Chile: Exxon, et. al.
High, Bob
Recent new investments in Chile by major multinationals, and promises of more to come, suggest that the Junta's aggressive "open doors" policy toward foreign capital may finally bear fruit...
...Box 800, Berkeley, Ca...
...In 1976, Chile withdrew from the Andean Common Market in order to avoid adopting its restrictions on the export of profits by foreign investors...
...94701, phone (415) 548-3221 or 339 Lafayette St., New York, N.Y...
...Chile was forced to borrow over $1.4 billion in 1977, while paying out $1.2 billion - or a record 48% of export revenues - to service its foreign debt...
...Recent new investments in Chile by major multinationals, and promises of more to come, suggest that the Junta's aggressive "open doors" policy toward foreign capital may finally bear fruit for the dictatorship...
...While these investments do represent a significant boost to the dictatorship (and for that reason they have been condemned by human rights activists and Chile solidarity groups in the U.S...
...Through this spiral of "borrowing from Peter to pay Paul," Chile's overall foreign debt has escalated to over $5.2 billion...
...In early 1977, the Junta enacted Decree Law No...
...These policies - including keeping the cost of labor down by the most brutal means - were devised and administered by the Junta's team of U.S.-trained economists, the so-called "Chicago Boys," who learned their economics under Milton Friedman and Arnold Harberger at the University of Chicago...
...According to Business Latin America, EXXON's decision to invest heavily in Chile "constitutes a public relations breakthrough as much as an economic milestone for the country...
...OIL & GAS INVESTMENTS In addition to these mining investments, the Junta is actively promoting foreign investment in oil and natural gas deposits...
...Frustrated by four years of cautious, "wait-and-see" attitudes by most foreign companies, the Junta is billing this spurt of new investments as the opening of a new stage in the country's economic development...
...Not only is it the largest single investment by a U.S...
...ARCO is also a major partner in a project to export Chilean natural gas to the U.S...
...and despite the Junta's official optimism, there are still some sizeable clouds on Chile's investment horizon...
...Perhaps the most important element in Chile's new investment picture is EXXON'spuchase of the copper mine La Disputada de las Condes for $107 million, with the possibility of up to $1 billion in further MaylJune 1978 investments over the next five to ten years...
...Chile's mining sector has attracted other investments as well...
...corporations, such as EXXON, ARCO, and Goodyear, aimed at forcing them to reconsider and revoke the vote of confidence they have given to one of the most repressive and regressive regimes in the hemisphere...
...In the United States, human rights and Chile solidarity organizations are mobilizing campaigns to exert crucial pressure on U.S...
...Chile has applied for a $100 million credit from the Inter-American Development Bank to help finance this project...
...Labor that is cheap and tightly controlled is not the only bait held out to foreign capital...
...Under such conditions, Chile's investment bubble could burst loudly, throwing the regime into a very major economic crisis...
...It appears, however, that the investment will not be finalized unless and until there is a substantial increase in the price of copper on the world market...
...Chile's state-owned oil industry, ENAP, has sold off part of its interest in potential off-shore oil deposits to a partnership formed by Atlantic Richfield (ARCO) and Amerada Hess Co...
...An initial $11 million is to be spent on exploration, followed by a guaranteed investment of at least $250 million over the next 30 years if initial explorations are successful...
...A consortium of U.S...
...and other countries, a project slated to grow to $400 million over the next 5-10 years...
...Noranda reportedly will be making a final decision on the investment in late 1978...
...In many cases they are also contingent upon successful preliminary explorations (in the case of oil) or on a sharp improvement in the price of copper on the world market...
...Canada's Noranda Mines has contracted to buy the Andacollo copper mine for about $350 million, with long-term investment possibilities similar to the EXXON deal...
...Chile, along with Indonesia, has even broken ranks with CIPEC, the Association of Copper Exporting Countries, in refusing to reduce copper production...
...And although demand for copper is expected to increase somewhat in 1978, new mines will also be coming into production in other countries, and a downturn in the present "recovery" from world recession, forecast by some, could seriously depress demand and prices...
...firm in many years, but it has beenmade by a large, image-conscious corporation, indicating that international business is giving its blessing to the Chilean military regime...
...These recent investments - in the mining, oil and manufacturing sectors - can be seen as a direct response to the economic policies pursued by the Junta since the coup...
...firm, has invested $100 million in Chile's largest gold mine, El Indio...
...Thus, the surplus in the balance of payments forecast by the Junta at the beginning of 1977 evaporated during that year...
...EXXON is the world's largest industrial corporation, with net profits of $2.4 billion and gross revenues of $58 billion in 1977 - more than five times the Chilean GNP...
...600, a Statute on Foreign Investments which provides foreign corporations with all the rights and privileges enjoyed by Chilean firms...
...Goodyear is already the largest tire manufacturer in Latin America...
...This last factor has the Chilean regime very worried, since the average price of copper throughout 1977 was well below its projections...
...Most of the largest new investments are to be spread out over a period of years and even decades...
...STATE REVENUES The continued low price of copper affects not only future investments, but also the foreign revenues that Chile receives from the sales of government-owned mines...
...Since then, according to official yearend statistics, the regime has approved some $1.1 billion in new investments (actual or projected), predominantly in the mining sector...
...Joseph, another U.S...
...Clearly, internal political developments in Chile, and particularly the strength of the resistance movement and broadbased opposition to the regime's brutalities, will have a determinant effect on the Junta's ability to create a "favorable investment climate" for foreign multinationals...
...10012, phone (212) 228-8272...
...in fact, Chile increased production in 1977, although not enough to offset the fall in price...
...and Canadian companies, headed by the Superior Oil Co., have made a tentative commitment to invest $500-$700 million in the Quebrada Blanca copper mine over several years, and another group is reportedly interested in the much larger El Abra mine...
...Continuing its policy of "denationalization" - selling off Chilean industries to foreign 41update * update * update . update multinationals, or, in a few cases, to Chilean monopolies - the Junta has recently sold the largest tire factory in Chile, INSA, to Goodyear for $34 million...
...While these figures do reflect a new situation that is somewhat more favorable to the Junta's economic project, there are several important contingencies to be taken into account...
...For further information on foreign investment in Chile and the current status of campaigns, write or call Non-Intervention in Chile (NICH) at P.O...
Vol. 12 • May 1978 • No. 3
