ITT AND THE CIA: The Making of a Foreign Policy
SWEENEY, DALE L. JOHNSON, JOHN POLLOCK, and JANE
ITT AND THE CIA: The Making of a Foreign Policy DALE L. JOHNSON, JOHN POLLOCK, and JANE SWEENEY When columnist Jack Anderson recently released documents which indicate that International Telephone...
...Industrial growth meant increased dependence on copper exports to provide foreign exchange with which to import machinery and equipment, raw materials, and other goods necessary to supply industry...
...Dale L. Johnson, John Pollock, and Jane Sweeney are scholars on the staff of the Chile Research Group at Rutgers University...
...Others, like ITT, favor an even harder line than the Nixon Administration has so far followed...
...The way is doubtless eased by the fact that the former director of the CIA, John McCone, is on the board of directors of ITT...
...By the time Allende became president, most of Chile's important areas of industry and finance had passed into foreign (mainly U.S...
...Negotiations broke down in August, 1971...
...It is only in this context that one can understand the ITT-CIA conspiracy against Allende, the green light apparently given our Chile ambassador by the Nixon Administration "to do all possible short of a Dominican Republic-type operation" to impede Allende's assumption of power, and the subsequent range of economic sanctions that have been employed against Chile...
...Through these investment companies, the Rockefellers have penetrated many Chilean firms...
...One of America's most distinguished newspapers, the St...
...corporations in Chile which face the prospect of nationalization...
...In short, IBEC in Chile operates as ITT does everywhere—it grows by achieving financial control of more and more independent firms...
...The country suffers from runaway inflation, virtual stagnation of the economy as a whole, real unemployment of up to thirty per cent, and a major crisis of food production...
...Anaconda Copper is within the sphere of the Rockefeller interests...
...It operates in twelve Latin American countries, including Chile...
...Government power to further corporate ends abroad...
...The Anderson documents, which the columnist said came from the private files of ITT's Washington office, to which he seems to have singular access, reveal that ITT put great pressure on the U.S...
...We cite the apparent existence of distinct "corporate interest groups" and "independent" multinationals because there seem to be some important differences among them in relation to modes of foreign expansion and to ways in which they seek to utilize U.S...
...The Rockefellers also frequently participate in Presidential Task Forces and Missions such as the recent Task Force on International Development which recommended that the U.S...
...ITT-CIA intrigues, together with conspiracies by local Chilean rightists, including the assassination of the commander of the Chilean Armed Forces, failed to prevent President Allende from taking office November 3, 1970...
...The ITT confidential memoranda revealed that several weeks before Allende was to take office, U.S...
...Chase Manhattan Bank president David Rockefeller is chairman of the CFR, and other family and close business associates are key members...
...Government will follow toward Chile in the future, as in other situations where the corporate empire is threatened, will depend essentially upon the constraints built into the situation and upon what the different interests and tendencies among the corporate elite resolve...
...ITT is among the largest of U.S.-based multinational corporations...
...With $233 million in defense business in 1971, ITT ranks number twenty-three on the Defense Department's list of prime contractors...
...The most significant of the Rockefeller holdings in Chile is the International Basic Economy Corporation (IBEC...
...Government to block Allende, at one point offering "to assist financially in sums up to seven figures...
...intervention in the internal affairs of Chile and other Third World nations will continue to prevail as long as the private interests of the ITTs, Rockefellers, and Morgans abroad are defined as the national interest of the United States...
...At the same time, the multinational giants have increased by threefold the value of their assets in underdeveloped countries...
...Former CIA chief McCone is a board member of the Rockefellers' Standard Oil of New Jersey...
...corporations, mainly industrials, have transferred more and more wealth and decision-making from underdeveloped countries like Chile to the home offices of the corporations...
...It is against this background that we heartily concur in the decision of the Senate Foreign Relations Committee to conduct a major investigation into the influence of multinational corporations like ITT on U.S...
...Thus, while the Committee's inquiry was triggered by the Anderson disclosures of ITT activities in Chile, the study will be a much broader examination to determine the extent to which our policymakers have equated corporate profits and conglomerate power with the public interest of both client countries and our own nation...
...Kennecott Copper is controlled by another major corporate interest group, the Morgans...
...For ITT now appears to have pursued its own foreign policy...
...Through Kennecott Copper, the Morgans are linked to the Guggenheim family (former owners of Chilean nitrates and other businesses in the north of Chile) and to the fiftieth largest U.S...
...ITT also owns two Sheraton Hotels in Santiago, All American Cables and Radio, World Directories, Inc., and ITT World Communications...
