Part 2 (1/2)

Lessons in Regime Change: Brazil and Indonesia

There were two models of ”regime change” that Allende s opponents had been studying closely as possible approaches. One was in Brazil, the other in Indonesia. When Brazil's U.S.-backed junta, led by General Humberto Castello Branco, seized power in 1964, the military had a plan not merely to reverse Joao Goulart's pro-poor programs but to crack Brazil wide open to foreign investment. At first, the Brazilian generals tried to impose the agenda relatively peacefully-there were no obvious shows of brutality, no ma.s.s arrests, and though it was later discovered that some ”subversives” had been brutally tortured during this period, their numbers were small enough (and Brazil so large) that word of their treatment barely escaped the jails. The junta also made a point of keeping some remnants of democracy in place, including limited press freedoms and freedom of a.s.sembly-a so-called gentlemen's coup.

In the late sixties, many citizens decided to use those limited freedoms to express their anger at Brazil's deepening poverty, for which they blamed the junta's pro-business economic program, much of it designed by graduates of the University of Chicago. By 1968 the streets were overrun with antijunta marches, the largest led by students, and the regime was in serious jeopardy. In a desperate bid to hold on to power, the military radically changed tactics: democracy was shut down completely, all civil liberties were crushed, torture became systematic, and, according to Brazil's later-established truth commission, ”killings by the state became routine.”44 Indonesia's 1965 coup followed a very different trajectory. Since the Second World War, the country had been led by President Sukarno, the Hugo Chavez of his day (though minus Chavez's appet.i.te for elections). Sukarno enraged the rich countries by protecting Indonesia's economy, redistributing wealth and throwing out the International Monetary Fund and the World Bank, which he accused of being facades for the interests of Western multinationals. While Sukarno was a nationalist, not a Communist, he worked closely with the Communist Party, which had 3 million active members. The U.S. and British governments were determined to end Sukarno's rule, and decla.s.sified doc.u.ments show that the CIA had received high-level directions to ”liquidate President Sukarno, depending upon the situation and available opportunities.”45 After several false starts, the opportunity came in October 1965, when General Suharto, backed by the CIA, began the process of seizing power and eradicating the left. The CIA had been quietly compiling a list of the country's leading leftists, a doc.u.ment that fell into Suharto's hands, while the Pentagon helped out by supplying extra weapons and field radios so Indonesian forces could communicate in the remotest parts of the archipelago. Suharto then sent out his soldiers to hunt down the four to five thousand leftists on his ”shooting lists,” as the CIA referred to them; the U.S. emba.s.sy received regular reports on their progress.46 As the information came in, the CIA crossed names off their lists until they were satisfied that the Indonesian left had been annihilated. One of the people involved in the operation was Robert J. Martens, who worked for the U.S. emba.s.sy in Jakarta. ”It really was a big help to the army,” he told the journalist Kathy Kadane twenty-five years later. ”They probably killed a lot of people, and I probably have a lot of blood on my hands, but that's not all bad. There's a time when you have to strike hard at a decisive moment.” As the information came in, the CIA crossed names off their lists until they were satisfied that the Indonesian left had been annihilated. One of the people involved in the operation was Robert J. Martens, who worked for the U.S. emba.s.sy in Jakarta. ”It really was a big help to the army,” he told the journalist Kathy Kadane twenty-five years later. ”They probably killed a lot of people, and I probably have a lot of blood on my hands, but that's not all bad. There's a time when you have to strike hard at a decisive moment.”4'

