Annotations for Countries: Ecuador

Juan Perón's electoral victory in Argentina and the political embarrassment suffered by the United States in Panama in March indicate a new willingness on the part of Spanish-speaking countries in Latin America to assert themselves. This has left Brazil, one of the United States' strongest supporters in the hemisphere, in an increasingly isolated position. This week's feature from Rio de Janeiro's Opinião discusses the possibilities of and fundamental reasons for a diplomatic realignment, which seems to be taking place in the Western Hemisphere.

Opinião asks, "Does some antagonism exist between Brazil and the rest of Latin America? Is Brazil the second-largest country in the Americas trying to exercise a type of sub imperialism in the hemisphere? And with the rush of huge foreign firms to Brazil, is that nation not transforming itself into a type of bridgehead over which the companies will carry out their actions in the hemisphere or is it exactly the opposite of all this? While Brazil transforms itself rapidly into a modern industrialized nation, are the majority of neighboring countries bogged down without direction in a swamp of under-development, looking for a scapegoat to explain their own failures and afraid of Brazilian development? Are they not the ones who are conspiring to encircle Brazil?"

As strange as these questions seem, they have influenced the actions of a good number of nations of the continent. Ever since President Nixon affirmed at the end of 1971 that as Brazil leans, so leans the rest of Latin America. Accusations and denials of a pretended hegemony have been issued with frequency from Brazil as well as from its neighbors. At the end of March, for example, an important leader of the Peronista party denounced a Washington Brasilia access and the ambition of the Brazilian government to try and exercise a delegated leadership and serve as a bridge for the entrance of an ultra capitalistic form of government incompatible with the interests of Latin America.

Opinião continues by noting that the declarations of the Peróneus leader are perhaps the most dramatic in a series of events which appear to be separating Brazil more and more from Spanish America. In Panama, the Panamanian foreign minister, speaking at the close of the United Nations Security Council meeting, talked about the awakening of Latin America and referred to the almost unanimous support of neighboring countries for panama's demand that the United States withdraw from the canal zone. To this same meeting, the Brazilian foreign minister had sent a telegram of evident neutrality, asking only for just and satispharic solutions to the problem of the canal.

After the meeting of the Security Council, the ministers of Panama and Peru announced that they are going to suggest a total restructuring of the Organization of American States, the OAS. Brazilian diplomacy, however, has systematically supported the OAS, which is seen by various Latin nations as an instrument used by the United States to impose its policies on the continent.

It was the Organization of American States which legalized the armed intervention of a predominantly American and Brazilian troops in the Dominican Republic in 1965. The Organization of American States also coordinated the political, economic, and diplomatic isolation of the Cuban regime within the Americas. Another event in February of this year can also be interpreted as a tendency away from Brazil's foreign policy, this time in the economic sphere. President Rafael Caldera announced that Venezuela, one of the richest nations in Latin America, and until recently, closely tied to the United States, would join the Andean Pact, an association formed in 1969 by Ecuador, Chile, Colombia, Peru, and Bolivia.

The pact was one of the solutions devised by the Andean nations to overcome the obstacles to regional integration found in the Latin America Free Trade Association. These nations saw the association as an instrument for large European and American firms, based in Argentina, Mexico, and Brazil, to realize their transactions more easily.

Opinião continues. "Today when the Argentinians have already announced that their intention to join the Andean Pact, where there are significant restrictions on foreign capital. Brazil is preparing a plan destined to permit the survival of the Free Trade Association. Thus once again, moving in the opposite direction of its Spanish-speaking neighbors. At the same time Brazil faces another political problem in the Americas. During the past decade, various nationalistic governments have appeared on the continent with widely divergent tendencies, including Chile, Peru, Mexico, Ecuador, and most recently Panama and Argentina. This new situation has given rise to a policy of coexistence, which is termed by the diplomats as ideological pluralism. This pluralism accepts the collaboration among governments of different natures and is opposed to the ideological frontiers against communism practiced by the Organization of American States, an idea which seems to orient Brazilian diplomacy to the present day."

Opinião speculates that Peronism could be the new element which will separate Brazil even more dangerously from the rest of Latin America. Representatives of the government elect in Argentina have already announced their intentions to denounce accords reached by the Brazilians and the present Argentine government over the utilization of the water of the Paraná River. At the same time, many nations in Latin America believe Brazil is trying to create its own sphere of influence. As typical examples, they cite the cases of Paraguay and Bolivia. The latter nation received $46 million in aid from Brazil last year while during the same period, the United States contributed only a little more, 52 million.

Opinião concludes that Brazil's economic growth, obvious favor in the eyes of American business and government officials, and the search for areas of influence, all indicate the emergence of a Brazilian sub imperialism in Latin America. There are two interpretations of this new phenomenon however as Opínion notes. "One sees Brazil always acting in accord with American interests while others feel it is acting for its own ends." To explore the subject further, Opínion offers three special reports from its correspondence on relations of Brazil with the rest of Latin America.

Opinião diplomatic correspondent filed the following report. "The idea of a diplomatic plot against Brazil is at best speculation. Concretely, Brazil's diplomacy in Latin America is in great difficulty, and therefore, there exists a possibility of isolation. The announcement of Brazil's foreign minister that he will visit the Andean Nations implies a recognition of this possibility and is an evident effort to avoid a total collapse. But the basic reason for the phenomenon is in Brazil's fixation with instruments of policy considered outmoded, such as the Latin American Free Trade Association and the Organization of American States, even the North Americans since this and in a recent interview, William Rogers, the United States Secretary of State, suggested a transformation of the OAS, the Organization of American States. However, Brazil clings to these old organizations."

Opinião correspondent continues. "In mid-March, the Brazilian Department of State announced that it was preparing a plan to save the Latin American Free Trade Association and that Brazil saw this as indispensable to the solution of Latin America's commercial problems. Other Latin nations feel, however, that the 12-year-old association has done nothing to fulfill its promise and has benefited the great Latin American firms, the only ones with the power, organization, and dynamism necessary to take advantage of the concessions granted to encourage industrial development. The consequences of the Free Trade Association agreements have been that the multinational corporations have established a division of labor among their Latin American factories. Through the agreements, they trade with one another and even win new markets while benefiting from suspensions of tariffs."

The Brazilian idea of integration through the Free Trade Association appears therefore as an attempt to create an ample market for multinational corporations. An OAS study of the continent's economy in 1972 affirms that 90% of all manufactured goods produced are made by subsidiaries of American firms. These firms export 75% of their products to other Latin countries and over half of this commerce is, in reality, internal trade between different branches of the same corporation. It is therefore clear why United States corporations are so interested in Latin American free trade. It opens a market too attractive to be ignored. Brazil's efforts to save this free trade area are not likely to find support in the rest of Latin America. As to Brazil's fixation on the Organization of American States, the recent meaning of the United States Security Council in Panama seems to have decreed the end of that obsolete instrument. The president of the OAS was not even invited to speak at the meeting.

One Latin American commented that the OAS evidently no longer had any importance in the solution of Latin American problems. With the demise of the Organization of American States, the rigid ideological stance of Latin America, born of the Cold War, will also disappear. Opinião correspondent concludes that, "Latin America is now going to assume its own personality in the pluralistic context and this is the reality which Brazil must recognize if it wants to avoid the total collapse of its Latin American diplomacy."