...hands...
...The recent revelations of ITT's friendly ties to the CIA—and to the Republican Party, as disclosed in other alleged ITT documents made public by Anderson—represent only one part of the conglomerate's relation to the U.S...
...The giant international conglomerate operates in sixty countries with more than $3 billion in assets abroad...
...In 1970, forty-seven per cent of ITT's assets and sales were located abroad and fifty-nine per cent of its 1970 profits flowed from foreign operations...
...Negotiations for Chilean state purchase of the telephone company were begun shortly after Allende took office...
...The conglomerate owns seventy per cent of the Chilean Telephone Company with assets of $153 million, as well as Standard Electric Company, which operates in twenty-four countries...
...It operates in thirty-three countries and in 1970 derived sixty per cent of its profits from Latin America, although only thirty-three per cent of its assets were in the region...
...Their tactic is to recruit close business associates from the local business elite, buy (from funds generated from within the country) into local businesses, and then put their men on the boards, thus increasing the concentration of decisionmaking in the hands of local oligarchs serving foreign interests...
...What is certain is that some form of U.S...
...foreign aid program be made multilateral...
...What emerges is a picture of a series of corporate interest groups—Rockefellers, First National City, Morgans, Mellons, and others—which form a web of corporate power brought together by common interests, complementary activities in the international sphere, and interlocking directorates...
...After Anaconda Copper, nationalized along with Kennecott and Cerro Corporation by the Allende government, ITT has the largest U.S...
...After company records were examined, the general manager and three other officials were arrested on charges of fraud in company dealings...
...In the industrial sector of the economy, the substantial development which had occurred in the 1930s and 1940s under control of Chilean entrepreneurs had come to a practical end by the mid-1950s...
...ITT AND THE CIA: The Making of a Foreign Policy DALE L. JOHNSON, JOHN POLLOCK, and JANE SWEENEY When columnist Jack Anderson recently released documents which indicate that International Telephone and Telegraph (ITT) and the Central Intelligence Agency (CIA) engaged in efforts to prevent President Salvador Allende from assuming power in Chile, the revelations provided an occasion to raise a pertinent question: What interests do ITT and other multinational corporations have in Chile that could make such corporate intervention and U.S...
...Over the last two decades, U.S...
...The World Bank, together with U.S...
...investments abroad were "a good thing, not only for the United States, but for other countries...
...creditors, is currently pushing Chile hard on the renegotiation of the $3 billion foreign debt that Allende inherited from previous regimes...
...For its part the Government, through the CIA, suggested a scheme designed to "reduce the Chilean economy to chaos," and thus bring about a military uprising, according to one of the documents...
...The Chilean case has been extensively discussed within the Rockefeller-dominated Council on Foreign Relations, and the minutes of last year's secret CFR meetings reveal a certain perplexity and tactical disagreement...
...Government...
...This policy of economic nationalism and socialization directly affects the interests of some of the most powerful men in the United States...
...For every dollar that U.S...
...The crude conspiracies of the independent ITT with the CIA, for example, are phenomena qualitatively distinct from the institutionalized influence of the Rockefeller interests over all aspects of U.S...
...The foreign-owned copper and nitrate mines have been nationalized, the banking system has been brought under state control, and a number of large foreign and domestic monopolies in the industrial sector are now transformed from private to social property...
...Department of Commerce figures for 1953-1968, for example, indicate that mining and smelting operations in Chile (about ninety per cent copper) earned $1,036 million, while new investments and reinvestment of profits together totaled only $71 million...
...Of the eighteen largest non-banking corporations, all but two involved foreign capital...
...According to the Anderson papers, McCone figured in the clandestine activities of ITT to prevent Allende from assuming the presidency...
...corporations invest abroad, three dollars are returned...
...The essential impact of the increase in multinational corporate penetration in Chile has been to lock the country into a situation of increasing foreign dependence...
...Two-fifths of Chile's largest 100 corporations were under foreign control, while many more were mixed ventures which allowed external influence or effective control...
...Of the top thirty U.S.-based multinational corporations, twenty-four operated in Chile...
...While the Committee's inquiry will range over the influence of the giant conglomerates on the political affairs of foreign nations, it is clear from statements by Committee Chairman J. W. Fulbright and Senator Frank Church, Idaho Democrat, who proposed the inquiry, that the investigation will range far more widely by exploring the economic impact of the corporations on foreign countries as well as their influence in the making of American foreign policy...
...ITT has ties to the principal international centers of corporate power...
...And so it goes...
