area handbook series

Chile

a country study



Chile

a country study

Federal Research Division

L ibrary of Congress

Edited by

Rex A. Hudson

Research Completed

March 1994
On the cover: A figure (lukutuel) from a seventeenth-century

Mapuche woman's belt called nimintraruwe

Third Edition, First Printing, 1994.

Library of Congress Cataloging-in-Publication Data

Chile : a country study / Federal Research Division, Library of Congress ; edited by Rex A. Hudson. — 3rd ed.

p. cm. — (Area handbook series, ISSN 1057-5294)

(DA pam ; 550-77)

"Supersedes the 1982 edition of Chile : a country study, edited

by Andrea T. Merrill." —T.p. verso. "Research completed March 1994."

Includes bibliographical references (pp. 381-417) and index.

ISBN 0-8444-0828-X

1. Chile. I. Hudson, Rex A., 1947- . II. Library of Congress. Federal Research Division. III. Series. IV. Series: DA pam ; 550-77.

F3058.C5223 1994 94-21663

983—dc20 CIP

Headquarters, Department of the Army

DA Pam 550-77

For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402
Foreword

This volume is one in a continuing series of books prepared by

the Federal Research Division of the Library of Congress under

the Country Studies/Area Handbook Program sponsored by the

Department of the Army. The last two pages of this book list the

other published studies.

Most books in the series deal with a particular foreign country,

describing and analyzing its political, economic, social, and national

security systems and institutions, and examining the interrelationships of those systems and the ways they are shaped by cultural

factors. Each study is written by a multidisciplinary team of social

scientists. The authors seek to provide a basic understanding of

the observed society, striving for a dynamic rather than a static portrayal. Particular attention is devoted to the people who make

up the society, their origins, dominant beliefs and values, their com- mon interests and the issues on which they are divided, the nature

and extent of their involvement with national institutions, and their

attitudes toward each other and toward their social system and

political order.

The books represent the analysis of the authors and should not

be construed as an expression of an official United States government position, policy, or decision. The authors have sought to adhere to accepted standards of scholarly objectivity. Corrections,

additions, and suggestions for changes from readers will be welcomed for use in future editions.

Louis R. Mortimer

Chief

Federal Research Division

Library of Congress

Washington, DC 20540-5220

iii

Acknowledgments

The book editor would like to thank the chapter authors for reviewing and commenting on various chapters. Their expertise

contributed greatly to the overall quality of the book.

The authors are grateful to individuals in various agencies of

the United States government, international organizations, private

institutions, and Chilean diplomatic offices who offered their time,

special knowledge, or research facilities and materials to provide

information and perspective. None of these individuals, however,

is in any way responsible for the work of the authors.

Thanks also go to Ralph K. Benesch, who oversees the Country Studies/Area Handbook Program for the Department of the

Army. In addition, the book editor would like to thank members

of the Federal Research Division who contributed directly to the

preparation of the manuscript. These include Sandra W. Meditz,

who reviewed all textual and graphic materials, served as liaison

with the sponsoring agency, and provided numerous substantive

and technical contributions; Marilyn L. Majeska, who managed

editing; Andrea T. Merrill, who edited the tables, figures, and Bibliography and managed production; and Barbara Edgerton and

Izella Watson, who did the word processing. Thanks also go to Vincent Ercolano, who performed the copyediting of the chapters;

Cissie Coy, who performed the final prepublication editorial review;

and Joan C. Cook, who compiled the index. Linda Peterson and

Malinda B. Neale of the Library of Congress Printing and Process- ing Section performed the phototypesetting, under the supervision

of Peggy Pixley.

David P. Cabitto provided invaluable graphics support, including preparation of several maps and the cover and chapter illus- trations. He was assisted by Harriett R. Blood, who prepared the

topography and drainage map, and by the firm of Greenhorne and

O'Mara.

Finally, the book editor acknowledges the generosity of the in- dividuals and the public, private, diplomatic, and international

agencies who allowed their photographs to be used in this study.

v

Contents

Page Foreword iii Acknowledgments v Preface xiii Table A. Chronology of Important Events xv Country Profile xix Introduction XXXV

Chapter 1. Historical Setting 1 Paul W. Drake

PRE-COLUMBIAN CIVILIZATIONS 6 CONQUEST AND COLONIZATION, 1535-1810 7 Politics and War in a Frontier Society 7 The Colonial Economy 10 Bourbon Reforms, 1759-96 11 WARS OF INDEPENDENCE, 1810-18 13 CIVIL WARS, 1818-30 14 ARISTOCRATIC REPUBLICANISM, 1830-91 16 The Conservative Era, 1830-61 17 The Liberal Era, 1861-91 22 PARLIAMENTARY REPUBLIC, 1891-1925 27 Urbanization 28

Arturo Alessandri's Reformist Presidency, 1920-25 . . 30

MILITARY INTERVENTIONS, 1925-32 32 The 1925 Constitution 32

Carlos Ibanez's First Presidency, 1927-31 33 MASS DEMOCRACY, 1932-73 34

Alessandri's Second Presidency, 1932-38 34

Popular Front Rule, 1938-41 36

Juan Antonio Rios's Presidency, 1942-46 37

Gabriel Gonzalez Videla's Presidency, 1946-52 39

Ibanez's Second Presidency, 1952-58 41 Jorge Alessandri's Rightist Term, 1958-64 44

Eduardo Frei's Christian Democracy, 1964-70 45

Salvador Allende's Leftist Regime, 1970-73 47 MILITARY RULE, 1973-90 51 Neoliberal Economics 53

vii
The 1980 Constitution 54

The Crisis of 1982 and the Erosion of Military

Rule 55 Chapter 2. The Society and Its Environment 59 J. Samuel Valenzuela

GEOGRAPHY 63

A Long, Narrow Nation 63

Natural Regions 67

THE PEOPLE 75 Formation of the Chilean People 75 Current Demographic Profile 80

URBAN AREAS 82

RURAL AREAS 88

THE LABOR FORCE AND INCOME LEVELS 90

SOCIAL ORGANIZATIONS AND ASSOCIATIONS 94

WELFARE INSTITUTIONS AND SOCIAL PROGRAMS . . 98

Social Security 100

Health Programs 103

Housing Policies 107

EDUCATION 108

Enrollments 108

Administration and Reforms 112

RELIGION AND CHURCHES 118

Religious Affiliations and Church Organization 118

Religion in Historical Perspective 120

Forms of Popular Religiosity 125

ATTITUDES TOWARD FAMILY AND GENDER 128

Divorce, Abortion, and Contraception 128

Family Structure and Attitudes Toward Gender

Roles 131

WHITHER CHILE? 133

Chapter 3. The Economy 137

Sebastian Edwards and Alexandra Cox Edwards

EVOLUTION OF THE ECONOMY 141 The Colonial Era to 1950 141 Economic Policies, 1950-70 144

The Popular Unity Government, 1970-73 145

Economic Crisis and the Military Coup 146

The Military Government's Free-Market

Reforms, 1973-90 149

The Return to Democracy, 1990 158

THE CURRENT STRUCTURE OF THE ECONOMY 161 Industry and Manufacturing 162

Vlll
Mining 163 Agriculture 165

Fishing and Forestry 166

Energy 170

Banking and Financial Services 173 Transportation 174 Telecommunications 178

Tourism 180

Construction 180

INCOME, LABOR UNIONS, AND THE PENSION

SYSTEM 182

Employment and Unemployment 182

Income Distribution and Social Programs 183 Unions and Labor Conflicts 184

Economic Results of the Pensions Privatization 187

MACROECONOMIC POLICY, INFLATION, AND THE

BALANCE OF PAYMENTS 188

The Central Bank and Monetary Policy 188

Exchange-Rate Policy and the Balance

of Payments 190

Trade Policy and Export Performance 191 THE FUTURE OF THE ECONOMY 192

Chapter 4. Government and Politics 197

Arturo Valenzuela

CONSTITUTIONAL HISTORY 200

Development and Breakdown of Democracy,

1830-1973 200

Imposition of Authoritarian Rule 203

The Constitution of 1980 205

Authoritarianism Defeated by Its Own Rules 208

The Constitutional Reforms of 1989 211

THE STATE AND GOVERNMENT INSTITUTIONS

IN CHILE 217

The State and the System of Government 217

The Presidency 220

The Legislative Branch 225

The Courts 231

The Autonomous Powers 233

Regional and Local Government 238

PARTIES AND THE ELECTORAL SYSTEM 241 The Party System 241 The Electoral System 242

ix
The Parties of the Left 245

The Parties of the Center 248

The Parties of the Right 250

THE 1993 PRESIDENTIAL ELECTION 252

THE CHURCH, BUSINESS, LABOR, AND THE MEDIA . . 255

The Church 255

Business 257

Labor 259

The Media 261

FOREIGN RELATIONS 263

Relations with the United States 264

Other Foreign Relations 267

FUTURE CHALLENGES OF DEMOCRATIC

CONSOLIDATION 271

Chapter 5. National Security 275

Adrian J. English and Scott D. Tollefson

MILITARY TRADITION AND THE EVOLUTION OF

THE ARMED FORCES 279

Early History 279

Genesis of the Armed Forces, 1814-36 280

Peru-Bolivia Confederation War, 1836-39 282

War of the Pacific, 1879-83 284

Development of the Armed Forces 287

Growth of United States Influence 290

Repression and Human Rights Violations 291

Civil-Military Relations 294

MISSION AND ORGANIZATION OF THE ARMED

FORCES 295

Mission 295

Command Structure 296

Army 299

Navy 302

Air Force 305

Civic Action 308

Defense Spending 308

MANPOWER AND TRAINING 310

Recruitment and Conditions of Service 310

Training 311

Uniforms, Ranks, and Insignia 312

FOREIGN SOURCES OF MATERIEL 316

THE DEFENSE INDUSTRY 319

Army Ordnance 320

Naval Equipment 321

x
Aircraft Equipment 322

Cardoen Industries 323

Minor Defense Manufacturers 325

THE SECURITY FORCES 326

The Carabineros 326

The Investigations Police 329

Internal Security Intelligence Organizations 330

PUBLIC ORDER AND INTERNAL SECURITY 331

Incidence of Crime 331

Narcotics Trafficking 333

Criminal Justice 334

The Penal System 335

Terrorism 336

NATIONAL SECURITY OUTLOOK 338

Appendix. Tables 341

Bibliography 381

Glossary 419

Index 431

Contributors 459

List of Figures

1 Administrative Divisions (Regions) of Chile, 1993 xxxiv

2 Three South American Viceroyalties, ca. 1800 12

3 Territorial Adjustments among Bolivia, Chile,

and Peru, 1874-1929 24

4 Topography and Drainage 66

5 Easter Island (Isla de Pascua), 1986 68

6 Estimated Population by Age and Gender, 1991 82

7 Employment by Sector, 1991 92

8 Gross Domestic Product (GDP) by Sector, 1992 164

9 Primary Petroleum, Natural Gas, and Minerals

Activity, 1993 172

10 Transportation System, 1993 176

11 Government Structure, 1993 224

12 Chile's Claims in Antarctica, 1993 270

13 Organization of the Armed Forces and Security

Forces, 1993 298

14 Administrative and Operational Structure of the Army,

1993 300

15 Administrative and Operational Structure of the Navy,

1993 304

xi
16 Administrative and Operational Structure of the Air

Force, 1993 306

17 Officer Ranks and Insignia, 1993 314

18 Enlisted Ranks and Insignia, 1993 315

Xll
Preface

Like its predecessor, this study is an attempt to examine objectively and concisely the dominant historical, social, environmental, economic, governmental, political, and national security aspects

of contemporary Chile. Sources of information included books, journals, other periodicals and monographs, official reports of governments and international organizations, and numerous interviews

by the authors with Chilean government officials. Chapter bibliographies appear at the end of the book; brief comments on sources recommended for further reading appear at the end of each chapter. To the extent possible, place-names follow the system adopted

by the United States Board on Geographic Names. Measurements

are given in the metric system; a conversion table is provided to

assist readers unfamiliar with metric measurements (see table 1

,

Appendix). A glossary is also included.

Spanish surnames generally are composed of both the fatner's and the mother's family names, in that order, although there are numerous variations. In the instance of Eduardo Frei Ruiz-Tagle,

for example, Frei is his patronymic and Ruiz-Tagle is his mother's

maiden name. In informal use, the matronymic is often dropped,

a practice that usually has been followed in this book, except in cases where the individual could easily be confused with a relative or someone with the same patronymic. For example, Frei RuizTagle, the current president, is the son of former president Eduardo Frei Montalva.

The body of the text reflects information available as of March

31, 1994. Certain other portions of the text, however, have been

updated. The Introduction discusses significant events that have

occurred since the completion of research, the Country Profile in- cludes updated information as available, and the Bibliography lists recently published sources thought to be particularly helpful to the

reader.

Xlll

Table A. Chronology of Important Events

Period Description SIXTEENTH CENTURY

October 21, 1520

1535-37

1540 February 12, 1541 1553-58

1557

1560s

Ferdinand Magellan first European to sight (but not identify) Chilean shores. Diego de Almagro leads first Spanish expedition

to explore Chile. Pedro de Valdivia conquers Chile. Valdivia founds Santiago.

Indigenous Araucanian uprising. Mapuche rebel chief Lautaro defeated. Alonso de Ercilla y Zuniga composes epic poem "La Araucana." SEVENTEENTH CENTURY

1603

1609

1643

1647 EIGHTEENTH CENTURY

1730

1759-96

1791 NINETEENTH CENTURY

September 18, 1810

1814-17 October 2, 1814

February 12, 1817

First army-like force, or militia, established in Chile. Pope Paul V authorizes war against Araucanians. Although warfare against Araucanians continues, Indians help Spaniards repel invasion

of southern Chile by Brouwer expedition. Earthquake destroys Santiago.

Earthquake causes great destruction in Santiago and most of central Chile. Bourbon reforms give Chile greater indepen- dence from Viceroyalty of Peru. Governor Ambrosio O'Higgins y

Ballenary out- laws encomiendas and forced labor.

Criollo leaders of Santiago declare independence from Spain.

The Reconquest (La Reconquista).

Spanish troops from Peru reconquer Chile at Battle of Rancagua.

Troops led by Bernardo O'Higgins Riquelme,

father of Chile, and General Jose de San Martin defeat Spanish in Battle of Chacabuco.

XV
Table A. —Continued

Period Description 1817 O'Higgins (1817-23) becomes supreme director of Chile.

April 5, 1818

August 1811

Chile wins formal independence after San

Martin defeats last large Spanish force in Battle of Maipu.

First provisional constitution approved in plebiscite. 1818-30

April 17, 1830

Period of civil wars.

Liberals defeated by Conservatives at Battle of Lircay. 1830-61 1830-37

1833 1836-39

Period of Conservative rule.

"Portalian State" initiated by businessman Diego Portales Palazuelos, who dominates

politics. New Portalian constitution implemented.

Chile wages war against Peru-Bolivia Confederation. January 1839

1861-91 1879-83

Chile wins war by defeating Peruvian fleet at Casma on January 12 and Bolivian Army at Yungay on January 20. Period of Liberal rule. Chile wages war against Bolivia and Peru in War of the Pacific. 1883

1891

Chile seals victorv w th Treatv of Ancon.

Civil war pits supporters of President Jose Manuel Balmaceda Fernandez against Congress, which wins. TWENTIETH CENTURY

1891-1925

1925 1945

Period of Parliamentary Republic.

Chile's second major constitution approved.

Gabriela Mistral wins Nobel Prize for Literature. September 4, 1970

1971

Popular Unity's Salvador Allende Gossens wins

presidential election. Pablo Neruda wins Nobel Prize for Literature.

XVI
Table A. —Continued

Period Description September 11, 1973

September 1973-90

1980

1988 1990

March 11, 1994

Military led by General Augusto Pinochet Ugarte overthrows Allende government.

Period of military rule under General Pinochet. New military-designed constitution is approved

in a plebiscite.

Plebiscite held on Pinochet rule. Transition to democracy begins with pre- sidency of Patricio Aylwin Azocar. Aylwin is succeeded by Eduardo Frei RuizTagle.

XVII

Country Profile

Country

Official Name: Republic of Chile (Republica de Chile).

Short Name: Chile.

Term for Citizen(s): Chilean(s).

Capital: Santiago.

NOTE—The Country Profile contains updated information as available.

XIX
Geography

Size: Totals 756,950 square kilometers (nearly twice the size of

California); land area: 748,800 square kilometers, including Easter Island (Isla de Pascua; 118 square kilometers), Islas Juan

Fernandez (179 square kilometers), and Isla Sala y Gomez but ex- cluding claimed Chilean Antarctic Territory (Territorio Chileno

Antartico), which covers 1,249,675 square kilometers (not recognized by the United States).

Coastline: 6,435 kilometers (continental Chile).

Maritime Claims: Contiguous zone: twenty-four nautical miles;

continental shelf: 200 nautical miles; exclusive economic zone: 200

nautical miles; territorial sea: twelve nautical miles.

Disputes: Bolivia has sought a sovereign corridor to Pacific Ocean

since ceding Antofagasta to Chile in 1883; Rio Lauca water rights

in dispute between Bolivia and Chile; short section of southern

boundary with Argentina indefinite; Lago del Desierto (Desert

Lake) region under international arbitration as a result of a border conflict between Argentina and Chile; Chile's territorial claim

in Antarctica partially overlaps Argentina's claim.

Topography and Climate: One of narrowest countries in world,

averaging 177 kilometers wide (ninety kilometers wide at thinnest

point in south and 380 kilometers across at widest point in north).

Rugged Andes Mountains run down eastern side of country. Cordillera Domeyko (Domeyko mountain chain) in northern part of

country runs along coast parallel to Andes. Five north-to-south

natural regions: far north (Norte Grande), consisting of dry brown

hills and sparse vegetation and containing extremely arid Atacama Desert and Andean plateau; near north (Norte Chico), a semiarid region between Rio Copiapo and Santiago; central Chile (Chile

Central), most densely populated natural region, including three

largest metropolitan areas—Santiago, Valparaiso, and Concepcion—and fertile Central Valley (Valle Central), with temperate,

Mediterranean climate; heavily forested south (Sur de Chile), south

of Rio Bio-Bio, containing cool and very rainy (especially during

winter) lake district and crisscrossed by hundreds of rivers; and

far south (Chile Austral), sparsely populated, forested, constantly

cold and stormy, with many fjords, inlets, twisting peninsulas, and

islands. Land use: 7 percent arable (of which 29 percent irrigated),

16 percent meadows and pasture, 21 percent forest and woodland,

and 56 percent other, including 1 percent irrigated. Temperate rain

forest totals 14,164,045 hectares. Annual rate of deforestation

(1981-85): 0.7 percent. Nearly 607,030 hectares clear-cut (stripped

xx
of all trees) since 1978. Seasons: spring—September 21 to December

20; summer—December 21 to March 20; autumn—March 21 to June 20; and winter—June 21 to September 20. Principal Rivers: Aconcagua, Baker, Bfo-Bfo, Imperial, Loa

(Chile's longest at about 483 kilometers), Maipo, Maule, Palena,

Token, and Valdivia.

Principal Lakes: Del Toro, General Carrera, Llanquihue, Puyehue, Ranco, Rupanco, Sarmiento, and Villarrica.

Society

Population: 13.7 million (July 1993 estimate), with 1.6 percent aver- age annual population growth rate between 1982 and 1992. Projected

annual population growth rate 1.5 percent for 1991-2000. Density

in 1993 eighteen persons per square kilometer, with great regional

variations. Valparaiso Region, Bfo-Bfo Region, and Metropolitan

Region of Santiago contained 63 percent of population, with about

39 percent of total population, or 5.3 million people, in Metropolitan Region of Santiago (1992). Population about 86 percent urban,

14 percent rural. Urban population annual growth rate in 1960-91

,

2.6 percent; projected 1991-2000, 1.8 percent. Of some 335 communities nationally in 1993, poorest twenty-one located in regions

of La Araucanfa (eleven), Bfo-Bfo (five), and Coquimbo (five),

together containing 2.6 percent of national population.

Ethnic Groups: Mestizo (mixed native American and European

ancestry), 66 percent; European, 25 percent; native American, 7 percent; and other, 2 percent. Under law of September 28, 1993,

state recognizes Mapuche (also called Araucanian), Aymara, Rapa

Nui, Quechua, Colla, Alacalufe, and Yagan as main indigenous

communities. Native Americans totaled 1.3 million in 1992, in- cluding 928,069 Mapuche, 48,477 Aymara, and 21,848 Rapa Nui.

Quechua and Aymara located in north; Alacalufe and Ona in south;

Mapuche, who speak Mapudungu, in south and central Chile,

mostly around Temuco; Pascuene and Huilliche on Easter Island.

Only Mapuche and former Huilliche islanders managing to sur- vive culturally on mainland.

Official Language: Spanish (called Castellano in Chile).

Education and Literacy: As of 1966, primary education eight years and secondary education four years. School year runs from March

through December. In mid-1980s primary school attendance varied

between 93 percent and 96 percent; by 1989 secondary school

enrollment had risen to 75 percent. Students in universities and

xxi
professional institutes numbered about 153,100 in 1989. Adult liter- acy rate 94.6 percent, with average of 7.5 years of schooling (1992).

Health: Heavy investments in programs for very poor and in water

and sanitation systems helped lower infant mortality rates and raise

life expectancy, giving country a relatively high human development index (HDI) world ranking of thirty-sixth in 1992. Proportion of Chileans living in poverty decreased from 45 percent in 1985

to 33 percent in 1992. Birthrate 22.4 per 1,000 population; fertility rate 2.4 children born per woman (1993); mortality rate 5.6 deaths

per 1,000 population (1992). In 1993 life expectancy estimated at seventy-one years for males and seventy-seven years for females

(total). Estimated 1993 infant mortality rate below 1991 rate of 14.6

per 1,000 live births. Population with access to health services in

1988-90, 95 percent; to safe water, 86 percent rural/urban average, 100 percent urban; to sanitation, 83 percent. Twenty-eight

recorded cholera cases in first nine months of 1993, with no deaths.

In 1984-89 population per physician averaged 1,230. Social security benefits expenditures as a percentage of GDP: 9.9 percent

(1980-89).

Religion: In 1992 census, of population aged fourteen years and

older (totaling 9,775,222), 76 percent declared themselves Roman

Catholic, 13 percent Evangelical or Protestant, 7 percent indiffer- ent or atheist, and 4 percent other, including small Jewish, Muslim,

and Christian Orthodox communities. Roman Catholic Church

source of significant opposition to military regime of General Augusto Pinochet Ugarte (1973-90), playing key role in protection

of human rights. Roman Catholic Church's influence in society

has diminished since 1970s because of substantial growth of Pentecostal (Evangelical) churches.

Economy

Salient Features of the Economy: International trade liberalized

since 1979. Has had fundamentally sound market economy. Since

1990 democratically elected government has maintained exportled growth, fiscal discipline, and relatively low inflation. Exchangerate policy, based on daily adjustments of nominal exchange rate and aimed at encouraging exports, has been at center of country's

economic success. Gross domestic public investment in 1991: 2.9 per- cent of GDP; gross domestic private investment in 1991: 15.9 per- cent of GDP. Gross national savings in 1992: 18.4 percent of GDP.

Average annual rate of inflation 20 percent in 1980-90 period. Inflation 18.7 percent in 1991, 12.7 percent in 1992, and 12.2 percent

in 1993; projected to be 10.0 percent in 1994 and 9.0 percent xxn
in 1995. Unemployment in 1992 about 4.5 percent, according

to National Statistics Institute. Estimated 1994 budget US$11.4

billion. Gross Domestic Product (GDP): One of Latin America's most

economically developed countries, with a diversified, free-market

economy. In 1992 GDP US$33.7 billion. In 1992 GDP per capita

between US$2,515 and US$2,800, rising to US$3,160 in 1993.

During 1990-93 period, poorest 20 percent of population ex- perienced increase in income of 30 percent. GDP growth rate in 1992: 10.4 percent. Slowed to 6 percent in 1993. GDP growth

projected by Central Bank to be 4.5 percent in 1994, and by

Economist Intelligence Unit (EIU) to be 8 percent in 1995.

Gross National Product (GNP): In 1990 GNP about US$25.5

billion; 2.8 percent annual growth rate in 1980-90 period. In 1992

GNP per capita US$2,550; 1.1 percent annual per capita growth

rate in 1980-90 period.

Agriculture: Agriculture, forestry, and fishing accounted for 8.2

percent of GDP in 1992, according to EIU, or 6.2 percent according to Inter-American Development Bank (IDB). Exports totaled

US$1.2 billion (1991). Major crops: apples, corn, grapes, plums,

potatoes, rice, sugar beets, and wheat, as well as forest products.

Leading agricultural export: fruit. Leading agricultural imports:

bananas, coffee, corn, cotton, dry milk, rice, soybean, sugar, tea, and wheat. Although free-market oriented, agricultural sector pro- tected by "price bands." Agriculture accounted for 18 percent of

labor force (1989-91).

Industry: One of most highly industrialized countries in Latin

America. Manufacturing accounted for 20.8 percent of GDP (1992),

according to EIU, or 35.9 percent, according to IDB. Industrial

exports totaled US$4 billion (1992), surpassing copper exports

(US$3.9 billion) for first time, but slowed in 1993. Industry ac- counted for 20.8 percent of labor force (1992). Mining accounted

for 6.7 percent of GDP (1992), with copper still most important

product in 1993, despite plunging prices (accounting for 30 per- cent of total value of exports in 1991). World's leading copper

producer since 1982. Estimated 2 million tons of copper produced

in 1993, up from 1 .9 million tons in 1992. Opening of new copper

mines and increasing output at existing mines expected to boost

country's share of world copper production from 17.5 percent in

1990 to about 33 percent in 2000, or 3.3 million tons by 2000. Chile

produces about twenty-four nonmetallic minerals, with exports

amounting to US$191 million (1993).

xxm
Energy: National energy reliance on petroleum and natural gas, 60 percent; hydroelectric power, 25 percent; and coal, 15 percent.

In 1992 kilowatt capacity 5,769,000; kilowatt-hours produced,

22,010 million. Annual rate of change in commercial energy con- sumption (1980-90), 2.9 percent. However, electricity demand rose by 8 percent in 1993, and growth of more than 6 percent was ex- pected for 1994. Domestic oil consumption estimated at 138,527

barrels per day (1991). Oil reserves declining at 10 percent per year;

stood at 300 million barrels in 1992. Estimated 17.9 billion barrels per day produced in 1991, equivalent to only 13 percent of

domestic oil consumption. In 1992 Argentina and Chile agreed to build a trans-Andean oil pipeline. Gas production amounted to about 4 billion cubic meters in 1991 . Work began on gas pipeline

from Argentina in 1992.

Services: Accounted for 29.1 percent of GDP (1992), according

to EIU, or 57.9 percent, according to IDB. Employed 26.4 per- cent of labor force (1991). Tourism one of key service industries.

Total visitors—half of them from Argentina—grew from 1 .35 million in 1991 to estimated 1.5 million in 1992; visitors spent esti- mated US$900 million in 1992 and 1993.

Balance of Payments: Continued trade surpluses since 1982 led

to accumulation of unprecedented US$9.9 billion in international reserves by end of 1993. Country's foreign investment inflow in

first eleven months of 1993 rose to US$2.3 billion, a 92 percent

increase over same period of 1992. Current account deficit in 1993

estimated at about 4.5 percent of GDP, or US$1 .9 billion. Expected

to broaden to US$2.4 billion, or 5.3 percent of GDP, in 1994.

However, capital account surplus in 1993 created US$800 million overall balance of payments surplus (US$50 million more

than in 1992). Balance of payments surplus in 1994 estimated

at only US$100 million, with current account deficit of US$2.4

billion. Imports: Principally petroleum, wheat, capital goods, spare parts,

motor vehicles, and raw materials, mainly from European Union

(EU), United States, Japan, and Brazil. Imports expenditures in

1993 estimated at US$10.1 billion, with 20 percent growth of imports of capital goods. Liberal import policy. Import duty a flat 11 percent for most products, except for expensive luxury goods

or commodities governed by price band, which often carry additional surtaxes; regional accords aiming to cut tariffs to zero. Imports also subjected to 18 percent value-added tax (VAT) on c.i.f. (cost, insurance, and freight) value. Duty-free imports of materials

xxiv
used in products for export within 180 days, with prior authorization. Free-zone imports, if reexported, exempt from duties and

VAT. Central Bank approval needed for all imports.

Exports: Principally copper (accounting for about 35 percent of

exports), industrial products, molybdenum, iron ore, wood pulp,

seafood, fruits, and nuts, mainly to EU, United States, Japan, and

Brazil. Constituted 34 percent of GDP in 1990; 7 percent annual

growth rate 1980-90. International recession and lower commodity

prices caused value of exports to fall 7 percent in 1993, but ex- ports constituted about 36 percent of GNP that year. Estimated

1993 total export earnings of US$9.3 billion down by US$800 million, creating country's first trade deficit in more than a decade.

In 1991-93 Japan was Chile's largest export market, surpassing

Chile's exports to United States. In 1993 Chile was third-largest

supplier of wine to United States, after Italy and France.

Foreign Debt: Despite substantial improvement in country's exports, foreign debt rose from US$17.4 billion in 1991 to US$18.9

billion in 1992 (or US$19. 1 billion according to International Monetary Fund) to an estimated US$20.2 billion in 1993. However, net

foreign debt (total debt minus net international reserves) declined

from 47 percent of GDP in 1989 to 21 percent of GDP in 1993.

By early 1991, Chile was upgraded to status of nonrestructuring

country, meaning that its debt was now considered recoverable,

thus facilitating access to voluntary capital markets. In June 1991,

Chile became first Latin American country to benefit from reduction in debt with United States within framework of President

George Bush's Initiative for the Americas agreement. In December 1993, Standard and Poor Corporation, a United States credit

rating agency, raised Chile's credit rating from investment-grade

(BBB) to BBB + for long-term debt in foreign currency.

Fiscal Year (FY): Calendar year. Exchange Rate: On September 13, 1994, Ch$405.9 = US$1

.

Transportation and Telecommunications

Roads: Totaled 79,025 kilometers, including 9,913 kilometers of

paved roads, 33,140 kilometers of gravel roads, and 35,972 kilo- meters of improved and unimproved earth roads. Pan American

Highway (Longitudinal Highway), running length of country,

forms 3,600-kilometer backbone of road system, with transversal

roads leading from it east and west. Southern extension of about

xxv
1,100 kilometers, Southern Highway, from Puerto Montt to Puerto

Yungay, opened in 1988. International highways also include AricaSantos Highway to Bolivia and Trans-Andean Highway between

Valparaiso and Mendoza, Argentina.

Motor Vehicles: 1.7 million (1994), including 1,034,370 automobiles, 403,842 vans, 49,006 buses, 126,698 trucks, 80,558 motorcycles, and 46,014 other commercial vehicles. An additional 202,000

motor vehicles expected to be registered in 1994.

Railroads: Mostly state owned, operated by State Railroad Company (Empresa de Ferrocarrilles del Estado—EFE). Totaled 7,766

kilometers. Privately owned lines, totaling 2,130 kilometers, mostly

in desert north, where northern terminal is Iquique. No passenger

trains to northern Chile from Santiago. Four international rail- roads: two to Bolivia, one to northwest Argentina, and one to Peru. In 1992 Congress approved privatization of EFE, with only infra- structure remaining state owned. After period of neglect, government investment in EFE infrastructure was expected in 1993 to

total US$98 million. In July 1993, Chile and Brazil invited Bolivia

and Argentina to participate in joint effort to build interoceanic

railroad line between Chilean and Brazilian coasts. Santiago has

underground railroad system (metro).

Ports: Nine main ports: Antofagasta, Arica, Coquimbo, Iquique,

Puerto Montt, Punta Arenas, San Antonio, Talcahuano (country's

best harbor and its main naval station), and Valparaiso; also nine

others. Only four or five have adequate facilities; about ten are used primarily for coastal shipping, restricted to Chilean flag vessels. Northern mining ports include Caldera, Chariaral, Coquimbo, and Huasco. Petroleum and gas ports include Cabo Negro,

Clarencia, Puerto Percy, and San Gregorio. Main forest product

ports San Vicente and Lirquen on Concepcion Bay. Transnational transport of goods by road between Chilean ports of Antofagasta, Arica, Iquique, and Valparaiso and Brazilian ports of Santos

and Porto Alegre. Government building US$10 million commercial port in Punta Arenas to service growing number of foreign

vessels, cruise liners, and scientific ships en route to Antarctica.

Puerto Ventanas—first private port in country, located on Quinteros Bay, in Valparaiso Region—opened in 1993.

Waterways: 725 kilometers of navigable inland waterways, mainly

in southern lake district; Rio Calle Calle provides waterway to Valdivia.

Airports and Air Transport: 390 total, of which 351 are usable

airports, forty-eight of them paved. Two international airports:

Comodoro Arturo Merino Benftez International Airport at Pudahuel

xxvi
outside Santiago; Chacalluta International Airport, Arica. Three

main Chilean carriers: National Airlines (Linea Aerea Nacional

de Chile—LAN-Chile), Fast Air, and Chilean Airlines (Lfnea Aerea

del Cobre—Ladeco). By 1993 air transportation market had grown

by 56 percent since 1990. United States share of United States- Chile market increased from 34 percent in 1990 to 62 percent in

late 1993.

Telecommunications: 342 radios, 205 televisions, and sixty-eight

telephones per 1,000 people in 1990. Broadcast stations included

167 AM, no FM, 131 TV, and twelve shortwave stations. Modern

telephone system based on extensive microwave relay facilities. Total telephones in 1991 about 768,000. In October 1993, Chilesat, a Telex Chile subsidiary, joined the Americas- 1, Columbus-2, and

Unisur cable networks, a fiber-optics telecommunications system

through submarine cables linking South America with North America and Europe.

Government and Politics

Government: Multiparty republic with presidential system based on 1980 constitution, amended and approved by referendum in July 1989, with fifty-four reforms. Executive, legislative, and judicial branches. Executive power with president directly elected; successive reelection not allowed. Presidential candidates must win

majority or face runoff. Under constitutional reform approved by

Congress in February 1994, presidential term reduced from eight

to six years, the traditional term. Eduardo Frei Ruiz-Tagle, elect- ed president of Christian Democratic Party (Partido Democrata

Cristiano—PDC) on November 23, 1991, won presidential elec- tion held on December 11, 1993, and assumed presidency on March

11, 1994. National Security Council (Consejo de Seguridad Nacional—Cosena) includes president of republic, presidents of

Supreme Court and Senate, and heads of armed forces and police.

Bicameral National Congress (hereafter, Congress; located in Valparaiso): Senate, with forty-six members, including eight designated senators, serving eight-year terms; and Chamber of Deputies

with 120 members serving four-year terms. Courts include Supreme

Court (seventeen judges), sixteen appellate courts, and a number

of military courts. Administrative Subdivisions: Twelve regions (regiones), and

Metropolitan Region of Santiago. Regions each headed by an in- tendant (intendente). Regions subdivided into total of fifty-one xxvn
provinces (provincias), each headed by a governor (gobernador) and

300 municipalities (municipalidades) , each headed by a mayor (al- calde) appointed by municipal council (in towns with fewer than

10,000 inhabitants) or by president of the republic (in towns with more than 10,000 inhabitants). Lowest subdivision, communes

(comunas). Santiago, like other cities, headed by mayor.

Politics: Governing coalition, Coalition of Parties for Democracy

(Concertacion de Partidos por la Democracia—CPD), dominated

by PDC and socialists, expected to retain control in Congress, but

without increase in legislative strength it may be unable to introduce

important constitutional reform, such as composition of Constitutional Tribunal, membership and functions of Cosena, and promotion of military officers. Political Parties: Left —Communist Party of Chile (Partido

Comunista de Chile—PCCh) discredited since October 1988 plebiscite (which PCCh claimed regime would not allow Pinochet to

lose), revolution in Eastern Europe, and disintegration of Soviet

Union. Party for Democracy (Partido por la Democracia—PPD),

which is an independent-minded creation of the Socialist Party (Partido Socialista) and a member of Aylwin government's CPD coalition, became second most popular party in 1993, after PDC.

United Popular Action Movement (Movimiento de Accion Popular Unitario—MAPU), a Mapuche leftist party, quit CPD in June

1993. Christian Left (Izquierda Cristiana), a minor leftist party

and CPD member. Humanist-Green Alliance (Alianza HumanistaVerde—AHV) also left CPD in 1993. Center—PDC had most fol- lowers in 1993, with 36.2 percent of overall votes. Radical Party

(Partido Radical) supporting Frei Ruiz-Tagle in 1993. Right

National Renewal (Renovacion Nacional). Independent Democratic

Union (Union Democrata Independiente—UDI), political voice

of former military regime's economic and political elite. Although

National Renewal dominant rightist party, it and UDI main rivals for leadership of right. Union of the Centrist Center (Union de

Centro Centro—UCC) also a rightist party. On July 3, 1993,

center-right parties—National Renewal, UDI, UCC, National

Party (Partido Nacional), and Liberal Party (Partido Liberal)

agreed to form coalition called Union for the Progress of Chile

(Union por el Progreso de Chile). However, center-right remained

in disarray prior to December 1993 elections.

Foreign Relations: Pro-West, pro-democracy. Maintains relations

with more than seventy countries. Since restoration of democratic

government in 1990, has reestablished political and economic ties xxvm
with other Latin American countries, North America, Europe, and

Asia. United States-Chilean relations have improved considerably since return to democracy and progress on issue of 1976 assas- sination in Washington of former Chilean ambassador to United

States Orlando Letelier and United States citizen Ronnie Moffitt.

Although shunning multilateral regional integration schemes, en- tered into bilateral tariff-cutting accords with individual Latin

American countries—including Argentina, Bolivia, Colombia, and

Mexico—in early 1990s, as well as negotiated framework trade

agreement with United States in October 1990. Since joining Rio

Group in 1990, has played active role in promoting democracy

within inter-American system.

International Agreements and Membership: Member of Agency for the Prohibition of Nuclear Weapons in Latin America and

the Caribbean; Economic Commission for Latin America and the

Caribbean; General Agreement on Tariffs and Trade; Group of

Eleven; Group of Seventy- Seven; Inter-American Development

Bank; International Atomic Energy Commission; International

Bank for Reconstruction and Development; International Civil Aviation Organization; International Criminal Police Organization;

International Labor Organization; International Maritime Satellite Organization; International Monetary Fund; International

Office for Migration; International Telecommunications Satellite Organization; International Telecommunications Union; Latin

American Integration Association; League of Red Cross and Red

Crescent Societies; Organization of American States; Organization of Copper Exporting Countries; Rio Group; United Nations

and its main affiliated organizations; World Federation of Trade

Unions; World Health Organization; World Intellectual Property

Organization; and World Tourism Organization.

National Security

Armed Forces: Despite seventeen years of military rule (1973-90),

still exceptionally professional and generally free of factionalism or partisan politics. In 1993 combined strength at least 91,800 (including 54,000 army, 25,000 navy, and 12,800 air force). Army

reserves additional 50,000.

Defense Budget: Defense budget averaged US$1 billion annually

in 1990-93. Annual average imports of major conventional arms US$212 million in 1987-91; as a percentage of national imports

in 1990, 3.0 percent.

XXIX
Military Units: Army organized into seven military areas (areas

militares—AMs)—headquartered in Antofagasta, Santiago, Concepcion, Valdivia, Punta Arenas, Iquique, and Coihaique—and

seven divisions, one for each AM. Navy organized into four naval

zones, headquartered in Iquique, Punta Arenas, Talcahuano, and

Valparaiso. Operational command includes Fleet, Submarine Command, and Transport Force. Navy includes Navy Infantry Corps

(3,000 marines), Naval Aviation (750 members), and Coast Guard

(1,500 members). Air force organized into three commands

Combat Command, Personnel Command, and Logistical Command—four air brigades, and twelve groups or squadrons. Air

brigades headquartered in Iquique, Santiago, Puerto Montt, and

Punta Arenas. Also operated an air base on King George Island,

in Chilean Antarctic Territory.

Military Equipment: Ground forces equipped with forty-seven

AMX-13 light tanks and twenty-one AMX-30 medium battle tanks

from France; fifty M-41, sixty M-24, and 150 M4A3/M51 SuperSherman tanks from United States/Israel; and 500 armored per- sonnel carriers (APCs) from Brazil and 60-100 from United States. Navy ships include six missile destroyers, four missile frigates, and

four submarines. Marines equipped with forty French APCs. Air

force equipment includes sixteen F-5 fighters from United States,

fifteen Dassault Mirage fighters from France, and thirty-three

Hawker Hunters from Britain, as well as twenty Chilean-made strike aircraft and sixty-eight trainers (made partially or wholly by Chile).

Police: Official name: Forces of Order and Public Security. Consist of two separate law enforcement forces: Carabineros (national,

31,000-member paramilitary police force) and Investigations Police

(national, 4,000-member plainclothes organization). Carabineros or- ganized into three main zones—Northern Zone, Central Zone, and

Southern Zone—with marine and air sections. Investigations Police

operate in support of Carabineros and intelligence services of armed

forces. For example, Investigations Police operate an antinarcotics

force. In addition to law enforcement and traffic management,

Carabineros engage in narcotics suppression, border control, and

counterterrorism. Italy and Spain pledged to help Aylwin government finance and train civilian-based security force capable of combating terrorist threat. Insurgents: Various terrorist groups still sporadically active in 1993:

pro-Cuban Movement of the Revolutionary Left (Movimiento de la Izquierda Revolucionaria), United Popular Action Movement-Lautaro (Movimiento de Accion Popular Unitario-Lautaro), Lautaro

XXX
Youth Movement (Movimiento de Juventud Lautaro), Manuel

Rodriguez Patriotic Front (Frente Patriotica Manuel Rodriguez),

and Maoist-oriented Manuel Rodriguez Patriotic Front-Autonomous (Frente Patriotica Manuel Rodriguez-Autonomo). None a

serious threat to national security, but each capable of occasional

acts of terrorism.

xxxi



Introduction

THE SOUTHERNMOST NATION of Latin America and one

of the longest and narrowest nations in the world, Chile may derive its name from the indigenous Mapuche word "Chilli," which

may mean "where the land ends." The Spanish conquistadors had

heard about Chilli from the Incas of Peru, who had tried but had

failed to conquer the land. In any case, the few survivors of Diego

de Almagro's first Spanish expedition south from Peru in 1535-37

called themselves the "men of Chilli."

Despite its geographical isolation by formidable barriers—the

Andes Mountains on its eastern flank, the Atacama Desert in its northernmost area, and the Pacific Ocean on its western side

Chile traditionally has been one of South America's best educated

and most stable and politically sophisticated nations. Chile enjoyed

constitutional and democratic government for most of its history

as a republic, dating from 1818, particularly after adoption of its 1833 constitution. After a period of quasi-dictatorial rule in the

1920s and early 1930s, Chile developed a reputation for stable democratic government. Chileans have also benefited from state- run universities, welfare institutions, and, beginning in 1952, a national health system.

Throughout the 1970-90 period, Chilean national identity was

tested as the country was subjected to profound political, economic,

and social changes. Although the country began the 1970s by embarking on what soon proved to be a disastrous experiment in so- cialism, it ended the 1980s with a widely acclaimed free-market

economy and a military government that had committed itself, al- beit inadvertently through a plebiscite, to allowing a transition to democracy in 1990. Since the restoration of democracy, Chile has

served as a model for other developing nations and the East European countries that are attempting to make a similar transition to democratic government and an antistatist, free-market economy.

Yet the Chileans endured rough times before finding an economic

prescription that worked for them.

During the ill-fated Popular Unity (Unidad Popular) government of its Marxist president, Salvador Allende Gossens (1970-73),

Chile experienced uncharacteristic economic and political turbulence. As economic and political conditions deteriorated rapidly

in August 1973, the Chilean Armed Forces and even the moderate Christian Democratic Party (Partido Democrata Cristiano

PDC), Chile's largest single party, began to view the Allende xxxv
Boundary representation

not necessarily authoritative

'Pacific

Ocean

Iquiquel

Antolagastal

Is la San

Felix

(Chile)

Is la San

Ambrosio

(Chile)

( 66 Key to Regions

, Region de Tarapaca

$^ BOLIVIA

II

III

Region de Antofagasta

Region de Atacama

y "l IV Region de Coquimbo

V Region de Valparaiso

)

'? - Region Metropolitana

de Santiago

VI Region del Libertador

General Bernardo O'Higgins

1

VII Region del Maule

VIII Region del Bio-Bio

IX Region de La Araucam'a

1 X Region de Los Lagos

XI Region Aisen del General

Carlos Ibanez del Campo

1v -A XII Region de Magallanes y La Antartica Chilena

Copiapd

^V1

a nd«

La Serena) \ \

Valparaiso^. ^.Santiago

Rancagua

Vli / Talca

ARGENTINA

' Ma Sala

28- w y Gomez

I 109* ,~v,

30' W J \ 10' W

^MataverT 2 7°

10' S~

o * Easter Island

i Miles (Isla de Pascua)

— International boundary — Region boundary

B National capital

Region capital

Populated place

< Region

100 200 300 400 Kilometers "•-H—V-—H 1 100 200 300 400 Miles

Figure 1. Administrative Divisions (Regions) of Chile, 1993

government's socialist economic policies as a threat. On September 11, 1973, the armed forces shocked the world by attacking the

lightly defended presidential palace, La Moneda, with army troops

and aerial bombardment. Led by newly appointed army com- mander General Augusto Pinochet Ugarte, the bloody coup seemed

incongruously violent for a country of Chile's democratic and civil traditions, especially considering that Allende had been elected

democratically and had won a substantial 43 percent of the vote

in the March 1973 congressional elections. Not having fought a

real war since the War of the Pacific (1879-83) against Peru and

Bolivia, the army seemed to welcome a pretext for reminding

Allende 's supporters of the military option contained in their own

national motto, "By reason or by force."

In the "Historical Setting" chapter, historian Paul W. Drake

summarizes various explanations for Allende 's downfall and the

coup as posited by analysts of the different political tendencies.

Drake takes a similarly egalitarian approach to assessing blame,

noting that "there was ample blame to go around" and that

"groups at all points on the political spectrum helped destroy the

democratic order by being too ideological and too intransigent."

Prior to the coup, Chilean society had become polarized between

Allende 's supporters and the growing opposition, particularly during the culmination of the constitutional crisis in August 1973. In

political terms, society was divided into three hostile camps—the

Marxist left, the Christian Democratic center, and the conservative right. In "The Economy" chapter, economists Sebastian Edwards and Alejandra Cox Edwards blame the downfall of the

Allende government to a large extent on its disregard of "many

of the key principles of traditional economic theory. " In their analysis, Allende' s Popular Unity government was at fault, not only

because of its monetary policies but also because of its lack of at- tention to the role that the real exchange rate plays in a country's

international competition and balance of payments.

The Allende episode has remained politically charged during the

past two decades, as evidenced by the march by Socialists and Communists on La Moneda and their skirmishes with police on the

occasion of the twentieth anniversary of Allende 's overthrow. A

peculiar aspect of the historiography of the military coup, one

that is illustrative of the political sensitivities surrounding it, is how

Allende 's death has been described. Some scholars have mentioned

both versions of his death—the official military account that he committed suicide and the left-wing version that he was assassinated

by the military. Others, including historian Mark Falcoff, have

used the more noncommittal phrase that Allende "died in the

xxxvi
coup." Thanks in large part to the assassination myth that Cuban

president Fidel Castro Ruz and Colombian novelist Gabriel Garcia

Marquez helped to create, the left-wing version is still widely believed. Available evidence, however, is adequate to reasonably con- clude that Allende committed suicide with the AK-47 assault rifle given him by Castro. Scholars such as Paul E. Sigmund and James

Dunkerley believe Allende 's death was a suicide, and reference sources and mainstream news media tend to use this version.

It is fairly well known that Allende was a long-time admirer of

Chilean president Jose Manuel Balmaceda Fernandez (1886-91),

who shot himself to death while inside the Argentine legation on

September 19, 1891 , the day after his term ended. Balmaceda committed suicide as a result of his defeat in the Civil War of 1891

between his supporters and those of the National Congress (hereafter, Congress). In the weeks before the 1973 military coup, Allende, who like Balmaceda had overstepped his constitutional

authority, had made his obsession with suicide as a last resort known

to various individuals, including French president Francois Mitterrand. The coup and Allende 's death were a tragic denouement

to a chapter in Chilean history that most Chileans probably would

like to forget, just as they would like to forget the repression that

followed.

After the overthrow of the Allende government, Chile was

plunged into a long period of repressive military rule. According

to the National Commission on Truth and Reconciliation (the Rettig Commission), an eight-member investigatory body created by

the government of Patricio Aylwin Azocar (1990-94), the armed

forces and security forces were responsible for the deaths of 2,115

Chileans in the years following the 1973 coup, as well as the sys- tematic torture or imprisonment of thousands of other opponents

of the Pinochet regime.

Beginning with the Allende government and continuing with the

military regime of General Pinochet (1973-90), Chile underwent

two decades of social, economic, and political restructuring. As political scientist Arturo Valenzuela points out in the "Government

and Politics" chapter, the Pinochet regime, ironically, proved to be "the longest and most revolutionary government in the nation's

history." Although the Pinochet regime adopted a system of local government administration based on corporatism (see Glossary),

it avoided the corporatist economic policies often associated with

authoritarian military rulers and favored by Chile's industrial bourgeoisie and landowning class. Instead, Pinochet was guided by the

so-called "Chicago boys" (see Glossary), economists trained at the

University of Chicago by Milton Friedman, a spokesman for xxxvn
monetarism (see Glossary). Determined to transform Chile's statist economy, Pinochet embraced the free-market, export-oriented eco- nomic model recommended by these advisers. The policies called

for integrating the Chilean economy into the world economy,

privatizing nationalized industries as well as the social security and

health sectors, sharply reducing the number of public employees,

adopting monetarist policies, deregulating the labor market, and

carrying out a sweeping tax reform, among other measures. By the late 1980s, the Chilean economy was again booming, and

other developing countries were looking to it as an economic model.

The regime's drive to privatize was an important indicator of the

transition to a market economy. Of about 550 firms under state control in the 1970s, fewer than fifty remained so by the end of

1991 . Whether Chile's structural transformations could have been

carried out by a democratic government is unclear. By the early

1990s, Argentina's democratically elected president, Carlos Saul

Menem, had achieved comparable reforms without sacrificing

democracy or human rights. However, the success of the Pinochet

model in Chile probably had less to do with authoritarianism per

se than it did with the authoritarian implementation of antistatist,

free-market policies.

Fortunately for the future of Chilean democracy, Pinochet was

unable to carry out his plan to permanently abolish traditional political parties and institutions and continue ruling as Chile's president for most of the 1990s. His mistake (and Chile's gain) was to hold a plebiscite on a key provision of the Pinochet constitution,

which voters had approved on September 11, 1980. The 1980 constitution provided for the gradual restoration of democracy by 1989,

but it would have extended Pinochet's presidency through most

of the 1990s. An overconfident Pinochet proceeded with the constitutionally mandated plebiscite on October 5, 1988, and was

shocked when nearly 55 percent of registered voters indicated their

preference for open elections in late 1989, while only 43 percent

voted for allowing Pinochet to remain president through 1997. According to Arturo Valenzuela in the "Government and Politics"

chapter, the opposition basically outfoxed Pinochet and won the

plebiscite "following Pinochet's rules."

Aylwin, a Christian Democrat, easily won the long-awaited

presidential election on December 14, 1989, as the candidate of

the Coalition of Parties for Democracy (Concertacion de Partidos

por la Democracia—CPD), winning 55.2 percent of the vote. In

concurrent congressional elections, the CPD also won a majority

of elected seats in both houses of Congress. However, the coali- tion was unable to offset the nine Pinochet-designated senators,

xxxvm
making the CPD's plans for further reform of the military-designed

constitution unattainable for the foreseeable future.

When Aylwin (1990-94) took office as president on March 11,

1990, he inherited one of the strongest economies in Latin America,

although the gross domestic product (GDP—see Glossary) growth

rate in 1990 was only 2.1 percent. In addition to continuing

Pinochet's free-market policies, Aylwin enhanced the former re- gime's foreign trade policy by further reducing import tariffs from

15 percent to 11 percent. Whereas the free-market policies adopted by Uruguay in 1990 met with strong resistance from a population accustomed to a generous cradle-to-grave welfare system, in

Chile similar policies met with support from all sectors of society.

Chile emerged not only as a showcase of a successful transition to moderate democratic government but also as a widely admired eco- nomic model for the developing world, achieving a GDP growth

rate of 5.5 percent in 1991, with an unemployment rate of only

6.5 percent, and an unprecedented 9 percent GDP growth rate in

1992. The GDP growth rate reportedly slowed to about 5.5 per- cent in 1993, but the economy remained strong. In 1993 unemployment was only 5 percent, and inflation was down to 12 percent.

Moreover, thanks to the economic policy of President Aylwin'

minister of finance, Alejandro Foxley Riesco, total investment in

Chile in 1993 was an impressive 27 percent of GDP, while Chile

invested a comparable percentage of its GDP in other countries,

including Argentina.

Chile's economic reforms had their downside. As Samuel Valenzuela points out, the Pinochet regime's social and economic policies led to increased socioeconomic inequalities, and urban and rural

poverty remained extensive. The severe structural transformations,

combined with the two harsh recessions and high debt-service obligations, aggravated the already high inequality of income distri- bution. According to Chilean sociologists Cristobal Kay and Patricio

Silva, who was health undersecretary in the early 1990s, extreme

poverty (see Glossary) still affected nearly 55 percent of the rural

population in 1990. The standard of living of many Chileans was

further reduced by the declining quality of schooling and health

care and inadequate land reform. Although the regime made heavy

investments in programs for the very poor, thus helping to lower

the infant mortality rate and raise life expectancy, its land reform measures were not particularly effective. Chile in 1987 remained

in the category of countries with high inequality in the distribution of landholdings, with a Gini coefficient (see Glossary) of 0.64,

according to the United Nations Development Programme.

xxxix
The Aylwin government funneled at least 20 percent more

resources into social programs, such as education, housing, and

health, by raising taxes and seeking foreign assistance. Under the

Aylwin government, the income of the lowest quintile of the population increased by 30 percent in 1990-93. By 1992 the proportion

of Chileans living in poverty had decreased to 33 percent, from

45 percent in 1985. This amounted to 4.2 million Chileans living

in poverty in 1993, with 1.2 million living in extreme poverty.

The Aylwin government also continued the privatization of social security, begun by the military regime in 1981. By the end

of Aylwin 's term, Chile's pension reform was the envy of the world.

Officials from developing as well as developed nations were visit- ing Chile to see how it was done. By 1994 the system was managing assets of US$19.2 billion, giving Chile a savings rate similar

to some Asian nations. Thanks in large part to its pension fund,

Chile now has a strong capital market consisting of stocks, bonds,

and other financial instruments.

As a democratic political model, the Aylwin government had a major handicap, namely the military, which, according to Arturo

Valenzuela, has served as a virtually autonomous power within

the government. With the help of its rightist allies in Congress,

the military demonstrated its influence by derailing the Aylwin

government's cautious but determined attempts to prosecute military officers for past human rights abuses. Aylwin refused to support the enactment of a blanket amnesty law, such as the one approved by Uruguay's General Assembly for military officers ac- cused of human rights abuses committed between 1973 and 1978.

The military's rightist allies in Congress also thwarted the Aylwin government's attempts to enact reforms, such as one that would

have eliminated the designated senators and another that would

have replaced the military-designed binomial electoral system (see

Glossary) with a system of proportional representation. Despite his

setbacks in enacting reforms, Aylwin made good use of the strong

presidential powers provided by the Pinochet-designed constitution. For example, he succeeded in enacting a constitutional

reform law restoring the country's tradition of elected local governments and another limiting the power of the military courts to trying only those military personnel on active duty.

Aylwin 's generally very successful presidency, particularly his

handling of the economy, assured a continuation of democratic

government under another politically moderate president, Eduardo

Frei Ruiz-Tagle, the well-regarded son of Eduardo Frei Montalva

(1964-70). one of Chile's most respected presidents. Frei RuizTagle entered politics only in 1989, when he ran successfully for

xl
a Senate seat from Santiago. He was elected PDC president in 1991

,

winning 70 percent of the vote. Although a consensus candidate

for the PDC presidency, Frei was particularly favored by the PDC's

right-wing faction, popularly known as the guatones (fat men). The

party's other factions—the left-wing's chascones (bushy-haired men)

and the center's renovadores (renewalists)—favored other candidates.

On May 23, 1993, Frei defeated his Socialist Party (Partido Socialista) rival, Ricardo Lagos Escobar, to obtain the CPD's

presidential nomination, with a lopsided vote of 60 percent to 38

percent. Thanks in part to Aylwin's strong performance in the social, economic, and political areas, in part to Frei's political in- heritance, and in part to continued divisiveness among the rightist

parties, there was never any doubt that Frei would win. As chairman of the Senate's key Finance and Budget Committee, Frei had

earned a reputation as a fiscal moderate. His positive public rat- ing, according to a Center for Public Studies (Centro de Estudios

Publicos—CEP)-Adimark poll ofJuly 1993, was a remarkable 75

percent, even higher than Aylwin's 73 percent positive rating.

Indeed, Frei's coalition easily won the presidential election on December 11, 1993, with 57.4 percent of the vote, compared with

24.7 percent for Arturo Alessandri Besa, Frei's closest challenger

and candidate of the newly formed center-right coalition called the

Union for the Progress of Chile (Union por el Progreso de Chile).

Frei received the largest popular mandate of any Chilean leader

since 1931. In sharp contrast to the presidential elections of September 4, 1970, the unexciting elections of December 11, 1993,

lacked left-wing and right-wing rhetoric. The vast majority of

Chileans, enjoying Latin America's strongest economy, were apparently content to let the government remain in the hands of the

political center, namely Frei Montalva's son. Although Frei RuizTagle, unlike his late father, is not known for his public oratory,

Chileans regarded his low-key, nonconfrontational, and statesmanlike campaigning style, as well as his penchant for consensusbuilding, as positive traits. Frei Ruiz-Tagle appears to have a better chance than Aylwin

had to make the executive stronger vis-a-vis the military, not only

because of his powerful mandate but also because the political right

is becoming less protective of the military's prerogatives within the

military-designed political system. In addition, Frei Ruiz-Tagle,

unlike his father's rightist alliance, allied himself with the Socialist

Party, thus strengthening social and political harmony. Nevertheless, daunting challenges in the form of military resistance face

Frei in his plans to seek to amend the Pinochet-era constitution. These plans include abolishing the designated Senate seats,

xli
reforming the electoral system, and making the army commander,

General Pinochet, and the other military commanders accountable to elected officials. Frei's political agenda also includes less politically sensitive goals, such as improving secondary and higher

education, consolidating Chile's political democracy, modernizing

public services, and giving priority to rural development and eradication of poverty.

On the foreign front, Frei appears to be inclined to reverse Chile's

uninterest in regional trade pacts. In particular, his government

is reassessing the potential benefits of joining the Southern Cone

Common Market (Mercado Comun del Cono Sur—Mercosur; see Glossary) and expects that Chile will become an associate member by January 1995. After the United States Congress ratified the

North American Free Trade Agreement (NAFTA—see Glossary)

in November 1993, Chile began lobbying to join a similar agreement with the United States (one that would drop the "North"

from NAFTA), citing President William Jefferson Clinton's position that Chile is "next in line" to join NAFTA. Total bilateral

trade between Chile and the United States amounted to US$4.1

billion in 1993.

Frei's coalition maintained a majority (seventy) of the 120 seats in the lower house of Congress, the Chamber of Deputies, but fell short of the eighty it needed for a two-thirds voting bloc. Its lack

of majority support in the forty-six-member Senate also seemed

to preclude passage of constitutional amendments, which require a three-fifths majority in both houses. Like its predecessor, the Frei

government's efforts are likely to be hampered by the nonelected

senators appointed by the Pinochet regime (of whom only eight are still serving) and by the binomial electoral system, which the

military adopted for the 1989 elections in order to strengthen the

hand of the rightists.

Furthermore, unlike its pre-coup democracy, Chile's democracy

of the 1990s is expected to remain fettered by a military with a

strong institutional role in government, a military that will not likely

tolerate a departure from the economic policies that constitute the

principal accomplishment of its seventeen years in power. Even

Frei's stated intention to push legislation to relieve the Copper Corporation (Corporacion del Cobre—Codelco) of its constitutional

obligation to give the armed forces 10 percent of its annual earnings entails a risk of antagonizing the military. In 1993 this contribution amounted to US$197 million, almost one-fifth of the total defense budget. However, one casualty of a financial scandal at Codelco that broke in January 1994 could be the army. The copper unions asked the army to give up its 10 percent share of

xlii
Codelco's annual sales as a patriotic gesture. Although the army

ignored this request, Congress was planning to discuss military

spending later in the year, leaving open the possibility that the army

could be compelled to make the sacrifice to head off additional budget cuts. Frei's relations with the military may determine how successful

he is in achieving his stated objectives, but confrontation with the

military does not appear to be his style. Indeed, in his address to Congress on May 21, 1994, Frei avoided the most controversial

issue, his lack of power to appoint or dismiss the military commanders. The only feasible resolution of the dilemma of Pinochet's

continuing influence in government and what Frei's government

refers to as "authoritarian enclaves" may need to await the general's

scheduled retirement in 1997. Even then, Chile's transition to democracy will not be fully consolidated until reform of constitutional anachronisms, such as the immunity of military commanders

from presidential dismissal, the binomial electoral system, and the

designated senators. However, there is no guarantee that Pinochet's

departure will allow for the rapid implementation of these needed

reforms.

September 15, 1994 Rex A. Hudson

xliii

Chapter 1. Historical Setting
A textilefigure depicting a tree ftemu, meaning the tree Temu divaricatum),

from a seventeenth-century Mapuche woman

3s belt called nimintrariiwe
FROM ONE OF THE MOST neglected outposts of the Spanish

Empire, Chile developed into one of the most prosperous and

democratic nations in Latin America. Throughout its history,

however, Chile has depended on great external powers for economic

exchange and political influence: Spain in the colonial period, Brit- ain in the nineteenth century, and the United States in the twentieth century.

Chile's dependence is made most evident by the country's heavy

reliance on exports. These have included silver and gold in the

colonial period, wheat in the mid-nineteenth century, nitrates up

to World War I, copper after the 1930s, and a variety of commodities sold overseas in more recent years. The national economy's

orientation toward the extraction of primary products has gone hand

in hand with severe exploitation of workers. Beginning with the

coerced labor of native Americans during the Spanish conquest,

the exploitation continued with mestizo (see Glossary) peonage on

huge farms in the eighteenth and nineteenth centuries and brutal

treatment of miners in the north in the first decade of the twentieth century. The most recent victimization of workers occurred

during the military dictatorship of Augusto Pinochet Ugarte (1973-

90), when unions were suppressed and wages were depressed, un- employment increased, and political parties were banned.

Another persistent feature of Chile's economic history has been

the conflict over land in the countryside, beginning when the

Spaniards displaced the indigenous people during their sixteenthcentury conquest. Later chapters of this struggle have included the

expansion of the great estates during the ensuing four centuries

and the agrarian reform efforts of the 1960s and 1970s.

Politically, Chile has also conformed to several patterns. Since

winning independence in 1818, the nation has had a history of

civilian rule surpassed by that of few countries in the world. In

the nineteenth century, Chile became the first country in Latin

America to install a durable constitutional system of government,

which encouraged the development of an array of political parties.

Military intervention in politics has been rare in Chile, occurring

only at times of extraordinary social crisis, as in 1891, 1924, 1925,

1932, and 1973. These interventions often brought about massive

transformations; all the fundamental changes in the Chilean political system and its constitutions have occurred with the intervention of the armed forces, acting in concert with civilian politicians.

3
Chile: A Country Study

From 1932 to 1973, Chile built on its republican tradition by

sustaining one of the most stable, reformist, and representative

democracies in the world. Although elitist and conservative in some

respects, the political system provided for the peaceful transfer of

power and the gradual incorporation of new contenders. Undergirding that system were Chile's strong political parties, which were

often attracted to foreign ideologies and formulas. Having thoroughly permeated society, these parties were able to withstand crushing

blows from the Pinochet regime of 1973-90.

Republican political institutions were able to take root in Chile

in the nineteenth century before new social groups demanded participation. Contenders from the middle and lower classes gradually were assimilated into an accommodating political system in which

most disputes were settled peacefully, although disruptions related

to the demands of workers often met a harsh, violent response. The

system expanded to incorporate more and more competing regional,

anticlerical, and economic elites in the nineteenth century. The

middle classes gained political offices and welfare benefits in the

opening decades of the twentieth century. From the 1920s to the

1940s, urban laborers obtained unionization rights and participated in reformist governments. In the 1950s, women finally ex- ercised full suffrage and became a decisive electoral force. And by

the 1960s, rural workers achieved influence with reformist parties,

widespread unionization, and land reform.

As the political system evolved, groups divided on either side

of six main issues. The first and most important in the nineteenth

century was the role of the Roman Catholic Church in political,

social, and economic affairs. Neither of the two major parties, the

Conservative Party and the Liberal Party, opposed the practice

of Catholicism. However, the Conservatives defended the church's

secular prerogatives; the Liberals (and later the Nationals, Radicals, Democrats, and Marxists) took anticlerical positions.

The second source of friction was regionalism, although less virulent than in some larger Latin American countries. In the north

and south, reform groups became powerful, especially the Conservatives holding sway in Chile's Central Valley (Valle Central),

who advocated opposition to the establishment. Regional groups

made a significant impact on political life in Chile: they mobilized

repeated rebellions against the central government from the 1830s

through the 1850s; helped replace a centralizing president with a

political system dominated by the National Congress (hereafter,

Congress) and local bosses in the 1890s; elected Arturo Alessandri

Palma (1920-24, 1925, 1932-38) as the chief executive representing

the north against the central oligarchy in 1920; and cast exceptional

4
Historical Setting

percentages of their ballots for reformist and leftist candidates (especially Radicals, Communists, and Socialists) from the 1920s to the 1970s. Throughout the twentieth century, leaders outside Santiago also pleaded for administrative decentralization until the

Pinochet government devolved greater authority on provincial and

municipal governments and even moved Congress from Santiago

to Valparaiso.

The third issue dividing Chileans—social class —grew in importance from the nineteenth century to the twentieth century. Although

both the Conservatives and the Liberals represented the upper stra- tum, in the nineteenth century the Radicals began to speak on

behalf of many in the middle class, and the Democrats built a base

among urban artisans and workers. In the twentieth century, the

Socialists and Communists became the leaders of organized labor.

Along with the Christian Democratic Party, these parties attracted

adherents among impoverished people in the countryside and the

urban slums.

In the twentieth century, three other issues became salient,

although not as significant as divisions over social class, regionalism, or the role of the church. One was the cleavage between city

and country, which was manifested politically by the leftist parties' relative success in the urban areas and by the rightist groups

in the countryside. Another source of strife was ideology; most

Chilean parties after World War I sharply defined themselves in

terms of programmatic and philosophical differences, often imported

from abroad, including liberalism, Marxism, corporatism (see Glossary), and communitarianism (see Glossary). Gender also became

a political issue and divider. After women began voting for president in 1952, they were more likely than men to cast ballots for

rightist or centrist candidates.

As Chile's political parties grew, they attracted followers not only on the basis of ideology but also on the basis of patron-client rela- tionships between candidates and voters. These ties were particularly important at the local level, where mediation with government

agencies, provision of public employment, and delivery of public

services were more crucial than ideological battles waged on the

national stage. Over generations, these bonds became tightly woven,

producing within the parties fervent and exclusive subcultures nurtured in the family, the community, and the workplace. As a result,

by the mid-twentieth century the parties had politicized schools,

unions, professional associations, the media, and virtually all other

components of national life. The intense politicization of modern

Chile has its roots in events of the nineteenth century.

5
Chile: A Country Study

During the colonial period and most of the twentieth century,

the central state played an active role in the economy until many

of its functions were curtailed by the military government of General

Pinochet. State power was highly centralized from the 1830s to the

1970s, to the ire of the outlying provinces.

Although normally governed by civilians, Chile has been

militaristic in its dealings with native peoples, workers, and neighboring states. In the twentieth century, it has been a supporter of

arbitration in international disputes. In foreign policy, Chile has

long sought to be the strongest power on the Pacific Coast of South

America, and it has always shied away from diplomatic entanglements outside the Americas.

Pre-Columbian Civilizations

At the time the Spanish arrived, a variety of Amerindian societies inhabited what is now Chile. No elaborate, centralized, sedentary civilization reigned supreme, even though the Inca Empire

had penetrated the northern land of the future state. As the

Spaniards would after them, the Incas encountered fierce resistance

from the indigenous Araucanians, particularly the Mapuche tribe,

and so did not exert control in the south. During their attempts

at conquest in 1460 and 1491, the Incas established forts in the

Central Valley of Chile, but they could not colonize the region.

In the north, the Incas were able to collect tribute from small groups

of fishermen and oasis farmers but were not able to establish a strong

cultural presence.

The Araucanians, a fragmented society of hunters, gatherers,

and farmers, constituted the largest native American group in Chile.

A mobile people who engaged in trade and warfare with other in- digenous groups, they lived in scattered family clusters and small

villages. Although the Araucanians had no written language, they

did use a common language. Those in what became central Chile were more settled and more likely to use irrigation. Those in the

south combined slash-and-burn agriculture with hunting.

The Araucanians, especially those in the south, became famous

for their staunch resistance to the seizure of their territory. Scholars

speculate that their total population may have numbered 1 million

at most when the Spaniards arrived in the 1530s; a century of European conquest and disease reduced that number by at least half. During the conquest, the Araucanians quickly added horses and

European weaponry to their arsenal of clubs and bows and arrows. They became adept at raiding Spanish settlements and, albeit in

declining numbers, managed to hold off the Spaniards and their

descendants until the late nineteenth century.

6
Historical Setting

The Araucanians' valor inspired the Chileans to mythologize

them as the nation's first national heroes, a status that did nothing,

however, to elevate the wretched living standard of their descendants. Of the three Araucanian groups, the one that mounted the

most resistance to the Spanish was the Mapuche, meaning "people

of the land."

Conquest and Colonization, 1535-1810

Politics and War in a Frontier Society

Chile's first known European discoverer, Ferdinand Magellan,

stopped there during his voyage on October 21 , 1520. A concerted

attempt at colonization began when Diego de Almagro, a companion of conqueror Francisco Pizarro, headed south from Peru in

1535. Disappointed at the dearth of mineral wealth and deterred

by the pugnacity of the native population in Chile, Almagro

returned to Peru in 1537, where he died in the civil wars that took

place among the conquistadors.

The second Spanish expedition from Peru to Chile was begun

by Pedro de Valdivia in 1540. Proving more persistent than

Almagro, he founded the capital city of Santiago on February 12,

1541. Valdivia managed to subdue many northern Amerindians,

forcing them to work in mines and fields. He had far less success with the Araucanians of the south, however.

Valdivia (1541-53) became the first governor of the Captaincy

General of Chile, which was the colonial name until 1609. In that

post, he obeyed the viceroy of Peru and, through him, the king

of Spain and his bureaucracy. Responsible to the governor, town

councils known as cabildos administered local municipalities, the

most important of which was Santiago, which was the seat of a

royal audiencia (see Glossary) from 1609 until the end of colonial rule. Seeking more precious metals and slave labor, Valdivia established fortresses farther south. Being so scattered and small,

however, they proved difficult to defend against Araucanian attack. Although Valdivia found small amounts of gold in the south, he rea- lized that Chile would have to be primarily an agricultural colony.

In December 1553, an Araucanian army of warriors, organized

by the legendary Mapuche chief Lautaro (Valdivia' s former ser- vant), assaulted and destroyed the fort of Tucapel. Accompanied

by only fifty soldiers, Valdivia rushed to the aid of the fort, but

all his men perished at the hands of the Mapuche in the Battle of

Tucapel. Valdivia himself fled but was later tracked down, tor- tured, and killed by Lautaro. Although Lautaro was killed by

Spaniards in the Battle of Mataquito in 1557, his chief, Caupolican,

7
Chile: A Country Study

continued the fight until his capture by treachery and his subsequent execution by the Spaniards in 1558. The uprising of 1553-58

became the most famous instance of Araucanian resistance; Lautaro in later centuries became a revered figure among Chilean nationalists. It took several more years to suppress the rebellion.

Thereafter, the Araucanians no longer threatened to drive the Spanish out, but they did destroy small settlements from time to time.

Most important, the Mapuche held on to their remaining territory

for another three centuries.

Despite inefficiency and corruption in the political system,

Chileans, like most Spanish Americans, exhibited remarkable

loyalty to crown authority throughout nearly three centuries of

colonial rule. Chileans complained about certain policies or offi- cials but never challenged the regime. It was only when the king

of Spain was overthrown at the beginning of the nineteenth century

that Chileans began to consider self-government.

Chileans resented their reliance on Peru for governance, trade,

and subsidies, but not enough to defy crown authority. Many

Chilean criollos (creoles, or Spaniards born in the New World) also resented domination by the peninsulares (Spaniards, usually officials,

born in the Old World and residing in an overseas colony), especially in the sinecures of royal administration. However, local Chilean elites, especially landowners, asserted themselves in politics well before any movement for independence. Over time, these

elites captured numerous positions in the local governing apparatus, bought favors from the bureaucracy, co-opted administrators

from Spain, and came to exercise informal authority in the countryside.

Society in Chile was sharply divided along ethnic, racial, and

class lines. Peninsulares and criollos dominated the tiny upper class. Miscegenation between Europeans and the indigenous people

produced a mestizo population that quickly outnumbered the

Spaniards. Farther down the social ladder were a few African slaves and large numbers of native Americans.

The Roman Catholic Church served as the main buttress of the

government and the primary instrument of social control. Compared with its counterparts in Peru and Mexico, the church in Chile was not very rich or powerful. On the frontier, missionaries were more important than the Catholic hierarchy. Although usually it supported the status quo, the church produced the most important defenders of the indigenous population against Spanish atrocities. The most famous advocate of human rights for the native

Americans was a Jesuit, Luis de Valdivia (no relation to Pedro

8
Pedro de Valdivia,

founder of Santiago

and Chile's first governor

Courtesy Embassy of

Chile, Washington

de Valdivia), who struggled, mostly in vain, to improve their lot in the period 1593-1619.

Cut off to the north by desert, to the south by the Araucanians,

to the east by the Andes Mountains, and to the west by the ocean, Chile became one of the most centralized, homogeneous colonies

in Spanish America. Serving as a sort of frontier garrison, the colony

found itself with the mission of forestalling encroachment by Araucanians and by Spain's European enemies, especially the British

and the Dutch. In addition to the Araucanians, buccaneers and

English adventurers menaced the colony, as was shown by Sir Francis Drake's 1578 raid on Valparaiso, the principal port. Because

Chile hosted one of the largest standing armies in the Americas,

it was one of the most militarized of the Spanish possessions, as well as a drain on the treasury of Peru.

