This period became a time of change for the secret warriors. James Schlesinger, a defense analyst with no intelligence experience other than his work on a management study for Nixon in 1970–1971, first replaced Richard Helms. Schlesinger moved over to secretary of defense after only five months at Langley, but in that short time he presided over important changes.

  Within the agency itself, Schlesinger tried in a more measured way to fulfill the president’s expectations for cutbacks. Convinced that much of the dead wood lay in the Directorate for Operations, the DCI concentrated there. Personnel began to fall as about a thousand officers were retired, asked to resign, or fired. Many of these people were paramilitary specialists. The actual reduction amounted to about 7 percent, not the 40 percent Nixon once spoke of. The covert action budget had been in decline since Laos funding had been taken away from the CIA and given to the Pentagon. The old Directorate for Plans disappeared, becoming, more appropriately, the Directorate for Operations (DO). Thomas Karamessines went into retirement with his colleague and friend Richard Helms, replaced as DDO by Bill Colby, and, when Colby swiftly moved up to the top job, by William Nelson, a Colby protégé.

  Another change begun by Helms continued under Schlesinger, to be completed by Colby. This was the reorganization of the air proprietaries. A DCI directive in 1972 ordered that Air America be maintained only through the end of the Indochina war, that Southern Air Transport be sold and its Pacific Division immediately liquidated. The CIA divested Air America in stages. The firm E-Systems, a Texas corporation, bought Air Asia, the massive Taiwan maintenance facility. Air America planes and other assets were sold off one by one. By 1975 the parent Pacific Corporation had been reduced to eleven hundred employees. Final disposition of Air America was completed by mid-1976. The CIA expected to realize $20 million from the transactions.

  A former owner of Southern Air Transport bid for the corporation and offered $5.6 million. Helms approved the sale during his last month as DCI, and the Southern Air board concurred. But other air freight companies objected, and one offered $7.5 million. Schlesinger rejected this bid. As acting director, Colby ordered final liquidation on July 31, 1973, but the former owner made a further counteroffer. The sale closed on the last day of 1973. There were later repercussions when the owner himself then liquidated Southern Air, violating a contract clause against windfall profits. The CIA sued and won a judgment of $1.3 million, in the course of that litigation admitting its ownership of Southern Air Transport. Ultimate losers were the SAT employees whose jobs evaporated.

  The CIA also liquidated Intermountain Aviation in 1973, selling its airfield complex to Evergreen Aviation Corporation. In a clever touch, agency lawyers retained the same Phoenix firm that first took the Miranda case to trial for the legal work on the sale. Because Evergreen continued to do the same kinds of work as its predecessor, including for the CIA, it had never been clear that this was not simply a fresh agency proprietary cover. Evergreen invested some $24 million in the Marana base over the next decades, turning it into the largest aircraft storage facility in the world.

  Meanwhile William E. Colby received the nod to follow Schlesinger as director of central intelligence. During Colby’s confirmation hearings before the Senate Armed Services Committee, Old West–style “Wanted” posters sprouted on walls all over Washington. This mimicked a technique used in the Phoenix Program. The posters featured an ace of spades—used by Americans in Vietnam to connote death or killing—within which was a sketch of Colby’s face. The DCI made sure that CIA’s Office of Security did nothing about the posters.

  Bill Colby’s agency still had a global reach. But storm clouds were already gathering. The accumulating revelations of CIA actions over the years, many of them controversial, built public concern about the Cold War functions of this agency. For years the public remained quiescent, sedated by the assurances of presidents that the CIA acted in America’s name to support its democratic values and combat the Russians on Cold War battlefronts. Mostly Americans had let it go at that. But the seeds that would bring those happy assumptions crashing down had already been sown. Not only could they not be recovered, but the reaping was about to begin. Colby took over at just that moment, September 1973, and the unraveling began in Latin America.