But the battle is really not against Brazil as some poorly informed or cynical editorialist pretend. Opinião correspondent says, "The battle is against the action of the great imperialistic powers that transformed Brazil into a spearhead for their interests." He says, "In this rich dialectic of Latin American history, the presence of a Brazil, overflowing with economic power and ready to join the Club of the Great Nations, encountered the Treaty of Cartagena, which created the Andean Pact in an effective agreement, which integrates six nations and imposes severe restrictions on foreign investment. The Peronists want to join this pact, and given the economic structure of the Andean region, it is clear that Argentina's entrance constitutes a necessary contribution to the solution of problems which affect the viability of the agreement."

Opinião analysis continues with a report on the significance of the elections in Argentina for the rest of the continent. Perón's triumph in the March 11th elections was the most important fact of the past few months in Latin American history when there were many decisive events. When Perón launched his party's platform in December of last year, he ended his message to the Argentine people by prophesizing, "In the year 2000, we will be united or we will be subjugated." The Argentine people believed this and when they elected Perón's party, they not only voted against 17 years of military inefficiency, but also, with a consciousness of the importance of historical development, and opted for the union of Spanish-speaking America. It was not only Perón's program, which created a consciousness of the problem. Undoubtedly, the country's geopolitical awareness was a direct consequence of Brazil's emergence as a power with pretensions to hegemony on the continent.

Argentina has the space, resources, and experience to supply all that is lacking in the Andean Nations, but it has above all, a tradition of popular masses who are profoundly committed to militant, Peronist, nationalism, which could function as the true backbone of the new attempt to integrate Spanish America. The emergence of a nationalistic type government in Uruguay, seen as a distinct possibility since the Peronista victory, is probably the next step and what Opinião reporter thinks is inevitable. The creation of one great Latin American country stretching from ocean to ocean, the only organization capable of confronting the multinational corporations and Brazil, which is being manipulated by the multinationals.

The final part of Opinião's report is an interview with Marcelo Sánchez Sorondo, an important figure in Perón's party and considered the probable next foreign minister of Argentina. Sorondo notes that this is a special time in Latin America, a time when new historical forces are at work and new configurations are emerging. He stated that it is necessary to converse, to dialogue, and to seek new forms of understanding, but the Argentine did not confine himself to diplomatic platitudes. He reiterated his opposition to what he termed the Brasilia Washington Axis.

Sorondo called this axis, "An obstacle for the unification of Hispanic America and a bastion of melting national firms interested in maintaining the dependence and backwardness of the Latin American peoples." He concluded by saying that the subject will require the future Peronist government to recuperate the Argentine predominance in the region and to discuss with neighboring countries modalities of economic interdependence and to impose energetically the imposition of an ultra capitalistic domination manipulated by huge companies without nations that are establishing themselves in Brazil. This report was taken from Opinião of Rio de Janeiro.

Many Latin American newspapers commented this week on the surprising degree of unity displayed at a UN Economic Commission for Latin America, ECLA, gathering during the last week of March in Quito, Ecuador. The wire service Prensa Latina reports that the Latin America of 1973 is not the Latin America of 1962. No longer is it Cuba alone that engages in vast economic and social transformations in this hemisphere, and ECLA must be prepared to face this new stage. This was the gist of the statements made by Cuban Deputy Prime Minister Carlos Rafael Rodriguez, head of his country's delegation to the 15th meeting of ECLA, which took place in Quito. The Cuban minister cited as facts which prove the new situation in Latin America, the process of construction of a socialist economy in Chile, the Peruvian revolutionary process and the results of the UN Security Council meeting held in Panama recently.

Rodriguez said, "We Latin Americans have come to an agreement at least on what we don't want, and that is backwardness, illiteracy, hunger and poverty, which are prevalent in practically every society in the region. Without an ingrained desire for development, without the determination and the will for development of the peoples, development is absolutely impossible," he added. He went on to say that one cannot demand sacrifices from people where 5% of the population receives 43% of the national income and 30% barely received 10 or perhaps 15%.

The head of the Cuban delegation said, according to Prensa Latina, that "accelerated development under the existing conditions implies in investments that the peoples cannot tackle for a lack of resources. After affirming that, here is where international financing comes into play." He said that "As far as the great capitalist economic powers are concerned, their help should not be considered as a gift, but rather as restitution for all the pillage the Latin American peoples have been subjected to." He added, "Such financing will never be obtained without the people struggle." This report from the Latin American wire service, Prensa Latina

Chile's participation in last month's ECLA meeting is reported in the Santiago weekly, Chile Hoy, which said that, "In clear language, the Chilean delegation to ECLA described the causes of the low level of economic development in Chile in recent years. The directions undertaken by the Allende administration, the successes of these strategies, and finally, the obstacles which block this path. In our judgment," said that Chilean delegation, "a number of historical errors were committed during this century in our country, which led to negative results for the Chilean people."

"In summary, we can point out seven fundamental errors. First, the surrender of basic natural resources to foreign capital. Secondly, a narrow base for the national economy with only one industrial potential, copper, generating a national external dependence, financial, commercial, technological, and cultural dependence. Third, land ownership remained in the hands of a few large landowners. Fourth, manufacturing was concentrated in the hands of a few monopolies. Fifth, Chile fell into intense foreign debt, $4 billion through 1970, the second largest per capita debt in the world, behind Israel. Sixth, establishment of a repressive state, which maintained an unequal distribution of income within the framework of only formal democracy. And seventh, the limited economic development was concentrated geographically in the capital of Santiago creating a modern sector while the rural provinces stagnated."

Chile Hoy goes on to say that, "Demonstrating the historical failure of capitalism in Chile, the Chilean delegate showed that in the 1970 presidential elections, two candidates who won over 65% of the votes suggested two different reforms. The Christian Democrat Reform had the goal of a socialist communitarian society, and the popular Unity's goal was the gradual construction of a true socialist economy. Since the popular unity won the election, there have been distinct revolutionary changes in the government's two and one half years in power, the recovery of national ownership of natural resources, the elimination of industrial monopoly through the formation of the area of social property, which is creating the mechanisms for workers' participation, nationalization of the finance and foreign commerce sectors. The Chilean state now controls 95% of credit and 85% of exports as well as 48% of imports. Further changes are that large land holdings have been expiated."

"The reformed sector now represents 48% of arable land, and with the passage of a new law during 1973, the second phase of agrarian reform will begin. Also, changes in international relations shown in the widening of diplomatic and commercial agreements, Chile is less dependent than before, and the diversification of our foreign relations permits us to say with pride that we are no longer an appendix of anyone. In addition, a vigorous internal market has been created raising the buying power of the people redistributing income and increasing national consumption." Chile Hoy further states that, "We are alleviating the burden of the inherited foreign debt. We hope that during 1973, we obtain the understanding of friendly countries in order to relieve our international payments problems." This report on Chile's statement at the ECLA gathering is from the Santiago Weekly, Chile Hoy.

The British News Weekly, Latin America gives a more detailed account of the main issues of the ECLA Conference. "The most remarkable feature of the meeting of the United Nations Economic Commission for Latin America, ECLA, which ended in Quito at the end of March, was the degree of Latin American unity. The mutual distaste felt by the governments of Brazil and Central America on the right and Chile and Cuba on the left was no secret, and since development strategy was what the discussion was all about, a good deal of mutual recriminations might have been expected, but mutual interest prevailed. Faced by the economic power of the world's rich and particularly the United States, every Latin American country appreciated the need to stick together. Indeed, there seems to have been a tacit understanding that Latin American governments would not criticize one another. As a result, nearly all their fire was concentrated on the US with a few broad sides reserved for the European economic community."

