by Naomi Klein
As soon as Allende won the vote, and before he was even inaugurated, corporate America declared war on his administration. The center of activity was the Washington-based Ad Hoc Committee on Chile, a group that included the major U.S. mining companies with holdings in Chile, as well as the de facto leader of the committee, the International Telephone and Telegraph Company (ITT), which owned 70 percent of Chile’s soon-to-be-nationalized phone company. Purina, Bank of America and Pfizer Chemical also sent delegates at various stages.
The committee’s single purpose was to force Allende to back off his nationalizations “by confronting him with economic collapse.”38 They had many ideas for how to make Allende feel the pain. According to declassified meeting minutes, the companies planned to block U.S. loans to Chile and “quietly have large U.S. private banks do the same. Confer with foreign banking sources with the same thing in mind. Delay buying from Chile over the next six months. Use U.S. copper stockpile instead of buying from Chile. Bring about a scarcity of U.S. dollars in Chile.” And the list goes on.39
Allende appointed his close friend Orlando Letelier to be his ambassador to Washington; that gave him the task of negotiating the terms of expropriation with the same corporations plotting to sabotage the Allende government. Letelier, a fun-loving extrovert with a quintessential seventies moustache and a devastating singing voice, was much beloved in diplomatic circles. His son Francisco’s fondest memories are of listening to his father play the guitar and belt out folk songs at gatherings of friends in their Washington home.40 But even with all Letelier’s charm and skill, the negotiations never stood a chance of success.
In March 1972, in the midst of Letelier’s tense negotiation with ITT, Jack Anderson, a syndicated newspaper columnist, published an explosive series of articles based on documents that showed that the telephone company had secretly plotted with the CIA and the State Department to block Allende from being inaugurated two years earlier. In the face of these allegations, and with Allende still in power, the U.S. Senate, controlled by Democrats, launched an investigation and uncovered a far-reaching conspiracy in which ITT had offered $1 million in bribes to Chilean opposition forces and “sought to engage the CIA in a plan covertly to manipulate the outcome of the Chilean presidential election.”41
The Senate report, released in June 1973, also found that when the plan failed and Allende took power, ITT moved to a new strategy designed to ensure that he would not “make it through the next six months.” Most alarming to the Senate was the relationship between ITT executives and the U.S. government. In testimony and documents, it became clear that ITT was directly involved in shaping U.S. policy toward Chile at the highest level. At one point, a senior ITT executive wrote to National Security Adviser Henry Kissinger and suggested that “without informing President Allende, all U.S. aid funds already committed to Chile should be placed in the ‘under review’ status.” The company also took the liberty of preparing an eighteen-point strategy for the Nixon administration that contained a clear call for a military coup: “Get to reliable sources within the Chilean military,” it stated “…build up their planned discontent against Allende, thus, bring about necessity of his removal.”42
When grilled by the Senate committee about his brazen attempts to harness the force of the U.S. government to subvert Chile’s constitutional process in order to further ITT’s own economic interests, the company’s vice president, Ned Gerrity, seemed genuinely confused. “What’s wrong with taking care of No. 1?” he asked. The committee offered a response in its report: “‘No. 1’ should not be allowed an undue role in determining U.S. foreign policy.”43
Yet despite years of relentless American dirty tricks, of which ITT was only the most scrutinized example, in 1973 Allende was still in power. Eight million dollars in covert spending had failed to weaken his base. In midterm parliamentary elections that year, Allende’s party actually gained support beyond the number that had first elected it in 1970. Clearly, the desire for a different economic model had taken deep root in Chile, and support for a socialist alternative was growing. For Allende’s opponents, who had been plotting his overthrow since the day the 1970 election results came in, that meant their problems would not be solved by simply getting rid of him—someone else would just come along and replace him. A more radical plan was needed.
Lessons in Regime Change: Brazil and Indonesia
There were two models of “regime change” that Allende’s opponents had been studying closely as possible approaches. One was in Brazil, the other in Indonesia. When Brazil’s U.S.-backed junta, led by General Humberto Castello Branco, seized power in 1964, the military had a plan not merely to reverse João Goulart’s pro-poor programs but to crack Brazil wide open to foreign investment. At first, the Brazilian generals tried to impose the agenda relatively peacefully—there were no obvious shows of brutality, no mass arrests, and though it was later discovered that some “subversives” had been brutally tortured during this period, their numbers were small enough (and Brazil so large) that word of their treatment barely escaped the jails. The junta also made a point of keeping some remnants of democracy in place, including limited press freedoms and freedom of assembly—a so-called gentlemen’s coup.
