The Price of Defying the Power Brokers

In 1972, Allende spoke at the United Nations to denounce the growing unaccountability of Western multinationals around the globe. Allende told the UN:

We are faced by a direct confrontation between the large transnational corporations and the states. The corporations are interfering in the fundamental political, economic and military decisions of the states. The corporations are global organizations that do not depend on any state and whose activities are not controlled by, nor are they accountable to any parliament or any other institution representative of the collective interest. . . . The large transnational firms are prejudicial to the genuine interests of the developing countries and their dominating and uncontrolled action is also carried out in the industrialized countries, where they are based.

Ottawa was hostile to Allende’s socialist program from the start. In 1964, Eduardo Frei defeated Allende in presidential elections. Worried about growing support for socialism, Ottawa allocated $10 million annually in development loans to support Chile under Frei’s leadership, marking its first aid to a South American country.

In spite of such interference, Allende was elected to office in 1970, and extended an invitation to Trudeau to visit Santiago. Despite Trudeau’s public gestures of goodwill, his diplomatic visit was canceled behind closed doors. The trip was kiboshed in the interest of not stepping on the toes of business interests and for “fear of alienating rightist elements in Chile and elsewhere.”

Export Development Canada (EDC) also refused to finance Canadian exports to Chile, which contributed to a reduction in trade between the two countries. The suspension of EDC credits led Chile’s Minister of Finance to criticize Canada’s “banker’s attitude.” But suspending bilateral assistance and export insurance was not enough. In 1972, Ottawa joined Washington in voting to cut off all money from the International Monetary Fund (IMF) to the Chilean government. (When Allende was first elected, most Western banks, including Canada’s, withdrew from Chile.)

Recognizing the Junta

While Trudeau collaborated with the United States in its attacks on the Chilean economy, he maintained ties with the white supremacist regimes in Southern Africa. As Tyler Shipley explains, “In 1971, while Canada was turning off the faucet for Chile, Trudeau’s external affairs minister insisted that Canada’s ‘capacity to influence’ the white minorities in Southern Africa was limited and that more economic connection — not less — was the best way to exert pressure for change.” In short, Trudeau dismissed aid boycotts against white supremacist regimes in Southern Africa as ineffective while imposing a similar strategy on an elected socialist government in Latin America.

When the coup against Allende finally occurred on September 11, 1973, the repression was immediate. The National Stadium in Santiago was converted into an open-air prison where those suspected of leftist sympathies were tortured and killed in front of their fellow prisoners. Tens of thousands of Allende supporters were terrorized or murdered.

Days after Pinochet ousted Allende, Andrew Ross, Canada’s ambassador to Chile cabled External Affairs:

Reprisals and searches have created panic atmosphere affecting particularly expatriates including the riffraff of the Latin American Left to whom Allende gave asylum . . . the country has been on a prolonged political binge under the elected Allende government and the junta has assumed the probably thankless task of sobering Chile up.

Thousands were incarcerated, tortured, and killed in “sobering Chile up.”

Within three weeks of the coup, Canada recognized Pinochet’s military junta. This move aligned with Ross’ kowtowing viewpoint at the time, as he stated “I can see no useful purpose to withholding recognition unduly. Indeed, such action might even tend to delay Chile’s eventual return to the democratic process.” Pinochet would not step down for seventeen years.

Diplomatic support for Pinochet translated into economic assistance. Shortly after the coup, Canada cast a vote in favor of a $22 million CAD loan from the Inter-American Development Bank (equivalent to $100 million CAD in today’s currency), which was swiftly approved. Ottawa also promptly backed the allocation of $95 million CAD from the International Monetary Fund (IMF) to Chile and lent its support to the renegotiation of the nation’s debt held by the Paris Club.

Right after the coup the World Bank chose Canada’s Noranda Inc to assess Chile’s mining laws. Noranda was the first foreign company to announce plans to invest in Pinochet’s Chile. As El Mercurio newspaper noted at the time, “the agreement reached with Noranda mines, in the present national and international conjunction, reiterates the confidence that foreign investors are demonstrating towards our country.”

Political scientist Timothy David Clark describes mining as “the motor of [Chile’s] development and party to its plunder.” Pinochet gave massive concessions to transnational mining companies, including those based in Canada. Since then, Canadian mining operations have persistently exploited mining opportunities in the country.

Economic Ties

By 1978, Canadian support for the coup d’etat in Chile had become significant and multifaceted. Canada was involved in supporting the coup through various means, including financial support, investments, and loans. This support included backing for $810 CAD million in multilateral loans, with Canada’s share amounting to approximately $40 million CAD. Additionally, Canadian involvement encompassed the provision of five EDC facilities valued between $15 and $30 million CAD, along with two instances of Canadian debt rescheduling for Chile, effectively amounting to additional loans of around $5 million CAD.

Canadian chartered banks were also deeply engaged, extending twenty loans exceeding $100 million CAD in total, which notably included a 1977 loan by Toronto Dominion to DINA, Pinochet’s secret police, for the purchase of equipment. Moreover, Canadian companies had made direct investments in Chile, collectively valued at nearly $1 billion CAD. This comprehensive support from Canada significantly contributed to the stability and operations of the Pinochet regime in Chile during that period. As a 1976 Latin America Working Group letter noted:

Canadian economic relations, in the form of bank loans, investments and government supported financial assistance have helped consolidate the Chilean dictatorship and, by granting it a mantle of respectability and financial [endorsements], have encouraged its continued violation of human rights.

Canadian leftists were outraged at Ottawa’s support for the coup and its unwillingness to accept refugees hunted by the military regime. Many denounced the federal government’s policy and some occupied various Chilean and Canadian government offices in protest. The federal government was surprised at the scope of the opposition, which curtailed some support for the junta. A 1974 cabinet document lamented that “the attention . . . focused on the Chilean Government’s use of repression against its opponents has led to an unfavorable reaction among the Canadian public — a reaction which will not permit any significant increase in Canadian aid to this country.”

As historian Jan Raska notes, “Aware of American support for the new Pinochet government and uncertain about the political affiliation of the aforementioned refugees the Canadian government acted slowly for nearly a year before implementing rigid security screening to prevent communist sympathizers from entering Canada.” It was only after significant lobbying from the United Nations High Commissioner for Refugees, Amnesty International, Canadian churches, and activist organizations that the Trudeau government sought to placate protesters by allowing 7,000 refugees from Pinochet’s regime asylum in Canada. But the Canadian government continued to support the dictatorship directly responsible for the refugee crisis.