249. Memorandum From Gordon Chase of the National Security Council Staff to the President’s Special Assistant for National Security Affairs (Bundy)1
- Chiefs of Mission Conference—Brazil and Chile
I attended a few sessions of the Chiefs of Mission Conference. One of the more interesting included discussions by Ambassadors Gordon and Cole about the situations in Brazil and Chile.
[Omitted here is discussion on Brazil; see Document 185.]
In contrast to Brazil, the economic situation in Chile is remarkably good. Ambassador Cole said there is a growth rate of 5%, unemployment is at a low level, and savings are up. Progress has been made in land and tax reform. There are, of course, some problems—e.g. unfavorable balance of payments and inflation. These problems tend to be related to Chile’s desire to push forward quickly in the field of economic development.[Page 553]
One of the outstanding aspects of the Chilean economy is the extent of U.S. involvement. The U.S. has big stakes in copper and manufacturing of all kinds. The huge U.S. involvement in Chile leads the Chileans to an ambivalent attitude towards the U.S. For example, while they like us in many ways, there is plenty of latent hostility.
- Chile’s biggest problem is political—the election for the Presidency in September (it should be noted that in Chile the President has great power). It now appears that there may be only two primary candidates—Frei, the moderate, and Allende, the extreme leftist. If there is a two man race, Frei is very likely to win. If there is a three or four man race, Allende’s chances will be improved. On balance, Ambassador Cole estimates that the odds are 3 to 1 against Allende winning in September. He noted, however, that a year ago he would have placed the odds at 10 to 1.
- In effect, there are four possibilities vis-à-vis Allende and the election.
- Allende could get beaten at the polls.
- Allende could get the most votes but not get the Presidency. According to Chilean law, if no candidate gets a majority, the assembly chooses one of the two leading candidates. Normally, it chooses the candidate with the most votes; however, it does have constitutional power to pick the second biggest vote-getter.
- Allende could win but be overthrown by the armed forces or the “carbinieri”; this would have to be done before Allende gets a chance to consolidate his power. Normally, the armed forces are very non-political, but they might conceivably intervene if Allende won.
- Allende could win and stay in power.
- If Allende wins and stays in power, we are in trouble. For example, he will probably nationalize the copper mines, which in turn, might end the aid program because of the Hickenlooper amendment;2 this, in turn, could lead Chile to ask the Bloc for economic aid. There are very few significant short term things we can do between now and election time. Generally speaking, we should simply do what we can to get people to back Frei.
- Source: Johnson Library, National Security File, Country File, Latin America, Vol. I, 11/63–6/64. Secret.↩
- This amendment to the Foreign Assistance Act of 1961 was initially approved in August 1962, and subsequently revised in December 1963. Sponsored by Senators Bourke B. Hickenlooper (R–Iowa) and E. Ross Adair (R–Indiana), the amendment stipulated that the President suspend assistance to any country that expropriated the property of U.S. citizens or corporations without proper compensation. (76 Stat. 260)↩