In the late sixties, many citizens decided to use those limited freedoms to express their anger at Brazil’s deepening poverty, for which they blamed the junta’s pro-business economic program, much of it designed by graduates of the University of Chicago. By 1968 the streets were overrun with antijunta marches, the largest led by students, and the regime was in serious jeopardy. In a desperate bid to hold on to power, the military radically changed tactics: democracy was shut down completely, all civil liberties were crushed, torture became systematic, and, according to Brazil’s later-established truth commission, “killings by the state became routine.”44
Indonesia’s 1965 coup followed a very different trajectory. Since the Second World War, the country had been led by President Sukarno, the Hugo Chávez of his day (though minus Chávez’s appetite for elections). Sukarno enraged the rich countries by protecting Indonesia’s economy, redistributing wealth and throwing out the International Monetary Fund and the World Bank, which he accused of being facades for the interests of Western multinationals. While Sukarno was a nationalist, not a Communist, he worked closely with the Communist Party, which had 3 million active members. The U.S. and British governments were determined to end Sukarno’s rule, and declassified documents show that the CIA had received high-level directions to “liquidate President Sukarno, depending upon the situation and available opportunities.”45
After several false starts, the opportunity came in October 1965, when General Suharto, backed by the CIA, began the process of seizing power and eradicating the left. The CIA had been quietly compiling a list of the country’s leading leftists, a document that fell into Suharto’s hands, while the Pentagon helped out by supplying extra weapons and field radios so Indonesian forces could communicate in the remotest parts of the archipelago. Suharto then sent out his soldiers to hunt down the four to five thousand leftists on his “shooting lists,” as the CIA referred to them; the U.S. embassy received regular reports on their progress.46 As the information came in, the CIA crossed names off their lists until they were satisfied that the Indonesian left had been annihilated. One of the people involved in the operation was Robert J. Martens, who worked for the U.S. embassy in Jakarta. “It really was a big help to the army,” he told the journalist Kathy Kadane twenty-five years later. “They probably killed a lot of people, and I probably have a lot of blood on my hands, but that’s not all bad. There’s a time when you have to strike hard at a decisive moment.”47
The shooting lists covered the targeted killing; the more indiscriminate massacres for which Suharto is infamous were, for the most part, delegated to religious students. They were quickly trained by the military and then sent into villages on instructions from the chief of the navy to “sweep” the countryside of Communists. “With rel
ish,” wrote one reporter, “they called out their followers, stuck their knives and pistols in their waistbands, swung their clubs over their shoulders, and embarked on the assignment for which they had long been hoping.”48 In just over a month, at least half a million and possibly as many as 1 million people were killed, “massacred by the thousands,” according to Time.49 In East Java, “Travelers from those areas tell of small rivers and streams that have been literally clogged with bodies; river transportation has at places been impeded.”50
The Indonesian experience attracted close attention from the individuals and institutions plotting the overthrow of Salvador Allende in Washington and Santiago. Of interest was not only Suharto’s brutality but also the extraordinary role played by a group of Indonesian economists who had been educated at the University of California at Berkeley, known as the Berkeley Mafia. Suharto was effective at getting rid of the left, but it was the Berkeley Mafia who prepared the economic blueprint for the country’s future.
The parallels with the Chicago Boys were striking. The Berkeley Mafia had studied in the U.S. as part of a program that began in 1956, funded by the Ford Foundation. They had also returned home to build a faithful copy of a Western-style economics department, theirs at the University of Indonesia’s Faculty of Economics. Ford sent American professors to Jakarta to establish the school, just as Chicago profs had gone to help set up the new economics department in Santiago. “Ford felt it was training the guys who would be leading the country when Sukarno got out,” John Howard, then director of Ford’s International Training and Research Program, bluntly explained.51
Ford-funded students became leaders of the campus groups that participated in overthrowing Sukarno, and the Berkeley Mafia worked closely with the military in the lead-up to the coup, developing “contingency plans” should the government suddenly fall.*52 These young economists had enormous influence over General Suharto, who knew nothing of high finance. According to Fortune magazine, the Berkeley Mafia recorded economics lessons on audiotapes for Suharto to listen to at home.53 When they met in person, “President Suharto did not merely listen, he took notes,” one member of the group recalled with pride.54 Another Berkeley grad described the relationship in this way: we “presented to the Army leadership—the crucial element in the new order—a ‘cookbook’ of ‘recipes’ for dealing with Indonesia’s serious economic problems. General Suharto as the top Army commander not only accepted the cookbook, but also wanted the authors of the recipes as his economic advisers.”55 Indeed he did. Suharto packed his cabinet with members of the Berkeley Mafia, handing them all the key financial posts, including minister of trade and ambassador to Washington.56
This economic team, having studied at a less ideological school, were not antistate radicals like the Chicago Boys. They believed the government had a role to play in managing Indonesia’s domestic economy and making sure that basics, like rice, were affordable. However, the Berkeley Mafia could not have been more hospitable to foreign investors wanting to mine Indonesia’s immense mineral and oil wealth, described by Richard Nixon as “the greatest prize in the Southeast Asian area.”*57 They passed laws allowing foreign companies to own 100 percent of these resources, handed out “tax holidays,” and within two years, Indonesia’s natural wealth—copper, nickel, hardwood, rubber and oil—was being divided up among the largest mining and energy companies in the world.