Throughout the colonial period, the Spaniards engaged in frontier

combat with the Araucanians, who controlled the territory south

of the Rio Bio-Bio (about 500 kilometers south of Santiago) and

waged guerrilla warfare against the invaders. During many of those

years, the entire southern region was impenetrable by Europeans.

In the skirmishes, the Spaniards took many of their defeated foes as slaves. Missionary expeditions to Christianize the Araucanians

proved risky and often fruitless. Most European relations with the native Americans were hostile,

resembling those later existing with nomadic tribes in the United

9
Chile: A Country Study

States. The Spaniards generally treated the Mapuche as an enemy

nation to be subjugated and even exterminated, in contrast to the

way the Aztecs and the Incas treated the Mapuche, as a pool of

subservient laborers. Nevertheless, the Spaniards did have some

positive interaction with the Mapuche. Along with warfare, there

also occurred some miscegenation, intermarriage, and acculturation between the colonists and the indigenous people.

The Colonial Economy

The government played a significant role in the colonial economy.

It regulated and allocated labor, distributed land, granted monopolies, set prices, licensed industries, conceded mining rights, created

public enterprises, authorized guilds, channeled exports, collect- ed taxes, and provided subsidies. Outside the capital city, however,

colonists often ignored or circumvented royal laws. In the countryside and on the frontier, local landowners and military officers

frequently established and enforced their own rules. The economy expanded under Spanish rule, but some criollos

complained about royal taxes and limitations on trade and production. Although the crown required that most Chilean commerce

be with Peru, smugglers managed to sustain some illegal trade with

other American colonies and with Spain itself. Chile exported to Lima small amounts of gold, silver, copper, wheat, tallow, hides,

flour, wine, clothing, tools, ships, and furniture. Merchants,

manufacturers, and artisans became increasingly important to the

Chilean economy.

Mining was significant, although the volume of gold and silver extracted in Chile was far less than the output of Peru or Mexico.

The conquerors appropriated mines and washings from the native

people and coerced them into extracting the precious metal for the

new owners. The crown claimed one-fifth of all the gold produced,

but the miners frequently cheated the treasury. By the seventeenth

century, depleted supplies and the conflict with the Araucanians

reduced the quantity of gold mined in Chile.

Because precious metals were scarce, most Chileans worked in

agriculture. Large landowners became the local elite, often maintaining a second residence in the capital city. Traditionally, most

historians have considered these great estates (called haciendas or

fundos) inefficient and exploitive, but some scholars have claimed

that they were more productive and less cruel than is conventionally depicted.

The haciendas initially depended for their existence on the land

and labor of the indigenous people. As in the rest of Spanish America, crown officials rewarded many conquerors according to the

10
Historical Setting

encomienda (see Glossary) system, by which a group of native Americans would be commended or consigned temporarily to their care. The grantees, called encomenderos, were supposed to Christianize

their wards in return for small tribute payments and service, but

they usually took advantage of their charges as laborers and ser- vants. Many encomenderos also appropriated native lands. Throughout the sixteenth and seventeenth centuries, the encomenderos fended

off attempts by the crown and the church to interfere with their

exploitation of the indigenous people.

The Chilean colony depended heavily on coerced labor, whether

it was legally slave labor or, like the wards of the encomenderos, nominally free. Wage labor initially was rare in the colonial period; it became much more common in the eighteenth and nineteenth centuries. Because few native Americans or Africans were available,

the mestizo population became the main source of workers for the

growing number of latifundios (see Glossary), which were basically

synonymous with haciendas.

Those workers attached to the estates as tenant farmers became

known as inquilinos. Many of them worked outside the cash econo- my, dealing in land, labor, and barter. The countryside was also

populated by small landholders (minifundistas), migrant workers

(afuerinos), and a few Mapuche holding communal lands (usually

under legal title). Bourbon Reforms, 1759-96

The Habsburg dynasty's rule over Spain ended in 1700. The

Habsburgs' successors, the French Bourbon monarchs, reigned for the rest of the colonial period. In the second half of the eighteenth

century, they tried to restructure the empire to improve its productivity and defense. The main period of Bourbon reforms in Chile

lasted from the coronation of Charles III (1759-88) in Spain to the end of Governor Ambrosio O'Higgins y

Ballenary's tenure in

Chile (1788-96).

The Bourbon rulers gave the audiencia of Chile (Santiago) greater

independence from the Viceroyalty of Peru (see fig. 2). One of the

most successful governors of the Bourbon era was the Irish-born

O'Higgins, whose son Bernardo would lead the Chilean independence movement. Ambrosio O'Higgins promoted greater self- sufficiency of both economic production and public administration,

and he enlarged and strengthened the military. In 1791 he also outlawed encomiendas and forced labor.

The Bourbons allowed Chile to trade more freely with other colonies, as well as with independent states. Exchange increased with

Argentina after it became the Viceroyalty of the Rio de la Plata

11
Chile: A Country Study

Source: Based on information from A. Curtis Wilgus, Historical Atlas of Latin America, New

York, 1967, 112. Figure 2. Three South American Viceroyalties, ca. 1800

in 1776. Ships from the United States and Europe were engaging

in direct commerce with Chile by the end of the eighteenth century. However, the total volume of Chilean trade remained small

because the colony produced few items of high unit value to outsiders. Freer trade brought with it greater knowledge of politics abroad,

especially the spread of liberalism in Europe and the creation of

the United States. Although a few members of the Chilean elite flirted with ideals of the Enlightenment, most of them held fast to the traditional ideology of the Spanish crown and its partner, the

Roman Catholic Church. Notions of democracy and independence,

12
Historical Setting

let alone Protestantism, never reached the vast majority of mestizos and native Americans, who remained illiterate and subordinate.

Wars of Independence, 1810-18

Aristocratic Chileans began considering independence only when

the authority and legitimacy of the crown were cast in doubt by

Napoleon Bonaparte's invasion of Spain in 1807. Napoleon replaced

the Spanish king with his brother, Joseph Bonaparte. On the peninsula, Spanish loyalists formed juntas that claimed they would govern

both the motherland and the colonies until the rightful king was

restored. Thus, Chileans, like other Spanish Americans, had to confront the dilemma of who was in charge in the absence of the

divine monarch: the French pretender to the throne, the Spanish

rebels, or local leaders. The latter option was tried on September

18, 1810, a date whose anniversary is celebrated as Chile's independence day. On that day, the criollo leaders of Santiago, employing the town council as a junta, announced their intention to govern

the colony until the king was reinstated. They swore loyalty to the

ousted monarch, Ferdinand VII, but insisted that they had as much

right to rule in the meantime as did subjects of the crown in Spain

itself. They immediately opened the ports to all traders.

Chile's first experiment with self-government, the Old Fatherland

(Patria Vieja, 1810-14), was led by Jose Miguel Carrera Verdugo

(president, 1812-13), an aristocrat in his mid-twenties. The militaryeducated Carrera was a heavy-handed ruler who aroused widespread

opposition. One of the earliest advocates of full independence, Ber- nardo O'Higgins Riquelme, captained a rival faction that plunged

the criollos into civil war. For him and for certain other members

of the Chilean elite, the initiative for temporary self-rule quickly es- calated into a campaign for permanent independence, although other

criollos remained loyal to Spain. Among those favoring independence, conservatives fought with liberals over the degree to which

French revolutionary ideas would be incorporated into the movement. After several efforts, Spanish troops from Peru took advantage of the internecine strife to reconquer Chile in 1814, when they

reasserted control by winning the Battle of Rancagua on October

2. O'Higgins and many of the Chilean rebels escaped to Argentina.

During the Reconquest (La Reconquista) of 1814-17, the harsh

rule of the Spanish loyalists, who punished suspected rebels, drove more Chileans into the insurrectionary camp. More and more members of the Chilean elite were becoming convinced of the necessity

of full independence, regardless of who sat on the throne of Spain.

As the leader of guerrilla raids against the Spaniards, Manuel

Rodriguez became a national symbol of resistance.

13
Chile: A Country Study

When criollos sang the praises of equality and freedom, however,

they meant equal treatment for themselves in relation to the peninsulares and liberation from Spanish rule, not equality or freedom

for the masses of Chileans. The criollos wanted to assume leadership positions previously controlled by peninsulares without upsetting

the existing social and economic order. In that sense, the struggle

for independence was a war within the upper class, although the

majority of troops on both sides consisted of conscripted mestizos

and native Americans.

In exile in Argentina, O'Higgins joined forces with Jose de San

Martin, whose army freed Chile with a daring assault over the

Andes in 1817, defeating the Spaniards at the Battle of Chacabuco on February 12. San Martin considered the liberation of Chile

a strategic stepping-stone to the emancipation of Peru, which he saw as the key to hemispheric victory over the Spanish. Chile won

its formal independence when San Martin defeated the last large

Spanish force on Chilean soil at the Battle of Maipu on April 5,

1818. San Martin then led his Argentine and Chilean followers

north to liberate Peru; fighting continued in Chile's southern

provinces, the bastion of the royalists, until 1826 (see Genesis of

the Armed Forces, 1814-36, ch. 5). Civil Wars, 1818-30

From 1817 to 1823, Bernardo O'Higgins ruled Chile as supreme

director (president). He won plaudits for defeating royalists and

founding schools, but civil strife continued. O'Higgins alienated

Liberals and provincials with his authoritarianism, Conservatives

and the church with his anticlericalism, and landowners with his

proposed reforms of the land tenure system. His attempt to devise a constitution in 1818 that would legitimize his government failed, as did his effort to generate stable funding for the new administration. O'Higgins's dictatorial behavior aroused resistance in the

provinces. This growing discontent was reflected in the continuing opposition of partisans of Carrera, who was executed by the

Argentine regime in Mendoza in 1821, as were his two brothers

three years earlier. Although opposed by many Liberals, O'Higgins angered the Roman Catholic Church with his liberal beliefs. He maintained

Catholicism's status as the official state religion but tried to curb

the church's political powers and to encourage religious tolerance

as a means of attracting Protestant immigrants and traders. Like

the church, the landed aristocracy felt threatened by O'Higgins,

resenting his attempts to eliminate noble titles and, more important, to eliminate entailed estates.

14
Bernardo O'Higgins Riquelme,

father of Chile

Courtesy Embassy of

Chile, Washington

O'Higgins's opponents also disapproved of his diversion of

Chilean resources to aid San Martin's liberation of Peru. O'Higgins

insisted on supporting that campaign because he realized that

Chilean independence would not be secure until the Spaniards were

routed from the Andean core of the empire. However, amid mounting discontent, troops from the northern and southern provinces

forced O'Higgins to resign. Embittered, O'Higgins departed for Peru, where he died in 1842.

After O'Higgins went into exile in 1823, civil conflict continued,

focusing mainly on the issues of anticlericalism and regionalism.

Presidents and constitutions rose and fell quickly in the 1820s. The

civil struggle's harmful effects on the economy, and particularly on exports, prompted Conservatives to seize national control in 1830. In the minds of most members of the Chilean elite, the bloodshed

and chaos of the late 1820s were attributable to the shortcomings

of liberalism and federalism, which had been dominant over conservatism for most of the period. The abolition of slavery in 1823

long before most other countries in the Americas—was considered one of the Liberals' few lasting achievements. One Liberal leader

from the south, Ramon Freire Serrano, rode in and out of the

presidency several times (1823-27, 1828, 1829, 1830) but could

not sustain his authority. From May 1827 to September 1831, with

the exception of brief interventions by Freire, the presidency was

occupied by Francisco Antonio Pinto Diaz, Freire 's former vice

15
Chile: A Country Study

president. In August 1828, Pinto's first year in office, Chile abandoned its short-lived federalist system for a unitary form of government, with separate legislative, executive, and judicial branches.

By adopting a moderately liberal constitution in 1828, Pinto alienat- ed both the Federalists and the Liberal factions. He also angered

the old aristocracy by abolishing estates inherited by primogeniture (mayorazgo—see Glossary) and caused a public uproar with his

anticlericalism. After the defeat of his liberal army at the Battle

of Lircay on April 17, 1830, Freire, like O'Higgins, went into exile in Peru.

Aristocratic Republicanism, 1830-91

Scholars have long pondered why Chile was the first country in

Latin America to achieve stable civilian rule in a constitutional,

electoral, representative republic. They have also asked why Chile was more successful at constitutional government thereafter than its neighbors. One part of the answer is that Chile had fewer obstacles

to overcome because it was less disturbed by regional, church- state, and ethnic conflicts. The geographically compact and relatively

homogeneous population was easier to manage than the far-flung

groups residing in many of the other new states of the hemisphere.

As the nineteenth century wore on, slow settlement of the frontiers to the north and south provided a safety valve without crea- ting a challenge to the dominance of the Central Valley.

As with regionalism, the church issue that rent many of the new

republics was also muted in Chile, where the Catholic Church had

never been very wealthy or powerful. Some historians would also argue that Chilean criollos, because they lived on the fringe of the

empire, had more experience at self-government during the colonial

period. In addition, the Chilean elite was less fearful than many

other Spanish Americans that limited democracy would open the

door to uprisings by massive native or black subject classes. At the same time, the ruling class was cohesive and confident, its members connected by familial and business networks. The elite was

powerful partly because it controlled the main exports, until foreigners took over trade late in the nineteenth century. The rapid recov- ery of the export economy from the devastation of the wars of

independence also helped, as economic and political success and

stability became mutually reinforcing. Capitalizing on these advantages, however, would require shrewd and ruthless political engineers, victory in a war against Chile's neighbors, continued

economic growth, and some luck in the design, timing, and se- quence of political change.

16
Historical Setting

The Conservative Era, 1830-61

Members of the first political parties, the Conservatives (pelucones, or bigwigs) and the Liberals (pipiolos, or novices), began to coalesce around the church-state issue. Not only more favorably

inclined toward the church, the Conservatives were also more sympathetic than the Liberals toward the colonial legacy, authoritarian

government, the supremacy of executive powers, and a unitary

state. After their victory at the Battle of Lircay, the Conservatives

took charge, spearheaded by a Valparaiso merchant, Diego Portales Palazuelos.

The Portalian State, 1830-37

Although never president, Portales dominated Chilean politics

from the cabinet and behind the scenes from 1830 to 1837. He in- stalled the "autocratic republic," which centralized authority in

the national government. His political program enjoyed support

from merchants, large landowners, foreign capitalists, the church,

and the military. Political and economic stability reinforced each

other as Portales encouraged economic growth through free trade

and put government finances in order.

Portales was an agnostic who said that he believed in the clergy

but not in God. He realized the importance of the Roman Catholic

Church as a bastion of loyalty, legitimacy, social control, and stability, as had been the case in the colonial period. He repealed Liberal reforms that had threatened church privileges and properties.

Portales brought the military under civilian control by rewarding loyal generals, cashiering troublemakers, and promoting a vic- torious war against the Peru-Bolivia Confederation (1836-39). After

defeating Peru and Bolivia, Chile dominated the Pacific Coast of

South America. The victory over its neighbors gave Chile and its new political system a psychological boost. Chileans experienced

a surge of national enthusiasm and cohesion behind a regime ac- cepted as legitimate and efficacious.

Portales also achieved his objectives by wielding dictatorial powers, censoring the press, and manipulating elections. For the next

forty years, Chile's armed forces would be distracted from meddling in politics by skirmishes and defensive operations on the

southern frontier, although some units got embroiled in domestic

conflicts in 1851 and 1859. In later years, conservative Chileans

canonized Portales as a symbol of order and progress, exaggerating the importance of one man in that achievement.

The "Portalian State" was institutionalized by the 1833 constitution. One of the most durable charters ever devised in Latin

17
Chile: A Country Study

America, the Portalian constitution lasted until 1925. The constitution concentrated authority in the national government—more

precisely, in the hands of the president, who was elected by a tiny

minority. The chief executive could serve two consecutive five-year

terms and then pick a successor. Although Congress had signifi- cant budgetary powers, it was overshadowed by the president, who

appointed provincial officials. The constitution also created an in- dependent judiciary, guaranteed inheritance of estates by primogeniture, and installed Catholicism as the state religion. In short,

it established an autocratic system under a republican veneer. The first Portalian president was General Joaquin Prieto Vial,

who served two terms (1831-36, 1836-41). President Prieto had

four main accomplishments: implementation of the 1833 constitution, stabilization of government finances, defeat of provincial

challenges to central authority, and victory over the Peru-Bolivia

Confederation. During the presidencies of Prieto and his two successors, Chile modernized through the construction of ports, rail- roads, and telegraph lines, some built by United States entrepreneur

William Wheelwright. These innovations facilitated the exportimport trade as well as domestic commerce.

Prieto and his adviser, Portales, feared the efforts of Bolivian

general Andres de Santa Cruz y Calahumana to unite with Peru

against Chile. These qualms exacerbated animosities toward Peru

dating from the colonial period, now intensified by disputes over customs duties and loans. Chile also wanted to become the dominant

South American military and commercial power along the Pacific.

Portales got Congress to declare war on Peru in 1836. When a Chilean colonel who opposed the war killed Portales in 1837, this act and the suspicion that Peruvians were involved in the assassination plot inspired an even greater war effort by the government.

Two Conservative Presidencies, 1841-61

Chile defeated the Peruvian fleet at Casma, Peru, on January

12, 1839, and the Bolivian army at Yungay, Peru, on January 20.

These Chilean victories destroyed the Peru-Bolivia Confederation,

made Chile lord of the west coast, brought unity and patriotism

to the Chilean elites, and gave Chile's armed forces pride and purpose as a military with an external mission. The successful war

also helped convince the European powers and the United States

to respect Chile's coastal sphere of influence. Subsequently, the

country won additional respect from the European powers and the

United States by giving them economic access and concessions,

by treating their citizens well, and by generally playing them off

against each other.

18
A church in Chiuchiu in northern Chile

Courtesy Embassy of

Chile, Washington

Since its inception, the Portalian State has been criticized for

its authoritarianism. But it has also been praised for the stability,

prosperity, and international victories it brought to Chile, as well

as the gradual opening to increased democracy that it provided.

At least in comparison with most other regimes of the era, the Portalian State was noteworthy for being dominated by constitutional

civilian authorities. Although Portales deserves some credit for launching the system, his successors were the ones who truly implemented, institutionalized, legitimized, and consolidated it. From

1831 to 1861, no other country in Spanish America had such a

regular and constitutional succession of chief executives.

Manuel Bulnes Prieto (president, 1841-51), hero of the victories over the Chilean Liberals at the Battle of Lircay in 1830 and

over the Bolivian army at Yungay in 1839, became president in

1841. As a decorated general, he was the ideal choice to consolidate the Portalian State and establish presidential control over the

armed forces. He reduced the size of the military and solidified

its loyalty to the central government in the face of provincial uprisings. As a southerner, he was able to defuse regional resentment

of the dominant Santiago area. Although Bulnes staffed his two

administrations mainly with Conservatives, he conciliated his opponents by including a few Liberals. He strengthened the new politi- cal institutions, especially Congress and the judiciary, and gave

legitimacy to the constitution by stepping down at the end of his

19
Chile: A Country Study

second term in office. Placing the national interest above regional or military loyalties, he also helped snuff out a southern rebellion

against his successor.

Intellectual life blossomed under Bulnes, thanks in part to the

many exiles who came to Chile from less stable Spanish American

republics. They clustered around the University of Chile (founded in 1842), which developed into one of the most prestigious educational institutions in Latin America. Both foreigners and nationals

formed the "Generation of 1842," led mainly by Liberal intellec- tuals and politicians such as Francisco Bilbao Barguin and Jose

Victorino Lastarria Santander. Through the Society of Equality,

members of the group called for expanded democracy and reduced

church prerogatives. In particular, they defended civil liberties and

freedom of the press, seeking to constrain the government's

authoritarian powers.

Bulnes presided over continued prosperity, as production from

the farms and mines increased, both for external and for internal

consumption. In response to foreign demand, especially for wheat

during the California and Australia gold rushes, agricultural ex- ports increased. Instead of importing scarce and expensive modern

capital and technology, landowners expanded production. They

did this primarily by enlarging their estates and absorbing more

peasants into their work forces, especially in the central provinces,

where the vast majority of Chileans toiled in agriculture. This ex- pansion fortified the hacienda system and increased the numbers

of people attached to it. The growth of the great estates also in- creased the political power of the landed elites, who succeeded in

exercising a veto over agrarian reform for a century.

In the mid- 1800s, the rural labor force, mainly mestizos, was

a cheap and expanding source of labor. More and more of these

laborers became tenant farmers (inquilinos). For a century thereafter, many workers would remain bound to the haciendas through

tradition, lack of alternatives, and landowner collusion and coercion. Itinerant rural workers and even small landowners became

increasingly dependent on the great estates, whether through parttime or full-time work. The landed elites also inhibited industrialization by their preference for free trade and the low wages they

paid their workers, which hindered rural consumers from accumulating disposable income. For a century, the lack of any significant challenge to this exploitive system was one of the pillars of

the social and political hierarchy.

Liberals and regionalists unsuccessfully took up arms against Bulnes' s Conservative successor, Manuel Montt Torres (president,

1851-61). Thousands died in one of the few large civil wars in

20
Historical Setting

nineteenth-century Chile. The rebels of 1851 denounced Montt's

election as a fraud perpetrated by the centralist forces in and around

Santiago. Some entrepreneurs in the outlying provinces also backed

the rebellion out of anger at the government's neglect of economic

interests outside the sphere of the central landowning elites. Montt

put down the uprising with help from British commercial ships.

From 1851 to 1861, Montt completed the construction of the

durable constitutional order begun by Portales and Bulnes. By

reducing church prerogatives, Montt eased the transition from a sequence of Conservative chief executives to a series of Liberals.

As a civilian head of state, he was less harsh with his Liberal adversaries. He also promoted conciliation by including many north- erners as well as southerners in the government.

Benefiting from the sharp growth in exports and customs reve- nues in the 1850s, Montt demonstrated the efficacy of the central

government by supporting the establishment of railroads, a telegraph

system, and banks. He created the first government-run railroad

company in South America, despite his belief in laissez-faire. He

also initiated the extension of government credit to propertied

groups. Under President Montt, school construction accelerated,

laying the groundwork for Chile to become one of the most liter- ate nations in the hemisphere. Expanding on the initiative started

by Bulnes, Montt also pushed back the southern frontier, in part

by encouraging German immigration.

As the next presidential succession approached, a second rebel- lion ensued in 1859. The rebels represented a diverse alliance, in- cluding Liberals who opposed the right-wing government and its encroachments on civil liberties, Conservatives who believed the

president was insufficiently proclerical, politicians who feared the

selection of a strongman as Montt's successor, and regionalists who

chafed at the concentration of power in Santiago. Once again,

Montt prevailed in a test of arms, but thereafter he conciliated his opponents by nominating a successor acceptable to all sides, Jose

Joaquin Perez Mascayano (president, 1861-71).

Under Bulnes and Montt, economic elites had resisted paying

direct taxes, so the national government had become heavily dependent on customs duties, particularly on mineral exports. Imports were also taxed at a low level. The most important exports

in the early years of independence had been silver and copper,

mined mainly in the northern provinces, along with wheat, tal- low, and other farm produce. The Chilean elites eagerly welcomed

European and North American ships and merchants. Although

these elites debated the issue of protectionism, they settled on low

tariffs for revenue. Despite some dissent and deviations, the

21
Chile: A Country Study

dominant policy in the nineteenth century was free trade—the ex- change of raw materials for manufactured items—although a few

local industries took root. Britain quickly became Chile's primary

trading partner. The British also invested, both directly and in- directly, in the Chilean economy.

The Liberal Era, 1861-91

Following Perez's peaceful ten-year administration, Chilean

presidents were prohibited from running for election to a second

consecutive term by an 1871 amendment to the constitution. Perez was succeeded as president by Federico Errazuriz Zafiartu (187 1 —

76), Anibal Pinto Garmendia (1876-81), and Domingo Santa Maria

Gonzalez (1881-86), the latter two serving during the War of the

Pacific (1879-83). All formed coalition governments in which the

president juggled a complicated array of party components.

The Liberal Party (Partido Liberal), the Conservative Party (Partido Conservador), and the National Party (Partido Nacional) were formed in 1857. Once the Liberal Party replaced the Conservative Party as the dominant party, the Liberal Party was in

turn challenged from the left by the more fervent reformists of the

Radical Party (Partido Radical). A spin-off from the Liberal Party,

the Radical Party was founded in 1861 . Reformists of the Democratic Party (Partido Democratico), which in turn splintered from the

Radical Party in 1887, also challenged the Liberal Party. The National Party also vied with the Conservatives and Liberals to represent upper-class interests. Derived from the Montt presidency,

the National Party, which represented the elite and the landed

aristocracy, took a less proclerical, more centrist position than that

of the Conservatives. Party competition escalated after the electoral reform of 1874 extended the franchise to all literate adult males,

effectively removing property qualifications.

Like Montt, most Liberal chief executives were centrists who

introduced change gradually. Their administrations continued to make incremental cuts in church privileges but tried not to inflame

that issue. Secularization gradually gained ground in education,

and Santa Maria transferred from the church to the state the

management of birth, marriage, and death records.

Even during internal and external conflicts, Chile continued to prosper. When Spain attempted to reconquer Peru, Chile engaged

in a coastal war (1864-66) with the Spaniards, whose warships

shelled Valparaiso. Once again, Chile asserted its sway over the

west coast of South America. Farming, mining, and commerce grew

steadily until the world depression of the 1870s, when Chile again

turned to a war against its Andean neighbors.

22
Historical Setting

War of the Pacific, 1879-83

Chile's borders were a matter of contention throughout the

nineteenth century. The War of the Pacific began on the heels of an international economic recession that focused attention on

resources in outlying zones. Under an 1866 treaty, Chile and Bolivia

divided the disputed area encompassing the Atacama Desert at 24°

south latitude (located just south of the port of Antofagasta) in the

understanding that the nationals of both nations could freely exploit mineral deposits in the region. Both nations, however, would

share equally all the revenue generated by mining activities in the

region. But Bolivia soon repudiated the treaty, and its subsequent

levying of taxes on a Chilean company operating in the area led

to an arms race between Chile and its northern neighbors of Bolivia

and Peru.

Fighting broke out when Chilean entrepreneurs and mine-owners

in present-day Tarapaca Region and Antofagasta Region, then belonging to Peru and Bolivia, respectively, resisted new taxes, the

formation of monopoly companies, and other impositions. In those

provinces, most of the deposits of nitrate—a valuable ingredient

in fertilizers and explosives—were owned and mined by Chileans

and Europeans, in particular the British. Chile wanted not only

to acquire the nitrate fields but also to weaken Peru and Bolivia

in order to strengthen its own strategic preeminence on the Pacific

Coast. Hostilities were exacerbated because of disagreements over boundary lines, which in the desert had always been vague. Chile

and Bolivia accused each other of violating the 1866 treaty.

Although Chile expanded northward as a result of the War of the

Pacific, its rights to the conquered territory continued to be questioned by Peru, and especially by Bolivia, throughout the twentieth century.

War began when Chilean troops crossed the northern frontier

in 1879. Although a mutual defense pact had allied Peru and Bolivia

since 1873, Chile's more professional, less politicized military over- whelmed the two weaker countries on land and sea. The turning

point of the war was the occupation of Lima on January 17, 1881, a humiliation the Peruvians never forgave (see War of the Pacific,

1879-83, ch. 5). Chile sealed its victory with the 1883 Treaty of

Ancon, which also ended the Chilean occupation of Lima.

As a result of the war and the Treaty of Ancon, Chile acquired

two northern provinces—Tarapaca from Peru and Antofagasta from

Bolivia. These territories encompassed most of the Atacama Desert

and blocked off Bolivia's outlet to the Pacific Ocean (see fig. 3). The war gave Chile control over nitrate exports, which would

23
Chile: A Country Study

V. Boundary representation

. r

1 not necessarily authoritative

BOLIVIA

Present-day international boundary

Disputed area boundary

Present-day department or province capital Populated place Peruvian territory administered by Chile, 1883-1929; awarded to Peru by Chile, 1929

Peruvian territory administered by Chile, 1883-1929; awarded to Chile by Peru, 1929 Awarded to Chile by

Peru, 1883 Awarded to Chile by

Bolivia, 1883 Awarded to Chile by

Bolivia, 1874

100 Kilometers

(Pacific

Ocean

Tocopiita L

CobijaU Punta j Angamos /

f Mejillones

Antofagasta ANTOFAGASTA

Paposoj^ _

3-^ ARGENTINA

Source: Based on information from David P. Werlich, Peru: A Short History, Carbondale, Illinois, 1978, 110-11. Figure 3. Territorial Adjustments among Bolivia, Chile, and Peru, 1874-

1929

24
Historical Setting

dominate the national economy until the 1920s, possession of copper deposits that would eclipse nitrate exports by the 1930s, greatpower status along the entire Pacific Coast of South America, and

an enduring symbol of patriotic pride in the person of naval hero

Arturo Prat Chacon. The War of the Pacific also bestowed on

Chile's armed forces enhanced respect, the prospect of steadily in- creasing force levels, and a long-term external mission guarding

the borders with Peru, Bolivia, and Argentina. In 1885 a German

military officer, Emil Korner, was contracted to upgrade and professionalize the armed forces along Prussian lines. In subsequent years, better education produced not only a more modern officer corps

but also a military leadership capable of questioning civilian

management of national development (see Development of the

Armed Forces, ch. 5). After batding the Peruvians and Bolivians in the north, the mili- tary turned to engaging the Araucanians in the south. The final defeat of the Mapuche in 1882 opened up the southern third of

the national territory to wealthy Chileans who quickly carved out

immense estates. No homestead act or legion of family farmers stood

in their way, although a few middle-class and immigrant agriculturalists moved in. Some Mapuche fled over the border to Argentina, The army herded those who remained onto tribal reservations

in 1884, where they would remain mired in poverty for generations. Like the far north, these southern provinces would become

stalwarts of national reform movements, critical of the excessive

concentration of power and wealth in and around Santiago.

Soon controlled by British and then by United States investors,

the nitrate fields became a classic monocultural boom and bust.

The boom lasted four decades. Export taxes on nitrates often fur- nished over 50 percent of all state revenues, relieving the upper

class of tax burdens. The income of the Chilean treasury nearly

quadrupled in the decade after the war. The government used the

funds to expand education and transportation. The mining bonanza

generated demand for agricultural goods from the center and south

and even for locally manufactured items, spawning a new plutocracy. Even more notable was the emergence of a class-conscious, nationalistic, ideological labor movement in the northern mining

camps and elsewhere.

Prosperity also attracted settlers from abroad. Although small

in number compared with those arriving in Argentina, European

immigrants became an important element of the new middle class; their numbers included several future manufacturing tycoons. These

arrivals came from both northern and southern Europe. People

also emigrated from the Middle East, Peru, and Bolivia. Although

25
Chile: A Country Study

most immigrants ended up in the cities of Chile, a minority suc- ceeded at farming, especially in the south. In the early twentieth

century, a few members of the Chilean elite tried to blame the rise of leftist unions and parties on foreign agitators, but the charge

rang hollow in a country where less than 5 percent of the population had been born abroad.

Downfall of a President, 1886-91

The controversial downfall of President Jose Manuel Balmaceda

Fernandez (1886-91) represented the only occasion when power

was transferred by force between 1830 and 1924. This event resulted

in the most important alteration in the constitutional system between 1833 and 1925. In many respects, the Balmaceda episode was the culmination of two trends: the growing strength of Congress in relation to the president, and the expanding influence of

foreign capital in the mining zone. In essence, the rebels opposed

Balmaceda' s plans to expand the role of the executive branch in

the political and economic systems.

Although scholars have debated whether the uprising against

Balmaceda was mainly a fight over political or economic privileges,

the bulk of research has supported the primacy of political over economic issues. From the 1830s to the 1880s, Congress had gradually asserted more and more authority over the budget and over

cabinet ministers. Balmaceda tried to circumvent that budgetary

power and break the hold of congressmen and local bosses on congressional elections.

Complaining about the heavy-handed rule of the president, and

in particular his interference in congressional elections, Congress

led a revolt against Balmaceda in 1891. Conservatives generally

supported the rebels; Liberals and Democrats backed the president. Along with some renegade Liberals, the newly emergent Radical Party aligned with the so-called congressionalists, not wishing

to see legislative prerogatives curtailed just as the party was gaining clients and strength. Those provincials resentful of the growing centralization of political and economic power in and around

Santiago also backed the rebellion, especially in the north. Initially,

the navy, the armed service that included the highest percentage of aristocrats, sided with the rebels; the army sided with the

president.

The rebellion also attracted British entrepreneurs worried by

Balmaceda' s threat to encroach on the independence and revenues

of the foreign-owned nitrate mines. Although not opposed to foreign

investment, Balmaceda had proposed a greater role for the state and higher taxes in the mining sector. Tension mounted because

26
Historical Setting

nitrate sales were in a slump, a recurring problem because of the

volatility of that commodity's price on international markets. The

most famous British mine owner was John North, the "nitrate

king, '' who was angry that his nitrate railroad monopoly had been

terminated by Balmaceda. Although not directly involved, the

United States supported Balmaceda as the legal president.

The insurgents won the bloody but brief Civil War of 1891 when

the army decided not to fight the navy. As a result of the rebel

victory, Congress became dominant over the chief executive and

the nitrate mines increasingly fell into British and North American hands. Having gained asylum in the Argentine embassy,

Balmaceda waited until the end of his legal presidential term and

then committed suicide. As Portales became a legendary hero to the right, so Balmaceda was later anointed by the left as an eco- nomic nationalist who sacrificed his life in the struggle for Chilean

liberation.

Already tense as a result of the civil war over Balmaceda, United

States-Chilean relations deteriorated further as a result of the Balti- more incident. In late 1891 , sailors from the U.S.S. Baltimore brawled

with Chileans during shore leave in Valparaiso. To avert a war with an angry United States, the Chilean government apologized and

paid reparations.

Parliamentary Republic, 1891-1925

The so-called Parliamentary Republic was not a true parliamentary system, in which the chief executive is elected by the legisla- ture. It was, however, an unusual regime in presidentialist Latin

America, for Congress really did overshadow the rather ceremonial

office of the president and exerted authority over the chief executive's cabinet appointees. In turn, Congress was dominated by the

landed elites. This was the heyday of classic political and economic

liberalism.

For many decades thereafter, historians derided the Parliamentary Republic as a quarrel-prone system that merely distributed

spoils and clung to its laissez-faire policy while national problems

mounted. The characterization is epitomized by an observation

made by President Ramon Barros Luco (1910-15), reputedly made

in reference to labor unrest: "There are only two kinds of problems:

those that solve themselves and those that can't be solved." At the

mercy of Congress, cabinets came and went frequently, although

there was more stability and continuity in public administration

than some historians have suggested.

Political authority ran from local electoral bosses in the provinces

through the congressional and executive branches, which reciprocated

27
Chile: A Country Study

with payoffs from taxes on nitrate sales. Congressmen often won

election by bribing voters in this clientelistic and corrupt system.

Many politicians relied on intimidated or loyal peasant voters in

the countryside, even though the population was becoming increasingly urban.

The lackluster presidents and ineffectual administrations of the

period did little to respond to the country's dependence on volatile nitrate exports, spiraling inflation, and massive urbanization.

They also ignored what was called "the social question." This eu- phemism referred mainly to the rise of the labor movement and

its demands for better treatment of the working class. Critics complained that the upper class, which had given Chile such dynamic

leadership previously, had grown smug and lethargic, thanks to the windfall of nitrate wealth.

In recent years, however, particularly when the authoritarian

regime of Augusto Pinochet is taken into consideration, some schol- ars have reevaluated the Parliamentary Republic of 1891-1925.

Without denying its shortcomings, they have lauded its democratic stability. They have also hailed its control of the armed forces,

its respect for civil liberties, its expansion of suffrage and participation, and its gradual admission of new contenders, especially

reformers, to the political arena. In particular, two young parties grew in importance—the

Democratic Party, with roots among artisans and urban workers,

and the Radical Party, representing urban middle sectors and

provincial elites. By the early twentieth century, both parties were winning increasing numbers of seats in Congress. The more leftist members of the Democratic Party became involved in the leadership of labor unions and broke off to launch the Socialist Workers'

Party (Partido Obrero Socialista—POS) in 1912. The founder of

the POS and its best-known leader, Luis Emilio Recabarren Ser- rano, also founded the Communist Party of Chile (Partido Communista de Chile—PCCh), in 1922.

Urbanization

Beginning in the middle of the nineteenth century, Chile's cit- ies grew rapidly. They absorbed a trickle of immigrants from abroad

and then vast numbers of migrants from the Chilean countryside.

Improved transportation and communications in the second half

of the nineteenth century facilitated these population movements.

Although Santiago led the way, smaller cities such as Valparaiso

and Concepcion also swelled in size. The founding of the Industrial Development Association (Sociedad de Fomento Fabril—Sofofa) in 1883 was another indication

28
A weaver in Donihue

in central Chile

Courtesy Embassy of

Chile, Washington

of urbanization. It promoted industrialization long before the in- tense efforts of the 1930s to the 1960s. Manufacturing grew in importance in the latter decades of the nineteenth century and the

opening decades of the twentieth. Most industry remained smallscale, with most of the labor performed by artisans. Protected

industrialization did not become the vanguard of economic development until the period between the world wars. The urban middle class also grew in size and became more politically assertive by the turn of the century. Whereas the economy

and the society became more urban and diversified, the political

system lagged behind, remaining mainly in the hands of the upper class. Nevertheless, more members of the middle class began

appearing in party leadership positions, especially among the Democrats and Radicals. They were also prominent in the Chilean Stu- dent Federation (Federacion de Estudiantes de Chile—FECh),

based at the University of Chile. Equally important was their

presence among the top commanders in the armed forces, who in- creasingly identified primarily with middle-class interests. In the closing years of the nineteenth century, labor organizations gathered force, first as mutual aid societies and then increasingly as trade unions. In the opening decades of the twentieth

century, labor organizing, unrest, and strikes reached new levels of intensity. In the northern nitrate and copper mines, as well as

in the ports and cities, workers came together to press demands

29
Chile: A Country Study

for better wages and working conditions. Attracted strongly to anarchist, anarcho-syndicalist, and socialist ideologies, they were harshly

repressed during the Parliamentary Republic. The government car- ried out several massacres of miners in the nitrate camps; the most

notorious took place in Iquique in 1907. Thus, a pattern of violent clashes between soldiers and workers took shape.

Organizational efforts in the mines and cities culminated in the

creation of the first national labor confederation, the Workers' Federation of Chile (Federacion Obrera de Chile—FOCh), in 1909.

The organization became more radical as it grew and affiliated with

the PCCh in 1922, under the leadership of Recabarren. Its greatest

strength was among miners, whereas urban workers were more

attracted to independent socialism or to anarcho-syndicalism. The

latter movement grew out of resistance societies and evolved into

the Industrial Workers of the World (IWW). Unlike the FOCh,

the IWW spurned ties with political parties.

The emergence of working-class demands and movements

spawned the so-called social question. Intellectuals and writers began

criticizing the ruling class and the Parliamentary Republic for their

neglect of workers and of social ills. New census data and other

studies at the beginning of the twentieth century shocked the proud

Chilean elite with revelations about the extent of poverty, illiteracy,

and poor health among the vast majority of the population. Especially alarming were infant mortality figures that far exceeded those

of Western Europe. Realization of the squalor and anger of the

working class inspired new reform efforts. Arturo Alessandri's Reformist Presidency, 1920-25

President Arturo Aiessandri Palma (1920-24, March-October

1925, 1932-38) appealed to those who believed the social question

should be addressed, to those worried by the decline in nitrate ex- ports during World War I, and to those weary of presidents dominated by Congress. Promising "evolution to avoid revolution,"

he pioneered a new campaign style of appealing directiy to the masses with florid oratory and charisma. After winning a seat in the

Senate representing the mining north in 1915, he earned the sobriquet "Lion of Tarapaca." As a dissident Liberal running for the

presidency, Aiessandri attracted support from the more reformist

Radicals and Democrats and formed the so-called Liberal Alliance.

He received strong backing from the middle and working classes as well as from the provincial elites. Students and intellectuals also

rallied to his banner. At the same time, he reassured the land- owners that social reforms would be limited to the cities.

30
Historical Setting

Alessandri also spoke to discontent stemming from World War

I. Although Chile had been neutral, the war had disrupted the in- ternational commerce that drove the economy. German development of artificial nitrates was especially damaging, and thereafter

copper would gradually surpass nitrates as the leading export, taking over conclusively in the 1930s. Inflation and currency depreciation compounded the country's economic woes. During and after the war, the United States displaced Britain

as Chile's most important external economic partner, first in trade

and then in investments. American companies, led by Kennecott

and Braden, took control of the production of copper and nitrates. As corporate investors, bankers, salesmen, advisers, and even entertainers, such as actor and humorist Will Rogers, came to Chile, a few Chileans began to worry about the extent of United States penetration.

As the candidate of the Liberal Alliance coalition, Alessandri

barely won the presidency in 1920 in what was dubbed "the revolt

of the electorate." Chilean historians consider the 1920 vote a benchmark or watershed election, along with the contests of 1938,

1970, and 1988. Like other reformers elected president in the twentieth century—Pedro Aguirre Cerda (1938-41), Gabriel Gonzalez

Videla (1946-52), and Salvador Allende Gossens (1970-73)

Alessandri had to navigate skillfully through treacherous waters

from the day he was elected until his inauguration, warding off attempts to deny him the fruits of victory. Mass street demonstrations by his middle- and working-class supporters convinced the

conservative political elite in Congress to ratify his narrow win.

After donning the presidential sash, Alessandri discovered that

his efforts to lead would be blocked by the conservative Congress.

Like Balmaceda, he infuriated the legislators by going over their

heads to appeal to the voters in the congressional elections of 1924.

His reform legislation was finally rammed through Congress under pressure from younger military officers, who were sick of the

neglect of the armed forces, political infighting, social unrest, and

galloping inflation.

In a double coup, first military right-wingers opposing Alessandri seized power in September 1924, and then reformers in favor

of the ousted president took charge in January 1925. The latter group was led by two colonels, Carlos Ibanez del Campo and Marmaduke Grove Vallejo. They returned Alessandri to the presidency

that March and enacted his promised reforms by decree. Many

of these reforms were encapsulated in the new constitution of 1925,

which was ratified in a plebiscite.

31
Chile: A Country Study

Military Interventions, 1925-32

As in 1891 and 1973, the military intervened in national politics in the 1920s partly because of economic distress, partly to break

a stalemate between the legislative and executive branches, and,

above all, to change the political system. Colonel Ibanez (president, 1927-31, 1952-58), quickly promoted to general, became the

dominant power. He ruled, either behind or on the seat of power,

until the economic crisis caused by the Great Depression (see Glossary) in 1931 prompted his resignation.

The 1925 Constitution

The 1925 constitution was the second major charter in Chilean

history, lasting until 1973. It codified significant changes, including the official separation of church and state, thus culminating

a century of gradual erosion of the political and economic power

of the Roman Catholic Church. The constitution also provided legal

recognition of workers' right to organize, a promise to care for the

social welfare of all citizens, an assertion of the right of the state to infringe on private property for the public good, and increased

powers for the now directly elected president in relation to the bi- cameral Congress, in particular concerning the removal of cabi- net ministers, who heretofore had often been removed at the whim

of the legislature.

Presidential and congressional elections were staggered so that a chief executive could not bring a legislature in on his coattails. The new constitution extended presidential terms from five to six years, with immediate reelection prohibited. It established a sys- tem of proportional representation for parties putting candidates

up for Congress. The government was divided into four branches,

in descending order of power: the president, the legislature, the

judiciary, and the comptroller general, the latter authorized to judge

the constitutionality of all laws requiring fiscal expenditures.

The Office of the Comptroller General of the Republic (Oficina

de la Contraloria General de la Republica) was designed by a United

States economic adviser, Edwin Walter Kemmerer. In 1925 he also created the Central Bank of Chile (see Glossary) and the position

of superintendent of banks, while putting the country on the gold

standard. His reforms helped attract massive foreign investments

from the United States, especially loans to the government.

Although a labor code was not finalized until 1931 , several labor

and social security laws enacted in 1924 would govern industrial

relations from the 1930s to the 1970s. The legislation legalized unions and strikes but imposed government controls over unions.

32
Historical Setting

Union finances and elections were subjected to government inspection. The laws also restricted union activities and disallowed national confederations, which therefore subsequently arose outside

the legal framework. Only factories with at least twenty-five workers could have an industrial union, even though approximately twothirds of the industrial enterprises employed four or fewer workers,

in effect artisans. Workers in smaller shops could form professional

unions with workers of the same skill employed nearby. Agricultural unions remained virtually outlawed or extremely difficult to organize until the 1960s. The code left unions disadvantaged in their bargaining with employers and therefore reliant on political

parties as allies. Those allies were crucial because the new code

made the state the mediator in labor-management disputes.

Carlos Ibafiez's First Presidency, 1927-31

After a weak successor served in the wake of Alessandri's resignation in 1925, Ibafiez made himself president in a rigged election

in 1927. He based his reign on military support (especially from

the army), on repression (especially of labor unions, leftists, and

political parties), and on a flood of loans from private lenders (especially from New York). He also created the national police, known

as the Carabineros. His expansion of the central government found

favor with the middle class. While Ibafiez promoted industry and

public works, the economy fared well until torpedoed by the Great

Depression.

According to the League of Nations (see Glossary), no other nation's trade suffered more than Chile's from the economic collapse.

Unemployment approached 300,000, almost 25 percent of the work

force. As government revenues plummeted, deficits grew. Chile

suspended payments on its foreign debt in 1931 and took its currency off the gold standard in 1932. Expansion of the money

supply and increased government spending thereafter generated

inflation and rapid recovery. Also helpful was an emphasis on

import-substitution industrialization (see Glossary) and the revival

of exports, especially copper.

Rather than run the risk of civil war, Ibafiez went into exile in Argentina in July 1931 to avert clashes with demonstrators protesting his orthodox economic response to the depression and generally oppressive rule. His regime was followed by a kaleidoscope

of governments, made and unmade through elections and military

coups. The most notable short-lived administration was the twelveday Socialist Republic of 1932, led by an air force commander,

Marmaduke Grove, who would establish the Socialist Party (Partido

Socialista) in 1933. Exasperated by depression and instability,

33
Chile: A Country Study

Chileans finally restored civilian rule by reelecting Alessandri to the presidency in 1932. Although the depression capsized civilian

governments in most of Latin America, it discredited military rule

in Chile. Now the 1925 constitution took full effect; it would remain

in force until the overthrow of Salvador Allende Gossens in 1973.

Mass Democracy, 1932-73

From 1932 to 1973, Chile was the only country in Latin America

to sustain electoral democracy at a time when major Marxist parties led the workers. Its stable multiparty political system bore more

resemblance to West European than to Latin American models.

Chileans took great pride in their representative democracy, and

many looked with contempt on their more tumultuous neighbors.

Out of the turmoil of the depression, new political forces arose

that shifted the political spectrum to the left. The Conservatives

and the Liberals grew closer together as the combined forces on

the right, now more fearful of socialism than of their traditional

enemies in the anticlerical camp. The Radicals replaced the Liberals

as the swing party in the center, now that they were outflanked on the left by the growing PCCh and the Socialist Party. A small

group of Catholics known as the Falange broke away from the Conservative Party in 1938 to form a new party, the National Falange

(Falange Nacional). It offered a non-Marxist, centrist vision of dramatic reform, a vision that would take wing in the 1950s under

the name of Christian Democracy.

Alessandria Second Presidency, 1932-38

Under the steady hand of the veteran Alessandri, reelected in

December 1932 with 55 percent of the vote, Chile rapidly reinstated its interrupted democracy and revived its shattered economy.

Although still a centrist reformer at heart, Alessandri now became

the paladin of the right because the new Socialist left had outflanked

him. He put into practice both the 1925 constitution and the 1931

labor code; reshuffled military commands; supported a 50,000-

member civilian paramilitary force, the Republican Militia (Milicia

Republicana), during 1932-36 to keep the armed forces in the barracks and to threaten leftists; and cut unemployment by promoting industry and public works.

In accordance with long-standing Chilean foreign policy principles, Alessandri sought to avoid entanglement in European conflicts. He cultivated good relations with both Britain and Germany,

while remaining friendly with the United States. He declared neutrality in the Spanish Civil War, as the Chilean government had

done during World War I.

34
Historical Setting

The Socialists, Communists, and Radicals denounced Alessandri for insufficient economic nationalism and inadequate attention

to the needs of working people. Heeding the new policy of the

Comintern (see Glossary), adopted in 1935, the Chilean Communists backed away from proletarian revolution, which they had

advocated obediendy from 1928 to 1934. Now they promoted broad,

reformist electoral coalitions in the name of antifascism. With slight

deviations and name changes, the PCCh sustained this accommodative approach from 1935 until 1980.

Prodded by the Communists, the Radicals and Socialists aligned

in 1936 with the Confederation of Chilean Workers (Confederation de Trabajadores de Chile—CTCh), a by-product of union

growth and solidarity, to forge the Popular Front (Frente Popular). The Popular Front was given impetus by Alessandri's crushing of a railroad strike that year. The coalition also included the

old Democrat Party, which was gradually supplanted by the Socialist Party until the former disappeared in the early 1940s. Similar to multiparty alliances in Europe and to populist coalitions in

Latin America, the Popular Front galvanized the middle and working classes on behalf of democracy, social welfare, and industrialization. Its redistributive, populist slogan was "Bread, Roof, and

Overcoat," coined by the 1932 Socialist Republic.

The Popular Front barely beat Alessandri's would-be rightist successor in the presidential contest of 1938 with 50.3 percent of

the vote. One key to the Popular Front's victory was its nomination of a mild-mannered Radical, Pedro Aguirre Cerda, rather than

the inflammatory Socialist, Marmaduke Grove. The other key was

a bizarre sequence of events in which a group of Chilean fascists (members of the National Socialist Movement), backing Ibafiez's

independent bid for the presidency, staged an unsuccessful putsch on the eve of the election. The slaughter of the putschists by forces

of the Alessandri government prompted the fascists to throw their votes to the Popular Front. Although not numerous, those ballots put the Popular Front over the top.

The incongruous alignment of Nazis behind the antifascist Popular Front showed how far Chilean politicians would go to subordinate ideology to electoral considerations. Thus, a coalition that

included Socialists and Communists captured the presidency quite

early in twentieth-century Chile. Future president Salvador Allende

served briefly as minister of health in this period.

Running under the slogan "To Govern Is to Educate," Aguirre

Cerda (president, 1938-41) won an electoral majority in 1938.

However, less than 5 percent of the national population actually

voted for him. Until the rapid expansion of the electorate in the

35
Chile: A Country Study

1950s, less than 10 percent of the national population voted for presidential candidates. Only literate males over the age of twenty- one could vote in most elections until the 1950s; of those eligible to vote, approximately 50 percent usually registered, and the vast majority of those registered cast ballots. Women were allowed to exercise the franchise in installments, first for municipal elections

in 1935, then for congressional contests in 1951, and finally for

presidential races in 1952.

As had been the case with other Chilean electoral victories by

left-wing candidates, tense days passed between the counting of

the ballots and the ratification of the results by Congress. Opponents of the left schemed to prevent the takeover by their nemeses

or to extract concessions before accepting defeat. Aguirre Cerda

assured rightists of his moderate intentions, and the Alessandri

government presided over his peaceful inauguration. The military

quashed a single coup attempt in 1939.

Popular Front Rule, 1938-41

Led by the centrist Radical Party, the administration of the Popular Front assimilated the Socialists and Communists into the es- tablished bargaining system, making potentially revolutionary forces into relatively moderate participants in legal institutions. Although

the official Popular Front ended in 1941, that bargaining system,

with Marxist parties usually backing reformist Radical presidents,

lasted until 1952.

Aguirre Cerda, like all Chilean presidents in the 1930s and 1940s,

essentially pursued a model of state capitalism in which government collaborated with private enterprise in the construction of a mixed economy. The Popular Front promoted simultaneous importsubstitution industrialization and welfare measures for the urban

middle and working classes. As in the rest of Latin America, the

Great Depression and then the onset of World War II accelerated

domestic production of manufactured consumer items, widened

the role of the state, and augmented dependence on the United

States. All these trends dissuaded Marxists from demanding bold

redistributive measures at the expense of domestic and foreign

capitalists.

Aiming to catch up with the more affluent West, Chile's Popular Front mobilized the labor movement behind national industrial development more than working-class social advances. Although

workers received few material benefits from the Popular Front, the

number of legal unions more than quadrupled from the early 1930s

to the early 1940s. Still, unions represented only about 10 percent

of the work force.

36
Historical Setting

Prior to his illness and death in November 1941, President

Aguirre Cerda labored to hold his coalition together, to overcome

the implacable opposition of the right-wing parties, and to fulfill his promises of industrialization and urban social reform. The Socialists and Communists quarreled incessantly, especially over the

PCCh's support of the 1939 German-Soviet Nonaggression Pact

between Hitler and Stalin. Early in 1941 , the Socialist Party withdrew from the Popular Front coalition because of its animosity

toward the PCCh, its rival claimant to worker loyalty and Marxist

inspiration. Because the Conservatives and Liberals blocked nearly

all legislation in Congress, little social reform was accomplished,

except for improvements in housing and education. To appease

right-wingers, the president clamped down on rural unionization.

From the 1920s into the 1960s, this modus vivendi between ur- ban reformers and rural conservatives held fast. Progressives car- ried out reforms in the cities for the middle and working classes,

while denying peasants union rights. Thus were preserved the avail- ability of low-cost foodstuffs for urban consumers, control of the

countryside for latifundistas (large landowners), and domination of

the rural vote by right-wing politicians. From time to time, Marxist

organizers threatened to mobilize the rural work force, and time

and again they were restrained by their centrist political allies, who

needed to reassure the economic and political right-wingers. When

peasants protested this exploitation, they were repressed by land- owners or government troops.

The greatest achievement of the Popular Front was the creation

in 1939 of the state Production Development Corporation (Corporacion de Fomento de la Produccion—Corfo) to supply credit

to new enterprises, especially in manufacturing. Partly with loans

from the United States Export-Import Bank, Corfo contributed

greatiy to import-substitution industrialization, mainly for consumer

items. The economically active population working in industry grew

from 15 percent in 1930 to 20 percent in 1952, where it hovered

for two decades. From the end of the 1930s to the start of the 1950s,

Corfo supplied almost one-fourth of total domestic investments.

Juan Antonio Rfos's Presidency, 1942-46

A Radical even more conservative than Aguirre Cerda, Juan

Antonio Rios Morales (president, 1942-46), won the 1942 presidential election with 56 percent of the vote. Although the formal Popular

Front had been terminated, the Socialists and Communists still gave

their votes to Rios to avoid a return of Ibanez as the candidate

of the Conservatives and Liberals. Under the stringencies of wartime, the new president further soft-pedaled social reform and

37
Chile: A Country Study

emphasized industrial growth, under the slogan, "To Govern Is to Produce." Although he made some improvements in housing

and health care, Rios concentrated on promoting urban enterprises.

Rios continued his predecessor's policy of neutrality in World

War II. Although sympathetic to the Allies, many Chileans worried about the vulnerability of their Pacific Coast. Because of a

desire for closer economic and security ties with the United States,

Rios finally bowed to pressure from Socialists, Communists, and

other staunch antifascists, severing relations with the Axis in January 1943.

Even after breaking relations, Chile was never satisfied with the

amount of aid and Lend-Lease military equipment it received from

the United States. The United States, in turn, was equally discontent with languid Chilean action against Axis agents and firms.

Nevertheless, Chile subsidized the Allied cause by accepting an

artificially low price for its copper exports to the United States while

paying increasingly higher prices for its imports. The war boosted

Chile's mineral exports and foreign-exchange accumulation. At the same time, United States trade, credits, and advisers facilitated

state support for new enterprises, including steel, oil, and fishing.

Not unlike Ibanez in the 1920s, Rios hoped to develop the national economy through external alignment with the "Colossus of

the North." After displacing Britain as Chile's most important eco- nomic partner in the 1920s, the United States faced a period of

German competition in the 1930s and then reasserted its economic dominance in the 1940s. That economic domination would last until the 1980s.

As Rios's health deteriorated in 1945, another Radical, Alfredo

Duhalde Vasquez (president, June-August 1946), took over as in- terim chief executive. Reacting against Rios's conservatism and

Duhalde 's antilabor policies, progressive factions of the Radical

Party joined with the Communists to field a left-wing Radical,

Gabriel Gonzalez Videla, for president in the 1946 election. Gonzalez Videla also received the backing of most Socialists. Trying to revive the reformist spirit of 1938, Gonzalez Videla

eked out a plurality of 40 percent against a field of rightist contenders. Once again, the candidate of the left had to walk a tightrope from election to inauguration because Congress had the right

to pick either of the two front-runners when no one polled an absolute majority. Gonzalez Videla ensured his congressional approval

by granting landowners new legal restrictions on peasant unionization, restrictions that lasted from 1947 until 1967. He also appeased the right by including Liberals in his cabinet along with

Radicals and Communists, the most exotic ministerial concoction

38
Historical Setting

Chileans had ever seen, again demonstrating the politician's ability to cut deals transcending ideology.

Gabriel Gonzalez Videla's Presidency, 1946-52

Chile quickly became enmeshed in the Cold War, as Moscow

and especially Washington meddled in its affairs. That friction

resulted in the splitting of the CTCh in 1946 into Communist and

Socialist branches and then the outlawing of the PCCh. The Socialists were now opposed to the Communists and aligned with the

American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), having grown closer to United States labor in- terests during World War II. Once in office, Gonzalez Videla (president, 1946-52) rapidly

turned against his Communist allies. He expelled them from his

cabinet and then banned them completely under the 1948 Law for the Defense of Democracy. The PCCh remained illegal until 1958.

He also severed relations with the Soviet Union, Yugoslavia, and

Czechoslovakia.

Controversy still swirls around the reasons for this about-face.

According to Gonzalez Videla and his sympathizers, the repres- sion of the Communists was necessary to thwart their plots against

his government, although no evidence has been found to substantiate that claim. According to the Communists and other critics of Gonzalez Videla, he acted under pressure from the United States and out of a desire to forge closer economic and military bonds

with the dominant superpower. Historians have established that

the president wanted to appease the United States, that the United States encouraged a crackdown on Chilean Communists, and

that the United States government appreciated Gonzalez Videla's

actions and thereafter expanded the scope of its loans, investments,

and technical missions to Chile. The United States and Chile also agreed to a military assistance pact while Gonzalez Videla was president. However, no conclusive evidence has come to light that the

United States directly pushed him to act. Although Gonzalez Videla feared Communist intentions and

respected the wishes of the United States government, he also turned

against the PCCh for other reasons. He hoped to mollify rightwing critics of his government, especially landowners, to whom

he guaranteed a continuing moratorium on peasant unionization.

He sought to remove any ideological justification for a military coup.

He also wanted to weaken the labor movement in a time of eco- nomic uncertainties, slow growth, and rising inflation, when the

PCCh was promoting strikes. Gonzalez Videla's banning of the

39
Chile: A Country Study

Communists coincided with his movement away from social re- form in favor of the promotion of industrial growth.

As the Radical years (1938-52) drew to a close, Popular Frontstyle coalition politics reached a dead end. The Radicals had

swerved to the right, the Socialists had splintered and lost votes,

and the Communists had been forced underground. Although the

middle and upper classes had registered some gains in those four- teen years, most workers had seen their real income stagnate or

decline. Often a problem in the past, inflation had become a permanent feature of the Chilean economy, fueled by the deficit spending of a government that had grown enormously under the Radical

presidents. Progress had been made in industrialization, but with

little benefit to the majority of the population. Promoting urban

industries did not generate the growth, efficiency, employment,

or independence promised by the policy's advocates. World War

II had left the country more dependent than ever on the United

States, which by then had become the dominant economic power

in Latin America.

Populist development strategies had proved viable during the

1930s and 1940s. The protection and credit that went along with

import-substitution industrialization had kept manufacturers satis- fied. Although penalized and forced to accept low prices for their

foods, agriculturalists welcomed expanding urban markets, low taxes, and controls over rural workers. The middle class and the armed

forces had applauded state growth and moderate nationalism. The

more skilled and organized urban workers had received consumer,

welfare, and union benefits superior to those offered to other lowerclass groups.

These allocations postponed any showdown over limited

resources, thus enabling right and left to compromise. Political in- stitutionalization and accommodation prevailed, partly because the

unorganized urban poor and especially the rural poor suffered,

in effect, from marginality (see Glossary). Starting in the 1950s,

however, social demands outpaced slow economic growth, and the

political arena became increasingly crowded and heated. In addition, accelerated mobilization, polarization, and radicalization by

ideologically competing parties placed more and more stress on the

"compromise state" to reconcile incompatible demands and

projects.

By 1952 Chileans were alienated by multiparty politics that

produced reformist governments, which would veer to the right once in office. Chileans were tired ofpolitiqueria (petty politics, political chicanery, and pork-barrel politics). Citizens were also dis- mayed by slow growth and spiraling inflation. They showed their

40
Historical Setting

displeasure by turning to two symbols of the past, the 1920s dicta- tor Ibanez and the son of former president Alessandri.

In an effort to "sweep the rascals out," the voters elected the

politically unaffiliated Ibanez back to the presidency in 1952. Brandishing his broom as a symbol, the "General of Victory" ran against

all the major parties and their clientelistic system of government.

He made his strongest attacks on the Radicals, accusing them of

mismanagement of the economy and subservience to the United

States. Along with the short-lived Agrarian Labor Party (1945-58), a few Communists backed Ibanez in hopes of relegalizing the PCCh;

a few Socialists also supported him in hopes of spawning a workers' movement similar to Peronism (see Glossary) in Argentina.

Other leftists, however, endorsed the first token presidential campaign of Salvador Allende in order to stake out an independent

Marxist strategy for future runs at the presidency. Allende received

only 5 percent of the vote, while Ibanez won with a plurality of

47 percent. As it always did when no candidate captured an absolute majority, Congress ratified the top vote-getter as president.

Ibaftez's Second Presidency, 1952-58

Like the Radicals before him, Ibanez entered office as a reformer

governing with a center-left coalition and ended his term as a conservative surrounded by rightists. Along the way, he discarded his

promises of economic nationalism and social justice. Also like the

Radicals, he left festering problems for subsequent administrations.

Early in his administration, Ibanez tried to live up to his billing as a nationalistic reformer. He rewarded those who had voted for him in the countryside by setting a minimum wage for rural

laborers, although real wages for farm workers continued to fall throughout the decade. He also postured as a Latin American

spokesman, hailing Juan Domingo Peron when the Argentine leader

visited Chile.

After two years of expansionary fiscal policies in league with

reformers and a few leftists, Ibanez converted to a conservative

program to stem inflation and to improve relations with the United States copper companies. As the effort to move importsubstitution industrialization beyond the stage of replacing foreign consumer goods bogged down, the economy became mired in stagflation. The rates of industrialization, investment, and growth all slowed. Monetarist policies proposed by a team of United States

experts, known as the Klein-Saks Mission, failed to bring infla- tion under control. Price increases averaged 38 percent per year

during the 1950s.

41
Chile: A Country Study

Persistent inflation stoked a debate among economists over causes and cures. Emphasizing deep-rooted causes and long-term solutions, advocates of structuralism (see Glossary) blamed chronic in- flation primarily on foreign trade dependency, insufficient local production (especially in agriculture), and political struggles over government spoils among entrenched vested interests. Their opponents, advocates of monetarism (see Glossary), attributed rising

prices principally to classic financial causes such as currency ex- pansion and deficit spending. Like the Klein-Saks Mission, the

monetarists recommended austerity measures to curb inflation. The

structuralists denounced such belt-tightening as recessionary, inimical to growth, and socially regressive. The monetarists replied that

economic development would be delayed and distorted until ex- pansionary monetary and financial policies were corrected (see Evolution of the Economy, ch. 3).

Adopting a monetarist approach, in 1955 Ibafiez made concessions to the United States copper companies, chiefly Anaconda and

Kennecott, in an effort to elicit more investment. These measures

reduced the firms' taxes and raised their profits but failed to at- tract much capital. Discontent with this experience underlay subsequent campaigns to nationalize the mines.

Ibafiez also enacted reforms to increase the integrity of the elec- toral system. Under the new plan, the secret ballot system was improved in 1958, and stiff fines for fraud were established. These

reforms reduced the sway of landowners and facilitated the growth

of the Christian Democrat and Marxist political movements among

peasants.

Ibafiez 's middle- and working-class support flowed over to the

Christian Democrats and the Marxists. The Christian Democratic

Party (Partido Democrata Cristiano—PDC) was founded in 1957

with the merger of three conservative elements: the National

Falange, founded in 1938; the Social Christian Conservative Party;

and the remnants of the Agrarian Labor Party that had backed

Ibafiez. The Christian Democrats espoused reformist Catholic doctrines that promised a society based on communitarianism. The

new party appealed strongly to the middle class, women, peasants,

and rural-urban migrants. Its displacement of the Radicals as the

preeminent centrist party meant that a pragmatic organization was

replaced by an ideological group less amenable to coalition and

compromise. At the same time that the center was hardening its position, the right and the left were also becoming more dogmatic

and sectarian.

Relegalized by Ibafiez in 1958, the PCCh formed an enduring

electoral alliance with the Socialists known as the Popular Action

42
Historical Setting

Front (Frente de Accion Popular—FRAP). The Marxist parties

embraced more militant projects for the construction of socialism

and disdained alliances behind centrist parties. They replaced Popular Front politics with "workers front" politics. The PCCh and

the Socialist Party became more exclusive and radical in their ideological commitments and in their dedication to the proletariat. Of

the two parties, the Socialist Party posed as more revolutionary,

especially after the 1959 Cuban Revolution.

As they had in the 1930s, the Marxist parties experienced success in the 1950s in tandem with a unified national trade union

movement. Dismayed by runaway inflation, the major labor unions replaced the fractionalized CTCh with the United Federation

of Chilean Workers (Central Unica de Trabaj adores de Chile

CUTCh) in 1953. The Communists and Socialists, with their en- during strength in older unions in mining, construction, and

manufacturing, took command of the new confederation.

As the 1958 election approached, the electorate divided into three

camps well-defined by their predominant class and ideology. The

right represented mainly Conservatives and Liberals, the upper

class, rural dwellers, the defenders of capitalism, and the status quo. In the center, the Christian Democrats and Radicals spoke

largely for the middle class and the proponents of moderate social

reforms to avoid socialism. On the left, the Socialists and Communists championed the working class, advocating a peaceful transition to socialism. Rural-urban migrants and women had gained

social and political importance. The percentage of the population

registered to vote in presidential contests had risen from about 1

1

percent in the 1940s to 17.5 percent in 1952 and then to 21 per- cent in 1958. In the 1958 election, the right—Conservatives and

Liberals—hoped to return to power for the first time since 1938.

Their standard-bearer was Jorge Alessandri Rodriguez, an en- gineering professor and the son of Chile's most recent rightist president. He posed as an independent who was above party politics,

offering technocratic solutions to the nation's problems. In the

center, the Radicals, with candidate Luis Bossay Leyva, and the

Christian Democrats, who nominated Eduardo Frei Montalva, vied

for moderate votes. On the left, the reunited Socialists and Communists backed Salvador Allende.

In a preview of the 1970 election, the 1958 vote split three ways:

31 percent for Alessandri, 29 percent for Allende, and 40 percent

for the rest, including a strong third-place showing by Frei with

21 percent. If it had not been for the 3 percent of the votes snared

by a populist defrocked priest, the 15 percent won by the Radicals, and the low percentage (22 percent) of women casting ballots

43
Chile: A Country Study

for Allende, the Marxists could easily have captured the presidency

in 1958, several months before the Cuban Revolution. As it was,

they and the Christian Democrats were highly encouraged to build

their electoral forces toward another face-off in 1964. An especially

noteworthy shift was the transfer of many peasant votes from the

right to the columns of Christian Democrat and Marxist politicians

promising agrarian reform.

Jorge Alessandri's Rightist Term, 1958-64

Once again, Congress approved the front-runner as president.

Alessandri promised to restrain government intervention in the

economy and to promote the private sector, although he did not

envision reliance on the market to the extent that later would occur under Pinochet. With a slender mandate, the opposition in control of the legislature, and a modest program, the president accomplished litde of note. Alessandri did, however, maintain political and economic stability. He temporarily dampened inflation, mainly by placing a

ceiling on wages. This measure sparked mounting labor protests

in the early 1960s. The economy grew and unemployment shrank.

He also passed mild land reform legislation, which would be implemented mostly by his successors. His action was partly the result of

prodding by the United States government, which backed agrarian

reform under the auspices of the Alliance for Progress (see Glossary) in hopes of blunting the appeal of the Cuban Revolution.

At the same time, Alessandri tried to attract foreign investment,

although he had no intention of throwing open the economy, as would be done under Pinochet. By the end of Alessandri's term,

the country was burdened with a rising foreign debt. In the 1964 presidential contest, the right abandoned its standardbearers and gave its support to Frei in order to avert an Allende

victory in the face of rising electoral support for the leftists. The

center-right alliance defeated the left, 56 percent to 39 percent. The

reformist Frei enjoyed strong United States support, both during

and after the campaign. He also had the backing of the Roman

Catholic Church and European Christian Democrats. Frei ran particularly well among women, the middle class, peasants, and residents

of the shantytowns {poblaciones callampas). Allende was most popular

with men and blue-collar workers.

Although Frei and Allende were foes on the campaign trail, they

agreed on major national issues that needed to be addressed: greater Chilean control over the United States-owned copper mines, agrar- ian reform, better housing for the residents of the sprawling shantytowns, more equitable income distribution, expanded educational

44
Historical Setting

opportunities, and a more independent foreign policy. They both

criticized capitalism as a cause of underdevelopment and of the

poverty that afflicted the majority of Chile's population. To dis- tinguish his more moderate program from Allende's Marxism, Frei

promised a "Revolution in Liberty."

Eduardo Frei's Christian Democracy, 1964-70

After the 1965 elections gave them a majority of deputies in Congress, the Christian Democrats enacted ambitious reforms on many

fronts. However, as a single-party government, they were often

loath to enter into bargains, compromises, or coalitions. Consequently, rightists and leftists often opposed their congressional initiatives, especially in the Senate.

One of the major achievements of Eduardo Frei Montalva (president, 1964-70) was the "Chileanization" of copper. The government took 51 percent ownership of the mines controlled by United

States companies, principally those of Anaconda and Kennecott.

Critics complained that the companies received overly generous

terms, invested too litde in Chile, and retained too much ownership. Nevertheless, copper production rose, and Chile received a higher return from the enterprises.

Frei believed that agrarian reform was necessary to raise the stan- dard of living of rural workers, to boost agricultural production,

to expand his party's electoral base, and to defuse revolutionary

potential in the countryside. Consequently, in 1967 his government promoted the right of peasants to unionize and strike. The

administration also expropriated land with the intention of dividing it between collective and family farms. However, actual redistribution of land fell far short of promises and expectations. Conflict arose in the countryside between peasants eager for land and land- owners frightened of losing their rights and their property.

During the tenure of the Christian Democrats, economic growth

remained sluggish and inflation stayed high. Nevertheless, Frei's

government improved income distribution and access to education,

as enrollments rose at all levels of schooling. Under the aegis of

"Popular Promotion," the Frei government organized many squatter communities and helped them build houses. This aided the PDC

in its competition with the Marxists for political support in the burgeoning poblaciones. At the same time, Frei enacted tax reforms that

made tax collection more efficient than ever before. The Christian Democrats also pushed through constitutional changes to strengthen the presidency; these changes later would be used to advantage by Allende. The PDC also revised electoral regulations,

lowering the voting age from twenty-one to eighteen and giving

45
Chile: A Country Study

the franchise to people who could not read (about 10 percent of

the population was illiterate).

Although friendly to United States investors and government

officials, the Frei administration took an independent stance in for- eign affairs—more collegial with the developing nations and less hostile to the Communist-bloc nations. For instance, Frei restored

diplomatic relations with the Soviet Union and most of its allies. Chile also gave strong backing to multilateral organizations, in- cluding the Latin American Free Trade Association (LAFTA—see Glossary), the Andean Group (see Glossary), the Organization of

American States (OAS—see Glossary), and the United Nations.

Meanwhile, aid and investment from the United States multiplied.

Under Frei, Chile received more aid per capita from the United

States than did any other country in Latin America.

After the two governments that followed the Christian Democrats,

Chileans would look back with nostalgia on the Frei administration and its accomplishments. At the time, however, it was hounded

by the right for being too reformist and by the left for being too

conservative. While some on the right began forming paramilitary

units to defend their property, some on the left began encouraging illegal seizures of farms, housing plots, and factories. Among

the masses, the Christian Democrats raised expectations higher than

they intended.

As the next presidential election approached, Frei remained per- sonally popular, but his party's strength ebbed. With no clear win- ner apparent, the 1970 campaign shaped up as a rerun of 1958,

with the right, center, and left all fielding their own candidates.

The right hoped to recapture power and brake the pace of reform

with former president Jorge Alessandri as the candidate of the National Party (Partido Nacional), established in 1965 by Conservatives and Liberals. In the center, the Christian Democrats promised

to accelerate reform with a progressive candidate, Radomiro Tomic

Romero. The left vowed to head down the road toward socialism

with Salvador Allende as its nominee for the fourth time.

Under the leadership of the Socialist Party and the PCCh, the

leftist coalition of 1970 called itself Popular Unity (Unidad Popular). Joining the alliance were four minor parties, including the

shrunken Radical Party and defectors from the Christian Democrats, most notably the United Popular Action Movement (Movimiento de Accion Popular Unitario—MAPU). The coalition was

reminiscent of the Popular Front of 1936-41, except that it was

led by the Marxist parties and a Marxist candidate. Farther to the

left, the Movement of the Revolutionary Left (Movimiento de la

46
Historical Setting

Izquierda Revolucionaria—MIR), a small organization headed by

radicalized students, scoffed at the electoral route, called for armed

struggle, and undertook direct assaults on the system, such as bank

robberies (see Terrorism, ch. 5). To the surprise of most pollsters and prognosticators, Allende

nosed out Alessandri 36.2 percent to 35 percent in the September

4, 1973, elections; Tomic trailed with 27.8 percent of the vote. In

the Cold War context of the times, the democratic election of a Marxist president sent a shock wave around the globe. The seven weeks between the counting of the ballots and the certification of the

winner by Congress crackled with tension. Attempts by the United

States and by right-wing groups in Chile to convince Congress to choose the runner-up Alessandri or to coax the military into staging a coup d'etat failed. A botched kidnapping planned by right-wing

military officers resulted in the assassination of the army commander

in chief, General Rene Schneider Chereau, on October 22, 1970,

the first major political killing in Chile since the death of Portales

in 1837. That plot backfired by ensuring the armed forces' support

of a constitutional assumption of power by Allende.

After extracting guarantees of adherence to democratic procedures from Allende, the Christian Democrats in Congress followed

tradition and provided the votes to make the front-runner Chile's

new president. Although a minority president was not unusual, one with such a drastic plan to revolutionize the nation was unique.

