U. S. officials remained committed to expanding what lines of communication they could with the Chilean armed forces despite considerable opposition on Capitol Hill. When the administration, back in March, proposed renewing military aid to Chile, this triggered a strong reaction from twenty congressmen, who signed a letter to Shultz expressing “grave concern” that such a move was even being considered. They reminded the Secretary that military aid could not be provided without a waiver of Section 726 of the FAA or a presidential certification that the human rights provisions written into legislation had been met. Acting precipitously on military aid “would profoundly set back the cause of human rights in Chile.”— This did not preclude the Executive Branch from occasionally taking advantage of loopholes in the legislation. During 1987, for instance, it secretly agreed to the Chilean Army purchase of fifteen transport helicopters on the grounds that they had not been outfitted for offensive use, had nonmilitary applications, and were therefore not on the list of munitions subject to human rights conditions.—
Personal liaisons were an important part of White House efforts to cultivate and deepen ties with the Chilean officer corp. Following a May 1987 meeting in Santiago with high-ranking military personnel, U. S. Southern Command head General John Galvin regaled Ambassador Barnes with the “very alarming symptoms of isolation apparent in senior Chilean military officers [and their] heightened sense of both mission and threat.” There were indications, Barnes reported, that younger generations of officers are “more and not less hardline,” and given the armed forces’ “pivotal role” in a successful transition to civilian rule, both he and Galvin considered it “vitally important to use every measure available to expand contacts between the U. S. and the Chilean military.” Priority should be given to establishing a program of regular Chilean “civilian/military” visits to the United States.— This recommendation was quickly adopted by the State Department, which began working on training programs that would include a civilian component to make it more “politically saleable” to Congress.— Within forty-eight hours of the Barnes memo, the NSC Deputy Director for Eatin American Affairs had transmitted a request to the U. S. Embassy for “a list of our initiatives for expanding our contracts and strengthening our relationship with the Chilean armed forces.”—
On Capitol Hill, selling any proposal that looked like a concession to the Chilean military was always going to be difficult. It wasn’t made easier by reports such as the one
Barnes filed in early June on how the security forces continued to engage in torture, threats, and harassment of regime opponents with the active support of “unidentified groups.” While there had been some progress toward a democratic transition in the first five months of 1987, including a lifting of the state of siege in Santiago and a lessening of restrictions on opposition political activity, the Ambassador could not say for certain whether these improvements were “genuine” or mere “window dressing” to ease international pressure and facilitate the best possible climate for Pinochet’s election scenario. “Positive steps taken by the GOC to create a more propitious climate for the visits of the Pope and the UNHRC Special Rapporteur were taken by one person, the President, and he can reverse any or all of these actions at will.”—
Yet Barnes’s comments could not disguise the momentum for change that was growing inside Chile. In June, the AD created the Political Parties Committee for Free Elections (COPPEL), whose members were drawn from eight parties, including the PDC, the Radical Party, and the Popular Socialist Union Party. A few days later, confusing the issue of who stood for what, a rival Eeft Committee for Free Elections was created by several Chilean cultural leaders and headed by the Socialist Party’s Ricardo Eagos (a former President of the AD).— Both groups demanded constitutional reforms and free elections that were anathema to Pinochet but at the same time redirected social mobilization tactics toward purely political ends by urging Chileans to register to vote.—
Whereas a major concern for U. S. officials was that ongoing civil disobedience and antiregime mobilizations would radicalize political conflict, this was not a key factor in the decision of the moderate political opposition to move the struggle from the streets to the negotiating table. The PDC’s Edgardo Boeninger elaborated: at first “the force and emotion of the popular protests generated a sense among the parties that the regime could not last” and the efforts of the opposition were “concentrated on bringing down the regime quickly, as was reflected in slogans like This is the decisive year.’” Over time, many moderate leaders “began to see clearly that social upheaval would not defeat a military force which still had significant, if minority, popular support.”— The Socialist Party leadership had drawn a similar conclusion. According to Heraldo Miinoz, even during the coordinated mass protests of 1983-1984 with the left, the moderate opposition “never thought that we would lose control of the situation.” We were convinced that, eventually, “the regime would fall through the protests until we realized that Pinochet was willing to shed a lot more blood to stay in power.”— The moderate political antiregime leaders were being driven toward an electoral democracy model less by a further shift to the right than by a realization that maintaining the rage had reached a point of diminishing returns, that they were never going to achieve a return to civilian rule by staying on the streets, and that to do so would simply result in more bloodletting. There was also a strategic factor to consider: the street protests were beginning to weaken popular opposition to the regime by dividing it: “When the Communists came out to join the protests, the middle class went home,” said Boeninger. “The protests waned not because politicians failed to seize the initiative, but because the middle class did not want to be seen in the streets with the Communists.”— The Socialist Party’s Enrique Correa dismissed any suggestion that U. S. pressure had played a role: “We had to create a big gap between us and the extreme left. Otherwise, we were never going to be in government.”—
Whatever Pinochet’s interest in some future return to civilian rule, his consistently violent response to the threat from the streets dramatically exposed the key dilemma confronting the left social movements and their political allies: although the extraparliamentary struggle had proved the only means of bringing significant pressure to bear on the junta, it could not effect a regime change so long as the armed forces remained united and retained a monopoly of coercive power. It was primarily this fear of Pinochet’s capacity for violence, his determination not to compromise, and, to a lesser extent, a concern that they were losing control of the antiregime leadership to those forces making demands that went beyond their own political and social boundaries that explained the decision of the center-right parties to break with the unacceptable or radical left and negotiate with the military high command and their elite supporters. Although such an outcome meshed perfectly with U. S. efforts to broker an acceptable transition, internal factors rather than external pressures played a more decisive role.
