way to preserve the regime. IThe fact that Allende did not do so and was overthrown convinces them of the merit of their position. Others argue that such second guessing ig­nores realities of power and political practice within Chile at the time;



arming the masses would have only provoked a coup earlier. The only real option he had, they argue, was moderation. Where he went wrong w-as not in his failure to engage the military in conflict, but his excessive populism, which damaged the economy by raising consump­tion too rapidly, causing rampant inflation and shortages, both of which gave the opposition the issues it needed to mobilize the middle sectors, truckers, copper workers, and other consumers against the regime.

No doubt disputes will persist as we continue to study the Allende experience. But if it teaches us anything it is the vulnerability of the democratic game to the intensification of conflict, especially over fun­damental issues of economic development and the distribution of wealth. Tolerance is a fragile thing, and seldom does it survive any­where when elites find themselves under assault by the masses.


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