...Allende's short-term economic policy has curtailed inflation somewhat, picked up the economy, and reduced unemployment, but the structural sources of these problems remain...
...The Rockefellers are more influential in shaping U.S...
...foreign policy...
...In addition, Russell Erickson, chairman of the board of ITT's Hartford Fire Insurance, is on the Advisory Committee of Chase Manhattan Bank, the main Rockefeller base of operations...
...This certainly included the ITT telephone monopoly...
...Allende's Popular Unity government had promised during the election to bring all large monopolies into the sector of social property...
...Here Chile ran into Anaconda and Kennecott's manipulation of the price of copper to the detriment of Chile's foreign exchange and tax revenues...
...Like ITT, IBEC is a conglomerate...
...ITT maintains links to the Rockefeller corporate empire through interlocking directorates with Standard Oil of New Jersey and Chemical Bank, both Rockefeller-controlled corporations...
...In 1965, ITT was ranked the twenty-eighth multinational corporation...
...The substantial influx of foreign capital in industry, banking, and services during the 1960s did not ameliorate any of the grave structural problems of the economy...
...Independent" corporations like ITT (as well as Dow Chemical, GE, Caterpillar Tractor, CPC International, Firestone, and others operating in Chile), which are not within the sphere of control of one of these groups, nevertheless have high-level personnel in close interrelationship with one or more of the established corporate interest groups and other "independent" multinationals...
...The Rockefellers are also linked to a number of other U.S...
...In the case of mining, the U.S.-owned corporations took out billions of dollars in profits over the years with minimal reinvestment of earnings for the benefit of the Chilean economy...
...The Rockefellers' IBEC and ITT are by no means strangers to each other...
...The attempt to buy the company occurred after years of notoriously bad service and aborted attempts by the previous Frei government to induce the monopoly to provide adequate service...
...In Chile, IBEC has a ready-mix cement plant, a construction firm, a mining enterprise, and four investment and management companies...
...Given the revelations of the Anderson documents, it is not hard to imagine ITT officials sitting down to talk about the business of politics with CIA agents and the Chilean equivalent to the Republican National Committee in a luxurious suite at the Hotel Carrera, one of ITT's Sheraton holdings in Santiago...
...A few, Rodman C. Rockefeller of IBEC, for example, seem to favor accommodation if possible...
...industrial corporation, W. R. Grace and Company...
...The policy which the U.S...
...Allende's Popular Unity government is attempting to take control of the main pillars of the Chilean economy from multinational corporations and their local business allies...
...This dependence removed control over more and more of the economic life of the country from Chilean hands and resulted in increased capital transfers abroad...
...investment in Chile...
...The documents—eighty-two pages in all—covered the period between September and November 1970 when Allende became the first avowed Marxist elected to lead a country in the Western Hemisphere...
...IBEC now participates in thirteen of the twenty-five largest Chilean corporations and controls more than fifty per cent of the stock in three of them...
...The message gave him maximum authority to do all possible—short of a Dominican Republic-type action—to keep Allende from taking power...
...Expansion abroad proceeds at an even more rapid clip than ITT's sensational growth inside the United States, where it is now the nation's eighth largest industrial concern...
...foreign policy than any other corporate interest group, the CIA, or the State Department...
...Ambassador Edward Korry "finally received a message from the State Department giving him the green light to move in the name of President Nixon...
...Eugene Black, for example, came to the board of ITT after fifteen years as president of the World Bank...
...At stake will be the soundness of the widely huckstered notion that U.S...
...ITT is not the only large U.S.-based multinational corporation whose interests in Chile are threatened by the Allende government's economic nationalism...
...Employing many former government personnel and foreign correspondents, ITT has its own foreign policy and foreign intelligence units and its own counterespionage operation, as well as a fleet of jet liners at the disposal of members of Congress looking for a free ride on some junket or other...
...Grace is a huge conglomerate with substantial interests in Chile and Latin America generally...
...Like all multinationals, ITT views economic nationalism, especially when it is combined with efforts, as in Chile, to build a socialist society, as a fundamental threat to its interests...
...Government complicity plausible...
...Louis Post-Dispatch, seemed to sum up recent disclosures when it observed: "Perhaps the ITT was not satisfied to assist the Nixon Administration with political arrangements and advise it on antitrust policy...
...They manage this through a high degree of influence over the Council on Foreign Relations and other policy-oriented, corporate elite-dominated organizations...
...in 1971, it was the sixth largest...
...On September 23, the Chilean government officially took over the company...
...foreign relations...
Vol. 36 • May 1972 • No. 5