The anti-Pinochet AD and COPPEL coalitions, it must be remembered, had no interest in “radically altering” the military’s economic model if only because to do so would be to threaten “a transition to democracy that would be stable and that would succeed.” To the Munoz Socialists, this meant not alienating the most conservative opponents of Pinochet, for whom the economic reforms were a red line not to be crossed. To radically challenge the market-based model, and thus its capitalist-class supporters (as well as the military), would make it impossible for a new civilian government to achieve its primary goals of changing the Constitution and tackling the human rights problem.—
Although viewed in positive terms by the executive branch, this decision by the acceptable anti-Pinochet forces had no impact on congressional resistance to any major change in the military aid status quo nor to legislators’ demands for the imposition of further economic sanctions on the regime. The latter took the form of growing pressure on the White House to campaign more aggressively against MDB lending to Chile and to strip the country of its GSP benefits and OPIC coverage. In July, at the invitation of Chairman Walter Fauntroy, Elliott Abrams appeared before the House Subcommittee on International Development Institutions and Finance to allay concerns that the November 1986 abstention by the U. S. representative on a World Bank SAE loan to Chile could be interpreted as an “endorsement” of Pinochet and to clarify U. S. policy on future MDB loans.— Abrams testified that the decision to abstain was based on his recommendation and that it was influenced by the manifest lack of support for a negative vote among the European and Eatin representatives on the bank’s board. “So we came to the conclusion that if we voted 'no’ we would be isolated, but that we could get a group together which would abstain, and there was in fact a substantial group of countries which abstained on the SAE, for the first time on human rights grounds.” Joining with allied democracies “was the most effective means of using our voice and vote in the IFIs to express our human rights concerns regarding Chile,” and it had the further advantage of not “strengthening hardliners in Chile opposed to carrying out a genuine transition to civilian rule.”
On purely economic grounds, of course, the case for supporting Pinochet’s Chile was irresistible as far as the administration was concerned. Testifying alongside Abrams, Treasury’s Deputy Assistant Secretary James Conrow effusively praised the Pinochet government’s economic performance, calling its free market approach a “model” for the
Rest of Latin America to emulate.— Paradoxically, though, bowing to White House pressure, his Department had earlier instructed the U. S. executive directors to abstain on two new World Bank loan requests ($95 million for power generation; $21 million for an irrigation project) and on an application to restructure a loan to the Cape Horn Methanol Company for a project in Chile’s petroleum - and gas-producing region north of Punta Arenas, which awaited a decision by the Bank’s International Finance Corporation.—
If the State Department had few qualms about urging an abstention vote on Chile MDB loan submissions, it was less enthusiastic about eliminating the country’s access to GSP and OPIC benefits. In late May, Barnes received a letter from Richard Howard indicating that the Department was resigned to Chile losing both benefits, the result of an interagency meeting on the subject where the “sentiment” of those present was “heavily weighted against Chile.”— In the House of Representatives, Douglas Bereuter (R-NE) had already introduced a resolution highly critical of Chile’s worker’s rights situation - the passage of which threatened to preempt the ongoing review of GSP eligibility ordered by Reagan in January. While officials in the Department of Labor and the U. S. Trade Representative scored the regime for “not taking steps to meet internationally recognized standards of worker rights” - which legally required its exclusion from both OPIC and GSP programs - the State Department, with strong support from Treasury and the NSC, maintained that the United States had “important economic and political stakes in Chile,” which militated against any move to terminate these programs.— For the moment, that seemed enough to hold the line.