Allende was inaugurated on November 3, 1970.

Salvador Allende's Leftist Regime, 1970-73

The Allende experiment enjoyed a triumphant first year, followed

by two disastrous final years. According to Popular Unity, Chile was being exploited by parasitic foreign and domestic capitalists.

The government therefore moved quickly to socialize the econo- my, taking over the copper mines and other foreign firms, oligopolistic industries, banks, and large estates. By a unanimous vote

of Congress in 1971, the government totally nationalized the for- eign copper firms, which were mainly owned by two United States companies, Kennecott and Anaconda. The nationalization measure was one of the few bills Allende ever got through the oppositioncontrolled legislature, where the Christian Democrats constituted

the largest single party.

Socialization of the means of production spread rapidly and widely. The government took over virtually all the great estates. It turned

the lands over to the resident workers, who benefited far more than

the owners of tiny plots or the numerous migrant laborers. By 1972

food production had fallen and food imports had risen. Also during

47
Chile: A Country Study

1971-72, the government dusted off emergency legislation from

the 1932 Socialist Republic to allow it to expropriate industries

without congressional approval. It turned many factories over to management by the workers and the state. In his first year, Allende also employed Keynesian measures to hike salaries and wages, thus pumping up the purchasing power

of the middle and working classes. This "consumer revolution"

benefited 95 percent of the population in the short run because prices were held down and employment went up. Producers responded

to rising demand by employing previously underused capacity.

Politically, Allende faced problems holding his Popular Unity

coalition together, pacifying the more leftist elements inside and

outside Popular Unity and, above all, coping with the increasingly

implacable opposition. Within Popular Unity, the largest party was

the Socialist Party. Although composed of multiple factions, the

Socialist Party mainly pressed Allende to accelerate the transition

toward socialism. The second most important element was the

PCCh, which favored a more gradual, legalistic approach. Outside Popular Unity, the most significant left-wing organization was

the MIR, a tiny but provocative group that admired the Cuban

Revolution and encouraged peasants and workers to take property

and the revolutionary process into their own hands, much faster than Allende preferred.

The most important opposition party was the PDC. As it and

the middle sectors gradually shifted to the right, they came to form

an anti-Allende bloc in combination with the National Party and

the propertied class. Even farther to the right were minuscule,

paramilitary, quasi-fascist groups like Fatherland and Liberty

(Patria yLibertad), determined to sabotage Popular Unity.

The Popular Unity government tried to maintain cordial rela- tions with the United States, even while staking out an independent position as a champion of developing nations and socialist causes. It opened diplomatic relations with Cuba, China, the Democratic People's Republic of Korea (North Korea), the Democratic

Republic of Vietnam (North Vietnam), and Albania. It befriended the Soviet Union, which sent aid to the Allende administration,

although far less than Cuba received or than Popular Unity had

hoped for. Meanwhile, the United States pursued a two-track policy toward

Allende 's Chile. At the overt level, Washington was frosty, especially after the nationalization of the copper mines; official rela- tions were unfriendly but not openly hostile. The government of

President Richard M. Nixon squeezed the Chilean economy by

terminating financial assistance and blocking loans from multilateral

48
Historical Setting

organizations, although it increased aid to the military, a sector unenthusiastic toward the Allende government. It was widely

reported that at the covert level the United States worked to destabilize Allende 's Chile by funding opposition political groups and media and by encouraging a military coup d'etat. Most scholars have

concluded that these United States actions contributed to the downfall of Allende, although no one has established direct United States

participation in the coup d'etat, and very few would assign the United States the primary role in the destruction of that government.

During the second and third years of Popular Unity, demand out- stripped supply, the economy shrank, deficit spending snowballed,

new investments and foreign exchange became scarce, the value of

copper sales dropped, shortages appeared, and inflation skyrocketed, eroding the previous gains for the working class. A thriving black

market sprang up. The government responded with direct distri- bution systems in working-class neighborhoods. Worker participation in the management of enterprises reached unprecedented

proportions. The strapped government could not keep the economy

from going into free fall because it could not impose austerity measures on its supporters in the working class, get new taxes approved

by Congress, or borrow enough money abroad to cover the deficit. Although the right was on the defensive in Allende' s first year,

it moved on the offensive and forged an alliance with the center

in the next two years. In Congress this center-right coalition erected a blockade against all Popular Unity initiatives, harassed Popular

Unity cabinet ministers, and denounced the administration as

illegitimate and unconstitutional, thus setting the stage for a military

takeover. The most acrimonious battle raged over the boundaries

of Popular Unity's "social property area" (area de propriedad social) , which would incorporate private holdings through government

intervention, requisition, or expropriation. The Supreme Court and

the comptroller general of the republic joined Congress in criticiz- ing the executive branch for overstepping its constitutional bounds.

Allende tried to stabilize the situation by organizing a succes- sion of cabinets, but none of them guaranteed order. His appointment of military officers to cabinet posts in 1972 and 1973 also failed to stifle the opposition. Instead, it helped politicize the armed ser- vices. Outside the government, Allende 's supporters continued

direct takeovers of land and businesses, further disrupting the econ- omy and frightening the propertied class. The two sides reached a showdown in the March 1973 congressional elections. The opposition expected the Allende coalition to suffer the typical losses of Chilean governments in midterm elections, especially with the economy in a tailspin. The National Party

49
Chile: A Country Study

and PDC hoped to win two-thirds of the seats, enough to impeach

Allende. They netted 55 percent of the votes, not enough of a majority to end the stalemate. Moreover, Popular Unity's 43 per- cent share represented an increase over the presidential tally of 36.2

percent and gave Allende 's coalition six additional congressional

seats; therefore, many of his adherents were encouraged to forge

ahead

.

In the aftermath of the indecisive 1973 congressional elections,

both sides escalated the confrontation and hurled threats of insurgency. Street demonstrations became almost daily events and in- creasingly violent. Right-wing groups, such as Fatherland and

Liberty, and left-wing groups, such as the MIR, brandished arms and called for a cataclysmic solution. The most militant workers

formed committees in their neighborhoods and workplaces to press

for accelerated social change and to defend their gains. The opposition began openly knocking on the doors of the barracks in hopes

that the military would provide a solution.

The regular armed forces halted an attempted coup by tank com- manders in June 1973, but that incident warned the nation that

the military was getting restless. Thereafter, the armed forces pre- pared for a massive coup by stepping up raids to search for arms among Popular Unity's supporters. Conditions worsened in June,

July, and August, as middle- and upper-class business proprietors

and professionals launched another wave of workplace shutdowns

and lockouts, as they had in late 1972. Their 1973 protests against

the government coincided with strikes by the trucking industry and

by the left's erstwhile allies among the copper workers. The Nationalists, the Christian Democrats, and conservative students

backed the increasingly subversive strikers. They called for Allende 's resignation or military intervention. Attempts by the Catholic

Church to get the PDC and Popular Unity to negotiate a compromise came to naught. Meanwhile, inflation reached an annual

rate of more than 500 percent. By mid- 1973 the economy and the

government were paralyzed.

In August 1973, the rightist and centrist representatives in the

Chamber of Deputies undermined the president's legitimacy by

accusing him of systematically violating the constitution and by

urging the armed forces to intervene. In early September, Allende was preparing to call for a rare national plebiscite to resolve the

impasse between Popular Unity and the opposition. The military

obviated that strategy by launching its attack on civilian authority on the morning of September 1 1 . Just prior to the assault, the com- manders in chief, headed by the newly appointed army commander,

50
Historical Setting

General Augusto Pinochet Ugarte, had purged officers sympathetic

to the president.

Allende committed suicide while defending (with an assault rifle) his socialist government against the coup d'etat. Although sporadic

resistance to the coup erupted, the military consolidated control

much more quickly than it had believed possible. Many Chileans

had predicted that a coup would unleash a civil war, but instead

it ushered in a long period of repression.

Debate continues over the reasons for Allende 's downfall. Why

did he fail to preserve democracy or achieve socialism? Critics of the

left blamed Allende for going to extremes, destroying the economy,

violating the constitution, and undermining the spirit if not the

letter of democracy. Right-wing critics in particular accused the

left of even plotting an armed takeover, a charge that was never

proved. Critics also assailed Popular Unity for being unclear about

the limits of its reforms and thus frightening the middle class into

the arms of the opposition. Critics of the right accused Popular Unity,

in conjunction with the United States, of ruining the economy and

of calling out the armed forces to protect its property and privileges.

Observers in general scolded the far left for its adventurous excesses. The far left retorted that Popular Unity failed because it was too timid to arm the masses. Critics of the Christian Democrats

chastised them for refusing to compromise, locking arms with the

rightist opposition, and failing to defend democracy.

Many analysts would concur that there was ample blame to go

around. In the view of many Chileans, groups at all points on the

political spectrum helped destroy the democratic order by being

too ideological and too intransigent. Many observers agree that a minority president facing adamant domestic and foreign opposition was extremely unlikely to be able to uphold democracy and

create socialism at the same time. In the late 1980s, polls also showed

that most Chileans did not want to try the Popular Unity experiment again, especially in light of its aftermath.

Military Rule, 1973-90

The armed forces justified the coup as necessary to stamp out

Marxism, avert class warfare, restore order, and salvage the econ- omy. They enshrined the National Security Doctrine, which defined their primary task as the defeat of domestic enemies who had

infiltrated national institutions, including schools, churches, politi- cal parties, unions, and the media. Although civilians filled prominent economic posts, military officers took most government

positions at the national and local levels. Immediately on seizing

power, the military junta—composed of the commanders in chief

51
Chile: A Country Study

of the army, navy, air force, and Carabineros—issued a barrage

of decrees to restore order on its own terms. The first phase of the dictatorship (1973-75) was mainly destructive, aimed at rapid demobilization, depoliticization, and stabili- zation. The armed forces treated Popular Unity as an enemy to be obliterated, not just as an errant political movement to be booted

from office. The military commanders closed Congress, censored

the news media, purged the universities, burned books, declared

political parties outlawed if Marxist or if in recess otherwise, and

banned union activities. The worst human rights abuses occurred in the first four years

of the junta, when thousands of civilians were murdered, jailed,

tortured, brutalized, or exiled, especially those linked with the Popular Unity parties. The secret police, reporting to Pinochet through

the National Intelligence Directorate (Direccion Nacional de

Inteligencia—DINA), replaced in 1977 by the National Information Center (Centro Nacional de Informacion—CNI), kept dissi- dents living in fear of arrest, torture, murder, or "disappearance."

Throughout the second half of the 1970s, the Roman Catholic

Church and international organizations concerned with human

rights denounced the widespread violations of decency in Chile.

Although officially neutral, the Roman Catholic Church became

the primary sanctuary for the persecuted in Chile from 1975 to 1985 and so came into increasing conflict with the junta.

The former members of Popular Unity went underground or

into exile. In the early years of the dictatorship, their main goal was simply to survive. Although the Communists suffered brutal

persecution, they managed to preserve their organization fairly intact. The Socialists splintered so badly that their party nearly dis- appeared by the end of the 1970s. Draconian repression left the

Marxists with no capacity to resist or counterattack. They did,

however, manage to rally world opinion against the regime and

keep it isolated diplomatically. By the end of the 1970s, most Christian Democrats, after initially cooperating with the junta, had also joined the opposition, although not in any formal coalition with

any coherent strategy for restoring democracy.

Pinochet soon emerged as the dominant figure and very shortly

afterward as president. After a brief flirtation with corporatist ideas,

the government evolved into a one-man dictatorship, with the rest of the junta acting as a sort of legislature. In 1977 Pinochet dashed

the hopes of those Chileans still dreaming of an early return to democracy when he announced his intention to institutionalize an

authoritarian regime to preside over a protracted return to civilian

rule in a "protected" democracy.

52
Historical Setting

Pinochet established iron control over the armed forces as well

as the government, although insisting that they were separate entities. He made himself not only the chief executive of the state but

also the commander in chief of the military. He shuffled commands

to ensure that loyalists controlled all the key posts. He appointed

many new generals and had others retire, so that by the 1980s all active-duty generals owed their rank to Pinochet. He also improved

the pay and benefits of the services. The isolation of the armed

forces from civilian society had been a virtue under the democracy, inhibiting their involvement in political disputes; now that erst- while virtue became an impediment to redemocratization, as the

military remained loyal to Pinochet and resisted politicization by

civilians. Although aid and loans from the United States increased spec- tacularly during the first three years of the regime, while presidents Nixon and Gerald R. Ford were in office, relations soured

after Jimmy Carter was elected president in 1976 on a platform

promising vigorous pursuit of human rights as a major component

of his foreign policy. During the Carter administration, a signifi- cant source of contention was the 1976 assassination in Washington of the former Chilean ambassador to the United States by agents

of Pinochet's secret police. The target, Orlando Letelier, had served

under Allende. In response to United States criticism, General

Pinochet held his first national plebiscite in 1978, calling for a yes or no vote on his defense of Chile's sovereignty and the institu- tionalization of his regime. The government claimed that more than

75 percent of the voters in the tightly controlled referendum en- dorsed Pinochet's rule. Neoliberal Economics

By the mid-1970s, the dictatorship switched from destroying the

old order to constructing its version of a new Chile. The junta not

only overturned decades of democratic government but also decades of statist economic policies, which had mainly protected in- dustrialists and organized workers. The new economic program

was designed by civilian technocrats known as the "Chicago boys"

(see Glossary) because many of them had been trained or influenced

by University of Chicago professors. The government instituted a dramatic conversion to free-market economics in 1975.

After curbing inflation and returning a significant amount of

property to its former owners, the administration embarked on a

radical program of liberalization and privatization, slashing tariffs as well as government welfare programs and deficits. As a result,

the economy grew rapidly from 1976 to 1981, a feat heralded as

53
Chile: A Country Study

the "Chilean miracle." That growth was fueled by the influx of

private foreign loans until the debt crisis of the early 1980s. Financial

conglomerates became the major beneficiaries of the open economy

and the flood of foreign bank loans. Exports of nontraditional commodities, especially fruit, timber, and fish products, also grew impressively; the value of new exportables came to equal that of copper

sales. Despite high growth in the late 1970s, income distribution

became more regressive, and unemployment stayed in double digits.

The underemployed informal sector also mushroomed in size. The

regime responded with a "minimum employment" public works

program (see The Military Government's Free-Market Reforms,

1973-90, ch. 3). In conjunction with the liberalization of the economy, the junta

implemented a series of social reforms to reduce the role of the central government in social security, labor disputes, health care, and

education. These reforms fit with the desire to shrink the central

government, decentralize administration, and privatize previous

state functions. Critics charged that the welfare state was being dis- mantled to leave citizens at the mercy of the marketplace. The re- gime retorted that it was focusing its social assistance on the poorest

of the poor to meet basic needs, and it pointed with pride to improvement in such indicators as infant mortality (see Welfare Institutions and Social Programs, ch. 2; Economic Results of the

Pensions Privatization, ch. 3). The most important of the government's so-called modernizations in social policy was the 1979 Labor Plan. The regime had

already outlawed the CUTCh, Marxist union leaders, several

Marxist unions, union elections, strikes, and collective bargaining. Nevertheless, after bearing the brunt of repression in 1973-74,

unions gradually revived in the late 1970s. Little by little, cooperation increased between Marxist and Christian Democrat union

leaders, the latter making gains because the former were outlawed.

Although a few unions supported the government, most firmly opposed the regime and its economic program. The Labor Plan sought

to codify the dictatorship's antilabor policies. It placed stringent

limits on collective bargaining, strikes, and other union activities,

especially any participation in politics. Almost all labor unions re- jected the Labor Plan and aligned with the opposition (see Unions

and Labor Conflicts, ch. 3). The 1980 Constitution

At the height of the economic boom, the regime moved to legitimize and regularize its reforms and its tenure. Its new "constitution of liberty" was approved in a controlled plebiscite in 1980,

54
Historical Setting

in which the government claimed to have received 67 percent of

the vote. Both leftists and Christian Democrats had called for a no vote. Because there were no safeguards for the opposition or

for the balloting, most analysts expressed doubts about the government's percentage and assumed that the constitution may have won

by a lesser margin. According to the new constitution, Pinochet

would remain president through 1989; a plebiscite in 1988 would

determine if he would have an additional eight years in office. The

document provided for military domination of the government both

before and after the 1988 plebiscite.

The constitution's approval marked the institutionalization of

Pinochet's political system. In the eyes of the military, a dictatorship had now been transformed into an authoritarian regime, rule

by exception having been replaced by the rule of law. When the

new charter took effect in 1981, the dictatorship was at the peak

of its powers, politically untouchable and economically successful.

At that moment, few would have predicted that the dispirited and

fragmented opposition would take power by the end of the decade.

The imposition of the authoritarian constitution cast further

gloom on the divided and dejected opposition. The PCCh now made

a historic reversal, claiming that all forms of struggle, including

armed insurrection, were justified against the dictatorship. Most

political parties on the left or in the center, however, continued

searching for a peaceful path to redemocratization.

The Crisis of 1982 and the Erosion of Military Rule

From 1982 to 1990, Chile underwent a prolonged journey back

to democracy. During that process, the country experienced five crucial changes. First, the economic collapse in 1982 provoked some

adjustments to the neoliberal model and sparked widespread protests against the regime. That recession was compounded by the

international debt crisis. Second, although most of the regime's supporters in the busi- ness community and the armed forces held fast, the 1980s witnessed

a weakening of their attachment to authoritarianism and a few defec- tions from their ranks. Third, civilian society became emboldened.

A series of demonstrations against Pinochet during 1983-85 spread

from organized labor to the middle class and finally ended up concentrated among the residents of the urban shantytowns. Fourth,

the previously repressed and dormant political parties came back

to life. They took charge during the 1988 plebiscite that effectively

ended the Pinochet regime and the subsequent 1989 elections for president and Congress. Fifth, after being surrounded by like- minded dictators in South America, Pinochet became isolated as

55
Chile: A Country Study

a tide of democratization swept the continent, and the United States and Europe began applying pressure for Chile to join the trend.

In sum, from its apogee in the 1980 plebiscite to its exit in 1990,

the authoritarian regime lost support and saw its opponents gain

momentum and eventually power. During its first decade, however,

the dictatorship had brought about profound and seemingly durable changes. Politically, it had pulverized the revolutionary Marxist

left. Economically, it had moved Chile's focus from the state to the market. Socially, it had fostered a new emphasis on individualism and consumerism, widening the gap between rich and poor, even while helping some of the most destitute. What it had failed to do was to extirpate the preference of most Chileans for democracy.

* * * Among works in English, an outstanding general history is Brian

Loveman's Chile: The Legacy of Hispanic Capitalism. For the colonial

period, Eugene H. Korth provides a useful introduction in Spanish Policy in Colonial Chile. The subsequent Bourbon years are cov- ered by Jacques A. Barbier in Reform and Politics in Bourbon Chile,

1755-1796.

For the nineteenth century, the work to begin with is Simon Collier's Ideas and Politics of Chilean Independence. The development of

the system of land tenure is examined by Arnold J. Bauer in Chilean

Rural Society from the Spanish Conquest to 1930. The country's exter- nal relations are analyzed by Robert N. Burr in By Reason or Force. Works covering the nitrate era and the Balmaceda controversy in- clude Thomas F. O'Brien's The Nitrate Industry and Chile's Crucial

Transition, 1870-1891; Michael Monteon's Chile in the Nitrate Era; Maurice Zeitlin's The Civil Wars in Chile, 1851 and 1859; and Harold

Blakemore's British Nitrates and Chilean Politics, 1886-1896.

Chilean relations with the United States can be surveyed in

Fredrick B. Pike's Chile and the United States, 1880-1962 and in William F. Sater's Chile and the United States. General coverage of the

economy is found in Markos J. Mamalakis's The Growth and Structure of the Chilean Economy. A classic work on the copper industry

is Theodore H. Moran's Multinational Corporations and the Politics of Dependence. The development of organized labor is explained in

Peter de Shazo's Urban Workers and Labor Unions in Chile, 1902-1927

and in Alan Angell's Politics and the Labour Movement in Chile. On

rural conflicts, valuable sources include Brian Loveman's Struggle

in the Countryside and Thomas C. Wright's Landowners and Reform

in Chile. Concerning the role of the Catholic Church, the key source

56
Historical Setting

is Brian H. Smith's The Church and Politics in Chile. The armed forces are covered in Frederick M. Nunn's The Military in Chilean History.

The evolution of the political system is discussed by Timothy

R. Scully in Rethinking the Center. Political developments leading

up to the tragedy under Allende are traced by Paul W. Drake in

Socialism and Populism in Chile, 1932-52, by Federico G. Gil in The

Political System of Chile, and by James F. Petras in Politics and Social Forces in Chilean Development.

The two most controversial governments in Chilean history have

generated a voluminous literature. On the Allende experiment, the

best books to start with are Stefan de Vylder's Allende 's Chile; Edy

Kaufman's Crisis in Allende 's Chile; Ian Roxborough, Philip O'Brien,

and Jackie Roddick's Chile: The State and Revolution; Paul E. Sigmund's The Overthrow ofAllende and the Politics of Chile, 1964-1976;

Barbara Stallings's Class Conflict and Economic Development in Chile,

1958-1973; Arturo Valenzuela's The Breakdown of Democratic Regimes: Chile; and Peter Winn's Weavers of Revolution.

The first half of the Pinochet period is dissected by J. Samuel

Valenzuela and Arturo Valenzuela in Military Rule in Chile, the

second half by Paul W. Drake and Ivan Jaksic in The Struggle for

Democracy in Chile, 1982-1990, and the entire seventeen years by

Pamela Constable and Arturo Valenzuela in A Nation of Enemies.

Analyses of the dictatorship's economic innovations are provided

in Sebastian Edwards and Alejandra Cox Edwards's Monetarism and

Liberalization and in Alejandro Foxley Riesco's Latin American Experiments in Neoconservative Economics. (For further information and

complete citations, see Bibliography.)

57

Chapter 2. The Society and Its Environment
A Mapuche rug representing a chilko, a plant reputed to cure cardiovascular illnesses
The development of Chilean society since the

country broke away from Spain early in the nineteenth century

reflects in many ways a significant incongruity. On the one hand,

the nation's political institutions and many of its social institutions

developed much like their counterparts in the United States and

Western Europe. On the other hand, the economy had a history

of insufficient and erratic growth that left Chile among the less developed nations of the world. Given the first of these characteristics, Chilean society, culture, and politics have struck generations

of observers from more developed nations as having what can be

described, for want of a better expression, as a familiar "modernity." Yet this impression always seemed at odds with the lack of resources at all levels, the highly visible and extensive urban and

rural poverty, and the considerable social inequalities.

Chile's location on the far southern shores of the Americas' Pacific Coast made international contacts difficult until the great advance

in global air travel and communications of the post-World War

II period. This relative isolation of a people whose main cultural roots lay in the Iberian-Catholic variant of Western civilization

probably had the paradoxical effect of making Chileans more receptive to outside influences than would otherwise have been the case. The small numbers of foreign travelers reaching the country in the

nineteenth and early twentieth centuries usually found a warm welcome from people eager to hear of the latest trends in leading nations. The immigrants to the country were similarly accepted quite

readily, and those who were successful rapidly gained entry into

the highest social circles. One result was a disproportionate number

of non-Iberian names among the Chilean upper classes. Moreover,

many Chileans, the wealthy as well as artists, writers, scientists,

and politicians, found it virtually obligatory to make the long voyage

to experience firsthand the major cities of Europe and the United

States, and they rapidly absorbed whatever new notions were emerging in more advanced nations.

At the same time, Chile's physical isolation probably buttressed

the commitment of the nation's leaders in all walks of life to building strong national institutions, which then developed their peculiarly Chilean features. For example, the rich could not easily envision sending their children to universities in Europe or the United

States, and this created a demand that would not otherwise have

existed for strong domestic centers of higher learning. A feeling of

61
Chile: A Country Study

pride in these various institutions soon developed that contributed

to the Chileans' strong sense of national identity.

This combination of openness to outside influences and commitment to the nation is undoubtedly related to the relative "modernity" that has been a feature of Chilean life since independence

from Spain. From the very first national administrations, there was

a strong expression of commitment to expanding the availability

of education to both boys and girls, principally at the primary level. The University of Chile was established by the national government in 1842 and soon had a large, centrally located building in

Santiago. In a matter of decades, the university became one of the

most respected institutions of higher learning in Latin America.

Women were admitted to the University of Chile beginning in 1877,

making it a world pioneer in coeducational instruction; by 1932

about a third of the university's enrollment was female.

In the Americas, Chile was second only to Uruguay in creating

state-run welfare institutions, adopting a relatively comprehensive

social security system in 1924, more than a decade before the United

States. A national health system was created by pooling existing

state-founded institutions into a comprehensive organization in

1952. Under this program, curative and emergency care were

provided free of charge to workers and the poor; in the early 1960s,

preventive care became available to all infants and mothers.

However, inadequate development of the economy undermined

Chile's relatively modern institutional edifice. The lack of resources

often led to sharp conflicts between different groups trying to obtain larger pieces of a meager pie. As better placed and politically more influential groups were able to draw disproportionate benefits

for themselves, inequalities were generated, as was made apparent by the wide disparities in the pension benefits that were paid

by the state-run system. Despite the government's early commitment to public education, budgetary limitations meant that illiter- acy decreased very slowly. By 1930 about a quarter of the adult

population still could not read or write, a low proportion by Latin

American standards but a far cry from the universal literacy exist- ing at the time in France, Germany, and Belgium, whose educational systems had served as models for Chilean public education.

Primary school attendance only approached universal levels in the

1960s, and full adult literacy was not achieved until the 1980s. The

lack of educational opportunities limited social mobility, and investments in new technologies often ran into the difficulty of not having properly trained workers. The nation's industries, mines, and

farms had at their disposal a large pool of unskilled or semiskilled

62
The Society and Its Environment

workers, and for most jobs the wages, benefits, and working conditions were generally deplorable. On numerous occasions, worker

demands met with heavy-handed repression, and class divisions

became deep fault lines in Chilean society.

The military government that took over after the bloody coup

of 1973 embarked on a different course from that followed by the

country's governments over the previous half-century. Based on

economic neoliberalism, the military regime's primary objectives were to reduce the size of the state and limit its intervention in

national institutions. Most state-owned industries and the state- run social security system were privatized, private education at all levels was encouraged, and labor laws limiting union rights were

enacted. Although new programs enhancing prior efforts to deal

with the poorest segments of the population were successfully put

into place, the authoritarian regime's overall social and economic

policies led to increased inequalities.

At the start of the 1990s, Chile began to recover its democratic

institutions under the elected government of Patricio Aylwin Azocar (president, 1990-94). Committed to redressing the social in- equalities that had developed under the military regime, the new

government allocated more resources to programs and institutions

in education and health in order to improve their quality and the

population's access to them. Although the Aylwin administration

made some changes in these institutions, there was no attempt to undo the privatization of the social security system, which was now

based on individual capitalization schemes rather than on the old

state-run, pay-as-you-go system.

In 1993 and early 1994, there was a sharp sense of optimism

regarding the Chilean economy. High rates of economic growth were expected to last through the 1990s. With its newfound eco- nomic dynamism, Chile seemed poised in the early 1990s to begin

resolving the long-standing incongruity of a relatively advanced

social and political system coexisting with a scarcity of means. Geography

A Long, Narrow Nation

In a classic book on the natural setting and people of Chile, Benjamin Subercaseaux Zanartu, a Chilean writer, describes the country's geography as loca (crazy). The book's English translator

renders this term as "extravagant." Whether crazy or extravagant,

there is litde question that Chile's territorial shape is certainly among

the world's most unusual. From north to south, Chile extends 4,270

kilometers, and yet it only averages 177 kilometers east to west.

63
Chile: A Country Study

On a map, Chile looks like a long ribbon reaching from the middle of South America's west coast straight down to the south- ern tip of the continent, where it curves slightly eastward. Cape

Horn, the southernmost point in the Americas, where the Pacific

and Atlantic oceans turbulently meet, is Chilean territory. Chile's

northern neighbors are Peru and Bolivia, and its border with

Argentina to the east, at 5,150 kilometers, is one of the world's

longest (see fig. 4). Chile's shape was determined by the fact that it began as a Spanish settlement on the western side of the mighty cordillera of the

Andes, in the central part of the country. This range, which in- cludes the two tallest peaks in the Americas—Aconcagua (6,959

meters) and Nevado Ojos del Salado (6,880 meters)—is a formidable barrier, whose passes to the Argentine side are covered by

a heavy blanket of snow during the winter months. As a result,

Chile could expand beyond its original colonial territory only to the south and north. The colony grew southward by occupying lands

populated by indigenous groups, and it grew northward by occupying sections of both Peru and Bolivia that were eventually awarded to Chile in the aftermath of the War of the Pacific (1879-83).

The northern two-thirds of Chile lie on top of the telluric Nazca

Plate, which, moving eastward about ten centimeters a year, is forc- ing its way under the continental plate of South America. This

movement has resulted in the formation of the Peru-Chile Trench,

which lies beyond a narrow band of coastal waters off the north- ern two-thirds of the country. The trench is about 150 kilometers

wide and averages about 5,000 meters in depth. At its deepest point,

just north of the port of Antofagasta, it plunges to 8,066 meters.

Although the ocean's surface obscures this fact, most of Chile lies at the edge of a profound precipice.

The same telluric displacements that created the Peru-Chile

Trench make the country highly prone to earthquakes. During the

twentieth century, Chile has been struck by twenty-eight major

earthquakes, all with a force greater than 6.9 on the Richter scale (see Glossary). The strongest of these occurred in 1906 (registering an estimated 8.4 on the Richter scale) and in 1960 (reaching

8.75). This latter earthquake occurred on May 22, the day after another major quake measuring 7.25 on the Richter scale, and cov- ered an extensive section of south-central Chile. It caused a tidal wave that decimated several fishing villages in the south and raised or lowered sections of the coast as much as two meters. The clash

between the earth's surface plates has also generated the Andes,

a geologically young mountain range that, in Chilean territory

alone, includes about 620 volcanoes, many of them active. Almost

64


The Society and Its Environment

sixty of these had erupted in the twentieth century by the early

1990s. More than half of Chile's land surface is volcanic in origin.

About 80 percent of the land in Chile is made up of mountains

of some form or other. Most Chileans live near or on these mountains. The majestically snowcapped Andes and their precordillera

elevations provide an ever-present backdrop to much of the scenery, but there are other, albeit less formidable, mountains as well. Although they seemingly can appear anywhere, the non-Andean

mountains usually form part of transverse and coastal ranges. The

former, located most characteristically in the near north and the

far north natural regions, extend with various shapes from the Andes

to the ocean, creating valleys with an east-west direction. The lat- ter are evident mainly in the center of the country and create what

is commonly called the Central Valley (Valle Central) between them

and the Andes. In the far south, the Central Valley runs into the

ocean's waters. At this location, the higher elevations of the coastal

range facing the Andes become a multiplicity of islands, forming an intricate labyrinth of channels and fjords that have been an en- during challenge to maritime navigators.

Much of Chile's coastline is rugged, with surf that seems to ex- plode against the rocks lying at the feet of high bluffs. This collision of land and sea gives way every so often to lovely beaches of various

lengths, some of them encased by the bluffs. The Humboldt current,

which originates northwest of the Antarctic Peninsula (which juts

into the Bellingshausen Sea) and runs the full length of the Chilean

coast, makes the water frigid. Swimming at Chile's popular beaches

in the central part of the country, where the water gets no warmer

than 15°C in the summer, requires more than a bit of fortitude.

Chilean territory extends as far west as Polynesia. The best known

of Chile's Pacific islands is Easter Island (Isla de Pascua, also known

by its Polynesian name of Rapa Nui), with a population of 2,800

people. Located 3,600 kilometers west of Chile's mainland port

of Caldera, just below the Tropic of Capricorn, Easter Island provides Chile a gateway to the Pacific. It is noted for its 867 monoliths

(Moais), which are huge (up to twenty meters high) and mysterious, expressionless faces sculpted of volcanic stone (see fig. 5). The

Islas Juan Fernandez, located 587 kilometers west of Valparaiso,

are the locale of a small fishing settlement. They are famous for

their lobster and the fact that one of the islands, Isla Robinson Crusoe, is where Alexander Selkirk, the inspiration for Daniel Defoe's

novel, was marooned for about four years. Natural Regions

Chile may have a "crazy" geography, but it is also a land of

67
Figure 4. Topography and Drainage

Chile: A Country Study

Boundary representation not necessarily authoritativeSou ^

Pacific

O.

Cerro Terevaka A (507)

Punta San Juan

Caleta Anakena

Punta Rosalia

Bahi'a La \|^> Perouse m

f Cerro Puhi

(302)

» Volcani

'

i Rano '

"

i Raraku <a

Cabo

O'Higgins

Volcan A Pukatiki (370) Cabo Cumming

Hanga Roa\ ? / Ce. rro Tuutapu

^ A (270) _ ^-C

Hanga^Piko ,„/ \ Punta Cuidado

Hutuiti Cabo

Roggeween

Volcan Rano

KauCabo Sur MotU'Nui

Rada

Benepu

Matavert

International

Airport

Punta

Baja So*

® National capital ® Province capital • Populated place Road

Track A Spot elevation

in meters Stone statue (Moai)

1 2 3 Kilometers

I LV h 1 1 2 3 Miles

500 1 ,000 Kilometers 500 1,000Mifes

Pacific Ocean

Is la Sata tsta San Ambrosfo

y Gomez (ChUe) / y

° (Chile) tsla San F&Tx > Easter island <CbHe> ff

(Chile) U £

tslas Juan Fernandez

(Chile)

Santiago MMMM

Figure 5. Easter Island (Isla de Pascua), 1986

unparalleled beauty, with an incredible variety that has fascinated

visitors since the Spanish conquest. Because Chile extends from

a point about 625 kilometers north of the Tropic of Capricorn to a point hardly more than 1,400 kilometers north of the Antarctic

Circle, within its territory can be found a broad selection of the

earth's climates. For this reason, geographically it is possible to

68
A monolith (Moai)

on Easter Island

Courtesy Embassy of

Chile, Washington

speak of several Chiles. The country usually is divided by geographers into five regions: the far north, the near north, central Chile,

the south, and the far south. Each has its own characteristic vegetation, fauna, climate, and, despite the omnipresence of both the

Andes and the Pacific, its own distinct topography.

The Far North

The far north (Norte Grande), which extends from the Peruvian

border to about 27°south latitude, a line roughly paralleled by the

Rio Copiapo, is extremely arid. It contains the Atacama Desert, one of the driest areas in the world; in certain sections, this desert

does not register any rainfall at all. Average monthly temperatures

range at sea level between about 20.5°C during the summer and

about 14°C during the winter. Most of the population lives in the

coastal area, where the temperatures are more moderate and the

humidity higher. Contrary to the image of monochrome barrenness that most people associate with deserts, the landscape is spectacular, with its crisscrossing hills and mountains of all shapes and

sizes, each with a unique color and hue depending on its mineral

composition, its distance from the observer, and the time of day.

In the far north, the land generally rises vertically from the ocean, sometimes to elevations well over 1,000 meters. The Cordillera

Domeyko in the north runs along the coast parallel to the Andes.

This topography generates coastal microclimates because the fog

69
Chile: A Country Study

that frequently forms over the cold ocean waters, as well as any

low clouds, is trapped by the high bluffs. This airborne moisture

condenses in the spines and leaves of the vegetation, droplets that

fall to the ground and irrigate the plants' roots. Beyond the coastal

bluffs, there is an area of rolling hills that encompasses the driest

desert land; this area ends to the east with the Andes towering over

it. The edges of the desert in some sections have subterranean

aquifers that have permitted the development of forests made up

mainly of tamarugos, spiny trees native to the area that grow to a

height of about twenty-five meters. Most of those forests were cut down to fuel the fires of the many foundries established since colonial

times to exploit the abundant deposits of copper, silver, and ni- trate found in the area. The result was the creation of even drier

surface conditions.

The far north is the only part of the country in which there is a large section of the Andean plateau. The area receives considerable rainfall during the summer months in what is commonly known

as the "Bolivian winter," forming shallow lakes of mostly saline

waters that are home to a number of bird species, including the

Chilean flamingo. Some of the water from the plateau trickles down

the Andes in the form of narrow rivers, many of which form oases

before being lost to evaporation or absorption into the desert sands,

salt beds, and aquifers. However, some rivers do manage to reach

the Pacific, including the Rio Loa, whose U-shaped course across

the desert makes it Chile's longest river. The water rights for one

of the rivers, the Rio Lauca, remain a source of dispute between

Bolivia and Chile. These narrow rivers have carved fertile valleys

in which an exuberant vegetation creates a stark contrast to the

bone-dry hills. In such areas, roads usually are built halfway up

the arid elevations in order to maximize the intensive agricultural use of the irrigated land. They offer spectacular panoramic vistas,

along with the harrowing experience of driving along the edges of

cliffs. In the far north, the kinds of fruits that grow well in the arid

tropics thrive, and all kinds of vegetables can be grown year-round.

However, the region's main economic foundation is its great mineral wealth. For instance, Chuquicamata, the world's largest openpit copper mine, is located in the far north. Since the early 1970s,

the fishing industry has also developed enormously in the main

ports of the area, most notably Iquique and Antofagasta (see The

Current Structure of the Economy, ch. 3). The Near North

The near north (Norte Chico) extends from the Rio Copiapo

70
The Society and Its Environment

to about 32°south latitude, or just north of Santiago. It is a semiarid

region whose central area receives an average of about twenty-five

millimeters of rain during each of the four winter months, with

trace amounts the rest of the year. The near north is also subject to droughts. The temperatures are moderate, with an average of

18.5°C during the summer and about 12°C during the winter at sea level. The winter rains and the melting of the snow that accumulates on the Andes produce rivers whose flow varies with the seasons, but which carry water year round. Their deep transverse valleys

provide broad areas for cattle raising and, most important, fruit growing, an activity that has developed greatly since the mid-1970s.

As in the far north, the coastal areas of the near north have a

distinct microclimate. In those sections where the airborne moisture

of the sea is trapped by high bluffs overlooking the ocean, temperate rain forests develop as the vegetation precipitates the vapor in

the form of a misty rain. Because the river valleys provide breaks

in the coastal elevations, maritime moisture can penetrate inland

and further decrease the generally arid climate in those valleys.

The higher elevations in the interior sections are covered with shrubs

and cacti of various kinds.

Central Chile

Central Chile (Chile Central), home to a majority of the population, includes the three largest metropolitan areas—Santiago, Valparaiso, and Concepcion. It extends from about 32°south latitude

to about 38°south latitude. The climate is of the temperate Mediter- ranean type, with the amount of rainfall increasing considerably

and progressively from north to south. In the Santiago area, the

average monthly temperatures are about 19.5°C in the summer

months ofJanuary and February and 7.5°C in the winter months

of June and July. The average monthly precipitation is no more

than a trace in January and February and 69.7 millimeters in June

and July. By contrast, in Concepcion the average monthly temperatures are somewhat lower in the summer at 17.6°C but higher

in the winter at 9.3°C, and the amount of rain is much greater.

In the summer, Concepcion receives an average of twenty millimeters of rain per month; in June and July, the city is pounded

by an average of 253 millimeters per month. The numerous rivers

greatly increase their flow as a result of the winter rains and the

spring melting of the Andean snows, and they contract considerably in the summer. The combination of abundant snow in the Andes

and relatively moderate winter temperatures creates excellent conditions for Alpine skiing.

71
Chile: A Country Study

The topography of central Chile includes a coastal range of mountains running parallel to the Andes. Lying between the two mountain ranges is the so-called Central Valley, which contains some

of the richest agricultural land in the country, especially in its north- ern portion. The area just north and south of Santiago is a large

producer of fruits, including the grapes from which the best Chilean

wines are made. Exports of fresh fruit began to rise dramatically

in the mid-1970s because Chilean growers had the advantage of

being able to reach markets in the Northern Hemisphere during

that part of the world's winter. Most of these exports, such as grapes, apples, and peaches, go by refrigerator ships, but some,

such as berries, go by air freight.

The southern portion of central Chile contains a mixture of some

excellent agricultural lands, many of which were covered originally

with old-growth forests. They were cleared for agriculture but were

soon exhausted of their organic matter and left to erode. Large tracts of this worn-out land, many of them on hilly terrain, have been

reforested for the lumber, especially for the cellulose and paper in- dustries. New investments during the 1980s in these industries trans- formed the rural economy of the region. The pre-Andean highlands

and some of the taller and more massive mountains in the coastal

range (principally the Cordillera de Nahuelbuta) still contain large

tracts of old- growth forests of remarkable beauty, some of which

have been set aside as national parks. Between the coastal mountains and the ocean, many areas of central Chile contain stretches

of land that are lower than the Central Valley and are generally

quite flat. The longest beaches can be found in such sections.

The South

Although many lovely lakes can be found in the Andean and

coastal regions of central Chile, the south (Sur de Chile) is definitely

the country's most lacustrine area. Southern Chile stretches from

below the Rio Bio-Bio at about 38° south latitude to below Isla de

Chiloe at about 43.4°south latitude. In this lake district of Chile,

the valley between the Andes and the coastal range is closer to sea

level, and the hundreds of rivers that descend from the Andes form

lakes, some quite large, as they reach the lower elevations. They

drain into the ocean through other rivers, some of which (principally the Rio Calle Calle, which flows by the city of Valdivia) are

the only ones in the whole country that are navigable for any stretch. The Central Valley's southernmost portion is submerged in the ocean and forms the Golfo de Ancud. Isla de Chiloe, with its rolling

hills, is the last important elevation of the coastal range of mountains.

The south is one of the rainiest areas in the world. One of the wettest spots in the region is Valdivia, with an annual rainfall of

72
Volcdn Osorno, Chile's most perfectly shaped volcano, overlooking nearby

Lago Llanquihue, and a Lutheran church, representative of the strong German influence in the region

Courtesy Ramon Mir

A lake near Coihaique in southern Chile

Courtesy Inter-American Development Bank

73
Chile: A Country Study

2,535.4 millimeters. The summer months of January and February are the driest, with a monthly average precipitation of sixty- seven millimeters. The winter months of June and July each

produce on average a deluge of 410.6 millimeters. Temperatures

in the area are moderate. In Valdivia the two summer months aver- age 16.7°C, whereas the winter months average 7.9°C.

The lakes in this region are remarkably beautiful. The snowcovered Andes form a constant backdrop to vistas of clear blue or even turquoise waters, as at Lago Todos los Santos. The rivers

that descend from the Andes rush over volcanic rocks, forming numerous white-water sections and waterfalls. The vegetation, in- cluding many ferns in the shady areas, is a lush green. Some sec- tions still consist of old-growth forests, and in all seasons, but

especially in the spring and summer, there are plenty of wildflowers and flowering trees. The pastures in the northernmost section,

around Osorno, are well suited for raising cattle; milk, cheese, and

butter are important products of that area. All kinds of berries grow

in the area, some of which are exported, and freshwater farming

of various species of trout and salmon has developed, with cultivators taking advantage of the abundant supply of clear running water. The lumber industry is also important. A number of tourists, mainly

Chileans and Argentines, visit the area during the summer. Many of Chile's distinctive animal species have been decimated

as they have been pushed farther and farther into the remaining

wilderness areas by human occupation of the land. This is the case with the huemul, a large deer, and the Chilean condor, the largest

bird of its kind; both animals are on the national coat of arms. The

remaining Chilean pumas, which are bigger than their California

cousins, have been driven to isolated national parks in the south

by farmers who continue to hunt them because they occasionally

kill sheep and goats.

The Far South

In the far south (Chile Austral), which extends from between

43°south latitude and 44°south latitude to Cape Horn, the Andes

and the South Pacific meet. The continental coastline features numerous inlets and fjords, from which the mountains seem to rise straight up to great elevations; this is, for example, the case with

the Cerro Maca (2,960 meters) near Puerto Aisen. The rest of the

land consists of literally thousands of islands forming numerous

archipelagos interwoven with sometimes-narrow channels, which

provide the main routes of navigation.

In the northern part of the far south, there is still plenty of rainfall. For instance, Puerto Aisen, at 45°24' south latitude, receives

74
The Society and Its Environment

2,973.3 millimeters of rain per year. However, unlike in Valdivia,

the rain falls more or less evenly throughout the year in Puerto

Aisen. The summer months average 206.1 millimeters, whereas

the winter months average 300 millimeters. The temperatures at sea level in Puerto Aisen average 13.6°C in the summer months

and 4.7°C in the winter months. Although the area generally is chilly and wet, the combination of channels, fjords, snowcapped

mountains, and islands of all shapes and sizes within such a nar- row space makes for breathtaking views. The area is still heavily

forested, although some of the native species of trees that grow in

the central and southern parts of the country have given way to others better adapted to a generally colder climate.

The southern part of the far south includes the city of Punta Arenas, which, with about 125,000 inhabitants, is the southernmost

city of any appreciable size in the world. It receives much less precipitation; its annual total is only 438.5 millimeters, or a little more than what Valdivia receives in the month ofJune alone. This

precipitation is distributed more or less evenly throughout the year, with the two main summer months receiving a monthly average

of thirty-one millimeters and the winter months 38.9 millimeters, some of it in the form of snow. Temperatures are colder than in

the rest of the country. The summer months average 1 1 . 1 °C, and

the winter months average 2.5°C. The virtually constant wind from

the South Pacific Ocean makes the air feel much colder.

The far south contains large expanses of pastures that are best

suited for raising sheep. The area's other main economic activity

is oil and natural gas extraction from the areas around the Strait

of Magellan. This strait is one of the world's important sea-lanes

because it unites the Atlantic and Pacific oceans through a channel that avoids the rough open waters off Cape Horn. The channel is perilous, however, and Chilean pilots guide all vessels through

it. The People

Formation of the Chilean People

To a traveler arriving in Santiago from Lima, Chileans will in

general seem more Latin European-looking than Peruvians. By

contrast, to a visitor arriving from Buenos Aires, certain native

American features will seem apparent in large numbers of Chileans

in contrast to Argentines. These differing perspectives can be

explained by tracing the distinctive historical roots of the Chil- ean people.

75
76
Paine (Paine Horns) and Lago Pehoe in Torres del Paine

(Paine Towers) National Park, Chilean Patagonia

Courtesy Ramon Miro and Laura Mullahy

77
Chile: A Country Study

The Spaniards who settled in the pleasant Central Valley of what

is now Chile beginning in the late sixteenth century found no rich

lodes of gold or silver to exploit, and therefore saw no need for

employing masses of indigenous forced laborers such as those who

were put to work in the Andean highlands and in the mines of Mexico. Although copper mining became an important part of the late colonial economy, even the most successful of operations employed no more than a few salaried workers. Settlers took to developing

the agricultural potential of the land, which, given Chile's climate, was well suited for growing the crops they knew from the Old

World. This seasonal form of farming was different from that practiced in semitropical plantations in that it required few workers ex- cept during the harvest. As a result, the Spanish settlers in Chile

did not seek to force large numbers of native Americans to toil for them, and they had little use for slaves. Relatively few enslaved

Africans were brought into Chile, and slavery was abolished soon

after the country gained its independence from Spain in 1818.

The Spaniards encountered fierce resistance to their occupation

efforts from one of the main indigenous groups, the Araucanians,

who lived in the south-central part of the country. The settlers managed to take control of the land down to the Rio Bio-Bio and

to establish strongholds farther south, but throughout the colonial

period the area that is now Chile consisted of two distinct nations: one a poor outpost of the Spanish Empire and the other an independent territory, Arauco, occupied by the Araucanians, whose terri- tory consisted of most of south-central Chile between the Rio

Bio-Bio and the coastal areas around Temuco. By the end of the

colonial period, the Araucanian territories had been reduced, but

they had not been fully incorporated into Spanish rule. The in- digenous wars lasted for more than three centuries, with a final skirmish in 1882.

Although warfare and the diseases brought by the Spaniards decimated the native population, Spain found it necessary to keep sending soldiers to protect its distant colony. They came from all regions

of Spain, including the Basque country, and many of them ended

up settling in Chile. The combination of an economy based on

temperate-zone agriculture, native American resistance to Spanish occupation, and a continuous influx of Spaniards from the midsixteenth century to the end of the colonial period defined the main

body of the Chilean population—a mixture of native American and

Spanish blood, but one in which the Spanish element is greater

than in the other Andean mestizo populations.

During the nineteenth century, the newly independent government sought to stimulate European immigration. Beginning in

78
The Society and Its Environment

1 845 , it had some success in attracting primarily German migrants

to the Chilean south, principally to the lake district. For this rea- son, that area of the country still shows a German influence in its architecture and cuisine, and German (peppered with archaic ex- pressions and intonations) is still spoken by some descendants of

these migrants. People from England and Scotland also came to Chile, and some established export-import businesses of the kind

that the Spanish crown previously had kept at bay. Other European

immigrants, especially northern Italians, French, Swiss, and Croats, came at the end of the nineteenth century. More Spaniards and

Italians, East European Jews, and mainly Christian Lebanese,

Palestinians, and Syrians came in the decades before World War

II. Many of ihese immigrants became prominent entrepreneurs

or professionals, but their numbers never exceeded 10 percent of

the total population at any given time. Thus, in contrast to Argentina, whose population was transformed around the turn of the

century by numerous European immigrants, especially Italians,

the Chilean population continued to be defined by the original Spanish and native American mixture. Acculturation was fairly rapid

for all immigrant groups. Because second-generation residents saw

themselves primarily as Chileans, ethnic identities had little impact on national society.

Chileans of all color gradations between the fair northern European and the darker native American complexion can be found,

although most have brown hair or dark brown hair and brown eyes. There have been no really salient racial distinctions affecting daily

life and politics in Chile, but there is unquestionably a strong correlation between high socioeconomic status and light skin.

The social definition of who is a native has not depended so much

on phenotypical characteristics as on cultural ones. This means that Chileans generally have considered someone to be a native only

if, in addition to native American features, he or she has an in- digenous last name, wears native clothing, speaks a native language,

or resides in a native community. Consequently, the native Americans who wish to assimilate fully into Chilean society often take

Spanish surnames after moving off reservations.

The term Mapuche ("people of the land") now encompasses

most of the native Chilean groups. The number of Mapuche residing on the reservations that were set up beginning in the late 1880s

has declined in recent years. About 300,000 were counted as liv- ing on the reservations by the 1982 census. The 1992 census asked

respondents to identify themselves ethnically as Mapuche, Aymara

(the native population of northern Chile whose main trunk lies in

Bolivia), Rapa Nui (the Polynesian group that lives in or originates

79
Chile: A Country Study

from Easter Island), and other. The results showed that 9.6 per- cent of the population over age fourteen self- identified as Mapuche,

0.5 percent as Aymara, and less than 0.25 percent as Rapa Nui

(see table 2, Appendix). This means that about 1.3 million Chileans

are native Americans, mainly Mapuche, or the descendants of one

of the fourteen or so different tribal groups that occupied what is now Chile before the Spanish conquest.

Although indigenous culture was most strongly retained on the

reservations, penetration by Chilean national culture was also extensive. For example, research on a sample of Mapuche living on

four reservations in the south showed that only 8.5 percent of them

were monolingual Mapuche (sometimes called Mapudungu) speakers; 50.7 percent lived in homes where both Spanish and Mapuche

were spoken, and 40.8 percent lived in homes where only Spanish was spoken. This situation was largely a result of the extension of

primary rural education. Of all Mapuche over fifteen years of age

living on the same reservations that were studied, 81 percent had

gone to school for at least one year (85.5 percent of the men and

76.2 percent of the women). Significant differences in schooling

by age among the Mapuche reveal how wide the reach of rural

education has been in recent years. In the sampled reservation communities, the literacy rate was 81.2 percent for all residents over

five years of age, and yet the rate was more than 96.2 percent for the age- group between ages ten and thirty-four. The acquisition

of language and literacy skills is, of course, a principal means of

acculturation.

With the partial exception of the indigenous groups, the Chilean

population perceives itself as essentially homogeneous. Despite the

configuration of the national territory, regional differences and sen- timents are remarkably muted. Even the Spanish accent of Chileans

varies only very slightly from north to south; more noticeable are

the small differences in accent based on social class or whether one

lives in the city or the country. The fact that the Chilean population essentially was formed in a relatively small section of the center of the country and then migrated in modest numbers to the north

and south helps explain this relative lack of differentiation, which

is now maintained by the national reach of radio and especially

of television. The media diffuse and homogenize colloquial ex- pressions.

Current Demographic Profile

A new decennial census was taken in 1992. Some of its data were

already available officially as of this writing, but other data were

still in the process of being tabulated. The total population was

80
The Society and Its Environment

officially given as 13,348,401, of whom 6,553,254 were males and

6,795,147 were females (see table 3, Appendix). According to the

data, the average population density in 1992 remained 17.6 in- habitants per square kilometer. Population density varied greatly,

however, from the sparsely populated far north and far south to the much more densely inhabited central Chile (see table 4, Appendix). In 1993 the figure rose to eighteen inhabitants per square

kilometer. The new total population figure shows that the growth

of the population in the ten years between the 1982 and the 1992

censuses was about 1.7 percent per annum. The National Statistics Institute (Instituto Nacional de Estadfsticas—INE) estimated the birthrate in 1991 at 22.4 per 1 ,000 population, an increase over 1985, when the rate stood at 21 .6 per 1 ,000.

This has led to a corresponding widening of the base of the age

pyramid of the population, which had narrowed significantly with

the decline in the birthrate that began in the mid- to late 1960s

(see fig. 6). The current increase in the birthrate is a slight demographic echo of the birth control programs that began in the

mid-1960s. These programs reduced the fertility of women of child- bearing age, causing the original drop in the birthrate, whereas

the rise in the early 1990s resulted from children born to new

generations of women who had reached the childbearing period

of their lives. Whereas women of childbearing age (fourteen to fortynine years) had had an average of 4.09 children in 1967, by 1992

this average had dropped to 2.39.

With the declining birthrate and no significant increase in immigration, much of the growth in the Chilean population over the

1970s and 1980s resulted from a decline in mortality. The mortality

rate in 1992 was estimated at 5.6 per 1,000 population, whereas

in 1960 it had been more than twice that, at 12.5 per 1,000. In 1990 life expectancy at birth was estimated at 71.0 years (sixtyeight for men and seventy-five for women), up from the 1960 figure

of 5 7 . 1 years (57.6 for men and 63.7 for women) . These improvements resulted in part from better health care beyond the first year

of life, but they are explained primarily by a dramatic decline in

infant mortality during the 1960-90 period. In 1960 infant mortality was 119.5 per 1,000 live births, and by 1991 it had declined

to 14.6 per 1,000. This latter rate, one of the lowest in Latin America, indicated the success of the various health programs for expectant mothers and infants implemented since the late 1960s. In the

early 1990s, the Chilean population was older than it had been in

the 1960s. The 1982 census revealed for the first time ever that

the population included a majority of adults over twenty-one years

of age. Yet it was still a very young population: 49 percent of

81
Chile: A Country Study

AGE-GROUP

80 and over 75—79

70—74

65—69

60—64

55—59

50—54

45—49

40—44

35—39

30—34

25—29

20—24

15—19

10—14

5—9

0—4

Total Population in 1991=13,385,805

MALES FEMALES

4 2 2 4

PERCENTAGE OF POPULATION

Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Compendio

estadistico, 1991, Santiago, 1991, 12.

Figure 6. Estimated Population by Age and Gender, 1991

Chileans were estimated in 1991 to be less than twenty-four years

of age. Urban Areas

Since the 1930s, the majority of Chileans have lived in urban

areas (defined as agglomerations of more than 2,000 inhabitants).

This reflects a demographic trend of migration from rural areas

that began early, according to developing world and Latin American standards. The urban population was estimated to be 86 percent

of the total in 1991. A perhaps better indicator of the degree of

urbanization of a country is the extent to which the population lives in agglomerations of more than 20,000. According to the 1982 census, there were fifty-one cities and towns in Chile with more than

20,000 inhabitants, and their combined population represented 65.6

82
The Society and Its Environment

percent of the total. This percentage shows that Chile is very

definitely an urban country. There has continued to be a signifi- cant internal migration of the population, although mostly from

one urban center to another. The 1982 census showed that a significant 8.6 percent of the population had moved to the province

of current residence during the previous five years. Central Chile is the site of the oldest urban centers, many of

which were founded by the Spanish in the mid-sixteenth century.

Most of the older cities are next to rivers in areas of rich soil. Santiago, founded in 1541, is typical of this pattern of settlement in a prime agricultural area. Little did its founders know that city streets and houses would occupy so much of the Santiago Valley's

fertile soil in the twentieth century. Santiago was designated from

its founding as the capital city of the new colony, and it has been

the seat of the Chilean government ever since. Other cities, such

as Valparaiso, founded in 1536, served as ports. The city of

Concepcion—founded in 1550 in what is now Penco and moved

a bit inland to its present location in 1754—served as the center

of a wheat-growing area, as a port for the southern part of the Central Valley, and as a military base on the Araucanian frontier.

Despite being continually populated for more than four centuries, Chilean cities have—unlike Lima or Cartagena, for instance

few architectural monuments from the past. This is explained in

part by the poverty of the country in colonial times but also by

the devastating action of the frequent earthquakes. Following the

usual Spanish colonial practice, Chilean cities were planned with

a central plaza surrounded by a grid of streets forming square

blocks. The plazas invariably were the site of both municipal or

regional government buildings and churches.

Communications between urban centers were facilitated during

the colonial period by the relative proximity to the ocean of even

the most Andean of locations. Except for cities in the Central Valley, between Santiago and Chilian, ocean transportation and shipping were vital to the north-south movement of people and goods

until the building of railroads from the second half of the nineteenth

century until the first decades of the twentieth century. Even then,

the railroads only served the central and southern parts of the country to Puerto Montt, leaving sea-lanes as the main links to the ex- treme north and south.

The most significant feature of the development of urban centers

in Chile has been the imbalance represented by the growth of Santiago, which has far exceeded that of other cities. According to the

1992 census figures, the Metropolitan Region of Santiago had about

5,170,300 inhabitants, a total equal to about 39 percent of the

83
Chile: A Country Study

Chilean population. In 1865, with a population of about 115,400,

Santiago was the residence of only 6.3 percent of the nation's in- habitants. From about 1885 onward, the capital city grew at a rate between about 30 percent and 50 percent every ten to twelve years

(see table 5, Appendix). The 1992 census figure showed a slight

moderation of this pace, which was, nonetheless, at 3.3 percent

per year significantly higher than the average national population

increase.

Santiago's population growth occurred mainly as a result of

migration from rural areas and provincial urban centers. Almost

30 percent of the population of the capital in 1970 had been born

in areas of Chile other than Santiago, a percentage that has probably not changed much since. The only other areas of the country

that have greatly increased their population in recent years are the

extreme south and the extreme north. This growth has resulted

from internal migration prompted by economic expansion associated with fishing and mining. However, given the much smaller populations in those areas to begin with, the fact that between 30 percent

and 40 percent of their inhabitants were born elsewhere does not

signify much in terms of the absolute numbers of people migrating.

Santiago is not only the seat of the national government (except

for the National Congress, hereafter Congress, now located in Valparaiso) but also the nation's main financial and commercial center,

the most important location for educational, cultural, and scientific institutions, and the leading city for manufacturing in terms

of the total volume of production. Although sprawling Santiago

has continued to absorb formerly prime agricultural areas, there are sections of town where wineries still cultivate grapes.

Historically, Santiago has been the main area of residence for the nation's wealthiest citizens, even for those with property else- where in the country. Unlike other Chilean cities, Santiago has

always had an extensive upper- and upper-middle-class residential area. Originally near the main plaza in the center of town, this area developed toward the south and west at the end of the

nineteenth century and the beginning of the twentieth century.

Although neighborhoods in these areas retain some samples of the

architecture of that period, by the 1990s they were occupied mainly

by lower-middle-class residents. Beginning in the 1930s, Santiago's upper-class residents moved east of the center of town, toward

the Andes. This transition was accompanied by an increase in the

commercial use of downtown as larger and larger buildings were

constructed and the public transportation system was enhanced.

As use of the automobile became more common, the upper-class

and upper-middle-class residential areas expanded farther up

84
A view from San Cristobal Hill, Santiago

Courtesy Embassy of Chile, Washington

Children returning from school in the town of Cochamo, located on the Seno Reloncavi in southern Chile

Courtesy Inter-American Development Bank

85
Chile: A Country Study

the foothills of the Andes. This process of suburbanization, complete with shopping mails and supermarkets with large parking lots, also has led to the development of new and faster roads to the center of the city and to the principal airport. New bus lines also were

established to serve the suburbs. All of this has increased motorvehicle traffic in the Santiago Valley, whose surrounding mountains trap particulate matter, generating levels of air pollution that are among the worst in the world. In the early 1990s, emergency

restrictions on the use of motor vehicles became a routine feature

of the city's life during all but the summer months, when there

is more wind and the thermal inversion that traps the dirty air in

the colder months no longer prevents its venting.

The large number of people migrating to Santiago and, to a lesser extent, to other major cities has led to a severe shortage of housing,

especially of affordable housing for low-income people. Estimates

in 1 990 were that the nation as a whole needed a million more housing units to accommodate all those living in crowded conditions

with relatives or friends, those with housing in poor condition, or

those living in emergency housing. Since the 1960s, extensive portions of the Santiago area, especially to the south, east, and north

of the center have been occupied by people who built precarious

makeshift housing on lots that were often used illegally. As these areas aged, the municipal authorities extended city services to them

and tried to redesign, where need be, their haphazard layout.

Moreover, many people—about 28,000 between 1979 and 1984

were moved out of illegal settlements by the authorities and into

low-income housing. The result was a further expansion of urbanization and an increase in the distances that people had to travel

to work, look for work, or attend school. Nonetheless, by 1990 vir- tually all of the poorer areas of Santiago had access to electricity,

running water, refuse collection, and sewerage. In fact, the country's urban population as a whole had good access to city services.

By 1987, 98 percent of the population in towns and cities had run- ning water (the great majority in their homes), 98 percent had gar- bage collection, and 79 percent had sewer connections.

The segregation within Chilean cities by income level has made

residential areas very different from one another. In Santiago, where

the differences are more sharply drawn than elsewhere, some neighborhoods are worlds apart. The upper-class areas in the eastern

foothills of the Andes offer comfortable houses with neat, fencedin gardens, or spacious apartments in sometimes attractively

designed buildings, all on tree-lined streets. Restaurants, supermarkets, shopping malls, boutiques, bookstores, cinemas, and theaters add to the appeal of what is a very comfortable urban life. The

86
The Society and Its Environment

area is well connected by public transportation, including the major

east-west line of an excellent subway and its feeder buses. The best

hospitals and clinics are within easy reach, as are the best private

schools.

The poor areas of the city are not as well served. There are few

supermarkets, and the usually poorly stocked corner groceries often

sell their goods at higher prices. Some streets are not paved, and

this, together with the lack of grass cover in the open spaces, cre- ates dusty conditions during much of the year. Trees have been

planted extensively in Santiago's poorer areas since the 1960s, but

many streets are still devoid of them. Getting to the city center and to clinics and hospitals is more difficult for residents of the poorer areas. However, access to preprimary schooling and to sport

facilities, especially to soccer fields, has expanded significantly since

the early 1970s. Except for some very plain-looking buildings with

apartments for low-income families, most housing consists of one

floor. The poorest houses are made of a variety of materials, in- cluding pine boards and cardboard. Houses are generally built with

brick and poured-concrete braces, and most poor people eventually try to build with such materials as well. As communities begun by land-squatters have become more settled, it has been possible

to see the gradual transformation of squatter construction.

Chilean cities commonly contain relatively large housing developments (poblaciones), including multifamily units, single-family units, or a combination of the two. Many of these developments were

constructed with loans made available to enterprises, pension funds, or savings and loan associations by the state for their employees

or affiliates, usually at subsidized rates (especially before the military government). Consequently, they are often occupied by people who have the same place of employment or who belong to a

specific occupational category. Such housing would not be available as easily to large numbers of people were it not for the special

financial arrangements worked out for the group. Transportation

to and from work is often arranged by employers. One unintended consequence of this pattern of urbanization is that it contributes to the overall segregation of housing in Chile by income level or occupation.

However, in part because of this pattern, Chile has a large

proportion of homeowners. About 60 percent of housing units are owned by their occupants. As the housing developments age and

many of the original occupants sell their houses and move else- where, the developments become more socially heterogeneous. People also begin to modify and remodel their houses; and new corner

groceries, hairstyling salons, tailor shops, schools, churches, and

87
Chile: A Country Study

other establishments emerge, giving the developments a more set- tled, urban look.

Because of a lack of jobs in the formal economy, many people

need to make a living selling odds and ends on the streets. These

people have not been counted as unemployed in official statistics because they are engaged in income-producing activities. During

the military regime, the authorities attempted to organize this form

of commerce by licensing stalls on the sidewalks of designated streets and by prohibiting sales elsewhere. However, there was greater

demand for such stalls than there were available spaces, and they

could not be erected in the most important commercial streets. Hence, many people defied the regulations and attempted to sell their goods where these activities were prohibited, risking confiscation of their wares by the police. The Aylwin government con- tinued the policy in slightly modified form.

Rural Areas

Although mining, banking, and industry have been the source

of the greatest Chilean fortunes since the early nineteenth century,

rural society has occupied a much more central place in the nation's history. Until the 1930s, most of the population lived in rural

areas, and most upper-class families, whatever the origin of their

wealth, owned rural land.

Until recently, large landholdings (latifundios—see Glossary) were a characteristic feature of rural society. The latifundia pattern

of landownership originated in the Spanish crown's early colonial

practice of giving land grants, some of them huge, to soldiers in- volved in the conquest and to the Roman Catholic Church. By the

late eighteenth century, the most important lands of the Central

Valley were held in large haciendas by families with noble titles that were all inherited by the elder son under the mayorazgo (see

Glossary) system. All such titles were abolished with Chile's adoption of a republican form of government after independence, and

new laws of inheritance eventually ended the practice of primogeniture. This led to the creation of a market for rural properties and

to their division as they were inherited by family members.

However, by the mid-twentieth century land transfers and divi- sions still had not put an end to ownership of large properties.

The typical large landholding was a complex minisociety. Some

of its laborers lived on the estate year-round, and they or their family members worked as needed in exchange for the right to culti- vate a portion of the land for themselves and to graze their animals

in specified fields. Among the rural poor, their families enjoyed

better living conditions. Other workers, a majority in times of strong

88
The Society and Its Environment

demand for labor, especially during the harvest, lived in rural towns

and villages or on small properties they held independently (whether

legally or not) at the edges of the large farms. These holdings were

usually insufficient to maintain a family adequately, and its members therefore would seek employment in the large rural enterprises.

When needed, other rural workers were recruited from among

migrants who would come during the summer from other parts

of the country. The large rural enterprises included stores where

people could buy a variety of goods, chapels where priests would

say mass, and dispensaries for primary medical attention. In addition to the sometimes ornate houses of the proprietors, which

generally were occupied only during the summer months, there were houses for the administrators, mechanics, accountants, enologists (if wine was produced), blacksmiths, and others who constituted

the professional and skilled labor forces of the enterprise.

Beginning in the 1950s, the large rural properties became the

target of heightened criticism by reformist politicians and economists.

They noted that the uneven distribution of land contributed to social inequality and that the large landholdings were highly ineffi- cient agricultural producers. During the governments of presidents

Eduardo Frei Montalva (1964-70), who established a reformed sec- tor (see Glossary), and Salvador Allende Gossens (1970-73), an

extensive land reform program was carried out. It basically did

away with the large rural properties on prime agricultural (nonforested) lands. Thus, whereas in 1965 fully 55 percent of all agricultural lands (measured as basic irrigated hectares—BIH) were held in 4,876 properties of more than eighty hectares each, by 1973 there were only 260 such properties left, covering only 2.7 percent of all BIH. The expropriations covered 40 percent of all the nation's BIH.

The military government put an end to the agrarian reform program, as well as to the technical assistance given to the beneficiaries

of the expropriations. It also returned to previous owners some of

the land that had not yet been formally transferred. In addition,

it distributed individual titles among residents of the peasant communities sponsored by the Allende government's agrarian reform

program. Moreover, the military government permitted the sale of

any rural property, including the small family farms created by the

agrarian reform. This policy led to new changes in land tenancy,

which did not, however, reconstitute the large landholdings to the same extent as before the agrarian reform. Instead, it favored an ex- pansion of medium-sized holdings. After all the changes, very small

holdings of fewer than five hectares still accounted for about 10 per- cent of the agricultural area. The largest holdings, of more than

eighty hectares, were far from restored to their prior importance,

89
Chile: A Country Study

at only 18 percent of the total area. If a primary purpose of the

agrarian reform was to create a better distribution of the agricultural land, after much turmoil and change the data indicate that

this had been achieved (see table 6, Appendix).

The remarkable transformations in land tenancy that started in

the mid-1960s were accompanied by other great changes in agriculture. These led to much more intensive land use, with the accelerated incorporation of modern technologies. Labor-service tenancy

and share-cropping arrangements as a source of agricultural labor

have disappeared from commercial farming, replaced by wageearning workers living mainly in towns or small rural properties.

The number of self-employed workers in agriculture has also in- creased with the land tenancy changes.

The rural network of mainly dirt roads was expanded to permit

access to new farms and logging areas. Concurrently, small-town

entrepreneurs were quick to respond to new opportunities by es- tablishing bus routes along these expanded roads, thereby facilitat- ing the rural population's access to schools and sources of

employment. By the 1980s, the peasantry was for the first time

overwhelmingly literate, with attendance at primary schools by its children virtually universal (see Education, this ch.).

The Labor Force and Income Levels

With a lower rate of population growth, Chile's working-age

population, which includes all those individuals more than fifteen

and less than sixty-five years of age, represented 64 percent of the

total population in 1992 (see table 7, Appendix). The labor force

participation rate, or the ratio of those in the labor force over the

working-age population, was 59 percent in August 1993; of the

total population, 37 percent were employed or were seeking a job.

Participation rates typically differ by age and gender. The young

participate in smaller proportions and join the labor force as they

leave the education system. Women have traditionally participated

at lower rates also. The participation rate for men was estimated

at 76 percent and that for women at 32 percent in 1992. These

figures had increased since the early 1980s because of the relative

aging of the overall population and a proportionately greater entry of women into the labor force. In the 1980-85 period, 74 per- cent of men and 26 percent of women over fifteen years of age had

been active in the work force. The rate of unemployment declined steadily throughout the 1987-

91 period. The overall rate of growth in employment for the 1987-91

period was 3 percent per year. The rate was higher from 1987 to 1989 (5 percent), the period of fast recovery after the economic crisis

90
The Society and Its Environment

of 1982-83. The most dynamic sectors during the 1987-89 period were construction and manufacturing, with average rates of employment growth of 20 percent and 1 1 percent per year, respectively. Employment creation increased by 5 percent again in 1992,

and by the end of the year unemployment stood at 4.4 percent.

A greater than expected increase in the size of the labor force, mainly

from women seeking employment, led to a slight increase in un- employment to 4.9 percent by late 1993.

The largest single component of the Chilean employment struc- ture in 1991 was services, which include health workers, teachers,

and government and domestic employees (see fig. 7; table 8, Appendix). Next was trade and financial services, including the real

estate, banking, and insurance industries. Together with transportation and communications, these categories of the services sector of the economy employed 55.6 percent of the labor force. The most

important of the productive activities in terms of employment was

agriculture, forestry, and fishing, which employed 19.2 percent of

the labor force. If mining is included, this means that 21.5 percent

of the labor force was employed in what is typically considered the

economy's primary sector. The manufacturing sector employed 16

percent of the labor force, roughly the same percentage as in the

mid-1960s; manufacturing's share had declined to about 12 per- cent during the economic crisis of 1982-83. Employment in what

is often considered the secondary sector of the economy amounted

to 23 percent, if the percentages engaged in construction and in

electricity, gas, and water are added to that in manufacturing.

In 1991 incomes had also almost recovered, for the first time

in twenty years, to their 1970 average levels (see table 9, Appendix).

During 1990 and the first months of 1991 , workers' wages increased more rapidly than the national average wage. This probably resulted

in some measure from the return to democracy that had enabled

workers to exercise their rights more freely and from labor market

conditions closer to full employment. Real incomes continued to

rise during 1992 and 1993, reaching levels that surpassed the previ- ous, but then unsustainable, peak established in 1971.

Nonetheless, the monthly wages of Chileans are, when expressed

in dollars, much lower than incomes in the United States (see table

10, Appendix). According to these figures, which probably understate high incomes and overstate lower ones, an unskilled worker

makes less than one-tenth the amount an executive or an administrator-director makes. The purchasing power of these incomes for daily

necessities is, however, higher than their dollar- denominated equivalents suggest.

91
Chile: A Country Study

1991 LABOR FORCE = 4.7 MILLION

Agriculture, forestry, and fishing 19.2 %

Trade and financial services 22.2%

Source: Based on information from Chile, Instituto Nacional de Estadisticas, Compendio

estadistico, 1991, Santiago, 1991, Table 141-02.

Figure 7. Employment by Sector, 1991

During the military government, unemployment rose well above

its historical levels for the Chilean economy. There were two dis- tinct shocks to the labor market. The first one took place around

1975 and can be related to the recessionary conditions created by

anti- inflationary policies and to employment reduction in the public

sector. The adjustment that followed was very slow. The second

shock took place with the financial and economic crisis of 1982-83

and affected private-sector employment. From 1979 to 1981, the

economy had entered into a recovery increasingly oriented toward

production of nontradable goods, a pattern that was not sustainable given the speed at which international debt was being accu- mulated. In response to the devaluation of the Chilean peso (see

Glossary) in 1982 and the macroeconomic management that fol- lowed, the economy shifted gears and reoriented production to trad- able goods and services. In 1982 the unemployment rate for the

country climbed to 19.4 percent, or 26.4 percent if those participating in state-financed makeshift work programs are included. Yet

92
The Society and Its Environment

the adjustment that followed took place at a faster pace. By 1986

the unemployment rate totaled 13.9 percent. Chile's unemployment rate returned in the early 1990s to levels that characterized

the country in the 1960s (see table 11, Appendix).

The distribution of personal income is quite regressive in Chile

in general and Santiago in particular, a tendency that became more

pronounced during the military government (see table 12, Appendix). The data reveal that personal income in Santiago is strongly

concentrated in the highest decile, which enjoys about 40 percent

of the total income. They also show that despite the great changes

in the Chilean economy during this period, the distribution of per- sonal income remains rather stable, even though a somewhat greater

concentration can be seen in 1989 than in previous years. The policies on income and taxes of the Aylwin government helped to slightly reverse this trend (see Future Challenges of Democratic

Consolidation, ch. 4). The distribution of consumption by household in Santiago

showed a strong tendency toward the concentration of expenditures in the higher-income groups during the military government.

The figures for the first two years of the Aylwin government show

a small change in direction toward a more equitable distribution

of consumption, although it is still significantly more concentrat- ed in the richest quintile than in 1969 (see table 13, Appendix).