"In fact," says Latin America, "only the United States failed to vote with the rest, including even the Europeans for the rather gloomy report on Latin America's development strategy over the past decade. One of the reports Chief criticisms was directed at the growth of Latin America's enormous external debt, now estimated at around 20 billion dollars, and it called for refinancing and even a moratorium on payments in certain circumstances. This of course affects the US first and foremost, as did the criticisms of private investment and the financing of foreign trade. But the United States ambassador refrained from the hard line retaliations that had been expected by the Latins. Instead, more in sorrow than in anger. He urged them to look at the advantages of private investment and pointed out that the US imported more Latin American manufactured goods than any in other industrialized country, and instead of voting against the report, he continued himself with abstaining."

Latin America continues commenting that, "The United States was also in the firing line with the resolution denouncing transnational companies for the enormous economic power which is concentrated in them and allows them to interfere in national interest as has happened in some cases. This echoed the resolution approved at the security council meeting in Panama and coincided with the Senate hearings in Washington on the attempt by IT&T to finance a CIA operation against Dr. Salvador Allende in 1970.

There was also considerable interest in the proposal put personally by the Chilean delegate, who emphasized he was not speaking for his government, that the United States and European members of ECLA should be expelled. This proposal is unlikely to be carried through, but is symptomatic of the Latin American desire to have an influential body of their own to look after their own interest without interference. It was notable too that all Latin American governments, whatever their political coloring, felt able to support the recommendation that social development and reforms should accompany economic development, something which would appear to run counter to current Brazilian development strategy," concludes the weekly Latin America.

Another hemispheric meeting with important consequences for US Latin American relations was the Organization of American States meeting the first week of April in Washington. Mexico City's Excélsior comments that, "The Latin American OAS members who have recently reasserted their continental solidarity in Bogota, Panama, and Quito are now seeking US isolation from their affairs. The most recent assembly during the first week of April officially called in order to examine political, economic, cultural and administrative problems also dealt in a radical way with the entire inner American system, with the hope of reducing the influence exercise by Washington. At the last three assemblies in Bogotá, Panama and Quito, Washington was accused of many actions detrimental to Latin American interests, and subsequently manifested a rather hostile attitude towards the accusing countries. Came voting time, and the US abstained."

"The most recent OAS assembly began and operated in the air of uncertainties," says Excélsior, "primarily because all members, including the US, realized that some fundamental structural modifications must be made, but no one was sure how to go about initiating them. The central debate centered on two issues. Venezuela challenged the validity of the OAS mission by inviting the entire assembly to reflect on the political nature of the institution within the international perspective. The second point was brought up by OAS Secretary General Galo Plaza, who proposed a revision of the inner American cooperation system. More specifically, he proposed the prevention of unilateral services and agreements, which often have detrimental results. For Latin America. The US attitude was one of surprise, but the problem they said was not insurmountable." This comment from Excélsior in Mexico City.

The Jornal do Brasil from Rio comments on the opening of the OAS meeting. "The days are long gone when the organization of American states with its orthodox image and its ideological and political unity constituted one well-tuned orchestra under the constant and undisputed direction of one director. Ideological pluralism is the order of the day in Latin America, and there is no longer any way the United States or anybody else can impose unity. The Jornal's editorial goes on to say that Brazil, though it is not encouraged or even liked the development of ideological pluralism in Latin America, must accept the facts and learn to live with them. Brazil cannot turn its back on the continent through lack of interest or resentment at the turn of events because Brazil belongs with Latin America."

The problem at the OAS meeting, therefore will be to establish new objectives for the organization. Ideological pluralism has made the OAS unfit for many of its former task, such as military planning on a hemispheric scale. However, the organization still can be used for presenting a united Latin American view to international groups on certain issues such as the demand for a 200-mile fishing limit. The Jornal do Brasil concludes that, "The OAS must change, but still can be useful to Latin nations."

This week's feature deals with the recent discovery of the Nixon administration's collusion with the International Telephone and Telegraph Company, IT&T, to overthrow the government of Chilean President Salvador Allende. But surfacing also is the discovery that the US State Department and the Central Intelligence Agency massively financed efforts, which led to the defeat of Allende's bid for the presidency in 1964.

Further discoveries have shown that the US government is presently working in collusion with the US-based corporation, Kennecott Copper Company, to affect a worldwide embargo on nationalized Chilean copper in an attempt to ruin the Chilean economy and topple the Allende government. The Guardian reports that US Senate hearings on efforts by the Nixon administration and US corporations to sabotage the Chilean government of Salvador Allende have begun to have repercussions. Two weeks ago, Allende announced the suspension of economic talks between Chile and the US In light of revelations during the Senate hearings on the Nixon administration's collusion with IT&T to overthrow Allende's popular Unity government.

The most important new development has been the report that the top level National Security Council allocated $400,000 to the Central Intelligence Agency for propaganda to be used against Allende during the 1970 Chilean presidential election campaign. Other testimony has revealed that IT&T offered a $1 million fund to help defeat Allende. Edward Gerrity IT&T Vice President for Corporate Relations offered the excuse that the fund was to promote housing and agricultural grants to improve Chile's economy, but former CIA director John McCone testified that he had transmitted an IT&T offer of the money to block Allende's victory to the CIA and the White House. Former US ambassador to Chile, Edward Korry refused to comment on this or other questions at the hearings, including IT&T memos, which claimed Korry was instructed by the White House to do all short of military action to prevent Allende from taking office.

The most important new development has been the report that the top level National Security Council allocated $400,000 to the Central Intelligence Agency for propaganda to be used against Allende during the 1970 Chilean presidential election campaign. Other testimony has revealed that IT&T offered a $1 million fund to help defeat Allende. Edward Gerrity IT&T Vice President for Corporate Relations offered the excuse that the fund was to promote housing and agricultural grants to improve Chile's economy, but former CIA director John McCone testified that he had transmitted an IT&T offer of the money to block Allende's victory to the CIA and the White House. Former US ambassador to Chile, Edward Korry refused to comment on this or other questions at the hearings, including IT&T memos, which claimed Korry was instructed by the White House to do all short of military action to prevent Allende from taking office.

The Guardian further states that IT&T is now trying to collect a $92 million claim with the Overseas Private Investment Corporation, OPIC, a US government-sponsored institution designed to reimburse companies which have overseas assets nationalized, but at the subcommittee hearings show that IT&T helped provoke the nationalization. OPIC will not have to pay on the claim. The details of IT&T's 18-point plan designed to ensure that the Allende government does not get through the crucial next six months were exposed in IT&T memos uncovered and released in March, 1972 by columnist Jack Anderson.

At that time, according to both IT&T and the Chilean government, both sides were near agreement on compensation, but the Anderson revelations of IT&T's attempts to overthrow the UP led the Chilean government to break off the talks. The UP government is now preparing to nationalize the Chilean telephone company, in which IT&T owns a major share worth about $150 million dollars. A constitutional amendment allowing for the nationalization is now going through the legislative process, although the government has been operating the company since 1971. In addition to its share in the phone company, IT&T owns two hotels, a Avis car rental company, a small telex service, and a phone equipment plant in Chile.