Meanwhile, State had changed its stance on bailing Chile out of its ongoing problems with commercial bank lenders. In January 1987, the Chilean Ambassador had complained to Abrams about Citibank decisions to twice veto a request from Santiago to restructure Chile’s commercial bank loans, which accounted for just under $15 billion of a total $21.4 billion foreign debt.— The Chileans had requested modest interest rate reductions and a retiming of interest payments that would result in a one-off savings of several hundred million dollars in 1987-1988. Ambassador Errazuriz denounced Citibank, one of twelve creditor banks negotiating with Chile in the so-called Bank Advisory Committee (BAG), which represented all 350 private bank lenders to the Latin nation, for “acting unreasonably” to block any agreement being reached. Abrams, however, took no action other than to sympathize with Chile’s plight.—
By February, the negotiations had reached an “impasse.” The commercial banks were prepared to reschedule maturities but reluctant to provide new funds. Instead, they settled on a strategy that would see them shift part of their debt burden to the World Bank and, indirectly, to the creditor/donor governments. The BAG Chair, Manufacturers Hanover, proposed that the World Bank cofinance $20 million of the $400-430 million proposed package for Chile with cross-default clauses. Although the administration had supported a move to have the World Bank guarantee some commercial bank loans to Chile in 1986, this time Abrams and his LB colleague Doug McMinn advised Secretary Shultz that the commercial banks were simply “playing politics” and further accused them of falsely telling the Chileans that the United States was “blocking the solution on 'political grounds.’” Chile’s economic performance now made a cofinancing arrangement unnecessary, they said, and, given the mood for tougher sanctions in Congress, entering into such a scheme would place at risk future MDB funding at adequate levels. The response of the World Bank itself was revealing: although Vice President Ernest Stern initially endorsed the cofinancing scheme, his superior Barber Conable quickly “backed away from the idea,” reportedly after being informed that the United States opposed such
Treasury Secretary James Baker vetoed the cofinancing proposal, apparently to avoid giving the banks “an easy way out” in view of Chile’s excellent record on debt renegotiation and IMF relations, which could justify a normal bank loan.— Additionally, this decision was part of a broader effort to redirect pressure back on the commercial banks to take a more accommodating line on Third World debt negotiations generally. Under “strong pressure” from Washington and other BAG members. Citibank agreed to moderate its stance, and the BAC eventually agreed to reschedule Chile’s interest payments, saving more than $400 million over the next twelve months, to restructure most of the country’s debt and to reduce interest rates payable to all creditors. Finally, in an unprecedented concession, Chile was permitted to repay interest on its debt once a year for four years beginning in 1988, instead of the normal six monthly payments.— In contrast to the difficulties experienced with its commercial creditors, the restructuring of Chile’s debt to official (Paris Club) creditors concluded without a hitch. At a club meeting in April, an agreement was reached with the IMF, the World Bank, and individual governments to reschedule debts maturing over the next twenty months.
In late July, ARA’s Richard Howard informed the U. S. Embassy in Santiago that a new UNGA strategy was being developed based on the idea of collaborating with European, and perhaps selected Fatin, governments to produce a “balanced resolution” on Chile’s human rights performance. The reasons for not proceeding at this point with an exclusively American-authored draft were twofold: the difficulty in reaching an interagency consensus and the limited possibility of “producing a text with a realistic chance of passage.” Cosponsoring a resolution proposed by another government was one option “provided, of course, that we can overcome International Organization’s (lO) opposition to any action other than voting no.” The other problem to be gotten around was UN Ambassador Walters, who remained “adamantly opposed to what he sees as an unfairly singling out of the Chileans.”— In a letter to Walters, Abrams attempted to overcome the Ambassador’s objections. While he “fully shared” the Ambassador’s frustration with the “hypocrisy of those quick to criticize Chile, but silent concerning horrendous human rights abuses in Cuba,” persuading Fatin American democracies to join the United States in condemning Cuba required a “consistently even-handed” approach in speaking out against human rights abuses wherever they occurred.— Walters was not the only hurdle to overcome. The lO Bureau was just as reluctant to support the UNGA resolution strategy. Despite approaches by other Department officials to lO, brokering a consensus was proving “far from easy.”—