The data show that the richest quintile of households increased its consumption steadily from 1969 to 1989 but that it declined in 1990

and 1991. Moreover, by 1991 the bottom two quintiles had in- creased their share of consumption slightly at the expense of the

fourth quintile. Hence, the distribution of household consumption was a bit more equal in 1991 than in 1988.

These results must be interpreted with caution. The distribution of household incomes is affected by the average number of

income earners by household income levels, and in times of eco- nomic crisis the poorer segments may be forced to rely on the in- come of fewer household members. This apparently happened in

Chile in 1983, when there were only 1.1 income earners in the

poorest 20 percent of families; in the 30 percent of families with

middle- to lower-middle incomes, there were 1.4 income earners;

in the 30 percent of households in the middle- to high-income group,

there were 1.7 income earners; and in the top 20 percent, there were two income earners per household. Because their incomes were also higher, the concentration of consumption in the highincome families was greater. Similarly, the expansion of secondary school enrollments during the 1980s benefited the children of

93
Chile: A Country Study

poorer households, but it may have deprived them of the income

derived from youth employment.

Social Organizations and Associations

Chileans have a remarkable facility for forming organizations

and associations. This propensity perhaps has something to do with

the fact that for more than three centuries both the Spanish-Chilean

and the indigenous components of the country led a precarious life of conflict with each other, a situation that forced people to rely more than usual on collective organizing, especially, as was the case for both sides, given the weakness of the state. In contrast to North Americans, however, Chileans usually take a formal approach to creating organizations. In addition to electing a president, a treasurer, a secretary, and perhaps a few officers, they prefer

to discuss and approve a statement of purpose and some statutes. This is a ritual even for organizations that need not register legally,

obtaining what is called a "juridical personality" that will enable

them to open bank accounts and to buy and sell properties. It is not known for certain where and how this formalism originated;

it perhaps could be traced back to the densely legalistic approach

adopted by Spain toward the governance of its faraway colonies

and to the legalism of Roman Catholic canonical law, which applied to many aspects of society. Whatever grain of truth there is in these speculations, observers of Chilean society are rapidly struck

by the density of its organizational life and the relatively high degree

of continuity of its organizations and associations (see The Church,

Business, Labor, and the Media, ch. 4). In any Chilean community of appreciable size can be found sports

clubs, mothers' clubs, neighborhood associations, parent centers linked to schools, church-related organizations, youth groups, and

cultural clubs, as well as Masonic lodges and Rotary and Lions'

clubs. Virtually all of the nation's fire fighters are volunteers, with

the exception of members of a few fire departments in the largest

cities. Government statistics greatiy understate the number of com- munity organizations because they refer mainly to those having some contact with one or another state office. According to the offi- cial estimate for 1991, there were about 22,000 such organizations,

the main ones being sports clubs (6,939), neighborhood councils

(6,289), mothers' clubs (4,243), and parent centers (1,362). Government publications do not report membership figures for these or- ganizations.

Most of the important urban areas in Chile also include a broad

sample of the local chapters of a wide variety of occupational as- sociations. These include labor unions and federations, public

94
The votive temple of Maipu,

also known as the Church

of Our Lady Carmen,

patroness of Chile

Courtesy David Shelton

employee and health worker organizations, business and employers' associations, and professional societies of teachers, lawyers,

doctors, engineers, dentists, nurses, social workers, and other oc- cupational groups. Membership in labor unions, which declined

significantly under the military government, has been growing

rapidly since the late 1980s, a change directiy related to the transition to democracy. Affiliation with organizations recognized as unions in labor legislation was officially estimated in 1990 at 606,800,

a 20 percent increase over 1989. That figure did not include in- dividuals affiliated with public employee associations (including

health workers), who were estimated to number about 140,000, nor the members of the primary and secondary teachers' association, who numbered about 105,000. But these two groups usually

have been closely tied to the labor movement through the national

confederations of labor. Thus, about 19 percent of a total labor

force of 4,459,600 was linked to unions or union-like associations

in 1990. With the continuing increases in union affiliations, which

are especially significant in rural areas, a conservative estimate is that the unionized population (in legal as well as de facto organizations) stood in 1992 at between 22 percent and 24 percent of the

labor force. The most important union confederation, which encompasses the great majority of the nation's unions and union-like or- ganizations, is the United Labor Confederation (Central Unica de

Trabajadores—CUT). CUT is the heir to a line of top labor

95
Chile: A Country Study

confederations that can be traced back through various reorganizations and name changes to at least 1936, and perhaps to 1917

(see Unions and Labor Conflicts, ch. 3; Labor, ch. 4).

There are numerous business and employer associations in Chile.

Their total membership is about 190,000, although they collectively

claim to speak for about 540,000 proprietors of businesses of all sizes. The most important business organization, the Business and

Production Confederation (Confederacion de la Produccion y del

Comercio—Coproco), encompasses some of the very oldest ongoing associations in Chile: the National Agricultural Association (Sociedad Nacional de Agricultura—SNA), founded in 1838, groups

the most important agricultural enterprises; the Central Chamber

of Commerce (Camara Central de Comercio), founded in 1858,

includes large wholesale and retail commercial enterprises; the National Association of Mining (Sociedad Nacional de Mineria),

founded in 1883, affiliates the main private mining companies; the

Industrial Development Association (Sociedad de Fomento Fabril

Sofofa), founded in 1883, organizes the principal manufacturing

industries; the Association of Banks and Financial Institutions

(Asociacion de Bancos e Instituciones Financieras), founded in 1943,

is the main banking-industry group; and the Chilean Construction Board (Camara Chilena de la Construccion), founded in 1951

,

organizes construction companies.

Another important confederation of business groups is the Council

of Production, Transport, and Commerce (Consejo de Produccion,

Transporte y Comercio). In contrast to Coproco, this organization groups primarily medium-sized to small businesses, including many self-employed individuals who do not hire nonfamily

members on a regular basis. Its main components are the 120,000-

member Trade Union Confederation of Business Retailers and

Small Industry of Chile (Confederacion Gremial del Comercio

Detallista y de la Pequena Industria de Chile), founded in 1938,

and the 24,000-member Confederation of Truck Owners of Chile

(Confederacion de Duefios de Camiones de Chile), founded in

1953.

Professional societies are also well established. The largest ones,

aside from the teachers' organization noted previously, are those

for lawyers (about 12,000 members), physicians (about 14,500),

and engineers (about 11,500). Affiliation figures for most of the more than thirty professional societies were unavailable, but there

are at least 100,000 members in such associations aside from

teachers. If these figures are added to those for membership in busi- ness groups and unions, it appears that about a third of the labor

force is involved in occupationally based associations.

96
The Society and Its Environment

The organized groups of Chilean society have long played an

important role in the nation's political life. The elections in some

of them—for example, in major labor federations, among university students, or in the principal professional societies—usually have

been examined carefully for clues to the strength of the various national political parties Most of the nation's university and professional institute students, totaling 153,100 in 1989, belong to student

federations. The various associations also make their views known

to state or congressional officials when issues of policy that affect them are debated.

Some associations traditionally have been identified with particular political parties. This was the case, to a greater or lesser extent, with Masons, fire fighters, and teachers' federations—the

Radical Party (Partido Radical); union confederations—the parties of the left; employer associations—the parties of the right; and

the Roman Catholic Church, as well as its related organizations

the Conservative Party (Partido Conservador), as well as, in recent decades, the Christian Democratic Party (Partido Democrata

Cristiano—PDC). Many of the most militant party members have

also been active in social organizations. In addition, party headquarters in local communities often have served as meeting places

for all kinds of activities. The Radical clubs of small towns in the

central south are especially active, often sponsoring sports clubs

as well as the formation of fire departments.

Chilean social life also has definite subcultures, with the main

lines of cleavage being proximity to or distance from the Roman

Catholic Church and social class. The schools that parents select for their children closely reflect these subcultural divisions. The

latter are also strongly mirrored in associational life, as Chileans

tend to channel their sports and leisure activities into organizations

within their subculture. Schools, churches, and unions contribute

to this pattern by being foci for such organizing. In addition, there are some clubs and centers related to specific ethnicities, such as Arab, Italian, or Spanish clubs, even though, as noted previously, such identities traditionally have been much less salient than

religion and class. Occupational associations have been an important component of class and social status identities in Chilean society, with most of them affiliating people of like occupations

regardless of their religious identities or preferences. Although this has helped diminish the significance of religiously based identities,

the leadership divisions and conflicts within the nation's associations can often be traced back to those subcultural differences. People's political preferences follow the subcultural lines of cleavage

as well in most cases.

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Chile: A Country Study

Social organizations did not fare well under the military government. Those that were perceived to be linked, however loosely,

to the parties of the left were subjected to sometimes severe repressive measures. This was particularly the case with labor unions,

whose activities were suspended for more than six years. They were

only permitted to reorganize under new legislation beginning in

1979. Moreover, most associations, including those of business

groups, were hardly ever consulted on policy matters, and, in the

absence of normal democratic channels for exerting influence, they

found their opinions and petitions falling on deaf ears. Eventually,

the most prominent social organizations joined in voicing their dis- content with the military government through what was called the

Assembly of Civility (Asamblea de la Civilidad), and their efforts contributed to the defeat of President Augusto Pinochet Ugarte

(1973-90) in the 1988 plebiscite. The only organizations that thrived

under the military government were the women's aid and mothers'

clubs, which were supported by government largesse and headed

at the national level by Pinochet's wife, Lucia Hiriart.

With the return to democracy, social organizations recovered

the ability to pressure Congress and the national government. The

new government opted for explicit solicitation of the opinions of

important interest associations on some of the policies it was considering. It also fostered negotiations between top labor and busi- ness leaders over issues such as labor law reforms, minimum wage

and pension levels, and overall wage increases for public employees.

These negotiations led to several national agreements between state

officials and business and labor leaders, thereby inaugurating a new

form of top-level bargaining previously unknown in Chile.

Welfare Institutions and Social Programs

Twentieth-century Chile has had an extensive system of state- run welfare programs, including those in the social security, health,

and education areas. From the mid-1970s to the early 1990s, spending on all these programs ranged from as little as 19 percent to as much as 26 percent of the gross domestic product (GDP—see Glossary), proportions that were similar to those spent in 1975 by

countries belonging to the Organisation for Economic Co-operation

and Development (OECD—see Glossary). In the same period,

about two-thirds of the national labor force was covered by oldage pensions and other benefits. In addition, there was universal

access to curative health care and programs of preventive care for

all expectant mothers, infants, and children less than six years of

age who did not have recourse to alternative health care. In addition, the state-run educational system, which was open to every

98
The Society and Its Environment

child at primary and secondary levels but had admissions standards

for higher education, was free of charge, except for nominal matriculation fees at all levels (see Education, this ch.). The state also

offered low-income housing programs at heavily subsidized rates. Spending for these various programs increasingly outpaced

revenues, as the decline in the mortality rate enhanced the dependency ratio and as the programs expanded. In addition, there were numerous programs, especially in the social security area, that

provided very unequal benefits. Consequently, the military government redesigned the most important welfare institutions in ways

that were consistent with its market-driven ideology, and social

spending was scaled down to about 17 percent of GDP by 1989.

By the end of its first year in office, the Aylwin government in- creased social spending by more than US$1.5 billion over the

Pinochet government's budget. The revenue came from a 4 per- cent increase in the higher tax rate on enterprises, from 11 per- cent to 15 percent; a 2 percent hike in the national value-added

tax (VAT—see Glossary) to 18 percent; and other sources. The

objective of the Aylwin government was to enhance the purchasing power of minimum pensions, to increase the quality of educational and health services, and to provide greater assistance in the

housing field. The new programs were intended to have a positive

effect on the distribution of income. The military government's

reforms had privatized or decentralized the administration of many

welfare and social-assistance institutions. The Aylwin government

did not reverse these privatizations, although it attempted to in- crease the quality and funding of the institutions that remained

in the public sector. It also decided not to recentralize the administration of the public portions of welfare, educational, and social- assistance institutions that had been placed in the hands of local or regional governments. The Aylwin administration was committed to strengthening local and regional governments as part of a broad effort to enhance the decentralization of authority. However,

in contrast to the military regime's decentralization projects that

organized local and regional governments along lines of authoritarianism and corporatism (see Glossary), new constitutional and le- gal reforms adopted in 1992 introduced democracy to these levels of government.

Through the combination of many efforts in the social field since

the 1930s, Chile has a relatively favorable overall human development index (HDI—see Glossary), as measured by the United

Nations Development Programme (UNDP). The UNDP's Human

Development Report, 1993 shows Chile ranking thirty-sixth among the

world's 160 countries for this indicator, eighth among all developing

99
Chile: A Country Study

countries, and second only to Uruguay among all Spanish-speaking

Latin American countries.

Social Security

Chile was one of the first countries in the Americas to establish

state-sponsored social security coverage. In 1898 the government

set up a retirement pension system for public employees. In 1924

the government approved a comprehensive set of labor laws and

established a national social insurance system for workers. In large

part, the authorities were responding to pressure exerted by the

growing number of worker organizations and strikes. At the same

time, a separate social-insurance system was set up for private whitecollar employees, and the one for public employees was reorganized.

The pension system for workers was known as the Workers' Security Fund (Caja del Seguro Obrero) and was modeled partly on

the system pioneered by Otto von Bismarck, first chancellor of the

German Empire (1871-90). The fund {caja) was established administratively as a semiautonomous state agency that received in- come from employer and worker contributions, as well as from state coffers. The systems for private and public employees provided

higher benefits than the workers' caja, and they were financed in

the same manner, except that the state acted as the employer for

public employees as well. The armed forces had a separate pension system.

The Workers' Security Fund was reorganized in 1952, becoming the Social Insurance Service (Servicio de Seguro Social—SSS).

Until its demise under the military government, the SSS served

as the primary agency for the state-run social security system. SSS

coverage expanded over the years. By the 1960s, in addition to providing old-age pensions to its main beneficiaries, it gave, at their

death, pensions to their widows (but not their widowers) and to minor children, if any. It also paid flat monthly sums for each immediate family dependent, income payments for qualified illness- es and disabilities, and several months of unemployment insurance,

albeit all at very low levels. Although the fund originally was meant to meet the needs of

miners and urban blue-collar and service workers, including domestics, over the years the number of occupational groups that participated in what became a system of different semiautonomous state funds increased gready. By the early 1970s, there were thirty-five

different pension funds (although three of them served 90 percent

of contributors) and more than 150 social security regimes for the

various occupational groups. This expansion led to many inequities because the newly incorporated groups demanded and obtained

100
The Society and Its Environment

by law special treatments and new benefits that had been denied

to original participants, even when these new groups' programs

were added to existing funds. There was not even a standard retire- ment age for all groups. Funding for the various pension programs

became extremely complex because the state's contributions were drawn by law from different tax bases. This pattern of growth of

social security institutions is typical of countries in which the sys- tem is not conceived from the very beginning on a universal basis

but rather is established for particular categories of employment.

Because coverage continued to be conditioned on the employment history of the main beneficiary, it was never extended to all Chileans, even during its heyday in the early 1970s.

The military government initially hoped to rationalize what had

become an unwieldy system, but eventually it changed the whole

system. It decided not to continue with a basic organizational principle of most social security systems, the pay-as-you-go system,

whereby benefits are paid out of funds collected from those who

are still contributing. In addition, the government decided to privatize the organization and management of pension funds and to dis- continue the state's own contributions to them. Thus, the military

regime enacted the legal basis for the creation of privately run

pension-fund companies, stipulating that all new workers enter- ing the labor force had to establish their accounts in the new pension companies. Moreover, the government also created incentives

for people in the semiautonomous, state-run system to transfer out

of that system by reducing the proportion of each employee's

paycheck that would be deducted under the new system to about

15 percent of gross income, instead of the prior 20 percent or 25

percent, and by permitting a transfer of funds based on the number of years individuals had paid into the system.

The new privately run pension funds are based on the notion

of individual capitalization accounts. Pension amounts are set by

how much there is in the individual account, which is determined

by the total that has been contributed plus a proportional share

of the pension fund's investments. In any event, by law no pension is allowed to fall below 70 percent of an individual's last monthly salary. If there are insufficient funds to generate the required

pension levels in the account, the pension-fund company must make

up the difference. If the company is unable to meet its obligations,

the state, which guarantees the system, has to cover the shortfall. Employees are allowed to choose the pension-fund company that

will handle their account, and those who are self-employed may

also elect to establish individual accounts. This choice is intended

to stimulate competition among pension-fund companies in order

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Chile: A Country Study

to keep the administrative fees charged to account holders at a reasonable level, and to encourage the companies to invest the

money they accumulate so as to generate the highest yields. Employers no longer contribute to employees' pensions under the new

system. Disability and survival pensions are paid out of an account

funded by a 3.8 percent share of the 15 percent the account holders

contribute, leaving the remaining 11.2 percent to build up the

pension-generating account. The 3.8 percent share is contracted

out by the pension funds to life insurance companies, many of them

newly created to meet the enormous increase in demand for their

services. Individual account holders are also permitted to make payments in excess of the obligatory minimum. The retirement age

is set at sixty-five years for men and sixty years for women, although

individuals who accumulate enough funds to obtain a pension equal

to 110 percent of the minimum pension may retire earlier. The new system took effect in 1981, and the great majority of

the contributing population opted to change to it. Deciding not

to make substantial changes in the social security system, the Aylwin

government increased the minimum pension paid by what remained

of the state-run social security system by about 30 percent in real terms. By December 1990, there were about 3.7 million people,

or 79 percent of the labor force, with accounts in fourteen pensionfund companies, called Pension Fund Administrators (Administradoras de Fondos de Pensiones—AFPs). A large proportion of

the uncovered population consisted of self-employed people; only

3 percent of the total accounts came from that group. The funds

gathered large sums of money relative to the size of the national

economy. By the end of 1992, the pension and life insurance companies had accumulated an estimated US$15 billion. The state regulates and oversees the pension-fund companies through a newly

created office that issues strict investment guidelines.

This radical departure from past institutional practices in the

pension system is unique, and it drew considerable attention from

experts in other Latin America countries also facing looming financial crises in their own social security systems. By generating large

amounts of capital in the private sector, the new system energized

the previously anemic Chilean capital markets. Because it has operated only for about a decade, however, it has yet to meet the test that will occur when the new pension funds have to pay out in

benefits what would correspond to an actuarially normal load. Most

of the nation's retirees and older workers have stayed in the state- run social security system, now called the Institute of Pension Fund

Normalization (Instituto de Normalizacion Previsional—INP). By

the end of 1990, the private pension companies were only paying

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The Society and Its Environment

out benefits to 2.3 percent of their affiliates (see Economic Results

of the Pensions Privatization, ch. 3). Health Programs

The state's efforts in the health field began in 1890 with the cre- ation of an agency in charge of public hygiene and sanitation.

Despite some subsequent initiatives to prevent and treat workrelated accidents, it was not until 1924, with the establishment of

the social security system, that the state assumed an active role in

providing health care to the population. Between the mid- 1920s

and the early 1950s, state-run programs for health care were or- ganized around the pension funds. During the 1940s, public health

experts argued that the individual pension funds could not organize

health delivery systems for their affiliates in a rational way. It was

also argued that a system was needed that would provide more comprehensive coverage to the whole population, not only those who

had accounts in the pension funds, if the country were to improve

its overall health indexes. The eventual acceptance of these arguments by policy makers led in 1952 to the creation of the National

Health Service (Servicio Nacional de Salud—SNS).

The SNS continued to provide care to all those who held ac- counts in the various funds, free of charge to workers and their

families in the social security system and for a variable fee to others. In addition, it extended health care to the population at large regardless of ability to pay. Services to those who were poor could be slow

and often inadequate if a condition was not life-threatening, but

accidents and other emergencies normally were given immediate

attention. Moreover, the SNS tried to identify specific health

problems and focus on providing care in these areas, such as giving all women primary prenatal and postpartum care (and access

since the 1960s to contraception), inoculating the population against

certain diseases, and working to improve nutrition and hygiene

through extension programs and publicity. It is estimated that 65

percent of the national population used the state-run system for curative medicine without paying fees. The SNS coexisted with

private medical practices and hospitals, which were preferred by

people who could afford them. The military developed its own sys- tem of clinics and hospitals. In the late 1960s, the government took

the initiative to develop a new program for white-collar employees,

permitting users to select their physicians. The program was funded

by payroll deductions but required users to pay a fee equal to 50

percent of the cost of their care. The program developed its own primary- and preventive-care clinics and laboratories, although it relied on the hospitals of the SNS for backup care of the more serious

103
Chile: A Country Study

cases and for hospitalizations. All but 15 percent of hospitalizations took place in SNS hospitals.

All physicians were obligated to work for the SNS for two years

after graduation; they were usually sent to rural areas and small

towns where there were chronic shortages of doctors. During the

rest of their professional lives, physicians were also obligated to work a certain number of hours a week for the SNS, for which

they received relatively small honoraria; in exchange, physicians

took advantage of many of the facilities of the state system to treat and test their private patients.

By the early 1970s, the state-run health programs faced a financial crisis. Given that the SNS was intimately tied to the social security system, the military government could not change the latter without altering the former. Thus, in 1980 and 1981 policy makers redesigned the nation's health care institutions.

As a result, the Chilean health system in the early 1990s contained essentially five components. The first is the main successor

of the SNS, now called the National System of Health Services (Sistema Nacional de Servicios de Salud—SNSS). In 1988 the SNSS

employed about 62,000 professionals, including about 43 percent

of the nation's 13,000 physicians, many fewer than had worked

for the SNS because physicians no longer had any obligation to serve the public health system. The SNSS's administration was

decentralized into twenty-seven regional units, and control over

its clinics and primary-care centers was transferred to the nation's

340 municipal governments. However, the national government

remained the main source of funding for these various units, and

it continued to control their basic design, including staff size and

equipment. The SNSS's funding comes from general state revenues and from a contribution of 7 percent of taxable income (up from

the original 4 percent in 1981) from the employed population. Access to the SNSS is open to everyone, free of charge in the case of indigents and of those whose income falls below a certain level; a variable percentage of the cost up to 50 percent is paid by those

with higher incomes.

The SNSS organizes and implements the broad public health

programs in areas such as inoculations and maternal-infant care.

It provides periodic preventive medical care to all children under

six years of age not enrolled in alternative medical plans. Through

this program, which has broad national coverage, low-income

mothers can receive supplemental nutritional assistance for their

children and for themselves as well if they are pregnant or nursing.

As a result, the incidence of moderate to severe childhood malnutrition among those participating in the program has been reduced

104
The Society and Its Environment

to negligible levels in Chile, while only about 8 percent of all chil- dren suffered mild malnutrition in 1989. The SNSS is the largest

health care provider in the country. In the late 1980s, it served

8.2 million people, or about 64 percent of the total population, and

its total expenditures on its participants in 1987 equaled about

US$22 per person.

The second component of the health system is the National

Health Fund (Fondo Nacional de Salud—Fonasa). Fonasa is part

of the SNSS, except that those who register in the program may

select their own primary-care physicians, as well as specialists. In

this sense, Fonasa continues the modus operandi of the program

initiated in the late 1960s for white-collar employees, except that

anyone can register in it. Fonasa affiliates direct their payroll or self-employment contributions to the fund. Pensioners of the state- run system, the INP, may also choose to participate in Fonasa.

The fund reimburses its users a variable portion of the cost of medical attention on presentation of vouchers for services that have been

performed (an average 36 percent reimbursement in 1989). In 1987

Fonasa served 2.5 million people, and health expenditures in it amounted to US$79 per affiliate. The Security Assistance Institutions (Mutuales de Seguridad

MS) constitute the third element in the health system. These consist of hospitals that deal primarily with treatment of the victims

of work-related accidents. These institutions house some of the best

trauma and burn centers in the country. The MS are financed out

of employer contributions equivalent to about 2.5 percent of their

total payrolls and completely cover the medical expenses of employees of the affiliated enterprises who are injured at work. In addition, the MS pay a temporary disability pension. The 1.96 million

employees who have access to these institutions work for 52,000

different enterprises. This program is among the better funded,

given that its income of US$123 million amounted to about US$62

per covered worker, while the rate of work-related accidents was

only about 10.8 percent per year for all incidents, however minor.

Safety experts hired by the MS system are also in charge of in- specting workplaces and suggesting improvements to prevent

accidents. The MS are composed of numerous institutions administered by boards with employer and employee representatives. In

1987 they ran eight hospitals and nineteen clinics, mainly in Chile's

most important urban centers. The product of initiatives taken by some of the country's largest employers in the late 1950s, the MS

expanded greatly in the 1980s.

Private insurance companies that are affiliated with the Insti- tute of Public Health and Preventive Medicine (Instituto de Salud y

105
Chile: A Country Study

Prevention—Isapre) constitute the fourth element in the health sys- tem. People enroll by asking their employers to direct their health

deduction to these companies, and they pay an additional premium

depending on the specific insurance policy. Medical services are reimbursed to users at a percentage of cost. In 1987 about 1.5 million people were enrolled in the Isapre, with expenditures of about

US$166 per enrollee. Critics of the Isapre insurance companies

note that the companies do not help mitigate the nation's highly

regressive distribution of income because they channel the deductions of many people with higher incomes out of the SNSS.

Moreover, as private carriers, the Isapre companies may deny en- rollment to those who are at higher risk (as a result of serious ill- ness or age), and they are prone to drop those who become excessive

risks. Consequently, the SNSS must take up the burden of cover- ing the health care of high-risk individuals.

The fifth component of the health care system is private medicine, which includes private hospitals and clinics. Most physicians,

dentists, and ophthalmologists maintain a private practice even if they work for the SNSS or other systems. There are also private

health insurers who do not form part of the Isapre structure be- cause they do not collect their premiums from payroll deductions.

In 1987 they insured 500,000 people drawn from the population

with the highest incomes.

In 1992 Chilean health indicators were much closer to those of

industrial nations than to those of the developing world (see table

14, Appendix). The four leading causes of death in Chile are cir- culatory diseases (27 percent), cancer (18 percent), accidents (13

percent), and respiratory illnesses (11 percent). Medical visits aver- age about 3.5 per person per year, or about 2 to 2.5 for the general

population and 1 to 1.5 for maternity and child check-ups. The

SNSS handles 89. 1 percent of all these visits (16.3 percent of them

through Fonasa). Fully 98.4 percent of all births occur with professional assistance in hospitals or maternity clinics. In rural areas, where women might need to travel longer distances to give birth,

they can spend the last ten to fifteen days of pregnancy in special

hostels. Inoculations of infants and children are virtually universal for tuberculosis, diphtheria, pertussis, tetanus, poliomyelitis,

and measles.

According to the Pan American Health Organization, the number of cases of acquired immune deficiency syndrome (AIDS) is gradually rising, with 3.8 per million population in 1987, 5.4 per

million in 1988, 6.3 per million in 1989, 8.9 per million in 1990,

and 11 per million in 1991. As of the end of 1991 in Chile, 196

individuals with AIDS in Chile had died. According to Health

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The Society and Its Environment

Under Secretary Patricio Silva and the National AIDS Commission,

of the 990 individuals who were registered as having been infected

with the AIDS virus in the country, 630 had become sick and half

of them had died by the end of 1992. The report stated that 93

percent of those diagnosed were men and 7 percent were women.

Although the government of President Patricio Aylwin did not

make structural changes to the health system, it increased funding

for the portions of the system that most benefited the poor, especially primary care services. The salaries of health workers in the

public sector were increased. The government also enhanced the

decentralization of authority in the public health sector by giving

local and regional governments more decision-making power over

the distribution and equipment of health-care resources and provisions within the limits of national government funding allotments.

Housing Policies

The state began its involvement in the construction of low-cost

housing in 1906, with a law stipulating that builders of low-cost

units would qualify for a complete exemption from all taxes and

that their owners would be exempt from real estate taxes for twentyfive years. Subsequent housing programs in Chile have usually consisted of providing subsidies to those who built low-cost houses or

to those who bought them. In addition, the programs have fur- nished one-time grants for the necessary down payments to per- mit people to obtain a loan or qualify for a housing program.

Generally, all three features have been in place since the 1950s,

although the emphasis on one or another means has shifted with

changing governments. Subsidies to buyers have been channeled

through below-market interest rates for long-term loans. These

generally were made available through pension plans. Between 1955

and 1973, these subsidies mostly benefited the poorest 60 percent

of the population, especially the lower-middle 30 percent (for defi- nition of extreme poverty—see Glossary).

Starting in the 1950s, the state also assumed a major role in the

construction of low-cost housing. The Housing Corporation (Corporacion de la Vivienda—Corvi) was established by the national

government in 1953. Between 1960 and 1972, an average of 42,000

houses per year were built in Chile, of which the state built 60 per- cent and the private sector with state financing built 20 percent;

private companies built the remaining 20 percent with private

funding.

The military government cut public spending for housing to less than half of its 1970 levels. Supporters of the regime argued that

state resources were more efficiently used than before, citing a slight

107
Chile: A Country Study

increase, to about 43,000 units, in average annual housing construction. They also argued that attempts were made—with greater success in the late 1980s than at the beginning of the Pinochet

regime—to channel state subsidies to the poorest sectors. However, on average the number of new housing units was equal to no more

than 56 percent of the total number of new households created between 1974 and 1989; the result was an increase in the nation's

housing deficit. A rapid acceleration of construction toward the end

of the 1980s, with almost 84,000 units being built in 1989, kept

the deficit from becoming even worse. The military regime reduced the subsidies on housing loans and

initiated a monthly readjustment of all such loans according to the

rate of inflation as a means of retaining their real value. The government also increased the participation of the private sector in the

construction of housing and municipal buildings. It also attempted

to allocate houses primarily to households that met certain savings

goals, an objective that proved virtually impossible for poor families to meet. As a result, toward the end of military rule the state put more resources into one-time grants to enable families to cover

the down payment.

The Aylwin government increased public funds for housing by

about 50 percent, although construction remained in the hands of

the private sector. It changed the eligibility requirements for public housing programs to favor poorer people unable to save money.

The government's intention was to freeze the housing deficit that

existed in 1990 by facilitating the building of as many new houses

as were needed by the new households that were being formed (see

Construction, ch. 3). It also reintroduced utilities subsidies to poor

neighborhoods and placed a greater emphasis on communal services

for such areas. Education

Enrollments

Despite plans dating back to 1812 to establish widespread primary

education, elementary school attendance did not become compulsory until 1920. However, the government did not provide effec- tive means to enforce this policy fully. There was considerable

progress, especially in the 1920s and the 1940s, but by mid-century

children of primary school age were still not universally enrolled.

The principal difficulty lay in the incomplete matriculation and

high dropout rate of the nation's poorest children. For this rea- son, in 1953 the government created the National Council for School

Aid and Grants (Junta Nacional de Auxilio Escolar y

Becas), which

108
- /

A resident of Conchali, a lowSantiago, making use of a

caseta, a government-financed

and government-built

housing unit containing cooking

and sanitation facilities Courtesy Inter-American

Development Bank

income district in northern j^^H|

The mayor of the low-income

community of Pefialolen on the eastern side of the Santiago

metropolitan area paying a visit

to her constituents to inspect casetas

Courtesy Inter-American

Development Bank

109
Chile: A Country Study

was charged with providing scholarships and with making school

breakfasts and lunches available to all children in the tuition-free

private and public schools. Through these means, policy makers

hoped to encourage the very poorest parents to send their children

to school and keep them there. By the early 1970s, school breakfasts were reaching 64 percent of all primary school students, and

lunches were being provided to 30 percent. This strategy was apparently successful, and in the mid-1960s primary education be- came nearly universal. In 1966 the number of years of primary

(and therefore compulsory) education was increased from six to eight; secondary education was thereby reduced to four years. In

the mid-1980s, primary school attendance fluctuated between 93

percent and 96 percent of the relevant age-group—a percentage

that was less than universal only because some children advanced

into secondary school at the age of fourteen instead of the normal

age of fifteen. Beginning in the first half of the nineteenth century, Chile's

governments made an effort to create secondary schools and led

Latin America in establishing high schools for girls as well as for

boys. By 1931 Chile had forty-one state-run high schools for boys

and thirty-eight for girls, as well as fifty-nine private high schools

for boys and sixty for girls, with a total enrollment of 20,21 1 boys

and 15,014 girls. Reflecting French and German influences on the

nation's secondary education, high schools were intended to provide a rigorous preparation for university education.

Chile had other postprimary educational channels that were meant to impart more practical or professional forms of training.

Among these were normal schools for the instruction of primary

school teachers (the first one for women was created in 1854),

agricultural schools (that taught the rudiments of agronomy, animal

husbandry, and forestry), industrial schools (with such specialties as mechanics or electricity), commercial schools (with specialties

in accounting and secretarial training), so-called technical women's schools (that mainly taught home economics), and schools for

painting, sculpture, and music. In 1931 there were 135 of these

schools, with a total enrollment of 1 1 ,420 males and 1 1 ,391 females.

Matriculation of relevant age-groups in all forms of secondary

education remained low, as can be surmised from the 1931 figures,

and progress was slow. The most rapid advances occurred in the

1960s and early 1970s under the governments of presidents Frei

and Allende, which increased spending for education at all levels. By 1970 about 38 percent of all fifteen- to eighteen-year olds in

the country had matriculated from one form or another of secondary education; by 1974 that figure had increased to 51 percent.

110
The Society and Its Environment

Moreover, the curriculum in schools other than high schools had

been enhanced significantiy, and the graduates of such schools could

opt to continue on to university levels. During the rest of the 1970s,

under the military government's first six years in power, secondary school enrollments as a percentage of the relevant age- group

stagnated. However, in the 1980s enrollments resumed their upward trend. Thus, from a level of 53 percent of the relevant agegroup in 1979, secondary school matriculations rose to 75 percent

in 1989.

Although the Chilean state traditionally directed about half of

its education budget to universities that were either free or charged

only nominal matriculation fees, the numbers of students in them

had always been tiny as a proportion of the national population

between nineteen and twenty-four years of age. As in other areas of education, the Frei and Allende administrations sponsored the

largest expansions in postsecondary enrollments. The total numbers of students (including only those in the relevant age-group)

almost doubled, from 41,801 in 1965 to 70,588 in 1970, and more

than doubled from that number, to 145,663, in 1973. However,

these enrollment figures were only equal to about 8 percent and

13 percent of the relevant age-group in 1970 and 1973, respectively. During the rest of the 1970s, the total number of students in

universities declined, reaching a low of around 9 percent of the

relevant age-group in 1980, including students enrolled in the so- called Professional Institutes (Institutos Profesionales—IPs), which

had been separated from the universities by the military government. During the 1980s, the numbers of students in universities

and in the IPs increased slowly and stood at about 153,100 in 1989, or 10.3 percent of the relevant age- group. However, the military

government fostered the creation of Technical Training Centers

(Centros de Formacion Tecnica—CFT) as an alternative to postsecondary education. Enrollment in these centers increased rapidly during the 1980s, to about 76,400 students by 1989. In 1991 a total of 245,875 students were in some form of higher or postsecondary education.

At the beginning of the twentieth century, under the influence

of German advisers, Chile began to develop preprimary education. Matriculation in these programs also remained very small

until the 1960s. In contrast to its attitude toward higher education, the military government took great interest in this form of

education, and enrollments increased greatly during the Pinochet

years. State-funded programs for preschoolers, which enrolled about

59,000 children in 1970, had increased their matriculation to about

111
Chile: A Country Study

109,600 by 1974. In 1989 they enrolled 213,200 children, or about

12 percent of the population under five years of age. Administration and Reforms

Primary and Secondary Education

Until 1980, authority over all primary and secondary schools was concentrated in the national government's Ministry of Public

Education. In addition to allocating funds to schools, the ministry

certified the qualifications of all teachers and employed those in

the state-run system. It developed all basic course content, even

for private schools, and approved all textbooks to be used throughout the country.

Primary school teachers were trained mainly in normal schools,

most of which were independent entities, although a few of these

institutions were attached to universities. Secondary school teachers

generally were graduates of pedagogical schools or university institutes, where students would be trained in the different disciplines

they would later teach. Primary and secondary school teachers opting to work in the state-run system were assigned to schools during

the first three years of their careers, a procedure that was meant

to ensure that all rural and provincial schools had the requisite staff- ing. The careers of primary and secondary school teachers employed

by the state were controlled by a national statute that determined

promotions according to a point system and salaries according to a fixed scale. Salary supplements were given to those who taught

in areas that were geographically isolated or had severe climates.

Teachers also had job tenure beyond a certain probationary period.

The Ministry of Public Education sponsored regular winter- and

summer-vacation training programs for teachers that were designed

to bring them up to date with curriculum changes and with new

thinking in their disciplines. Merit increases were given to those

who participated in these programs.

The Ministry of Public Education gave subsidies to private

schools that did not charge tuition. These subsidies, amounting

to about half the per-student cost of public education, were based on calculations of salary and other fixed costs. They were given

primarily to schools sponsored by the Roman Catholic Church,

as well as by Protestant churches. The teachers of these schools

(except those who were in religious orders or in the clergy) were

supposed to have the same salary and working conditions as teachers

in the public system. Many teachers in the state-run system supplemented their salaries by taking on additional hours in the pri- vate schools, which were supposed to follow the national curriculum

112
The Society and Its Environment

whether or not they received state subsidies, although they were free

to add supplementary courses. All state-run primary and secondary

schools were visited regularly by supervisors employed by the Ministry of Public Education, who would observe classes and monitor

many final examinations. For purposes of certification, the final ex- aminations of all private secondary schools were conducted by committees of teachers employed by the Ministry of Public Education.

Despite the successes of this education system in terms of ex- panding enrollments and ensuring a uniform standard of quality across the nation, the military regime's social and economic plan- ners thought it gave the government too much influence over education, stifling parents' and local communities' freedom of choice.

They also thought the administration of the system was too bureaucratic and inefficient. The regime's education authorities decided to decentralize the

administration of state schools by turning them over to the municipal governments. Presumably, the schools would thus become more responsive to local demands and needs, although the Ministry of Public Education continued to issue the basic guidelines to be followed in the curricula, to approve textbooks, and, in principle, to require the certification of teachers, although the standards

became more flexible. Moreover, the national program of school

breakfasts and lunches was transferred, along with the necessary

resources, to the municipalities. The authorities committed the

necessary funding to maintain universal primary enrollments and,

after 1980, to continue to increase the size of secondary enroll- ments, despite the severe economic downturn of 1982-83.

With the 1980 reforms, all teachers in the state-run system be- came municipal employees, effectively ending the national system

controlling teachers' careers. The result was new inequalities in

terms of income and benefits for teachers. Despite increased education subsidies from the central government to poorer municipalities, the richer school systems were able to afford better teacher

salaries and educational facilities. In addition, beginning in 1988

municipal authorities were permitted to fire teachers, ending the

tenure they had enjoyed in the national career system, a measure

that generated widespread manifestations of teacher discontent, in- cluding strikes. The military government fostered the growth of privately run

schools by further facilitating the process through which they could

obtain subsidies. Moreover, tuition-free public and private schools were put on an equal footing in terms of access to state funding

when both began to receive amounts calculated on a similar per- student basis. This amount was prorated on the basis of student

113
Chile: A Country Study

attendance records, a measure that put the public systems at a dis- advantage because private schools could be selective in their admissions; they could therefore draw their student body from those

with more stable family backgrounds and hence could require more

regular attendance and better behavior. As a result of these new

incentives, enrollments in the publicly funded but privately administered system increased at the expense of the state-owned

schools. In 1980, before the beginning of the reform program, the

state-run schools had enrolled about 79 percent of primary and

secondary students, private but state-subsidized schools enrolled

14 percent, and fully private schools (those that charged tuition)

enrolled 7 percent. By the end of 1988, the proportion of students

in the state-run schools (by then under municipal control) had

dropped to 60 percent, the private but state-subsidized schools'

proportion had increased to 33 percent, and the fully private schools

continued to enroll 7 percent. Other data suggest that the number

of primary and secondary students in private schools increased from

27 percent in 1981 to 56 percent in 1986 (see table 15, Appendix).

The authorities also transferred administration of the state's vocational, industrial, and agricultural schools to employer associations,

although the public funding of these schools continued.

The Aylwin government doubled funding for education by 1992

and began to address the new challenge the nation confronted to increase the quality of education. As part of this effort, the government examined with renewed interest the issues of teacher morale,

training, and careers. It decided to reinvigorate the national continuing education programs for teachers and to reintroduce a National Statute for Teachers. This recreated in part the previous

national career system, with a minimum starting salary of about

US$250 per month for primary school teachers and promotions

and raises based on years of service, merit, additional training, and

premiums for teaching in areas that were isolated or had harsh cli- mates. However, because of the Aylwin government's commitment

to the decentralization of authority, administration of the system

of primary and secondary schools remained to a significant extent

in the hands of local governments, with continued efforts to provide

increased funding to the poorer municipalities and regions. An initia- tive by the Aylwin government also committed it to increasing technical training of workers and of youth who had already left the

education system. By the end of 1993, about 100,000 people, principally youth, had graduated from such training programs.

Higher Education

Chilean universities are widely recognized as being among the

114
The Society and Its Environment

best in Latin America. Before the education reforms of 1980, Chile

had eight universities—two state-run and six private—although all received most of their funding from the state. The two state universities consisted of the University of Chile (Universidad de Chile),

founded in Santiago in 1842 as the successor to the University of

San Felipe (Universidad de San Felipe; founded in 1758), and the

State Technical University (Universidad Tecnica del Estado),

founded in Santiago in 1947. The private universities consisted of

the Pontifical Catholic University of Chile (Pontffica Universidad

Catolica de Chile), founded in 1888; the University of Concepcion (Universidad de Concepcion), founded in 1919; the Catholic

University of Valparaiso (Universidad Catolica de Valparaiso),

founded in 1928; the Federico Santa Maria Technical University

(Universidad Tecnica Federico Santa Maria), founded in Valparaiso in 1931; the Southern University of Chile (Universidad

Austral de Chile), founded in Valdivia in 1955; and the University of the North (Universidad del Norte) in Antofagasta, founded

in 1956. The nation's largest and most important university, the

University of Chile, has the authority to oversee the quality

of professional training programs in important fields, such as medicine, in the other universities. The University of Chile, the Pontifical Catholic University of Chile, the Federico Santa Maria

Technical University, and, to a lesser extent, the University of Concepcion all developed campuses in other cities during the expansion of university enrollments in the late 1960s and early 1970s.

As noted previously, Chilean universities did not charge tuition,

aside from minimal matriculation fees that were, following changes

introduced in the mid- to late 1960s, higher for students of more

affluent parents. In effect, the state used general tax revenues to subsidize a higher-education system whose students were drawn

disproportionately from the middle and upper classes. The regressive impact of this policy on the nation's distribution of wealth had

been noted repeatedly by economists and sociologists since at least the 1950s.

The military government took a highly critical view of the nation's university system. Persuaded by the notion that state funding for lower education is more efficient in terms of generating the

necessary human capital for economic development, the military

decided to give priority in resource allocation to preprimary,

primary, and secondary schools. In addition to politically motivated purges of faculty members and students, among the first changes the military authorities made at the higher-education level was to charge students substantially higher enrollment fees. Lowincome students were supposed to continue to have access to higher

115
Chile: A Country Study

education through an expanded system of student loans with gener- ous repayment terms. Yet, as noted earlier, the expansion of highereducation enrollments that had begun in the 1960s ceased after these

new policies were put into place.

With the 1980 education reforms, the military government split

the two state universities apart, creating separate universities out

of what had been their regional provincial campuses. In addition,

taking a dim view of increases in the numbers of training programs

and degree programs at these universities since the 1960s, the re- gime limited the degrees that could be obtained in the state-run

universities to twelve of the most traditional fields, such as law,

medicine, and engineering. Degrees in other areas henceforth had

to be obtained from professional institutes; those sections of the

state universities consequently were detached, with some attrition,

and transformed into freestanding entities. The large School of Pedagogy of the University of Chile, for example, became the Pedagogical Institute.

The Pinochet government also fostered the formation of new private universities and professional institutes, allowing them to set tuition at whatever level they wished and promising to give them

direct per-student subsidies, as well as funds for loans to low-income

students, on an equal footing with older institutions. The education authorities hoped to stimulate competition among the universities and institutes for the best students by granting the per-student

subsidies on the basis of schools' ability to attract the students with

the highest scores on a national aptitude test required of all first- year applicants. This competition was thought to be an expeditious way to encourage efforts to increase the quality of higher education. Subsequently, the state subsidies did not become nearly as important as was expected because funding for universities and

for student loans declined beginning with the economic crisis of

1982-83. The lower funding levels led to decreases in salaries for faculty and other personnel across the country.

As a result of the policies of breaking up the state universities

and stimulating the formation of private institutions, the number

of universities increased to forty-one by 1989. Only half of these

received state funding that year. In addition, by 1989 there were

fifty- six professional training institutes, only two of which received

state funding that year. There was also a large increase in the numbers of centers for technical training. In 1989 there were 150 such

centers, none of which received state support. Relying entirely on

tuition payments, these centers had responded to a demand for postsecondary education that the universities and professional institutes,

despite their increased number, had been unable to meet. However,

116
The Department of Physical Sciences and Mathematics at the Pontifical Catholic University of Chile in Santiago

Courtesy Inter-American Development Bank

the quality of the training these centers provided was questionable. Most of them had two-year training programs with few facili- ties other than classrooms.

The changes introduced by the military government increased

the number and variety of higher education institutions, but the

reforms also led to much greater disparities among them, as well

as to a likely decline in the overall quality of the nation's higher

education system. There was an increase in part-time faculty teaching, a decline in full-time faculty salaries, and a much greater dis- persion of resources needed by important facilities, such as laboratories and libraries. These changes also led to the creation

of a considerable number of research institutes with no student train- ing programs that were dependent on grants or research contracts from international or national sources for their funding. These

institutes developed most prominently in the social sciences and

became an important alternative source of employment for specialists who had been or would have been engaged by universities.

Consequently, in contrast to the period before 1973, most of the

innovative thinking and writing in these areas was no longer being

done at universities, and new generations of students were having

less contact with the best specialists in these fields.

117
Chile: A Country Study

The Aylwin government did not introduce fundamental changes

in the higher education system handed down to it by the military

regime. It continued to fund higher education in part by allocat- ing per- student subsidies to institutions able to attract students who

scored highest on the multiple-choice examination modeled on the

Scholastic Aptitude Test used in the United States. However, the

Aylwin government was critical of what it considered an excessive

disaggregation and dispersion of higher education institutions. Consequently, it concentrated more of its direct subsidies on the traditional universities and their offshoots and attempted to enhance

their quality by making more funds available for basic and applied

research. The government also increased funding for low-income

student loans and scholarships to pursue studies at any institution.

Religion and Churches

Religious Affiliations and Church Organization

Roman Catholicism is an integral part of Chile's history and

culture, and the great majority of Chileans consider themselves Roman Catholic. However, their numbers have been declining since

1970, while the Protestant population has been increasing. The 1970

census showed that about 90 percent of the population was nominally Roman Catholic, and a little over 6 percent was Protestant. The 1982 census did not include questions on religion. The 1992

census showed that 76.9 percent of the population fourteen years

of age and older declared itself Catholic, while 13.1 percent declared

itself either "Evangelical" (see Glossary) or "Protestant" (see

table 16, Appendix). This latter percentage reflected a moderate

but steady increase with each census since 1920, when only 1.4

percent of the population was counted as Protestant. About 90

percent of Protestants belong to Pentecostal (Evangelical) denominations.

The more than doubling of the proportion of Protestants in the

total population over the 1970-92 period means that a large number of them are converts. Surveys taken in December 1990 and

October 1991 by the Center for Public Studies (Centro de Estudios Publicos—CEP) in collaboration with Adimark, a polling agency, showed that about 95 percent of Roman Catholic respondents

have been Catholics since childhood, whereas only about 38 per- cent of Protestants said they have been Protestants since their early years. Moreover, fully 26 percent of Protestants noted that they

had converted sometime in the previous ten years. According to the 1992 census, there was also a significant minority

of about 7 percent of Chileans who declared themselves indifferent

118
The Society and Its Environment

to religion or were atheists. This group had increased from a little over 3 percent in 1970. Other religious groups, mainly Jewish, Muslim, and Christian Orthodox, accounted for 4.2 percent of the population fourteen years of age or older. The CEP-Adimark surveys also included questions on religious

practice. According to the surveys, about a quarter of all adult

Chileans attend church services at least once a week, a proportion

indicative of considerable secularization. A much greater proportion of Protestants (about 46 percent) than of those who said they

are Roman Catholics (about 18 percent) are regular churchgoers.

Thus, the authors of the CEP-Adimark report note that there is roughly one Protestant for every two Catholics among people at- tending church at least once a week in Chile. The proportion of

nominal Catholics attending mass weekly seems to have increased

slightly since the late 1970s; prior studies had shown an attendance

rate between 10 and 15 percent.

The distribution of practicing Catholics and Protestants varies

dramatically on the basis of socioeconomic status. In 1990-91 about

half the practicing Protestant population (52.1 percent) was composed of individuals from poorer groups, while a tiny minority (2.3

percent) had high socioeconomic status. Among practicing Catholics, the proportion with high status was significant at 15 percent,

whereas the poorest segment constituted about a fifth (21.8 percent) of all those who practiced. These differences are so salient

that among the poor Chilean urban population, for every practicing Roman Catholic there is a practicing Protestant. The growth

of Protestantism has therefore mainly been at the expense of the

Catholicism of the lower socioeconomic groups, among whom

Catholicism has long been weakest. Surveys taken between the late 1950s and early 1970s showed that only between 4 and 8 percent

of working-class people who were nominally Catholic attended mass

weekly. The 1991 survey showed that 93.4 percent of high-income

respondents indicated that they are nominally Catholic; the proportions declined to 75.2 percent of middle-income people and to 69

percent of those with lower incomes. Among the latter, 22 percent

consider themselves nominally Protestant. The practicing Protestants also tend to work in greater proportions in the personal ser- vice areas of the economy and to be less educated than Catholics.

This is consistent with the generally lower economic status of the Protestant population.

Slightly more than half of all Chileans who declared a religious

affiliation are women. However, among those who practice, the

proportion of women is significantly higher. This is particularly

the case for Protestants. Among urban Protestant respondents,

119
Chile: A Country Study

about 70 percent of those who attend church services at least once

a week are women. Among Roman Catholics, the proportion of

practicing women is about 63 percent.

The Roman Catholic Church is divided into twenty-four dio- ceses and one armed forces chaplaincy. These are led by five archbishops and thirty bishops, some of whom serve as auxiliaries in

the larger dioceses. There are also two retired cardinals. The church

has long suffered from a shortage of priests. Since the 1960s, they

have numbered between 2,300 and 2,500, about half of them for- eign born. By 1990 there were 3,000 Catholics per priest. With

about 760 parishes throughout the country, the church is unable

to extend its presence to the entire Catholic population. This situ- ation is illustrated by a comparison of the number of places of worship for Santiago's Catholic and Protestant populations: 470 Roman

Catholic parishes and chapels versus about 1,150 churches and other

places of Protestant (mainly Pentecostal) worship.

Religion in Historical Perspective

Independence from Spain disrupted the church-state relationship. The clergy was divided over the question of breaking the ties to Spain, although the most prominent church officials were generally royalists. As a result, the new independent governments and

the leaders of the church viewed each other with distrust. The development of what would later be called the ' 'black legend' ' (a highly

unfavorable view of the colonial administration, of which the church was an integral part), coupled with an admiration for the progress

of Protestant lands, fueled this distrust. Despite their misgivings

about church attitudes toward independence, the new rulers in- sisted that they were entitled to exercise the patronato real (see Glossary), the agreement between the Spanish crown and the pope,

thereby assuming this important royal power as well. This prerogative was enshrined in the 1833 constitution, which made Roman

Catholicism the established church of the new Chilean state. Consequently, to oversee the goverance of the church, the authorities

followed the tradition of sending church appointments to the Vatican

for its formal approval. For their part, church officials expected

that the government would continue to ban all other religions from

the country. Moreover, they hoped to retain full authority over

education, to keep all civil law subordinate to canonical law, and

to continue to function as the state's surrogate civil registry, as well as to control all cemeteries. In addition, they increasingly asserted

the independence of the church from the interference of state authorities.

120
A church in Rancagua, central Chile

Courtesy Embassy of Chile, Washington

121
Chile: A Country Study

The church-state relationship was fraught with potential for conflict, and as the nineteenth century progressed many conflicts did

indeed emerge. By the late 1850s, a fundamental fault line in

Chilean politics and society had developed between unconditional

defenders of church prerogatives, who became the Conservatives,

and those who preferred to limit the church's role in national life, who became the Liberals or, if they took more strongly anticlerical positions, the Radicals. Although most Liberals and even most

Radicals were also Roman Catholics, they were in favor of allowing the existence of other churches and of limiting canonical law

to church-related matters, while establishing the supremacy of

the state's laws and courts over the nation as a whole, even over

priests and other church officials. They also advocated the crea- tion of non-Catholic schools and civil cemeteries, and they pressed

for the establishment of a state-managed civil registry that would

be entitled to issue the only legally valid birth, marriage, and death

certificates. By the 1880s, a decade that saw a break in relations

between the Chilean government and the Vatican, all of these points

of the more secular and anticlerical agendas had been established.

However, the Roman Catholic Church continued to be the established church, dependent on the state for its finances and appointments. This led periodically to new political tensions.

Emerging in the 1820s, the first source of state-church conflicts was the issue of the right of non-Catholics to practice their religion.

The government favored allowing them to do so in private homes

or other nonpublic places, while the Roman Catholic Church opposed this notion. The issue was a question of considerable significance for more than just civil liberties. Independence from Spain had permitted the legal establishment

of direct commercial links between Chile and other countries

throughout the world. These links led to the creation, especially

in Valparaiso, of wholesale commercial enterprises that brought

British and other foreign nationals who were non-Catholic to the

country, and they demanded the right to practice their religion.

Denying them religious freedom not only created diplomatic

problems with the dominant economic powers of the time but also

had the potential to undermine the operations of the export-import

concerns that handled much of the emerging country's foreign trade. Beginning in the 1840s, the Chilean government sponsored the

immigration of German settlers to the southern lake district. Most

of them, contrary to the government's wishes, came from Protestant parts of Germany. As a result, the first Protestant services in

Chile, mainly Anglican and Lutheran, began in immigrant communities. Initially, they were merely tolerated by the authorities,

122
The Society and Its Environment

but in 1865 a new law interpreting the religious clause of the constitution that declared Roman Catholicism as the official state religion permitted private practice by non-Catholic denominations.

In the last quarter of the nineteenth century, Protestant missionaries of various denominations, beginning with the Presbyterians, came to Chile. Although they continued to serve mainly the immigrant communities, they also made an effort to obtain Chilean

converts. The Anglicans set up missions among the Mapuche, and

these are still operating in Araucama Region. American Methodists

founded schools—the well-known Santiago College, which was es- tablished in 1880, among them—that were open to middle- and

upper-class Chilean children, especially girls. Parents seeking al- ternatives to Catholic education opted for Protestant missionary

schools. By the turn of the century, a small community of local converts to Protestant denominations began to form. In 1909 a seg- ment of the new Methodist group that had adopted charismatic

rituals broke off from the main missionary body. This breakaway

group became the Pentecostal Methodist Church, which itself split

in 1934 when the Evangelical Pentecostal Church was formed.

These two denominations remained the principal Pentecostal groups

in Chile, although there were many different subdenominations.

Judaism, virtually unknown in nineteenth-century Chile, originated with the Central European Jews who arrived in the country

fleeing persecution mainly between World War I and World War

II. Both Jews and Protestants, as religious minorities in a pre- dominantly Catholic country, were strongly in favor of religious

freedoms and of full separation between church and state. It was

therefore natural for them to identify more closely with the more

secular and even anticlerical segments of Chilean society and politics; and it was natural for the latter to consider them a part of

their constituency. Yet, given their religious beliefs, strict moral

upbringing, and, among Chilean Protestants, generally, abstention from alcohol, these segments of the non-Catholic Chilean so- ciety had little in common with the broader anticlerical groups.

In fact, on many moral issues, non-Catholics' opinions were much

closer to those of practicing Roman Catholics. For this reason, although practicing Protestants and Jews tended to vote for the more

secular parties in greater proportions than other groups, they generally did not have a particularly strong political identity or play important leadership roles in political or social life. In 1925 President Arturo Alessandri Palma (1920-24, 1925,

1932-38) pressed for and obtained a separation of church and state. This resolved most sources of church-state friction, but more than

a century of conflicts had already created subcultures in Chilean

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Chile: A Country Study

society that continued to leave their mark on twentieth-century

educational institutions, intellectual life, social organizations, and

politics. The segments most distant from and even opposed to the

Catholic Church were receptive to positivism (see Glossary) and,

especially after the 1930s, to Marxism. In this sense, the nineteenthcentury fault line contributed indirectly to the eventual appeal

among educated Chileans of the nation's communist and socialist parties.

During the interwar years, partly in response to the challenges

of secular intellectuals and political leaders and partly as a result of new trends in international Catholicism, the Roman Catholic

Church in Chile slowly began to espouse socially and politically more progressive positions. This more progressive Catholicism initially had its main impact among university students, who, in the

mid- 1930s under the leadership of Eduardo Frei, created a new

party that in 1957 fused with other groups to become the Christian

Democratic Party (Partido Democrata Cristiano—PDC). This development split the subculture that was closer to the Catholic Church

into politically conservative and centrist segments. By the early

1960s, a solid majority of the church hierarchy favored the Christian Democrats, and there was a significant shift of voter support

from the Conservative Party (Partido Conservador) to the PDC.

Following the new thinking in church circles, the hierarchy openly embraced positions favoring land reform, much to the dismay

of the still-important minority of Catholics on the right.

The dominant consensus within Chilean Catholicism was much

in tune with the resolutions and spirit of Vatican Council II (1962-65) in theological, ritual, and pastoral matters. Within the

Latin American context, the Chilean Roman Catholic Church

quickly became noted as a post-Vatican Council II church of moderately progressive positions on political and socioeconomic issues,

and its representatives played an important part in the reformminded Medellin (1968) and Puebla (1979) conferences of Latin

American bishops. In the late 1960s and 1970s, the church fostered

the establishment of Christian Base Communities (Comunidades

Eclesiasticas de Base—CEBs; see Glossary) in poor urban neighborhoods. However, only a minority in the Chilean church subscribed to what became known as liberation theology (see Glossary).

In the wake of the military coup of September 1973, the church

established, initially in association with some leaders of the nation's

Protestant and Jewish communities, an office for the defense of

human rights. Later reorganized under exclusive sponsorship of

the archdiocese of Santiago as the Vicariate of Solidarity (Vicaria

de la Solidaridad), this organization continued to receive funds from

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The Society and Its Environment

international Protestant sources and valiantly collected information on human rights violations during the nearly seventeen years

of military rule. Its lawyers presented literally thousands of writs

of habeas corpus, in all but a few cases to no avail, and provided

for the legal defense of prisoners. The church also supported popular

and labor organizations and called repeatedly for the restoration

of democracy and for national reconciliation.

As the papacy ofJohn Paul II (1978- ) progressed, the Chilean

Catholic Church, like other national congregations around the

world, became somewhat more conservative in outlook. In the early

1990s, the episcopal conference was about evenly split between those

formed in the spirit of Vatican Council II and those espousing more

conservative positions. However, this shifting balance did not af- fect the church's advocacy of human rights and democracy during

the military regime (see The Church, ch. 4).

Forms of Popular Religiosity

Anthropologists of religion would be hard-pressed to find expressions of indigenous beliefs in the "popular" sectors (see Glossary)

of Chile. The principal exception to this is in the north, where var- ious religious festivals honoring the Virgin Mary show bold traces of highland Andean indigenous beliefs. The most noted of these

is "La Tirana," held each July in Iquique and the nearby village

of La Tirana. In the rest of the country, Christian and indigenous

religious syncretism have been largely confined to native American communities, where faiths in various animal and bird spirits

coexist with beliefs of Christian origin.

Popular religious beliefs focus to a large extent on the notion

that there is a struggle between good and evil, the latter seen as a force personified by the devil. This perspective is much in line

with Mapuche beliefs. Illnesses are often seen, like sin, as tied in some way to the devil's work. Catholic priests in poor parishes

usually have had the experience of being called by their least educated parishioners to perform exorcisms, particularly of demons

thought to be afflicting sick children, and many Pentecostal ser- vices focus on ridding body and soul of satanic influences and on

faith healing. A belief in heaven and in the eternal horrors of hell

is a fundamental ingredient of the popular religious imagery, with

earthly life said to be a brief trial determining the soul's final destination. Much of the message of Pentecostal sermons revolves

around these concepts, focusing on the weakness of the flesh and

on the necessity of leading a life of constant preparation for eter- nal deliverance. In this respect, there is a puritan streak to the Pentecostal message that is reinforced through a liberal use of individual

125
126
A dance at a religious festival held each July in Iquique and the nearby

village of La Tirana in honor of the Virgin Mary

Courtesy Embassy of Chile, Washington

127
Chile: A Country Study

testimonies of repentance and conversion from members of the congregation. Among Catholics, this element of popular religiosity is tied intimately to a belief in the intercession of saints and,

most important, of the Virgin Mary. Intercession may be invoked on behalf of deceased family members who are remembered in

prayers.

The afterworld is heavily populated in popular religious imagery

by errant souls atoning for their sins and seeking their final rest. Particularly in rural areas, it is common along roadsides to see niches carved into the sides of hills or shaped from clay that contain crosses, occasionally photographs, and candles. The niches are

in the proximity of places where people met sudden, violent deaths,

primarily from traffic accidents, without the benefit of last rites. The candles are lit mainly to plead for their souls but also in some

cases to ask the deceased to intercede for those who light them.

It is customary among the Chilean poor to believe that infants who

die become little angels. Pilgrimages to Catholic churches that house

special images of the Virgin or of saints and multitudinous processions in which these images are displayed are also part of the popular

religious landscape. The faithful frequently offer penances in the

hope of obtaining special favors.

A central objective of Pentecostal services is to experience a

manifestation of the Holy Spirit. The leader of the service tries to cleanse the congregation of devilish influences and to prepare the

way for this manifestation. Between his or her invocations stress- ing the necessity and possibility of redemption from sin and anointments of the sick, the congregation joins in rhythmic but often

lamentational singing, sometimes to the accompaniment of guitars and tambourines, and often supplemented by the clapping of

hands. While singing, some of the women who attend will frequently

begin to dance, swaying back and forth, and even to "speak in

tongues." Sometimes the dancing will surround certain individuals who are chosen because they need special attention for some

reason. Another common practice is for members of the congregation to pray individually in a loud voice.

Attitudes Toward Family and Gender

Divorce, Abortion, and Contraception

Chile is one of the last countries in the world that has not legalized divorce. A law permits marital separation under certain conditions, but it does not terminate the conjugal bond. Despite the

Catholic hierarchy's opposition to the legalization of divorce, at least half of all Chileans apparently favor enacting such a law (see

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The Society and Its Environment

table 17, Appendix). In the 1990 CEP-Adimark survey, 55.6 per- cent of those interviewed were in favor of legal divorce.

The differences of opinion on divorce among various categories

of the population are noteworthy. Support for its legalization is slightly stronger among men than among women. It is much

stronger among young adults than among the middle-aged, while

only a minority of older people support it. High-income respondents constitute the group most in favor, whereas lower-income

respondents largely disapprove (70.1 percent to 15.5 percent); a

small majority of those with middle and lower incomes support

legalization. A slight majority of self- identified Catholics are in

favor, but among practicing Catholics a majority reject the notion.

A small majority of those who said they are Protestant reject legalization. This rejection is stronger among weekly churchgoers. Curiously, Protestants (mainly Pentecostals, who tend to have very

traditional opinions) are closer to the positions of the Catholic hi- erarchy than are Catholic respondents.

Although Chile does not have a divorce law, a surrogate and

well-institutionalized means of severing conjugal bonds is the an- nulment of civil marriages. Civil marriage ceremonies are the only

legally valid ones, and couples who have church weddings must

also marry at the civil registry. The annulment is usually done with

the assistance of attorneys who argue that there has been some

procedural error in the civil marriage process. It often involves

obtaining witnesses who would attest to facts, whether true or false, that vitiate the original proceedings, such as asserting that the couple

does not reside where they said they did when they were married.

This is enough to make a case for invalidating the action of the

civil registrar who performs the ceremony and draws up the papers. To a large extent, Chile's lack of a proper divorce law can be at- tributed to the ability of separated couples to annul their marriage

following these procedures. As a result, the political pressure to enact a divorce law is diffused. In 1991, the latest year for which

there were published figures, there were 5,852 marriage annulments

(and 91 ,732 marriages) in the country; the number of annulments

showed a steady increase over seven years from a level of 3,987

in 1984. The actual number of separations of married couples is much higher, especially among those who lack the means to hire

the necessary annulment lawyers. New bonds are often established

outside of wedlock.

Whereas the Chilean public seems somewhat favorably inclined

toward the legalization of divorce, it shows considerable resistance

to legal abortion. Although survey results vary, according to the way

questions on abortion are posed, the notion of permitting abortion

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Chile: A Country Study

on demand has only a small proportion of supporters. It varied

from 5 percent in the CEP-Adimark December 1990 survey to a high of 22.4 percent in the July 1991 survey conducted by the Center

for Contemporary Reality Studies (Centro de Estudios de la Realidad Contemporanea—CERC). However, a relatively large

proportion of survey respondents favored abortion under certain

circumstances. The CERC survey ofJuly 1991 showed that 76 per- cent considered abortion permissible when "the mother's life is in danger or when the baby will be born with malformations"; similarly, 53.4 percent thought that abortion should be permitted in cases of rape. While nearly half of all respondents rejected abortion in all circumstances, 44.7 percent would permit it with qualifications (see table 18, Appendix).

There is a considerable degree of consensus among the various

categories of respondents to a December 1991 CEP-Adimark sur- vey, except for individuals of high socioeconomic status and practicing Catholics or Protestants. As on the issue of divorce, the first group had the most liberal views of all, with only 14 percent agreeing

with the notion that abortion should not be permitted and 78 per- cent accepting it in qualified circumstances. Practicing Catholics

rejected abortion in a somewhat greater proportion than the average, and they accepted it in qualified circumstances to a slightly lesser extent. Practicing Protestants (mainly Pentecostals) had the

most restrictive views of all: more than 80 percent rejected abortion outright, 17.6 accepted it in qualified circumstances, and a

tiny fraction agreed that the matter should be left up to the individual woman. Although illegal, abortions are commonly performed

in Chile. Social science researchers have estimated that about a

third of all Chilean women have one or more induced abortions

during their childbearing years. Birth control methods of all types find broad acceptance among

the population. This is true even of practicing Catholics, 81.3 per- cent of whom found their use acceptable. National health programs

have facilitated access to birth control since the 1960s, and the use

of contraceptives is widespread. However, these programs provide

easy access to birth control only to women who have already had

at least one child because the programs are mainly organized to provide prenatal and postpartum primary care. Birth control is therefore more difficult to obtain for childless women, especially

younger and poorer women. Thus, first pregnancies out of wedlock as well as first marriages of pregnant brides are frequent. This

differential in contraceptive practices is largely responsible for the

fact that the proportion of births out of wedlock over the total number of births increased with the overall decline in the birthrate (see

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The Society and Its Environment

table 19, Appendix). The number of births in wedlock has fallen almost by half since the initiation of the contraception programs,

while the births out of wedlock have remained fairly constant. This means that currently a third of all births are out of wedlock, up

from 17.5 percent in 1965.

Premarital sex among couples in love with each other is also broadly accepted, except among practicing Protestants, only 40 per- cent of whom approved, and among those age fifty-five and older,

only 39 percent of whom approved. Sixty-three percent of practicing Catholics accepted this practice, despite the strong disapproval

of the church hierarchy. On this issue, practicing Protestants again

are closer to the Catholic hierarchy's teachings than are lay Catholics

themselves. The acceptance of premarital relations compounds the

problems caused by the relatively more difficult access to birth control for childless women.

Family Structure and Attitudes Toward Gender Roles

Extended-family life has occupied an important place in Chilean

society. Although couples are expected to set up their own households, they remain in close contact with the members of their larger

families. Children generally get to know their cousins well, as much

adult leisure time, generally on weekends and holidays, is spent

in the company of relatives. It is also common to find children liv- ing for extended periods of time for educational or other reasons

in households headed by relatives, sometimes even cousins of their

parents. These extended-family ties provide a network of support

in times of nuclear family crises. It is also common for close friendships among adults to lead to links that are family-like. For example, children often refer to their parents' friends as "uncle" or "aunt."

Traditional definitions of gender roles have broken down considerably as women have won access to more education and have

entered the labor force in larger numbers. By 1990 about half the

students in the nation's primary and secondary schools were fe- male; the proportion of women was lower, about 44 percent of the

total enrollment in all forms of higher education. The University

of Chile graduated Latin America's first female lawyers and physicians in the 1880s. However, women made faster progress in tradi- tionally female professions than in other professions. Thus, by 1910

there were 3,980 women teachers, but there were only seven physicians, ten dentists, and three lawyers. By the 1930s, female en- rollments reached significant numbers in these fields. The

University of Chile in 1932 had 124 female students enrolled in

law (17 percent of the total), ninety-six in medicine (9.5 percent),

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Chile: A Country Study

and 108 in dentistry (38 percent), although 55 percent of all women

students at the university were enrolled in education.

Attitudes regarding the proper roles of men and women in soci- ety seemingly no longer follow a fully traditional pattern. A 1984

survey conducted in Santiago by the Diagnos polling firm found

widespread support among men (more than 80 percent) and women

(more than 90 percent) of high, medium, and low socioeconomic

status for the notion that women benefit as individuals if they work

outside the home. When asked if they agreed or disagreed with

the notion that "it is better for women to concentrate on the home

and men on their jobs," 43 percent of the national sample in the

CERC July 1991 survey agreed, even though the term "concentrate" does not imply a denial of the right of women to work outside the home. There were some differences between the genders

over this question, with 49 percent of men and 38 percent of women

in agreement. The percentage in favor of this notion increased with

age. Only 30 percent of those under age twenty-five agreed, while

61 percent of those over age sixty-one did so. Men and women in the same CERC study were considerably

divided over whether "women should obey their husbands." This

is a sentence included in family law that is supposed to be read

(although it is frequentiy omitted) to Chileans when they take their

marriage vows in the civil registry's ceremony; 55 percent of men

agreed, while only 40 percent of women did so. Again, men held

the more traditional views, but considering the nature of the proposition and its long-established status in civil law, the fact that only

slightly more than half of them agreed can be considered a sign

of changing times.

Surveys of working-class respondents can usually be counted on

to capture the more traditional views of urban society toward male

and female roles because such attitudes are usually associated with

lower levels of educational attainment. But working-class Chileans

are in general not as tradition minded as could be expected about

the issue of women working outside the home. In a 1988 survey

of workers, 70 percent of the men and 85 percent of the women

agreed with the notion that "even if there is no economic necessity, it is still convenient for women to work." The notion that "men

should participate more actively in housework so that women are able to work" was accepted by 70 percent of men and 92 percent

of women. Forty-five percent of men believed that "women who

work gravely neglect their home obligations," while 21 percent of

women did so. However, male support for the notion of women

working outside the home varied depending on the way the question was phrased. When interviewers presented the idea that "if

132
The Society and Its Environment

men were to make more money, then women should return to the

home," 63 percent of men agreed, while only 33 percent of women did.

Nonetheless, popular beliefs hold very strongly to the notion that

women reach full self-realization primarily through motherhood.

This generates strong pressures on women to have children,

although most take the necessary measures to have fewer children

than did their mothers and especially their grandmothers. Employed

working-class women usually are able to find preschools and day

care for their small children, as these programs are broadly established throughout the country. The extended family also provides

a means of obtaining child care. Middle-class to upper-class households usually hire female domestic servants to do housework and take care of children. This practice facilitates the work life of the women of such households.

Women can frequently be found in the professions even outside

such traditionally female-dominated areas as primary and secondary education, nursing, and social work. For example, among the

nation's 14,334 physicians in 1990, there were 3,811 women, or 27 percent of the total. This percentage has been increasing in re- cent years. Among the 7,616 physicians less than thirty-five years

of age, there were 2,778 women, or 37 percent of the total. In 1991

about 48 percent of the nation's 748 judges were women; although

there were none on the Supreme Court, 24.2 percent of the appellate court judges were women. A slight majority of the roughly 4,200

journalists in the country were women.

Whither Chile?

In the early 1990s, most social, economic, and political leaders

are being driven by a search for consensus on pragmatic solutions

to national problems. The strength of these attitudes stems in large measure from an attempt to recover from what most Chileans view,

in one sense or another, as national failures. The country ex- perienced slow and erratic growth, hyperinflation, the breakdown

of its democracy, human rights abuses, the exile of many people,

and a period of harsh economic adjustment under military government. Chileans hope to put these events behind them, and to do

so with a new sense of unity and purpose, avoiding cosdy mistakes

and unnecessary conflicts. The nation's transition to democracy was a smooth one, thanks

in large part to the new national mood favoring negotiations and

consensus. But many challenges lie ahead. The objective of continuing rapid development while increasing equity and enhancing

democratic governance is indeed a tall order. However, buoyed

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Chile: A Country Study

by high levels of growth and historically low levels of unemployment, a majority of Chileans view the future optimistically.

Since the early 1970s, Chilean social scientists have been active

in studying virtually all aspects of their society. The most comprehensive, useful, and authoritative source on Chilean physical and

human geography is Geografia general y regional de Chile by Ximena

Toledo O. and Eduardo Zapater A. The book is best complemented

by the latest edition of the Compendio estadistico of Chile's Instituto

Nacional de Estadisticas, which provides a summary of the most

commonly consulted statistics. The political characteristics of the

various regions of the country are treated in Cesar N. Caviedes's

The Politics of Chile. Consistent with the relative unimportance of ethnic divisions in

the Chilean population, there are no significant studies of the nation's ethnic groups, except for the Mapuche. The best source for an examination of their culture and social organization is Louis

C. Faron's The Mapuche Indians of Chile. A wealth of recent information on the Mapuche can be found in Censo de reducciones indtge- nas seleccionadas, edited by Jorge Martinez.

The best single work on the current situation in the countryside

is Sergio Gomez and Jorge Echenique's La agricultura chilena. An

examination of the countryside at the height of agrarian reform

is Solon Lovett Barraclough and Jose Antonio Fernandez's Diagnostic de la reforma agraria chilena. A useful collection of articles cover- ing the period from the 1950s to the early 1990s is contained in

Development and Social Change in the Chilean Countryside, edited by

Cristobal Kay and Patricio Silva.

