Abstract
Nationalization of the large, partly U.S.-owned copper companies, jointly known as Gran Minería del Cobre,1 was a major promise in the Programme with which Salvador Allende was elected President of Chile in 1970. Within eight months of his inauguration the promise had been fully carried out and in a manner, moreover, that can be described as uncompromising: the Government refused to engage in any negotiations with the companies regarding compensation and instead proceeded to deduct from the amount owed to the companies all excess profits made during the preceding fifteen years. This effectively ruled out payment of direct compensation above what had already been paid out by the previous Government for the purchase of 51% of the companies’ assets.
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Notes
This includes companies with a productive capacity of at least 75,000 metric tons per year, namely those operating the mines of Chuquicamata and El Salvador (49% Anaconda), El Teniente (49% Kennecott) and Exótica (75% Anaconda). Also nationalized was the Andina Company (70% Cerro Corporation) which was contemplating expanding beyond the 75,000 tons mark within the next few years. Altogether the five mines accounted, in 1970, for about 80% of total copper production in Chile and about 60% of the total value of Chilean exports. See R. Corvalan Vera, Indicadores económicos y financieros 1970–76 [Finance and Economic Indicators 1970–76] (Santiago de Chile, Economic and Financial Survey, 1976), 46.
M. Wilkins, The Emergence of Multinational Enterprise: American Business Abroad from the Colonial Era to 1914 (Cambridge, Mass., Harvard University Press, 1970), 184.
C.W. Reynolds, ‘Development Problems of an Export Economy. The Case of Chile and Copper’ in M. Mamalakis and C.W. Reynolds, Essays on the Chilean Economy (Chicago, R.D. Irwin, 1965), 226.
T.H. Moran, El cobre es chileno. ‘Dependencia’ e ‘independencia’ en la economía politico internacional del cobre chileno 1940–70 [The Copper is Chilean. ‘Dependence’ and ‘Independence’ in the International Political Economy of Chilean Copper, 1940–70] (Santiago de Chile, Universidad de Chile, 1970), 59; and P. Nudelman, La compensación a las companías del cobre nacionalizadas por el Gobierno de Chile [The Chilean Government’s Compensation to the Nationalized Copper Companies] (Santiago de Chile, CODELCO, 1973), 4.
R. Tomić, ‘Primeros pasos hacia la recuperación del cobre: el Convenio de Washington de 1951’ [First Steps towards the Recovery of Copper: the Washington Agreement of 1951], in R. French-Davis and E. Tironi (eds), El cobre en eldesarrollo nacional [Copper in National Development] (Santiago de Chile, Ediciones Nueva Universidad, 1974), 131–157.
C.W. Reynolds, ‘Development Problems…’, 375; M. Mamalakis, ‘Contribution of Copper to Chilean Economic Development, 1920–67: Profile of a Foreign Owned Export Sector’, in R.F. Mikesell, et. al., Foreign Investment in the Petroleum and Mineral Industries. Case Studies of Investor-Host Country Relations (Baltimore, Johns Hopkins University Press, 1971), 416-417.
These figures are taken from annual balance sheet of Andes.
See N. Girvan, Copper in Chile: A Study in Conflict between Corporate and National Economy (Jamaica, University of the West Indies, 1972); K. Griffin, Underdevelopment in Spanish America (London, George Allen and Unwin, 1969); Moran, El cobre es chileno…; Moran, Multinational Corporations and the Politics of Dependence (Princeton, Princeton University Press, 1974); R. Novoa, La batalla por el cobre [The Struggle for Copper] (Santiago de Chile, Editorial Quimantu, 1972); M. Vera, La politico económica del cobre en Chile [The Economic Policy for Copper in Chile] (Santiago de Chile, Ediciones de la Universidad de Chile, 1961).
An English translation of the complete text of the constitutional amendment has been published in International Legal Materials, 10 (1971), 1067.
Details of the litigation on Chilean copper can be found in Novoa, La batalla…, especially 297ff.
Kennecott Copper Corporation, Expropriation of El Teniente. The Largest Underground Copper Mine (New York, 1971).
William P. Rogers, ‘Preface’ in R.B. Iillich (ed), The Valuation of Nationalized Property in International Law (Charlottesville, University of Virginia Press, 1972).
See C. Fortin, ‘Principled Pragmatism in the Face of External Pressure: The Foreign Policy of the Allende Government’, in R. Hellman and H.J. Rodenbaum (eds), Latin America: The Search for a New International Role (New York, Halsted Press, 1975), 217–245; and J. Petras and R. LaPorte, Jr., ‘U.S. Response to Economic Nationalism in Chile’, in J. Petras (ed), Latin America: From Dependence to Revolution (New York, John Wiley and Sons, 1973), 195-230.
Novoa, La batalla…, 120-130.
Kennecott in fact explicitly used the 1965–67 agreements to question the validity of the nationalization in legal proceedings undertaken in Sweden. See Kennecott Copper Corporation, Expropriation of El Teniente…, 10-11.
Kennecott Copper Corporation, Expropriation of El Teniente…, 84 and 92.
Anaconda Company, Confiscation of Anaconda Property by the Chilean Government (New York, 1971), 1.
The Wall Street Journal (25 July 1974).
