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%chile.rep[s90,jmc]	Reprint of Moscow News article on Chile

This article is copied from the 1990 April 1-8 issue of Moscow
News.  This weekly is about the most non-communist offically
supported publication in the Soviet Union.

(For those who don't remember Allende was elected President in
Chile by a divided Congress in 1968 and overthrown in a military
coup by Pinochet in 1973.  Pinochet has just been replaced by an
elected president but retains some power over the military.

Remember that the word "us" here refers to the Soviet Union.)

I have some comments at the end.

		PINOCHETS AND US

	Timely and untimely thoughts

		by Prof. Yuri Korolyov

Together with other foreign experts I was employed at the Ministry
of the Economy in the government of Allende.  The famous reformer
recruited quite a lot of them.

My story is difficult to tell.  But I feel I must do that because
some of the former illusions should be refuted and our own mistakes
admitted.

Allende's vision was the well-tried one of a powerful state geared
to workers' social needs, the union of left-wing parties,
democratism interpreted as equal representation of social organizations
and workers' associations.  A powerful state, trade unions as the
main subject and object of social policy, and unity of revolutionary
democracy constituted the main components of Chilean socialism.
To put in a nutshell the buzz words were statism, syndicalism
and democracy.

Some features of the Chilean experiment proved attractive in
comparison to the blind alley in which the USSR and other
socialist countries were heading down.  State monopolism
in the economy was opposed by the idea of a mixed economy.
Chile's trade unions and other mass organizations of
working people remained fully independent.  The Communist
Party was just another party in a coalition where plurality
of views and positions on all matters prevailed.

The rallying call was national revival opposed to imperialism,
understood as a system of international organization of
production.  Therein, I think, was concealed the main threat.

The project of nationally oriented development which entailed
the nationalization of a number of bigger foreign companies
ran clearly against the world trend to make economies
transnational, to integreate te most dynamic and technologically
advanced sectors of many countries into a single system.

The attempt of this relatively small state, which possesses
strategic resources, to oppose this process proved ruinous
to its own economy.  In fact as the government nationalized
foreign firms it proved unable to sustain its operation
because it immediately lost its markets.  Neither was it
able to give new jobs to those who lost them, nor to
ensure the inflow of currency formerly derived from the
taxation on company incomes.  In the absence of hard
currency it couldn't buy new technology.

By raising wages and keeping consumer prices stable, by
creating more jobs in the state-run sector to offset
the growing industrial unemployment, the governmet
stimulated the turnover of capital on the national
market.  In the initial stage it encouraged small and
medium-sized businesses.  But the second year of this
programme already saw a rapidly growing black market
of hard currency and consumer shortages.  Inflation
started to accelerate.  The government project in the
economy was limited to opposing the growing state
monopolism to all other forms of ownership and
organization of production and the encouragement
of a harmonious mixture of various types of
ownership.   All these forms opposed each other
rather than interacting.

In the social sphere workers' unions opposed organizations
of industrialists and associations of professionals, etc.
In politics pluralism was recognized only among the left-wing
parties, and opposed otherwise.  Signs of impending
civil war became visible.  The national socialist project
in the prevailing situation was proving untenable.
Nonetheless taking a different course was out of the
question for the political leaders, who believed it would
be siding with the enemy's imperialist policy.

That impasse brought forth Pinochet ... .

Oncan often hear: what do the military know about economics?
They at best care for the good of their armed forces and
their personnel.  What happened in Chile seemed to confirm
this idea, but then ... .

In simple terms, coming to power, the general wanted his army
to be equipped with the latest computerized and electronic
weaponry.  He later found out that the country's industry
was not equipped to manufacture it.  Then Pinochet turned to
the school of economics in Chicago to hire young and gifted
scientists to head the country's economy and finances.
In a decade's time the weaponry was finally there.  But
together with the well equipped army an entirely new economy
happened to take shape.  It didn't need the dictator at all.
He could only harm this complex and delicate structure
which he was able to regard as the only tool to deliver the
weaponry.  As it happens, weaponry that was no longer needed.
the new government urgently occupied itself with the
conversion of military production.  The process has been
more successful than in some countries closer to our own
borders.