There is a growing body of literature on Chilean social policies,

welfare institutions, and social-assistance programs. The best works

are Jose Pablo Arellano's Politicas sociales y desarrollo, which provides an excellent overview of the welfare institutions since their inception; Pilar Vergara's Politicas hacia la extrema pobreza en Chile, 1973-

1988, which examines the military government's programs to assist the poorest segments of the population; Tarsicio Castafieda's Para combatir la pobreza, which covers some of the same ground as Vergara but from the perspective of a supporter of the military

government; Hernan Cheyre Valenzuela's La prevision en Chile, ayer y hoy and Augusto Iglesias P. and Rodrigo Acuna R.'s Sistema de pensiones en America Latina, Chile, both of which examine the new

private pension system and its social and economic effects; and Jorge

Jimenez de lajara's Chile: Sistema de saluden transicion a la democracia,

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The Society and Its Environment

which is comprehensive in its analysis of the various components

of the health system.

Guillermo Campero's Los gremios empresariales en el periodo 1970-

1983 is the most comprehensive examination of entrepreneurial

associations. A more recent analysis of entrepreneurs is Cecilia

Montero's "La evolucion del empresariado chileno." Alan Angell's Politics and the Labour Movement in Chile remains the best source

for examining the composition of the twentieth-century labor move- ment prior to the military government. The labor movement during the 1980s is well treated in Patricio P. Fnas's El movimiento

sindical chileno en la lucha por la democracia, 1973-1988.

The best single work on the Roman Catholic Church is Brian

H. Smith's The Church and Politics in Chile. The Catholic Church

during the military regime is the object of Enrique Correa and Jose

Antonio Viera-Gallo's Iglesia y dictadura. A brief but excellent ex- amination of the growth of Protestantism, including a comparison

of the social and political attitudes of practicing Protestants and

Catholics, is Arturo Fontaine Talavera and Herald Beyer's "Retrato del movimiento evangelico a la luz de las encuestas de opinion

publica." The development of religious life in Chile and the rela- tions between the military regime and all religious groups, especially Protestants, is the subject of Humberto Lagos Schuffeneger's

Crisis de la esperanza. The most comprehensive single analysis of women in Chilean

society continues to be Felfcitas Klimpel's La mujer chilena. Paz

Covarrubias and Rolando Franco's Chile: Mujer y sociedad covers

virtually all aspects of women's involvement in society with its thirtytwo separate articles. Teresa Valdes's Venid benditas de mi padre provides a useful in-depth look at the life of twenty-six popular-sector

women. (For further information and complete citations, see Bibliography.)

135

Chapter 3. The Economy
A series of textile figures (lukutuel) >m a seventeenth-eentury Mapuehe

woman's belt called nimintrariiwe
CHILE'S ECONOMY ENJOYED a remarkable boom in the early

1990s, the result of a comprehensive transformation that began in

1974 with the adoption of free-market economic policies. Between

the 1930s and the early 1970s, the Chilean economy was one of

the most state-oriented economies in Latin America. For decades,

it was dominated by the philosophy of import-substitution industrialization (see Glossary). Heavily subsidized by the government,

a largely inefficient industrial sector had developed. The sector's main characteristics were a low rate of job creation, a virtual ab- sence of nontraditional exports, and a general lack of growth and

development. In the early 1970s, the ruling socialist-communist

Popular Unity (Unidad Popular) coalition of President Salvador

Allende Gossens (1970-73) attempted to implement a socialist eco- nomic system. The Allende experiment came to an end with the

military coup of September 1 1, 1973. From that point on, Chile's

economic policies took a radical turn, as the military government

undertook, first timidly and later more confidently, deep reforms

aimed at creating a market economy.

In the early 1990s, politicians and analysts from around the world

looked to the Chilean economy for lessons on how to open up inter- national trade, create dynamic capital markets, and undertake an

aggressive privatization process. In early 1994, Chile had the strongest economic structure in Latin America and, in large part because

of the military government's reforms, was emerging as a modern

economy enjoying vigorous growth. Moreover, there seemed to be a consensus among politicians of widely varying beliefs that the

existing economic model should be maintained in the future.

Chile's income per capita, approximately US$2,800, placed the

nation squarely in the middle of what the World Bank (see Glossary) calls "middle-income economies." Of the Latin American

nations, Brazil, Uruguay, Venezuela, Mexico, and Argentina in 1990 each had a higher gross national product (GNP—see Glossary) per capita than Chile; the rest had a lower level. In the 1991-93

period, the rate at which Chile's gross domestic product (GDP

see Glossary) grew exceeded 6.5 percent per year, making Chile's

GDP during these years by far the fastest growing in Latin America.

In 1992 GDP grew at a record 10.3 percent pace, year-end unemployment was down to 4.5 percent, real wages were up 5 percent,

inflation was down to 12.7 percent, and the public-sector surplus was equivalent to 3 percent of GDP. When a longer period is

139
Chile: A Country Study

considered, Chile still comes up ahead of the rest of the Latin American nations. For instance, according to the United Nations Economic Commission for Latin America and the Caribbean (Comision

Economica para America Latina y el Caribe; see Glossary), Chile's

GDP per capita increased by 32.2 percent between 1981 and 1993;

Colombia was a distant second with an accumulated rate of growth

during the period of 23.6 percent.

The success Chile enjoyed by the 1990s resulted largely from

the boom in agricultural exports. In 1970 Chile exported US$33

million in agricultural, forestry, and fishing products; by 1991 the

total had jumped to US$1.2 billion. This figure excluded those

manufactured goods based on products of the agricultural, livestock,

and forestry sectors. Much of the increased agricultural production in the country was the result of rapidly improving yields and

higher productivity, spurred by an export-oriented policy.

There was little doubt that an exchange-rate policy aimed at en- couraging exports lay behind the strong performance of the Chilean

economy in the 1986-91 period. First, the liberalization of international trade substantially lowered the costs of imported agricultural inputs and capital goods, enabling the sector to become more

competitive. In fact, the liberalization of international trade put an end to a long history of discrimination against agriculture. Tariffs

and other forms of import restrictions throughout the 1950s and

1960s gave a relative advantage to those industries that produced

importable goods, making them domestically competitive at production costs above international prices. The same policies, because

they permitted an overvalued exchange rate, punished those eco- nomic activities, like agriculture, that could produce exportable

goods. While those goods could be sold at international prices, the

foreign-exchange earnings would be converted into domestic cur- rency at an unfavorable exchange rate. Second, the exchange-rate

policy, pursued aggressively since 1985, had provided incentives

for the expansion of exports.

Third, an institutional framework that secured property rights

to land and water, along with reformed labor laws, had increased

the openness of factor markets (see Glossary) and established clear

signals for the allocation of resources. Potential profits in new busi- ness initiatives had by then become very much tied to international prices of goods and domestic costs of resources. The likelihood

of government intervention in property rights allocation, prohibitions, special permits, and so forth had been significantly reduced.

Related reforms in the transportation sector, particularly in air and

marine transport, had further increased access to international

trade.

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The Economy

A fourth fundamental policy-based explanation of the increase

in agricultural exports was the pursuit of a stable macroeconomic

policy whose purpose was to give entrepreneurs confidence in the

system and enable them to plan their activities over the longer term. Many of the export-oriented agricultural activities required siza- ble investments that could only be undertaken in an environment

of stability and policy continuity. What is most remarkable, per- haps, is that since 1989 poverty and inequality have been reduced

significantly.

Evolution of the Economy

The Colonial Era to 1950

In colonial times, the segmentation of Chile into latifundios (see

Glossary) left only small parcels for native American and mestizo

(see Glossary) villagers to cultivate. Cattle raised on the latifundios were a source of tallow and hides, which were sent, via Peru,

to Spain. Wheat was Chile's principal export during the colonial

period. From the inquilinos (peons), indentured to the encomenderos

(see Glossary), or latifundio owners, to the merchants and encomenderos themselves, a chain of dependent relations ran all the way to the Spanish metropolis (see The Colonial Economy, ch. 1). After Chile won its independence in 1818, the economy prospered

through a combination of mercantilist and free-market policies.

Agricultural exports, primarily wheat, were the mainstay of the

export economy. By mid-century, however, Chile had become one

of the world's leading producers of copper. After Chile defeated

Bolivia and Peru in the War of the Pacific (1879-83), nitrate mines

in areas conquered during the war became the source of huge

revenues, which were lavished on imports, public works projects,

education, and, less directly, the expansion of an incipient industrial sector (see The Liberal Era, 1861-91, ch. 1). Between 1890

and 1924, nitrate output averaged about a quarter of GDP. Taxes on nitrate exports accounted for about half of the government's

ordinary budget revenues from 1880 to 1920. By 1910 Chile had

established itself as one of the most prosperous countries in Latin

America.

Dependence on revenues from nitrate exports contributed to financial instability because the size of government expenditures

depended on the vagaries of the export market. Indeed, Chile was

faced with a severe domestic crisis when the nitrate bonanza ended abruptly during World War I as a result of the invention of synthetic substitutes by German scientists. Gradually, copper replaced

nitrates as Chile's main export commodity. Using new technologies

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Chile: A Country Study

that made it feasible to extract copper from lower-grade ores, United

States companies bought existing Chilean mines for large-scale development.

Chile initially felt the impact of the Great Depression (see Glossary) in 1930, when GDP dropped 14 percent, mining income

declined 27 percent, and export earnings fell 28 percent. By 1932

GDP had shrunk to less than half of what it had been in 1929, ex- acting a terrible toll in unemployment and business failures. The

League of Nations (see Glossary) labeled Chile the country hardest

hit by the Great Depression because 80 percent of government

revenue came from exports of copper and nitrates, which were in

low demand.

Influenced profoundly by the Great Depression, many national

leaders promoted the development of local industry in an effort to insulate the economy from future external shocks. After six years

of government austerity measures, which succeeded in reestablishing

Chile's creditworthiness, Chileans elected to office during the

1938-58 period a succession of center and left-of-center governments interested in promoting economic growth by means of

government intervention.

Prompted in part by the devastating earthquake of 1939, the

Chilean government created the Production Development Corporation (Corporacion de Fomento de la Produccion—Corfo) to en- courage with subsidies and direct investments an ambitious program

of import-substitution industrialization. Consequently, as in other

Latin American countries, protectionism became an entrenched

aspect of the Chilean economy.

Import-substitution industrialization was spurred on by the advent of World War II and the loss of access to many imported

products. State enterprises in electric power, steel, petroleum, and

other heavy industries were also created and expanded during the

first years of the industrialization process, mostiy under the guidance

of Corfo, and the foundations of the manufacturing sector were

set. Between 1937 and 1950, the manufacturing sector grew at an

average yearly real rate of almost 7 percent.

Despite initially impressive rates of growth, import-substitution

industrialization did not produce a sustainable expansion of the

manufacturing sector. With the industrialization process evolved an array of restrictions, controls, and often contradictory regulations. With time, consumer-oriented industries found that their

markets were limited in a society where a large percentage of the

population was poor and where many rural inhabitants lived at the margins of the money economy. The economic model did not

generate a viable capital goods (see Glossary) industry because firms

142
Survivors of the March 1985 earthquake in central Chile stand among

the ruins of their homes in the Santo Domingo area of Santiago.

Courtesy Inter-American Development Bank

relied on imports of often outmoded capital and intermediate goods.

Survival often depended on state subsidies or state protection. In

fact, it was because of these import restrictions that many of the

domestic industries were able to survive. For example, a number

of comparative studies have indicated that Chile had one of the

highest, and more variable, structures of protection in the developing world. As a consequence, many, if not most, of the industries

created under the import-substitution industrialization strategy were

inefficient. Also, it has been argued that this strategy led to the use of highly capital-intensive (see Glossary) production, which,

among other inefficiencies, hampered job creation. Additionally,

the import-substitution industrialization strategy generated an economy that was particularly vulnerable to external shocks.

During the import-substitution industrialization period, copper

continued to be the principal export commodity and source of

foreign exchange, as well as an important generator of government

revenues. The Chilean government's retained share of the value

of copper output increased from about one-quarter in 1925 to over

four-fifths in 1970, mainly through higher taxes. Although protectionist policies better insulated Chile from the occasional shocks of

world commodities markets, price shifts continued to take their toll.

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Chile: A Country Study

Economic Policies, 1950-70

Between 1950 and 1970, the Chilean economy expanded at meager rates. GDP grew at an average rate of 3.8 percent per annum,

whereas real GDP per capita increased at an average yearly rate of

1 .6 percent. Over this period, Chile's economic performance was the

poorest among Latin America's large and medium-size countries.

As in most historical cases, Chile's import-substitution industrialization strategy was accompanied by an acute overvaluation

of the domestic currency that precluded the development of a

vigorous nontraditional (that is, noncopper) export sector. Although some agrarian reform was attempted, the government increasingly resorted to control-ling agricultural prices in order to subsidize the urban working and middle classes. The agricultural

sector was particularly harmed by the overvaluation of Chile's cur- rency. The lagging of agriculture became, in fact, one of the most

noticeable symptoms of Chile's economic problems of the 1950s

and 1960s. Over this period, manufacturing and mining, mainly

of copper, significantly increased their shares in total output.

By the early 1960s, most of the easy and obvious substitutions

of imported goods had already been made; the process of importsubstitution industrialization was rapidly becoming less dynamic.

For example, between 1950 and 1960 total real industrial production grew at an annual rate of only 3.5 percent, less than half the

rate of the previous decade.

During the 1950s, inflation, which had been a chronic problem

in Chile since at least the 1880s, became particularly serious; the

rate of increase of consumer prices averaged 36 percent per an- num during the decade, reaching a peak of 84 percent in 1955.

The main source of the inflationary pressure on the Chilean econ- omy was a remarkably lax fiscal policy. Chile's economic history

has been marked by failed attempts to curb inflation. During the

1950s and 1960s, three major stabilization programs, one in each

administration, were launched. The common aspect of these ef- forts was the emphasis placed on tackling the various consequences

of inflationary pressures, such as prices, wages, and exchange-rate

increases, rather than the root cause of money growth, the monetization of the fiscal deficit. In spite of the efforts of presidents Carlos

Ibanez del Campo (1927-31, 1952-58) and Jorge Alessandri

Rodriguez (1958-64), inflation averaged 31 percent per annum during these two decades. In 1970, the last year of the government

of President Eduardo Frei Montalva (1964-70), the inflation rate stood at 35 percent.

144
The Economy

During the 1960s, and especially during the Frei administration, some efforts to reform the economy were launched. These included an agrarian reform, a limited liberalization of the external sector,

and a policy of minidevaluations aimed at preventing the erosion

of the real exchange rate. Under the 1962 Agrarian Reform Law,

the Agrarian Reform Corporation (Corporacion de Reforma

Agraria—Cora) was created to handle the distribution, but land

reform proved to be slow and expensive. In spite of these and other

reforms, toward the end of the 1960s it appeared that the perfor- mance of the economy had not improved in relation to the previous

twenty years. Moreover, the economy was still heavily regulated.

The Popular Unity Government, 1970-73

In September 1970, Salvador Allende, the Popular Unity candidate, was elected president of Chile. Over the next three years, a unique political and economic experience followed. Popular Unity was a coalition of left and center-left parties dominated by the Socialist Party (Partido Socialista) and the Communist Party of Chile

(Partido Comunista de Chile—PCCh), both of which sought to implement deep institutional, political, and economic reforms.

Popular Unity's program called for a democratic "Chilean road

to socialism" (see Salvador Allende's Leftist Regime, 1970-73,

ch. 1). When Allende took office in November 1970, his government

faced a stagnant economy weakened by inflation, which hit a rate of 35 percent in 1970. Between 1967 and 1970, real GDP per capita had grown only 1.2 percent per annum, a rate significantly below the Latin American average. The balance of payments (see

Glossary) had shown substantial surpluses during all but one of

the years from 1964 to 1970, and, at the time Popular Unity took

power, the Central Bank of Chile (see Glossary) had a stock of in- ternational reserves of approximately US$400 million.

Popular Unity had a number of short-run economic objectives:

initiating structural economic transformations, including a program

of nationalization; increasing real wages; reducing inflation; spurring economic growth; increasing consumption, especially by poorer

people; and reducing the economy's dependence on the rest of the

world. The nationalization program was to be achieved by a combination of new legislation, requisitions, and stock purchases from

small shareholders. The other goals—output and increased con- sumption, with rising salaries and declining inflation—were to be

accomplished by a boost in aggregate demand, mainly generated

by higher government expenditures, accompanied by strict price

controls and measures to redistribute income.

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Chile: A Country Study

Allende's macroeconomic program was based on several key as- sumptions, the most important being that the manufacturing sec- tor had ample underutilized capacity. This provided the theoretical

basis for the belief that large fiscal deficits would not necessarily

be inflationary. The lack of full utilization was, in turn, attributed

to two fundamental factors: the monopolistic nature of the manufacturing industry and the structure of income distribution. Based on

this diagnosis, it was thought that if income were redistributed

toward the poorer groups through wage increases and if prices were

properly controlled, there would be a significant expansion of demand and output.

In regard to inflation, the Popular Unity program placed blame

on structural rigidities (namely, slow or no response of quantity

supplied to price increases), bottlenecks, and the role of monopolistic

pricing, and it played down the role of fiscal pressures and money

creation. Little attention was paid to the financial sector, given the

orientation of the new regime's economic technocrats toward the

import-substitution industralization, structuralist philosophy of the

Economic Commission for Latin America. In fact, Allende's minister of foreign relations and vice president, Clodomiro Almeyda, re- lates in his memoirs how in the first postelection meeting of the

economic team, these technocrats argued expressly and convincingly

that monetary and financial management did not deserve too much

attention. Alfonso Inostroza, the Central Bank president, stated

in early 1971 that the main objective of the monetary policy was

to "transform it into a key instrument ... to achieve the complete mobilization of productive resources, and their allocation to those areas that the government gives priority to . . .

. " This was

consistent with the view of inflation of those espousing structuralism (see Glossary).

The Popular Unity perspective on the way the economy functioned ignored many of the key principles of traditional economic

theory. This was reflected in the greatly diminished attention given

to monetary policies and also in the complete disregard of the ex- change rate as a key variable in determining macroeconomic equilibrium. In particular, the Popular Unity program and policies paid no attention to the role of the real exchange rate as a determinant

of the country's international competitive position. Moreover, Popular Unity failed to recognize that its policies would not be sustainable in the medium term and that capacity constraints were

going to become an insurmountable obstacle to rapid growth.

Economic Crisis and the Military Coup

After assuming power in November 1970, Popular Unity rapidly

146
The Economy

began to implement its program. In the area of structural reforms,

two basic measures were immediately begun. First, agrarian reform were greatly intensified, and a large number of farms were expropriated. Second, the government proposed to change the constitution

in order to nationalize the large copper mines, which were jointly

owned by large United States firms and the Chilean state. Government expenditures expanded greatly, and in 1971 real salaries and wages in the public sector increased 48 percent, on

average. Salaries in the private sector grew at approximately the same rate. In the first two quarters of 1971, manufacturing out- put increased 6.2 percent and 10.6 percent, compared with the same

periods in the previous year. Manufacturing sales grew at even

faster rates: 12 percent during the first quarter and 1 1 percent during the second quarter. Overall, the behavior of the economy in

1971 seemed to vindicate Popular Unity economists: real GDP grew

at 7.7 percent, average real wages increased by 17 percent, ag- gregate consumption grew at a real rate of 13.2 percent, and the

rate of unemployment dipped below 4 percent. Also, and more important for Popular Unity political leaders, income distribution improved significantly. In 1971 labor's share of GDP reached 61.7

percent, almost ten percentage points higher than in 1970. All of

this created a sense of euphoria in the government.

OnJune 11, 1971, Congress approved unanimously an amendment to the constitution nationalizing large copper mines. As a

result, reform of the banking system and large manufacturing firms was more difficult because the government lacked the institutional means to implement nationalization. Initially, this obstacle was

alleviated because the government purchased blocks of shares, es- pecially bank shares, at high prices. These share acquisitions were complemented by a process of requisition or expropriation of

foreign-owned companies based on an old, and until then forgotten, decree law promulgated during Marmaduke Grove Vallejo's

short-lived Socialist Republic of 1932.

All did not remain well in the economy in 1971. Popular Unity's macroeconomic policies were rapidly generating a situation

of repressed inflation. The high growth rate of GDP was largely

the result of an almost 40 percent increase in imports of intermediate

goods. The fiscal deficit had jumped from 2 percent of GDP in

1970 to almost 11 percent in 1971. The rate at which the money

supply grew exceeded 100 percent in 1971. As a result, the stock

of international reserves inherited by the Allende government was

reduced by more than one-half in that year alone. A rapid reduction of inventories was another important factor in the expansion

of consumption.

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Chile: A Country Study

By the end of 1971 , the mounting inflationary pressures had become evident. The economy was experiencing the consequences

of an aggregate demand for goods and services well above the ag- gregate supply at current prices. This imbalance was aggravated

by a series of labor disputes in many large establishments that result- ed in the takeover of those firms by their workers. In fact, this proce- dure became the institutionalized way in which the government

seized a large number of firms.

During 1972 the macroeconomic problems continued to mount.

Inflation surpassed 200 percent, and the fiscal deficit surpassed

13 percent of GDP. Domestic credit to the public sector grew at al- most 300 percent, and international reserves dipped below US$77

million.

The underground economy grew as more and more activities moved out of the official economy. As a result, more and more

sources of tax revenues disappeared. A vicious cycle began: re- pressed inflation encouraged the informal economy, thus reducing tax revenues and leading to higher deficits and even higher

inflation. In 1972 two stabilization programs were implemented,

both unsuccessfully.

When evaluating the problems faced by the economy, Popular

Unity economists generally held the view that the authorities had

failed to impose appropriate controls in implementing Allende's

program. This view guided the first, rather weak, attempt at stabiliz- ing the economy that was launched in February 1972. Price controls were the main ingredient of the program. By mid- 1972 it was

apparent that the February stabilization program was a failure. The underground economy was now widespread, output had begun to fall, open inflation reached an annual rate of 70 percent

in the second quarter, foreign-exchange reserves were very low,

and the black-market value of the currency was falling rapidly.

Parliamentary elections scheduled for March 1973 made the situ- ation particularly difficult for the government. In August 1972, a new stabilization program was launched under the political

monitoring of the PCCh. This time not only prices were officially

controlled, but the distribution channels were taken over by the

government in an attempt to reduce the extent of the black market.

Unlike the previous plan, the August 1972 stabilization program was based on a massive devaluation of the escudo (for value of the

escudo—see Glossary). The government expected that the result would be an easing of the mounting pressures on the balance of

payments. The program also called for two basic measures to contain fiscal pressures. First, nationalized firms were authorized to increase prices as a means of reducing the financing requirements

148
The Economy

of the newly formed nationalized sector. Second, the program called for a massive increase in production, especially in the recently nationalized manufacturing and agriculture sectors (large manufacturing firms and farms had been expropriated arbitrarily). The

devaluation and a large number of price increases resulted in an- nualized inflation rates of 22.7 percent in August and 22.2 per- cent in September.

In mid-August 1972, the government announced that it had draft- ed a new wage policy based on an increase in public- and privatesector wages by a proportion equal to the accumulated rate of

inflation between January and September. In addition, the new

policy called for more frequent wage adjustments.

During the first quarter of 1973, Chile's economic problems be- came extremely serious. Inflation reached an annual rate of more

than 120 percent, industrial output declined by almost 6 percent,

and foreign-exchange reserves held by the Central Bank were barely

above US$40 million. The black market by then covered a widening range of transactions in foreign exchange. The fiscal deficit con- tinued to climb as a result of spiraling expenditures and of rapidly

disappearing sources of taxation. For that year, the fiscal deficit ended up exceeding 23 percent of GDP.

The depth of the economic crisis seriously affected the middle

class, and relations between the government and the political opposition became increasingly confrontational. On September 11, 1973,

the regime came to a sudden and shocking end with a military coup

and President Allende's suicide.

When the military took over, the country was divided politically, and the economy was a shambles. Inflation was galloping, and

relative price distortions, stemming mainly from massive price controls, were endemic. In addition, black-market activities were rampant, real wages had dropped drastically, the economic prospects

of the middle class had darkened, the external sector was facing a serious crisis, production and investment were falling steeply,

and government finances were completely out of hand.

The Military Government's Free-Market Reforms, 1973-90

After the military took over the government in September 1973,

a period of dramatic economic changes began. Chile was trans- formed gradually from an economy isolated from the rest of the

world, with strong government intervention, into a liberalized,

world-integrated economy, where market forces were left free to guide most of the economy's decisions. This period was characterized by several important economic achievements: inflation was

reduced greatly, the government deficit was virtually eliminated,

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Chile: A Country Study

the economy went through a dramatic liberalization of its foreign

sector, and a strong market system was established.

From an economic point of view, the era of General Augusto

Pinochet Ugarte (1973-90) can be divided into two periods. The

first, from 1973 to 1982, corresponds to the period when most of

the reforms were implemented. The period ended with the international debt crisis and the collapse of the Chilean economy. At

that point, unemployment was extremely high, above 20 percent,

and a large proportion of the banking sector had become bankrupt.

During this period, a pragmatic economic policy that emphasized

export expansion and growth was implemented. The second period,

from 1982 to 1990, is characterized by economic recovery and the

consolidation of the free-market reforms.

Trade Policy

One of the fundamental economic goals of the military regime was to open up the economy to the rest of the world. However,

this was not the first attempt at liberalizing international trade in

Chile. Between 1950 and 1970, the country went through three

attempts at trade liberalization without ever reaching full liberali- zation. Moreover, all three attempts quickly ended in frustration

and in a reversion to exchange controls, the use of multiple ex- change rates, and massive quantitative restrictions. A particularly

interesting feature of the three attempts at liberalization is that,

although they took place under three different exchange-rate sys- tems, they all collapsed, at least in part because of a highly over- valued real exchange rate. Starting in 1974, Chile adopted unilaterally an open trade re- gime characterized by low uniform import tariffs, a lack of exchange

or trade controls, and minimum restrictions on capital movements.

Starting in 1979, Chile's trade policy became highly liberalized;

subsequently, there were no quantitative restrictions, licenses, or

prohibitions. A uniform import tax varying between 10 percent

and 35 percent took effect, and, until 1980, real exchange-rate over- valuation generally was avoided. By 1990 Chile was the only country, according to the World Bank, whose index of liberalization

reached the maximum possible level of 20, indicating an absence

of external-sector distortions.

In 1973 import tariffs averaged 105 percent and were highly dis- persed, with some goods subject to nominal tariffs of more than

700 percent and others fully exempted from import duties. In addition to tariffs, a battery of quantitative restrictions were applied,

including outright import prohibitions and prior import deposits of

up to 10,000 percent. These protective measures were complemented

150
The Economy

by a highly distorting multiple exchange-rate system consisting of

fifteen different nominal exchange rates. By August 1975, all quantitative restrictions had been eliminated, and the average tariff had

been reduced to 44 percent. This process of tariff reductions con- tinued until June 1979, when all tariffs but one (that on automobiles) were set at 10 percent. In the mid-1980s, in the midst of the

debt crisis, temporary tariff hikes were implemented; by 1989,

however, a uniform level of 15 percent had been established.

During the early period (1975-79) of the military regime, the

opening of Chile's external sector was accompanied by a strongly

depreciated real exchange rate. In 1979, however, the authorities

adopted a fixed-exchange-rate policy that resulted in an acute over- valuation of the Chilean peso (for value of the Chilean peso—see Glossary), a loss in international competititiveness, and, in 1982,

a deep crisis. In 1984-85 this situation was reversed, and a policy

of a depreciated and highly competitive real exchange rate was implemented. The combination of these two policies—low tariffs and

a competitive real exchange rate—had a significant impact on

Chile's economic structure. The share of manufacturing in GNP

dropped from almost 29 percent in 1974 to 22 percent in 1981.

Productivity in tradable sectors grew substantially, and exports be- came highly diversified. Chile had also diversified its export markets, with the result that no individual market bought more than

20 percent of the country's total exports. By the early 1990s, exports

had become the engine of growth, and the Chilean trade reform was

winning praise from multinational institutions and observers of dif- ferent ideological persuasions. Largely thanks to the boom in ex- ports between 1986 and 1991, particularly the increasing growth

in exports of fresh fruits and manufactured products, Chile ex- perienced the highest rate of GDP growth in Latin America (the

''Chilean miracle"), with an annual increase of 4.2 percent.

In what was perhaps the surest sign of the success of trade re- form, the new democratic government of President Patricio Aylwin Azocar (1990-94), elected in December 1989, decided to continue the opening process and reduced import tariffs to a uniform 11 percent. Interestingly, Aylwin's economic team, including the minister of finance and the minister of economy,

development, and reconstruction, had been relentless critics of the

trade reform process during its implementation in the mid- and

late 1970s.

Banking Reform and the Financial Sector A major policy objective of the military regime was the liberali- zation and modernization of the banking sector. Until 1973 the

151
Chile: A Country Study

domestic capital market had been highly repressed, with most banks

being government owned. Real interest rates were negative, and

there were quantitative restrictions on credit. The liberalization

process began slowly, in early 1974, with the sale of banks back

to the private sector, the freeing of interest rates, the relaxation

of some restrictions on the banking sector, and the creation of new

financial institutions. International capital movements, however, were strictly controlled until mid- 1979. In June 1979, the government decided to begin to liberalize the capital account (see Glossary) of the balance of payments, lifting some restrictions on medium- and long-term capital movements.

The opening of the capital account resulted in a massive inflow

of foreign capital that contributed to Chile's subsequent international debt problems. In 1980 capital inflows were more than double

those of 1979—US$2.5 billion versus US$1.2 billion—and in 1981

the level of capital inflows nearly doubled again, to US$4.5 billion. An important result of the reforms of the financial sector was

that the number of financial institutions and the volume of financial intervention both increased greatly. For example, in 1981 there were twenty-six national banks, nineteen foreign banks, and fifteen savings and loan institutions (financieras) , a number significantly

higher than the eighteen national banks and one foreign bank in

operation in September 1973. Furthermore, between 1973 and 1981

the real volume of total credit to the private sector increased by more than 1,100 percent.

At least in terms of increasing the degree of financial intermediation, liberalization was a success. However, it was apparent from

the beginning that capital-market liberalization faced three major

obstacles. First, interest rates were very high. Second, in spite of

the significant growth in the extent of financial intermediation,

domestic savings had not increased to the extent that the proponents of the reforms had expected. In fact, domestic savings were

at one of their lowest levels in history from 1974 to 1982. There

are several possible explanations for the behavior of domestic savings. One of the most popular of these relies on the notion that

the appreciation of domestic assets that was taking place at the time,

such as stocks and land prices, resulted in a real accumulation of

assets without saving. This increase in private-sector wealth was

consistent with higher levels of consumption at a given income.

Third, and perhaps more important, the rapid growth of the financial sector took place in an environment in which monetary authorities exercised no supervision. As a result, many banks accumulated an unprecedented volume of bad loans, a situation that led to the

financial crisis of 1982-83. As a consequence of this crisis, a number

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The Economy

of banks went bankrupt during 1983-84, were placed temporarily

under government control, and then were reprivatized. By 1992,

after monetary authorities had learned the hard way the importance of bank supervision, Chile's financial sector had become highly stable and dynamic.

Rural Land Market Reform

At the time of the military coup, about 60 percent of Chile's ir- rigated land and 50 percent of total agricultural land was under

the control of the public sector. Land reform had started in the 1960s

with expropriations of large landholdings (those larger than eighty

basic irrigated hectares—BIH) and the encouragement of small

farms (about 8.5 BIH) managed by their owners. The Allende administration favored large-scale farms under cooperatives and state- farm management over private ownership of agricultural land.

Starting in 1974, the military government began using Cora to end

agrarian reform by distributing land to establish family farms with

individual ownership. In a period of three years, 109,000 farmers

and 67,000 descendants of the Mapuche had been assigned property

rights to small farms. About 28 percent of the expropriated land was returned to previous owners, and the rest was auctioned off. Three key legal issues were then clarified by decree law in 1978.

Government authority to expropriate land was repealed, the ceil- ings on landholdings (the equivalent of eighty BIH) were removed,

and the ban on corporate ownership of land was eliminated. At

the end of 1978, all farmland owned publicly had been distributed, and Cora was legally closed.

Reforms in the legislation that regulated land rentals and land

subdivisions in 1980 added flexibility to the rural land markets.

But perhaps more crucial aspects of the reforms were the separation of water rights from the land itself and the legal possibility

of transferring water titles independently of land transactions.

Labor-Market Reform

Immediately after the 1973 coup, many labor institutions, that

is, traditional channels of influence, such as government offices,

which unions used to get their voices heard, were disbanded, and some important unions were dissolved. Thus, wage adjustments

became mainly a function of indexation, which, given Chile's his- tory of inflation, had become an established element of any wage

negotiation. Indexation was kept in place until 1982, through ten

years of declining inflation.

Starting in October 1973, the government mandated across-theboard periodic wage adjustments tied to the rate of inflation. Lower

153
Chile: A Country Study

wages were adjusted proportionally more than higher ones. From

1973 to 1979, indexation to past inflation with varying lags was

the norm throughout the economy. The 1979 Labor Plan formalized this practice by requiring that collective bargaining agreements

allow for wage adjustments at or above the rate of inflation. In 1982

the indexation clause of the Labor Plan was eliminated. The government continued the practice of periodically announcing wage re- adjustments and bonuses, with the wage increases usually not

keeping pace with inflation and covering the nonunionized sector only. The dynamism of the economy in the early 1990s resulted

in actual wage increases above officially announced readjustments.

The Employment Security Law established that in the absence

of "just cause" for dismissal, such as drunkenness, absenteeism,

or theft, a dismissed employee could be reinstated to the job by

a labor court. This law was replaced by a less costiy system of sever- ance payments in 1978. Decree Law 2,200 authorized employers

to modify individual labor contracts and to dismiss workers without

"cause." A minimum severance payment was established that was

equivalent to one month of salary per year of service, up to a max- imum of five months' pay. This new system applied to all contracts signed after August 1981.

The changes introduced by Decree Law 2,200, along with the

1979 reforms, which established new mechanisms to govern

union activity (Decree Law 2,756) and collective bargaining (Decree

Law 2,758), became known in Chile as the Labor Plan. Decree

Law 2,756 departed significantly from traditional legislation:

union affiliation within a company became voluntary, and all negotiations would now have to be conducted at the company level; bargaining among many companies would be eliminated. According to the previous law, which had applied until the 1973 coup, once the majority of the workers of an enterprise chose to join an

"industrial union," all workers became part of that union. That

is, one union would have exclusive representation of all workers

in an enterprise. The right to collective bargaining was granted

to unions at the enterprise level and also to union federations and

confederations. This resulted in some negotiations at the industry

level with the participation of the Ministry of Labor and Social

Welfare through the Labor Inspectorate. As in the past, the new

law required participation of 10 percent of the workers or a minimum of twenty-five workers (whichever was greater) for creation

of a union. Workers were not required to be represented by a union in collective bargaining.

Decree Law 2,758 stipulated that in the event of a strike, a firm

could impose a lockout and temporarily lay off workers, which the

154
Farmers at work in the Maule Norte irrigation

project near Talca

Courtesy Inter-American

Development Bank

previous law had prohibited. At the same time, Decree Law 2,758

established norms about collective bargaining, and in its Article

26 the law established that unionized workers' nominal wages should

be adjusted to at least match the rate of inflation. This article, which

became a severe constraint to downward real wage flexibility during the 1982-83 crisis, can be understood only in the context of a previously existing policy of 100 percent indexation across the

board. In 1982, at the onset of the debt crisis, Article 26 was amended, eliminating the downward inflexibility of real wages. This

reformed law was in effect until April 1991 , when some important

changes proposed by the Aylwin administration were approved by

the National Congress (hereafter, Congress).

Public Employment Programs

Two public employment programs affected the labor market

during the period of economic reforms between 1975 and 1987.

The Minimum Employment Program (Programa de Empleo

Mmimo—PEM) was created in 1975 at a time when unemployment had reached record levels. The program, administered by

local governments, paid a small salary to unemployed workers, who,

for a few hours a week, performed menial public works. At first, the government tightly restricted entry into the program. Gradually,

most of these restrictions were lifted, and a larger number of un- employed people were allowed to participate. Thus, the proportion

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Chile: A Country Study

of the labor force employed by the program remained virtually constant between 1977 and 1981, despite the economic recovery and

a reduction in the real value of PEM compensation.

When Chile entered a new and more severe recession, the number of individuals employed by PEM in the Metropolitan Region

of Santiago increased from about 23,000 in May 1982 to 93,000

in May 1983. An Employment Program for Heads of Household

(Programa de Ocupacion para Jefes de Hogar—POJH), created

in October 1982, employed about 100,000 individuals in the greater

Santiago area by May 1983. The two programs combined absorbed more than 10 percent of the labor force of the greater Santiago area

in May 1983. These programs were also implemented in other

regions of the country. The PEM program was cut back drastically

in February 1984. Likewise, by December 1988, there were only

about 5,000 individuals employed by the POJH in the entire

country.

The Debt Crisis: Further Reforms and Recovery

The international debt crisis unleashed in 1982 hit the Chilean

economy with particular severity, as foreign loans dried up and

the international terms of trade (see Glossary) turned drastically

against Chile. The policies implemented initially to face the 1982

crisis can best be described as hesitant. In early 1983, the financial sector was nationalized as a way to avoid a major banking crisis, and a number of subsidy schemes favoring debtors were enacted.

The decision to subsidize debtors who had borrowed in foreign cur- rency during the period of fixed exchange rates and to bail out the

troubled banks resulted in heavy Central Bank losses, which contributed to the creation of a huge deficit in public-sector finance.

This deficit, in turn, would become one of the underlying causes

of the inflation of the early 1990s. Different exchange-rate systems were tried, including a floating rate, only to be abandoned rapidly

and replaced by new plans. Policies aimed at restructuring the

manufacturing sector, which had entered a deep crisis as a conse- quence of the collapse of some of the major conglomerates, the so- called groups (grupos), were implemented. In spite of this array of

measures, the economy did not show a significant response; un- employment remained extraordinarily high, and the external crisis, which some had expected to represent only a temporary setback,

dragged on. In early 1985, increasingly disappointed by the economy's per- formance, Pinochet turned toward a group of pragmatic economists

who favored free markets and macroeconomic stability. Led by

newly appointed finance minister Hernan Buchi Buc, an economist

156
The Economy

who had studied business administration at Columbia University,

the new economic team devised a major adjustment program aimed

at reestablishing growth, reducing the burden of the foreign debt,

and rebuilding the strength of the financial and manufacturing sectors. Three policy areas became critical in the implementation of

the program: active macroeconomic policies, consolidation of the

market-oriented structural reforms initiated in the 1970s, and debtmanagement policies geared toward rescheduling debt payments

and making an aggressive use of the secondary market. With the

help of the International Monetary Fund (IMF—see Glossary), the

World Bank, and improved terms of trade, these policies succeeded in achieving their objectives.

The macroeconomic program of a group of Chilean economists

known as the "Chicago boys" (see Glossary), who had guided

Pinochet's early economic policies, had relied on a hands-off "automatic adjustment" strategy. By mid- 1982 this approach had

generated a severe overvaluation of the real exchange rate. By

contrast, the new macroeconomic program relied on active and

carefully monitored macroeconomic management. An active

exchange-rate policy, based on large initial exchange-rate adjustments followed by periodic small devaluations, became one of the

most important policies of the post- 1982 period. Between 1982 and

1988, the international competitiveness of Chilean exports was in- creased greatly by a real exchange-rate depreciation of approximately 90 percent. This policy not only helped generate a boom

in nontraditional exports but also contributed to reasonable interest- rate levels and to the prevention of capital flight.

The adjustment program that started in 1985 also had a struc- tural adjustment component that was aimed at consolidating the

market-oriented reforms of the 1970s and early 1980s, including

the privatization process, the opening of the economy, and the development of a dynamic capital market. There were several struc- tural goals of the 1985 program: rebuild the financial sector, which

had been nearly destroyed during the 1982 crisis; reduce import

tariffs below the 35 percent level that they had reached during 1984

to a 15 percent uniform level; and promote exports through a set of fiscal incentives and a competitive real exchange rate. Perhaps the most important aspects of these structural reform measures were the privatization and recapitalization of firms and

banks that had failed during the 1982-83 crisis. As a first step in

this process, the Central Bank bought private banks' nonperforming

portfolios. In order to finance this operation, the Central Bank

issued domestic credit. The banks, in turn, paid a rate of 5 per- cent on the nonperforming portfolios and promised to repurchase

157
Chile: A Country Study

them out of retained profits. This recapitalization program had as

its counterpart a privatization plan that returned the ownership

of those banks and firms that had been nationalized in 1983 to the

private sector. Economist RolfJ. Liiders estimates that about 550

enterprises under public-sector control, including most of Chile's

largest corporations, were privatized between 1974 and 1990. By

the end of 1991 , fewer that fifty firms remained in the public sector. The overall privatization program undertaken after 1985 has

been criticized by some Chileans and also by some international

economists because banks and manufacturing firms were sold too

rapidly and at "very low prices."

Chile's structural adjustment of the second half of the 1980s was

unique in comparison with the rest of the world. The most difficult,

controversial, and costly reforms—including the bulk of privatization, trade liberalization, financial deregulation, and labor market

streamlining—were undertaken in Chile in the 1975-80 period;

the measures taken after 1985 were minor in comparison. The success of the post- 1985 period was rooted in the early reforms. For

example, the boom in nontraditional exports that took place in the

second half of the 1980s was only possible because of investments

begun almost ten years before. The markets' flexible and rapid

response to incentives was also a direct consequence of the microeconomic reforms of the 1970s.

One of the most hotly debated issues of the Chilean recovery

of the second half of the 1980s concerns the different foreign-debt

conversion plans aimed at rapidly reducing foreign indebtedness.

When the debt crisis erupted in 1982, Chile's foreign debt was US$17.2 billion, one of the highest debts per capita in the world.

Through the aggressive use of a variety of debt-conversion plans,

between 1985 and 1991 Chile retired an estimated US$10.5 bil- lion of its debt, most of which was converted into equity in Chilean

companies.

Chile's net international reserves totaled US$9 billion in 1992,

enough to cover a year of imports and equivalent to roughly half

of its foreign debt. The stock of foreign direct investment in Chile was estimated to be between US$10 billion and US$13 billion,

roughly 30 percent of GDP. About US$4 billion of this was ac- quired through debt-equity conversions. The debt-swap program

was ended when the growth of direct investment and the strength

of the economy had done away with the need for special incentives to attract foreign capital.

The Return to Democracy, 1990

On March 11, 1990, General Pinochet handed the presidency

158
A view of the Trans-Andean Highway, the most important road

link between Argentina and Chile

Courtesy Inter-American Development Bank

of Chile to Patricio Aylwin. When Aylwin's Coalition of Parties

for Democracy (Concertacion de Partidos por la Democracia

CPD) government took over, Chile had the best performing econ- omy in Latin America.

Continuity in Economic Policy

For years, opponents of the Pinochet government had argued

that its economic program was based on ideas alien to the Chilean

tradition. In early 1990, analysts, scholars, stockbrokers, and politicians throughout the world wondered if the new democratic

government of President Aylwin would maintain some, or for that

matter any, of the most important aspects of the military government's market-oriented policies, or if the CPD government would

reform the system along the lines of the decade-long criticisms of

the opposition. What made this question particularly interesting was that at the time of the restoration of democracy, Chile was

considered by many, including international institutions such as the World Bank and the IMF, as a premier example of the way

the adjustment process after the debt crisis should be carried out. A number of analysts asked themselves how the advent of democracy would affect Chile's economic policy. In particular, analysts were

159
Chile: A Country Study

concerned about the new government's attitude toward the free price system and Chile's new openness to international competition.

Regarding price competition, the Aylwin program's position was

stated as follows: "We affirm that within an efficient economic policy there is no role for price controls.

'

' In discussing the role of the

market, the program noted: "The market cannot be replaced as a mechanism for consumers to articulate their preferences." These

views were a far cry from those sustained by Frei's Christian

Democratic government of the 1960s and, especially, from those

of Allende's Popular Unity government of 1970-73. They were

also substantially different from those of the new market critics of

the 1970s and mid-1980s. Indeed, the CPD program conveyed that

there had been a significant convergence of domestic views on the

role of markets in the economic process. Addressing the opening of the economy to the rest of the world,

the CPD program stated: ' 'The most important instruments of the

external sector policy are the maintenance of a stable high real ex- change rate and a reasonably low import tariff [emphasis added].

This statement suggests that from its onset the Aylwin government was not prepared to implement major changes to one of the most

fundamental features of Chile's new economics.

Emphasis on Social Programs

In seeking funding for new social programs, the Aylwin government made clear immediately that the only way of increasing social spending without generating unsustainable macroeconomic

pressures was by finding secure sources of government revenue. Economists associated with Aylwin' s CPD coalition calculated in

1989 that in order to implement their antipoverty social programs,

annual funds on the order of 4 percent of GDP would be required.

They argued that these resources could be obtained through a combination of expenditures, reallocation, foreign aid, and increased

tax revenues. In order to implement these programs rapidly, in

April 1990 President Aylwin submitted to the newly elected Congress a legislative proposal aimed at reforming the tax system. The

main features of the package were the following: the corporate

income-tax rate was to be increased temporarily from 10 percent

to 15 percent for 1991-93; and the tax base, which in 1985 had

been defined as distributed profits, was to be broadened to include

total profits. The progressiveness of the personal income tax was

to be increased by reducing the income level at which the maximum rate was applicable; and the rate of the value-added tax (VAT—see Glossary) would be increased to 18 percent from 16

percent. During most of the Pinochet government, the VAT rate

160
The Economy

had been 20 percent. It was only reduced to 16 percent prior to the electoral contest before the plebiscite on Pinochet's continuation in power. After intense and often frustrating negotiations between the Aylwin administration and the opposition, the tax reform was approved in late 1990.

Pinochet's labor reforms of 1978-79 had been, from the beginning, strongly criticized by the opponents of the military regime.

Although the 1979 decrees had modernized labor relations in some

areas, they had also severely limited the activities of unions and,

as initially conceived, had made real wage rates unusually rigid.

Reforming the labor plan was an important priority of the new

democratic government.

After the support of some opposition senators was obtained, a mild labor reform was passed in 1991. An important characteristic of Chile's constitution of 1980 is that it stipulates the seating

of nine nonelected senators in the legislature's upper house, as well

as former presidents and former justices of the Supreme Court.

The CPD coalition lacked a parliamentary majority because the

nonelected senators had been appointed by Pinochet. Consequendy,

in order to approve legislation it had to obtain support from the

opposition for some measures. The new labor legislation restricted the causes for firing employees, increased the compensation that firms had to pay to lay

off employees, and restricted employers' recourse to lockouts.

Although there was little doubt that these new regulations had in- creased the cost of labor, it was too early to know the effect of the

new legislation on job creation. It was known, however, that the

reform of labor laws by a democratically elected government had

greatly legitimated the modernization of labor relations. In a way,

the concept of labor-market flexibility had ceased to be associated

exclusively with the authoritarian military regime and had become

generally accepted by the population at large.

The Current Structure of the Economy

A World Bank study shows that after the trade liberalization of

the 1970s, Chile experienced a substantial increase in productivity.

This study also shows that in the 1987-91 period, Chile's productivity increased much more than that of any other country in

Latin America. Chile's national accounts for 1989-91 show a number of interesting features (see table 20, Appendix). First, the share

of agriculture, livestock, and forestry in GDP decreased during these

three years from 8.1 percent to 7.9 percent. This short-term trend,

however, was somewhat misleading. In 1971 the share of GDP generated by agriculture, livestock, and forestry had been 7.4 percent.

161
Chile: A Country Study

From a historical perspective, the increase in the relative importance of the primary sector in a twenty-year span—from 7.4 per- cent to 7.9 percent of GDP—was somewhat of an anomaly. A

well-documented trend is that in the vast majority of countries,

as income and output expand and national economies become more

developed, this sector generates a smaller share of GDP. In the case of Chile, the absence of this phenomenon can be explained

by the drastic structural reforms implemented in the second half

of the 1970s and in the 1980s. An important consequence of the

market-oriented reforms of the Pinochet government was the elimination of discrimination against export agriculture that had

characterized the Chilean economy during the decades of importsubstitution industrialization. The level of productivity of the agricultural sector (measured as crop yields) had increased significantly

by the early 1990s (see Agriculture, this ch.).

A second important feature of Chile's national accounts in

1 989-9 1 is that the manufacturing sector represented approximately

21 percent of GDP for the period. This was significantly lower than

this sector's share of total output in 1969-70, when it was almost

25 percent. The reduced participation of manufacturing also reflect- ed the structural reforms of the 1970s and 1980s. Those policies

had eliminated the protection walls that had artificially encouraged

Chile's industrial sector during the 1960s.

The share of mining in GDP remained roughly constant from

1967 to 1992. However, the composition of mining production

changed substantially; in particular, there was a drop in the importance of copper mining. Also, construction's share of GDP

shrank from 7.7 percent of GDP in 1970 to 6.0 percent in 1992.

During the same period, the share of services increased from 26

percent to 29.1 percent. Within this sector, a particularly significant increase occurred in the financial area (see fig. 8).

Industry and Manufacturing

The Chilean manufacturing sector experienced strong performance in the 1985-91 period, and the Industrial Development Association (Sociedad de Fomento Fabril—Sofofa) expected a 7 percent to 10 percent increase in industrial output in 1992. (The

sector actually grew 12.3 percent during the first three quarters.)

Between 1985 and 1991, the manufacturing sector grew at an aver- age annual rate of 6.2 percent, a figure that compared favorably

with the average rate for the 1960s of 5.1 percent per annum.

However, in spite of the dynamic behavior of manufacturing as a

whole, the development of different industries within the sector was

uneven. Some industries were able to exploit Chile's comparative

162
The Economy

advantages, expanding at a rapid pace. In many cases, this ex- pansion was the result of the development of new international markets and of rapidly growing exports. Other industries, however, were victims of drops in relative prices, caused either by trade liber- alization or by loss of international buyers, and were forced to reduce their scope of operations.

The major industries of the Chilean economy in the late 1980s

and early 1990s were agriculture and food products, textiles and

clothing, nonelectrical machinery, transportation equipment, and

industrial chemicals. As noted previously, the performance of in- dividual industries was uneven (see table 21, Appendix). Although

foodstuffs, furniture, and glass products experienced strong expansion, other industries had a lower level of output in 1991 than in

1979.

For decades, wine has been one of Chile's best-known products,

and wineries were expected to experience double-digit growth in

the 1990s. Exports of wine increased during the 1970s, primarily

to the United States, reaching US$31 .9 million in 1989. Total wine

exports in 1992 were estimated at US$127 million. By that year, Chile had become the third largest exporter of wine to the United

States, behind Italy and France.

Not surprisingly, those sectors that had shrunk since the early

1980s, such as footwear and transportation equipment, were those

that had been hardest hit by increased foreign competition.

However, the firms that finally survived in these sectors did so by

adapting to the new external circumstances and by finding ways

to rapidly increase productivity. In 1992 the transportation equipment sector was the most dynamic of all, increasing output at an

annual rate of 46 percent.

Mining

Although copper's relative importance declined in the 1970s and

1980s, it was still the Chilean economy's most important product

in 1992. The mining sector represented 6.7 percent of GDP in 1992,

as compared with 8.9 percent in 1985. In 1991 copper exports

represented 30 percent of the total value of exports, a substantial

decline with respect to the 1960s, when it represented almost 80

percent of total exports. Mining exports in general accounted for about 48 percent of total exports in 1991.

Since the late 1970s, the production of gold and silver has in- creased greatly (see table 22, Appendix). The lead, iron, and

petroleum industries have shrunk since the mid-1970s, the result of both adverse international market conditions and declines in the

availability of some of these resources. With a combined total value

163
Chile: A Country Study

FY 1992 - GDP US$33.7 billion

Services

(including financial services) 29.1% /

Agriculture and forestry 7.4%

Transportation and

communications

7.6%

Fishing 0.8%

*w//\Mining 6.7%

sX Electricity, gas, and water ^ 2.5%

Construction 6.0%

Manufacturing

20.8%

Trade 19.1%

Source: Based on information from Economist Intelligence Unit, Country Report: Chile [London], No. 2, 1993, 11.

Figure 8. Gross Domestic Product (GDP) by Sector, 1992

of about US$4 billion, two of the largest investments planned in

Chile in the early 1990s were designated for aluminum-smelter

projects in the Puerto Aisen and Strait of Magellan areas. Two developments in the copper sector were noteworthy. First,

in the 1987-91 period there was a substantial increase in the out- put of refined copper, as well as a relative decline in the production

of blister copper (see table 23, Appendix). Second, the state-owned

Copper Corporation (Corporation del Cobre—Codelco), the world's

largest copper producer, still had an overwhelmingly dominant role (accounting for 60 percent of Chile's copper output in 1991). The

so-called Codelco Law of April 1992 authorized Codelco for the

first time to form joint ventures with the private sector to work

unexploited deposits. Thus, in a major step for Codelco, in 1992

it invited domestic and foreign mining firms to participate in four

joint explorations in northern Chile. Foreign-owned private firms were to become increasingly important as new investment projects

got under way. The heightened importance of these foreign pri- vate firms in large-scale copper mining also resulted from the in- ternational business community's improved perception of Chile and

from a mining law enacted during the Pinochet regime that clearly established compensation rules in the case of nationalization and

164
The Economy

otherwise encouraged investment in this sector. Given this more

favorable context, Phelps Dodge, a United States mining company, and the Sumitomo Metal Mining Company, a Japanese firm,

signed a US$1 .5 billion contract in 1992 with the Chilean government to develop La Candelaria, a copper and gold mine south of

Copiapo. The mine's potential production of refined copper was

equivalent to about 10 percent of Codelco's entire production.

Despite the decline in copper's importance, Chile continued to be affected by the vagaries of the international copper market. The

high variability of copper prices affects the Chilean economy, particularly the external accounts and the availability of foreign ex- change, in several ways. In the 1987-91 period, the international

copper market was very favorable; for example, copper prices in

1989 were 50 percent higher than in 1980. By May 1992, however,

the price of copper had declined to about its 1980 level. The government decided to counteract the effect of the variability of copper

prices by creating the Copper Stabilization Fund, which works as

follows: whenever the price of copper increases, the government

directs a proportion of the increased revenues into the fund; these resources will then be used during those years when the price of

copper falls below its "normal" level. This institutional development has helped Chile at least partially free itself from the volatili- ty of the copper market.

Agriculture

As a result of land appropriations from 1970 to 1973, extensive

disinvestment occurred in the agricultural sector. The Pinochet

government reversed this trend by returning lands to previous owners and providing incentives for increased exports. Although Chile was basically a net importer of agricultural goods from 1960 to 1970,

by 1991 agricultural exports, as well as forestry and fishing exports, were becoming increasingly important in the economy. Whereas

in 1970 Chile exported US$33 million in agriculture, forestry, and

fishing products, by 1991 the figure had jumped to US$1.2 bil- lion. This figure excluded those manufactured goods based on the

products of the agriculture, livestock, and forestry sectors. In the 1989-91 period, exports of fresh fruits became increasingly important (see table 24, Appendix). Data also indicate that

production of grapes, pears, lemons, and peaches was expanding

rapidly (see table 25, Appendix). However, the country's virtual

monopoly on grape exports during the Northern Hemisphere's

winter season is likely to disappear as other potential giants, such

as Argentina, begin to compete. The fruit-packing industry also expanded greatly, providing seasonal employment to thousands of

165
Chile: A Country Study

workers in its refrigerated plants. Although fruit production takes

place in small to medium-size landholdings, fruit-packing plants are very large operations. Indeed, six of the major fruit-packing

plants generate more than half of all the boxes exported.

Chile's success in export agriculture is not confined to fruits. Also increasing significantly is production of more traditional crops, many of which are devoted primarily to domestic consumption.

Much of the increased agricultural production in the country is the result of rapidly improving yields and higher productivity (see

table 26, Appendix). These figures are particularly impressive if compared with historical data. For example, in the 1969-70 agricultural year, wheat's yield is 12.5 quintals per hectare, that of corn was 32.4 tons per hectare, and that of potatoes was 95.4 tons per

hectare. By 1990-91 these yields had increased to 34.1 quintals

of wheat per hectare, 83.9 quintals of corn per hectare, and 142.2

quintals of potatoes per hectare.

Fishing and Forestry

Chile is well endowed in fish and forest resources. Since the 1980s,

output has increased rapidly in both sectors, and exports have

boomed. An increasing proportion of these sectors' output is being

processed, appearing in the economic statistics as manufactured

products.

Fishing

The cold waters of South America's western coast are rich in

fish and contain a wide variety of shellfish. For instance, about

800 varieties of mollusks are found there, including the largest abalones and edible sea urchins in the world. Some species, such as the abalones, have been depleted to the point that they cannot be

harvested legally. About 750 kilometers from the mainland, the

waters surrounding the Islas Juan Fernandez are much warmer

and contain different types of fish and shellfish, including lobster. Fishing expanded rapidly starting in the late 1970s. By 1983 Chile was ranked fifth in the world in catch tonnage and has become the

world's leading exporter of fish meal. Despite naturally caused year- to-year variations, the volume of the total fish catch has increased over the long term. For example, in 1970 the total catch was 1.2

million tons, but the figures increased to 2.9 million tons in 1980

and 6.3 million tons in 1989. The total catch was about 5.4 million tons in 1990, according to Central Bank data. Total fish caught

in 1991 reached 6 million tons, and fishing exports totaled US$1 .

1

billion, up 21 percent from 1990 and 138 percent from 1985

(see table 28, Appendix). Of the 1991 figure, fish meal accounted

166
A worker pauses while

unloading grapes at a packing shed in Mayoco,

a farming community

near Santiago.

Courtesy Inter-American

Development Bank

for US$466 million. Fish exports rose to 6.5 million tons in 1992.

Salmon production was expected to reach 46,000 tons in 1992,

earning about US$250 million and turning the country into the

third largest producer in the world (after Norway and Canada).

Starting with fifty- three tons in 1981 , the explosive growth in salmon

production and exports reflected the combination of perfect natural

conditions for its cultivation in the south with the successful adaptation of modern technology.

By the early 1990s, a lack of fishing regulations was threatening some species and giving the large fishing fleets advantages over

the smaller- scale, traditional fishermen who use small boats. After

long debate, Congress approved the new General Fishing Law in

July 1991 . The law's purpose was to encourage investment in commercial fishing by ensuring the conservation of hydrobiological

resources, by protecting against overfishing, by reserving for tradi- tional fishermen an exclusive eight-kilometer strip of coastal waters,

and by promoting fishing research. The infrastructure plan also included providing resources for developing large and small ports

for industrial and traditional fishing. Total output of industrialized fish products was expected to increase significantly with new

investments during the 1990s. Both the good catches in the 1989-91

period and the openness of the regulations had prompted Chilean

companies to invest a total of US$100 million and to build nearly

twenty boats.

167
Chile: A Country Study

Forestry

Beginning in 1975, the planting and exploitation of forests was

subsidized heavily by the state, which remitted 70 percent of the

cost of planting new areas with trees, exempted such lands from

taxes, and permitted a 50 percent deduction for tax purposes from

the profits generated from cutting the forests. The forestry policy

of the military government was a major exception to its free-market

approach and stimulated a significant expansion of forested land.

Chile's forested land is highly concentrated in the hands of a few major companies, principally those connected with the flourishing paper industry and with the national oil company. About 90

percent of all the wood harvested comes from plantations that were

established, beginning in the early 1960s, on land of poor quality

that originally had been cleared of forests for the growing of wheat

and other crops. Reforestation, mostly with pine but also increasingly with eucalyptus, has continued at a faster pace than the cut- ting of the forests, thereby ensuring ample supplies for the

foreseeable future (see table 28, Appendix). It is thought that the

volume of production could double 1990 levels by the year 2000.

The public sector is playing a drastically smaller role in foresttry. This diminution of the public sector's role is the result of the

general tendency in the country toward reducing, and even

eliminating, directly productive government activities. In 1992 the

forestry industry was objecting strongly to the new powers that the

Aylwin government was proposing to confer on the National Forestry Corporation (Corporacion Nacional Forestal—Conaf) to protect native forests. Whereas exports of basic—that is, nonmanufactured—forestry

products had declined by the early 1990s, exports of manufactured

wood products had almost doubled. This doubling of manufactured

wood exports meant that instead of exporting raw logs, Chile is increasingly adding value to its forest products and is producing

such items as milled boards, pulp, paper, and cardboard (see ta- ble 24, Appendix). The main market is Japan, which absorbed 25

percent of the value of exports in 1 993 , followed by the United States and Germany, with 8 percent each. Chile's print industry was en- joying a boom in the early 1990s, supplying books and magazines

to neighboring countries, especially to Argentina (which accounted for 75 percent of overseas sales) and Brazil (12 percent). Exports of books and magazines grew by 90 percent in 1992 to about

US$70 miUion.

Under study in 1992 was a bill to regulate Chile's shrinking but

still large native old-growth forests, which totaled 7.62 million

168
A team of Antofagasta fishermen repairing their nets after the morning's catch Courtesy Inter-American Development Bank

169
Chile: A Country Study

hectares out of 8.86 million hectares of woodland (the remaining

1.24 million hectares are plantations). Chile's forestry industry has

worked mostly on plantations of radiata pine, the raw material used

for making pulp. But the country's native forests are in need of

management to avoid extinction or indiscriminate harvesting of

slow-growing species and the resultant erosion and loss of land for future plantations of new species. During 1991, about 107,000 hectares were planted.

Energy

Chile derives its energy mainly from petroleum and natural gas

(60 percent), hydroelectric power (25 percent), and coal (15 percent) (see fig. 9). Unlike other countries in Latin America, Chile

has been able to make effective plans for the development of the

electricity sector. No bottlenecks are expected in this sector, and

most analysts predict that it will continue to expand at a healthy

pace. The country is endowed with ample hydroelectric resources and has an extensive electric net formed primarily by hydroelectric plants. For example, the Tocopilla station feeds electricity to the huge Chuquicamata and La Escondida copper mines, as well

as to cities in northern Chile. An interesting feature of the system

is that, although the central net is thoroughly interconnected, there

are many individual producers. Since the late 1980s, there has been

a marked increase in the importance of small ("other") producers

(see table 29, Appendix).

As part of the final stages in the Pinochet regime's privatization process, beginning in 1985 the two large state-owned utilities, the

National Electric Company (Empresa Nacional de Electricidad

ENDESA) and the Chilean Electric Company (Compania Chile- na de Electricidad—Chilectra), both Corfo subsidiaries, were privatized. Now the entire electricity sector basically is run by private

companies. The government, however, established a supervisory

system that ensures electricity companies a fair return. This keeps

prices under reasonable control.

Domestic petroleum production has suffered a steady decline since

1982, from 2.48 million cubic meters to 1 .38 million cubic meters

in 1990, a reduction of 46 percent. In an environment of fast eco- nomic growth and rising demand for energy, this decline in production has translated into a much faster decline in the share of domestic

production in total consumption. Although domestic production

satisfied 35 percent of domestic consumption in 1986, in 1992 it met only 13 percent of Chile's needs. Consequently, Chile's oil import bill more than doubled between 1986 and 1990. The country's

170


The Economy

oil reserves, declining at a rate of 10 percent a year, stood at 300

million barrels in early 1992.

Petroleum exploration efforts have been unsuccessful since the

1970s. The National Petroleum Enterprise (Empresa Nacional de

Petroleo—ENAP) has diversified its activities outside Chile with

production contracts with Argentine, Brazilian, Colombian, and

Ecuadorian companies. Exploration activities have increased in the

Atacama Desert and the Strait of Magellan. In late 1992, ENAP

began installing a US$18 million oil-drilling platform off Punta Arenas, the first of four that the company planned to operate in the

Strait of Magellan in a joint venture with Argentina's state-owned

oil company. About two-thirds of the crude oil produced in Chile came from offshore platforms in the Strait of Magellan. In 1991

domestic consumption was averaging 138,527 barrels per day (bpd)

and was growing at a 5 percent annual rate. Pipelines for crude oil products totaled about 775 kilometers in

length; for refined petroleum products, about 785 kilometers; and

for natural gas, about 320 kilometers. In mid- 1992 Chile and Argentina agreed to build a 459-kilometer trans-Andean pipeline,

designed to carry US$500 million in crude oil a year, or 94,000

bpd, from Neuquen, Argentina, and to help meet Chile's need for refined oil. Both countries also approved a US$1 billion project

to build a 1,200-kilometer gas pipeline to feed Argentine natural

gas to Santiago and other Chilean cities by 1997. In 1989 Chile's

proven natural gas reserves totaled 46.1 billion cubic meters, of

which 41.9 billion cubic meters were onshore and 4.2 billion cubic

meters were offshore.

Banking and Financial Services

By the end of the Allende period, commercial banks were little more than cash vaults. The availability of credit was low, and lending patterns were highly distorted. During 1975-90, however,

Chile's financial sector experienced a remarkable boom, and by

1992 it was modern and dynamic. Banks performed a variety of

operations, and the stock exchange was gaining rapidly in importance. The development in the 1980s of several financial operations involved with servicing Chile's external debt helped to increase

the sophistication of the system.

The road to a modern financial sector was not easy. In the

process, a number of banks collapsed as a result of the credit crisis of the early 1980s, and interest rates were high. After a period of

government control, the failed banks were reprivatized in the

mid-1980s, and the banking sector went through an extensive consolidation process. Some banks ceased to exist, and others sought

173
BOLIVIA

ARGENTINA

BRAZIL ~ 7

PARAGUAY

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) u

J R

9° r^s. 109° W J \^ 10' w

£Mataveri 27« _

10' s

j Easier /s/and

[ Miles (Isla de Pascua)

Key to Minerals

Ag Silver

Au Gold

C Coal

Cu Copper (mine output)

Cu Copper (refined) Fe Iron ore

Li Lithium

Mg Magnesium

Mo Molybdenum

N Nitrate

NG Natural gas

Pb Lead

Pet Petroleum

Zn Zinc

NOTE-Underlined symbol

indicates plant.

International boundary

National capital

Populated place

Crude petroleum pipeline Petroleum products pipeline

Projected natural gas pipeline Petroleum terminal Mine

Atlantic

Ocean

Strait of Magellan

Pet Pet

• Beagle Channel

Source: Based on information from Orlando D. Martino (ed.), Mineral Industries of Latin

America, Washington, 1988, 32; Carlos M. Bechelli and Roberto D. Brandt "Six

Latin American Countries Could Join in New Gas Market," Oil and Gas Journal October 21 , 1991 , 46-52; and Economist Intelligence Unit, Country Report: Chile [London], No. 4, 1993, 20.

Figure 9. Primary Petroleum, Natural Gas, and Minerals Activity, 1993

172

Chile: A Country Study

mergers. In 1989 the government made the Central Bank independent of government control by creating the Central Bank Council, a five-member group consisting of two members appointed by

the government, two by the opposition, and a president selected

by consensus. Beginning in the late 1980s, the number of banks

became more stable: thirteen domestic banks and twenty-two

foreign-owned banks. Their level of operation had risen rapidly

by the early 1990s. Nevertheless, Chile's top seven banks, squeezed

by growing competition from consumer finance houses and in- store credit operations, suffered a 17 percent decline in profits in 1991.

As a result, the banks were looking to the mining sector for profits.

Since the economic crisis of 1982-83, a recurrent preoccupation

of policy makers has been the behavior of interest rates in Chile.

Many analysts argued that the near collapse of the Pinochet re- gime's free-market experiment in those years was the consequence

of extremely high interest rates. In 1991 and the first few months

of 1992, interest rates experienced a major decline; this was the

case for both nominal and real interest rates. As the degree of openness in the capital account increased, domestic interest rates seemed

likely to converge toward international levels. Transportation

The heavy regulation of the transportation sector—including rail- roads, air transport, marine shipping, and buses—represented a tremendous barrier to international competitiveness. For all these means of transportation, reforms were enacted in the 1970s that were aimed at establishing a competitive environment and widening the participation of the private sector. Railroads were greatly

affected by the imposition of self-financing discipline in the

mid-1970s. With their infrastructure already failing, financial dis- cipline forced further delays in maintenance programs. The growing

demand for transportation services found a more dynamic response

in the trucking industry, which developed as a more reliable and

economic alternative and surpassed railroads in movement of

freight.

Chile's internal transport network is basically well developed,

although in need of considerable improvement. To that end, in

late 1991 President Aylwin announced a US$2.4 billion publicsector investment program, designed to upgrade the neglected trans- port infrastructure. There are 7,766 kilometers of railroads (3,974

kilometers of 1,676-meter gauge, 150 kilometers of 1,435-meter

standard gauge, and 3,642 kilometers of 1,000-meter gauge), fourfifths of which are state-owned (see fig. 10). In addition, there are 1,865 kilometers of 1,676-meter gauge and eighty kilometers of

174
The Krnnnmv

The Economy

1,000-meter gauge electrified. The privately owned segment, lo- cated mostly in the desert north, totals 2,130 kilometers. A total of 8, 185 kilometers of track connect the northern terminal of Iquique to Puerto Montt in the south. That trunk line is being increasingly electrified. Feeder lines run westward to the ports and seaside

resorts and eastward to mines and mountain resorts. Four international railroads run to northwestern Argentina and to Bolivia

and Peru; two of these lines link Chile with Bolivia between Arica

and La Paz (448 kilometers) and between Antofagasta and La Paz

via Calama. Except for the international routes to La Paz, pas- senger service to the north of Santiago has been suspended. There

is no passenger service on the Chile-Argentina line. The government plans to refurbish and modernize the State Railroad Company (Empresa de Ferrocarriles del Estado). The Aylwin government was planning to invest US$98 million in

infrastructure improvements in 1993 and was considering the cre- ation ofjoint ventures with private companies to run the cargo trans- portation services. The Santiago metro is also to be expanded.

Roads are the principal means of moving people and freight.

It was only in the 1960s that a paved road had been completed,

linking the extreme north with Puerto Montt at the far southern

tip of the Central Valley (Valle Central), and it was only in the

mid-1970s that construction began on a north-south road from Puerto Montt into the extreme south. Transversal roads run east and

west from the north- south highway. These include the northern

Arica-Santos Highway to Bolivia and the southern Trans-Andean

Highway between Valparaiso and Mendoza (Argentina).

Chile's road network totals approximately 79,025 kilometers that can be used year-round. Of the total network, 9,913 kilometers

are paved, including the Pan American Highway (Longitudinal

Highway), which extends, with the opening of the Southern Highway (Gran Carretera Austral) in 1989, about 4,700 kilometers to Puerto Yungay in the south. The highway is paved only to Puerto

Montt. Chile has about 10,000 kilometers of paved road, with the

region around Santiago and the Central Valley being the best

served. Gravel roads total 33,140 kilometers, and improved and

unimproved earth roads total 35,972 kilometers. There are about

1.7 million motorized vehicles of all kinds in Chile, including more

than 1 million automobiles and 176,000 trucks and buses. Chile's

national bus service and Santiago's metro system are considered

excellent. The 1991-94 program to improve the transportation in- frastructure envisages construction of a new metro line in Santiago.

As befitting a country with such a long coastline, Chile has about

eighteen ports, but the country has few good natural harbors. Only

177
Figure 10. Transportation System, 1993

176

Chile: A Country Study

four or five ports have adequate facilities, and about ten are used

primarily for coastal shipping. Shipping facilities are used to ca- pacity, with a dozen companies engaged in coastal and international trade. Coastal shipping is restricted to Chilean flag vessels. The main ports are Antofagasta, Arica, Coquimbo, Iquique, Puerto

Montt, Punta Arenas, San Antonio, Talcahuano, and, most important, Valparaiso. The state controls port organization and approximately 40 percent of the merchant marine, which had

thirty-one ships totaling 756,000 deadweight tons in 1993. Chile's

inland waterways are navigable for a total of only 725 kilometers,

mainly in the southern lake district. The Rio Calle Calle provides

a waterway to Valdivia from at least one lake for ships up to 4,000

deadweight tons. Linking the country's extremes, air transport has also become

an important way of moving people and freight. Chile has 351 us- able airports, forty-eight with paved runways, but none with run- ways longer than 3,659 meters. The international airport, in

Santiago, is served by eighteen international airlines and two national ones. The state carrier, the National Airline of Chile (Lmea

Aerea Nacional de Chile—LAN-Chile), serves major cities in Chile

and also carries passengers to other countries. Privatized in 1989,

LAN-Chile merged with a new airline, Southeast Pacific, in 1992.

LAN-Chile's domestic coverage is supplemented by the services of

Chilean Airlines (Linea Aerea del Cobre—Ladeco), the airline of

the state copper company (Ladeco is an acronym for copper airline)

and Chile's second largest carrier. Ladeco has a 52 percent share

of passengers, and LAN-Chile has a 46 percent share. LAN-Chile,

however, controls 84 percent of the international movement of passengers, and Ladeco controls 16 percent. In 1992 Fast Air, Chile's

largest air cargo carrier, incorporated the first of three DC-8 air- craft as part of a US$75 million service improvement program.

Telecommunications

Chile's Ministry of Transportation and Telecommunications

oversees the telecommunications sector. The development of this natural monopoly (telecommunications) is highly influenced by the

type of regulations to which it is subjected. In the mid-1980s, Chile

had an estimated deficit of 300,000 telephone lines. This deficit had accumulated through years of deficient management by the

public sector. It was clear that major investments were needed and

that the old regulatory framework was outmoded.

Reforms that directly affected telecommunications occurred in

1982 and 1985. Before the 1982 reform, Chile's telecommunications

sector had been dominated by state-owned national companies.

178
The Economy

Santiago and the central part of the country had been served by

the Telephone Company of Chile (Compama de Telefonos de

Chile—CTC), a subsidiary of Corfo. The southern part of the

country was served by two private companies, the National Telephone Company (Compama Nacional de Telefonos—CNT) and

the Telephone Company of Coihaique (Compama de Telefonos

de Coihaique). Another Corfo subsidiary, the National Telecommunications Enterprise (Empresa Nacional de Telecomunicaciones

Entel), controlled Chile's international telephone service and much

of the domestic long-distance service (including Easter Island).

Following key pricing reforms in 1987, most of the state-owned

telecommunications firms were privatized during the 1987-89

period. The National Telephone Company of Spain (Telefonica)

obtained control of CTC, which has been 50 percent privatized.

Entel retained its monopolies.

By 1991 Chile had 768,000 telephones. CTC plans called for in- stalling 190,000 new lines in 1992 and investing US$500 million

in 1993 in expanding and upgrading the telephone network. This

would permit the installation of 280,000 new lines and the replacement of the remaining analog switching systems that were serving

320,000 lines in 1992. In April 1992, however, Chile's monopoly

commission ordered Telefonica to sell its stake in one of the two

Chilean telephone companies in which it owned shares—CTC and

Entel. Telefonica was appealing the decision to the Supreme Court.

Chile's modern telephone system is based on extensive micro- wave relay facilities. The rapid development of cellular telephones,

digital technology, and satellite links has put even the smallest town

in Chile within reach. In 1992 telecommunications service increased

36 percent; CTC had installed more than 900,000 telephone lines

by that year. In 1991 there were 4.25 million radios in the country (see The

Media, ch. 4). The United States firm Scientific-Atlantic, under

contract to CTC, built a US$29 million domestic digital satellite communications receiving system. Chile was the first South American country to establish an emergency satellite rescue receiver sta- tion. A European Space Agency ERS-1 tracking and command

station is located in Santiago.

