Pinochet’s Echoes Today


January 9th, 2009 Posted in Books, Chile, Democracy, Economy, Justice |
World Policy Institute

Ian Williams

September 11 is a day that will live in infamy: a terrorist attack on a landmark building whose aftermath left more than 3,000 dead. Yes, Chileans will always remember the coup of September 11, 1973, when their military commanders—with tacit, and indeed active, support from Washington—bombed their own presidential palace, setting up a repressive regime that imprisoned, tortured, and executed supporters of the deposed government while driving untold more into exile.

But while Osama bin Laden is being hounded around the North West Frontier, one of the architects of the Chilean coup, Henry Kissinger, is a revered advisor to governments; the other, Augusto Pinochet, died without facing trial for his involvement.

“He had taken full advantage of the rights guaranteed to him by due process—rights that his victims were denied—and postponed his day of reckoning indefinitely.” On the day he died, “My feelings of hate toward Pinochet and what he represented had waned through the years; instead I felt a serene contempt for the man,” concludes Heraldo Muñoz in The Dictator’s Shadow, a highly readable, fascinating, and revelatory account of the General’s career.

Muñoz, now Chile’s ambassador to the United Nations and one of those who had to flee his country in 1973, has written a remarkably restrained memoir assessing just how big a shadow Pinochet cast, both globally and historically.

In fact, Pinochet comes across almost as a Zelig-like figure crossed with his earlier Spanish counterpart, Francisco Franco. Muñoz points out that as with many other aspects credited to him, Pinochet only adopted Chicago School economics under pressure from Admiral José Toribio Merino. Indeed, it wasn’t only economics the General bought ready-made off the shelf. A gray military bureaucrat who prospered by hanging on, Pinochet joined the coup against the president (who had appointed him commander-in-chief, mind you) mostly because his subordinates told him they were going ahead anyway. He adopted the anticommunist ideology and rhetoric almost retrospectively.

Muñoz stresses that the dictator stood out from other Latin America caudillos largely because he broke a uniquely long tradition (for Latin America) of democracy in Chile, but also because of his economic policies. Furthering this point, Muñoz writes: “In contrast to the disastrous record of most Latin American dictators, Pinochet would have had far fewer defenders if it had not been for his regime’s economic reforms.”

Could Chile have reached its present level of prosperity without the dictatorship? There is credit given in The Dictator’s Shadow for some of the economic reforms but Muñoz dismisses totally the idea that the dictatorship, the killings, and the repression were necessary—or even helpful—for the implementation of fiscal policies.

To cope with the initial recession that the Chilean shock treatment induced (and with ironic parallels to the current Bush administration policy), “Pinochet had to nationalize banks and industries on a scale unimagined by the Allende government.” The irony continues: it was the alleged socialistic trends of the Allende government that were the excuse for the coup in the first place.

Muñoz is emphatic that while some of the reforms had positive effects in weaning the country off its overdependence on copper and in encouraging a more entrepreneurial spirit, most economic growth has been made since democracy’s return, which has provided Chile a growth rate and prosperity that is in stark contrast, for example, with neighboring Argentina.

One of the reasons for this, Muñoz explains, is that Pinochet united the previously dispersed factions of Chilean politics in a renewed appreciation of both democracy and rule of law. While on the day of the coup Muñoz was picking up the pathetic armory of his Socialist Party unit, he eventually helped form the Socialist Party faction that tried to work within the realities of the situation rather than indulge in revolutionary gestures. They reached out to the Christian Democrats, among others, and campaigned against the referendum which would cement Pinochet’s rule.

Even though he correctly ascribes much of the blame for the coup’s chaos to Washington and its agents who worked to destabilize the country, Muñoz also accepts some of the responsibility for the growing schism in Chilean society—due in large part to the radical elements of the Socialist Party. Muñoz’s story of his involvement in the small jeans-making workshop (whose laborers were urged into reappropriating it for themselves) is emblematic. After the coup it was returned to its owner—only to close completely under the pressure of Friedmanite “reforms.”

While the tale of Pinochet, the coup, and the involvement of the United States may seem like ancient history to many younger readers, what makes The Dictator’s Shadow an engaging read is the discovery by Muñoz and his compatriots of the seductions of democracy that paved the way for what is now a prosperous Northern European-style socially democratic state at the Southern tip of the Antipodes.

Modern Chile is a much more successful model for the world than Pinochet’s military regime and its muddled laissez-faire economics (the same financial thinking that is widely blamed for the current global crisis). Insofar as there are lessons to be learned regarding prosecuting former heads of state for crimes against humanity, for Pinochet himself, they come sadly too late.

Driving Performance

- a conservative conspiracy in Detroit
My latest "Speculator Column" from
Investor Relations magazine

The New Year is not just a time for making Resolutions on the lines "Aggh, I'll never mix rum and champagne again." It is also a time to look back so that we can inform our future through the lessons of the past.

As the old year shuffled off two of the free market's biggest proponents resurfaced when British Prime Minister Margaret Thatcher praised her recently dead chum Augusto Pinochet, self appointed President of Chile.

These two were of course the grand panjandrums of privatization, Pinochet famously privatized the Chilean pension system and Thatcher, in the oft-repeated erroneous words of the New York Times, "privatized the loss making state industries."
But Pinochet's military and police resolutely refused to have their own pension schemes privatized, which, since they were running the country which could have been taken as a wink and nudge by the wise. And most of the state owned industries that Thatcher sold were making huge profits, which is why everyone was so eager to buy them. In those days, BP, originally nationalized by that firebrand socialist Winston Churchill, not only made big money for the British Treasury, it did so without blowing up Texas and leaking on Alaska.

The afterlives of the biggest projects of Thatcher and Pinochet also returned for a quick haunt at the end of the year.

First, the New York Times had an editorial warning that the Chile's pension schemes were facing disaster, because half or more of them could not promise their prospective pensioners even the minimum living standards.

Across the Atlantic, the UK's staunchly conservative Daily Telegraph lamented how business investment in Britain was at risk because of the poor state of British utilities: electricity, gas, telephone and water connections were inefficient, businessmen complained. The Telegraph did not mention that these were the first industries that Mrs T had privatized, nor that they were now celebrating their first quarter century of profit-taking lack of infrastructural investment.

But she was never the free market ideologue that was claimed. Rather she was a ruthless and accomplished politician who was trying to lock in her party's victory. By selling deeply discounted shares in state industries to consumers, and selling off municipal housing to its tenants, she raised a pot of capital that let her hold off on tax increases-and, she hoped, created a whole constituency of anti-socialist working class voters.

Selling off the state industries was a move to break the power of the unions, because, not only were they a source of opposition, which she never took kindly to, but because they bankrolled the Labour Party, which she wanted to cripple.

Of course, in the US, the strongest unions in the private sector are the autoworkers, who fund the Democrats. One can only speculate, but is it possible that long term GOP coddling of the big three in Detroit has a similar agenda inspired by Thatcher's example?

By giving huge tax breaks to Detroit to build gas-guzzling SUV's, they have been locked immovably into heavy capital investment in truck-beds that have all the commercial future of a dinosaur squinting at a plummeting meteor. Any analyst can see where fuel prices were going, but Congress has held back on any stringent MPG restrictions. Foreign car makers, where the unions do not have a stranglehold, are coming into the US and making smaller, more efficient and sellable vehicles.

Could the misguiding coddling of Detroit be intended to lead to the US auto industry to auto destruct, taking with it the UAW funding for the Democrats?

Not for reproduction without permission from Cross Border Publications