Created: 9/28/1973

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tate of siege, the curfew inhas been relaxed, indicating the junta'sconfidence that it is bringing the country under control. The "phase of nationalhas been officially inaugurated, and the junta's economic policies are taking shape. While the military does not appear to be totallyin its political or economic policies, itsrepressiveness and intolerance could cause it continuing problems internallyime when it needs to build support.

On the political front, the junta has rebuffed attempts by some Christian Democrats tothe military to modify some of its actions and policies. In addition to this possibleof potential supporters, the military'smay give Other supporters pause. The government's actions could also subject it tocriticism abroad just when itympathetic hearing. The junta is concerned with its international image and is making eiforts to improve it, but it has committedas the public burning ofconjure up negative historical comparisons.

The barring of all Marxist parties and the "recessing" of the remaining politicalwill add to the repressive image. Thedetermination to keep the left frompower is clear, but its suppression of allentities-evenmisfire. The junta's tight hold on the country could begin to ease somewhat as it secures its position further, but if the left regroups and is able to launch an urban or rural insurgency, even stronger measures are possible.

The Christianlargest parly inhave been hopeful of influencing the regime from within, will be disheartened by the turn of events. The military's increasingly pervasive role and its effects on civilianwill discourage the party's moderates and agitate its left wing.plit in the partyreak between it and the regime seems likely now. but at the same time the junta cannot afford to take the party's continued support for granted-

Economic Policies

There are some signs of improved public confidence in the economy. In this area, the regime is concentrating on reviving production, controlling government finances, and securingcredit and investment.

The junta hasreeze on the money supply and has begun to raise prices to spur production. It hopes to control the publicercent ofgovernment expenditures, boosting taxes.


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and by putting public enterprisesself-financinghe Junta expects to "increase dramatically" the prices charged by government' controlled industries, while holding down wage increases.

Iregime is also planning moves to boost

farm output. Individual land titles will beon farms that were legallyfarms thatseized or intervened willto their former ownors. At theprice controls on agricultural productslifted to offer further incentives. Manymoves indicate that the excessiveof the past Is over and workers' realfall, notwithstanding the regime'sthat "the gains of the workers winDespite the sharp price increasesresultarge devaluation, thepolicy, and moves to put publica paying basis, the de"

cided that wageQ)esriaTplyrepnmioniTT5cessa'yToco*Uro4demands, since "the government tswith an internal war."

Tha junta is also attempting to straighten out its international financialpecial group of emissaries has been sent to the monetary talks In Nairobi, where they will organize aof international agencies to explain Chile's

financial situation. Chile then will request that these agenciestudy of the economy prior to the upcoming "Paris Club" meeting of Chile's creditors- Chile plans to request aof the Pans Club meeting from its scheduled October meeting until mid-November, at which time the inter-agency study, as wellossible special IMF report, would be prepared.

I Chileon-OTTaWon^TiiswiorT-terrn debts at the meeting, as well as maximum relief on its long-term debts.

International Affairs

core of countries have formally recognized the new government,umber of others have recognized it by implication through application of various versions of theecognition of states, not governments. The US. Britain, West Germany. Brazil. Argentina, Peru. Mexico, and France are the major nations to have extended some form of recognition.

The USSR moved late last week to suspend relations with Chile East Germany, Bulgaria. Czechoslovakia. Yugoslavia, and Hungary have followed the Soviet lead, and Poland probably will do so shortly. Romania has recalled Usfrom Santiago. The official Sovietemphasized that numerous acts againstin somemade the situationone of these specific incidents had been cited before in the Soviet media, however, and the USSR hasworsehe past withoutrelations. The alleged acts against Sovietand institutions may have reinforced asense that something had to be done to demonstrate that Moscow had not lost allardor in the pursuit of detente.

may also have acted in part toa break in relations by Santiago. Chile had already broken relations with North Korea antf had cracked down severely on the Cubans. Soviet and East European media continue to avoidcharges of US involvement in the coup, although they havo cited third-party statemi to that effect.


Sep 73

Original document.

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