Chile's economic growth in recent four-five years has been
stable at 5-6 per cent.  In 1989 the figure was as high as
10 per cent.  The new government has plans to sharply
slash defence spending which constitutes 7 per cent of
the current budget.  It is also determined to considerably
increase funds for public education which even under
present circumstances exceed defence spending, and are
several times more than the shameful 2.5 per cent in
our own budget.

Chile is rated as a strong competitor on the world market.
International monetary organizations regard it as one
of the most reliable partners.  Chle is an industrial
country.  Its agricultural production is less than
20 per cent of its GNP; at the same time it is one of
the major suppliers of fruit on the world market.  Each
industrial workder turns out yearly products worth more
than 10,000 dollars which is close to the average of the
developed countries and four times the figure of the USSR.
Thus, as regards the economy, the new government inherits
a good thing.

Yes, the overdue reforms in Chile were carried through under
an authoritarian regime.  I'm of course far from thinking that
economic reforms can only be effected through violence.
Democratic reforms are preferable, but carrying through
reforms overdue in this country can't be done without
sacrifice: you can't buy the latest computer selling
your obsolete one.  If there is not enough money, it should
be accumulated.  This can be done while the people are
still prepared to sacrifice, while they still have faith
in ther leaders, and while they are prepared to shoulder
an additional burden in the belief that things will be
better tomorrow.  The same goal can be achieved gradually
and without great sacrifice, but for that a timely start
should be made and that can only be done by a wise
government.  If society and its leaders aren't up to
either course, strong men appear on the scene in a
variety of guises as they did throughout centuries,
to flog their people into the future.

*****
Comments by J. McCarthy
On a superficial reading of this article, its main point seemed
to be that Prof. Korolyov, who observed the Allende regime from
the vantage point of a Soviet adviser, agreed with some of the
American conservative views about the reasons for its failure.

When I typed it in to the computer, I got a different and rather
spooky view of it.  To be sent to Chile as an adviser, Korolyov
would have had to be close to the Party leadership or close to
the KGB, perhaps even a member of the KGB.  I then assigned
a greater significance to the description of the Pinochet regime.
This description of its main objectives as one of developing
the capability of making modern military equipment struck me
as rather fanciful.  Can Chile make military electronics even
today?  Anyway Korolyov was presumably booted out of Chile
when Pinochet took over, so how would he know much about what
went on afterwards except what he could read in the Western
press?

Then what should have been an obvious interpretation struck me.
Korolyov was saying that if Soviet politicians didn't get
their economic act together, there would be a military regime
in the Soviet Union that would enforce economic reforms analogous
to Pinochet's and with prospects of a similar success.
Depending on what Prof. Korolyov's current connections are,
the article could even be taken as advocating a military
or KGB government for the Soviet Union, or at least trying
to soften up pulblic opinion for it.

His use of he word ``authoritarian'' would suggest he is hinting
that Western countries would or should look benevolently on such
a regime as not totalitarian.  His emphasis of the point that
Pinochet's military got modern weapons through the economic
reforms, suggests that the Soviet military might similarly
achieve some of their ambitions.

His remark about how the Chilean military budget is now being
reduced in favor of education suggests to the Soviet public
that everything will work out for the good in the end.

If such an article appeared five years ago, one could infer
that it was a trial balloon on the part of the Party leadership.
Too many different opinions are being expressed in the Soviet
press today for that to be an immediate inference.

The most relevant question is: What are Prof. Korolyov's
present connections?

It seems to me that if this kind of thing is real, the West
should let it be known that it would not look with favor on a
Soviet military regime, no matter how many analogies with
Pinochet were made.  Pinochet's military ambitions, if any, had
to be limited far below a level that would constitute a threat to
world peace.  This is not true of the Soviet Union.

Is this reading too much into the reminiscences of an old
Chile hand?