Chile has 167 AM radio stations, no FM stations, 131 televi- sion stations, and 12 shortwave radio stations. Most of these units

are affiliated with the Association of Chilean Broadcasters (Asociacion de Radiodifusores de Chile—Archi). Chile uses two Atlantic

Ocean stations and three domestic satellite ground stations of the In- ternational Telecommunications Satellite Organization (Intelsat

see Glossary).

179
Chile: A Country Study

Tourism

Another area of significant new investment is tourism, which

increased significantly during the 1980s, aided by government efforts to promote it both domestically and abroad through the National

Tourism Service (Servicio Nacional de Turismo—Sernatur). More

than 1.5 million tourists visited the country in 1992. Sernatur reported that during 1992 a total investment of US$320 million in hotel

construction had either already been made or was under consideration in Vina del Mar, Santiago, Cuenca del Sol in Coquimbo

Region, and the ski resorts of La Parva and Valle Nevado. For

the 1992-2007 period, more than US$2 billion is expected to be

invested in tourism infrastructure projects in Chile.

One of the most important tourist destinations is Coquimbo

Region, about forty-eight kilometers north of Santiago. The region

is considered to have some of the best beaches and climatic and

geographic conditions in Chile. A US$505 million project to develop 330 hectares with nine kilometers of beaches north of Coquimbo 's capital, La Serena, was awarded competitively to a Spanish-Chilean consortium in 1992.

Construction

The relative importance of the construction sector has declined

significantly since the early 1970s. In 1970 the construction share

of GDP was almost 8 percent, but by 1992 it had fallen to 6 percent. This trend is largely the result of a dramatic decline in the

public sector's construction activities. Whereas in 1970 the public

sector was responsible for over 30 percent of the total square meters

constructed, in 1991 this portion had been reduced to 3. 1 percent.

This trend is partially reflected in a decline in the quality of the

infrastructure. In order to maintain its pace of growth, Chile must

reverse this trend.

The total construction area grew during the 1987-91 period at a healthy pace of 12.5 percent per annum. However, all of this increase is attributable to the private sector. During this period,

the yearly area constructed by the public sector declined (see table

30, Appendix). The sector enjoyed a robust growth of 10 percent

in 1992 as a result of an increase in housing starts and other construction projects.

A significant percentage of private- sector construction is financed

by the government. In fact, one of the most important innovations

of the military regime was that the state's role as direct producer was gready reduced. Since the late 1970s, the overwhelming majority

180
view from the Southern Highway in southern Chile

Courtesy Inter-American Development Bank

181
Chile: A Country Study

of public works have been executed by private-sector firms under

government contract. A similar major structural reform has taken

place in housing for people with low income. Whereas in the 1960s

and early 1970s houses in this sector were constructed by

government-owned firms, in the early 1990s they were being built

by private firms and sold to people with low incomes through an

elaborate subsidy system (see Housing Policies, ch. 2). Income, Labor Unions, and the Pension System

The modernization of labor-market legislation during the late 1970s played a fundamental role in the subsequent performance

of the Chilean economy. Included in this modernization were: re- forms in the labor code that assign individual workers the right

to seek representation in collective bargaining organizations, and

a reduction in the cost of dismissals. Moreover, the financial re- forms in social security and health care removed a major tax burden from the labor market, as it transformed social security and

health care taxes into required basic health care programs. In addition, the reforms in the financing of education had a tremendous impact on the allocation of human resources and resulted in a significant growth of privately funded technical training programs

(see Welfare Institutions and Social Programs, ch. 2). The financial aspects of these reforms directly affected the efficiency of the

labor market. For example, pension funds became the largest in- stitutional investors of the capital market, representing 26.5 per- cent of GDP in 1990 (see Economic Results of the Pensions

Privatization, this ch.).

Employment and Unemployment

According to the 1992 census, the Chilean population totaled

13,348,401 in that year. The average annual rate of population

growth in the 1982-92 period was 1 .6 percent, a relatively low rate

in the context of Latin America. Chile and Argentina are the

two countries with the lowest rates of population growth in South

America (see Current Demographic Profile, ch. 2). Chile is a highly urbanized country. According to estimates for 1991, about 85 percent of the population resides in urban areas. A large fraction of the population is in the metropolitan area, which

includes the capital city, Santiago. The population share of this region was estimated at slightly more than 39 percent in 1992, which is one

percentage point higher than the 1982 share. These figures indicate

that the relative growth of the metropolitan area has slowed down

compared with the 1970-80 decade, when the rate climbed to 38.1

percent in 1982 from 35.4 percent in 1970 (see Urban Areas, ch. 2).

182
The Economy

With a lower rate of population growth, Chile's "working-age"

population, which includes all those individuals above fifteen and

below sixty-five years of age, represented 64 percent of the total population in 1992. The labor force participation rate, or the ratio of those in the labor force over the "working-age" population, was 52.6 percent in March 1992. Thus, 36.8 percent of the total population was working or seeking a job (see table 7, Appendix).

The rate of unemployment has declined steadily throughout the

period (see table 8, Appendix). The overall rate of growth in employment for the 1987-91 period was about 3 percent per year. The rate was substantially higher from 1987 to 1989 (5 percent),

the period of fast recovery after the debt crisis. It is possible that

the uncertainty regarding the final reforms on the labor legislation might have delayed employment creation, but there were other

important factors, such as an increase in the interest rate. The most

dynamic sectors during the 1987-89 period were construction and

industry, with average rates of employment growth of 20 percent

and 11 percent per year, respectively.

After years of high unemployment, in the 1990s the trend began to change. By late 1993, the rate of unemployment had plunged

to 4.9 percent, a rate significantly lower that that of the rest of Latin America, and one of the lowest in Chile's modern history. Interestingly, this drastic reduction in unemployment has taken place

at the same time as real wages have increased significantly. The

Economic Commission for Latin America and the Caribbean es- timates that average real wages increased by 13.7 percent between

1990 and 1993. This change in employment conditions has been

the direct result of the emphasis that Chile's economic model has

placed on the development of employment-intensive industries. The

increase in employment has been so impressive that a number of

analysts have argued that Chile may be running into a period of

labor shortages (see The Labor Force and Income Levels, ch. 2). Income Distribution and Social Programs

Latin America has traditionally had one of the most unequal in- come distributions in the world. Chile has not been an exception

to this rule. Although data are scarce, existing evidence suggests

that during the years of military rule income inequality increased

significantly in Chile. It has been estimated that in 1985 about 25

percent of households lived in extreme poverty (see Glossary), and

that 45 percent of households lived below the poverty line. During

the 1990-93 period, the incidence of poverty declined substantially. In late 1993, the Ministry of Planning and Cooperation estimated

that between 1990 and 1993 more than 1.3 million people moved

183
Chile: A Country Study

out of poverty. This was the result of a combination of factors: the

rapid rate of growth experienced by the economy; and the implementation of social programs aimed at the poorest groups in

society.

The emphasis on social programs aimed at certain groups began in the mid-1970s. This approach seeks to deliver social programs directly to the poor, avoiding leakages to middle- and

upper-income groups. These programs have been largely successful. It has been reported, for example, that 90 percent of the food

distributed through the preschool nutritional programs went to the

poorest three deciles of the population in the mid-1980s. Moreover, more than 80 percent of the food has reached the rural poor. Since

the basic housing program was reformed in the early 1980s, more

than 50 percent of the subsidies have been reaching the poorest

three deciles of the population. In 1969, before the system was

reformed, only 20 percent of subsidies were received by the poorest

30 percent of the population.

Unions and Labor Conflicts

After reluctantly accepting the Labor Plan of 1979, unions be- came active again in the early 1980s and were able to push for wage

concessions during the economic boom of that period. A minority

maintained a tough stance in opposition to the new system, but

they lacked significant influence, so opposition eventually disappeared.

The most radical change experienced by the union movement

with the return to democracy has been its reintegration into the

national discussion of labor reforms and social policies. The re- forms of 1990-91, which introduced some changes to the original

Labor Plan, represented a moderate increase in workers' bargaining power in each of the three central areas of the labor law: dis- missals, the right to collective bargaining, and the right of employers

to hire temporary replacements or to impose lockouts during strikes. Law 19,010, enacted in 1990, regulates individual contracts. In

the area of dismissals, it introduces two important differences rela- tive to the previous law—the size of the severance compensation

and the right of the worker to appeal. Whereas the Labor Plan had

introduced the practice of dismissals without cause and established a severance pay equal to one month's salary per year of service

up to a maximum of five months' worth, this reform reinstates the

principle of dismissal only with cause, and it increases the severance- pay ceiling to eleven months. The law considers two possible reasons

for dismissal—the traditional "just cause" (serious misconduct)

184
A construction worker

at the Rio Melado

Dam spillway, located about seventy kilometers southeast of Talca

Courtesy Inter-American

Development Bank

and the new "economic cause." If the employee appeals and the

employer fails to prove "just cause," the employer would have to pay a 50 percent penalty in addition to the usual severance. Failure

to prove "economic cause" would result in a 20 percent penalty.

The previous law was also modified to provide an option to replace the normal severance with a "payment in all separations."

This option is available to workers with more than seven years of

service with the same employer. If this option is exercised, the employer would establish a fund in the worker's name, with monthly

deposits of a minimum of 4. 1 percent and a maximum of 8.3 per- cent of the salary (the salary base having a maximum) in a private

financial institution. These contributions and the corresponding

accumulated interest would be nontaxable income and would constitute a fund that would be withdrawn on separation.

Law 19,069, enacted in 1991, regulates the rights of employers

and employees during collective bargaining. Under this law,

enterprise-level workers' organizations have the right to negotiate

with employers, and employers are obliged to negotiate with them.

The law gives the employer the right to limit to thirty-five days

the period of bargaining with all unions representing the enterprises'

workers. Under Law 19,069, collective agreements can establish

pay scales, indexation formulas, fringe benefits, and the like, but

they cannot limit the sovereignty of the employer over the organization and administration of the enterprise (Article 82).

185
Chile: A Country Study

One of the important departures from the previous law is that

trade unions or workers' associations are given the right to bargain with more than one employer. Yet this right can only be ex- ercised under the following circumstances: in the case of collective

bargaining affecting more than one enterprise, prior agreement of

the parties is required (Article 79); submission of collective agreement by other trade union organizations (such as federations or

confederations) requires approval by secret ballot of the absolute

majority of the member workers of the enterprise (Article 110);

and a given worker cannot be covered by more than one collective

agreement (Article 83).

A strike would suspend the individual contract, give employers

a conditional right to temporary replacement, and give employees

a conditional right to renounce union membership and return to work. Employers can use temporary replacements from the first day of the strike if their last offer, before the strike was declared, was equivalent to the previous contract adjusted by the consumer

price index (CPI—see Glossary). If the last offer was lower, employers cannot use temporary replacements within a minimum of

thirty days after the strike is called. Employees have the right to renounce union membership and go back to work fifteen days after calling the strike, as long as the outstanding offer of the employer

is equivalent to the last contract adjusted by the CPI. If the last offer is lower, employees must delay their walkout a minimum of

thirty days after the strike is called. The law does not establish a maximum duration for strikes, but if more than half of the workers

return to work, the strike must end. At that point, all workers must

return to the job. In order to make use of the right to replace workers

temporarily, employers must make an offer that at least adjusts

wages by past inflation. If the employer also offers other fringe

benefits but workers still go on strike, the employer may hire temporary replacements. However, the employer loses that right if the

wage adjustment for past inflation is given but some fringe benefits are cut. That would not be a contract equivalent to the previous one adjusted by inflation. If workers go on strike, the employer

cannot use temporary replacements within thirty days of the declaration of the strike.

It was unclear in 1992 what the final form would be for the new

legislation on labor-management relations, labor productivity, in- vestment, on-the-job training, and other aspects of labor markets'

performance. However, workers have almost doubled their participation in labor unions since 1983, and by 1990 about 13 percent

of those employed were affiliated with unions. During 1990, 25,000

workers, out of 184,000 who participated in collective contracts,

186
The Economy

used strikes as a means of pressing their demands. Most strikes during 1990 and 1991 were of short duration (see Labor, ch. 4). Economic Results of the Pensions Privatization

Chile's pension system, which started to operate in May 1981,

is based on individual capitalization of funds (see Social Security,

ch. 2). This system determines a minimum basic contribution equal

to 10 percent of disposable income and makes the benefit a function of an individual's contributions during his or her active life. Benefits for incapacity and survival are financed by complementary insurance with financial reserves. Decree Law 3,500 of 1981

instituted a social security system that makes contributions obligatory for dependent workers who joined the labor force after December 31, 1982, and makes them voluntary for independent

workers and those who had already contributed to the traditional

pension funds. The old pay-as-you-go system, which was being

phased out, covered all those workers who had entered the labor

force in 1982 or earlier and who chose not to transfer to the new

capitalization system. The reform responds to a need that has been

recognized before, when the old system entered a phase of serious

financial difficulties. In the reformed system, the state now plays a fundamental role

in regulating and monitoring operations and guaranteeing '' solidarity in the base" through a minimum pension. All workers, after contributing a minimum amount (15 percent of their gross income

annually), have the right to a minimum pension of 85 percent of

their minimum salary, even if their life- time contributions to the

system result in a smaller benefit. The new system brought about an increase in coverage, with the proportion of independent workers covered increasing from 58 percent in 1985 to 79 percent in

1990. The proportion of dependent workers covered increased from

79 percent in 1985 to 92 percent in 1990.

Article 28 of Decree Law 3,500 establishes that the numerous

Pension Fund Administrators (Administradoras de Fondos de

Pensiones—AFPs) are authorized to charge a fee to cover their

administrative costs. The most important restriction is that, with

a few exceptions, fees have to be the same for all affiliates in a given

AFP. After a relative increase in the fees between 1981 and 1983,

competition resulted in a steady decline in the cost to individuals. In 1990 the cost for an "average contributor" was 33 percent

lower in real terms than in December 1983. Commissions fell from

5 percent of taxable income in 1985 to about 3.2 percent in 1990. In 1992 the AFPs were charging about 0.9 percent of salary in

187
Chile: A Country Study

insurance premiums and 1.8 percent in commissions, for a total of 2.7 percent.

Strict norms regulate the investment of pension funds. Only cer- tain instruments may be used, and there are clear limits on the

distribution of investments by type of instrument. The dynamism

of the Chilean capital market since the early 1980s has forced constant revisions of these norms. Pension funds are the largest institu- tional investors in the capital market, representing 26.5 percent

of GDP in 1990 (compared with 0.9 percent in 1981). The aver- age real return to investment of Chilean pension funds between

1981 and 1990 was 13 percent. In 1992 AFPs were authorized to invest up to 3 percent of their portfolios abroad, double the previ- ous maximum.

Macroeconomic Policy, Inflation, and the Balance of

Payments

The Central Bank and Monetary Policy

One of the key lessons of the Chilean reforms is the importance

of macroeconomic equilibrium in providing the "right" environment conducive to economic growth and stability. For all practical purposes, by 1988-89 macroeconomic equilibrium had been

achieved in Chile.

One of the problems that occupied many scholars and politicians

in the late 1980s was how to guarantee the continuity of macro- economic policy after the military regime. The key issue was how

to ensure that macroeconomic decisions, and in particular monetary and exchange-rate policies, would not be determined by partisan politicians with a short-term mentality. In short, a crucial

point in the transition's debate was how to remove Central Bank

decisions from the day-to-day urgencies of politics. This issue was

seen as particularly important by those economists who argued that

the politically inspired management of monetary policy was at the root of Chile's long history of inflation.

After much debate, the Pinochet government decided, in 1989,

to implement a new law that would greatly enhance the independence of the Central Bank. The law made the bank autonomous

and legally removed it from the area of influence of the minister

of finance. According to the new legislation, the bank was to be

governed by a five-member board, the Central Bank Council. Each

member was to serve for ten years and could only be removed under a strict set of circumstances. The president of the republic was

required to obtain Senate approval to name new members of the

board.

188
Monkey-puzzle trees (Araucaria araucana)

of the pine family,

valued for their beautifully

veined hardwood and

plentiful resin, near Temuco in southern Chile

Courtesy Embassy

of Chile, Washington

When the new legislative project on Central Bank reform was

announced in mid- 1989, the members of the opposition denounced

it as an attempt by the Pinochet regime to perpetuate itself in power.

However, after some internal debate within the CPD coalition, the

opposition forces decided to support the project, as long as the members of the initial board were considered unbiased technocrats. After a long process of negotiation at the highest level, it was decided

that the first five members would serve for two, four, six, eight,

and ten years, respectively; two of them were chosen by the opposition, two were chosen by the departing Pinochet government,

and the chairperson of the board was chosen by consensus. It was

also decided that the chairperson would serve for two years. In 1992

the chairperson's two years were up, and a new member of the

board was chosen as chairperson, this time for ten years. On that

occasion, the idea of an independent Central Bank was put into

effect. In 1991-92 the Central Bank focused on two issues: the desire

to reduce the rate of inflation from double digits to single digits;

and the exchange-rate policy of trying to balance the need for con- tinuous promotion of exports with the reduction of inflation. To

address these issues, the Central Bank used a number of means,

including the auctioning of Central Bank bills and the acquisition

of international securities. Also, the bank introduced a series of

amendments to exchange-rate policy.

189
Chile: A Country Study

Exchange-Rate Policy and the Balance of Payments

There was broad agreement that the implementation of an

exchange-rate policy aimed at encouraging exports had been at the center of Chile's economic success. Since at least 1985, the members of the Chilean economic team had understood that avoiding

exchange-rate overvaluation was crucial to the promotion of growth

and prosperity. As a result, it was decided that a policy based on

small daily adjustments of the nominal exchange rate would be

adopted. In this way, exporters would be compensated for any in- crease in their domestic costs stemming from inflation.

Although the basic elements of this "crawling peg" exchangerate policy were maintained during the 1985-92 period, the sys- tem went through a number of changes. The first important innovation was to center the "reference" exchange rate set by the

Central Bank within a 6 percent band. Market participants were

allowed to transact freely within the band. A second important

change was to widen the band to 10 percent and to adjust the refer- ence rate downward. Finally, in 1992 the Central Bank decided

to alter the method used to calculate the daily adjustment of the

reference rate by using a basket of currencies made up of the dollar, the German deutsche mark, and the Japanese yen in a 50-30-20

ratio, instead of only the dollar. In early 1990, Chile started to receive increasing amounts of for- eign financial flows. This generated an overabundance of foreign

exchange, which tended to make the exchange rate appreciate.

From a practical point of view, the increased capital inflows were

reflected in the fact that the exchange rate moved to the "floor"

of the band, reducing the amount of real Chilean pesos that each

exporter received per United States dollar exported. This development affected the profitability of a number of export projects, reducing the overall competitiveness of the Chilean economy. Also, the

real appreciation of the exchange rate affected local industries that

competed with imported goods, including the agricultural sector. Not too surprisingly, exporters have tried to persuade the government to alter its exchange-rate policy in a way that would increase

their profits.

In 1991 the pressure of capital inflows subsided somewhat.

However, this did not end the overabundance of foreign exchange, nor did it put an end to the tendency toward real exchange-rate

appreciation. That year the current account of the balance of payments experienced a remarkable turnaround of almost US$1 bil- lion (see table 31, Appendix). Consequently, during 1991 the overall

result was that external accounts were once again positive, with

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The Economy

the Central Bank accumulating more than US$1 .2 billion, as compared with US$2.4 billion in 1990.

Chilean balance of payments trends for 1990-92 generally were

positive, despite a current account deficit in 1992-93. Although

the capital account experienced a reversal in 1991, moving from

a large surplus in 1990 to a modest deficit, in 1992 this tendency

appeared to be reversing itself once again, with capital inflows ex- ceeding outflows. An important aspect of the balance of payments

data for the early 1990s is the large positive figure for " errors and

omissions," which was US$161 million in 1991. However, there

is evidence suggesting that the government's figure represents

"reversed capital flight" entering the country in an illegal fashion.

Some observers have claimed that illegal drug-related monies were moving toward Chile in the early 1990s (see Incidence of Crime,

ch. 5). Trade Policy and Export Performance

A fundamental element of the Aylwin government's economic

program was the maintenance of Pinochet's foreign-trade policy.

Early on, the forces of the CPD coalition pointed out that an open

external sector was a fundamental component of their economic

package. One of the early decisions of the Aylwin government was

to open the Chilean economy further to international competition.

This was done by reducing import tariffs from 1 5 percent to 1

1

percent, except for expensive luxury goods or commodities governed

by a price band.

Data on exports for the 1989-91 period reveal three telling developments. First, the share of traditional mining exports showed

a clear downward trend. Second, there was a significant increase

in the shares of the agricultural and manufacturing sectors. (In 1991

fruits and forest products constituted 85 percent of total exports,

and the agricultural sector accounted for about US$1.2 billion, or about 14 percent of total exports.) Third, an increasing proportion of manufacturing exports were going to industrial countries

(see table 32, Appendix).

Exports in 1991 showed a noteworthy increase in shipments

toward other Latin American countries. Chile signed a trade ac- cord with Argentina and in 1992 was working on a trade accord

with Venezuela and Colombia. In 1991 Chile signed a bilateral free-trade agreement with Mexico, under which each country would

gradually reduce tariffs on three categories of products. The ChileMexico bilateral accord, which took effect on January 1 , 1993, called for the removal of tariffs on almost all of Chile's trade with Mexico by about 1996. Chile was hesitant in the early 1990s to join the

191
Chile: A Country Study

other countries in South America in participating in regional trading

agreements, such as the Southern Cone Common Market (Mercado Comun del Cono Sur—Mercosur; see Glossary), or the

renewed Andean Group (see Glossary). By early 1994, however,

Chile was ready to join Mercosur and was expected to become a member in January 1995.

Chile's exports were also moving rapidly beyond the scope of

Latin America. An important goal in the area of trade diplomacy was a free-trade agreement with the United States. On October

1, 1990, Chile and the United States signed a framework agreement on trade and investment aimed at negotiation of a proposed

Chile-United States free-trade accord similar to the North American Free Trade Agreement (NAFTA; see Glossary) among the

United States, Mexico, and Canada. The United States remained

Chile's most important trade partner, although in 1991 the value

of Chilean exports to Japan surpassed the value of exports to the

United States by US$10 million, and in 1992 the figure rose to

at least US$52 million. Japan accounted for US$900 million of

Chile's US$1.5 billion surplus in 1991.

The Future of the Economy

In early 1994, the Chilean economy stood out as one of the strongest in Latin America. Moreover, President-elect Eduardo Frei

Ruiz-Tagle had stated that his administration would continue the

export-oriented, market-based policies of Aylwin and Pinochet.

Frei's minister-designate of finance, Harvard-educated Eduardo

Aninat Ureta, publicly endorsed the main aspects of the current

economic model. However, the trend in the early 1990s toward

real exchange-rate appreciation clouded the future of the export

sector. However, there are still some areas of concern. Most of the

growth in Chile in the early 1990s was the result of a combination

of increased capacity utilization and improvements in productivity. The contribution of capital accumulation to growth has remained

relatively low. Despite increases, in 1992 total capital investment

barely surpassed 20 percent of GDP. Historical data from other

parts of the world are emphatic in indicating that high rates of capital

formation (see Glossary) are required to sustain growth in the longer run. Data for 1993 suggest that there has been a remarkable in- crease in savings (see table 33, Appendix). In the years to come,

it will be fundamentally important to maintain (or even to increase)

the savings effort. A second and related area of concern has to do with infrastructure. Although in the case of Chile the situation is not as dire as

192
Buses on Avenida Bernardo O'Higgins in downtown Santiago

Courtesy Inter-American Development Bank

in other Latin American countries, Chile needs to continue to maintain and improve its infrastructure. With the already active participation of the private sector in important projects, the selective

participation of the government as the main entrepreneur is clearly needed.

A third concern is the environment, where two problems are particularly acute. The first one is air pollution in Santiago. The Aylwin government decided to address this issue in a rather gradual

way. Whether this is the most effective and efficient approach is unclear. The second serious problem is ocean pollution, especially

in the more densely populated coastal areas. An important fourth area to focus on in the future is the battle against poverty. President-elect Frei stated that this would indeed

be a priority for his administration. The appointment of Carlos

Massad Adub, a well-respected, University of Chicago-trained

economist, to the Ministry of Health indeed suggests a high commitment to social services. In that regard, an increase in the ag- gressiveness of targeted social programs seemed to be the most

promising avenue. An important question, however, is where to obtain the resources. This is not easy to answer, but creative solutions, including a possible reduction in the military budget in the

years to come, are among those that might be contemplated.

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Chile: A Country Study

* * * A number of fine sources provide information on the recent trans- formation and performance of the country's economy. These in- clude Jere Behrman's Foreign Exchange Regimes and Economic

Development: Chile, Vittorio Corbo's Inflation in Developing Countries,

Ricardo Ffrench-Davis's Politicas economicas en Chile, 1952-1970,

Markos J. Mamalakis's Historical Statistics of Chile, and Gonzalo

Martner's El pensamiento economico del gobierno de Allende. The literature on the economic reforms of the mid-1970s and

1980s is extensive. Comprehensive studies include Una decada de cambios economicos: La experiencia chilena, 1973-1983 by Alvaro Bardon,

Camilo Carrasco M. , and Alvaro Vial G. ; Monetarism and Liberalization, by Sebastian Edwards and Alejandra Cox Edwards; and The

National Economic Policies of Chile, edited by Gary M. Walton. Tarsicio Castaneda's Combating Poverty provides a first-rate analysis of

Chile's highly praised approach to social programs. In La revolu- cion laboral en Chile and El cascabel al gato, Jose Pinera Echenique

offers an insider's account of two of the most important and politically difficult reforms in the Chilean social and economic system:

the labor decrees and the social security system.

Much of the literature on the Chilean economy appears in article form in scholarly and professional journals or in edited volumes.

In Chile three journals are particularly important. One is Coleccion de Estudios de CIEPLAN, published by a Christian Democraticleaning think tank, the Corporation for Latin American Economic Research (Corporacion de Investigaciones Economicas Para

America Latina—Cieplan). Early issues of this journal examine

the economic thinking of many of the Aylwin government's eco- nomic officials. Other issues contain some of the more severe criti- cisms of the Pinochet economic policy. Cuadernos de Economia,

published by the Catholic University of Chile, provides somewhat

technical pieces on the evolution of the Chilean economy. Most

of these are written by economists who sympathized with the

Pinochet regime. A number of important pieces on the evolution

of the Chilean economy have appeared only in the form of working papers. Although it has sometimes been difficult to gain access

to these documents, a list of the most important can be found in

the Bibliography. Estudios Publicos, published by the Centro de Estudios Publicos, is a multidisciplinary journal devoted to public

policy. It has published important debates, with different positions

being duly represented.

Current data on monetary variables, balance of payments, national accounts, and employment have been published periodically

194
The Economy

by the Central Bank. The National Statistics Institute (Instituto

Nacional de Estadfsticas—INE) is a major source of basic information. The Economic Commission for Latin America and the

Caribbean, with offices in Santiago, also is a valuable source of

economic and social data for Chile and all other Latin American

countries. (For further information and complete citations, see Bibliography.)

195

Chapter 4. Government and Politics
A masculine textilefigure (kolumameU)from the reverse side ofa seventeenth- century Mapuche woman 's belt called nimintraruwe
THE REESTABLISHMENT OF DEMOCRATIC government

in March 1990 once again thrust Chile into the international

limelight. In the early 1970s, the long, narrow country on the west

coast of South America had drawn widespread attention by elect- ing a Marxist president, Salvador Allende Gossens (1970-73), who

was intent on forging a new path to socialism. Following Allende 's overthrow on September 11, 1973, Chile under military rule be- came notorious for some of the worst excesses of modern-day

authoritarianism

.

Headed by General of the Army Augusto Pinochet Ugarte

(1973-90), the dictatorship was widely reviled for ending Chile's

tradition of democratic politics and committing numerous violations of human rights. Although isolated politically, Chile's military government earned international acclaim for far-reaching

economic and social reforms that transformed the country's state- oriented economy into one of the most open economic systems in

the developing world. The economic reforms of the late 1970s and

1980s set the foundation for extraordinary investment and growth

in the early 1990s. Economic progress, combined with the return

of democratic politics largely devoid of the confrontation and polarization of the past, positioned Chile to enter the twenty-first cen- tury with increased prosperity in a climate of peace and freedom.

Chile's favorable situation developed because the military government's success at implementing an economic revolution was not

duplicated in the political arena. From the outset, Pinochet and

his colleagues had sought to displace the parties, politicians, and

institutions of the past so that they might create a nation of pliant

and patriotic citizens, devoted to their private pursuits under the

tutelage of a strong and benevolent state with merely a facade of

representative government.

However, the military commanders badly underestimated the

strength of the nation's traditional political parties and failed to understand the degree to which democratic practices and institu- tions had become a fundamental part of Chile's national character. Indeed, Pinochet was forced to abandon his plan for virtual

life-long rule after a humiliating personal defeat in a 1988 plebiscite (see Glossary) at the hands of the very civilian leaders whom

he had reviled and persecuted. Their resilience made possible the

transition to democracy in March 1990 and the success of Chile's

first civilian government after seventeen years of authoritarian rule.

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Chile: A Country Study

Chile's transition back to democracy encountered serious

challenges. Although opposition groups had vehemently rejected

the Pinochet government's constitution of 1980 as illegitimate and

undemocratic, they were forced to accept the political rules and

playing field as defined by the military government in order to challenge its very authority. To a greater degree than most other

transitions to democracy in Latin America, Chile's was accomplished within the framework of an institutional order conceived

by an authoritarian regime, one that continued to define the political game long after the return to representative government.

Pinochet was unable to destroy his adversaries or project his own

presidential leadership into the future, but he succeeded in imposing an institutional legacy that Chile's civilian elites would

have to modify substantially if Chile were to become fully democratic. Constitutional History

Development and Breakdown of Democracy, 1830-1973

Following the wars of independence and several failed experiments in institution building, Chile after 1830 made steady progress

toward the construction of representative institutions, showing a constancy almost without parallel in South American political his- tory. From 1830 until 1973, almost all of Chile's presidents stepped

down at the end of their prescribed terms in office to make way

for constitutionally designated successors. The only exceptions to

this pattern occurred in 1891, after a brief civil war; in the turbulence from late 1924 to 1927, which followed the military's intervention against the populist President Arturo Alessandri Palma

(1920-24, 1925, 1932-38); in 1931, when several chief executives

resigned under pressure and military officers intervened directly

in politics; and in 1932, when the commander of the Chilean Air

Force (Fuerza Aerea de Chile—FACh), Marmaduke Grove Vallejo,

proclaimed his short-lived Socialist Republic. For most of its his- tory, Chile was governed by two charters—the constitution of 1833

and the constitution of 1925, which drew heavily on its nineteenthcentury predecessor.

Under the 1833 document, Chilean presidents, notably Manuel

Bulnes Prieto (1841-51) and Manuel Montt Torres (1851-61),

presided over the gradual institutionalization of representative practices and a gradual expansion of suffrage, while exercising strong

executive authority. By the 1870s, the president was being challenged by increasingly cohesive political parties, which, from

their vantage point in the National Congress (Congreso Nacional;

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Government and Politics

hereafter, Congress), sought to limit executive prerogatives and

curb presidential intervention in the electoral process. With the assertion of congressional power, presidents were limited

to one term, and their control over elections was circumscribed.

However, it took the Civil War of 1891 to bring to an end the chief

executive's power to manipulate the electoral process to his advantage. The victory of the congressional forces in that conflict inaugurated a long period in which Congress was at the center of

national politics. From 1891 until 1924, presidents were required

to structure their cabinets to reflect changing legislative majorities, and the locus of policy making was subject to the intrigues

and vote trading of the legislature.

Although politics during the parliamentary period was often

chaotic and corrupt, Chile enjoyed unusual prosperity based on

a booming nitrate trade and relatively enlightened leadership. Political parties, whose activities had once been limited to the cor- ridors of Congress, soon engaged the interests and energies of

Chileans at every level of society. The parties thus provided the

basis for an open, highly competitive political system comparable

to those of Europe's parliamentary democracies. The competitiveness of Chilean politics permitted the emergence of new interests

and movements, including the Communist Party of Chile (Partido Comunista de Chile—PCCh) and the Socialist Party (Partido

Socialista), representing a growing and increasingly militant

proletariat.

The collapse of nitrate exports and the crisis brought on by the

Great Depression (see Glossary) of the 1930s discredited the politicians of Chile's oligarchical democracy and encouraged the growth

of alternative political forces. From 1924 to 1931, Chile was buffeted

by political instability as several presidents resigned from office and

Carlos Ibanez del Campo (1927-31, 1952-58), a military officer, rose to power on an antipolitics platform. In 1925 a new constitution was approved. Although it did not deviate substantially from

previous constitutional doctrine, it was designed to shift the balance

of power from Congress back to the president.

By the second and third decades of the twentieth century, Chile was facing some of the same challenges confronting the nations of

Europe. Parliamentary democracy had fallen into disrepute as the machinations of corrupt elites were challenged by both fas- cism and socialism, doctrines that stressed social as opposed to political rights and that sought to expand the power of the state in

pursuing them. Precisely because of its tradition of competitive politics and the strength of its political parties, Chile was able to withstand the challenge of alternative ideologies without experiencing

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Chile: A Country Study

the breakdown of democratic authority that swept the South American continent.

Chilean politics changed dramatically, however, as a multiparty

system emerged without exact parallel in Latin America, one in

which strong Marxist parties vied with conservative parties, while

pragmatic centrist parties attempted to mediate. In this polarized

context, presidents governed with shifting coalitions, pushing the

country alternately to the right or left, depending on the particular political configuration of the moment. Although the left gained

ground throughout the 1940s and 1950s, the right maintained elec- toral clout by blocking efforts to bring congressional representation into line with new demographic trends. This was not a period

of policy stalemate, however. By encouraging a policy of importsubstitution industrialization (see Glossary) and expanding social

welfare programs, the Chilean state markedly increased its role in

national life. In the aftermath of the Cuban Revolution of 1959, Chilean politics changed in a qualitative sense. With the 1964 election of a Christian Democratic government under the leadership of President Eduardo Frei Montalva (1964-70), Chile embarked on an ex- periment in reformist politics intended to energize the economy

while redistributing wealth. Frei and his colleagues were determined

to modernize the country through the introduction of significant

social reforms, including an extensive agrarian reform that would

bring an end to the concentration of economic power in the hands

of rural landlords.

Frei's government accomplished many of its objectives. In pushing for change, however, the president broke the tacit alliance with

the right that had made his election possible. His attempt to co- opt part of the program of the left and mobilize followers in traditionally leftist constituencies also threatened the Marxist parties.

By the end of the 1960s, the polarization of Chilean politics had

overwhelmed the traditional civility of Chile's vaunted democratic institutions. The centrist agreements of the past, which had en- abled presidents to navigate a difficult course of compromise and

conciliation, now became more difficult to attain.

In a reflection of Chile's increased ideological polarization, Allende was elected president with 36.2 percent of the vote in 1970.

Unable or unwilling to form coalitions, the left, center, and right

had all nominated their own candidates in the mistaken hope of

obtaining a majority. Allende's Popular Unity (Unidad Popular)

government drew initially on the congressional support of the Christian Democrats, whose backing made his election possible in the

congressional runoff on October 24, 1970. However, the left

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Government and Politics

increasingly pushed to implement its agenda without building political bridges to the ''bourgeois parties." Like Frei before him,

Allende was convinced that he would be able to break the deadlock of Chile's ideologically entrenched multiparty system and create a new majority capable of implementing his revolutionary agenda.

Once this effort failed, Allende 's attempts to implement his program by decree only heightened opposition to his policies. Finally,

the president's failure to make substantial gains from his electoral

victory in the March 1973 congressional elections meant that he

would be unable to obtain the necessary congressional majority to implement his legislative objectives (see table 34, Appendix). In an atmosphere of growing confrontation, in which moderates on

both sides failed to come up with a regime-saving compromise, the

military forces moved in to break the political deadlock, establishing the longest and most revolutionary government in the nation's

history.

Imposition of Authoritarian Rule

The military commanders took power in a violent coup on September 11, 1973, accusing Allende, who committed suicide during the takeover, of having violated the constitution. Within months,

however, it became apparent that the new regime blamed the breakdown of democracy not only on the parties of the left and the

Marxist president but also on the institutional framework embodied in the constitution of 1925. In the military's view, Chile's constitution had encouraged the rise of venal parties and politicians

preoccupied not with the broader welfare of the country but with

their own interests and hunger for power. The military blamed what

they viewed as self-serving politicians for allowing foreign ideologies to penetrate the nation, thereby creating an internal threat

that the armed forces felt obliged to confront.

Within days of the coup, the new government appointed a commission of conservative scholars to begin crafting a new constitutional order. However, after initial enthusiasm for their work,

commission members soon discovered that institutional reform was

not a top priority of the authorities and that the junta was in no

hurry to set a timetable for its own departure. The military's

primary goal was to revitalize the economy, while destroying the

parties of the left and rendering obsolete the parties and leaders

of other stripes.

In 1978, however, a power struggle within the junta between

Pinochet, commander of the Chilean Army (Ejercito de Chile),

and Gustavo Leigh Guzman, the FACh commander, forced the

military government to come to terms with its blueprint for the

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Chile: A Country Study

future of the country. Leigh resented the growing power and in- fluence of Pinochet, his putative equal in the junta, and sought

to force an early conclusion to the transition back to civilian rule

in a form similar to the constitutional framework of the immediate past. Pinochet, basking in the power and authority of an ex- ecutive with access to a powerful secret police network, the National

Information Center (Centro Nacional de Informacion—CNI),

which replaced the National Intelligence Directorate (Direction Nacional de Inteligencia—DINA) in 1977, had no enthusiasm for an

early return to civilian rule; rather, he hoped to institute more far- reaching transformations of Chile's institutions. The junta president was an admirer of long-time Spanish dictator Francisco Franco,

whose 1975 funeral he had attended in one of his few trips abroad.

Pinochet also viewed Franco's political system as a model for Chile, one in which the armed forces could play a permanent guiding role. When Leigh was forcibly dismissed from the junta in April 1978,

in a veritable coup within a coup, Pinochet's position became unassailable. Within months, Pinochet instructed the constitutional

commission, which had languished with no clear purpose, to produce a new constitution with a time frame more to his liking.

When the Council of State (Consejo de Estado), headed by for- mer president Jorge Alessandri Rodriguez (1958-64), softened some

of the provisions of the draft and proposed a return to civilian rule

by 1985, Pinochet balked and demanded a new, tougher version.

The "permanent" articles of the draft were designed to go into

effect a decade after promulgation, and Pinochet was specifically

named to preside over the country's fortunes for an eight-year

"transition" period. Pinochet further insisted that he be named

to fill the first eight-year term of the "constitutional period" that

followed, which would begin in 1990. The president's advisers,

however, were able to persuade him that ratification of the constitution in a plebiscite could be seriously jeopardized if it were too apparent that Pinochet would obtain an additional sixteen-year

mandate.

To satisfy Pinochet's ambitions, the designers of the constitution provided for a plebiscite to be held in late 1988 or 1989 on

a single candidate to be designated by the four commanders of the

armed forces (army commander Pinochet included) to lead the

country in the next eight-year term. In an obscure provision, the

text specifically exempted Pinochet from the article barring presidents from reelection, a clear sign that the general had every in- tention of perpetuating himself in power.

With the ratification of the constitution of 1980, in a highly ir- regular and undemocratic plebiscite characterized by the absence

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Government and Politics

of registration lists, Pinochet achieved his objectives. Chile's

democratic parties had proved incapable of challenging the power

of the military to impose its own blueprint for the future. After seven years of constitutional ambiguity and questionable political

legitimacy, the military's sweeping control over virtually every

aspect of public life had become codified and sanctioned in an

elaborate "democratic" ritual, which the authorities believed fi- nally conferred on them the legitimacy of the popular will. With

the economy at last on the upswing and a majority of voters resigned

to accepting military rule as the only means of ensuring order and

prosperity, Pinochet seemed invincible. As if to signal the government's renewed confidence and continuing contempt for its politi- cal opponents, Andres Zaldivar, the highly respected president of

the Christian Democratic Party (Partido Democrata Cristiano

PDC), was exiled for daring to question the plebiscite's results. The Constitution of 1980

The constitutional document imposed by the regime in 1 980 consisted of 120 "permanent" articles, which went into full effect af- ter the transition to "constitutional government." The document

also included thirty-four "transitional" articles applying to the transitional period from March 1 1 , 1980, to March 1 1

, 1990. The transitional articles provided the regime with sweeping powers and

outlined the procedures for the 1988-89 plebiscite on constitutional

amendments and the election of a legislature. The most controversial

provision was Transitional Article 24, which eliminated due process

of law by giving the president broad powers to curtail the rights

of assembly and free speech and to arrest, exile, or banish into in- ternal exile any citizen, with no rights of appeal except to the president himself.

The "permanent" articles of the constitution were intended to create a "modern and protected democracy," an authoritarian ver- sion of representative government that guarantees "national secu- rity" by severely circumscribing the will of the people. This was

to be accomplished in three ways: through the establishment of a permanent role for the armed forces as "guarantors" of the nation's institutions; through the imposition of restrictions on politi- cal activity, including the banning of movements or ideologies

hostile to democracy; and through the creation of institutional

mechanisms that would limit popular sovereignty.

The cornerstone of the military regime's constitutional doctrine was, according to the 1980 document, the establishment of a per- manent tutelary role for the armed forces. The principal manifestation of this "tutelage" was, according to the 1980 document, the

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Chile: A Country Study

National Security Council (Consejo de Seguridad Nacional

Cosena), a body composed of eleven members, eight of whom have

enjoyed full voting rights since 1989 and only two of whom were

to be elected officials (Article 95). Voting members consisted of

the president of the republic, the president of the Senate of the

Republic (Senado de la Republica; hereafter, Senate), the president of the Supreme Court (Corte Suprema), the commanders in

chief of the armed forces, and the director general of the Carabineros

of Chile (Carabineros de Chile). This arrangement provided military leaders with an absolute majority on any Cosena vote. Nonvoting members included the ministers of defense; economy,

development, and reconstruction; finance; foreign relations; and

interior.

The 1980 constitution prescribed that Cosena could "express

to any authority established by this constitution its opinion regarding

any deed, event, act, or subject matter, which in its judgment gravely challenges the bases of the institutional order or could threaten

national security" (Article 96). Cosena was thus empowered to admonish top government leaders and institutions, including Congress and the president, on any matter Cosena deemed relevant

to the nation's security as Cosena defined it. Although the fundamental law did not specify what would transpire should an

authority ignore Cosena' s opinion, the framers clearly intended

to give the armed forces constitutional authority to take matters

into their own hands should their views be ignored.

The 1980 constitution also gave Cosena significant powers of

"authorization" and "nomination." The constitution required the

president to seek approval from Cosena to impose any state of ex- ception (see Glossary) and gave the council authority to solicit any

information it deemed necessary in "national security" matters

from any government agency. Under the 1980 charter, Cosena was

also empowered to name four of the nine designated members of

the Senate and two of the seven members of the powerful Constitutional Tribunal (Tribunal Constitucional), whereas the president and the Senate could nominate only one each. Finally, only

Cosena could remove military commanders.

Perhaps the most significant protection of military prerogatives was provided by Article 93 , which severely limits civilian control over the armed forces. Although the president names the com- manders of each of the military services and the director general

of the Carabineros, nominees must be selected from a list of the

five highest-ranking officers with greatest seniority. Once a com- mander is appointed, that appointee is safe from presidential

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Government and Politics

dismissal for the duration of the individual's four-year term, unless qualified charges are brought against the person.

A second set of instruments for the establishment of a "protected" democracy excluded from political life those individuals, parties, or movements whose views and objectives are judged hostile

to democracy. The language of Article 8 was aimed specifically at the parties of the Marxist left, although it could be applied to other

groups and movements as well. According to the article, "any act by a person or group intended to propagate doctrines that are antagonistic to the family or that advocate violence or a totalitarian

concept of society, the state, or the juridical order or class struggle

is illicit and contrary to the institutional order of the Republic."

Furthermore, any organization, movement, or political party that

supports such aims is deemed unconstitutional. Article 19 barred

parties from intervening in any activities that are "foreign to them, '

including the labor movement and local or community politics. Fi- nally, Article 23 and Article 57 specifically barred leaders of "intermediate groups," such as unions, community organizations, and

other associations, from leadership of political parties, and vice versa; deputies or senators could lose their seats for acting directly on such groups' behalf.

Third, the military regime sought to limit the expression of popular sovereignty by placing a series of checks on government insti- tutions whose existence derives from popular consent. The most

dramatic example was the elimination of elected local governments.

Since colonial times, Chileans had elected municipal governments

with considerable local powers and autonomy. Although modern

local governments were limited in their efficacy by the overwhelming

power and financial resources of the state, participation and in- terest in local politics had always been high. Article 32 of the constitution called for the direct presidential appointment of regional

intendants (intendentes) , governors (gobernadores) of provinces, and

mayors {alcaldes) of large cities. Other mayors could be appointed

by provincial corporative bodies (see Regional and Local Government, this ch.).

Reversing Chilean democratic practice, the constitution creat- ed an exaggerated presidentialism, severely limiting the prerogatives of Congress. Article 32 was particularly dramatic, giving the

president the power to dissolve the lower house, the Chamber of

Deputies (Camara de Diputados), at least once in the chief ex- ecutive's term. Popular representation in Congress was to be

checked through the appointment of nine "designated" senators, more than a fourth of the thirty-five-member chamber. Finally,

the constitution made any reform in the basic text extremely difficult

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Chile: A Country Study

to implement by requiring the concurrence of the president and

two succeeding legislatures, each of which would have to approve an amendment by a three-fifths vote. Authoritarianism Defeated by Its Own Rules

The reversal of fortune for Chile's democratic opposition came

very gradually. After massive protests in 1983, spearheaded by labor

leaders buoyed by mass discontent in the wake of a sharp downturn in the nation's economy, party leaders sought to set aside their

acrimonious disputes and make a collective effort to bring an end

to the military government. By this point, even influential elements on the right were signaling their displeasure with the personalization of power, fearing that a prolongation of the Pinochet regime

would only serve to radicalize Chilean politics further and set the

stage for a popular uprising that would overwhelm the authorities.

But Pinochet seemed to relish the challenge of taking on the opposition and was determined to carry out his self-appointed mandate to reshape Chile's economic and political systems. In a strategic retreat made under pressure from regime moderates, Pinochet brief- ly permitted officials to open a dialogue with democratic opponents,

only to refuse to make any change in the formula for transition

outlined in the constitution of 1980. In response to the continuing wave of protests, Pinochet declared a state of siege in November

1984 that included a crackdown on all demonstrations.

In August 1985, after months of delicate intraparty negotiations

backed by Chile's Roman Catholic cardinal Juan Francisco Fres- no, a broad alliance of eleven political groups, from center-right

to socialist, signed a document entitled the National Accord for

Transition to Full Democracy. It called for a gradual transition

to civilian rule without specifying a particular timetable; legalization of all political activity; an end to restrictions on civil liberties; and free, direct presidential elections rather than the plebiscite con- templated in the constitution of 1980. The signing of the accord

by such an array of groups meant that for the first time since 1973

Pinochet could no longer claim majority support. The regime appeared vulnerable, and many Chileans began to believe that

Pinochet would agree to relinquish power.

However, the accord soon lost its momentum as Pinochet and

his aides worked skillfully to sow mistrust and rancor within the

fragile alliance. The general refused to acknowledge the accord's

existence or meet with its leaders, despite a personal plea from

Cardinal Fresno.

In the face of a determined military leader, opposition forces were

at a clear disadvantage. They had no coherent strategy to force

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Government and Politics

the regime to accept their point of view. The far left, which had

refused to endorse the accord, hoped for a Sandinista-style insurrection that would drive Pinochet from power and give the PCCh

and its allies, which included clandestine armed groups, the upper hand in the formation of a "provisional" alternative government. The moderate opposition envisioned a completely different

scenario: some kind of breakdown of military support for Pinochet

in response to peaceful civilian discontent, followed by free elections. With the erosion of support for the National Accord, the Chilean

opposition fell back into partisan and ideological quarrels. After

years without national, local, or even internal party elections, opposition leaders were frozen in past disputes, incapable of gauging popular support for various policies. Given the parties' stasis,

student elections on Chile's university campuses became bellwethers

of political opinion. Often, the Christian Democratic and Communist candidates for student offices proved far more willing to compromise and form working alliances than their older counterparts.

The dramatic attempt on Pinochet's life by the Manuel

Rodriguez Patriotic Front (Frente Patriotica Manuel Rodriguez

FPMR) in September 1986 further weakened the general's divided opponents and temporarily strengthened his own grip on power. The elaborately planned attack by the PCCh-linked group, in

which commandos stormed Pinochet's motorcade on a hillside road

outside Santiago, left five bodyguards dead but the general un- harmed. Conservatives rallied around the regime, Christian

Democrats and moderate Socialists distanced themselves from the

Communists, and the Western democracies tempered their support of the opposition movement. Over the ensuing months, several

new campaigns by the democratic opposition fizzled, including a movement of prominent citizens calling for free elections. Key opposition leaders, notably Christian Democrat Patricio Aylwin Azocar, began to emphasize the wisdom of trying to take on the regime

in the upcoming plebiscite, rather than pressing for free elections.

As 1987 began, Pinochet and his aides confidently started planning for the presidential plebiscite. The economy was showing signs

of recovery. The Marxist left, decimated by arrests and executions

following the attack on Pinochet, was discredited. The democratic

opposition was torn between those who accepted the regime's transition formula and those who denounced it as illegitimate. Moderate

conservatives and some regime insiders, including the chiefs of

the FACh and the Carabineros, urged Pinochet to permit open

elections or to allow a candidate other than himself to stand for

office. But the general was surrounded by sycophants who assured

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Chile: A Country Study

him that he was the only man capable of saving Chile from anar- chy and chaos. Pinochet viewed politicians as demagogues determined to reverse the accomplishments of the military regime that

only he, as a patriotic, self-sacrificing soldier, could defend in the

face of a life-and-death threat from the communist foe. On August 30, 1988, Chile's four military commanders met in

secret deliberation and unanimously nominated the seventy-threeyear-old Pinochet to run for president in a plebiscite that would

take place in just five weeks, on October 5. Any commander who

might have opposed General Pinochet did not do so, apparently

because of a belief in the principle of military unity, or because

of intimidation by Pinochet's power. The vast resources of the re- gime were already mobilized to ensure Pinochet's victory. Military provincial governors and civilian mayors, all appointed by

Pinochet, were acting as local campaign chiefs. A voter-registration

drive had begun in early 1987, with Pinochet himself the first to

register. While opposition forces were denied access to the mass

media, state television aired glowing advertisements for the government's accomplishments. The regime stepped up production of

low-income housing, and Pinochet presided over countless ribboncutting ceremonies. The general's wife, Lucia Hiriart, who headed

a vast network of women's aid and mothers' clubs, organized them

into a grass-roots support network for the yes vote. The turning point for the opposition had come in 1987, when

key leaders concluded that their only hope to defeat the military was to beat it at its own game. Opposition leaders accepted the

reality, if not the legitimacy, of constitutional provisions they

despised by agreeing to register their followers in the electoral rolls set up by the junta, legalize political parties according to the re- gime's own prescriptions, and prepare to participate fully in a plebiscite they viewed as undemocratic.

By early 1988, fourteen parties had joined a loose coalition for the no vote. Moderate Socialists played a key role in convincing

dubious Chilean leftists to register to vote, and the more radical

wing of the Socialist Party finally followed suit. With little money

and only limited freedom to operate, an all- volunteer force led by

Socialists and Christian Democrats registered voters, organized

training sessions for poll watchers, and collected the signatures needed to legalize parties. By the cutoff date, a record 92 percent of

the voting-age population had registered to vote, and four parties

had collected enough signatures to register poll watchers for 22,000

voting tables. Despite inherently unfair campaign conditions, the military

government made some efforts to provide a level playing field. The

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Government and Politics

Constitutional Tribunal, to the annoyance of some hard-liners in

the regime, issued a firm ruling arguing that the constitution re- quires the implementation of a series of measures that would

guarantee an impartial vote and vote count. Ironically, these measures had not been applied in the plebiscite that had ratified the

constitution itself in 1980. Although opposition leaders did not trust the government, a fair election was also in the government's interest. Pinochet and his commanders were confident that the population's fear of a return to the confrontations of the early 1970s,

in combination with signs of economic recovery and a campaign

run with military efficiency, would permit Pinochet to overwhelm

the fractious opposition and let his detractors, both at home and

abroad, know that he enjoyed broad popular legitimacy.

In the weeks before the plebiscite, the no campaign, finally

granted access to television, stunned the nation with its unity and

a series of upbeat, appealing advertisements that stressed harmony

and joy in a reunited Chile, called for a return to democratic traditions, and hinted at the poverty and oppression average people had

suffered under the dictatorship. In response, the government stepped

up its official propaganda campaign, bombarding the airwaves with

grim and far less appealing advertisements that reminded voters of the violence and disorder that had preceded the coup and warned

that Pinochet's opponents offered only more of the same. On October 5, 1988, the voting proceeded in a quiet, orderly

fashion, with military guards at each polling place, per tradition.

By 9:00 P.M., the opposition's computers had counted half a million votes and showed the no tally to be far ahead. However, the

government kept delaying the release of its tallies, and state televi- sion finally switched to a comedy series from the United States. After frantic behind-the-scenes negotiations and a failed effort by some government officials to provoke street violence as an ex- cuse to cancel the plebiscite, government television announced, at 2:40 A.M., that with 71 percent of the vote counted, the no was

far ahead. The following night, a grim-faced Pinochet appeared on television and acknowledged his defeat: 54.5 percent for the no, versus 43 percent for the yes. Pinochet's acceptance of his electoral loss was a remarkable event. Despite the general's evident ambition to remain in power, the firm discipline within Chile's military

establishment and the commitment of the other junta commanders,

who had pledged to guarantee the vote's outcome, prevented him

from doing so. The Constitutional Reforms of 1989

The victory of the opposition led to a period of political uncertainty.

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Chile: A Country Study

The no coalition had campaigned on a platform that rejected not

only Pinochet's candidacy but also the "itinerary" and proposed

"institutionally" of the Pinochet government. Democratic leaders felt that their clear victory entitled them to seek significant

modifications in the constitutional framework established by the

armed forces. However, they firmly rejected calls for Pinochet's

resignation, or the formation of a provisional government, as unrealistic. Although Pinochet and the armed forces had suffered an

electoral defeat, they had, of course, not been defeated militarily, nor had they lost their iron grip on the state. Nor was there any

hint that the military would be willing to disregard Pinochet's wishes

and abandon the transition formula and institutional order envisioned in "their" 1980 constitution. The fact that Pinochet had

received 43 percent of the popular vote, despite fifteen years in

office, only strengthened his hand in military circles. Under these circumstances, the opposition leaders understood

that they could not risk upsetting the military's transition formula

or giving Pinochet an excuse to renege on the constitutional provision calling for an open presidential election within seventeen

months. The opposition had won the plebiscite following Pinochet's

rules; it could not now turn around and fully disavow them. Yet

the opposition faced a serious dilemma. The 1980 constitution would

be very difficult to amend once a new government was elected; a government elected under its terms would be locked into a legal structure the coalition considered fundamentally undemocratic.

Pinochet would appoint almost one-third of the Senate, and the

congressional election would take place under the rules of a sys- tem designed to favor the forces of the right, which had supported

the military government. Changes to the constitution could be ap- proved much more expeditiously before the full return to democracy

because they would require the approval of only four men on the

military junta, subject to ratification by a plebiscite.

Moderates within the military government who were open to discussions with the opposition quickly distanced themselves from

regime officials and supporters who saw any compromise as capitulation. These moderates believed that it was in the military re- gime's clear interest to bargain with the opposition so as to salvage

the essential features of the institutional legacy of the armed forces. They wanted a "soft landing" and feared that if the regime proved

inflexible, a groundswell of support for the opposition could sweep

away all of what they viewed as the government's accomplishments.

The position of the moderates in the military government, whose

power was not assured, was bolstered significantly by the willingness

of the largest party on the right, the National Renewal (Renovation

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Government and Politics

Nacional), to sit down with the opposition parties to come to an agreement on constitutional reforms. Political leaders of the

democratic right were also uncomfortable with many of the

authoritarian features of the 1980 constitution and anxious to dis- tance themselves from the more unpalatable features of the regime

as the country began to move toward electoral politics. They too were committed to a spirit of dialogue that might help prevent a breakdown in the transition and a return to raw military rule. The

rightists' willingness to talk to their opponents in the center and

on the left placed the regime hard-liners on notice: if reforms were

not accomplished before the election of a new Congress, the centerleft parties of the opposition and the moderate right might yet find a way to dismantle the constitution of 1980.

The moderates within the government won the day with two additional arguments. First, they argued that any compromise with

the opposition would leave the essence of the constitution intact

while providing it with a legitimacy it presently lacked. The constitutional reforms finally would establish the Pinochet document

as the legitimate successor to the 1925 constitution.

Second, the government soft-liners made persuasive arguments

that constitutional reforms, prior to the advent of democratic politics, could improve certain features of the constitution. The constitution was designed for Pinochet's reelection, not his defeat, and

the armed forces feared that the document did not sufficiently protect their institutional autonomy. By entering into a constitutionalreform agreement, the authorities could insist on an amendment

that would elevate the law regulating the armed forces' internal

operations, including promotions, organization, training, and

finances, to the status of an "organic constitutional law." This

would mean that changes in the law could not be made unless approved by a majority, or four- sevenths, of all senators and deputies.

The extraordinary bargaining among the democratic opposition,

the moderate right, and the regime owed much to the leadership

of Patricio Aylwin, the leader of the Christian Democrats, who had

become the standard-bearer of the no alliance. Aylwin understood

that the hard-liners within the military government could make

the transition difficult, if not impossible, if the reform process broke

down. Nor did Aylwin, who expected to be the next president of

Chile, relish the prospect of a confrontational transitional government in which the new authorities would endeavor vainly to implement reforms while supporters of the former military government

sought to hold the line. The prospects for the first government af- ter a long authoritarian interlude would be jeopardized by a con- tinuous struggle to define the future of the country's institutional

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Chile: A Country Study

order. Better to agree on the playing field now, in order to avoid

fatal problems later. For the regime, Carlos Caceres, Pinochet's

minister of interior, played a critical role. At one point in the talks,

he threatened to resign when the general balked at key constitutional reforms, only to find strong support for his position among

other commanders on the junta.

Opponents of constitutional reform on both the far left and the

far right shared a curious symbiotic logic. Those on the left rejected reform because they envisioned a sharp break with the military

government, which would be defeated once again in an open

presidential election and would have to concede the failure of its institutional blueprint. Those on the right relished that very confrontation because they saw it as forcing the military once again

to accept its "patriotic responsibility" and save the country from

a citizenry still not ready for democracy.

The fifty-four reforms, approved by 85.7 percent of the voters on July 30, 1989, fell far short of the expectations of the opposition but nevertheless represented significant concessions on the part

of the authorities. From the point of view of the opposition, the

most important modifications were to Article 8, which in its new

form penalized parties or groups that, through their actions and

not simply through their objectives, threatened the democratic or- der. Other reforms eliminated the prohibition against party membership of labor or association leaders, required the courts to consider habeas corpus petitions in all circumstances, and prohibited

exile as a sanction. The revised article also reduced the qualified

majorities required for approval of organic constitutional laws and

constitutional amendments in Congress; eliminated the requirement that two successive Congresses vote to enact amendments;

and increased the number of elected senators to thirty-eight, thus

reducing the proportion of designated senators while restoring some

oversight functions to the Senate. In addition, the amended arti- cle eliminated the president's power to dissolve the lower house

of Congress and reduced some of the chief executive's power to declare a state of exception; changed the mandate of Cosena by

substituting the word representar (represent) for hacer presente (make

known), a legal construction that the opposition interpreted from

legal precedents at the Office of the Comptroller General of the

Republic (Oficina de la Contralona General de la Republica) as giving Cosena an advisory role, rather than an enforcement role; and increased the membership of Cosena to eight by adding another

civilian member, the comptroller general (contralona general). The

latter modification ensured that the military members of Cosena

would not enjoy a four-to-three majority.

214
Government and Politics From the perspective of the Pinochet government, the most important result of the reform process was the retention of the essential elements of its constitutional design and its ratification by an

overwhelming majority of the citizenry. What the military had not

achieved in 1980, it achieved with the negotiations of 1989. The

constitution of the armed forces had now replaced the constitution

of 1925 as the legitimate fundamental law of the land. Although

it had to concede some points, the military gained a significant vic- tory with the provision that laws dealing with the armed forces

would be governed by an organic constitutional law. The Pinochet

regime also succeeded in having the first elected president's term

limited to four years with no option to run for reelection. Government officials were convinced that even if the opposition parties

won the next election, they would be incapable of governing, a sit- uation that would open the door in four years to a new administration more to the military's liking.

With the approval of the constitutional reforms, Chile's transition became, in political sociologist Juan J. Linz's terms, a transi- tion pactada (a transition by agreement), rather than a transition por

ruptura (a sharp break with the previous order). However, the opposition made clear that it saw the agreements as constituting only

a first step in democratizing the constitution, and that it would seek

further reforms of Cosena, the composition of the Constitutional

Tribunal and the Senate, the election of local governments, the

president's authority over the armed forces, and the powers of Congress and the courts. With the constitutional reforms behind them, Chileans turned

their attention to the December 14, 1989, elections, the first democratic elections for president and Congress in nineteen years. The fourteen opposition parties formed the Coalition of Parties for Democracy (Concertacion de Partidos por la Democracia—CPD),

with Aylwin as standard-bearer. His principal opponent was

Pinochet's former minister of finance, Hernan Biichi Buc, who ran

as an independent supported by the progovernment Independent

Democratic Union (Union Democrata Independiente—UDI) and

the more moderate rightist party, National Renewal, which ran

a joint congressional coalition called Democracy and Progress

(Democracia yProgreso). Independent businessman Francisco

Javier Errazuriz Talavera ran as the third candidate on a populist

platform supported by a heterogeneous group of small parties calling

themselves Unity for Democracy (Unidad por la Democracia).

Aylwin (1990-94) won a decisive victory, improving on the no

vote in the plebiscite with 55.2 percent of the 7.1 million votes cast

to Biichi's 29.4 percent and Errazuriz's 15.4 percent (see table 25,

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Chile: A Country Study

Appendix). In the congressional races, the CPD was able to beat

the heavy odds imposed by the government's electoral formula and

win a majority of the elected seats in both the Chamber of Deputies

and the Senate. In the Chamber of Deputies, the CPD gained 49.3

percent of the vote to 32.4 percent for Democracy and Progress

and 50.5 percent of the vote versus 43 percent for its opponent in

the Senate (see table 36, Appendix).

Although the CPD won a majority of the contested seats in Congress, it fell short of having the numbers required to offset the designated senators to be appointed by the Pinochet government. Passage

of even the simplest legislation would have required negotiations

with opposition parties or individual designated senators. The mili- tary regime's electoral law had ensured an overrepresentation of

the parties of the right in relation to their voting strength, making

it virtually impossible for the new civilian government to adopt

constitutional reforms without the concurrence of one of the main

opposition groups.

Not the least of the new government's challenges was Pinochet

himself, who by constitutional provision could remain as com- mander in chief of the army until 1997. Pinochet made it clear that

he would continue to be a watchdog, ensuring that the new rules were followed and that "none of his men were touched" for their

actions in the "war" to save Chile from communism.

Although Chile's authoritarian legacies clearly frustrated the new

leadership, the transition probably was facilitated in the short term

by the veto power that the military and the right continued to enjoy. Had the CPD pressed for an immediate modification of

Pinochet's institutional edifice and attempted to dismiss many of

his supporters, the armed forces would have been far more resis- tant to the return of civilian rule. Chile's rightist parties, which remained suspicious of popular

sovereignty and fearful that a center-left alliance with majority support could threaten their survival, would have been much more

likely to conspire with the military had their "guarantees" been

undermined. These authoritarian legacies also contributed to the success of the transition by helping the broad coalition under Aylwin's leadership achieve unity, retain it, and elaborate a common

program of moderate policies. This moderation can be attributed

not only to respect for a new style of politics after the traumatic

years of authoritarian rule, but also to the new authorities' genuine

fear of the strength of the armed forces and their rightist supporters. The danger Chile now faced was that the very provisions that

made the transition possible in the short term could make the consolidation of a stable democracy more difficult in the long term.

216
Patricio Aylwin Azocar,

president 1990-94

Courtesy Presidency

of the Republic,

Department of

Photography

The State and Government Institutions in Chile

The State and the System of Government

Even prior to the 1970 election of Salvador Allende, the Chilean

state was one of the most extensively structured in Latin America.

By the end of the 1960s, direct public investment constituted over

50 percent of all gross investment. Government expenditures ac- counted for 14 percent of the gross national product (GNP—see Glossary), and 13 percent of the economically active population

worked in the public sector. From 1940 until 1952, the budget deficit of the government averaged 0.5 percent of the gross domestic product

(GDP—see Glossary). It grew to 2.4 percent between 1940 and 1952

and 4.3 percent between 1959 and 1964, a period largely conconcurrent with the administration of the conservative Jorge Alessandri.

With the growth of the state went the growth of a far-flung

bureaucracy with its own dynamic and considerable independence

from executive power. State expansion involved the creation of an

ever larger and more bewildering array of decentralized and semiautonomous agencies, which depended only nominally on particular ministries for control. By the mid-1960s, 40 percent of all public employees in Chile worked for more than fifty such agencies, charged with implementing most of the economic and social

service responsibilities of the state.

217
Chile: A Country Study

Particularly important was the Production Development Corporation (Corporacion de Fomento de la Production—Corfo),

created in 1939 to develop Chilean industry in accord with an

import-substitution industrialization policy. By mid-century Corfo owned shares in eighty of the country's most important enterprises and held majority shares in thirty-nine of them. Utilities,

ports, steel production, and other enterprises were developed by

an array of state agencies. Although public ventures, these enterprises were governed by their own boards and enjoyed substantial

autonomy from ministerial and executive control. Some permitted direct representation of interest groups in a quasi-corporatist

scheme. Such representation was most commonly enjoyed by busi- ness organizations, which had voting rights in agencies such as the

Central Bank of Chile (Banco Central de Chile; hereafter, Central Bank—see Glossary), the State Bank of Chile (Banco del Es- tado de Chile; hereafter, State Bank), and Corfo. During the

Allende years, a policy of nationalization of private industry brought

close to 500 firms into state hands, including the country's giant

copper companies, which had been owned by United States

interests.

The expansion of the state sector was in response to a development strategy that entrusted economic growth to public-sector

initiative and regulation. State expansion was also fueled by a

presidential form of government that encouraged chief executives

to establish new programs as their historical legacy. Civil service

laws made it difficult for incoming presidents to dismiss employees,

a situation that led to the creation of new agencies to undertake

new programs without dismantling old ones. In a sluggish economy,

the state sector was also an important source of patronage. Politi- cal parties, particularly those that were part of the incumbent

presidential coalition, became important employment centers for

government agencies.

The Chilean state, however, was also notable for its general lack

of corruption and its fairly efficient operation. Public employees were keenly aware that their careers could be ruined if the powerful Office of the Comptroller General caught them using funds improperly. Although tax revenues often lagged, Chile enforced tax laws with greater success than many of its neighbors. A career in

public service was valued, and the Chilean state counted on many

dedicated and fairly well-educated officers from Chile's middle classes. The relative efficiency and probity of the Chilean state was the

result of a long history of competitive party politics, in which opposition parties and Congress kept a close watch on the conduct

of public affairs.

218
Government and Politics By the 1960s, Chile's strategy of import-substitution industrialization had run its course. The country was plagued by chronic

inflation as contending groups sought government subsidies or wage

readjustments that would keep them ahead of their competition.

The scramble for favorable state action on behalf of sectoral in- terests was intensified by growing polarization and confrontation

in the political sphere, as increasingly mobilized social groups sought

larger shares of Chile's finite resources. The system came to a breaking point during the Popular Unity government, when the authorities unabashedly used state agencies as a means of expanding

political support. The Allende government swelled the rolls of

government offices with regime partisans and made ample use of

regulatory powers to freeze prices and increase wages, while printing

unbacked money to cover an expanding government deficit. State agencies became veritable fiefdoms for the different parties, each

trying to pursue its own agenda with little regard for a coordinated national policy.

Within days of toppling the Allende government, the military

regime began a dramatic reduction in the size of Chile's public

sector. Between 1973 and 1980, public-sector employment was

reduced 20 percent, and by the latter year only forty-three firms

remained in state hands. In the late 1980s, another round of privatization further reduced state control of productive enterprises. Cutbacks in state expenditures in other fields, including medical care and education, reduced deficits to the point that by the mid-1980s

the state budget was in the black. Government surpluses reached

3 percent of GNP by the end of the military regime.

The civilian government of Patricio Aylwin took great pains to retain a smaller but more efficient state. By 1992 government sur- pluses had reached 5 percent of GNP; expansions in state expenditures for social services were financed by increased revenues

generated by tax reform, rather than by deficit spending. By comparison with many developed countries, Chile still retained a powerful state sector, with utilities, railroads, and the giant copper mines

that produced a significant percentage of government revenues re- maining under government control. At the same time, the process

of state decentralization begun by the military government continued, albeit under the aegis of democracy rather than dictatorship.

Chile's system of government was patterned after that of the United States, as were those of all of the Latin American countries.

The failure of the French Revolution to produce an enduring republican model left the representative model of Philadelphia as the only

viable republican system of government in the early nineteenth century. Chile thus incorporated the principle of the separation of

219
Chile: A Country Study

powers into its constitutional framework, even though the country rejected in its constitution of 1833 the federal system pioneered

by the United States. Much of Chile's political history can be described as an ongoing, occasionally violent struggle for advantage among the executive and legislative branches of government. In the 1920s, the Office

of the Comptroller General became a virtually coequal branch of

government with the others because of its great oversight powers

and its virtual autonomy. With the approval of constitutional

amendments in 1970 and the adoption of the 1980 constitution,

the Constitutional Tribunal, Cosena, and the Central Bank be- came important government organs in their own right (see The

Autonomous Powers, this ch.).

The Presidency

The constitution of 1925 sought to reestablish strong presidential rule in order to offset the dominant role assumed by the legislature after the Civil War of 1891. Elected to serve a single six-year

term, the president was given broad authority to appoint cabinets

without the concurrence of the legislature, whose members were no longer eligible to serve in executive posts. Formal executive

authority increased significantly in succeeding years as Congress

delegated broad administrative authority to new presidents, who

increasingly governed by decree. Constitutional reforms enacted

in 1947 and in 1970 further reduced congressional prerogatives.

Although the 1925 constitution gave Chilean presidents increased

power on paper, actual executive authority does not appear to have

increased significantly. No president could count on gaining majority support without the backing of a broad alliance of parties. In

1932, 1938, 1942, and 1964, presidential candidates structured successful majority coalitions prior to the presidential election, promising other parties cabinet appointments and incorporation of some

of their programmatic objectives. In 1946, 1952, 1958, and 1970,

because presidential candidates did not attract sufficient coalition

support to win a majority of the votes, the election was thrown into

Congress, which chose the winner from the two front-runners.

Whether elected by a majority of the voters or through compromises

with opposition parties in Congress, Chilean presidents found that

governing often amounted to a balancing act. Only by structuring

complex majority coalitions could the president pass legislative programs and prevent the censure of key ministers by Congress.

The presidential balancing act was complicated by frequent defections from the chief executive's coalition of supporters, even by

members of his own party, particularly in the waning months of

220
La Moneda Palace, seat of the executive branch, in Santiago

Courtesy Embassy of Chile, Washington

his constitutionally stipulated single term. One result was that the

average cabinet often lasted less than a year (see table 37, Appendix). For example, in the government of Gabriel Gonzalez Videla

(1946-52), who was a member of the Radical Party (Partido Radical), the average cabinet lasted six and one-half months; Allende's

cabinets lasted slightly less than six months. The average duration

of ministerial appointments was six months and seven months in

the same two governments, respectively. This pattern resulted in

frustrated presidents and policy discontinuity that belied the for- mal powers of the chief executive.

The authors of the constitution of 1980 sought to address the

government's structural problems by creating a far stronger executive. The 1980 charter increases presidential terms from six to eight years but retains the prohibition against immediate reelection, and it gives broad new powers to the president at the expense

of a weakened legislature. However, prior to the transfer of power

in March 1994, the constitution was amended, reducing the

presidential term back to six years. The constitution specifies that the president should be at least forty years of age, meet the constitutional requirements for citizenship, and have been born on Chilean territory. The president is elected by an absolute majority of the valid votes cast. The 1980

221
Chile: A Country Study

constitution did away with the traditional practice of having Congress decide between the two front-runners when no candidate

receives an absolute majority of the votes. It institutes instead a second-round election aimed specifically at barring political bargaining in the legislature and ensuring the election of a president

with the backing of a majority of the population.

In addition to specific prerogatives and duties, the constitution

grants the president the legal right to "exercise statutory authority in all those matters that are not of a legal nature, without

prejudice to the power to issue other regulations, decrees, or in- structions which he may deem appropriate for the enforcement of

the law" (Article 32). The president has the right to call plebiscites, propose changes to the constitution, declare states of emergency and exception, and watch over the performance of the court system. The president names ministers and, in accord with specific procedures, two senators, the comptroller general, the com- manders of the armed forces, and all judges of the Supreme Court

and appellate courts (cortes de apelaciones) . Departing from previous

practice, which required senatorial confirmation of diplomatic appointments, the 1980 constitution bars the legislative branch from

any role in the confirmation process. Finally, it increases the legislative powers of the president dramatically, making the chief ex- ecutive a virtual colegislator (Article 32, in concordance with Article

60).

Ironically, although the CPD strongly criticized the disproportionate powers given to the president in the 1980 constitution, President Aylwin moved with determination to make full use of those

very powers. The son of a middle-class family whose father was

a lawyer and judge and eventually president of the Supreme Court,

Aylwin was born on November 26, 1918, in Vina del Mar. He

studied law and had faculty appointments at the University of Chile

and the Pontifical Catholic University of Chile. In 1945 he joined

the National Falange (Falange Nacional), the precursor of the PDC,

which he helped form in 1957. A former senator, Aylwin served seven terms as president of the PDC , a position he held when he was nominated as the PDC's presidential candidate. In his work

as spokesman for the multiparty opposition coalition, he displayed

great skills as a conciliator, gaining the confidence of parties and

leaders on the left, who had vehemently opposed his support for the overthrow of the Allende government. A man of deep religious

conviction, humble demeanor, and unimpeachable honesty, Aylwin impressed friends and foes alike when he successfully negotiated

the constitutional reforms of 1989.

