Allende’s excess-profits deduction inverted the US compensation rule for expropriation

Evidence

More disturbing to neoliberals was the government’s move to nationalise Chile’s largest US-owned copper mines. US law required ‘adequate, prompt and effective compensation’ for expropriated US companies. As the campaign for Permanent Sovereignty over Natural Resources discussed in Chapter 3 intensified, Allende received a standing ovation in the United Nations General Assembly when he explained that his government would deduct ‘excess profits’ amounting to US$774 million from the compensation it paid the two biggest US mining companies, leaving them with a debt to the Chilean government. What Allende termed Chile’s ‘reasoned rebellion’ challenged the inequalities of the global economy, giving substance to the demand for economic self-determination. — Jessica Whyte, The Morals of the Market, 318

Categorization

• XREF: The ‘excess profits’ deduction echoes how citizens dispossess creditors in a debt audit — a theme in the reader’s austerity literature (e.g. Jason Hickel, ‘The Divide’). — connects to: The Allende government displaced market allocation to remedy material inequalities — Jessica Whyte, The Morals of the Market: Human Rights…, 317; Extortion can function as a market-displacement tactic rather than mere income extraction — Diego Gambetta, The Sicilian Mafia The Business of…, 492
• DEFINE: Reveals the ‘adequate, prompt and effective compensation’ standard that anchors the regulatory-takings norm in international investment law.
• SEED: Article angle: the sovereign debt audit as ‘reasoned rebellion’ — how a government that owes a substantive debt can instead assert that foreign capital owes it, reversing the creditor-debtor framing.

Broader Connections

• The Allende government displaced market allocation to remedy material inequalities #expands (0.75) — Jessica Whyte, The Morals of the Market, 317
• Extortion can function as a market-displacement tactic rather than mere income extraction #expands (0.70) — Diego Gambetta, The Sicilian Mafia The Business of…, 492