Talks on renegotiations of the Chilean debt to the US and on the resumption of purchased credits to Chile began last December and resumed in March. The next day the talks were suspended by the Chilean government in response to the latest revelations. Chile owes the US about $60 million for repayments of debt from November 1971 to the end of 1972, out of a total debt of $900 million dollars. Another controversial question, which the Chilean foreign minister says is now holding up an agreement, is the question of compensation for US copper companies whose holdings have been nationalized. Under a 1914 treaty between Chile and the US, the disagreement on copper compensation could be submitted to the international panel for non-binding arbitration. Chile has offered to use this means for arriving at an agreement, but the US refuses. This report is from The Guardian.

But US efforts to thwart the development of socialism in Chile are not a recent phenomenon. In a Washington Post news service feature, the post claims that massive intervention by the Central Intelligence Agency and State Department helped to defeat Socialist Salvador Allende in the 1964 election for president of Chile. American corporate and governmental involvement against Allende's successful candidacy in 1970 has been the controversial focus of a Senate foreign relations subcommittee investigation into the activities of US multinational companies abroad.

But the previously undisclosed scale of American support for Christian Democrat, Eduardo Frei against Allende six years early makes the events of 1970 seem like a tea party according to one former intelligence official, deeply involved in the 1964 effort. The story of the American campaign, early in the Johnson administration, to prevent the first Marxist government from coming to power in the Western hemisphere by constitutional means was pieced together from the accounts of officials who participated in the actions and policies of that period.

The Washington Post concludes, "Cold War ideology lingered, and the shock of Fidel Castro's seizure of power in Cuba still was reverberating in Washington. 'No More Fidels' was the guidepost of American foreign policy in Latin America under the Alliance for Progress. Washington's romantic zest for political engagement in the Third World had not yet been dimmed by the inconclusive agonies of the Vietnam War. 'US government intervention in Chile in 1964 was blatant and almost obscene,' said one strategically-placed intelligence officer at the time. 'We were shipping people off right and left.

Mainly State Department, but also CIA, with all sorts of covers.' A former US ambassador to Chile has privately estimated that the far-flung covert program in Frei's behalf cost about $20 million. In contrast, the figure that emerged in Senate hearings as the amount IT&T was willing to spend in 1970 to defeat Allende was $1 million." This from the Washington Post News Service.

The most recent tactic used against the Allende government by the Nixon administration and the US corporations has been an attempt to impose an economic embargo against Chilean copper. The North American Congress on Latin America, NACLA, reports that, "Since the Kennecott Copper company learned of the Allende government's decision to deduct from its indemnification the excess profits Kennecott earned since 1955, the company's position has been that Chile acted in violation of international law. The Allende government determined the amount of excess profits by comparing the rate of profit the nationalized companies earned in Chile to the return on capital invested elsewhere."

NACLA reports that Kennecott first tried to get satisfactory compensation by litigating in Chilean courts. When this failed, it threatened actions abroad in a letter directed to the customers of El Teniente Copper. In essence, Kennecott resolved unilaterally to try to coerce Chile to pay Kennecott for its properties. Kennecott's strategy has transformed a legal issue into a political and economic struggle. The loss of its Chilean holdings inflicted a heavy loss on Kennecott. In 1970, Kennecott held 13% of its worldwide investments in Chile, but received 21% of its total profits from those holdings. The corporation earned enormously high profits from its El Teniente mine. According to President Allende, Braden's, Kennecott subsidiaries, profits on invested capital averaged 52% per year since 1955, reaching the incredible rates of 106% in '67, 113% in '68 and 205% in '69. Also, though Kennecott had not invested any new capital, it looked forward to augmented profits from the expansion of production in its facilities due to the Chileanization program undertaken by the Frei government.

Although Kennecott was hurt a great deal in losing the Chilean properties, it did not lose all. In February '72, Chile agreed to pay $84 million, which represented payment for the 51% of the mines bought under the Chileanization plan. Chile also agreed to pay off the loans to private banks and to the export import bank that Kennecott had negotiated to expand production in the mines. Further, Kennecott has written off, for income tax purposes, its equity interest of $50 million in its Chilean holdings. Generally, such deductions not only mean that the US taxpayer will absorb the company's losses, but also that attractive merger possibilities are created with firms seeking easy tax write-offs.

Nevertheless, the Chilean expropriations came at a particularly bad moment for Kennecott because the corporation was under attack in other parts of the world. Environmentalist questioned Kennecott's right to pollute the air in Arizona and Utah, and other groups attempted to block Kennecott's plans to open new mining operations in Black Mesa, Arizona and Puerto Rico. On the legal front, Kennecott is contesting the Federal Trade Commission's order to divest itself with a multimillion dollar acquisition of the Peabody Coal Company. In all of these cases, Kennecott has taken an aggressive position to protect its interest at home and around the world. In September, 1972, Kennecott's threats materialized into legal action, asking a French court to block payments to Chile for El Teniente copper sold in France.

In essence, Kennecott claimed that the expropriation was not valid because there had been no compensation. Therefore, Braden was still the rightful owner of its 49% share of the copper. The court was requested to embargo the proceeds of the sales until it could decide on the Braden claim of ownership.

The NACLA report continues, "To avoid having the 1.3 million payment embargoed, French dock workers in Le Havre, in a demonstration of solidarity with Chile, refused to unload the freighter. The ship sailed to Holland where it immediately became embroiled in a new set of legal controversies, which were ultimately resolved. Finally, the odyssey ended on October 21st, '72 when the ship returned to Le Havre to unload the contested cargo. Copper payments to Chile were impounded until the court rendered a decision on its competence to judge the legality of the expropriation. Chile was forced to suspend copper shipments to France temporarily. The legal battle spread across Europe when Kennecott took similar action in a Swedish court on October 30th. Most recently, in mid-January 1973, Kennecott took its case to German courts.

NACLA states that, "It is not easy to ascertain the degree of coordination between Kennecott and the US government on their policy toward Chile." The State Department told us in interviews that Kennecott is exercising its legal rights as any citizen may do under the Constitution, but a reporter for Forbes Magazine exacted a more telling quote. When asked if there had been any consultation between Kennecott and the State Department, the State Department spokesman said, "Sure, we're in touch from time to time. They know our position." The Forbes reporter asked, "Which is?" The spokesman replied, "We're interested in solutions to problems, and you don't get solutions by sitting on your hands."

In fact, US government policies and Kennecott's actions fully compliment each other. They share the same objectives and function on the same premises of punitive sanctions and coercive pressures guised in the garb of legitimate legal and financial operations. Kennecott's embargoes will necessarily serve as a factor in the current negotiations between Chile and the US government. Whether or not the government was instrumental in Kennecott's actions, the United States now has an additional powerful bargaining tool. The Kennecott moves were denounced by all sectors of Chilean political life as economic aggression violating national sovereignty.

Other Latin American nations have also condemned Kennecott. Most significantly, CIPEC, the organization of copper exporting nations, Chile, Peru, Zaire, and Zambia, which produced 44% of the world's copper, met in December 1972 and issued a declaration stating they would not deal with Kennecott and that they would refrain from selling copper to markets traditionally serviced by Chilean exports. Such solidarity is important because it undercuts the Kennecott strategy in the present market where the supply is plentiful. Kennecott cannot deter customers from buying Chilean copper if they have nowhere else from which to buy.

Even within the US, the embargo has not proven totally successful. The Guardian reports that there have been some breaks among the US banks, Irving Trust, Bankers Trust, and the Bank of America are carrying on a very limited business with Chile and various companies continue to trade on a cash and carry basis. In a number of respects, US policy has backfired. If the US will not trade with Chile, its Western European competitors will fill the markets formally controlled by US companies. The US pressure has also helped to intensify the anti-imperialist reactions of a number of South American countries within the US and its multinational corporations. The Panama meeting of the UN Security Council is just one example of this.