For those plotting the overthrow of Allende just as Suharto’s program was kicking in, the experiences of Brazil and Indonesia made for a useful study in contrasts. The Brazilians had made little use of the power of shock, waiting years before demonstrating their appetite for brutality. It was a near-fatal error, since it gave their opponents the chance to regroup and for some to form left-wing guerrilla armies. Although the junta managed to clear the streets, the rising opposition forced it to slow its economic plans.
Suharto, on the other hand, had shown that if massive repression was used preemptively, the country would go into a kind of shock and resistance could be wiped out before it even took place. His use of terror was so merciless, so far beyond even the worst expectations, that a people who only weeks earlier had been collectively striving to assert their country’s independence were now sufficiently terrified that they ceded total control to Suharto and his henchmen. Ralph McGehee, a senior CIA operations manager during the years of the coup, said Indonesia was a “model operation…. You can trace back all major, bloody events run from Washington to the way Suharto came to power. The success of that meant that it would be repeated, again and again.”58
The other crucial lesson from Indonesia had to do with the pre-coup partnership between Suharto and the Berkeley Mafia. Because they were ready to take up top “technocratic” positions in the new government and had already converted Suharto to their worldview, the coup did more than just get rid of a nationalist threat; it transformed Indonesia into one of the most welcoming environments for foreign multinationals in the world.
As momentum began to build toward Allende’s ouster, a chilling warning began appearing in red paint on the walls of Santiago. It said, “Jakarta is coming.”
Shortly after Allende was elected, his opponents inside Chile began to imitate the Indonesia approach with eerie precision. The Catholic University, home of the Chicago Boys, became ground zero for the creation of what the CIA called “a coup climate.”59 Many students joined the fascist Patria y Libertad and goose-stepped through the streets in open imitation of Hitler Youth. In September 1971, a year into Allende’s mandate, the top business leaders in Chile held an emergency meeting in the seaside city of Viña del Mar to develop a coherent regime-change strategy. According to Orlando Sáenz, president of the National Association of Manufacturers (generously funded by the CIA and many of the same foreign multinationals doing their own plotting in Washington), the gathering decided that “Allende’s government was incompatible with freedom in Chile and with the existence of private enterprise, and that the only way to avoid the end was to overthrow the government.” The businessmen formed a “war structure,” one part of which would liaise with the military; another, according to Sáenz, would “prepare specific alternative programs to government programs that would systematically be passed on to the Armed Forces.”60
Sáenz recruited several key Chicago Boys to design those alternative programs and set them up in a new office near the Presidential Palace in Santiago.61 The group, led by the Chicago grad Sergio de Castro and by Sergio Undurraga, his colleague at the Catholic University, began holding weekly secret meetings during which they developed detailed proposals for how to radically remake their country along neoliberal lines.62 According to the subsequent U.S. Senate investigation, “over 75 percent” of the funding for this “opposition research organization” was coming directly from the CIA.63
For a time, the coup planning proceeded on two distinct tracks: the military plotted the extermination of Allende and his supporters while the economists plotted the extermination of their ideas. As momentum built for a violent solution, a dialogue was opened between the two camps, with Roberto Kelly, a businessman associated with the CIA-financed newspaper El Mercurio, acting as the go-between. Through Kelly, the Chicago Boys sent a five-page summary of their economic program to the navy admiral in charge. The navy gave the nod, and from then on the Chicago Boys worked frantically to have their program ready by the time of the coup.
Their five-hundred-page bible—a detailed economic program that would guide the junta from its earliest days—came to be known in Chile as “The Brick.” According to a later U.S. Senate Committee, “CIA collaborators were involved in preparing an initial overall economic plan which has served as the basis for the Junta’s most important economic decisions.”64 Eight of the ten principal authors of “The Brick” had studied economics at the University of Chicago.65
Although the overthrow of Allende was universally described as a military coup, Orlando Letelier, Allende’s Washington ambassador, saw it as an equal partn
ership between the army and the economists. “The ‘Chicago boys,’ as they are known in Chile,” Letelier wrote, “convinced the generals that they were prepared to supplement the brutality, which the military possessed, with the intellectual assets it lacked.”66
Chile’s coup, when it finally came, would feature three distinct forms of shock, a recipe that would be duplicated in neighboring countries and would reemerge, three decades later, in Iraq. The shock of the coup itself was immediately followed by two additional forms of shock. One was Milton Friedman’s capitalist “shock treatment,” a technique in which hundreds of Latin American economists had by now been trained at the University of Chicago and its various franchise institutions. The other was Ewen Cameron’s shock, drug and sensory deprivation research, now codified as torture techniques in the Kubark manual and disseminated through extensive CIA training programs for Latin American police and military.
These three forms of shock converged on the bodies of Latin Americans and the body politic of the region, creating an unstoppable hurricane of mutually reinforcing destruction and reconstruction, erasure and creation. The shock of the coup prepared the ground for economic shock therapy; the shock of the torture chamber terrorized anyone thinking of standing in the way of the economic shocks. Out of this live laboratory emerged the first Chicago School state, and the first victory in its global counterrevolution.