The bases for this estimate are presented in the paper I have written entitled ‘Nationalization of Natural Resource Industries and Multinational Corporations: Reflections on the Case of Chilean Copper’, which was submitted to the Cambridge Symposium on Foreign Investment and External Finance in Latin America in June 1974. In July and October of that year the Chilean military junta announced that it had reached an agreement on compensation with Anaconda and Kennecott respectively. The agreement included an immediate payment of $85 million and average annual payments of about $55 million beginning in 1975 and extending over ten years (this figure includes the capitalized value of a tax exemption of $54 million). Capitalizing the down payment at 6% a year, the compensation amounts to about $66 million over ten years. See Carlos Fortin, ‘Compensating the Multinationals: Chile and United States Copper Companies’, IDS Bulletin, 7.1 (1975), 23-29.
These figures are taken from the companies’ Financial Accounts for 1970.
Kennecott Copper Corporation, Expropriation of El Teniente…, 14; and M. Molff, ‘Los problemas básicos del cobre’ [The Basic Problems of Copper], in G. Martner (ed), El pensamiento económico del Gobierno de Allende [The Economic Thought of Allende’s Government] (Santiago de Chile, Editorial Universitaria, 1971), 176.
Banco Nacional de Cuba [National Bank of Cuba] vs. Sabbatino, 376 (U.S.) 398.
N.R. Doman, ‘New Developments in the Field of Nationalization’, New York University Journal of International Law and Politics, 3 (1970), 318.
Novoa, La batalla…, passim.
Novoa, La batalla…, 330-339.
O.B. Miranda, Las nacionalizaciones cubanas, los tribunales norte-americanos y la enmienda Hickenlooper [The Cuban Nationalizations, the U.S. Tribunals and the Hickenlooper Amendment] (La Habana, Ministerio de Relaciones Exteriores, 1971).
Secretaría Ejecutiva de Relaciones Económicas Externas del Gobierno de Chile (SEREX) [Foreign Trade Department of the Central Bank], Análisis de las vinculaciones comerciales con los Estados Unidos [Analysis of the Commercial Relationships with the U.S.] (Santiago de Chile, 1972).
These figures are taken from the annual reports of the IDB and the World Bank.
L. Geller and J. Estevez, ‘La nationalizatión del cobre’ [The Nationalization of Copper], in: Instituto de Economía [Institute of Economics], La economía chilena en 1971 [The Chilean Economy in 1971] (Santiago de Chile, Universidad de Chile, 1972), 557–558.
Instituto de Economia, La economia chilena…, 570–571.
See Chile hoy [Chile Today] 49 (1973) (Santiago de Chile).
R.F. Mikesell, Foreign Investment in Copper Mining. Case Studies of Mines in Peru and Papua New Guinea (Baltimore, The Johns Hopkins Press for Resources for the Future, 1975), chapters 6–10.
‘Kennecott Declares War’, The Times (6 November 1972).
Some of the documents related to the legal proceedings in Europe are reproduced in Kennecott Copper Corporation, Expropriation of El Teniente…, Supplements 2-4.
The resolutions included breaking commercial relations with Kennecott and the commitment not to replace any Chilean copper that might be excluded from certain markets as a result of Kennecott’s action.
Novo, La batalla…, 338.
These figures were provided by CODELCO’s Supplies Department (July 1973).
Multinational Corporations and United States Foreign Policy. Hearings before the Subcommittee on Multinational Corporations of the Committee on Foreign Relations, 93rd Congress, 1st Session, 2 April 1973 (Washington D.C., The U.S. Government Printing Office, 1973).
Covert Action in Chile, 1963–73. Staff Report of the Select Committee to Study Governmental Operations with Respect to Intelligence Activities (Washington D.C., The U.S. Government Printing Office, 1975), 28.
The last Minister of Defense in the Allende Government, Orlando Letelier — who was assassinated in Washington D.C in September 1976 — stated in a lecture at Oxford University in June of that year that there was mounting evidence of direct involvement of the United States’ Defense Intelligence Agency (the military counterpart of the CIA) in the preparing and executing of the coup d’état in Chile. In his view, this was not brought out by the U.S. Senate investigation because the Ford Administration made their cooperation with the Church Committee conditional to the Committee refraining from any probing into the activities of the Defense Intelligence Agency.
Covert Action in Chile…, 27.
According to the information obtained by The New York Times, the CIA contribution to financing and planning opposition activities against Allende increased in October 1971. Informants indicated that this increase was related to the announcement in September 1971 that there would be no compensation for the copper companies, to the arrival of Soviet technicians at the mines and to reports received in Washington D.C. about the shipment of Cuban arms to Chile. See The New York Times (24 September 1974).
Rogers, ‘Preface’ to Lillich (ed), The Valuation.…
Central Bank, Economic News, 19 (30 April 1972), 4.
See, for instance, the testimony of Professor John Strasma to the U.S. House of Representatives in The United States and Chile during the Allende Years. Hearings before the Subcommittee on Inter-American Affairs of the Committee on Foreign Affairs, 18 September 1974 (Washington D.C, The U.S. Government Printing Office, 1975), 268-269. Former U.S. Ambassador to Chile Edward M. Korry has referred repeatedly to an offer which he made to Allende in September 1971 but has given contradictory accounts of the authority under which he acted and of the specific terms offered. See U.S. House of Representatives, The United States and Chile…, 641 and 651; and Hearings before the Select Committee to Study Governmental Operations with Respect to Intelligence Activities of the United States Senate, 94th Congress, 1st Session, Volume 7, Covert Action (Washington D.C, The U.S. Government Printing Office, 1976), 130-134.
The full text of this Treaty was published in Diario oficial [Official Diary] No. 11, 397 (17 February 1916) (Santiago de Chile).
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Fortin, C. (1979). Nationalization of Copper in Chile and its International Repercussions. In: Sideri, S. (eds) Chile 1970–73: Economic Development and its International Setting. Institute of Social Studies, vol 4. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-8902-6_6
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