Every week brings new defeats for the US strategy in South America. At the recent session of the UN Economic Commission for Latin America in Quito, Ecuador, South American countries unanimously condemned US economic policy toward the continent. The resolution was based on a detailed report showing how South America suffers great economic losses because of unequal trade agreements with the US. This report from The Guardian.

The London News Weekly Latin America reports that the dramatic new initiatives launched by President Nixon in Europe and Asia this year and last are not to be matched in the region nearest to the United States, Latin America. This is the only conclusion that can be drawn from the Latin American section of his annual policy review to Congress last week, which was significant for what it did not say than for what it did. The only major positive move to be announced was that the president himself is to make at least one trip to Latin America this year, preceded by his Secretary of State, William Rogers. In the light of the Watergate scandal and of the current bad relations between the US and Latin America, it may be doubted whether President Nixon's trip would be any more successful than his disastrous tour of Latin America as General Eisenhower's vice president in 1958.

Latin America continues, certainly, there is little enough in the policy review for Latin Americans to welcome. An assertion of the president's desire to underscore our deep interest in Latin America through closer personal contacts was not accompanied by any concession to Latin American interests or aspirations. Only, perhaps, the Mexicans can find some satisfaction in Nixon's promise of a permanent, definitive and just solution to the problem of the high salinity of Colorado River waters diverted to Mexico, but there was no give it all in the United States position on many of the other broader disputes with Latin America. On the Panama Canal issue, he appealed to Panama to help take a fresh look at this problem and to develop a new relationship between us, one that will guarantee continued effective operation of the canal while meeting Panama's legitimate aspirations.

Panama's view, however, is that its effort to persuade Washington to take a fresh look at the problem had been frustrated for so long that its only recourse was to make this matter an international issue at the United Nations Security Council. On this, President Nixon merely noted disapprovingly that an unfortunate tendency among some governments and some organizations to make forums for cooperation into arenas for conflict, so throwing the blame back on Panama.

Latin America's report continues that, in a clear reference to the dispute with Chile over compensation for the copper mines taken over from United States companies, the president said adequate and prompt compensation was stipulated under international law for foreign property nationalized. There was no sign of any concessions there nor did Nixon envisage any reconciliation with Cuba, which he still saw as a threat to peace and security in Latin America. Furthermore, his proposal that any change of attitude towards Cuba should be worked out when the time was ripe. With fellow members of the Organization of American States, OAS, came at a moment of deep disillusion with the OAS on the part of many Latin American governments. The review displayed no understanding in Washington of why nearly all Latin American and Caribbean governments sympathize with Chile and Panama and many, if not most, want to reestablish relations with Cuba.

Nixon's undertaking to deal realistically with Latin American governments as they are, providing only that they do not endanger peace and security in the hemisphere, merely begs the question that Latin Americans have been posing for years nor did the review reflect in any way the Latin American feeling expressed with a unanimous vote at last month's meeting of the United Nations Economic Commission for Latin America, ECLA, in Quito that the countries of the region are helping to finance the rise in United States' standard of living at the cost of their own impoverishment.

Latin America concludes that there is some satisfaction at President Nixon's call to Congress to revise the legislation that imposes penalties on countries which arrest United States' fishing vessels in territorial waters the USA does not recognize, but many Latin Americans see this merely as a recognition that the existing policy hurts United States' interests, but the failure of Washington to appreciate Latin America's views may not be the main feature of the United States' policy towards Latin America this year. Unless the White House can overcome the Watergate scandal and revive its decision-making process, the United States will be quite unable to react to the new Peronist government in Argentina or exert any influence over the selection of Brazil's new president. This report was taken from the London News Weekly Latin America.

For a more harmonious note, we next report on popular music in Latin America. There has long been a rich tradition of communicating concerns and struggles, victories and defeats of working people through popular music. There has been a resurgence of interest and enthusiasm about this musical tradition in Chile in recent years, and many Chilean musicians have been active in the profound cultural and social changes occurring in their country.

One of these musicians is Isabel Parra, daughter of Violeta Parra, the well-known folk singer and partisan of Chilean peasants and workers. The Santiago magazine, Chile Hoy, published an interview with Isabel Parra shortly after her return from a concert tour in Ecuador. After discussing her tour, she commented on some of the present concerns of art workers in Chile.

Ms. Parra recalled that the Chilean group always performed to full houses. She remembered one performance in particular. At a concert near Quito, a group of priests, along with wealthy Chileans now living in Ecuador, passed out circulars calling for a boycott of what they called the Communist Concert. They said that the songs were not messages of love and peace but were carriers of Marxist-Leninist ideology. These same boycotters, however, attended the concert, and their participation was to attack the performers with shouts and insults. In response to this, the performers responded and described the Chilean situation, noting that words about love and peace are not enough to overcome economic bondage. 

Isabel Parra continued the interview by discussing the problems of making progressive music and culture easily available to all the people. "I think that it's an injustice that the communication media prohibit the broadcast of our music," she said. "There is a power struggle in Chilean music since the right wing, the richer class, still controls most of the broadcasting facilities, but the leftist media also suffer from weaknesses.

There is still no sensitive criteria which provides an honest musical selection. We must present all types of new, original music in different places," she continued, "putting this music to good use. Of course, we must mobilize ourselves. We must sing in the universities, in labor unions, in factories, in state farms, in the neighborhoods, but we lack the organization to manage this. However, we are determined to create this organization." This report from Chile Hoy.

The Puerto Rican Weekly, Claridad, reports from Santiago, Chile that only a few weeks after the frustrated attempt by the Chilean army to overthrow the government of President Salvador Allende, the popular government appears strengthened by it. Within hours of the attack, the civilian accomplices of the mutiny, flushed out by their failure, began to run for cover. Five top leaders of the right-wing Fatherland and Freedom Organization released a statement from Ecuador where they'd received political asylum admitting their participation in the coup attempt and calling on all their members to go underground. The document was published in the Daily, Ultima Hora, and is signed by Pablo Rodriguez and other Fatherland and Freedom leaders. 

Ultima Hora on June 30th said the coup was part of a vast plot, which apparently included the entry into Chile of fascists trained abroad. On the same day as statement made by the government declared that the hands of foreign governments, fascism and all Chilean rightists are involved in this. Vigilance committees of the workers have been formed in work centers all over the country to defend the nation from further right-wing actions. A deputy of the coalition that brought Allende to power, Unidad Popular, was quoted as saying that, "There are hundreds of parliaments in the factories and they're more genuine and democratic than the traditional one." 

These parliaments, the workers' councils, have full political freedom of expression for Christian Democratic workers as well, many of whom took part in the anti-coup preparations. President Allende and the government have called for a dialogue with the opposition, except for the Fatherland and Freedom and the National Party, which was also responsible for the coup attempt. This has put the conservative leadership of the Christian Democratic Party in a tough spot. To refuse the negotiations would alienate much of the party's working-class membership.

One important economic development is the ending of the two-month-long strike at El Teniente Copper Mine, which had cost Chile some $80 million. The strikers, made up of one fourth of the miners and three-fourths of the white collar workers at the mining complex, accepted the new terms proposed by President Allende. The right wing had used the strike as a rallying point for demonstrations, marches, sabotage, propaganda, and attacks on government leaders and officers. Meanwhile, serious strikes plaguing the trucking and transportation industries remain unsettled.

