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Approved For Release 2006/04/19 ; CIA-RDP85T00875RO01700040058-3
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- however, will have little impact on the direction of Allende’s future actions except in the unlikely event that his coalition falls below the 36% of the popular vote he received in the I970 presidential race. Such a major defeat might convince top Chilean military leaders to assume a greater, possibly a decisive, role in determining the policies of the Allende government. Moreover, it also would seriously impair Allende's influence over legislation.
- The economic crunch probably can be postponed until after the election, partly because their timing is opportune for Allende. Although agricultural production probably will be down about 10% in 1972/73, the election will occur at the harvest season's peak, when most foodstuffs supplies will be at the year's highest level. Furthermore, December through February are the summer vacation months, when people traditionally flock to the seashore and sales of many things slump. During this breathing spell, the administration can concentrate its efforts on undoing supply snarls affecting important consumer goods.
- Allende should be able to keep import levels reasonably high until after the election. On 30 September, Chile still had an estimated $100 million in disposable assets, about equally divided between gold and foreign exchange holdings. Although foreign exchange assets by now probably are down nearly to the minimum level needed for trade transactions. Allende could raise some cash by borrowing against the gold reserves held in French banks. In addition, Chile is scheduled to receive a $43 million loan from the IMF in December[1] and could borrow $11 million against its fund quota before the election if it agreed to certain conditions. Chile may also receive emergency assistance from Communist countries during this period. Although it is doubtful that Allende's December trip to Moscow will yield the massive aid being sought, the Soviets may be willing to match the $50 million in hard currency extended in 1972. Chile's Long-Term Economic Prospects
- Regardless of the election's outcome and subsequent political events, Chile faces grave economic problems during the next several years. The economy is a shambles in most respects and probably will deteriorate further before remedial action is taken. An effectively functioning socialist state appears unlikely unless the country becomes highly oriented toward authority — and perhaps not even then. Consumers face long~continued austerity, whether they like it or not. The USSR can be expected to provide help, but only to the extent of lessening the economic shambles.
- ↑ This is the last drawing on a loan granted to compensate for declining copper prices in recent years. After loan eligibility has been determined, disbursements are nearly automatic.
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Approved For Release 2006/04/19 ; CIA-RDP85T00875RO01700040058-3
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