The shooting lists covered the targeted killing; the more indiscriminate ma.s.sacres for which Suharto is infamous were, for the most part, delegated to religious students. They were quickly trained by the military and then sent into villages on instructions from the chief of the navy to ”sweep” the countryside of Communists. ”With relish,” wrote one reporter, ”they called out their followers, stuck their knives and pistols in their waistbands, swung their clubs over their shoulders, and embarked on the a.s.signment for which they had long been hoping.”48 In just over a month, at least half a million and possibly as many as 1 million people were killed, ”ma.s.sacred by the thousands,” according to Tzme. In just over a month, at least half a million and possibly as many as 1 million people were killed, ”ma.s.sacred by the thousands,” according to Tzme.49 In East Java, ”Travelers from those areas tell of small rivers and streams that have been literally clogged with bodies; river transportation has at places been impeded.” In East Java, ”Travelers from those areas tell of small rivers and streams that have been literally clogged with bodies; river transportation has at places been impeded.”50 The Indonesian experience attracted close attention from the individuals and inst.i.tutions plotting the overthrow of Salvador Allende in Was.h.i.+ngton and Santiago. Of interest was not only Suharto's brutality but also the extraordinary role played by a group of Indonesian economists who had been educated at the University of California at Berkeley, known as the Berkeley Mafia. Suharto was effective at getting rid of the left, but it was the Berkeley Mafia who prepared the economic blueprint for the country's future.

The parallels with the Chicago Boys were striking. The Berkeley Mafia had studied in the U.S. as part of a program that began in 1956, funded by the Ford Foundation. They had also returned home to build a faithful copy of a Western-style economics department, theirs at the University of Indonesia's Faculty of Economics. Ford sent American professors to Jakarta to establish the school, just as Chicago profs had gone to help set up the new economics department in Santiago. ”Ford felt it was training the guys who would be leading the country when Sukarno got out,” John Howard, then director of Ford's International Training and Research Program, bluntly explained.51 Ford-funded students became leaders of the campus groups that partic.i.p.ated in overthrowing Sukarno, and the Berkeley Mafia worked closely with the military in the lead-up to the coup, developing ”contingency plans” should the government suddenly fall.652These young economists had enormous influence over General Suharto, who knew nothing of high finance. According to Fortune Fortune magazine, the Berkeley Mafia recorded economics lessons on audiotapes for Suharto to listen to at home. magazine, the Berkeley Mafia recorded economics lessons on audiotapes for Suharto to listen to at home.53 When they met in person, ”President Suharto did not merely listen, he took notes,” one member of the group recalled with pride. When they met in person, ”President Suharto did not merely listen, he took notes,” one member of the group recalled with pride.54 Another Berkeley grad described the relations.h.i.+p in this way: we ”presented to the Army leaders.h.i.+p-the crucial element in the new order-a 'cookbook' of'recipes' for dealing with Indonesia's serious economic problems. General Suharto as the top Army commander not only accepted the cookbook, but also wanted the authors of the recipes as his economic advisers.” Another Berkeley grad described the relations.h.i.+p in this way: we ”presented to the Army leaders.h.i.+p-the crucial element in the new order-a 'cookbook' of'recipes' for dealing with Indonesia's serious economic problems. General Suharto as the top Army commander not only accepted the cookbook, but also wanted the authors of the recipes as his economic advisers.”55 Indeed he did. Suharto packed his cabinet with members of the Berkeley Mafia, handing them all the key financial posts, including minister of trade and amba.s.sador to Was.h.i.+ngton. Indeed he did. Suharto packed his cabinet with members of the Berkeley Mafia, handing them all the key financial posts, including minister of trade and amba.s.sador to Was.h.i.+ngton.56 This economic team, having studied at a less ideological school, were not antistate radicals like the Chicago Boys. They believed the government had a role to play in managing Indonesia's domestic economy and making sure that basics, like rice, were affordable. However, the Berkeley Mafia could not have been more hospitable to foreign investors wanting to mine Indonesia's immense mineral and oil wealth, described by Richard Nixon as ”the greatest prize in the Southeast Asian area.”757 They pa.s.sed laws allowing foreign companies to own 100 percent of these resources, handed out ”tax holidays,” and within two years, Indonesia's natural wealth -copper, nickel, hardwood, rubber and oil-was being divided up among the largest mining and energy companies in the world. They pa.s.sed laws allowing foreign companies to own 100 percent of these resources, handed out ”tax holidays,” and within two years, Indonesia's natural wealth -copper, nickel, hardwood, rubber and oil-was being divided up among the largest mining and energy companies in the world.