On January 10th, Peruvian president, Juan Velasco Alvarado, in calling for a conference of Peru's five neighboring countries, unveiled a proposal for their limitation of arms purchases. The proposal, which would include Peru, Bolivia, Colombia, Chile, Brazil, and Ecuador, calls for the elimination of unnecessary military expenditures during the coming 10-year period. 

According to the Mexico City daily, Excelsior, Peru presently ranks fourth in total dollars spent on military armaments, behind Brazil, Argentina, and Venezuela, respectively. Brazil, who easily heads the list of Latin American nations, spends almost twice as much on arms as second-ranked Argentina. Chile, over the past three years, however, has maintained the highest rate of military spending as a percentage of gross national product, that being 22.4%. The arms limitation proposal dubbed by President Velasco, The Pact of Honor, contends that by freezing arms purchases and postponing a needless arms race, great amounts of vital monies can be channeled into programs of economic, social, and educational development. 

Thus far, says Excelsior, the proposal has been thoroughly backed by both Colombia and Bolivia, virtually ignored by Ecuador, and all but rejected by Brazil. Chile, whose military chiefs have publicly voiced interest, has been clear, however, in expressing its feelings of skepticism and impracticality of the plan. This can be witnessed in a statement from El Mercurio, Chile's pro-government newspaper, which said that any disarmament at present would jeopardize Chile's security both internally as well as externally. Military circles in Brazil received the proposal with indifference. The Brazilian paper, Folha de Sao Paolo, pointed out that the Brazilian armed forces are the most powerful in South America because in 1973, they acquired large amounts of modern equipment and war material. 

In an editorial, Excelsior cites four possible motives for Peru's position. The first and rather dubious motive is that Ecuador, using its recent landslide oil revenue for armaments, might hope to reclaim the two oil rich Amazonian provinces, which it lost to Peru in 1941 as a result of a violent border dispute. Another theory based on continuing Peruvian publications is that Chile's arms purchases are a preparation for a preemptive strike against Southern Peru, thus adding Chile to the list of credible enemies. Thirdly, Brazil's expansionist tendencies have evoked fear throughout Peru, as well as throughout Brazil's other neighboring countries.

And lastly, amid speculation that somewhere in Latin America, there have already been purchases of ground-to-ground and ground-to-air missiles, Peru sees the escalation into missile weaponry as dangerous, as well as disastrously expensive. Regardless of what the motive, The Pact of Honor will certainly become the topic of great debate in the coming year, beginning in February at the Foreign Minister's Conference to be held in Mexico City. This report on Peru's proposed arms pact was compiled from Mexico City Daily, Excelsior, the Chilean daily, El Mercurio, and the Brazilian newspaper, Folha de Sao Paulo.

In a related story, Excélsior reports that the ambassadors from Peru and Ecuador speaking at the Inter-American Social and Economic Council in that country charged the United States with protecting its own interests through international banks. The Peruvian ambassador stated that the International Development Bank has taken coercive measures to obtain its own economic ends. 

The representative from Ecuador added that the International Development Bank has frequently exercised pressure in defending the interest of multinational corporations. US Ambassador John Joseph Jova, when asked about the role of the International Development Bank in Latin America, smilingly answered that it was positive. "Nothing is more treacherous than statistics. We have to be very careful in using them." These reports from Mexico City's leading daily, Excélsior. 

There has been speculation in the international press about the relationship between the September, 1973 military coup in Chile and the Brazilian military takeover in 1964. A recent article in the Washington Post, dateline Rio de Janeiro, substantiates many of the questions that have been raised about Brazilian influence in Chile. 

Dr. Depaiva describes himself as a mining engineer with a number of other interests. One of his recent interests as a leading figure in a private anti-communist think tank in Rio de Janeiro was advising Chilean businessmen how to prepare the ground for the military overthrow of President Salvador Allende last Fall. A founding member of a Brazilian paramilitary group says he made two trips to Chile as a courier, taking money for political actions to a right wing anti-Allende organization. 

These men are two of a number of Brazilians who acknowledge helping Chilean foes of Allende. Other private and business interests in this country gave money, arms, and advice on political tactics. There is no evidence that the Brazilian government played any role in this anti-Allende effort. Although its sophisticated military intelligence network must have been aware of it. Brazil was never publicly hostile to Allende. The Washington Post points out that the coup that brought Brazil's armed forces to power in March, 1964 appears to have been used as a model for the Chilean military coup.

The private sector played a crucial role in the preparation of both interventions and the Brazilian businessmen who plotted the overthrow of the left-leaning administration of President Goulart in 1964 were the same people who advised the Chilean right on how to deal with Marxist president, Allende. Soon after Allende's election, thousands of Chilean businessmen took their families and fortunes abroad, settling principally in Ecuador, Argentina, Venezuela, and Brazil. 

In Brazil, the well-to-do Chileans quickly found work in multinational corporations or invested their capital in new companies or on the stock exchange. And in their dealings with Brazil's private sector, they quickly established contact with the architects of the 1964 Brazilian coup. For example, they met Gilberto Uber, the wealthy owner of Brazil's largest printing business. In 1961, Uber and several powerful business associates had founded the Institute of Research and Social Studies, a political think tank with the specific object of preparing to overthrow Brazil's so-called communist infiltrated civilian government.

Between 1961 and 1964, the institute organized, financed and coordinated anti-government activities and served as the bridge between private enterprise and the armed forces before the coup. The Executive Secretary of the Institute was General Couto e Silva, who founded Brazil's Political Intelligence Agency in 1964. 

One year ago, Chilean Luis FuenZalida, who had joined Uber's Printing Company, told friends proudly, "We are going to throw out Allende, and I'm learning from Uber that the Brazilians did in 1964." Another key member of the institute and one of its founders was Dr. Depaiva, a leading conservative economist, ardent anti-communist, and an admirer of the United States, which he has visited frequently.

Depaiva also acts as a consultant to a number of US and multinational companies in Brazil. He believes the Allende government was a threat to the entire continent, but it was clear Allende would not be allowed to stay. He said, "The recipe exists and you can bake the cake anytime. We saw how it worked in Brazil and now again in Chile." 

Dr. Depaiva's recipe involves creating political and economic chaos, fomenting discontent and deep fear of communism among employers and employees, blocking legislative efforts of the left, organizing mass demonstrations and rallies, even acts of terrorism if necessary. His recipe, Depaiva recognizes, requires a great deal of fundraising. "A lot of money was put out to topple Allende," he said, "but the money businessmen spend against the left is not just an investment, it is an insurance policy." 

After Chile's coup, a prominent Brazilian historian who asked not to be named said, "The first two days I felt I was living a Xerox copy of Brazil in 1964. The language of Chile's military communiques justifying the coup and their allegations that the communists had been preparing a massacre and a military takeover was so scandalously identical to ours, one almost presumes they had the same author." 

Following in the footsteps of the Brazilian Institute and using its recipe, Chile's Gremios or Middle Class Professional Brotherhoods with Business and Landowners Associations created the center for Public Opinion Studies. Public Opinion Studies was one of the principle laboratories for strategies such as the crippling anti-government strikes, the press campaigns, the spreading of rumors and the use of shock troops during street demonstrations. The center also served as headquarters for the women's movement, which was so effectively used against the Marxist president. 