  17

  The Southern Cone

  RICHARD NIXON and Henry Kissinger’s most maligned covert enterprise took place in Chile, where they encouraged dictatorship over democracy, sanctioning a lapse in democratic rule that endured for two decades. But in truth the Chile case has broader meaning, for Nixon and Kissinger came on the scene late in the game, when U.S. intervention in Chilean politics had been under way for some time, one more facet of Washington’s effort to guide the political evolution of an entire continent. What Nixon and Kissinger did escalated the CIA involvement. This operation spanned the terms of three American presidents—Kennedy and Johnson before Nixon—and the crossover illustrates an important aspect of political action: projects initiated for a specific purpose at a moment in time have often turned into open-ended campaigns from which extrication becomes difficult. We have seen this phenomenon at work in Italy and Guyana, but Chile provides the best-documented example as well as an illustration of the dangers associated with these activities. The adventure in Chile set the stage for a challenge to the very existence of the Central Intelligence Agency.

  Political action in Chile in the Kennedy-Johnson era has been known ever since the Nixon operations sparked intensive investigations in the mid-1970s, but the breadth of the earlier involvement has been obscured by its characterization as simply “an” intervention in the 1964 Chilean presidential election. In fact the CIA functioned as the U.S. government’s action agency for a wide-ranging program to shape Chilean politics that went on for more than a decade. That the CIA would lead a democracy into dictatorship no doubt never occurred to the secret war managers who started down this road, but that is how it turned out.

  An American ally for many years, proud of its tradition of more than a century of democracy, Chile originally declared its independence from the Spanish Crown in 1810. Several features distinguished the history of Chile. First, unlike much of Latin America, where military rule and coups were quite common, the military in Chile found the climate inhospitable for intervention in politics. One coup in 1927 brought military rule for fewer than four years until, his government discredited, the caudillo resigned and slunk away. After ineffectual efforts to form a stable government, a couple of more coups in 1932, and further political posturing, the military gave way to civil administration. From 1932 until John Kennedy’s day, Chilean democracy remained vibrant.

  The second important fact is that Chilean democracy reigned in the face of economic problems. Large landholdings impeded agricultural growth while lack of capital restricted the exploitation of Chile’s rich natural resources, especially copper, and opened the door to foreign investors who ended up with a major stake in Chile’s economy. Fluctuations in world prices prevented Chile, like Bolivia, from enjoying the full benefits of its mineral riches.

  These persistent problems led directly to the third feature of the Chilean scene: politicians promising radical reforms were the norm, not an aberration. Only one president in modern Chilean history had been elected on an openly conservative platform while between 1938 and 1953 the Chilean Communist and Socialist parties constantly served in government. In short, when John F. Kennedy took office in the United States, Chilean politics had long had a reformist character embracing a wide political spectrum.

  Arthur M. Schlesinger, Jr., credits John Kennedy with sophisticated understanding of the evolution of Latin America. Kennedy’s biographer sees JFK as well aware of the breakdown of oligarchies, the impossibility of saving the old order, even of avoiding the trap of favoring right-wing regimes, as he finds Eisenhower was prone to do. Kennedy wanted to chart a different course. Schlesinger describes at length how JFK came to his “Alliance for Progress,” a sort of combination Marshall Plan and social/political program for Latin America. Kennedy outlined this initiative and gave it a name in Tampa, Florida, in October 1960. Among the tenets of that speech—Schlesinger quotes it—stood “ ‘unequivocal support to democracy’ and opposition to dictatorship.” Once established in the White House, President Kennedy gave substance to the initiative and sent a delegation to an inter-American gathering at Punta del Este, Uruguay. This same conference became the setting for the confrontation, already recounted, between Che Guevara and JFK’s Latin America man Richard Goodwin. The conference’s joint declaration explicitly made a series of pledges, the first of them: “To improve and strengthen democratic institutions through application of the principle of self-determination by the people.”

