President Allende of Chile, the only Marxist to come to power through the ballot-box, has announced `war economy' measures because of the widespread food shortages. Official rationing has not yet been introduced but distribution of food is now being controlled by the army.
Allende's opponents are claiming that the President's controversial agrarian reforms have caused the food shortage. But the harvest shortfall in Chile itself has in fact been slight and the food shortage is more a result of a rising standard of living, increased demand for food, and the general rise of food prices on the world market.
Chile is unable to import large quantities of food at present world prices because of a serious shortage of foreign exchange. Chile is 75% dependent for its foreign earnings on its exports of copper, and the world price of copper has fallen from around £72 per ton in 1971 to approximately £52 per ton in 1973.
Difficulties in exporting Zambian copper, following the closing of the border with Rhodesia, may boost world prices temporarily, but Chile's own copper exports are suffering from the `blockade' of Chilean copper-carrying ships in European and American ports. The ‘blockade' is a result of legal proceedings brought against Chile by the Kennecott company which is protesting at the nationalisation of its copper mines without compensation by the Allende government. The United States is backing up the US owned Kennecott company by ensuring that the financial help available to Chile from an international organization like the World Bank is seriously reduced.