According to the Washington Post, Dr. Depaiva takes particular pride in the way we taught the Chileans how to use their women against the Marxist. In Chile, the opposition to Allende created Poder Femenino, Feminine Power, an organization of conservative housewives, professional and businesswomen who became famous for their marches of the empty pots. Poder Femenino took its cues, its finances, and its meeting rooms from the gremios, the professional brotherhoods.

Despite the directives from the male dominated leadership, Dr. Depaiva explains that, "The women must be made to feel they're organizing themselves, that they play a very important role. They're very cooperative and don't question the way men do. Both in Chile and Brazil," Depaiva points out, "women were the most directly affected by leftist economic policies, which create shortages in the shops. Women complain at home and they can poison the atmosphere, and of course, they're the wives and the mothers of the military and the politicians." 

There appeared to be no shortage of financial offers. The inflow of dollars from abroad was no secret to Allende. By early August, it had become public knowledge that the organizers of the transportation strike preceding the coup were paying close to 35,000 drivers and owners of trucks, buses, and taxis to keep their vehicles off the road. Two taxi drivers told me they were each receiving the equivalent of $3 at the black market rate for every day they were not working, and a group of truck drivers said they received $5 a day, paid in dollar bills. On the basis of this, Allende aides calculated that the 45 day strike cost close to $7 million in payoffs alone. 

It was also an accepted fact that the thousands of Chileans abroad were raising funds and sending in contributions. Jovino Novoa, a conservative lawyer and a member of the Chilean exile community in Buenos Aires said in an interview, "Of course money was sent to Chile. We all did what we could, each according to his capacity." 

This roundup of evidence linking the recent military coup in Chile with the 1964 Brazilian coup is taken from The Washington Post. 

The London News Weekly Latin America reports on developments in Ecuador, Latin America's newest oil producing nation. By mid-1972, the pipeline connecting the rich oil fields of Ecuador's northeastern jungles to the shipping ports on its western shores was completed. This boosted Ecuador to the top of the list of Latin American oil exporting nations, second now only to Venezuela.

Oil, which scarcely one year ago replaced bananas as Ecuador's leading export, is expected to bring a total 1974 revenue of over $700 million. In 1971, oil earnings were only $1 million. With world prices at attractive heights, Ecuador's fledgling state oil corporation obviously wants to get hold of as much oil for free dispersal abroad as it possibly can. At present, only the United States companies of Texaco and Gulf Oil are producing and drilling on any scale in Ecuador. 

No matter how tough and nationalistic the new oil terms might be, Gulf and Texaco seem confident that they can run a very profitable operation. Despite the flood of revenue from its oil bonanza, Ecuador's economic situation has not improved. In fact, quite the opposite has occurred. Ecuador, which continues to be classified as one of Latin America's four least developed nations, now faces an annual rate of inflation of 17%, unprecedented in recent Ecuadorian history.

Ecuador's outdated social structure has virtually prevented the huge inflow of oil money from being readily absorbed. Ecuador's archaic tax system has long been criticized. The collection of taxes has been called abusive and unjust and Ecuador's allocation of tax revenue branded absolutely irrational. 

A small number of people control the majority of Ecuador's wealth. Less than 2% of Ecuador's population has cornered 25% of the country's total wealth. Unequal land distribution, a high illiteracy rate, and a lack of adequate healthcare continue to plague Ecuador's indians who comprise well over half of Ecuador's population. The mal-distribution of wealth is compounded by a sharp fall in agriculture production brought on by the resistance of Ecuador's large landowners to the present regime's haphazard attempts at agrarian reform. 

While it is apparent that the Rodriguez Lara regime would like to control the new oil fortune and further Ecuador's economic development, recent events point toward strife and unrest. An increasing number of strikes and demonstrations staged by students, faculty, and trade unionists are expressions of discontent. It appears that rising expectations have resulted in frustration. This is clearly expressed in an Ecuadorian wall slogan, "Why is there hunger if the oil is ours?" This from Latin America, the British news weekly. 

In a recent article entitled "Central America: Made Martyr by The Big Fruit Company", La Opinión, an Argentine newspaper reports on the US-based Standard Fruit Company. Standard Fruit unilaterally suspended its import of bananas from Honduras in reprisal for an agreement Honduras made establishing an export tax on bananas of $1 per case. According to Standard Fruit, the agreement will bring Honduras unemployment and cause a drop in wages, as well as affect banana production in all of Latin America's other banana-producing nations. The decision, reports La Opinión, was made public by Standard Fruit following an interview which several of the corporation's highest officials had with Honduran President López Arellano. 

Officials spokesmen have stated that Honduras remained firm in defense of its recent agreements, reached collectively with Panama, Nicaragua, Ecuador, Guatemala, Costa Rica, and Colombia. Standard Fruit alleged in a press statement that the rise in the export price of bananas will diminish North American banana consumption, thus making it necessary to adjust the supply in order to compensate for the new situation.

Standard Fruit announced its intention to take such action at a recent meeting of Latin American banana producers held in Honduras. During the meeting, a Standard Fruit official warned all of the various representatives that it would suspend all banana shipments out of Honduras if the $1 tax was agreed upon. The threat, which would hurt, especially Costa Rica, Nicaragua, and Honduras, was ignored by all of the representatives present. 

Following the meeting, a Costa Rican newspaper, Latin, reported on the reaction to Standard Fruits actions by Costa Rican President José Figueres. Figueres labeled Standard Fruit's operations colonialist. The Costa Rican President also said that Standard Fruit was the only foreign fruit company which had refused to pay the $1 export charge. Addressing his country in a national television broadcast, Figueres stated, "It is a typically colonialist attitude and has caused us great difficulty. However, we will not alter our approach and we'll do what must be done." 

Standard Fruit's hardline policy, reports La Opinión, is due to two chief factors. Standard Fruit fears that competitors will move in and capture its market when its prices rise. The company also fears that the banana producers, if not dealt with firmly, will pursue with greater interest their recent tendency towards trade with Socialist nations. 

This report on the banana trade in Central America was taken from the Argentine daily, La Opinión, and the Costa Rican paper, Latin. 

The Christian Science Monitor comments on the recent wave of nationalizations announced by the new government in Venezuela. "We are not in an excessive hurry," says Venezuelan President Carlos Andrés Pérez about putting his country's economy in the hands of Venezuelans. But we cannot hold back a decision, and that decision shows that President Pérez and his new government expect to have huge foreign-owned oil enterprises in Venezuelan hands within two years.

They will begin moving immediately to nationalize the iron mines and steel furnaces of two United States firms, and they have told other foreign investors that they must reduce their ownership of plants, service industries, and other activities to 20% of the facilities within three years. It is too early to assess the full impact of the Venezuelan decisions, says the Christian Science Monitor. 

But they involve billions of dollars worth of foreign investment. The oil industry alone, which is heavily owned by United States Enterprises, is a $5 billion investment. Whereas the iron ore, manufacturing, and service industries represent another $1 billion or more of investment. The action comes as a shock to many a foreign investor in Venezuela's booming economy. It amounts to the most significant and far-reaching nationalization movement in Latin America in a decade.

It clearly came as a surprise to many foreigners, and particularly to North Americans whose oil, mining, and service investments in Venezuela account for nearly 80% of all foreign ownership in South American countries. They had expected the oil nationalization, which under the terms of leases and other concession agreements, would've automatically occurred in 1983. But they had not been prepared for the mining and service industry takeovers announced by President Pérez in a May Day speech and then amplified in subsequent remarks by members of his government. 