For those plotting the overthrow of Allende just as Suharto's program was kicking in, the experiences of Brazil and Indonesia made for a useful study in contrasts. The Brazilians had made little use of the power of shock, waiting years before demonstrating their appet.i.te for brutality. It was a near-fatal error, since it gave their opponents the chance to regroup and for some to form left-wing guerrilla armies. Although the junta managed to clear the streets, the rising opposition forced it to slow its economic plans.

Suharto, on the other hand, had shown that if ma.s.sive repression was used preemptively, preemptively, the country would go into a kind of shock and resistance could be wiped out before it even took place. His use of terror was so merciless, so far beyond even the worst expectations, that a people who only weeks earlier had been collectively striving to a.s.sert their country's independence were now sufficiently terrified that they ceded total control to Suharto and his henchmen. Ralph McGehee, a senior CIA operations manager during the years of the coup, said Indonesia was a ”model operation. . . . You can trace back all major, b.l.o.o.d.y events run from Was.h.i.+ngton to the way Suharto came to power. The success of that meant that it would be repeated, again and the country would go into a kind of shock and resistance could be wiped out before it even took place. His use of terror was so merciless, so far beyond even the worst expectations, that a people who only weeks earlier had been collectively striving to a.s.sert their country's independence were now sufficiently terrified that they ceded total control to Suharto and his henchmen. Ralph McGehee, a senior CIA operations manager during the years of the coup, said Indonesia was a ”model operation. . . . You can trace back all major, b.l.o.o.d.y events run from Was.h.i.+ngton to the way Suharto came to power. The success of that meant that it would be repeated, again and * ”58 again. ?0 ?0.

The other crucial lesson from Indonesia had to do with the pre-coup partners.h.i.+p between Suharto and the Berkeley Mafia. Because they were ready to take up top ”technocratic” positions in the new government and had already converted Suharto to their worldview, the coup did more than just get rid of a nationalist threat; it transformed Indonesia into one of the most welcoming environments for foreign multinationals in the world.

As momentum began to build toward Allende's ouster, a chilling warning began appearing in red paint on the walls of Santiago. It said, ”Jakarta is coming.”

Shortly after Allende was elected, his opponents inside Chile began to imitate the Indonesia approach with eerie precision. The Catholic University, home of the Chicago Boys, became ground zero for the creation of what the CIA called ”a coup climate.”59 Many students joined the fascist Patria y Lib-ertad and goose-stepped through the streets in open imitation of Hitler Youth. In September 1971, a year into Allende's mandate, the top business leaders in Chile held an emergency meeting in the seaside city of Vina del Mar to develop a coherent regime-change strategy. According to Orlando Saenz, president of the National a.s.sociation of Manufacturers (generously funded by the CIA and many of the same foreign multinationals doing their own plotting in Was.h.i.+ngton), the gathering decided that ”Allende's government was incompatible with freedom in Chile and with the existence of private enterprise, and that the only way to avoid the end was to overthrow the government.” The businessmen formed a ”war structure,” one part of which would liaise with the military; another, according to Saenz, would ”prepare specific alternative programs to government programs that would systematically be pa.s.sed on to the Armed Forces.” Many students joined the fascist Patria y Lib-ertad and goose-stepped through the streets in open imitation of Hitler Youth. In September 1971, a year into Allende's mandate, the top business leaders in Chile held an emergency meeting in the seaside city of Vina del Mar to develop a coherent regime-change strategy. According to Orlando Saenz, president of the National a.s.sociation of Manufacturers (generously funded by the CIA and many of the same foreign multinationals doing their own plotting in Was.h.i.+ngton), the gathering decided that ”Allende's government was incompatible with freedom in Chile and with the existence of private enterprise, and that the only way to avoid the end was to overthrow the government.” The businessmen formed a ”war structure,” one part of which would liaise with the military; another, according to Saenz, would ”prepare specific alternative programs to government programs that would systematically be pa.s.sed on to the Armed Forces.”60 Saenz recruited several key Chicago Boys to design those alternative programs and set them up in a new office near the Presidential Palace in Santiago.61 The group, led by the Chicago grad Sergio de Castro and by Sergio Undurraga, his colleague at the Catholic University, began holding weekly secret meetings during which they developed detailed proposals for how to radically remake their country along neoliberal lines. The group, led by the Chicago grad Sergio de Castro and by Sergio Undurraga, his colleague at the Catholic University, began holding weekly secret meetings during which they developed detailed proposals for how to radically remake their country along neoliberal lines.62 According to the subsequent U.S. Senate investigation, ”over 75 percent” of the funding for this ”opposition research organization” was coming directly from the CIA. According to the subsequent U.S. Senate investigation, ”over 75 percent” of the funding for this ”opposition research organization” was coming directly from the CIA.63 For a time, the coup planning proceeded on two distinct tracks: the military plotted the extermination of Allende and his supporters while the economists plotted the extermination of their ideas. As momentum built for a violent solution, a dialogue was opened between the two camps, with Roberto Kelly, a businessman a.s.sociated with the CIA-financed newspaper El Mercurio, El Mercurio, acting as the go-between. Through Kelly, the Chicago Boys sent a five-page summary of their economic program to the navy admiral in charge. The navy gave the nod, and from then on the Chicago Boys worked frantically to have their program ready by the time of the coup. acting as the go-between. Through Kelly, the Chicago Boys sent a five-page summary of their economic program to the navy admiral in charge. The navy gave the nod, and from then on the Chicago Boys worked frantically to have their program ready by the time of the coup.