222
Government and Politics

As president, Aylwin surprised even his closest advisers with his firm leadership, particularly his willingness to stand up to Pinochet,

who remained army commander. For instance, in a crucial meeting of Cosena, Aylwin challenged Pinochet on a matter directly

related to the issue of presidential authority and received backing

from the other military commanders for his position. Aylwin moved

cautiously but firmly in dealing with the human rights abuses of

the past, appointing a commission that officially acknowledged the

crimes of the security forces. Subsequent legislation provided compensation for victims or their families, even if prosecution for most

of those crimes appeared unlikely ever to take place.

The Aylwin government also took great pains to assure domestic and foreign investors of its intention to maintain the basic fea- tures of the free-market economic model. The CPD was keenly aware that it needed to retain the confidence of the national and

international business communities and show the world that it too could manage economic policy with skill and responsibility. Indeed,

by showing that Chile could manage its economic affairs in

democracy, the government could provide an even more favorable economic climate, one not clouded by the political confrontations and potential instability of authoritarianism. The Aylwin

government appeared to meet this objective, as the Chilean economy

grew at an average rate of more than 6 percent from 1990 through

1993.

The Aylwin government was cautious in proposing constitutional

reforms for fear of alienating the military and the opposition parties of the right, which controlled the Senate. The key constitutional reform, enacted on November 9, 1991 , created democratically

elected local governments by reestablishing elections for municipal

mayors and council members. Additional reforms of the judicial

system were also approved. Although it indicated its desire to change

the electoral system and the nature of civil-military relations, the

Aylwin government was unable to achieve those objectives.

The executive branch in Chile is composed of sixteen ministries

with portfolio and four cabinet-level agencies—the Central Bank,

the Production Development Corporation (Corfo), the National

Women's Service (Servicio Nacional de la Mujer—Sernam), and

the National Energy Commission (Comision Nacional de Energia) (see fig. 11). Ministers serve exclusively at the president's dis- cretion. Each ministry is required to articulate a series of firm

objectives for each fiscal year, and the president uses these ministerial goals to judge the success of a particular department and minister.

Every seven months, a formal evaluation (state of progress) is con- ducted to ascertain the progress of each ministry. The president

223
Chile: A Country Study

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writes a formal letter to each minister in January, evaluating the

accomplishments or failures of the department in question. Cabinet officers have significant authority over their own agencies.

Although important in setting the overall priorities of the government and coordinating a uniform response to issues, cabinet meetings deal primarily with general subjects. Critical policy questions,

however, are often addressed at the ministerial level by interministerial commissions dealing with specific substantive areas. These

include infrastructural, development, economic, socioeconomic, and

political issues. If there is no unanimity on a particular matter,

the question goes to "the second floor" (the president's office) for

final disposition. The president is kept closely apprised of all matters under discussion at all times by the secretary general of the

presidency, who has the primary responsibility of coordinating the

work of ministerial commissions. Under President Aylwin, that position was held by Edgardo Boeninger Kausel, a former rector of

the University of Chile. Boeninger' s success resulted not from the

power of his position, which in formal terms is unimportant, but

from his skills as a negotiator and consensus builder and from the

willingness of the cabinet, composed of individuals from different

parties, to work in a collegial fashion. This style of authority might

slow decisions, but it has the advantage of averting serious conflicts and sparing the president from having to micromanage policy or serve as a constant referee. Aylwin 's secretary general of the

government, Enrique Correa Rios, the government's chief spokesman, also played a prominent role in projecting the government's

image and serving as a bridge to political parties and opposition

leaders. In addition to the office of the secretary general of the presidency

and secondary general of the government, two ministries had key

roles in the Aylwin administration. The Ministry of Finance had

virtual autonomy in formulating and guiding overall economic and

budgetary policy. The Ministry of Interior, the principal "political ministry" of the government, was charged with law enforcement and with coordinating government policy with the parties of

the CPD.

The Legislative Branch

Inaugurated on July 4, 1811, the National Congress became one

of the strongest legislative bodies in the world by the end of the

nineteenth century. The 1925 constitution reaffirmed the commitment to a bicameral system made up of a 150-member Chamber

of Deputies and a fifty-member Senate. However, that charter

diminished congressional prerogatives by barring members of

225
Chile: A Country Study

Congress from occupying ministerial posts, restricting the legisla- ture's power over budget laws, and giving the president considerable legislative powers, including the right to designate particular

legislation as "urgent." Nevertheless, Congress remained a criti- cal arena for the formulation of national policy, serving as the most

important institution for cross-party bargaining and consensus

building in Chile's fragmented political system. Congress produced

fundamental legislation, such as laws establishing social security

(1924), the Labor Code (1931), the minimum wage (1943), Corfo

(1939), restrictions on the PCCh (1948), and agrarian reform

(1967). Congress also had an important means of oversight in its authority to accuse ministers of wrongdoing.

Under the 1980 constitution, Chile retains a bicameral legisla- ture composed of the Chamber of Deputies and the Senate, both

of which play a role in the legislative process. However, the 1980

charter reduced the Chamber of Deputies to 120 members, two

for each of sixty congressional districts. All deputies serve for four

years on the same quadrennial cycle. Upon taking office, all deputies

must be citizens possessing the right to vote. They must be at least twenty-one years old, must have completed secondary education,

and must have lived in the district they represent for at least two

years. The 1980 constitution also reduced the Senate, to thirtyeight elected members, who serve eight-year terms, with half of

the body coming up for election every four years, plus nine designated senators. Senators must be citizens with the right to vote,

must be at least forty years old, must have completed secondary

school, and must have lived in the region they represent for at least three years. High-level government officials, including ministers,

judges, and the five members of the Central Bank Council, are barred from being I candidates for deputy or senator until a year

after they leave their posts. Leaders of community groups or other

associations also are not permitted to become candidates unless they

give up their posts.

In addition to the elected senators, the Senate has nine designated senators (eight since the death of one in 1991), all of whom

serve eight-year terms. The Supreme Court names two from the

ranks of former members of the court and one who has served as comptroller general. Cosena designates four senators, each a former

commander of each of the armed services who held that post for at least two years. Finally, the president of the republic designates

two senators, one who has been a university president and the other a government minister (Article 45). All former presidents who re- main in office for at least six years of the eight-year term are automatically senators for life. Pinochet, the only former president

226
Government and Politics

alive when the current Senate was installed in March 1990, opted

instead to remain commander in chief of the army, a post that is constitutionally excluded from a senatorial position. The appointed

senators played a somewhat surprising role in the Aylwin government by not always acting in unity with the rightist opposition,

as the government feared they would. Indeed, these senators

occasionally served as bridges between the government and the

armed forces, helping to diffuse tensions and avert misunderstandings.

The Chamber of Deputies carries out its duties by means of thir- teen permanent commissions, each one of which is composed of

thirteen deputies. The Senate has eighteen commissions, each with

five members. Most of the commissions correspond to a ministry

responsible for a similar substantive area. Mixed commissions, composed of members from both houses, are charged with resolving

discrepancies between the houses on particular pieces of legislation.

The constitution establishes a hierarchy of laws that must be

approved by majorities of various sizes. Ordinary laws are approved

by a simple majority of the members present in both chambers.

Laws requiring a qualified quorum must be approved by an absolute majority of all legislators. An example would be a law redefining

the boundaries of regions or provinces (see table 38, Appendix).

Organic constitutional laws, designed to complement the constitution on key matters, require approval by four-sevenths of all members to be modified, repealed, or enacted into law. Finally, laws

interpreting the constitution require the approval of three-fifths of

all legislators for enactment.

Constitutional amendments can be initiated by the president, ten deputies, or five senators, and they require the concurrence

of three-fifths of all legislators and the signature of the president

to be approved. Key provisions dealing with such matters as rights

and obligations, the Constitutional Tribunal, the armed forces, and

Cosena require the assent of two-thirds of the members of each

chamber and approval by the president. If the president rejects a

constitutional reform measure that is subsequently reaffirmed by

Congress by at least a three-fifths vote, he or she can take the matter to the voters in a plebiscite.

Congress has the exclusive right to approve or reject international treaties presented to it by the president before ratification,

following the same procedure used in approving an ordinary law.

Although the president, with the consent of Cosena, can institute a state of siege (see state of exception, Glossary), Congress, within

a period of ten days, can approve or reject the state of siege by

a majority vote of its members.

227
Chile: A Country Study

In case the office of the president is left vacant and there are fewer than two years left in the presidential term, Congress can

select a presidential successor through a majority vote of its members. Should the vacancy occur with more than two years left in

the presidential term, a new presidential election would be called. The Chamber of Deputies can also initiate a constitutional accusation by majority vote against the president, ministers, judges,

the comptroller general, admirals, generals, intendants of regions,

and governors of provinces for violations of the; law, constitutional dispositions, or abuse of power. The Senate, in turn, acts as a jury and finds the accused either innocent or guilty as charged.

If the president of the republic is accused, the conviction depends on a two-thirds majority in the Senate. The Senate is also required

to give the president permission to leave the country for a period

of more than thirty days or for any amount of time during the last ninety days of the presidential term. Further, the Senate can declare

the physical or mental incapacity of the president or president-elect, once the Constitutional Tribunal has pronounced itself on the matter. The original constitutional provisions of 1980 virtually barred

the Senate from exercising oversight of the executive branch or ex- pressing opinions on the conduct of government. These provisions were removed from the constitution in the 1989 amendments. The

amendments also eliminate the president's power to dissolve the

Chamber of Deputies. The constitution of 1980, however, severely limits the role of Congress in legislative matters relative to earlier

legislatures in Chilean history. Article 62 states that "the President of the Republic holds the exclusive initiative for proposals of

law related to changes of the political or administrative division

of the country, or to the financial or budgetary administration of

the State." Article 64 of the constitution also restricts the budgetary prerogatives of the legislative branch.

In several areas, the president is given sole authority to introduce

bills. These include measures involving spending, changes in the

duties and characteristics of public-sector administrative entities,

modifications to the political-administrative configuration of the

state, and initiatives related to collective bargaining. The president can also call the legislature into extraordinary session, at which

time the legislature can only consider legislative and treaty proposals

introduced by the president. The president may grant certain in- itiatives priority status, requiring that Congress act within three,

ten, or thirty days, depending on the degree of urgency specified.

In this sense, the president has the exclusive power to set the legislative agenda and, therefore, the political agenda. In a further

228
The Chamber of Deputies in the new parliament building in Valparaiso

The National Congress building in Valparaiso

Courtesy Embassy of Chile, Washington

229
Chile: A Country Study

restraint on legislators, the 1980 constitution permits the Constitutional Tribunal to remove a senator or deputy from office if he or she "permits the voting of a motion that is declared openly contrary to the political constitution of the State by the Constitutional

Tribunal" (Article 5,7). Finally, Congress is limited in its ability to act as a counterforce

against the president's power in matters dealing with the constitutional rights of citizens. Although the president needs the approval

of the majority of Congress to establish a state of siege, the president may declare a state of assembly, emergency, or catastrophe

solely with the approval of Cosena (Article 40).

Important legislative initiatives approved during the Aylwin

government have included, in the political sphere, constitutional

changes leading to the creation of democratic local governments;

laws reforming the administration of justice, including the treat- ment of political prisoners and terrorism; and the creation, in 1990,

of a cabinet-level agency, Sernam, to pay special attention to women's issues. In the sociocultural area, changes included a revision

to the National Education Law to "dignify" the teaching profession and establish a "teaching career' '

; a reformulation of student

loan programs; and measures designed to simplify the reporting

of petty crimes and robbery and increase the powers of the police

in dealing with such crimes. Congress also approved measures to regulate collective bargaining and recognize labor organizations. In the economic sphere, the most important legislation enacted into

law included the Industrial Patents Law, designed to ease Chile's

entrance into international markets; the lowering of tariff barriers; and the creation of a price-stabilization fund for petroleum.

In the international sphere, Congress approved various treaties of

economic cooperation (including one with the European Economic Community) and ratified the findings of the Bryan Commission,

a joint commission with the United States that settled the case of

the 1977 assassination of Chilean ambassador Orlando Letelier in

Washington, which had constituted a long-time source of conflict

between Chile and the United States. During the Aylwin administration, relations between the executive and Congress were conducted through an informal network

of bilateral commissions composed of ministers and their top advisers and senators and deputies of the governing coalition working in the same policy area. However, these meetings proved less important than the weekly gatherings presided over by the minister

of interior with party leaders of the CPD coalition, leaders of the

CPD parties in the legislature, and the secretaries general of the

presidency and the government. At these weekly meetings, the

230
Government and Politics

legislative agenda was discussed and decided upon. This pattern

of decision making signified, in practice, that individual members

of Congress and the legislature itself had assumed a secondary and

pro forma role, following the instructions of legislative leaders in

their close negotiations with government and party leaders. Nor

did congressional committees or members of Congress have enough

staff and expertise to deal with experts from the executive branch on complex legislative matters. Individual legislators could articulate concerns and provide important feedback, but early in the

postauthoritarian period the legislature appeared to be playing a decidedly secondary role. The Courts

Although the Republic of Chile's founders drew on the example of the United States in designing the institutions of government,

they drew on Roman law and Spanish and French traditions, particularly the Napoleonic Code, in designing the country's judicial

system. The judicial system soon acquired a reputation for independence, impartiality, and probity. However, the judiciary fell into some disrepute during the Parliamentary Republic (1891-1925),

when it became part of the logrolling and patronage politics of the

era.The 1925 constitution introduced reforms aimed at depoliticizing and improving the judicial system by guaranteeing judicial in- dependence. Chile's justice system established itself as one of the

best on the South American continent, despite a serious lack of resources and inadequate attention to the needs of the nation's

poorest citizens. During the Popular Unity government, the Supreme Court

repeatedly clashed with the president and his associates. The Allende government viewed the court as a conservative and inflexi- ble power, obsessed with a literal definition of a law designed to protect the privileges of private property against the new logic of a revolutionary time. The Supreme Court retorted vehemently that

its task was simply to follow the dictates of the law, not to change

it to suit some other objective.

The courts had much less difficulty dealing with the military re- gime, which left the court system virtually intact. As soon as the courts accepted the legitimacy of the military junta as the new ex- ecutive and legislative power, they worked diligently to adjudicate

matters in conformity with the new decree laws, even when the

latter violated the spirit and letter of the constitution. In particular, the courts did nothing to address the serious issue of human

rights violations, continuously deferring to the military and security

231
Chile: A Country Study

services. The Supreme Court saw its own jurisdiction severely eroded as the military justice system expanded to encompass a wide

range of national security matters that went far beyond institutional concerns. According to the 1925 constitution, modified somewhat by the

1980 document, the Supreme Court can declare a particular law,

decree law, or international treaty "inapplicable because of unconstitutionality." This does not invalidate the statute or measure for all cases, only for the one under consideration. Another

important function of the Supreme Court is the administration of

the court system. The organization and jurisdiction of Chile's courts were established in the Organic Code of the Tribunals (Law 7,241)

adopted in 1943. This law was modified on several occasions; two

recent instances are the organic constitutional Law 18,969 of March

10, 1990, and Law 19,124 of February 2, 1992. Chile's ordinary

courts consist of the Supreme Court, the appellate courts (cortes de

apelacion), major claims courts, and various local courts (juzgados

de letras). There is also a series of special courts, such as the juvenile

courts, labor courts, and military courts in time of peace. The lo- cal courts consist of one or more tribunals specifically assigned to each of the country's communes, Chile's smallest administrative

units. In larger jurisdictions, the local courts may specialize in criminal cases or civil cases, as defined by law.

Chile has sixteen appellate courts, each with jurisdiction over one or more provinces. The majority of the courts have four members, although the two largest courts have thirteen members, and

Santiago's appellate court has twenty-five. The Supreme Court

consists of seventeen members, who select a president from their

number for a three-year term. The Supreme Court carries out its functions with separate chambers consisting of at least five judges

each, presided over by the most senior member or the president

of the court. Members and prosecutors of the Supreme Court are appointed

by the president of the republic, who selects them from a slate of

five persons proposed by the court itself. At least two must be senior

judges on an appellate court. The others can include candidates

from outside the judicial system. The justices and prosecutors of

each appellate court are also appointed by the president from a

slate of three candidates submitted by the Supreme Court, only one of whom can be from outside the judicial system. In order to be appointed, ordinary judges at the local level are appointed by

the president from a slate of three persons submitted by an appellate court. They must be lawyers, must be at least twenty-five years

old, and must have judicial experience. Ministers of the appellate

232
Government and Politics

courts must be at least thirty-two years old, and Supreme Court

ministers must be at least thirty-six years old, with a specified number of years of judicial or legal experience. Judges serve for life and cannot be removed except for inappropriate behavior.

The relationship between the Aylwin administration and the

Supreme Court was tense. Pinochet offered extraordinary retire- ment bonuses to the eldest court members to ensure the appointment of relatively young judges who were friends of the outgoing

regime. The parties of the CPD were highly critical of these appointments and made no secret of their strong disapproval of the

Supreme Court's behavior under the military government, particularly its complete disregard for the massive violations of human

rights. Responding to these concerns, the Aylwin administration

introduced constitutional reform legislation that would overhaul

the nomination procedure for Supreme Court ministers, create a

separate administrative structure for the judicial branch, and obligate the Supreme Court to take a more vigilant role in the protection of human rights. These reform efforts failed because the

parties of the right refused to go along with change in the face of

strong opposition from the Supreme Court, which was fearful that

it would lose its prerogatives and concerned that the judicial sys- tem would become "politicized." Still pending as Aylwin's term

neared its end were reforms of the military justice system with its authority to try civilians in areas of national security and to judge

military personnel even when charged with a criminal or civil crime

against civilians. The Autonomous Powers

The Comptroller General

The Office of the Comptroller General of the Republic has been

a highly visible institution since the adoption of the 1925 constitution. In 1943 it was upgraded to an autonomous government or- gan through an amendment to the constitution (Law 7,727) and

was retained as such in the constitution of 1980. Charged with serv- ing as the government's auditor, the agency has a large professional staff, which scrutinizes the collection and expenditure of

government funds by the National Treasury, the municipalities,

and other state services as determined by law. Over the years, the

agency gained a reputation for insisting on strict conformity to the

law, instilling respect in career officials and elected officials alike. In addition to its preaudit and postaudit functions, the Office

of the Comptroller General has significant juridical functions, as

it is empowered to rule on the legality and constitutionality of

233
Chile: A Country Study

decrees and laws. All supreme decrees and resolutions are routinely

sent to the Office of the Comptroller General for a ruling prior

to adoption. In this sense, the comptroller general's oversight functions are essentially preventive. The chief executive can overrule

the comptroller general's objection to a presidential decree by is- suing a so-called decree of insistence requiring the signature of every

cabinet minister. Overruling the comptroller general opens the

ministers to the threat of censorship by the Chamber of Deputies.

In order to guarantee the comptroller general's autonomy, the offi- cial is appointed by the president, with the consent of the Senate,

to serve until age seventy-five. The comptroller general has complete control over the organization and staff of the office in conformity with Law 10,336 (Law of Organization and Powers of the

Comptroller General of the Republic).

The Constitutional Tribunal

Although the comptroller general serves as an effective watchdog over government officials and functionaries, definitive and

binding decisions on constitutional matters are made by the Constitutional Tribunal. The tribunal was created by the constitutional

reforms of 1970 (Law 17,284) to provide the country with a body

that would serve as final arbiter on constitutional matters and thus

prevent the adoption of unconstitutional laws or decrees. Like other

"neutral" institutions, such as the military and the courts, the

tribunal was highly politicized by the crisis of the Allende years.

It was unable to serve as an effective arbiter as the institutional

conflict—between the government and its opposition and between

the presidency and Congress—as well as the political conflict es- calated beyond the point of no return. Under the 1980 constitution, the Constitutional Tribunal consists of seven members appointed on a staggered basis to eight-year

terms. The Supreme Court selects three, Cosena two, and the president and Senate one each. The tribunal possesses broad powers to judge the constitutionality of laws at all points in the legislative process. It can also declare unconstitutional any decrees issued by

the president of the republic and rule on the constitutionality of a

plebiscite. The tribunal resolves disputes among government ministers, legislators, and the executive and can rule on complaints

presented by the president or members of either of the legislative

chambers, provided that at least one-fourth of the members agree

to register a formal grievance. The tribunal also rules on constitutional challenges to the legality of political parties (Article 19).

The Constitutional Tribunal is the court of last resort on constitutional matters. Article 83 of the constitution provides that "no

234
Government and Politics

appeal whatsoever shall apply against the decisions of the Constitutional Tribunal." The article adds that "once the court has decided

that a specific legal precept is constitutional, the Supreme Court

may not declare it inapplicable on the same grounds on which the

decision was based."

The parties represented in the Aylwin coalition were not comfortable with the tribunal's broad jurisdiction. In their view, the

tribunal's far-reaching powers to determine the constitutionality

of laws, presidential decrees, and other government decisions made

it a highly undemocratic body, particularly given that its members are appointed almost entirely by nonelected bodies. The Aylwin government favored constitutional reforms that would give the

president and Congress the right to appoint a substantial majority

of the tribunal members. The government also sought to limit the

tribunal's power to decide the constitutionality of laws approved

by Congress and signed by the president.

Reforms seemed unlikely in the immediate future because the

parties of the right argued that a tribunal designed to protect the

supremacy of the constitution would be undermined, should it be

constituted by those very bodies that would be scrutinized. In addition, those accepting the status of the tribunal pointed to the positive role it played in settling the dispute over the status of

independent candidates in the 1992 municipal elections. They con- tended that the tribunal's role in settling the dispute helped avert a major political dispute that might have delayed the elections.

The Central Bank of Chile

The Central Bank of Chile, like the Office of the Comptroller

General, was created in 1925 on the recommendation of the financial mission to Chile headed by United States banking official Edwin Walter Kemmerer. The Central Bank was charged with

printing money and controlling its circulation. Its authority over

the country's monetary policy increased gradually over the years. The 1980 constitution elevates the Central Bank to constitutional

status as an

' 'autonomous" state organ to be governed by an or- ganic constitutional law (Law 18,840). The military government was concerned that the Central Bank be insulated from political

pressures to ensure that sound monetary policies were followed.

The regime was reacting in part to the common practice of earlier years, particularly under the Popular Unity government, when public expenditures were financed with direct and indirect loans from

the Central Bank, fueling budget deficits and inflation.

The Central Bank is governed by the five-member Central Bank

Council appointed by the president, with the consent of the Senate,

235
Chile: A Country Study

on a staggered basis. Each member serves ten years and can be

reappointed. The president of the Central Bank is selected from

among the council members to serve for five years. The Electoral Certification Tribunal

Until the adoption of the 1925 constitution, the fairness of the

electoral process was determined by Congress itself. Because of

widespread abuses engendered by the system, the constitutional

reformers of the time created the Electoral Certification Tribunal

(Tribunal de Certificacion Electoral—TCE), drawn by lots from

a group of distinguished public figures, primarily jurists, who would

evaluate the integrity of the electoral process and rule on particular challenges. The 1980 constitution preserves the TCE, specifying that its members include three ministers or former ministers

of the Supreme Court chosen by the Supreme Court through a

secret ballot, a lawyer also elected by the Supreme Court, and a former president of the Senate or Chamber of Deputies who has

held that post for no fewer than three years. The TCE's duties and

responsibilities are defined by an organic constitutional law (Law

18,460).

The Armed Forces

The armed forces constitute an essentially autonomous power

within the Chilean state. An entire chapter of the constitution

(Chapter 10) is devoted specifically to the armed forces, granting

them a status comparable to that of Congress and the courts. Although the opposition felt that it had reduced the tutelary role of the armed forces with the constitutional reforms of 1989 by soften- ing the language dealing with Cosena's powers, the military con- tinued to have a constitutionally sanctioned right to discuss politics

and policy and make its views known to the democratically elected

authorities.

Whether or not the commanders of the services "represent" their

views "or make them known," the political fact remains that the

armed forces are defined by the constitution as the "guarantors

of the institutional order of the Republic." Thus, their leadership

exercises tutelage over the conduct of the elected government and

other state bodies. This privilege is given only to the commanding

officers. The 1980 constitution lays down strict rules requiring

lower-ranking officers to refrain from any political activity or ex- pression and to conform strictly to the orders of their superiors.

The 1989 reforms did not change the provisions that insulate

the commanders in chief of the armed services and the Carabineros from democratically elected leaders. Although the military

236
Government and Politics commanders and the head of the Carabineros are chosen by the

president from among those officers having the most seniority in

their respective services, the appointment is for four years, during

which time the commanders cannot be removed except by Cosena

under exceptional circumstances.

The constitution also specifies that entry into the armed ser- vices can only be through the established military academies and

schools that are governed exclusively by the services, without outside interference. The Organic Constitutional Law on the Armed

Forces (Law 18,948 of February 1990) governs in detail military

education, hierarchy, promotion, health, welfare, and retirement.

It also provides the armed forces with a specific minimum budget

that cannot be reduced. Other legislation provides the military with

a set percentage from the worldwide sales of the state-run copper

companies.

Despite seventeen years of military rule, the armed forces in 1994 were remarkably uncontaminated by factionalism or partisan politics. No major divisions within the services are apparent. However,

because the military enjoyed privileged treatment during Pinochet's

rule, any attempt to tamper with military prerogatives is likely to be strongly resisted.

Pinochet's insistence on retaining his position as commander in

chief of the army displeased the Aylwin government. As commander

of the army, the general affirmed the military's determination to

resist prosecution for human rights violations. Yet the army's credibility was badly damaged by allegations of financial wrongdoing

by Pinochet's son, the discovery of mass graves containing corpses

of individuals who died while in military hands, and the illegal ex- port of arms to Croatia. The report of the National Commission

on Truth and Reconciliation, known as the Rettig Commission,

confirmed many of the allegations of military abuses.

The Aylwin government contended that the full consolidation

of democracy could not be accomplished without a fundamental

change in the relationship between civil and military authority.

Members of the CPD asserted that presidential control of the armed

forces existed in all modern democracies and since 1822 had been an essential element in Chile's constitutional tradition.

A proposal for reform of the Organic Constitutional Law on the

Armed Forces was signed by President Aylwin on March 29, 1992,

and sent to Congress. Aylwin's initiative dealt specifically with Article 7 and Article 53 of the organic laws of the armed forces and

police, which limit presidential prerogatives in relation to the hir- ing, firing, and promotion of members of the military. Among the

suggested reforms was a provision providing the president with the

237
Chile: A Country Study

right to choose commanders of the armed forces from among the ten most senior officers, instead of the top five. These proposals were opposed, however, by both parties of the right, making it impossible to envision any constitutional reform on this matter in the

foreseeable future.

The opposition contended that the tenure of the commanders

had contributed to the stability and moderation of the Chilean transition. It argued that these reforms would result in the politicization of the armed forces by undermining the hierarchy, discipline,

and professionalism of military institutions. The rightist parties also contended that the reform proposals, if successful, would upset the

counterweights on presidential power and would disturb the in- stitutional balance existing among the president, the Constitutional

Tribunal, Congress, and Cosena. This balance, they argued, helped

guarantee the success of the Chilean transition by insulating the

armed forces from overt political pressures (see Civil-Military Relations, ch. 5). Regional and Local Government

With the adoption of the constitution of 1833, Chile abandoned

earlier attempts to create a federal system and opted for a unitary

form of government. As such, regional and local governments be- came creatures of national authority, subject to the legislative and

constitutional powers vested in the central government. This did

not mean that local governments did not enjoy varying degrees

of self-determination and autonomy over the years. The 1833 document provided for the election of local municipal councils through

direct popular vote, a practice retained by the constitution of 1925.

During much of the nineteenth century, local governments were

barely able to provide the minimal services they were charged with,

such as the maintenance of public order and basic sanitation, given

the scarcity of resources. In 1891, however, the country embarked

on a bold experiment, providing significant local autonomy to the

nation's elected municipalities, many of which flourished under

local leadership with local resources. The center of gravity of Chilean

politics shifted toward local governments and their allies in

Congress.

Partly in reaction to the corrupt machine politics of the city bosses,

the 1925 constitution sought greater oversight of local authorities

by expanding the democratic process through the creation of elected

provincial assemblies. However, enabling legislation that would

have made those assemblies a reality was never adopted. Instead,

the oversight functions were turned over to appointed agents of

the central government. During the dramatic expansion of the

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national state in the wake of the Great Depression, local governments were left behind. Tax revenues, which by law were supposed

to be returned to local governments, were routinely kept by the

authorities of the central government. The essence of local politics

became a struggle to use party and patronage networks to extract resources on a preferential basis for local development. As the nation's electorate expanded, local government officials played an in- creasingly important role as electoral agents. Mayors and councilors

became political brokers seeking to exchange votes for a water treat- ment plant, a stretch of highway, or jobs for constituents. Elections for local office were as hotly contested as elections for national

office and served as building blocks of party development.

The military regime viewed the somewhat fractious state of lo- cal politics as proof that parties and politicians were incapable of

efficient administration. As a result, it designed a system of local administration distinctly based on corporatism (see Glossary) and

heavily dependent on direct appointments from the center. According to the constitution of 1980, regional and local governments

would be administered by intendants and mayors, respectively.

These figures would be appointed directly by the president of the

republic, although the mayors of smaller towns would be designated by regional councils created to advise the intendants. The

regional councils would be formed by employees of state agencies

in the locality, by military officers, and by designated representatives of interest groups with no party affiliation. This conception

of regional government would be extended to the municipal level with similarly designated local councils.

Although this scheme would make local authorities highly dependent on appointments from above, the military government also took an important step to decentralize state functions by giving local administrative units greatly increased resources and autonomy to make local governments viable. A notable example was the decision to give municipal governments far more responsibility for elementary and secondary education and other local services.

The Aylwin government made the restoration of democracy at the

grass-roots level a matter of high priority. Many opposition leaders on the right shared the view that the military regime had gone too

far in eradicating the country's long tradition of elected local governments. After considerable debate, the government and National

Renewal were able to reach consensus on a constitutional reform

law, adopted in November 1991, to change Chapter 13 of the constitution dealing with local administration (Law 19,097).

The constitutional reform was followed by the adoption of a new

Organic Constitutional Law on Municipalities (Law 19,130 of

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Chile: A Country Study

March 19, 1992), which paved the way for municipal elections in June 1992. Under the law, local governments are formed by a municipal council and a mayor who serve four-year terms and are

elected through a proportional representation system. Candidates

must be sponsored by registered political parties that obtained at

least 5 percent of the vote in previous contests. The number of councilors varies, from six in smaller municipalities to ten in the larger ones. The law establishes that the councilor who receives the most

votes on the party list that receives the largest number of votes is elected mayor, provided that he or she obtains at least 35 percent

of the total vote. If this requirement is not met, the mayor is elected

by the municipal council from among its own number by an absolute majority of the vote. The Organic Constitutional Law on

Municipalities requires that the mayor and councilors be citizens

in good standing, reside in the region where they are running for

office, and be literate. It bars government officials and members

of Congress from running for local office. It is the mayor's responsibility to propose a communal plan, a budget, investment programs, and zoning plans to the municipal council for approval.

The mayor also appoints delegates to remote areas of the community. The municipal council approves local ordinances and regulations and oversees the work of the mayor, being authorized to

call to the attention of the comptroller general any irregularities.

Municipalities have sole responsibility for traffic regulation, urban

planning and zoning, garbage collection, and beautification.

Municipal governments work closely with state agencies on a host

of other matters, ranging from public health to tourism, recreation, and education, and are authorized to create administrative

units to oversee each of these activities. Most of the municipal

resources come from the Common Municipal Fund, administered

by the Ministry of Interior, which endeavors to favor poorer areas

in the distribution of resources for local government. The law on

municipalities also calls for the creation of an economic and social

council in each municipality. This is an advisory body constituted

by representatives of local organized groups, including neighborhood associations and functional organizations, such as parentteacher associations and mothers' groups.

On June 23, 1992, 6.4 million Chileans (90 percent of the nation's registered voters) participated in Chile's first municipal elec- tions since 1971 . As was done in the congressional elections of 1989,

joint lists designed to maximize electoral fortunes were formed by

both the progovernment and the antigovernment parties. The results of the municipal contests did not deviate substantially from those

observed in the earlier race. The CPD obtained 60.6 percent

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Government and Politics

of the vote, to the right's 30 percent (38 percent if the independent Union of the Centrist Center [Union de Centro Centro

UCC] is counted with the right) (see table 39, Appendix).

Nationwide elections for the country's thirteen regional councils were held in April 1993. The CPD won the majority of the

thirteen regions. Of the total of 244 regional council members elect- ed nationwide, 134 were CPD candidates and eighty-six were candidates of the opposition parties of the right. Another thirteen seats went to independent candidates or those from other parties. A tie resulted only in the sparsely populated Aisen del General Carlos

Ibanez del Campo Region in the far south, where the government

and the opposition each won eight council seats. Parties and the Electoral System

The Party System

In the early 1990s, Chile had a strong, ideologically based multiparty system, with a clear division among parties of the right, center,

and left. Chile's parties traditionally have been national in scope,

penetrating into remote regions of the country and structuring politics in small villages and provincial capitals. Party affiliation has

served as the organizing concept in leadership contests in universities and private associations, including labor unions and professional

associations. Political tendencies are passed from generation to generation and constitute an important part of an individual's identity.

By the middle of the twentieth century, each of Chile's political

tendencies represented roughly one-third of the electorate. The left was dominated by the Socialist Party (Partido Socialista) and the

Communist Party of Chile (Partido Comunista de Chile—PCCh),

the right by the Liberal Party (Partido Liberal) and the Conservative Party (Partido Conservador), and the center by the anticlerical Radical Party (Partido Radical), which was replaced as Chile's

dominant party by the Christian Democratic Party (Partido

Democrata Cristiano—PDC) in the 1960s.

Although ideological polarization characterized party politics until the 1960s, political coalitions across party lines helped to mitigate

conflict. Party politics dominated both the national arena, where

ideological objectives predominated, and the local arena, which fo- cused on more clientelistic concerns. The interplay between these

two levels helped moderate interparty conflict. Polarization in- creased markedly, however, in the wake of the 1959 Cuban Revolution as parties radicalized their programs, seeking to achieve

hegemony over their rivals in an increasingly desperate attempt

to control Chile's future.

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Chile: A Country Study

The military authorities believed that their policies would fundamentally change the traditional party system. Repression, legal

restrictions, and new legislation governing parties and elections,

combined with profound underlying changes in the nation's social structure, would render the old parties obsolete. Although the

authorities conceded by 1985, in the aftermath of national protests,

that they had not destroyed the party system, they remained in- tent on designing rules that would change its basic physiognomy.

In March 1987, the Law of Political Parties was adopted, which

provided for stringent requirements that officials of the military

government believed the old parties could not meet. The law re- quires each legal party to obtain signatures equivalent to 5 per- cent of the electorate in at least eight regions, or in at least three

contiguous regions. It also places restrictions on party activities and

regulates party financing, internal organization, and selection of

leaders, specifying that top party leaders be chosen democratically

by rank-and-file members.

However, Chile's parties were able to adjust well to the law. In- deed, the requirement for a large number of signatures gave party

leaders a strong incentive to mobilize grass-roots support and

strengthen local party organizations. The selection of party leadership through democratic means helped legitimize the leaders who

fought the military government, leaders whom the authorities had

often characterized as unrepresentative.

The Electoral System

The far-reaching electoral reforms implemented before the 1989

elections represented a further attempt to transform Chile's party

structure into a moderate two-party system. The constitution of

1925 had established a system of proportional representation to al- locate seats in multimember districts, the most widely used sys- tem in Latin America and Europe. For the elections to the Chamber

of Deputies, the country was divided into twenty-eights districts,

each electing between one and eighteen deputies for a total of 150,

producing an average district delegation of 5.4 deputies. Although

implementation of the proportional representation system was not

responsible for the emergence of the country's multiparty system,

it encouraged party fragmentation, particularly before 1960, when

parties were allowed to form pacts with each other in constituting

individual lists. Women were granted the vote for municipal elections in 1934

and for national elections in 1949. Chile has a lively history of women's civic and political organizations that goes back to the early

decades of the twentieth century, including the formation of two

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Government and Politics

political parties led by women, one of which, the Feminine Civic

Party (Partido Cfvico Femenino), elected its main leader to the

Senate before it faded from the scene in the mid-1950s. However,

there are still conspicuously few women in national politics and

in top government positions. Only six women were elected to Congress in 1989, and only one woman held ministerial rank in President Aylwin's government. Yet close to half of all Chileans who

were affiliated with parties in 1992 were women, and slightly more

than half of the electorate is composed of women.

The military government redrew electoral boundaries to create

sixty legislative districts, each of which would send two representatives to the Chamber of Deputies. Redistricting favored smaller

and more rural districts that were deliberately designed to favor

progovernment parties. Thus, one vote in District 52, which was

a government stronghold in the plebiscite, was worth three times more than one vote in District 18, in which the opposition had fared

better. By reducing the electoral districts to an average representation of two deputies per district, the military authorities sought

to create an electoral formula that would provide supporters of the

Pinochet regime with a majority of the seats in the legislature, with

a level of support comparable to Pinochet's vote in the plebiscite, or about 40 percent of the turnout. According to the new law, parties or coalitions continue to present

lists with a candidate for each of the two seats to be filled. The

law considers both the votes for the total list and the votes for in- dividual candidates. The first seat is awarded to the party or coali- tion with a plurality of votes. But the first-place party list must

receive twice the vote of the second-place list, if it is to win the

second seat. This means that in a two-list contest a party can obtain one seat with only 33.4 percent of the vote, whereas a party

must take 66.7 percent of the vote to gain both seats. Any electoral support that the largest party gets beyond the 33.4 percent

threshold is effectively wasted unless that party attains the 66.7 per- cent level. The designers of the electoral system considered the worst-case

scenario to be one that assumed a complete unity of purpose among

the anti-Pinochet forces, a unity that would at best provide them

with 50 percent of Congress. Government officials were convinced

that another scenario was more likely: the parties of the center-left would soon fragment, unable to maintain the unity born of their

common desire to defeat Pinochet. The military government en- visioned multiple lists, with the list of the right being the largest,

able to double the next competing list in many constituencies and

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Chile: A Country Study

thus assuring the promilitary groups at least half of all elected

representation, if not a comfortable majority.

For the parties of the right, the worst-case scenario came to pass. Showing remarkable focus and discipline, the fourteen parties of

the opposition structured a common list and chose a common

presidential candidate, and as a result the coalition garnered a majority of the elected seats. The binomial electoral system (see

Glossary) did, however, benefit the right. National Renewal obtained many more seats than it should have in light of the percentages of the vote it received nationally. The system also forced parties to coalesce into large blocs to maximize their strengths. The result was two broad coalitions, not a two-party system. Indeed, the results of the 1989 congressional elections, despite the requirements of the

binomial system and the constitution that broad slates be formed

by these party coalitions, reveals that the Chilean electorate split

its vote for individual candidates in a manner reminiscent of traditional tendencies. Thus, the right obtained 38 percent of the vote; the center, 24 percent; and the left 24.3 percent.

Survey research corroborated that the electorate was likely to continue to identify with left-right terms of reference. In March

1993, about 22.8 percent of respondents classified themselves as

politically right or center-right; 24.6 percent as center; and 33.7

percent as center-left. Only 19 percent refused to opt for an ideological identification (see table 40, Appendix). These figures differ somewhat from the electoral results reported previously but are consistent with trends indicating that the right lost some of its appeal

during the Aylwin government, while the moderate left gained.

Despite attempts at political engineering, not only did Chileans

continue to identify with broad ideological tendencies, but they also identified with a wide range of parties explicitly considered to em- body those tendencies. In surveys, between 70 percent and 80 per- cent of all Chileans identified themselves with particular parties, a high level considering the many years of military rule and the

experience of other democratic countries. Identification with in- dividual parties increased during the first three years of the Aylwin

government. In the March 1993 survey, more than a third of the

respondents identified themselves with the Christian Democrats,

20 percent with the leading parties of the left, and 20 percent with

the principal parties of the right. The rest identified themselves

with smaller parties of the left, center, and right (see table 41 , Appendix).

The survey findings do not mean that the ideological polarization of the past has remained constant. The Chilean electorate still segments itself into three roughly equal thirds, but the distance

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Government and Politics

between its left and right extremes has narrowed substantially. With

its more radical program, the PCCh was not able to win more than

6.5 percent of the vote in municipal elections. In surveys taken

during the 1990-93 period, fewer than 2 percent of respondents

preferred the PCCh. Right-wing nationalist parties associated with

the military government had even less appeal and did not ever

register on surveys. The far left of the Socialist Party had lost ground

to the more moderate tendencies of the party, and the authoritari- an right had developed no significant electoral following. Ideological moderation also characterized the centrist Christian Democrats,

who no longer defended the "third way" between Marxists and

capitalists that they advocated in the 1960s. Perhaps the strongest

indication of programmatic moderation was the consensus in postmilitary Chile on free-market economics and the important role of the private sector in national development.

As Chile approached the twenty-first century, differences among

parties were no longer based on sharply differing visions of Utopias. Ideological differences now concerned more concrete matters, such as the degree of government involvement in social services

and welfare or, increasingly, moral questions such as divorce and

abortion. A narrowing of programmatic differences did not mean,

however, that the intensely competitive, multiparty nature of

Chilean politics was likely to change in the near future.

The Parties of the Left

The Communist Party of Chile (Partido Comunista de Chile

PCCh) is the oldest and largest communist party in Latin America and one of the most important in the West. Tracing its origins

to 1912, the party was officially founded in 1922 as the successor

to the Socialist Workers' Party (Partido Obrero Socialista—POS).

It achieved congressional representation shortly thereafter and

played a leading role in the development of the Chilean labor movement. Closely tied to the Soviet Union and the Third International (see Glossary), the PCCh participated in the Popular Front

(Frente Popular) government of 1938, growing rapidly among the

unionized working class in the 1940s. Concern over the PCCh's

success at building a strong electoral base, combined with the onset of the Cold War, led to its being outlawed in 1948, a status

it had to endure for almost a decade. By midcentury the party had

become a veritable political subculture, with its own symbols and

organizations and the support of prominent artists and intellectuals, such as Pablo Neruda, the Nobel Prize-winning poet, and Violeta Parra, the songwriter and folk artist.

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Chile: A Country Study

As a component of the Popular Unity coalition that elected Sal- vador Allende to the presidency in 1970, the PCCh played a strong

moderating role, rejecting the more extreme tactics of the student

and revolutionary left and urging a more deliberate pace that would

set the groundwork for a communist society in the future. The mili- tary government dealt the PCCh a severe blow, decimating its leadership in 1976. Although the party called for a broad alliance

of all forces opposed to the dictatorship, by 1980 it moved to a

parallel strategy of armed insurrection, preparing cadres of guerrillas to destabilize the regime and provide the party with the military capability to take over the state should the Pinochet government

crumble.

After the attempt on Pinochet's life in 1986, the democratic parties began to distance themselves from the PCCh because the PCCh

was openly opposed to challenging the regime under the regime's

own rules. The PCCh's strong stand against registration of voters and participation in the plebiscite alienated many of its own supporters and long-time militants, who understood that most of the

citizenry supported a peaceful return to democracy.

Particularly problematic for the party was the Manuel Rodriguez

Patriotic Front (Frente Patriotica Manuel Rodriguez—FPMR),

an insurrectionary organization spawned by the PCCh. The party

found the FPMR difficult to rein in, and the FPMR continued

to engage in terrorism after the demise of the military government.

The FPMR had eclipsed Chile's better-known revolutionary group,

the Movement of the Revolutionary Left (Movimiento de la Iz- quierda Revolucionaria—MIR), formed in the 1960s by university students, a movement that barely survived the repression of the

military years. During the Aylwin administration, a group known

as the Lautaro Youth Movement (Movimiento Juvenil Lautaro

MJL), an offshoot of the United Popular Action Movement-Lautaro

(Movimiento de Accion Popular Unitario-Lautaro—MAPU-L),

sought without success to maintain a "revolutionary" offensive (see

Terrorism, ch. 5). The dramatic failure of the PCCh's strategy seriously undermined its credibility and contributed to growing defections from

its ranks. The party was also hurt by the vast structural changes

in Chilean society, particularly the decline of traditional manufacturing and extractive industries and the weakening of the labor

movement. The collapse of the Soviet Union and its East Europe- an allies represented a final blow. Although the PCCh obtained

6.5 percent of the vote in the 1992 municipal elections, by mid- 1993

it was enjoying less than 5 percent support in public opinion sur- veys and did not fare well in the 1993 presidential race.

246
Government and Politics The Socialist Party (Partido Socialista), formally organized in

1933, had its origins in the incipient labor movement and workingclass parties of the early twentieth century. The Socialist Party was

far more heterogeneous than the PCCh, drawing support from bluecollar workers as well as intellectuals and members of the middle

class. Throughout most of its history, the Socialist Party suffered

from a bewildering number of schisms resulting from rivalries and

fundamental disagreements between leaders advocating revolution

and those willing to work within the system.

The Socialist Party's greatest moment was the election of Sal- vador Allende to the presidency in 1970. Allende represented the

moderate wing of a party that had veered sharply to the left. The

Socialist Party's radical orientation contributed to continuous political tension as the president and the PCCh argued for a more

gradual approach to change and the Socialists sought to press for

immediate "conquests" for the working class. After the overthrow of Allende 's Popular Unity government, the

Socialist Party suffered heavy repression and soon split into numerous factions. Some joined with the Communists in supporting a more insurrectionary strategy. Another faction of "Renewed Socialists," led primarily by intellectuals and exiles in Western Europe,

argued for a return to a moderate socialism for which democratic

politics was an end in itself. The latter faction broke with the

Marxist-Leninist line of the immediate past, embracing market eco- nomics and a far more pluralist conception of society. Guided by

leaders such as Ricardo Lagos Escobar and Ricardo Nunez Mufioz, the Renewed Socialists reached an accord with the Christian

Democrats to mount a common strategy to bring an end to the

military government.

Prior to the 1988 plebiscite, the Socialists launched the Party

for Democracy (Partido por la Democracia—PPD) in an effort to provide a broad base of opposition to Pinochet, one untainted by

the labels and struggles of the past. Led by Lagos, an economist

and former university administrator, the PPD was supposed to be an "instrumental party" that would disappear after the defeat of

Pinochet. But the party's success in capturing the imagination of

many Chileans led Socialist and PPD leaders to keep the party label for the subsequent congressional and municipal elections, working jointly with the Christian Democrats in structuring national

lists of candidates.

The success of the PPD soon created a serious dilemma for the

Socialist Party, which managed to reunite its principal factions

the relatively conservative Socialist Party-Almeyda, the moderate

Socialist Party-Nunez "renewalists," and the left-wing Unitary

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Chile: A Country Study

Socialists—at the Socialist Party congress in December 1990.

Heretofore an instrument of the Socialists, the PPD became a party

in its own right, even though many Socialists had dual membership. Although embracing social democratic ideals, PPD leaders

appeared more willing to press ahead on other unresolved social

issues such as divorce and women's rights, staking out a distinct

position as a center-left secular force in Chilean society capable

of challenging the Christian Democrats as well as the right on a

series of critical issues. As the PPD grew, leaders of the Socialist Party insisted on

abolishing dual membership for fear of losing their capacity to enlarge the appeal of the Socialist Party beyond its traditional constituency. By 1993 both parties, working together in a somewhat

tense relationship, had comparable levels of popular support in opinion polls. In a March 1993 survey by the Center for Public Studies

(Centro de Estudios Publicos—CEP) and Adimark (a polling company), 10.6 percent of Chilean voters identified with the PPD while

8.5 percent registered a preference for the Socialist Party. As the

1993 presidential election approached, PPD leader Ricardo Lagos signaled his intention to challenge the Christian Democrats for the presidential candidacy of the CPD. His move indicated the determination of the parties of the moderate left to remain an important force in Chilean politics. However, Christian Democrat

Eduardo Frei Ruiz-Tagle, son of the former president, defeated

Lagos in a convention of CPD parties held on May 23, 1993, making him the strong favorite to win the presidential elections scheduled for December 11, 1993. Frei Ruiz-Tagle won by a vote of

60 percent, while Lagos received 38 percent.

Other parties that could be placed on the center-left included

the Humanist-Green Alliance (Alianza Humanista-Verde) and the

Social Democratic Party (Partido Social Democratico), an offshoot

of the Radical Party, which managed to elect one of its leaders to the Senate. These new parties were successful in mobilizing support against Pinochet in the plebiscite but faltered in subsequent

elections.

The Parties of the Center

The Christian Democratic Party (Partido Democrata Cristiano

PDC), formally established in 1957, traces its origins to the 1930s,

when the youth wing of the Conservative Party, the Conservative

Falange (Falange Conservativa), heavily influenced by the progressive social doctrines of the Roman Catholic Church and the works

of French Catholic philosopher Jacques Maritain, broke off to form

the National Falange in 1938. Although the PDC remained small

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Government and Politics

for many years, it came to prominence in the 1940s, when party

leader Eduardo Frei Montalva became minister of public works.

The party's fortunes gradually improved as the leadership of the

Roman Catholic Church shifted from an embrace of the right

toward a more progressive line that paralleled the reformist bent

of the Falangist leadership. The PDC came into its own in 1957,

when it adopted its present name after uniting with several other

centrist groups. It elected Frei to the Senate while capturing four- teen seats in the Chamber of Deputies. The party polled 20 per- cent of the vote in the presidential race in 1958, with Frei as standard-bearer. In 1964, with the support of the right, which feared

the election of Allende, Frei was elected president on a platform

proclaiming a "third way" between Marxism and capitalism, a form of communitarian socialism of cooperatives and self-managed

worker enterprises.

Although the PDC grew significantly during Frei's presidency

and succeeded in obtaining the largest vote of any single party in

contemporary Chilean history in the 1965 congressional race, the

Christian Democrats were not able to overcome the tripartite di- vision of Chilean politics. Its candidate in the 1970 election,

Radomiro Tomic Romero, came in third with 27.8 percent of the

total vote. The PDC soon broke with Allende, rejecting measures issued

by decree without legislative support and shifting to an alliance

with the parties of the right. Although the PDC leadership, which

by 1973 had returned to the more conservative orientation, welcomed the coup as "inevitable," a significant minority condemned

it. Within months, the party began to distance itself from the military government over the new regime's strongly antipolitical cast,

its human rights violations, and its clear intention of remaining

in power indefinitely. By 1980 the PDC was playing a leadership

role in opposition to the military regime.

In the aftermath of the military regime, the PDC emerged as Chile's largest party, with the support of about 35 percent of

the electorate. The PDC had been divided internally by a series of ideological, generational, and factional rivalries. A large number of party followers identified themselves as center-left, while

many viewed themselves as center-right. The PDC retained a com- mitment to social justice issues while embracing the free-market

policies instituted by the military government. However, the communitarian ideology of the past receded in importance, and the

Christian Democrats remained reluctant to take issue with the

Roman Catholic Church's stands on divorce and abortion.

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Chile: A Country Study

Although the Aylwin administration was a coalition government,

the PDC secured ten of twenty cabinet seats. In the 1989 elections,

the Christian Democrats also obtained the largest number of congressional seats, with fourteen in the Senate and thirty-eight in the

Chamber of Deputies. In October 1991, in a major challenge to President Aylwin and the traditional leadership of the party, Eduardo Frei Ruiz-Tagle was elected PDC president, placing him in a privileged position to run for president as the candidate of the

CPD.

Another party that could be classified as centrist was the Radical Party, whose political importance outweighed its electoral

presence. The Radical Party owed its survival as a political force

to the binomial electoral law inherited from the military government and the desire of the Christian Democrats to use the Radical

Party as a foil against the left. It was to the Christian Democrats'

advantage to provide relatively more space to the Radicals on the

joint lists than to their stronger PPD partners. The Radicals suc- ceeded in electing two senators and five deputies in 1989 and were

allotted two out of twenty cabinet ministers, despite polls reporting that they had less than 2 percent support nationally. It remained

to be seen if, over the long run, the Radical Party could compete

with Chile's other major parties, particularly the PPD, which had

moved closest to the Radical Party's traditional position on the political spectrum.

The Parties of the Right

In 1965, following the dramatic rise of the Christian Democrats,

primarily at their expense, Chile's two traditional right-wing parties, the Liberal Party and Conservative Party, merged into the

National Party (Partido Nacional). Their traditional disagreements over issues such as the proper role of the Roman Catholic Church

in society paled by comparison with the challenge posed by the left to private property and Chile's hierarchical social order. The new

party, energized by the presidential candidacy ofJorge Alessandri

in 1970, helped the right regain some of its lost electoral ground.

The National Party won 21.1 percent of the vote in the 1973 congressional elections, the last before the coup.

The National Party was at the forefront of the opposition to the

Allende government, working closely with elements of the busi- ness community. National Party leaders welcomed the coup and,

unlike the Christian Democrats, were content to accept the military authorities' injunction that parties go into "recess." Until 1984

the National Party remained moribund, with most of the party lead- ers concerning themselves with private pursuits or an occasional

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Government and Politics

embassy post. With the riots of 1983 and 1984, leaders on the right

began to worry about the return of civilian politics and the challenge

of rebuilding party organizations. In 1987 three rightist organizations—the National Unity Movement (Movimiento de Unidad

Nacional—MUN), representing many of Chile's traditional leaders of the right; the National Labor Front (Frente Nacional del

Trabajo—FNT), headed by a more nationalistic group tied to small

business and rural interests; and the Independent Democratic Union

(Union Democrata Independiente—UDI), constituted by former

junta advisers and officials of the military government—joined to form National Renewal as a successor to the National Party. The

uneasy alliance soon broke apart as the UDI signaled its strong

support for the plebiscite of 1988 and a Pinochet candidacy, while

MUN indicated its preference for an open election or a candidate

other than Pinochet.

With Pinochet's defeat, National Renewal's prestige rose considerably. In the aftermath of the plebiscite, National Renewal

worked closely with the other opposition parties to propose far- reaching amendments to the constitution. National Renewal,

however, could not impose its own party president, Sergio Onofre

Jarpa, having to concede the presidential candidacy of the right

to the UDI's Biichi. After the 1989 congressional race, National

Renewal emerged as the dominant party of the right, benefiting

strongly from the electoral law and electing six senators and twentynine deputies. Its strength in the Senate meant that the Aylwin

government had to compromise with National Renewal to gain sup- port for key legislative and constitutional measures. National

Renewal saw much of its support wane in the wake of party scandals involving its most promising presidential candidates, whereas

the UDI's positive image grew.

While National Renewal drew substantial support from rural areas and traditional small businessmen, the UDI appealed to new

entrepreneurial elites and middle sectors in Chile's rapidly growing modern sector. The UDI also made inroads in low-income

neighborhoods with special programs appealing to the poor, a legacy

of the Pinochet regime's urban policy. The assassination of UDI

founder Senator Jaime Guzman Errazuriz on April 1, 1991, was

a serious blow, depriving the party of its strongest leader.

A discussion of the parties of the right would not be complete

without a mention of the Union of the Centrist Center (Union de

Centro Centro—UCC), a loose organization created by Francis- co Errazuriz. Because parties of the left like to call themselves

"center-left" and parties of the right "center-right" to avoid being labeled as extremist, Errazuriz coined the somewhat redundant

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Chile: A Country Study

name of the UCC to show that he is the only centrist-centrist. The

UCC had no party organization and no clear programmatic orientation. Yet it regularly commanded the support of about 5 percent

of the electorate, enough to place the party in a privileged position

to bargain for places on the party lists of either the right or the

CPD, giving Errazuriz more clout than his real support would in- dicate.

The advent of the 1993 presidential race underscored the con- tinued rivalry of the parties of the right. Reformers in National

Renewal failed in their effort to provide the nation with a new generation of rightist leaders as Senator Sebastian Pifiera and Congresswoman Evelyn Matthei canceled themselves out in a bitter struggle.

Only after months of charges and countercharges, and in the face

of the CPD's remarkable capacity for unity, could National Unity,

the UDI, and the UCC succeed in structuring a joint congressional

list and selecting a presidential candidate.

The 1993 Presidential Election

The compromises struck in the 1980 constitutional reform dis- cussions between the military government and the opposition led

to the limitation of President Aylwin's term to four years, half of

the normal term contemplated in the constitution. This meant that

by mid- 1992 parties and leaders were already jockeying to prepare

the succession. Leaders of the Aylwin government, including prominent cabinet members, made no secret of their desire to put forth

the name of Alejandro Foxley Riesco, the minister of finance, as a man who would guarantee stability and continuity. A Christian

Democrat, Foxley had presided ably over the delicate task of maintaining economic stability and promoting growth.

Within the CPD, however, there was considerable disagreement

over a Foxley candidacy. Christian Democrats controlling the party

organization, who had not been favored with prominent governmental positions, pushed the candidacy of Eduardo Frei Ruiz-Tagle, son of the former president, as an alternative. Frei's candidacy was

given an enormous boost when he succeeded in defeating several

Christian Democratic factions, including the Aylwin group, by cap- turing the presidency of the PDC. In the first open election for

party leadership among all registered Christian Democrats, Frei,

drawing on the magic of his father's name, scored a stunning

victory.

While most observers presumed that from his position as PDC

president Frei would be able to command the nomination of the

center-left alliance, elements in the Socialist Party and the PPD

argued that the nomination in the second government should go

252
Eduardo Frei Ruiz-Tagle,

president

March 11, 1994-

Courtesy Embassy of Chile,

Washington, and

El Mercurio, Santiago

to a Socialist, not a Christian Democrat. This was the position of

Ricardo Lagos, a minister of public education in the Aylwin cabi- net and the most prominent leader of the moderate left. Lagos,

who was defeated for a Senate seat in Santiago by the vagaries of

the electoral law, remained one of the most popular leaders in Chile

and was widely praised for his tenure in the Ministry of Public Education.

A Lagos candidacy, however, implied the serious possibility that

the CPD would break up. Christian Democrats pointed to their

party's significant advantage in the polls and noted that the country might not be ready for a candidate identified with the Socialist

Party. Lagos faced opposition within the PPD and the Socialist

Party among leaders who thought that risking the unity of the CPD

could only play into the hands of forces that would welcome a victory of the right or an authoritarian reversal. Lagos, in turn, ar- gued that the Socialists could be relegated to the position of a permanent minority force within the coalition if they did not have

the opportunity to present their own candidate. The constitutional provision for a second electoral round, in case no candidate obtained an absolute majority in the first round, would permit the

holding of a kind of primary. The CPD candidate that failed to go into the second round of the two finalists would simply support

the CPD counterpart. Lagos, however, was not able to persuade

either the Christian Democrats or his own allies to launch two

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Chile: A Country Study

center-left presidential candidacies spearheading one joint list for congressional seats. Instead, he had to settle for a national con- vention in which Frei handily defeated him with his greater or- ganizational strength.

The right had even more difficulty coming up with a standardbearer. National Renewal was intent on imposing its own candidacy

this time and sought to elevate one of its younger leaders to carry

the torch. Bitter opposition by the UDI and the destructive internal struggle within National Renewal precluded Chile's largest

party on the right from selecting the standard-bearer of the coali- tion. After a bitter and highly destructive process, the parties of

the right, including the UCC, finally were able to structure a joint

congressional list and turn to Arturo Alessandri Besa, a senator

and businessman, as presidential candidate.

Several other candidates were presented by minor parties. The

PCCh, which had reluctantly supported Aylwin in 1989, endorsed

leftist priest Eugenio Pizarro Poblete, while scientist Manfredo MaxNeef ran a quixotic campaign stressing environmental issues. In

the election held on December 11, 1993, Eduardo Frei scored an

impressive victory, exceeding the total that Aylwin obtained in 1989.

Frei's victory underscored the strong support of the CPD's overall policies, bucking the Latin American trend of failed incumbent governments. Frei obtained 57.4 percent of the vote to Alessandri's 24.7 percent (see table 42, Appendix). The surprise

in the race was Max-Neef, who, exceeding all expectations, obtained 5.7 percent of the vote, surpassing the vote for Pizarro, which was 4.6 percent. Max-Neef was able to translate his shoestring can- didacy into the most significant protest vote against the major candidates.

The election of the fifty-one-year-old Frei marked the coming

of age of a new generation of political leaders in Chile. Frei, an

engineer and businessman, had avoided the political world of his

father until the late 1980s when he agreed to form part of the Committee for Free Elections. Subsequentiy, his party faction challenged

Aylwin for the leadership of the party prior to the 1989 election.

Although Frei lost, he laid the groundwork for his successful bid

for party leadership in 1992 and, eventually, the race for president.

Frei's election signals the intention of the CPD to remain united

in a coalition government for the foreseeable future. The designation of Socialist Party president German Correa as minister of in- terior and Ricardo Lagos 's acceptance of another cabinet post

underscore the broad nature of the regime. Frei's challenge,

however, will be to maintain unity while addressing many of the

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Government and Politics

lingering social issues that still affect Chilean society without upsetting the country's economic progress. The Church, Business, Labor, and the Media

The Church

The Roman Catholic Church has played a central role in Chilean

politics since colonial days. During the nineteenth century, the question of the proper role of the Catholic Church in society helped

define the differences among the country's incipient political parties. The Conservatives, in defending the social order of the colonial

era, championed the church's central role in protecting that order

through its control of the educational system and its tutelage over

the principal rights of passage, from birth to death. They also supported the close tie between church and state based on the Spanish patronato real (see Glossary), which provided the president with

the authority to name church officials. Liberals, and especially Radicals, drawing on the ideals of the Enlightenment, sought a secular order, a separation of church and state in which the state would

take the primary responsibility for instruction and assume "civil"

jurisdiction over births, marriages, and the burial of the dead. The

Liberals and Radicals also promoted the liberal doctrine of the rights

of man and citizenship, seeking to implement the notion of one man-one vote, unswayed by the influence of the upper class or the

preaching of the clergy.

During the 1861-91 period, the Liberals were in the ascendancy, succeeding in their quest to expand the authority of the state to the detriment of that of the church. The de jure separation of

church and state, however, did not occur until the adoption of the

constitution of 1925. Although a few priests and Catholic laity embraced the progressive social doctrines inspired by papal encyclicals such as Rerum Novarum (1891) and Quadragesimo Anno (1931),

it was not until the 1950s that the church hierarchy began to loos- en its ties to the Conservative Party. Keenly aware of Marxism's

challenge to their core values and the growing influence of Marxist

parties, church leaders responded with an increased commitment

to social justice and reform. Some of the early efforts at breaking

down Chile's semifeudal land tenure system were undertaken on

church lands by progressive bishops, notably Bishop Manuel Larrain Errazuriz of Talca in the 1960s.

The church's shift away from Conservative politics coincided with

the development of a close alliance between the church elite and

the emerging Christian Democrats, which contributed to the success of the new party, particularly among women and another

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Chile: A Country Study

previously disenfranchised group, rural voters. The church, and

in particular Cardinal Raul Silva Henriquez, the archbishop of Santiago, welcomed the election of Eduardo Frei Montalva to the

presidency in 1964.

Relations between the church and Allende, however, were far

less cordial. Church leaders retained correct relations with the leftist government, fearful that the new authorities would make use of

the public schools for Marxist indoctrination and further undermine the waning influence of the church in society. When Allende was overthrown, all of the bishops welcomed the coup and helped

legitimize the new military junta with solemn ceremonies. Several

bishops, including the bishop of Valparaiso, remained staunch supporters of the military for years to come. Other church leaders, notably Cardinal Silva, shocked by

widespread human rights violations and disturbed by the growing

rift between the armed forces and the church's Christian Democratic

allies, soon distanced themselves from the military authorities. The

church, and particularly the archdiocese of Santiago, responded

by gradually assuming a critical role as a defender of human rights

and providing an "umbrella" of physical and moral shelter to in- tellectuals and party and union leaders. Antagonizing the regime

and its many supporters in upper- and middle-class sectors, the

Vicariate of Solidarity (Vicaria de la Solidaridad) helped provide

for the legal defense and support of victims of the dictatorship. Sil- va' s successor, though more conservative, supported the church's

work in the human rights field and, in 1985, sought to broker the

National Accord for Transition to Full Democracy. As the plebiscite approached, the Episcopal Conference made clear that it did

not consider the junta's plan to be democratic and urged Pinochet

to step down, further aggravating the relationship between the

authorities and the church.

With the restoration of democracy, the church retreated from

the political arena. Following dictates from Rome and the appointment of more conservative bishops, relations between the hierarchy and the Christian Democrats cooled. Church leaders also

made it clear that, in recognition of church support for the democratic opposition in the difficult years of the dictatorship, they

expected support from the new government for the church's own

more conservative agenda. In early 1994, Chile remained one of

the few countries in the world that did not recognize divorce, and

issues such as abortion and the role of women in society were not

fully addressed (see Divorce, Abortion, and Contraception, ch.

2). Chile's political right made clear that it hoped to capitalize on

256
Government and Politics

these "moral" issues and revive an alliance between clerical authorities and the parties of the right not seen since the 1940s.

Although the challenge from the Marxist left had waned, the

Roman Catholic Church appeared to be engaged in a losing struggle

to stem the extraordinary growth of Protestant Evangelicals (see

Glossary). Evangelical groups grew rapidly during the years of mili- tary rule, primarily as a result of severe social and economic dislo- cations. While the Roman Catholic Church gained adherents and

supporters through its politicized Christian Base Communities

(Comunidades Eclesiasticas de Base—CEBs; see Glossary) and the

work of highly committed priests, tens of thousands of other

Chileans were seeking a new meaning for their lives by responding to the far more flexible and spontaneous religious appeals of

hundreds of storefront churches. Surveys in Santiago indicated that Evangelicals made up close to 15 percent of the population, with

far larger proportions in shantytowns (poblaciones callampas) and other

low-income neighborhoods. What is perhaps more significant is that active Evangelicals were as numerous as active Catholics (see

Religion and Churches, ch. 2). Business

Chile's business community has long played an active role in

the nation's politics. During the years of import-substitution in- dustrialization, businesses developed close links with political leaders

and state agencies, seeking subsidies, tariffs, and other forms of

regulation that would protect them from the rigors of market competition domestically and internationally. Indeed, the expansion

of the state, in particular its decentralized semiautonomous agencies, led to the creation of semicorporatist boards whose members

included formal representatives of large business associations. As

the parties of the right began to decline in importance, business

leaders became increasingly "apolitical," preferring "independent"

candidates such as Jorge Alessandri to those with strong party ties. In the early 1990s, most businesses in Chile employed only a handful of workers, and business trade groups probably represented

less than 20 percent of all business establishments in the country.

Small businesses were represented by the Council of Small and

Medium Enterprises (Consejo de la Pequefia y Mediana Industria—CPMI), and large businesses were represented by the Chamber of Production and Commerce (Camara de la Produccion y

Comercio—CPC). Small and medium-sized business groups were

in turn divided into associations, such as the Truck Owners Association (Asociacion Gremial de Duenos de Camiones) and the

Federation of Retail Business of Chile (Confederacion del Comercio

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Chile: A Country Study

Detallista de Chile). The most important of the associations affiliated with the CPC were the Industrial Development Association (Sociedad de Fomento Fabril—Sofofa) and the National Agricultural

Association (Sociedad Nacional de Agricultura—SNA), both of

which had considerable political influence and clout. During the Allende years, the associations of both small and large

businesses played a critical role in combating the parties of the left and undermining the Allende government. Small-business associations, particularly the truck owners, brought the country to a standstill, aggravating an already difficult economic and political

situation. Large-business associations also worked hard to depose

the Popular Unity government. Sofofa, in particular, played an

important role by supporting a highly cohesive group of economists

critical of the Allende government who prepared a document that

served as the basis for the military regime's shift in economic poli- cy. Because of their prominent role in bringing down the Allende

government, business leaders assumed that they would have in- fluence over economic policy and be able to reestablish a close and

mutually beneficial relationship with the state. Much to the busi- ness leaders' surprise, the far-reaching structural adjustment policies pursued by the military government proved extraordinarily

disruptive, contributing to the bankruptcy of hundreds of major

firms.

Business leaders, already weakened by the reform and revolutionary policies of the previous two civilian presidents, were too

dispirited to oppose the determined economic advisers of the military. Small business, which had the most to lose, made some

gestures toward joining the growing opposition movement after the

dramatic economic downturn of 1981, only to be kept in line by

the regime's strategy of using tough measures when necessary and

moderating its policies at key points just enough to retain privatesector allegiance.

Overall, the lack of strenuous resistance to the regime, particularly from medium-sized and large businesses, was attributed to memories of the traumatic Allende years. Entrepreneurs and business managers feared that any strong opposition on their part might

weaken the military regime and create the possibility of a return

to the leftist policies that they felt had practically destroyed the pri- vate sector in the past. A weak business community, in combination with the private sector's determination not to risk a return

of the left, gave the military regime wide latitude to restructure

the economy as it saw fit. Because of the weakness of the parties of the right, business groups

remained influential in right-wing politics after the return to

258
Government and Politics

democracy. In 1989 they were instrumental in imposing an "independent" candidate of the right to run for president and actively

supported one of their own in the presidential race of 1993. Yet

business associations were less influential in politics in the early

1990s than previously, largely because of the changes resulting from

Chile's opening to world markets and, ironically, because of the

decreased importance of the state in regulating and controlling business. Political leaders and government officials, however, solicited the views of business interests on labor and environmental questions because of their common desire to encourage continued ex- pansion of the Chilean economy (see Social Organizations and

Associations, ch. 2). Labor

For many decades, Chile had one of the most extensive labor

movements in the Western Hemisphere. Large increases in unionization through the 1960s occurred in response to efforts by the

authorities to organize working-class groups. Intense competition

between the Christian Democrats and the left added further to the

extraordinary efforts to mobilize previously disenfranchised groups

in the late 1960s and early 1970s.

Under center-left administrations, Chile's workers obtained an

array of workers' rights and established a collective bargaining sys- tem in which the state played a significant role as mediator. During the Popular Unity years, unions closely tied to the parties of

the left played important roles in the management of enterprises

taken over by the state. However, Chile's organized workers hardly

constituted the revolutionary vanguard envisioned by some sec- tors of the far left. They were proud of their "conquests" and en- visioned the policies of the Allende government as a continuation

of favorable treatment for workers. Despite the size of Chile's labor

movement, labor had little autonomy from party leadership. Most

labor demands, outside of particular collective bargaining situations, responded to the strategies and calculations of party leaders

both in and out of the government.

When the coup came, despite the rhetoric of the far left there was no independent working-class movement capable of resisting

the imposition of military rule. With the arrest of labor and party

leaders, any possibility of resistance vanished. The military regime was extremely harsh on organized labor because of its close ties to the parties of the left. The principal labor federation, the United

Labor Federation (Central Unica de Trabajadores), was disbanded, and many of its leaders were killed, imprisoned, or exiled. The

authorities adopted a new labor code, which prohibited labor

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Chile: A Country Study

federations, sharply restricted the right to strike, and gave significant latitude to employers in the hiring and firing of workers and

in procedures for settling disputes.

Structural changes in the Chilean economy, particularly the col- lapse of large traditional industries that had depended on state subsidies and tariff protection, combined with the highest levels of urban

unemployment in Latin America during the 1980s, also exacted

a harsh toll on the labor movement. By the mid-1980s, the number of unionized workers was only one-third of its highest level,

while the growing numbers of women in the labor force, particularly in commercial agriculture, remained nonunionized. By 1987

only about 10 percent of the total work force was unionized; approximately 20 percent of industrial labor belonged to unions. Only

in select areas, such as copper mining, where 60 percent of the workers were unionized, was the union movement able to hold its own.

Despite organized labor's decline, when the military authorities

attempted to develop an alternative labor movement with a "renewed" leadership to their liking, they failed. Even in

government-mandated elections for new union leaders at the plant

level, workers tended to select union members who were hostile

to the government and had close ties to opposition parties. It was

this "tolerated" labor movement, spearheaded by the Confederation of Copper Workers (Confederacion de Trabajadores del

Cobre—CTC), that ignited the widespread protests and strikes

of 1983 coordinated by the National Workers' Command (Comando

Nacional de Trabajadores—CNT). Less militant was the centrist (pro-PDC) Workers' Democratic Federation (Central Democratica de Trabajadores—CDT). The government moved swiftly,

however, to curb all labor activism through repressive measures and threats to fire workers, particularly in the copper mines. Party

leaders soon replaced labor leaders as the principal organizers of

the growing opposition to the military government.

In the early 1990s, the principal labor confederation in Chile was the Unitary Confederation of Labor (Confederacion Unica de

Trabajadores—CUT), established in 1988 as the successor to the

National Trade Union Coordinating Board (Coordinadora Nacional de Sindicatos—CNS), a grouping of industrial, professional, and mining unions led by leftist Christian Democrats and

elements of the left. With the return of democracy, labor pressed

for a more favorable labor code and for social policies that would

improve the standard of living for the poor. Although the Aylwin

government was constrained in approving new labor legislation by

the opposition majority in the Senate, some modifications were made to the labor code. The strong climate of opinion in the country

260
Government and Politics

in favor of free markets and minimal government restrictions on

labor markets, a position embraced by the Aylwin government,

has hemmed in labor's room for maneuvering.

The weakness of the labor movement reflected not only the low

incidence of organized labor in Chile's new economic context but

also the degree to which labor continued to be controlled by Chile's

principal parties, parties that were able to exert substantial "labor

discipline" during Aylwin 's transitional government. There were

indications, however, that this discipline may have been obtained

at a cost. There appeared to be dissatisfaction among rank-andfile workers with the close relationship between union and party

leaders and some bitterness about the low priority the government

accorded their interests, despite government success in changing some of the labor laws (see Unions and Labor Conflicts, ch. 3). The Media

Chile has a long tradition of an active press, closely tied to the

country's competitive political parties. Prior to the 1973 coup, Santiago had ten daily newspapers spanning the ideological spectrum.

These included, on the left, the Communist El Siglo, the Socialist

Ultima Horn, and the far-left papers Puro Chile and Clarin. The Christian Democrats owned La Prensa. Newspapers identified with the

center-right or far right included El Mercurio (founded in 1827),

Las Ultimas Noticias (founded in 1902), La Segunda (founded in 1931),

La Tercera de la Hora (founded in 1950), and La Tribuna.

The wide ideological range of Chile's major newspapers did not

mean that circulation was evenly distributed. All of the newspapers

supporting the Allende government had a combined circulation of

less than 250,000, while, for instance, La Tercera de la Hora, a center- right paper, had a circulation of 200,000. By far the most important newspaper in Chile has been El Mercurio, with a Sunday cir- culation of 340,000 and wide influence in opinion circles. The El

Mercurio Company, easily the most powerful newspaper group

in Chile, also owns La Segunda, the sensationalist Las Ultimas Noticias,

and regional papers. With its close ties to the Chilean Navy (Armada de Chile), El Mercurio played a critical role in mobilizing support against the Allende government, openly supporting the military

coup.