In the mining field, the Venezuelan subsidiaries of both the U.S. Steel Corporation and the Bethlehem Steel Corporation are involved. Both have concessions that are due to run out in the year 2000, but President Pérez says, "We are taking them back now." US Steel through its subsidiary, the Orinoco Mining Company, is the larger of the two, with an investment of $330 million. President Pérez said he planned to adhere strictly to the Andean Pact decisions that govern the operations of foreign investments in the Six Nation Andean common market, of which Venezuela is a member.

Pact provisions set up formulas for foreign investment percentages in many industries, including raw material exploitation and certain service and product industries. President Pérez's decision to adhere to these formulas is regarded as a more severe application of the provisions than that taken by other Andean Pact members; Columbia, Ecuador, Peru, Bolivia, and Chile. This comment on Venezuelan nationalization appeared recently in the Christian Science Monitor. 

A more recent declaration by the Venezuelan president was reported by the Caracas daily, El Nacional. President Andrés Pérez announced May 16th, the beginning of the nationalization of oil companies operating in Venezuela. Pérez called May 16th, "One of the major dates in Venezuelan history." And he added that, "Today, Venezuela begins the final stage towards sovereign ownership of its natural resources." He went on to say that a new historical epic has opened for Venezuela, the same age which has begun in Latin America and all of those countries which have been the victims of economic totalitarianism by the developed nations.

President Pérez pointed out that the legitimate rights of the transnational corporations and the United States will be respected in the state takeover. He assured the foreign companies that they could continue their activities without interference until the nationalization process is completed. The President did not specify the date by which the concessions and properties of foreign oil firms will come under state control, although a government spokesman has said that the nationalizations will be completed before the end of the President's five year term. This from El Nacional in Caracas, Venezuela. 

And finally, the British news weekly, Latin America, had this to say about developments in Venezuela. President Pérez's new economic policy based on oil wealth and reflecting a strong nationalist sentiment has delighted the left and has infuriated a large part of the private sector. With his new policy at home and abroad, Pérez has stood recent Venezuelan politics on its head. Remembered during his election campaign as the former tough anti-guerrilla interior minister and seen as a strong friend of foreign business interests, Pérez has now amazed friend and foe alike by announcing a nationalist and progressive program.

Referring to Pérez's plans to increase workers' salaries and reorganize the country's whole financial system, Latin America points out that it is oil that makes all this possible. With estimated oil earnings of well over $15 billion this year, two and a half times as much as last year, Venezuela is in danger of being swamped with money, which it cannot absorb in a hurry.

This would force a currency reevaluation, bringing in its train a flood of cheap foreign imports and a strong disincentive to industrial and agricultural development, not to mention a worsening of the contrast between the rich and the poor. The new economic policy is designed to prevent just this. Instead of squandering money, as in the past, on useless construction works like massive freeways, at least half the earnings from oil are to be transferred to a special domestic development fund. Most of the rest will be used for investment and aid to other Latin American countries. In the next few years, Venezuela is therefore likely to be one of the most influential countries in the continent, concludes Latin America. 

The Christian Science Monitor comments on the recent wave of nationalizations announced by the new government in Venezuela. "We are not in an excessive hurry," says Venezuelan President Carlos Andrés Pérez about putting his country's economy in the hands of Venezuelans. But we cannot hold back a decision, and that decision shows that President Pérez and his new government expect to have huge foreign-owned oil enterprises in Venezuelan hands within two years.

They will begin moving immediately to nationalize the iron mines and steel furnaces of two United States firms, and they have told other foreign investors that they must reduce their ownership of plants, service industries, and other activities to 20% of the facilities within three years. It is too early to assess the full impact of the Venezuelan decisions, says the Christian Science Monitor. 

But they involve billions of dollars worth of foreign investment. The oil industry alone, which is heavily owned by United States Enterprises, is a $5 billion investment. Whereas the iron ore, manufacturing, and service industries represent another $1 billion or more of investment. The action comes as a shock to many a foreign investor in Venezuela's booming economy. It amounts to the most significant and far-reaching nationalization movement in Latin America in a decade.

It clearly came as a surprise to many foreigners, and particularly to North Americans whose oil, mining, and service investments in Venezuela account for nearly 80% of all foreign ownership in South American countries. They had expected the oil nationalization, which under the terms of leases and other concession agreements, would've automatically occurred in 1983. But they had not been prepared for the mining and service industry takeovers announced by President Pérez in a May Day speech and then amplified in subsequent remarks by members of his government. 

In the mining field, the Venezuelan subsidiaries of both the U.S. Steel Corporation and the Bethlehem Steel Corporation are involved. Both have concessions that are due to run out in the year 2000, but President Pérez says, "We are taking them back now." US Steel through its subsidiary, the Orinoco Mining Company, is the larger of the two, with an investment of $330 million. President Pérez said he planned to adhere strictly to the Andean Pact decisions that govern the operations of foreign investments in the Six Nation Andean common market, of which Venezuela is a member.

Pact provisions set up formulas for foreign investment percentages in many industries, including raw material exploitation and certain service and product industries. President Pérez's decision to adhere to these formulas is regarded as a more severe application of the provisions than that taken by other Andean Pact members; Columbia, Ecuador, Peru, Bolivia, and Chile. This comment on Venezuelan nationalization appeared recently in the Christian Science Monitor. 

A more recent declaration by the Venezuelan president was reported by the Caracas daily, El Nacional. President Andrés Pérez announced May 16th, the beginning of the nationalization of oil companies operating in Venezuela. Pérez called May 16th, "One of the major dates in Venezuelan history." And he added that, "Today, Venezuela begins the final stage towards sovereign ownership of its natural resources." He went on to say that a new historical epic has opened for Venezuela, the same age which has begun in Latin America and all of those countries which have been the victims of economic totalitarianism by the developed nations.

President Pérez pointed out that the legitimate rights of the transnational corporations and the United States will be respected in the state takeover. He assured the foreign companies that they could continue their activities without interference until the nationalization process is completed. The President did not specify the date by which the concessions and properties of foreign oil firms will come under state control, although a government spokesman has said that the nationalizations will be completed before the end of the President's five year term. This from El Nacional in Caracas, Venezuela. 

And finally, the British news weekly, Latin America, had this to say about developments in Venezuela. President Pérez's new economic policy based on oil wealth and reflecting a strong nationalist sentiment has delighted the left and has infuriated a large part of the private sector. With his new policy at home and abroad, Pérez has stood recent Venezuelan politics on its head. Remembered during his election campaign as the former tough anti-guerrilla interior minister and seen as a strong friend of foreign business interests, Pérez has now amazed friend and foe alike by announcing a nationalist and progressive program.

Referring to Pérez's plans to increase workers' salaries and reorganize the country's whole financial system, Latin America points out that it is oil that makes all this possible. With estimated oil earnings of well over $15 billion this year, two and a half times as much as last year, Venezuela is in danger of being swamped with money, which it cannot absorb in a hurry.

This would force a currency reevaluation, bringing in its train a flood of cheap foreign imports and a strong disincentive to industrial and agricultural development, not to mention a worsening of the contrast between the rich and the poor. The new economic policy is designed to prevent just this. Instead of squandering money, as in the past, on useless construction works like massive freeways, at least half the earnings from oil are to be transferred to a special domestic development fund. Most of the rest will be used for investment and aid to other Latin American countries. In the next few years, Venezuela is therefore likely to be one of the most influential countries in the continent, concludes Latin America.