  President Kennedy may have understood the realities of Latin political development, but the language of fine promises stopped at the hard edge of purpose once Kennedy decided to go after Fidel Castro. Washington counted its friends and marked its supposed enemies. There would be a second conference at Punta del Este in early 1962, by which time Washington had begun shopping for support to eject Cuba from the OAS. Chile under President Jorge Alessandri, a moderate in office since 1958, refused to participate. Just a few weeks later suggestions for projects in Chile went to Kennedy’s Special Group.

  These would be the first of many CIA projects in this land in the Southern Cone of South America. If the United States could get the right people elected to the Chilean National Assembly, the government in Santiago could act against Cuba without fear of domestic consequences. In early April 1962 the CIA put two fresh ideas before the Special Group, one to strengthen the organization of Chile’s Christian Democrats, the party considered most in tune with U.S. interests; the other to help the Radical Party, a movement farther to the right. Initially the Special Group approved $50,000. That merely turned on the spigot. Before the summer ended, the group approved another $180,000 for the Christian Democrats alone.

  A pair of decisions in early 1963 provided more cash to the Radical Party. That failed to keep the Radicals from losing their place as the country’s largest political grouping in municipal elections in the spring. The Christian Democrats henceforth became the agency’s main bet. And bet Langley did. On August 30, 1963, the Special Group continued the Chilean political action payments. More than a dozen proposals in all gained approval during the first two years.

  One such project came directly from the president. Kennedy, attending a meeting of Harvard’s Board of Overseers, spoke to fellow member David Rockefeller about enlisting big business to fight Castro. Spurred by Kennedy administration guarantees of investments, Rockefeller formed the Business Group for Latin America, which ultimately enlisted more than three dozen multinational corporations. In the same way the CIA conducted relations with labor or cultural groups, Langley assigned a case officer full time to handle the Business Group (the first of these left to work directly for the organization). The Business Group provided cover for CIA officers and contributed to political action, serving as a conduit for agency funds. Meanwhile, in Chile’s uncertain economic climate, by 1967 the investment insurance had cost American taxpayers $600 million.

  From the U.S. perspective, Chile no longer seemed a potential addition to Washington’s anti-Castro mobilization. The existing Chilean government had presided over ballooning foreign debt while huge inflation sapped peoples’ salaries. The influx of foreign investment seemed more like a fire sale of the national patrimony. At the same time the Socialist/Communist coalition had barely been defeated in the previous election. Another presidential election impended. Suddenly Washington saw CIA political action as a necessity.

  The opposition would be formidable. Salvador Allende Gossens, scion of a clan of prominence, studied medicine but loved politics, and in 1933 broke his family’s tradition of ties to the Radicals by helping found the Socialist Party. Allende became a Socialist leader in Valparaiso, first elected to the Chamber of Deputies, the lower house of the assembly, in 1937. Two years later he appeared in national government for the first time as minister of public health. Allende innovated public policy, creating a national health care system and contributing to Chile’s social security system. In 1943 he became secretary general of the Socialists. From the mid-1940s Allende began broadening the left, beginning with cooperation between the Socialists and Chilean Communists. In the 1952 presidential election, Allende’s first, he finished last in a field of four candidates. Ariel Dorfman, the noted Chilean poet, has written that he began hearing Allende’s name as a young man in the mid-fifties, ranked with such leaders as the Argentinian Arturo Frondisi or the Guyanese Cheddi Jagan. In the 1958 elections Allende lost again, but barely—the margin of his defeat wafer thin. By 1964 there could be no doubt that Salvador Allende was the man to beat.

  None of this came as any surprise to the secret warriors. They put the groundwork in place late the year before. On December 19, 1963, the Special Group approved a onetime payment to a Chilean democratic front that included Radicals, conservatives, and liberals. At the same time senior Christian Democratic Party (CDP) operatives were in Washington, meeting the CIA’s J. C. King to tout their candidate Eduardo Frei Montalva and beg for agency money to fill their campaign coffers. Colonel King, receptive to these entreaties, on Christmas Eve sent Director John McCone a proposal memorandum. The bid involved half a million dollars, quite a present. McCone wanted to hear more. Just before New Year’s, Hank Knocke, his executive assistant, asked King to clarify a few points. The baron represented the CDP as the fastest-growing party in Chile and the only one able to beat the Communists among their own base constituency. The concept ruled out any possibility the agency might influence CDP policy because Langley’s money would have to be unattributable and Frei unwitting. But King nevertheless expected Frei to move in directions the United States favored.

