Vuskovic Plan - Application

Application

The plan considered the following economic measures as necessary:

• Nationalization of the country’s basic resources.
• Nationalization of large foreign enterprises, which were seen to be draining the wealth out of the country.
• Agrarian reform: the breaking-up of the latifundios (large landed estates) and redistribution of land to the peasants.
• Transferring banks and large businesses into state property in order to obtain control over internal credit and income.
• A massive redistribution of income. These measures were seen as a first phase and, in theory, would form the basis of a popular-social movement. Having gained the popular support of the masses, the government would then be in a position to make a successful transition to a socialist society.

Little attention was paid to the financial sector, given the orientation of the new regime's economic technocrats toward the import substitution, structuralist philosophy of the CEPAL (United Nations Economic Commission for Latin America and the Caribbean). In fact, Allende's Minister of Foreign Affairs and Vice President, Clodomiro Almeyda, relates in his memoirs how in the first postelection meeting of the economic team, these technocrats argued expressly and convincingly that monetary and financial management did not deserve too much attention. Alfonso Inostroza, the Central Bank president, stated in early 1971 that the main objective of the monetary policy was to "transform it into a key instrument . . . to achieve the complete mobilization of productive resources, and their allocation to those areas that the government gives priority to . . . ." This was consistent with the view of inflation of those espousing structuralism.

US President Richard Nixon had made it known that he wanted to "make the (Chilean) economy scream" and this policy was outlined in National Security Decision Memorandum (NSDM) 93 of November 1970: "All new bilateral foreign assistance was to be stopped, although disbursements would continue under loans made previously. The US would use its predominant position in international financial institutions to dry up the flow of new multilateral credit or other financial assistance. To the extent possible, financial assistance or guarantees to US private investment in Chile would be ended, and US businesses would be made aware of the government's concern and its restrictive policies…"