ITT in Chile

September 25, 2007

In a memo dated September 14, J.D. Neal, an
ITT operative in Chile, wrote that he had spoken
with "Pete" Vaky, the State Department's Latin
American advisor to Henry Kissinger: "I told him
of Mr. Geneen's deep concern about the Chile
situation, not only from the standpoint of our
heavy investment, but also because of the threat
to the entire hemisphere." The threat to its
interests explains in a nutshell why ITT worked
so hard in the period between September 4 and
November 4 to prevent the Allende government
from taking power in Chile.
ITT had a great deal to lose in Chile. Its
holdings consisted of six affiliates employing
about 8,000 workers and worth around $200 mill-
ion. It operated the Chilean Telephone Company
(one of ITT's biggest earners abroad), had
investments in telephone equipment, assembling
and manufacturing, directory printing and
international communications, and operated
hotels. Among foreign investors in Chile, only
the copper holdings of Anaconda and Kennecott
exceeded the worth of ITT's Chilean subsidiaries.
In 1969, the Frei administration agreed that
the telephone company be guaranteed a minimum
annual profit of 10 percent. Profits for ITT
have further been augmented by special foreign
exchange arrangements for the communications
monopolies in Chile.
The memos below illustrate how far ITT was
willing to go to keep these investments; and
reveal the close ties among ITT executives and
the U.S. government, including the Central
Intelligence Agency (referred to as the McLean
Agency in the documents), and between ITT and
the Chilean Right. ITT had access to the
centers of Chilean domestic power as well,
having recruited prominent Chileans through
career and investment ties.
The memos expose ITT as a corporate nation
on which the sun never sets. As Jack Anderson
summarized, "ITT operates its own worldwide
foreign policy unit, foreign intelligence mach-
inery, counterintelligence apparatus, communi-
cations network, classification system and air-
liner fleet." With total assets equal to the
combined GNP's of Paraguay, Guatemala, Costa '
Rica, Haiti, Bolivia and Chile, ITT can weild
its power almost at will.
Although the memos indicate that the ITT
maneuverings failed, we know that in the
one and one half years that have passed since
the Unidad Popular government assumed power,
the Right, aided by the U.S. government and
U.S. business interests has continued to engage
in counter-revolutionary activity against Allende.
This activity has taken many forms, including
assasination attempts against Allende, outright,
but abortive military coups, manipulation of food
and other resources to exacerbate scarcities and
create economic chaos, and, of course, the
withholding of aid and loans as a "big stick"
to whip the government in line.
All of these tactics were suggested in the
memos printed below. Why should we believe that
ITT gave up on overthrowing Allende as early
as November, 1970?
ITT has struggled for a year to wring from
the UP a generous compensation for its interests
in the Chilean Telephone Company (CHITELCO),
which the Allende government earmarked for
expropriation immediately upon its inauguration.
CHITELCO was ITT's most remunerative Chilean
asset, with sales in 1968 of $60.16 million.
That same year, ITT had contracted to under-
take a four year $140 million expansion program.
for CHITELCO. Throughout the first part of
1971, ITT bickered over the terms of the
expropriation, and finally, on September 30,
1971, the government took over operation of
CHITELCO, claiming its services were "highly
Since then, ITT and the UP have continued
to negotiate over how much the government should
pay for ITT's 70% share in Chitelco. ITT
valued the company at $153 million, but the
government claimed it was only worth $24 mill-
ion. Based on its past experience in other
countries, ITT had every reason to believe that
it would be reimbursed. In the past three years,
the governments of Peru, Ecuador and Brazil have
all "nationalized" the ITT-owned telephone
companies in their countries on terms extremely
favorable to ITT.
The memoranda printed below may destroy ITT's
chances for compensation from the Allende
government and may lead to further nationaliza-
tion of ITT properties in Chile. In order to
expropriate a corporation, the Chilean Congress
must bass a constitutional amendment in each
case. Presumably, these documents are giving
the government more fuel in its effort to regain
control of Chile's industries from the North
American investors. As nationalism grows in
Latin America, the threat to U.S. corporations
abroad also grows. As the documents make clear,
U.S. corporations are urging the U.S. government
to take a firm stand against "unfriendly" acts
of expropriation by Latin American governments,
and are prepared to resist this trend by active-
ly interferring in the internal affairs of
other nations to safeguard their interests.
These memos illustrate the case of ITT in
Chile, an example that is all too common
in Latin America.

Tags: ITT, Chile, Salvador Allende, expropriation, Imperialism

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