  Washington’s deliberations took time, in part because this set of decisions marked the transition from Kennedy to Johnson. As the secret-war wizards deliberated, the price tag went up. When Frei’s emissaries pursued their request again, in Santiago with U.S. embassy officials in March 1964, the CDP wanted a million dollars. The White House viewed this with equanimity. Ralph A. Dungan, a Kennedy holdover and political adviser whose special interest was Latin America and who would soon go to Santiago as ambassador, told Mac Bundy that he would not balk at $750,000. Dungan promised to talk to Desmond FitzGerald and find out exactly how much cash was at stake. The CIA now said it had no money for this project. The Special Group would have to approve use of the DCI’s contingency fund. Bundy convened the group in the White House Situation Room on April 2, but deliberations failed to settle doubts. The group did okay CIA’s own plan for propaganda and political action during the election campaign.

  At this point FitzGerald, who had replaced King as Latin America baron, visited Santiago for a personal reconnaissance. He closeted himself with station chief Rudolph Gomez, reviewing CIA assets and operational possibilities apart from the CDP. Rudy Gomez, formerly Colonel King’s deputy, had good lines to Langley and knew of King’s earlier contacts with Chilean politicos. He set up a meeting for Des to hear the party’s needs directly. That took place on May 5. In an unrelated but troubling development, a few days earlier, while complaining to a U.S. diplomat of a blabbermouth associate, Eduardo Frei revealed that he was not, after all, unwitting of the CIA.

  Richard Helms related what FitzGerald had learned to the Special Group, which met again on May 14, directing McCone to disburse $1.25 million from his contingency fund for the project. A small portion would be aimed at the Radical Party, but most went to support Frei. There would be no CIA task force, but an interagency group that periodically reviewed political payments would monitor the election operation. At Langley, Helms began daily sessions with deputy Tom Karamessines, familiar with political action from his days in Greece; FitzGerald; and the DO’s Chile branch officers.

  The rapidity with which the agency swung into gear once fresh money flowed indicates that Rudy Gomez had worked overtime to prepare this campaign. Television not being well established in Chile at that time, radio figured importantly. By June a CIA propaganda group had produced a series of political advertisements, purchasing air time to broadcast them twenty times a day on Santiago and local Chilean stations. Agency assets at several Chilean radio stations, capable of direct action, began inserting items in daily news broadcasts, reports picked up and recycled by dozens of local stations. Cartoonists sketched anti-Communist drawings lampooning opponents that were printed on posters, several thousand of which went out every day. Hundreds of thousands of copies of a pastoral letter by Pope Pius XI, written years before, were reproduced with the notation “printed by citizens without political affiliation.” In other countries the CIA inserted more stories in media or solicited dire warnings from figures opposing Allende rule. In Chile these were reported as legitimate news. And there was “black” propaganda, scurrilous items purportedly from Communist or Socialist sources to discredit their supposed authors. In all, the propaganda operations cost $3 million. Langley considered the scare campaign the best part of its Chile operation.

  Gomez conducted a second political project distinct from the CIA’s help to the CDP. This effort tried to dissuade the Radical Party from serious participation in the election. The agency wished to avoid drawing votes away from Frei or the possibility that the Radicals might throw their support to the Socialists.

  Finally there was popular political mobilization, enlisting blocs of voters, interest groups, and the like—recognizable from any American election—which the CIA did on its own, independently of Frei’s party. The agency supported an anti-Communist womens’ group, and it pursued at least two projects with Chilean labor unions and another with the Business Group.