Wednesday, September 30, 2009

Ron Paul explains why the Fed must end

Impressive: a US Congressman sticks his neck out and claims the need to put an end to the Fed. As everybody knows (well, maybe not everybody but certainly many people), money is created out of debt, reason why when Central Banks produce the money and borrow it to governments, make government increase their debt towards banks.

Our monetary system is created in a way that makes public debt natural and impossible to pay off. If governments are in debt, populations are in debt and, as we well know, banks live out of debt, through interests and always higher rates.

I think this video is worth watching and the subject needs to be analysed in greater depth.

Friday, September 11, 2009

September 11th, 1973: a day to remember

Today media all over the world are celebrating the anniversary of 9/11. Since 2001 the 11th of September is a day everybody remembers. However, I think it should have been remembered well before the attacks to the Twin Towers, because on 9/11 1973 the United States backed, organized and financed the military coup that established one of the bloodiest dictatorships of modern history.

Democratically elected Salvador Allende was ousted and replaced by General Augusto Pinochet, “for the sake of democracy,” according to one of the world’s worst war criminals, Henry Kissinger (awarded with the Nobel Peace Prize, in an amazing show of hypocrisy).

The Chilean coup d’état of 1973 is deemed as one of the most violent military interventions in Latin America. On the 16th of October 1998 Scotland Yard put under arrest Pinochet, who was recovering from back surgery in a private clinic in London, for crimes against humanity. After having indicted and interrogated him, the Chilean courts decided not to put him on trial for the atrocities committed during his dictatorship.

The years between Allende’s involvement in politics and his accession to power are emblematically intertwined with the hottest moments of the Cold War. In this framework, Socialist Salvador Allende became President of Chile, with the ambitious goal, according to the US, to challenge American imperialism and cooperate with the other Socialist and Communist Parties across the continents. The United States could not afford to see their leadership undermined within their same hemisphere and so soon after the Cuban Revolution.

On September the 4th, 1970, Allende received the largest number of votes in the Chilean elections. Since no candidate had reached the absolute majority, the Congress, on the 24th of October, was to vote and choose the President between the two candidates that obtained the highest number of votes. On the 16th of September, US secretary of the State, Henry Kissinger, started pressuring publicly the Chilean Congress to influence its decision: "I have yet to meet somebody who firmly believes that if Allende wins there is likely to be another free election in Chile. […] In a major Latin American country you would have a Communist government, joining, for example, Argentina, which is already deeply divided, along a long frontier, joining Peru, which has already been heading in directions that have been difficult to deal with, and joining Bolivia, which has also gone in a more leftist, anti-U.S. direction."[1]

These comments become more meaningful and sound as a threat if we consider that already in June before the elections the White House was planning to take action in case of Allende’s victory, that the CIA was given 400,000 dollars to be used to oppose Allende candidacy and that in September the 18th Kissinger suggested that other 350,000 dollars would be given to the CIA to corrupt the members of the Congress in favour of Jorge Alessandri, the other candidate running against Allende who got the second highest number of votes. Moreover, after Allende was confirmed President by the Congress, the CIA was officially entitled to dispose of eight million dollars to “destabilize” the Chilean government in the years 1971-1973. [2]

The same Kissinger, in his memoirs, reports how Edward Korry, U.S. Ambassador in Chile at the time, sees the victory of the socialist Allende: ‘It will have the most profound effect on Latin America and beyond; we have suffered a grievous defeat; the consequences will be domestic and international.’[3] In Kissinger’s own terms, “we were persuaded that it would soon be inciting anti-American policies, attacking hemisphere solidarity, making common cause with Cuba, and sooner or later establishing close relations with the Soviet Union.” [4] National interest and containment of communist proliferation were, then as well as now, the usual US imperialist excuses to invade other countries following the Roman principle of divide et impera. The worst case scenario had come: Allende alone got 36.2 percent of the popular vote, leading the US to fear an ‘irreversible’ change in the Chilean politics.

The US (rightly) feared that Salvador Allende was willing to “destroy the present system” and start “revolutionary changes” anti-imperialist and anti-America, condemning the Vietnam War and expressing solidarity towards the Cuban Revolution. As usual when it comes to losing ground and territory, the US “exceptional” zeal to protect democracy took over: they had to save Chilean people from Allende dictatorship and give them back their right to live in a democratic country. With Pinochet (sic!).

Nixon and Kissinger were witnessing their worst nightmare come true: Chile was not just an island like Cuba, it was a continental country, geographically and culturally close to Peru, Argentina and Bolivia, with the very realistic risk of a greater communist alliance, not only in South and Central America but also among the Western European Communist parties.

American academic and political mainstream opinionists maintained of course that the fall of Allende’s government was due to his incompetence, arguing that policies of income and resources redistribution and the promotion of rapid but substantial changes were to fail because impracticable. Therefore, the socialist administration itself created the reasons for the coup, making it unavoidable.

James Petras and Morris Morley highlighted how Chile was actually in debt “prior” to Allende’s arrival to power and the debts, mostly contracted to banks directly under the US influence, came due during his administration. The economic pressure carried out by the United States was entirely aimed at undermining the socialist government and the US played an important and direct role in overthrowing Allende’s Government.

