THE SOVIETS ABANDON ALLENDE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900030108-6
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 6
• Document Creation Date: December 19, 2016
• Document Release Date: August 18, 2005
• Sequence Number: 108
• Publication Date: September 1, 1974
• Content Type: REPORT

STAT
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C"I A/oE/3.~/7i
The Soviets
Abandon Allende
During Salvador Allende's last year as President,
the Soviet Union failed to provide the massive financial
assistance so desperately needed to bolster Chile's
staggering economy. In December 1972, Allende traveled
to Moscow in search of untied convertible currency credits
or commodity assistance to relieve Chile's balance of
payments crisis. Instead Moscow granted more long-term
credits, largely to finance the import of Soviet machinery
and equipment, and offered advice to set Chile's economic
house in order.
During his first two years in office, Allende frittered
$245 million trade surplus in 1969, the 1972 trade deficit
ports, and falling export earnings. In contrast to the
Mounting trade deficits reflected both increasing im-
$289 mill~pn in December 1972.
September 1970, the month Allende was elected, to minus
foreign exchange reserves to plummet from $378 million in
deficits and large capital outflows caused Chile's net
away the inheritance from the Frei years. Continuing trade
reached $427 million. Much of the increase in imports was
due to the massive foodstuff purchases abroad, as food imports
tripled during 1970-72 to $400 million. Agricultural pro-
duction fell more than 20% during 1972 and 1973; while
Allende's policies encouraged growing demand.
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With Chile's poor international. credit rating and
its lack of convertible currency, Allende turned to the
Soviet Union for assistance in obtaining desperately
needed foodstuffs, petroleum, spare parts and other
commodities. In the face of these needs, Moscow's response
was clearly inadeauate?. During 1971-73, the Soviet Union
authorized short-term credits totaling $98.5 million and
long-term supplier's credits amounting to $162.0 million,
but Chile was able to utilize little of either line of
credit. Moscow may have failed to grant larger credits
because it was already supporting Cuba at great cost and
.agricultural difficulties at home were causing the Soviet
union to import substantial quantities of wheat
from the United States.
During the first eight months of 1973 the Soviet Union
refused to grant additional credits, despite continuing
deterioration in the economy. Agricultural production fell
from the 1972 low, necessitating food imports of $650 million.
Industrial output continued its decline. Copper production,
which accounted for most of Chile's foreign exchange
earnings,-also began to drop.
CIA/OER
25 September 1974
0F; !CiLESS CAL Y
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Table 1
Imports of Foodstuffs
1` 1970
128
192
Millions US $
1971 1972 1973
Table 2
Trade Balance
Millions us $
1969
1970
1971
1972
1973
Imports (c.i.f.)
-927
-1,001
-1,085
-1,285
-1,447
Exports (f.o.b.)
1,172
1,135
984
858
1,191
Trade balance
245
134
-101
-427
-256
CIA/OER
25 September 1974
OFFF1Cj,?L USJE ONLY
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OFF1C ~~, USE 0NILY
Net Foreign Exchange
Millions US $
December September December December December
1969 1970 1970 1971 1972
219.8 377.6 343.5 39 -289
Annual Percentage Increase in Cost of Living
(December to December)
1969 1970 1971 1972 1973 a/
29.3 34.9 22.1 163.4 710.0
a. Computed on a new index.
Percentage Changes in Gross Domestic Product
a. January-September
1969
1970
1971
1972
1973 a/
3.3
3.7
8.3
1.6
-9.3
CIA/OER
25 September 1974
OFFICIAL USE mu, y
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