Their five-hundred-page bible-a detailed economic program that would guide the junta from its earliest days-came to be known in Chile as ”The Brick.” According to a later U.S. Senate Committee, ”CIA collaborators were involved in preparing an initial overall economic plan which has served as the basis for the Junta's most important economic decisions.”64 Eight of the ten princ.i.p.al authors of ”The Brick” had studied economics at the University of Chicago. Eight of the ten princ.i.p.al authors of ”The Brick” had studied economics at the University of Chicago.65 Although the overthrow of Allende was universally described as a military coup, Orlando Letelier, Allende's Was.h.i.+ngton amba.s.sador, saw it as an equal partners.h.i.+p between the army and the economists. ”The 'Chicago boys,' as they are known in Chile,” Letelier wrote, ”convinced the generals that they were prepared to supplement the brutality, which the military possessed, with the intellectual a.s.sets it lacked.”66 Chile's coup, when it finally came, would feature three distinct forms of shock, a recipe that would be duplicated in neighboring countries and would reemerge, three decades later, in Iraq. The shock of the coup itself was immediately followed by two additional forms of shock. One was Milton Friedman's capitalist ”shock treatment,” a technique in which hundreds of Latin American economists had by now been trained at the University of Chicago and its various franchise inst.i.tutions. The other was Ewen Cameron's shock, drug and sensory deprivation research, now codified as torture techniques in the Kubark Kubark manual and disseminated through extensive CIA training programs for Latin American police and military. manual and disseminated through extensive CIA training programs for Latin American police and military.

These three forms of shock converged on the bodies of Latin Americans and the body politic of the region, creating an unstoppable hurricane of mutually reinforcing destruction and reconstruction, erasure and creation. The shock of the coup prepared the ground for economic shock therapy; the shock of the torture chamber terrorized anyone thinking of standing in the way of the economic shocks. Out of this live laboratory emerged the first Chicago School state, and the first victory in its global counterrevolution.

PART 2.

THE FIRST TEST.

BIRTH PANGS.

The theories of Milton Friedman gave him the n.o.bel Prize; they gave Chile General Pinochet.

-Eduardo Galeano, Days and Nights of Love and War, Days and Nights of Love and War, 1983 1983.

I don't think I was ever regarded as ”evil.”

-Milton Friedman, quoted in The Wall Street Journal, The Wall Street Journal, July 22, 2006 July 22, 2006

CHAPTER 3.

STATES OF SHOCK.

THE b.l.o.o.d.y BIRTH OF THE COUNTERREVOLUTION.

For injuries ought to be done all at one time, so that, being tasted less, they offend less.

-Niccolo Machiavelli,The Prince, 1513 15131.