To understand the responsibility of the American administration over the coup against the Chilean President, it is important to consider how and to what extent Chilean economic and political system were subject to US influence. The financial dependence of Chile increased substantially during the decade preceding Allende’s election and during his administration remained very high. External debts became therefore political weapons and “the debt-basis of U.S.-Chilean relationships became the cause and consequence of the ‘porous’ nature of Chilean economic, social and military institutions”. [5]

In 2004, Peter Kornbluh, Chile Documentation Project director at the National Security Archive, after collecting all secret dossiers declassified during the Clinton White House, published the controversial book The Pinochet File: A Declassified Dossier On Atrocity And Accountability. As he reports, just before the confirmation by the Congress of Allende’s victory, the CIA, the State and the Defense Department analysts carried out an investigation about the implications for the United States. The document, known as National Security Study Memorandum 97, drew the conclusions that the U.S. did not have any “vital national interest within Chile” but only economic interests. Despite many officials tried to discourage the Nixon-Kissinger covert actions with arguments such as the danger of instigating a civil war in Chile and the bad reputation of the United States all over South America and the world, the secret operations continued and brought to the military coup. Therefore, American main concern was the good image that Allende could give of himself and his success to the world. [6]

American efforts in providing financial and strategic help to the non-socialist candidates ended in a substantial failure and Allende’s election placed the Chilean case right at the top of the American political agenda. The State Department tried to influence Christian Democrats and parliamentarians to vote against the confirmation of Allende, the International Telephone and Telegraph Corporation suggested aggressive actions to be taken by the U.S. government, offered funds to the CIA and pressured the Ambassador in Chile at the time favoring all possible ways towards an actual and urgent overthrow. All attempts to prevent Allende from taking office had failed because, despite the CIA activity, the Chilean military was not well equipped for organizing a coup.

The Nixon administration’s response to Allende's victory was immediately one of hostility, with the organization of the so-called ‘Forty Committee’, to discuss the possible aftermath of the Chilean electoral results in relation to US policy and to plan appropriate reactions. The US Ambassador in Chile at the time, Edward Korry, defined Allende’s election “an irreversible political structure”, [7] with the danger that after the instauration of the socialist regime, the country would have entered a non-democratic phase without the possibility of free elections while Allende was in power.


Once the Congress had confirmed the results of the elections and Allende took office, the CIA started encouraging a military coup within the Chilean armed forces as the only alternative possible. The strategy that would have brought to the overthrow of Allende government consisted in the collaboration between Kissinger, the CIA and ITT, and consisted in increasing external economic pressures, discouraging other countries to invest in Chile and denying further credit. [8] They created a true “economic strangulation and diplomatic isolation”. [9]

Also the National Security Council strictly collaborated with many large US corporations with the same objective to undermine Allende’s presidency. As Petras and Morley put it, “through their combined efforts they determined the closure of vital financial and economic resources necessary to sustain Chile’s dependent economy”. As the socialist administration managed to increase in popularity and its level of competition, the United States felt threatened and thought it was essential to “promote strict and direct political control through a dependent military régime”.[10]


With the coup, the United States eliminated the threat to their hegemony in Latin America and the establishment of a ‘client regime’ made it possible the enhancement of a dialogue between the United States and Chile. Despite the lengthy process of the pressure by the American administrations in influencing Chilean economic and political life, with the election of Salvador Allende Chile became the first Latin American country to have a socialist president nominated after free elections. And, even harder to accept and difficult to explain by Nixon entourage, Allende was the first socialist parliamentarian democratically elected in the Western Hemisphere, where only capitalist societies were seen as free and democratic.


The dramatic end of Allende’s government shocked the world and raised universal humanitarian issues, such as how and to what extent the United States have the right to exercise their power in other countries’ domestic politics. It’s worth considering the Chilean coup for its topicality, as the American people and the international community stared at the launch of the war in Iraq, war that present many similarities with 1973 coup: preemptive strikes, regime change, unilateral aggression, international terrorism, political assassination, sovereignty, and the death of innocents.


[1] As reprinted in Multinational Corporations and United States Foreign Policy, Hearings before the Subcommittee on Multinational Corporations of the Committee on Foreign Relations, United States Senate, Ninety-Third Congress, Washington, GPO, 1973, Part 2, pp. 542-3, as reported in Fagen, Richard R., ‘The United States and Chile: Roots and Branches’, Foreign Affairs, Vol. 53, No. 2, January 1975, p. 297

[2] Fagen, Richard R., ‘The United States and Chile: Roots and Branches’, Foreign Affairs, Vol. 53, No. 2, January 1975, p. 298

[3] Kissinger, Henry, White House Years, Phoenix Press, 2000, p. 653

[4] Ibid., p. 654

[5] Petras, James and Morley, Morris, How Allende Fell. A Study in U.S.-Chilean Relations, Bertrand Russell Peace Foundation Ltd, 1974, pp. 8-13

[6] Kornbluh, Peter, The Pinochet File: A Declassified Dossier On Atrocity And Accountability, New Press, New York, 2004, p. 79

[7] U.S. Congress, Senate, Committee on Foreign Relations, Subcommittee on Multinational Corporations, Multinational Corporations and United States Foreign Policy, Part I, pp. 291-292, as reported in Petras and Morley, op. cit., 1974, p. 30

[8] Petras and Morley, op. cit., pp. 33-35

[9] Kornbluh, op. cit., p. 87

[10] Petras and Morley, op. cit., pp. 42-57
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