If this shock approach were adopted, I believe that it should be announced publicly in great detail, to take effect at a very close date. The more fully the public is informed, the more will its reactions facilitate the adjustment.

-Milton Friedman in a letter to General Augusto Pinochet, April 21, 19752.

General Augusto Pinochet and his supporters consistently referred to the events of September 11, 1973, not as a coup d'etat but as ”a war.” Santiago certainly looked like a war zone: tanks fired as they rolled down the boulevards, and government buildings were under air a.s.sault by fighter jets. But there was something strange about this war. It had only one side.

From the start, Pinochet had complete control of the army, navy, marines and police. Meanwhile, President Salvador Allende had refused to organize his supporters into armed defense leagues, so he had no army of his own. The only resistance came from the presidential palace, La Moneda, and the rooftops around it, where Allende and his inner circle made a valiant effort to defend the seat of democracy. It was hardly a fair fight: though there were just thirty-six Allende supporters inside, the military launched twenty-four rockets into the palace.3 Pinochet, the operation's vain and volatile commander (built like one of the tanks he rode in on), clearly wanted the event to be as dramatic and traumatic as possible. Even if the coup was not a war, it was designed to feel like one-a Chilean precursor to Shock and Awe. It could scarcely have been more shocking. Unlike neighboring Argentina, which had been ruled by six military governments in the previous four decades, Chile had no experience with this kind of violence; it had enjoyed 160 years of peaceful democratic rule, the past 41 uninterrupted.

Now the presidential palace was in flames, the president's shrouded body-was being carried out on a stretcher, and his closest colleagues were lying facedown in the street at rifle point.8 A few minutes' drive from the presidential palace, Orlando Letelier, recently returned from Was.h.i.+ngton to take up a new post as Chile's defense minister, had gone to his office that morning in the ministry. As soon as he walked through the front door, he was ambushed by twelve soldiers in combat uniform, all pointing their submachine guns at him. A few minutes' drive from the presidential palace, Orlando Letelier, recently returned from Was.h.i.+ngton to take up a new post as Chile's defense minister, had gone to his office that morning in the ministry. As soon as he walked through the front door, he was ambushed by twelve soldiers in combat uniform, all pointing their submachine guns at him.4 In the years leading up to the coup, U.S. trainers, many from the CIA, had whipped the Chilean military into an anti-Communist frenzy, persuading them that socialists were de facto Russian spies, a force alien to Chilean society-a homegrown ”enemy within.” In fact, it was the military that had become the true domestic enemy, ready to turn its weapons on the population it was sworn to protect.

With Allende dead, his cabinet in captivity and no ma.s.s resistance in evidence, the junta's grand battle was over by mid-afternoon. Letelier and the other ”VIP” prisoners were eventually taken to freezing Dawson Island in the southern Strait of Magellan, Pinochet's approximation of a Siberian work camp. Killing and locking up the government was not enough for Chile's new junta government, however. The generals knew that their hold on power depended on Chileans being truly terrified, as the people had been in Indonesia. In the days that followed, roughly 13,500 civilians were arrested, loaded onto trucks and imprisoned, according to a decla.s.sified CIA report.5 Thousands ended up in the two main football stadiums in Santiago, the Chile Stadium and the huge National Stadium. Inside the National Stadium, death replaced football as the public spectacle. Soldiers prowled the bleachers with hooded collaborators who pointed out ”subversives”; the ones who were selected were hauled off to locker rooms and skyboxes transformed into makes.h.i.+ft torture chambers. Hundreds were executed. Lifeless bodies started showing up on the side of major highways or floating in murky urban ca.n.a.ls. Thousands ended up in the two main football stadiums in Santiago, the Chile Stadium and the huge National Stadium. Inside the National Stadium, death replaced football as the public spectacle. Soldiers prowled the bleachers with hooded collaborators who pointed out ”subversives”; the ones who were selected were hauled off to locker rooms and skyboxes transformed into makes.h.i.+ft torture chambers. Hundreds were executed. Lifeless bodies started showing up on the side of major highways or floating in murky urban ca.n.a.ls.