After the coup, Chile's independent press disappeared. The newspapers of the left were closed immediately, and the centrist La Prensa stopped publishing a few months later. Newspapers that kept publishing gave strong support to the military government and submitted to its guidelines on sensitive issues; they also developed a keen

sense of when to censor themselves. The print media became even

261
Chile: A Country Study more concentrated in the hands of two groups: the Edwards family, owners of El Mercurio, with approximately 50 percent of all cir- culation nationwide, and the Pico Carias family, owners oiLa Tercera de la Hora, with another 30 percent. Only toward the end of the

military government did two opposition newspapers appear

La

Epoca, founded in 1987 and run by Christian Democrats, and Fortin Mapocho, a publication run by groups on the left that became

a daily newspaper in 1987. By 1990 Chile had approximately eighty

newspapers, including thirty-three dailies. During the years of military rule, opposition opinion was reflected in limited-circulation weekly magazines, the first being Mensaje, a Jesuit publication founded in 1951. Over time, magazines such

as Hoy, a Christian Democratic weekly started in 1977; Andlisis and

Apsi, two leftist publications that began reaching a national audience

in 1983; and the biweekly Cauce, established in 1983, all circulated

under the often realized threat of censorship, confiscation of their

publications, and arrests of reporters and staff. In perhaps the worst

case of government suppression, Cauce, Apsi, Andlisis, and Fortin

Mapocho were all shut down from October 1984 to May 1985. After the restoration of democracy, two conservative weekly magazines were founded, opposed to the Aylwin government: the

influential {Que Pasa? (founded in 1971) and Ercilla (founded in

1936). By 1990 Chile had more than twenty major current affairs periodicals.

The return of civilian government did not lead to an explosion

of new publications. Both La Epoca and Fortin Mapocho, which had

received some support from foreign sources, faced enormous financial challenges in competing with the established media. Fortin Mapocho folded, and La Epoca finally was sold to a business group,

which retained the newspaper's standards of objective reporting. El

Mercurio continued to dominate the print media and remained the

most influential newspaper in the country. The El Mercurio Company remained closely tied to business groups that had supported the military regime but made efforts, particularly through La

Segunda, to present balanced and fair reporting. The only openly

pro-CPD newspaper in Chile was the government-subsidized financial newspaper, La Nacion, which reflected the views of the authorities. Radio traditionally has been dominated by progovernment sta- tions, the most notable exceptions being Radio Cooperativa, run by Christian Democrats, and Radio Chilena, run by the Roman

Catholic Church. At first the size of the audience for these two sta- tions did not approach the listenership levels of Mineria, Portales,

and Agricultura—stations identified with the business community.

262
Government and Politics

Radio Tierra, claiming to be the first all-women radio station in

the Americas, has identified exclusively with women since its es- tablishment in 1983 (see Telecommunications, ch. 3). Although the opposition had some print outlets, it had no ac- cess to television. Not until 1987, in the months leading up to the

plebiscite, did opposition leaders gain limited access to television.

The medium was strictly controlled by the authorities and by net- work managers: the University of Chile, the Pontifical Catholic

University of Chile, and the National Television Network of

Chile—Channel 7 (Television Nacional de Chile—Canal 7). Competitive politics transformed television news broadcasting,

introducing numerous talk shows that focus on politics. Channel

7, the official station of the military government, was reorganized

by the junta after Pinochet's defeat as a more autonomous entity

presenting a broad range of views and striving for more impartial news presentation. The station with the widest audience in Chile

in the early 1990s was the Pontifical Catholic University of Chile's

Channel 13, offering a right-of-center editorial line. Other channels with a more regional focus included Channel 5 of Valparaiso,

operated by the Catholic University of Valparaiso (Television

Universidad Catolica de Valparaiso—Canal 5); Channel 1 1 , operated in Santiago by the University of Chile (Corporacion de Television de la Universidad de Chile—Canal 11); and two commercial

channels, Valparaiso's Channel 4 and Santiago's Red Televisiva

Megavision—Channel 9, owned by the Pinto Claude Group and

directed by Ricardo Claro. In May 1993, the Luksic Group entered the private television market by acquiring a 75 percent share

of Maxivision (TV MAX), broadcast on UHF (ultrahigh frequency)

in the Metropolitan Region of Santiago.

The National Council of Television (Consejo Nacional de Television) is charged with regulating the airwaves and setting broadcast standards. Its jurisdiction in matters of censorship is unclear

in the wake of Supreme Court rulings challenging its decisions.

Foreign Relations

Since the early decades after independence, Chile has always had

an active involvement in international affairs. In 1837 the country aggressively challenged the dominance of Peru's port of Callao for preeminence in the Pacific trade routes, defeating the

short-lived alliance between Peru and Bolivia, the Peru-Bolivia

Confederation (1836-39), in an international war. The war left Chile an important power in the Pacific. A second war, the War

of the Pacific (1879-83), further increased Chile's regional dominance and international prestige, while adding considerably to its

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Chile: A Country Study

territory. In the twentieth century, although Chile did not become

involved in an international war, it continued to maintain one of

the largest standing armies per population size in the region.

Because of the prestige of Chile's democratic institutions, Chile's

diplomatic service is well respected, and Chile has influence far beyond the country's size or geostrategic importance. Over the

years, Chile has played an active role in promoting multilateral

institutions and supporting democratic and human rights principles. Because of its strong ideologically based multiparty system,

Chileans have widespread contacts with counterpart parties in Europe and are present in the international federations of Christian

Democrats, Socialists, and Communists. These contacts contrib- ute to Chile's European orientation.

During the nineteenth century, Chile's commercial ties were

primarily with Britain, a country that had a decisive influence on

the organization of the navy. Culturally and intellectually, Chileans

felt close to France. The French influenced Chile's legal and educational systems and had a decisive impact on Chilean culture, in- cluding the architecture of the capital in the boom years at the turn

of the century. German influence came from substantial German

immigration to southern Chile and the organization and training

of the army by Prussians. Aside from important markets for Chilean

wheat in California, the United States played a decidedly secon- dary role. Relations with the United States

Chile has never been particularly close to the United States. The

distance between Washington and Santiago is greater than the dis- tance between Washington and Moscow. In the twentieth century,

Chile's giant copper mines were developed by United States eco- nomic interests, although Europe remained a larger market for

Chilean products. Chile's democratic governments distanced themselves from European fascism during the world wars and embraced

the cause of the Allies, despite internal pressures to support the

Axis powers. Chile later joined with the United States in supporting collective measures for safeguarding hemispheric security from

a Soviet threat and welcomed United States support in developing

the Chilean Air Force. But the advent of the Cold War and the

official Chilean policy of support for the inter-American system

exacerbated internal conflicts in Chile. The growing presence of

the Marxist left meant a sharp increase in anti-American sentiment

in Chilean public opinion, a sentiment that was fueled by opposition to the United States presence in Vietnam, the United States

264
Government and Politics

conflict with Cuba, and increased United States intervention in

domestic Chilean politics.

During the 1960s, the United States identified Chile as a model

country, one that would provide a different, democratic path to development, countering the popularity of Cuba in the developing world. To that end, the United States strongly supported the

candidacy of Eduardo Frei Montalva in 1964 with overt and covert funds and subsequently supported his government in the implementation of urban and rural reforms. This support spawned considerable resentment against the United States in Chile's conservative

upper class, as well as among the Marxist left. The election of Allende was viewed in Washington as a signifi- cant setback to United States interests worldwide. National Security Adviser Henry Kissinger was particularly concerned about the

implications for European politics of the free election of a Marxist

in Chile. Responding to these fears and a concern for growing Soviet

influence in the Western Hemisphere, the United States embarked

on a covert campaign to prevent Allende from gaining office and

to destabilize his government after his election was ratified. Although the United States did not have a direct hand in the over- throw of Allende, it welcomed the coup and provided assistance

to the military regime.

The widespread violations of human rights in Chile, combined

with a strong rejection of covert activities engaged in abroad by

the administration of President Richard M. Nixon, galvanized

United States congressional opposition to United States ties with

Chile's military government. With the election of Jimmy Carter

in 1976, the United States took an openly hostile attitude toward

the Chilean military government, publicly condemning human

rights violations and pressing for the restoration of democracy. Particularly disturbing to the United States government was the complicity of the Chilean intelligence services in the assassination in

Washington of Chilean ambassador Orlando Letelier and one of

his associates, a United States citizen. That incident contributed

to the isolation of the Pinochet government internationally and led

to a sharp rift in relations between the two countries. The Chilean

military turned elsewhere for its procurement needs and encouraged

the development of a domestic arms industry to replace United

States equipment (see The Defense Industry, ch. 5). With the defeat ofJimmy Carter and the election of Ronald Reagan, the pendulum in the relations between the two countries swung

the other way. Reagan argued that anticommunist authoritarian

regimes should not be antagonized for fear that they might be undermined, leading to the triumph of a Marxist left, as in Nicaragua.

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Chile: A Country Study

Chile would be pushed to respect human rights through "quiet

diplomacy," while the United States government reestablished nor- mal ties with the dictatorship.

The new policy did not last long. After the riots in Santiago in

1983, the United States began to worry that the Pinochet government was no longer a solution to a potential threat from the far

left, but part of the problem. United States officials increasingly

began to reflect the concerns of prominent conservatives in Chile,

who believed that Pinochet's own personal ambitions could stand

in the way of a successful transition back to civilian rule. The shift in policy became far more apparent in Reagan's se- cond term, when the Reagan administration, struggling to oppose

the leftist government of Nicaragua, sought to show its consistency by criticizing the right-wing government of Chile. The United

States made it clear that it did not see the Pinochet government's

plebiscite as a satisfactory step toward democracy and conducive

to open and competitive elections. Whereas in the early 1980s the

United States government had embraced the military regime while

refusing to take the democratic opposition seriously, by the end

of the decade the United States was actively backing the opposition in its effort to obtain a fair electoral process so that it could

attempt to defeat Pinochet at his own game. Pinochet's defeat was

considered by Washington to be a vindication of its policies.

With the election of Patricio Aylwin in Chile, relations between

the two countries improved greatly. The administration of George

Bush welcomed Chile's commitment to free-market policies, while

praising the new government's commitment to democracy. The

United States also supported the Aylwin government's human rights

policies and came to a resolution of the Letelier assassination by

agreeing to a bilateral mediation mechanism and compensation of

the victims' families.

A few issues have complicated United States-Chile relations, in- cluding the removal of Chilean fruit from United States supermarkets in 1991 by the Food and Drug Administration, after tainted

grapes were allegedly discovered. The United States also objected

to Chile's intellectual property legislation, particularly the copying of drug patents. However, these issues pale by comparison with

the strong ties between the two countries and the admiration that

United States officials have expressed for Chile's remarkable eco- nomic performance. As evidence of this "special" relationship, both

the Bush and the Clinton administrations have indicated United

States willingness to sign a free-trade agreement with Chile in the

aftermath of the successful negotiations with Mexico on the North

266
President Patricio Aylwin Azocar

with President George Bush

at the White House,

May 13, 1992

Courtesy, The White House

Enrique Silva Cimma,

Courtesy Embassy of

ChHe, Washington

Aylwin's minister offoreign relations

American Free Trade Agreement (NAFTA—see Glossary). Although Chile has pressed strongly for the agreement as a way to ensure access to United States markets, the United States in 1991 was replaced by Japan as Chile's largest trading partner, with the

United States accounting for less than 20 percent of Chile's world

trade. Ironically, in the post-Cold War era, anti-Americanism in

Chile is more prevalent in military circles and among the traditional right, still bitter about United States support for democratic parties prior to the plebiscite and concerned that the United

States has hegemonic presumptions over the region.

Other Foreign Relations

With the military coup of 1973, Chile became isolated politically as a result of widespread human rights abuses. The return of

democracy in 1990 opened Chile once again to the world. President Patricio Aylwin traveled extensively to Europe, North America, and Asia, reestablishing political and economic ties. Particularly

267
Chile: A Country Study

significant was Chile's opening to Japan, which has become Chile's

largest single trading partner.

In Latin America, Chile joined the Rio Group (see Glossary)

in 1990 and played an active role in strengthening the interAmerican system's commitment to democracy as a cardinal value.

However, Chile has shied away from regional economic inte- gration schemes, such as the Southern Cone Common Market

(Mercado Comun del Cono Sur—Mercosur; see Glossary), arguing that the country is better off opening its economy to the world,

rather than building regional markets with neighboring countries.

Where in the past Chile drew on the prestige of its democratic in- stitutions to bolster its international standing, the extraordinary

success of Chile's economic performance in the early 1990s has given

Chile the status of a "model" country, with a global rather than

regional focus.

Chile's relations with other Latin America countries have improved considerably with the return of legitimate governments in

the region. However, serious border disputes still cloud relations

with the country's three contiguous neighbors. Chile's victory over Peru and Bolivia in the War of the Pacific meant that Bolivia lost the province of Antofagasta and became landlocked, while Peru

lost its southern province of Tarapaca. The quest to regain access

to the sea became the major foreign policy objective for Bolivia

and is still a source of tension with Chile. The two countries do

not maintain full diplomatic relations. A treaty signed in 1929

resolved major boundary disputes with Peru that arose following

the War of the Pacific, but many Peruvians do not accept the terms

of the treaty. Tensions between the two countries reached danger- ous levels in 1979, the centennial of the War of the Pacific.

Chile's most serious border conflict was with Argentina and con- cerned three islands—Picton, Lennox, and Nueva—that are lo- cated south of the Beagle Channel. The two countries agreed to submit to arbitration by Britain's Queen Elizabeth II. In May 1977,

the queen ruled that the islands and all adjacent formations belonged to Chile. Argentina refused to accept the ruling, and rela- tions between the two countries became extremely tense, moving

to the brink of open warfare. In 1978 the two countries agreed to allow the pope to mediate the dispute through the good offices of

Cardinal Antonio Samore, his special envoy. The pope's ruling

resulted in the ratification of a treaty to settle the dispute in Rome

in May 1985. With the inauguration of democratic governments

in both countries, relations improved significantiy. In August 1991,

presidents Aylwin and Carlos Saul Menem signed a treaty that

resolved twenty-two pending border disputes, while agreeing to

268

Source: Based on information from Chile, Instituto Geografico Militar, Alias Geogrdfico de Chile, Santiago, 1988, 39. Figure 12. Chile's Claims in Antarctica, 1993

270

Chile: A Country Study

This pattern of "forced consensus," however, could not continue indefinitely. As the new Frei administration was inaugurated on March 1 1 , 1994, it was clear that members of Congress and

lower-level leaders resented their lack of significant input into the

policy process. The lack of authority in the legislature created the

risk that Congress would become an essentially negative institu- tion seeking to undermine the executive, with no significant role

in developing arenas of accommodation and consensus that had

served Chile so well in previous eras. Particularly vexing is incompatibility between a presidentialist

form of government and a highly institutionalized multiparty sys- tem, one in which the president appears unlikely to obtain majority support in the presidential race and unlikely to enjoy majority

support in the legislature. Under such circumstances, Chile will need institutional rules and procedures to provide incentives to build

political coalitions across party lines. Although there is consensus

in 1993 among the elite on fundamental questions, there is no

guarantee that consensus will remain once Chile moves away from

the "heroic politics" of the immediate postauthoritarian period to the more "banal politics" of democratic normality. Among the

many issues that will challenge Chile's parties and, indeed, may

lead to a reconfiguration of party alliances, are, of course, poverty,

as well as other matters that have not as yet reached the national

policy agenda, such as divorce, abortion, the environment, and

grass-roots political participation.

Chile's electoral system also poses a challenge. Rather than generate a two-party system, the electoral system has encouraged the

maintenance of broad coalitions, including parties that would probably not obtain seats in a fully competitive electoral framework.

The electoral system could encourage political instability if two

runners-up were evenly matched. In a political system where the

forces on the left, right, and center are roughly equal in size, the

electoral system could lead to the disenfranchisement of one of those

sectors if the politics of broad coalitions were to break down.

Finally, it remains clear that Chilean democracy will not be fully

consolidated until civil- military relations are normalized. Although

it is important that a democracy insulate the armed forces from

partisan political meddling in the same way that the judicial sys- tem is kept "apolitical," the broad latitude given the armed forces

in the 1980 constitution threatens democratic stability by shielding the military institution from civilian oversight. The task of the

Frei government will be to ease this threat by completing the constitutional reforms left pending after the 1989 compromises made

with the outgoing military regime.

272
Government and Politics

* * * The classic study in English of politics and government in Chile

remains Federico G. Gil's The Political System of Chile. Paul W.

Drake's Socialism and Populism in Chile, 1932-52 and James F. Petras's Politics and Social Forces in Chilean Development provide valuable discussions of the politics of Chile in the pre-Allende period.

There are numerous studies of the Allende years, many of which

also provide background material on the political conditions in Chile

leading up to the election of the Popular Unity government. These

include Paul E. Sigmund's The Overthrow of Allende and the Politics of Chile, 1964-1976, Barbara Stallings's Class Conflict and Economic

Development in Chile, 1958-1973, Mark Falcoff s Modern Chile, 1970-

1989, Edy Kaufman's Crisis in Allende 's Chile, and Arturo Valenzuela's The Breakdown of Democratic Regimes: Chile. Arturo Valenzuela and J. Samuel Valenzuela's Chile: Politics and Society provides an anthology of essays. The Allende years, from the point of view

of the United States ambassador who served at the time of the coup,

are described in Nathaniel Davis's The Last Two Years of Salvador

Allende. Studies of the Pinochet years are fewer. The first comprehensive study of the period of military rule is Pamela Constable and

Arturo Valenzuela's A Nation ofEnemies. A volume of essays providing an overview of the first decade of military rule is J. Samuel

Valenzuela and Arturo Valenzuela's Military Rule in Chile. For cover- age of civil-military relations during the 1973-88 period, see also Manuel Antonio Garreton Merino's The Chilean Political Process. Paul W. Drake and Ivan Jaksic's The Strugglefor Democracy in Chile,

1982-1990 is an anthology covering the transition phase.

The best study of the Catholic Church in Chile is Brian H.

Smith's The Church and Politics in Chile. Chile's party system is dis- cussed in Timothy R. Scully's Rethinking the Center, Michael Fleet's The Rise and Fall of Christian Democracy, and Cesar N. Caviedes's

Elections in Chile. Frederick M. Nunn's The Military in Chilean History provides a historical discussion of the military. A critical dis- cussion of the military institution under Pinochet can be found in

Genaro Arriagada's Pinochet: The Politics of Power. United States-Chile relations in the contemporary period are

treated in Michael J. Francis's The Limits ofHegemony and Paul E. Sigmund's The United States and Democracy in Chile. (For further in- formation and complete citations, see Bibliography.)

273

Chapter 5. National Security
A series of masculine textile figures on a seventeenth-century Mapuche

woman's belt called nimintraruwe
GEOGRAPHICALLY ISOLATED but not immune from occasional foreign threats over the centuries, Chileans have developed some of the strongest military and naval traditions in Latin America.

The indigenous inhabitants of Chile established a formidable reputation as warriors, in no small part by warding off Incan attempts

at conquest in 1460 and 1491 . Even the Spanish conquerors of the

sixteenth century failed to establish their dominion south of the

Rio Bio-Bio, which remained, in effect, the southern frontier of

Chile until more than three centuries later. Following its declaration of independence in 1810, Chile became

the first Latin American country to organize its armed forces on

a professional basis. Its army and navy quickly earned a reputation for effectiveness, engaging in successful wars against the PeruBolivia Confederation of 1836-39, against Spain in 1865-66, and

again against Peru and Bolivia in 1879-83.

Chile's long coastline (6,435 kilometers) and elongated shape cre- ate major defense problems, but geographical barriers such as the

Andes, the Atacama Desert, the Strait of Magellan, and the Beagle Channel have long helped discourage any thoughts of military

aggression by neighboring Argentina, Bolivia, and Peru. The Chil- ean Army has not engaged in a foreign war since 1883. Beginning

with the inauguration in 1886 of a staff school, the War Academy

(Academia de Guerra), under the direction of a captain in the German army, German influence became predominant in the army,

which achieved such prestige throughout Latin America that many

of the other states of the region sent selected officers for postgraduate

training in Chilean military schools. Several countries contracted

with full-scale Chilean military and naval missions to train their

armed forces, and Chilean officers taught in the military schools

of several other Latin American countries.

Persistent friction with Peru since the War of the Pacific

(1879-83) has been fueled by Peruvian irredentism in regard to the territories ceded to Chile following that conflict, despite the ratifi- cation in 1929 of the Treaty of Ancon (also known as the Treaty

of Tacna-Arica), recognizing their loss. Bolivia also has aspired

to regain its outlet to the sea through the former coastal province

of Antofagasta, lost as a result of that war, but has been too weak

to pursue this objective alone. In early 1994, the possibility of any

escalation of tension seemed slight in the medium term.

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Chile: A Country Study

A continuing frontier dispute with Argentina almost led to war

at the turn of the twentieth century and again in 1978. Tension

with Argentina led Chile to break ranks with the rest of Latin

America and quietly support Britain in the 1982 Malvinas/Falklands

War between Britain and Argentina, although Chile has supported Argentina's claim to the islands. The risk of outright hostilities between Chile and Argentina was removed by the Beagle Channel Treaty of May 1985, an increase in diplomatic contacts, and

economic agreements since Patricio Aylwin Azocar (1990-94) took

office as president. Brazil, Ecuador, and to a lesser extent Colombia have historically been Chile's natural allies, given shared dis- putes with Argentina and Peru. In the early 1990s, however,

relations between Chile and its immediate neighbors have been

generally normal. Chile has carried out joint naval exercises with

both Argentina and Peru. Nevertheless, border tensions have sur- faced occasionally, particularly with Peru, and the armed forces

of Argentina and Chile have remained resistant to cooperation.

Despite a record of subordination to constitutional government

that was almost unique in Latin America, the Chilean Armed Forces

(Fuerzas Armadas de Chile) incurred international opprobrium in

September 1973 when they violently overthrew the democratically elected government of Marxist president Salvador Allende Gossens (1970-73). The military regime, led by General Augusto

Pinochet Ugarte (1973-90), rebuilt the country's shattered econo- my, but it was responsible for extensive human rights abuses. The

Pinochet regime adopted a new constitution in 1980 that called for a plebiscite to renew the presidential mandate for another eight

years. The candidate was Pinochet himself, having been chosen

by the military junta. Bowing to domestic and international pressures, the plebiscite was held under conditions that permitted a proper test of the nation's majority will. Pinochet lost, and free presidential elections were held in December 1989 in accordance

with constitutional provisions. Pinochet honored the results of the

1989 presidential elections by handing over the reins of government to a civilian coalition led by President Aylwin in March 1990.

However, Pinochet was entitled by the 1980 constitution to remain

as head of the army for an additional eight years, until 1998, with no possibility of removal by the president.

In 1993 the combined strength of the armed forces was at least 91,800 (including 54,000 members of the army, 25,000 members

of the navy, and 12,800 members of the air force). In addition,

the army reserves had about 50,000 members.

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National Security

Military Tradition and the Evolution of the Armed

Forces

Early History

Chile's indigenous Mapuche people established themselves as tenacious warriors in the fifteenth century. An attempted invasion

by the forces of Pachacuti Inca Yupanqui (1438-71) in 1460 was

held off by the Mapuche in the Valley of Coquimbo. The Incas withdrew, defeated, six years later. A second effort at invasion,

this time by Huayna Capac, son of and successor to Yupanqui,

enjoyed greater success in 1491, penetrating as far as the Central

Valley (Valle Central) of Chile before it, too, was turned back by

the Mapuche.

The first Spanish attempt at conquest, led by Diego de Almagro

in 1535-37, was undertaken by a force of 500 to 700 Spaniards

and as many as 15,000 native Americans. Although this expedition penetrated as far as the Rio Maule, Almagro 's forces, finding no sign of hoped-for riches and constantly harassed by the Mapuche,

retreated across the Atacama Desert and returned to Peru without

establishing any permanent settlements. In 1540 Pedro de Valdivia

launched a much smaller but longer expedition, leading some 150

Spaniards and 1,000 native Americans. Valdivia's expedition suc- ceeded in establishing the first permanent European settlements

in Chile. However, Araucanian (particularly Mapuche) resistance

kept Valdivia from penetrating to any significant degree beyond

the Rio Bio-Bio. In a Christmas Day battle at Tucapel in 1553,

Araucanian warriors, led by Lautaro, a legendary chief, slaughtered a force of Spanish cavalry commanded by Valdivia, who was

executed. Lautaro had studied the Spaniards and their tactics when

he was a slave for Valdivia during a period of captivity. After that

initial success, the indigenous warriors adapted rapidly to Europeanstyle warfare and soon, using captured horses and weapons, field- ed their own cavalry against the invader.

The Araucanians were contained only with difficulty throughout the next three centuries. The Rio Bio-Bio remained the effective southern frontier throughout the colonial period. The Araucanians

made frequent incursions northward, one of which threatened to destroy the Spanish settlement in Santiago in 1554. In an attempt

to defeat these native Americans, Alonso de Rivera created a Chilean army of sorts in 1603. By the beginning of the eighteenth

century, the Araucanian wars had already cost the lives of more

than 40,000 Spaniards and untold thousands of native Americans.

Throughout this period, the coastal region was also subjected to sporadic attacks by English, French, and Dutch buccaneers.

279
Chile: A Country Study

The Hispano-Amerindian society that evolved in Spanishcontrolled Chile thus developed in an environment that was under a constant shadow of real or potential external threat. These

circumstances produced a people for whom military defense and

prowess were important attributes. During the latter years of the

colonial period, Chile depended for its defense principally on a

militia, which numbered 16,000 by the beginning of the nineteenth

century. The Spanish colonial administration was overturned with

relative ease in 1810, and a small volunteer militia, consisting of one battalion of infantry, two squadrons of cavalry, and four companies of artillery, was established.

Genesis of the Armed Forces, 1814-36

In 1814 the royalist forces, based in Peru, took advantage of in- ternal dissensions among the various factions of the nationalist

movement in Chile to mount an invasion. The 5,000-man royalist

army defeated the 1,800-man nationalist force, led by Bernardo

O'Higgins Riquelme and Juan Jose Carrera, in the Battle of Rancagua on October 2, and the remnants of the routed army (300

men) fled to Mendoza in present-day western Argentina.

The leaders of the United Provinces of the Rio de la Plata, a

short-lived (1813-26) federation of the provinces that had made

up the Viceroyalty of the Rio de la Plata, realized that their position remained insecure following independence in 1816 so long as Chile and Peru remained bastions of Spanish power. It was decided, therefore, to send an expeditionary force, named the Army of

the Andes, across the mountains to confront the royalists. The combined Argentine-Chilean Army of the Andes, under the joint com- mand of O'Higgins and Jose de San Martin, set out from San Juan

in northern Argentina on January 12, 1817. The army consisted

of 2,795 infantry, 742 cavalry, and 241 artillerymen, who carried

with them twenty-one guns and sufficient arms to equip a force

of 15,000. Crossing the Andes at Paso de Uspallata and Paso de

los Patos, this sizable army took the royalist forces in Chile completely by surprise. With only half of the total royalist strength of

approximately 4,000 available to meet the invaders (the other 2,000 were deployed mainly in defense of the southern frontier), the

royalists suffered a decisive defeat at Chacabuco, northeast of Santiago, on February 12, 1817. By the end of 1817, the Chilean Army

(Ejercito de Chile), consisting of 5,000 soldiers and officers, had

been established. Despite reverses at Talcahuano on December 16,

1817, and at Cancha Rayada on March 19, 1818, the allied army

swept to final victory at Maipu on April 5, 1818. Peru, however,

remained a royalist stronghold, separated from Chile by the

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National Security

Atacama Desert and approachable only by sea (see Wars of In- dependence, 1810-18, ch. 1). Chile had first attempted to form a navy in 1813, when the United

States-built frigate Perla and the brigantine Potrillo were acquired

to break the Spanish blockade of Valparaiso. However, royalist

elements succeeded in bribing the mercenary crew of the Perla, with

the result that both vessels fell into the hands of the Spaniards. The

official history of the Chilean Navy (Armada de Chile) dates from

February 26, 1817, when the brigantine Aguila was acquired by

the nationalists. Armed with sixteen guns, the Aguila was commissioned as the first naval vessel of the Republic of Chile, under the

command of Raimundo Morris, an Irish mercenary and former

lieutenant in the British Royal Navy. Under the overall command

of Manuel Blanco Encalada, the first rear admiral of the Chilean

Navy, the tiny fleet rapidly tripled in size with the capture of the

Spanish merchant vessel San Miguel and the recapture of the Perla. Additional vessels were added by purchase, the arming of merchant

ships, and further captures from the enemy. With those acquisitions, the revolutionary fleet consisted of a small ship of the line,

two large frigates, and four corvettes. In 1818 the Naval School

(Escuela Naval) was established, later named the Arturo Prat Naval

School (Escuela Naval Arturo Prat), after Arturo Prat Chacon,

naval hero of the War of the Pacific. Then, on November 28, 1818,

the famous British admiral Thomas Alexander Cochrane (Lord

Dundonald), who had been forced to resign from the Royal Navy

following a financial scandal, assumed command of the revolutionary fleet from Blanco Encalada. Within two years, Cochrane 's fleet had established control of the sea, and it was then possible to pre- pare for an amphibious invasion of Peru. With the help of the

Chilean fleet, the allied army, headed by San Martin, liberated

Lima on July 9, 1821, and the independence of Peru was declared on July 28. When Cochrane left Chile in 1823, Blanco Encalada reassumed

command of the navy, which was reequipped in 1824. The allies

now joined by a substantial force from a republic known as Gran

Colombia (consisting of present-day Colombia, Panama, and

Venezuela) and led by Simon Bolivar Palacios and Antonio Jose

de Sucre—scored successive victories at Junm and Ayacucho in

August and December 1824, respectively. That year Blanco Encalada fought in Callao, Peru, under Bolivar's command. Meanwhile, despite their defeats on the Chilean mainland and in Peru,

the royalists had continued to hold out on the Isla de Chiloe, off the southern Chilean coast, and were only finally defeated in 1826

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Chile: A Country Study

after two amphibious campaigns by Blanco Encalada and several

nationalist reverses. Diego Portales Palazuelos, Chile's main political strongman from

1830 to 1837, reorganized and streamlined the army, putting it on a firm basis with three infantry battalions, two regiments of

cavalry, a squadron of hussars, and a regiment of artillery. The

General Bernardo O'Higgins Military Academy (Escuela Militar

"General Bernardo O'Higgins"), founded by O'Higgins on March

16, 1817, was also reorganized. It provided an uninterrupted flow

of professional officers from 1832 onward. Portales also reestablished the civic militias, which were important elements in the

defense of cities and towns during the colonial period. Over the

next decades, these militias, whose officers were appointed and

removed by the ministers of interior, proved to be a significant

countervailing power to that of the army. They thus contributed

to the stability of the constitutional government. During the civil wars of 1851 and 1859, the authorities relied on the combination

of civic militas and some army units to defeat the insurrectionists.

Peru-Bolivia Confederation War, 1836-39

Fearing a threat to Chilean commercial and shipping interests,

and even sovereignty by the newly created Peru-Bolivia Confederation led by Bolivian general Andres de Santa Cruz y Calahumana,

Chile declared war on the confederation in 1836. The Chilean Navy,

gradually run down since the end of the struggle for independence,

consisted of only two small vessels. Nevertheless, once more it rapidly tripled its strength by captures from the larger Peruvian fleet. Within a year, the Chilean Navy had established control of the sea. On land, a Chilean force of approximately 2,800, under the com- mand of Blanco Encalada, landed at Islay in southern Peru in October 1837, occupying Arequipa after a long and arduous march,

during which the Chileans were decimated by disease. Following an encounter at Paucarpata with an army under the command of

Santa Cruz, the Chilean force concluded a peace treaty, the Treaty

of Paucarpata, on November 17, before returning to Valparaiso

rather ignominiously. The Chilean government repudiated the

treaty in indignation and in 1838 dispatched a better-prepared

Chilean force under General Manuel Bulnes Prieto. Landing at Ancon, north of Lima, on August 6, this force commenced a slow

march southward toward the Peruvian capital of Lima, while the

Chilean fleet blockaded the main Peruvian port of Callao.

Although their advance was delayed by harassment from small

allied forces, the Chileans were finally able to lay siege to Lima.

The Chilean force occupied Lima at the end of October 1838 but

282
Two naval guards

at the monument

to the War of the Pacific

in front of the Naval

Headquarters, Valparaiso

Courtesy David Shelton

abandoned it on November 3 on hearing of the approach of a large

Bolivian army under General Santa Cruz. The Chileans withdrew

by land and sea toward Huacho. However, Santa Cruz failed to exploit the Chilean retreat fully, despite successes in several small

skirmishes culminating in a major Chilean reverse at Bum on January 6, 1839.

The resounding defeat of the Peruvian fleet at Casma by a smaller

Chilean squadron under British admiral Roberto Simpson, on January 12, left Chile in absolute control of the southeastern Pacific.

General Bulnes again assumed the initiative. After inflicting a crushing defeat on the Bolivian Army at Yungay on January 20, the

Chileans commenced a second push southward, occupying Lima

for the second time in April. Santa Cruz had already fled to Ecuador, and both the war and the short-lived Peru-Bolivia Confederation now came to an end.

After 1843, when Bulnes was president (1841-51), the Chilean

Army concentrated on penetrating the area south of the Rio BioBfo, still largely the domain of the Araucanian people. In response,

the Araucanians rose in a bloody revolt, which was suppressed in

1859-61, although the southern portion of the country remained

largely outside the control of the national government.

In 1865, in a last attempt to reconquer their lost South American colonies, the Spaniards blockaded Chilean and Peruvian ports, an action that led to war between Spain and an ad hoc alliance

283
Chile: A Country Study

of Chile, Bolivia, Peru, and Ecuador. Hostilities were confined to the sea. Although twenty-six years of freedom from external threat

had once again seen the decline of the Chilean Navy, the blockade was effectively broken by the naval victory of the allied fleet, under the Chilean admiral Juan Williams Rebolledo, at Papudo on

September 17, 1866. The naval war with Spain ended shortly af- terward.

War of the Pacific, 1879-83

Despite cooperation among Chile, Peru, and Bolivia in the war

against Spain, friction began to develop over the mineral-rich Bolivian province of Antofagasta and the Peruvian provinces of Tarapaca, Tacna, and Arica, whose wealth was exploited largely by

Chilean enterprises. In 1875 Peru seized Chilean nitrate mines in

Tarapaca, and in 1878 a new Bolivian government greatiy increased taxes on Chilean business interests. To protect these interests and

preempt their threatened expropriation, Chile dispatched a naval

squadron headed by the ironclad Blanco Encalada and landed 200

troops at the Bolivian port of Antofagasta on February 14, 1879,

provoking a declaration of war by Bolivia on March 1 , an action

reciprocated by Chile on April 5. Peru, which had concluded the

secret Treaty of Mutual Defense with Bolivia in 1873, was now

also drawn into the conflict (see The Liberal Era, 1861-91, ch. 1). The Bolivian Army, with 2,361 members and generally antiquated equipment, and the Peruvian Army, with 5,241 members

and a mixture of modern and older equipment, opposed the comparatively well-equipped Chilean Army of 2,845 officers and enlisted personnel. The Chilean Navy, still under the command of

Admiral Williams, had two new ironclads (the Blanco Encalada and

the Cochrane), four unarmored steam corvettes, and two gunboats.

These vessels faced a Peruvian force consisting of an ironclad frigate, a small ironclad turret ship, two monitors, an unarmored steam

corvette, and a gunboat.

Neither Chile, Peru, nor Bolivia was prepared for war. While

they were mobilizing their land forces, any major actions were confined to encounters between the Chilean and Peruvian navies.

Bolivia lost its three warships and four Pacific Coast ports early

in the war. The naval war commenced with simultaneous bombardments of Pisagua and Mollendo by the Chilean fleet, followed

by blockades of Callao and Iquique.

The Chilean expeditionary force at Antofagasta, reinforced to a strength of 1,400, occupied the ports of Cobija, Tocopilla, and

Mejillones, penetrating inland against weak resistance as far as Calama. No further major land actions occurred for the next five

284
National Security

months. However, by the middle of May 1879 Bolivia and Peru,

having expanded their ranks with mostly peasant conscripts, had

concentrated 9,000 men at Tarapaca, 4,000 at Tacna, and an additional 7,000 in the vicinity of Arica.

Peru gained a Pyrrhic victory in the first naval action of the war.

Its most powerful ships, the ironclad frigate Independencia and the

turret ship Hudscar, closed in on the two Chilean ships blockading

Iquique on May 21 , 1879. The Peruvians broke the blockade, sinking the Chilean corvette Esmeralda as her captain, Arturo Prat Chacon, led a boarding party of the Hudscar in a heroic but futile act. However, the Independencia hit a reef and sank as it was pursuing

the fleeing Chilean gunboat Covadonga, which had sought refuge

in shallow waters. Despite the loss of its largest unit, the Peruvian

fleet remained a great menace, mainly owing to the audacity and

genius of Admiral Miguel Grau. Flying his flag on the Hudscar,

which, together with the corvette Union, broke through the Chilean

blockade of Callao on three occasions, Grau wreaked havoc on

Chilean shipping.

Chilean naval energies were now largely directed toward the

elimination of these two Peruvian ships. On October 8, 1879,

Grau's luck ran out when he skirmished with two Chilean flotillas off Punta Angamos. The Hudscar was captured after the heroic admiral was killed, although the Union escaped. The following month,

the Peruvians suffered another major setback when the gunboat

Pilcomayo, operating as a commerce raider, was sunk by the

Chileans. Chilean naval supremacy was now complete. The sur- viving major units of the Peruvian Navy remained blockaded at Callao and Arica, and any naval action was limited to the minor

units of both fleets. These consisted mainly of torpedo boats, of

which Chile acquired a total of twelve and Peru three during

1880-81.

Major land operations commenced at the end of October 1879

with the amphibious landing of more than 10,000 Chilean troops

at Pisagua on what is now the Peruvian coast. After a resolute

defense by its small Bolivian garrison, Pisagua was captured on November 2. The Chileans advanced rapidly southward from this beachhead. On November 19, a Chilean force of 6,000 defeated a Confederation force of 9,000 at Pozo Dolores, north of Iquique.

As a result of this reverse, the Peruvians abandoned Iquique without

a fight. The garrison joined the survivors of the Battle of Pozo

Dolores at Tarapaca, where a total Confederation army of 5,000

assembled. Although a reconnaissance force of 2,000 Chileans was

routed on November 27, the victorious Confederation forces failed to pursue their advantage, abandoning Tarapaca and retreating to

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Chile: A Country Study

Tacna. The Chileans, now reinforced to 17,000, continued to ad- vance toward Tacna and Arica. A Chilean force of 5,000 carried

out an amphibious raid at Ilo, to the north of Tacna, on December 31 , and withdrew after capturing and sacking Moquegua, the

ruins of which were soon reoccupied by the Peruvians.

Another Chilean amphibious landing established a beachhead

at Ilo on February 25, 1880. During the first weeks of March, most

of the Chilean forces disembarked. On March 13, a force of about

10,000 men carried out another major landing, at Pacocha, and

an additional 3,000 landed at Vftar on March 14. On March 22,

these forces, under General Manuel Baquedano Gonzalez, pushed

through the defenses at Moquegua and scored a crushing victory over 2,000 Peruvians at Torata. The Chilean forces now split for a two-pronged attack on Tacna to the south.

A combination of difficult terrain and the constant harassment

by Peruvian guerrillas delayed the Chilean advance. It was not until

May 26 that Baquedano 's forces encountered a combined force of

10,000, which the Confederation had concentrated at Alto de la Alianza, north of Tacna. Baquedano scored another spectacular

victory, which split the Bolivian and Peruvian armies; the former

retired toward the Altiplano (Bolivia's high plateau), and the lat- ter retreated in the direction of Arequipa. Following this disaster,

the Bolivians took no further significant part in operations.

Chilean pressure was now concentrated on Arica, whose

2,000-man garrison surrendered on June 7, 1880. Another lull in

major land operations now occurred as the Chileans prepared for

the final advance on Lima. At sea several minor Chilean vessels,

engaged in the blockade of Callao, fell victim either to shore batteries or to the occasional sallies of Peruvian torpedo boats and

armed launches.

By November the Chileans had concentrated 25,000 men at Arica. Reembarking on November 14, this force made an amphibi- ous landing four days later and captured Pisco. During the fol- lowing weeks, a series of other amphibious landings allowed the

Chileans to close in on Lima. On January 13, 1881, a Chilean force

under General Baquedano scored a decisive if costly victory at Chorrillos, south of Lima. Two days later, the Peruvians broke an ar- mistice, negotiated under the auspices of the foreign diplomatic

corps in Lima. The ensuing Battle of Miraflores resulted in the

total rout of the Peruvians and the collapse of their army. Peru's

president and his High Command fled into the interior. Lima it- self surrendered to the Chileans on January 16, and Callao fell the

next day. The Chilean victory was now effectively complete,

although guerrilla warfare was to continue another two years.

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National Security

Chile's imaginative combination of land and sea power in the war

against Peru and Bolivia had introduced a highly mobile form of

amphibious warfare that was without precedent in South America.

Before the victorious Chilean Army was demobilized, it was

turned to the pacification of the Araucanians, who had terrorized

the southern frontier after the depletion of the regular army garri- sons during the war. By the mid- 1880s, the authority of the Chilean

government was established throughout the national territory. Chile

had now emerged as the major military and naval power in Latin

America, with a battle-hardened army and an impressive fleet of

three ironclads, three cruising vessels, one gunboat, and ten torpedo

boats. Its navy outranked all other Latin American navies, as well

as the United States Navy, in terms of modern and effective sea- going warships. Thanks to its navy, Chile incorporated Easter Is- land (Isla de Pascua) into its national territory in 1888.

Development of the Armed Forces

French influence was perceptible in the Chilean Army from the

mid-nineteenth century up to the War of the Pacific. However,

following the defeat of France in the Franco-Prussian War of

1870-71, admiration of Prussian military institutions grew. This

led to the appointment in 1885 of a German, Captain Emil Korner,

who had fought with distinction against France, to reorganize the

Chilean military instruction system. On beginning his duties in

1886, Korner reorganized the General Bernardo O'Higgins Military Academy, inaugurated a staff school (the War Academy), and

quickly consolidated the growing German influence in the Chilean

Army.

When most of the army sided with the winning congressional

forces (Congresionalistas) in the Civil War of 1891, Korner acted

as chief of the General Staff and was largely credited with the victories of the army. In that war, the majority of the navy also supported the congressional faction. However, the new torpedo gunboats,

the Lynch and the Condell (the only major naval units that supported the president), scored a spectacular victory when they attacked

and sank the flagship of the congressional fleet, the ironclad Blanco

Encalada, in Valparaiso harbor on the night of April 23.

After the Civil War, Korner, now a general, was joined by thirtysix other German instructors and was confirmed as chief of staff of the army, a position he held until 1910. German instructors or- ganized the army into four divisions and developed the General

Staff. German reforms also included establishment of the Noncommissioned Officers' School (Escuela de Suboficiales y

Clases) and

other military schools.

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Chile; A Country Study

The expansion of the navy continued in the decade following

the Civil War, under the added impetus of an increasingly bitter

boundary dispute with Argentina. The danger of war was defused

as both countries agreed to mediation by King Edward VII of Brit- ain. The mediation resulted in the General Arbitration Treaty of

1902, under which all subsequent territorial disputes with Argentina were settled until the late 1970s.

Chile's military aviation was officially inaugurated in February

1913 with the creation of the army's Captain Avalos Prado Military Aviation School (Escuela de Aeronautica Militar "Capitan

Avalos Prado" —EAM) at El Bosque, outside Santiago. In 1915

aircraft participated in the annual military maneuvers for the first time. The shortage of aircraft caused by World War I severely

impeded the development of Chilean military aviation. With the

end of the war in 1918, a dozen British fighter monoplanes were

obtained to equip the First Aviation Company. As early as 1916,

naval officers had also undertaken flight training at the EAM. The

end of the war in Europe permitted the formation of the Naval

Aviation Service (Servicio de Aviacion Naval).

In 1921 the Chilean government contracted for the services of

a British naval and air mission. The EAM was also reorganized,

and additional aircraft were acquired. In 1924 a German air mission arrived and was entrusted primarily with the development of

civil aviation. It was precluded from overt involvement in the development of the Chilean military and naval air arms by the Treaty

of Versailles.

The military and naval air services were merged as the Chilean

Air Force (Fuerza Aerea de Chile—FACh) on March 21, 1930,

thereby becoming the world's fourth independent military air arm. The formation of the FACh coincided with a growing economic

crisis that necessitated cutbacks in the armed forces, severe cur- tailment of procurements, and a steady attrition of fielded materiel.

Demoralized as a result of pay reductions and the political chaos

then rampant in the country because of the Great Depression (see

Glossary), the Chilean Navy staged a work stoppage from August

to November 1931 . The mutiny finally collapsed after the air force

bombed the fleet. Although little physical damage was done, this event significantly affected naval morale and the subsequent development of the navy by demonstrating the vulnerability of warships to air attack.

In the early 1930s, during the Great Depression, the army was

reduced from four to three divisions, and its troop strength was

reduced to 12,000. An improvement in the economic situation in

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the mid- 1930s, however, permitted an expansion back to four di- visions.

Chile remained officially neutral during most of World War II, although it sold its copper at a fixed price only to the United States; however, a perfunctory declaration of war on the Axis Powers was made in February 1945. As was the case for most other neutral

armed forces, the war years were lean ones for the Chilean military, which was forced to rely on its own resources for the maintenance of increasingly obsolete materiel.

Despite Germany's defeat in the two world wars, German in- fluence remained stronger in the Chilean Armed Forces as a whole

than in those of any other Latin American country. However, the

navy—founded largely by British, Irish, and North American

mercenaries and commanded in its formative years by Thomas

Cochrane, one of the most brilliant British naval officers of the

day—preferred to model itself on the British Royal Navy. In the

early 1990s, the Chilean Navy continued to show a strong British

influence, which had been reinforced by British training missions

until the eve of World War II. The navy, not immune to the German influences at work on the army for more than half a century,

achieved a synthesis of the better elements of the Prussian military and British naval traditions. Yet the navy did not lose its es- sentially British orientation, underlined in its repeated return to British shipyards for new materiel. As in the case of the army, the

influence of United States naval missions has been largely confined

to the areas of tactical and operational doctrine.

The FACh also owed its early independent existence to the activities of British training missions during the 1920s. Like the

Chilean Navy, the FACh retained certain Prussian influences,

deriving mostly from the military and naval air services from which

it had been formed. However, the FACh probably has been the

most receptive of Chile's uniformed services to United States in- fluence. A succession of United States air-training missions began

in the early 1940s.

Chile has exercised a strong formative influence on the armed

forces of other Latin American countries. The armed forces of

Colombia, Ecuador, Venezuela, and El Salvador have come under the tutelage of Chilean military missions, in some cases for lengthy periods. Many of the smaller republics, including Nicaragua

and Paraguay, have sent officer personnel for postgraduate training in Chilean military schools. The navy also has exerted considerable influence on the Colombian and Ecuadorian navies. The

Ecuadorian Navy was effectively established under Chilean guid- ance and has continued a long-standing arrangement whereby

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Chile: A Country Study

Ecuadorian naval cadets have received part of their training in

Chile.

Growth of United States Influence

Beginning in the 1940s, United States military missions have

imparted certain tactical doctrinal concepts. However, they diluted

the original German influence to a markedly lesser degree than

elsewhere in the region. In 1941 , following the entry of the United

States into World War II, a United States air mission was established in Chile and charged with reorganizing the FACh. In 1944

significant quantities of equipment for the army and air force, in- cluding 230 aircraft procured under the Lend-Lease Agreement,

the legal apparatus for military equipment transfers during World

War II, began to arrive in exchange for the availability of Chilean

bases to the United States. However, Chile received no materiel

assistance from the United States during the war period because

the Chilean Navy had refused to sell the 28,000-ton battleship

Latorre, the six destroyers of the Serrano class, and the submarine

depot ship Araucano to the United States Navy following the Japanese

attack on Pearl Harbor. Chile received only some coastal artillery

equipment for the defense of the copper-mining zone, whose products were considered vital to the Allied war effort. Following the conclusion of World War II, and with the signing

of the Inter-American Treaty of Reciprocal Assistance of 1947 (Rio

Treaty—see Glossary), additional United States materiel was also

acquired by the army and air force. This time, acquisitions were

also made by the navy. The formation of an amphibious warfare

force equipped with United States war-surplus gear stimulated ex- pansion and reorganization of the Coast Artillery (Artilleria de Costas), which had been subordinate to the navy since 1904. The name

of the organization was changed from Coast Artillery to the Navy

Infantry Corps (Cuerpo de Infanteria de la Marina—CIM), a

reflection of the newly dominant role of the CIM's marine mission. Naval aviation was revived in 1953. Initially equipped with

a few light transports and helicopters, the naval air force operated

from a new naval air base at El Belloto, Valparaiso. In 1958 a group

of frogmen commandos, modeled after the United States Navy

SEALs (sea-air-land team), was also formed.

Postwar expansion of the army also brought some organizational

changes. The Magallanes military district was raised to the status of a full Military Area {area militar—AM); its garrison was expanded

into the army's Fifth Division. The Sixth Division was later es- tablished in the region adjoining the Bolivian and Peruvian borders; it also acquired the status of an AM. In 1965 the army formed

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National Security

a paratroop/special forces battalion, and in 1970 it regained its own

aviation arm with the establishment of the Army Aviation Command (Comando de Aviacion del Ejercito—CAE). The CAE was

initially equipped with a few light communications and observation aircraft transferred from the air force. The Seventh Brigade,

raised in the southern part of AM 4 during the tension with Argentina over the Beagle Channel in the late 1970s and early 1980s, was raised to divisional status in 1990. This brought the total number of AMs and divisions to seven. Repression and Human Rights Violations

In the immediate aftermath of the 1973 coup, there was extensive repression, including summary executions of prisoners. During this period, the number of people who were detained so exceeded

the capacities of the existing penal institutions that for a time stadi- ums, military grounds, and naval vessels were used as short-term

prisons. Subsequently, at least five prison camps were established

for political prisoners, mostly in the remote south and the far north.

The intelligence service that was created after the coup, the National Intelligence Directorate (Direccion Nacional de Inteli- gencia—DINA), also kept secret detention centers, where torture of prisoners was a routine practice. All of these places of detention

had been closed down by the time of the return to civilian government in 1990.

During the four-and-one-half years following the 1973 coup,

Chile was officially in a state of siege (see Glossary under state of

exception) and functioned under martial law. The military tribunals

expanded their jurisdictions to include all violations (including those

perpetrated by civilians) of the much more encompassing security

laws enacted by the government. At the end of this period, the state of siege was replaced by a state of emergency, which restored a

larger degree of authority to the civilian courts, although military

tribunals continued to deal with cases involving public security.

The Aylwin government reestablished the competence of the

civilian courts to deal with all matters pertaining to civilians. It therefore opened the way for these courts to reexamine cases of

human rights violations that had been previously dismissed by the

military tribunals as lacking in evidence or as falling under the amnesty law approved by the military government in 1978. It enact- ed a significant constitutional amendment that reduces the power

of military courts only to that of trying offenses committed by mili- tary personnel acting in the line of duty or on military bases. Military courts can no longer try civilians.

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Chile: A Country Study

The Aylwin government also established the National Commission on Truth and Reconciliation, or Rettig Commission, to in- quire into human rights abuses during the 1973-90 period of

military rule. It eventually produced a voluminous report holding

the security forces responsible for 2,115 deaths, including those of

957 detainees who disappeared and an additional 164 victims of

political violence.

The military's reputation for apolitical professionalism was tar- nished by the 1973 military coup and subsequent repression. A

national survey conducted in March 1991 by the Center for Contemporary Reality Studies (Centro de Estudios de la Realidad

Contemporanea—CERC), after the release of the Rettig Commission report, showed that 75.3 percent of the population assigned

"much" blame to the military for violations of human rights.

Another 14.4 percent thought the armed forces had at least "some"

responsibility, and only 3.8 percent thought they had "none."

An amnesty law has protected military officers involved in human rights abuses committed between 1973 and 1978. However,

by 1993 as many as 600 officers, mainly from the army, had been

cited in 230 cases involving rights abuses. The numerous calls from

civilian courts for military officers to testify regarding cases of dis- appearances that occurred during the military government, the decision of an independent state office that oversees cases of corruption

to investigate the circumstances under which the army paid General

Pinochet's sons about US$3 million for his interest in a bankrupt

firm that manufactured arms, and certain delays of the Ministry

of Defense in issuing decrees demanded by the army for the promotion of its officers led to a highly visible demonstration (boinazo)

by the army in Santiago on May 28, 1993. About sixty heavily

armed officers and elite troops in full battle dress mobilized to guard

a meeting of the Corps of Army Generals, themselves in batde dress,

in the armed forces building across the street from La Moneda,

the presidential palace. The president was on an official trip to Europe, and the minister of interior, in charge of the government as vice president, thought that the events were so critical that they

could well lead to a military coup. On his return to the country,

President Aylwin initiated an intensive round of consultations with

General Pinochet, political parties, and human rights groups, but

he reaffirmed his unwillingness to back the enactment of a blanket

amnesty law, such as the one approved in Uruguay. Instead, he

sponsored a law that would expand the number of special civilian

court judges examining the cases of the disappeared and permit

the officers summoned to testify to do so in secret without their names appearing in the press. This proposed law was, however,

292
General Augusto

Pinochet Ugarte,

chief of state, 1973-90

Courtesy Embassy of Chile,

Washington, and

El Mercurio, Santiago

President Augusto

Pinochet Ugarte

reviewing troops at

the 19th of September

Armed Forces Day

parade in Santiago

in 1985

Courtesy David Shelton
Chile: A Country Study

rejected by the National Congress (hereafter, Congress), and therefore no changes resulted from the demonstration of May 28.

Civil-Military Relations

After the boinazo of May 1993, the international press often

referred to the Aylwin administration as a co-government, in which

the military and civilians shared power equally. According to this view, Chile's democracy was emasculated, with a president unable to resist the military and with a Congress acting as a rubberstamp body. This view seemed to be supported by the fact that

President Aylwin lacked the power to appoint, promote, and dis- miss officers. The president cannot appoint or fire the commanders

in chief of each service. Furthermore, military officers seem to be

immune to prosecution for human rights abuses. In fact, the notion of " co- government" is simplistic and fails to explain some of

the limited yet significant developments under the Aylwin government. In 1993 Genaro Arriagada, a leader within the Christian

Democratic Party (Partido Democrata Cristiano—PDC), referred

to a civil-military opposition to Aylwin' s policies. This suggests

that the confrontation is not merely one between the military and

civilians. Whereas the ruling center-left coalition known as the Coalition of Parties for Democracy (Concertacion de Partidos por la Democracia—CPD) held an advantage in the Chamber of Deputies

(seventy to forty-nine), the military was protected by a majority

in the Senate, thanks to the electoral engineering of the Pinochet

regime that provided for nine designated senators. Without the

designated senators, the CPD would have had a majority in the

Senate (twenty-two to sixteen) from 1989 until March 1994. The

designated senators, appointed by Pinochet, gave the right-wing

opposition a three-seat advantage in the Senate (after 1991, only a two-seat advantage, with the death of a designated senator).

The Aylwin administration was willing to raise issues in civil- military relations even when it was clear that it would not win.

In mid- 1992 the Aylwin government proposed a series of constitutional reforms that would have limited the prerogatives of the mili- tary by allowing the president to appoint, promote, and remove

officers. In addition, the president would have the power to appoint and remove the commanders in chief of the armed forces,

although this would not apply to the current commanders. The

reforms were opposed by the National Renewal (Renovation National) and the Independent Democratic Union (Union Democrata

Independiente—UDI), which suffered electoral setbacks in the June

23, 1992, municipal elections and were afraid of further losses. The

army also opposed the reforms in a leaked paper published by La

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National Security

Tercera de la Hora, a leading daily. In the prosecution of military

officers for human rights abuses, an unusual coalition between the

right and left derailed an initiative by the Aylwin government to complete the process. Unable to successfully carry out major constitutional reforms in

relation to the military, the Aylwin administration exercised its power in other ways. The Chilean president can veto the promotions of military officers, and in late 1993 Aylwin adroitly used the

threat of the veto to influence the matter of when Pinochet would

step down as army commander in chief. The Ministry of Defense lacks the power to initiate actions, but

it can selectively stall army initiatives through administrative in- action. It deliberately delayed the signing of decrees on postings

and promotions, in addition to the sale of armaments—one of the

major causes of the May 1993 boinazo. The co- government argument also fails to take into consideration the effects of time. As Eduardo Frei Ruiz-Tagle prepared to take office as president on March 1 1 , 1994, the political right was becoming less protective of the military and the political system

it had created. The largest right-wing party, the National Renewal, showed signs that it was willing to consider amendments limiting the military's prerogatives, especially after the army was

involved in telephone-tapping conversations of National Renewal

members in 1992. Even the extreme right-wing UDI showed signs

that it was weary of some of the features of the military-sponsored

system, such as the binomial electoral system (see Glossary), which

hurt the party in the December 1993 elections.

Mission and Organization of the Armed Forces

Mission

The 1980 constitution, prepared and enacted by the military

government, states that the armed forces "exist for the defense of

the fatherland, are essential for national security, and guarantee the

institutional order of the Republic" (Article 90). The military is capable of carrying out its responsibility to deter any probable ene- my or group of enemies. As in most other Latin American countries, the role as guarantor of national security and institutional

order is deemed to extend to the defense of national institutions

against internal as well as external threats. These have been controversial notions, but the Aylwin government was unable to clarify the role of the military or to assert the principle of presidential

control over the military.

The 1980 constitution and the Organic Constitutional Law of

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Chile: A Country Study

the Armed Forces (Law 18,948 of February 1990) that was enact- ed at the end of the military government expanded the military's

autonomy from the president and gave it a voice over national af- fairs through its participation in the newly created National Security Council (Consejo de Seguridad Nacional—Cosena). Presided over by the president of the republic, Cosena includes the presidents of the Senate and the Supreme Court, the commanders in

chief of the armed forces, and the director general of the Carabineros

of Chile (Carabineros de Chile), a national police force with a paramilitary organization (see The Security Forces, this ch.). The

constitutional reforms approved in July 1989 added the comptroller

general (contralona general) to Cosena, bringing the total number

of voting members on it to eight. Also participating as members,

but without the right to vote, are the ministers of defense; econo- my, development, and reconstruction; finance; foreign relations;

and interior. Cosena also selects four former military commanders

in chief (one from each service) as designated senators and two of seven judges of the powerful Constitutional Tribunal (Tribunal

Constitucional). After the 1989 constitutional reform, Cosena was

given the power to represent (representar) its views on any matter

that it deemed appropriate to the president, Congress, or the Constitutional Tribunal; to give its consent to the president to remove

a top military commander (and thus a member of Cosena); and

to ask any government agency for information on security matters. In 1992 and early 1993, the Aylwin government presented constitutional reform legislation to Congress in order to reinstitute the

president's right to remove military officers, including the heads

of the services, at the chief executive's discretion (only Cosena has

that right). Another set of proposed reforms presented in 1993 also would have eliminated the designated senators and revamped the

composition of Cosena by adding the president of the Chamber

of Deputies (the lower house of Congress) to it (thereby creating a civilian majority on it), and it would have changed the Constitutional Tribunal by composing it of members chosen mainly by the

president and the Senate. However, the Aylwin government lacked

the congressional majorities needed to enact these reforms. As a

result, these changes were not instituted (see The Autonomous Powers, ch. 4). Command Structure

Under the 1925 and 1980 constitutions, the president is the head

of the armed forces, with the ability to order the disposition of the

air, sea, and land forces with the advice of the military commanders.

In case of war, the president may declare war and assume the

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National Security

supreme military command of troops directly. The minister of

defense, assisted by the subsecretaries of defense for the army, navy,

and air force, is responsible for the armed forces' administrative

control (see fig. 13). However, since the transition to civilian government in 1990 the president has had little actual control over the

military, and the Ministry of Defense has lacked any effective control of the services and the Carabineros.

The chief executive appoints, for four-year terms, commanders

in chief of the army, navy, and air force and the director general

of the Carabineros "from among the five senior generals who have

the qualifications required as per the respective constitutional stat- utes for such posts" (Article 93). However, the president may not remove any of these appointees from their posts during their fouryear terms, unless there are proven criminal charges against them,

in which case Cosena must approve the president's disciplinary action. The president, through the minister of defense, prepares all decrees giving officers of the armed forces and Carabineros their

promotions. To remove an officer, the president must refuse the

officer's promotion, after the candidate has spent a maximum number of years in the current grade. Officer assignments and qualifications are made by the military command in accordance with the

law and regulations of each service. The army commander, General

Pinochet, has resisted all executive branch attempts to amend the

constitutional article that prevents the president of the republic from

removing the armed forces' commander in chief. Although the positions of the minister of defense and the subsecretaries remained effectively unchanged under the Aylwin

government, the Subsecretariat of the Carabineros and the Subsecretariat of Investigations are subordinate to the minister of

defense rather than to the minister of interior, as was formerly the

case. However, new laws call for the Ministry of Interior to coor- dinate the actions of the security forces. The Southern Military

Region (Region Militar Austral), including the two provinces of

Magallanes and the Chilean Antarctic Territory (Territorio Chil- eno Antartico), are also directly subordinate to the Ministry of

Defense.

In addition to Cosena, two other bodies, whose functions are

specifically limited to the advisory level, deal with matters of national defense and security: the Politico-Strategic Advisory Council (Consejo Asesor Polftico-Estrategico—CAPE) and the Internal

Security Advisory Council (Consejo Asesor de Seguridad Interior

CASI). CAPE consists of six military and four civilian members

and is entrusted with long-range planning of the defense and external security of the state. CASI, which consists of the minister

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Chile: A Country Study

MINISTRY OF DEFENSE MINISTRY OF INTERIOR

NATIONAL DEFENSE

STAFF

AIR FORCE

SOUTHERN

MILITARY REGION CARABINEROS INVESTIGATIONS POLICE

SUBSECRETARIAT OF

THE ARMY

SUBSECRETARIAT OF

THE NAVY

SUBSECRETARIAT OF

THE AIR FORCE

SUBSECRETARIAT OF

THE CARABINEROS

SUBSECRETARIAT OF

INVESTIGATIONS

Administrative control Operational contrrol

Figure 13. Organization of the Armed Forces and Security Forces, 1993

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National Security

of interior and seven military members, deals with internal security planning.

A combined National Defense Staff (Estado Mayor de la Defensa

Nacional—EMDN) is also largely an advisory body. The position

of chief of the EMDN rotates biennially among the army, navy,

and air force. Each of the armed forces also maintains its own

General Staff (Estado Mayor General), which carries out standard

general-staff functions with regard to its own service.

The more recently established Supreme Command of the Armed

Forces (Comando Supremo de las Fuerzas Armadas—CSFA) is primarily a coordinating body, concerned with introducing the max- imum possible degree of standardization in procurement policies

and the elimination of duplication of effort at the administrative

level. It largely superseded the Council of Commanders in Chief

(Junta de Comandantes en Jefe). The latter entity, established in

the late 1950s but nonoperational under the military regime, consisted of the three commanders in chief of the armed forces, together

with the chief of the EMDN.

Army

The Chilean Army has long enjoyed a reputation as a creditable military force. Although it had not fought a war against a for- eign enemy since the War of the Pacific, the army is still well

regarded by armed forces throughout Latin America. However,

it has been the most backward of the three services, having fallen behind the navy and FACh in the modernization process. Nevertheless, in 1993-94 the army was undertaking modernization measures, including the replacement of its old armored vehicles with

French AMX-30 or German Leopard- 1 tanks.

The army divides the country into seven military areas (AMs)

headquartered in Antofagasta, Santiago, Concepcion, Valdivia,

Punta Arenas, Iquique, and Coihaique. AM 1 (Antofagasta) embraces the province of Antofagasta and Atacama Region. AM 2 (Santiago) includes the capital and the provinces of San Felipe de

Aconcagua, Colchagua, and Valparaiso, as well as Libertador

General Bernardo O'Higgins Region and Coquimbo Region. AM

3 (Concepcion) encompasses the provinces of Bfo-Bfo, Concepcion,

Curico, Linares, Malleco, Nuble, and Talca, as well as Maule

Region. AM 4 (Valdivia) contains the provinces of Cautin, Llanquihue, and Valdivia. AM 5 (Punta Arenas) shares its borders with

Magallanes Province. AM 6 (Iquique) consists of Tarapaca Region.

AM 7 (Coihaique) encompasses the provinces of Aisen and Chiloe.

In 1993 the army totaled about 54,000 personnel, including

27,000 conscripts. It is organized into seven divisions—one for each

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Chile: A Country Study

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of the seven AMs (see fig. 14). Five of the divisions are grouped

under two army corps headquarters. The First Corps, based in Iquique, comprises the First Division and the Sixth Division. The Sec- ond Corps, headquartered in Punta Arenas, controls the Fourth

Division, the Fifth Division and the Seventh Division. In the early 1990s, it appeared that the Second Division and the Third Division might ultimately be grouped under a third corps headquarters

in keeping with the strategic doctrine developed during the 1970s,

which envisaged the formation of the army into three divisions of

varying sizes in time of war. The composition of the divisions has varied considerably. The

Second Division and the Third Division have between two and three

times the strength of the other five. Each division essentially in- corporates an artillery regiment and a regiment or battalion each

of engineers, signals, and logistic troops, plus a variable number

of infantry and mechanized cavalry units.

The First Division, headquartered in Antofagasta, includes a commando battalion and adds three motorized infantry regiments

and one armored cavalry regiment, plus an antitank guided-weapon

(ATGW) company to the basic elements. The Second Division,

based in Santiago, adds three motorized regiments and five mountain infantry regiments, an armored cavalry regiment, and a motorcycle reconnaissance group to its basic support units. The Third

Division, headquartered in Concepcion, includes two infantry

regiments, three mountain regiments, and two armored cavalry

regiments. The Fourth Division, based in Valdivia, includes a com- mando battalion and adds two infantry regiments, one mountain

regiment, and two armored cavalry regiments, plus a tank battal- ion to its basic support units. The Fifth Division, headquartered

in Punta Arenas, also includes a commando battalion, plus two

infantry regiments, two armored cavalry regiments, and an antitank battalion. The Sixth Division, based in Iquique, has a full commando regiment, plus two infantry regiments, one mountain

regiment, and two armored cavalry regiments. The Seventh Division, based in Coihaique, was raised from brigade status in 1990

and comprises an infantry regiment, a reinforced mountain infantry

regiment, a commando company, a horsed cavalry group, a motorcycle reconnaissance squadron, an artillery regiment, an aviation

section, an engineer company, and a logistics battalion. It was

scheduled to acquire a tank battalion from the Fourth Division.

Army troops include an army headquarters battalion, an aviation regiment, engineer and signals regiments, and a transport battalion. Each infantry regiment contains one to four battalions. Eight

of the battalions are designated as reinforced (reforzado) because they

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Chile: A Country Study

have additional attached combat and logistic support elements to enable them to function as semi-independent combat teams.

The difficulty in acquiring materiel during the period of international ostracism that followed the 1973 coup resulted in an ex- tremely varied equipment inventory likely to cause considerable

logistical problems (see table 43, Appendix). In 1993 the army's

aviation regiment, created in 1970, operated 111 aircraft. Each

major army unit had a close defense antiaircraft artillery section.

Navy

Chile's long coast contributed to the development of a distinguished maritime tradition. The Chilean Navy accordingly has en- joyed an unusual primacy among the nation's armed forces, despite

the army's formal status as the senior service. From its earliest days,

the navy has operated under strong British influence.

The navy, with a strength of 25,000—including conscripts and

the Navy Infantry Corps (Marines), Naval Aviation, and Coast

Guard)—divides the long Chilean coastline into four naval zones, headquartered in Iquique, Punta Arenas, Talcahuano, and Valparaiso (see fig. 15). The First Naval Zone (Valparaiso) corresponds

approximately to the coastal portions of AM 1 and AM 2 and contains most of the training establishments. These include the Arturo Prat Naval School, the Hydrographic Institute (Instituto

Hidrografico), the Naval War Academy (Academia de Guerra

Naval), and the Supplies and Services School (Escuela de Abastecimientos y Servicios), all in Valparaiso, as well as the School of Operations (Escuela de Operaciones), the Armaments School (Escuela

de Armamentos), the School of Naval Engineering (Escuela de In- genieria Naval), and the Marine Corps School (Escuela de Infanteria de Marina), all in Vina del Mar.

The Second Naval Zone (Talcahuano) corresponds approximately to the coastal portions of AM 3 and AM 4 and contains

the main naval base, the Submarine School (Escuela de Submarines), the Seamen's School (Escuela de Hombres de Mar), and the

Naval Artisans' School (Escuela de Artesanos Navales), all at Talcahuano. It also includes the Chiloe Naval District (Puerto Montt).

The Third Naval Zone (Punta Arenas) corresponds to the coastal

portion of AM 5 and includes the Beagle Channel Naval District,

which is headquartered at Puerto Williams. In the early 1990s, a new naval dockyard was under construction at Bahia Catalina. The

Fourth Naval Zone (Iquique) corresponds to the former Northern

Naval District, which until 1991 formed part of the First Naval

Zone and covered an area corresponding to the coastal portion of

AM 6.

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The major operational command is the fleet, which includes four

missile destroyers, two of which had been converted to helicopter

carriers. The Submarine Command (La Fuerza de Submarinos)

forms a separate operational command, with four submarines, a depot ship, and a subordinate group of frogmen commandos. The

Transport Force (La Fuerza de Transportes) also forms an operational command. In addition, some minor patrol vessels, auxiliaries,

and service craft are distributed among the naval zones and districts (see table 44, Appendix).

The 3,000 marines of the Navy Infantry Corps are organized

into four detachments, based in Iquique, Vina del Mar, Talcahuano, and Punta Arenas. Each detachment consists of a reinforced

infantry battalion, a commando company, a field battery, an anti- aircraft battery, and logistic support units. In addition, there are some small embarked detachments, an amphibious assault battal- ion, and a logistics battalion, the latter two based in Valparaiso.

Equipment is largely the same as that used by army infantry units.

Most of the Marines' thirty LVTP-5 (landing vehicle, tracked,

personnel) amphibious-landing vehicles are out of service, and their

Cactus SAM systems have been disposed of. Amphibious-assault

capability is confined largely to semirigid, inflatable craft. Naval Aviation, with 750 personnel and a total of forty-five air- craft and forty-two armed helicopters, is organized into four

squadrons: the General Purpose Squadron VG-1, the Helicopter

Squadron VH-1, the Maritime Reconnaissance Squadron VP-1,

and the Training Squadron VT-1 . Naval Aviation began a modernization process in 1990 with the acquisition of new French and

German helicopters and United States patrol aircraft. The principal naval air base is at Torquemada, twenty kilometers north of

Vina del Mar. The Torquemada Aeronaval Base has an efficient airport of 1,750 meters and is supported by the Naval Aviation

Repair Center (Centro de Reparaciones de la Aviacion Naval

CRAN). There are minor bases at Punta Arenas and Puerto

Williams.

The Coast Guard, a component of the General Directorate of

the Maritime Territory and Merchant Marine (Direccion General del Territorio Mantimo y de la Marina Mercante), is an in- tegral part of the navy and has 1 ,500 personnel. The Chilean coastline is segmented into thirteen maritime administrations (gober- naciones maritimas), comprising a total of forty- six port captaincies

(capitanias de puerto). The seagoing elements of the service consist

of two converted fishing vessels (employed primarily as buoy

tenders), four coastal patrol craft, and ten high-speed cutters. There

are also eleven inshore patrol craft, in addition to numerous small

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Chile: A Country Study

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surface skimmers and Zodiac craft used for inshore patrol and res- cue. The service also operates a floating medical-dental clinic, mainly in the coastal waters off the Isla de Chiloe, and an air-sea rescue launch, based at Easter Island.

Chile assumes responsibility for maritime search and rescue in an area extending approximately 4,000 kilometers west of its coastline. It maintains search-and-rescue coordination centers at Iquique, Valparaiso, Talcahuano, Puerto Montt, and Punta Arenas.

As none of its vessels is suitable for deep-sea patrol or rescue work,

the Coast Guard may call on the ships and aircraft of the navy

proper, in particular its helicopters, for support when necessary.

The various port captains also maintain and staff lifeboats for in- shore rescue. Air Force

The world's fourth oldest independent military air arm in exis- tence, the Chilean Air Force (Fuerza Aerea de Chile—FACh)

predated its United States counterpart by seventeen years and be- came the most United States-oriented of Chile's three armed forces. With a total strength of 12,800 personnel and 120 combat aircraft,

the FACh is organized into the Combat Command, the Personnel

Command, and the Logistical Command. FACh aircraft are deployed among four air brigades with a total of five wings {alas)

and twelve groups (grupos de aviacion) or squadrons. The Combat

Command controls all combat units (see fig. 16). In early 1994,

the FACh began studying the replacement of its fleet of thirty-two

Hawker Hunter aircraft, of which only ten were operational (see

table 45, Appendix).

The Air Brigade (Brigada Aerea) is the main operational for- mation. Each wing, an administrative unit generally concentrat- ed at a single base wing (ala base), includes an Antiaircraft Artillery

Group (Grupo de Artillerfa Antiaerea—GAA). An antiaircraft artillery regiment in La Colina serves primarily as an administrative headquarters and training school for the five dispersed

antiaircraft artillery groups. The First Wing (Ala 1) and Fourth

Wing (Ala 4) each also include an Electronics Communications

Group (Grupo de Comunicaciones Electronicas—GCE).

The First Air Brigade, headquartered at the Los Condores Air

Base, Iquique, covers northern Chile from the Peruvian border

to the Rio Huasco in southern Atacama Region. It controls both

the First Wing—based in Cerro Moreno, Antofagasta, and comprising the Seventh Group (Grupo 7) and Eighth Group (Grupo

8)—and the Fourth Wing, in Los Condores, which consists solely

of the First Group (Grupo 1). The First Wing includes the Cerro

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Chile: A Country Study

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Moreno Liaison Squadron (Escuadrilla de Enlace Cerro Moreno)

and GCE 31. The Seventh Group and the Eighth Group are lo- cated at Cerro Moreno. The Eighth Group includes inventory that

formerly equipped the now-defunct Ninth Group (Grupo 9). The

Fourth Wing includes the Los Condores Liaison Squadron (Escuadrilla de Enlace Los Condores), GAA 24, and GCE 34. The

First Group in Los Condores serves as a combined light- strike and

combat-training unit. In early 1992, the First Group began replacing its Cessna A-37B Dragonflies with a mix of Enaer/CASA T-36

Halcon trainers, locally built in a joint venture between Spain's

Aeronautic Constructions, S.A. (Construcciones Aeronauticas,

S.A. —CASA) and Chile's National Aeronautical Enterprise

(Empresa Nacional de Aeronautica—Enaer), and A-36 light-strike

aircraft. The Second Air Brigade, based in Los Cerrillos, Santiago, covers

the region southward from the Rio Huasco to the Rio Bio-Bio and

consists of the Second Wing (Ala 2), which combines the Second

Group (Grupo 2) with the existing Tenth Group (Grupo 10) and

Eleventh Group (Grupo 11). The Second Wing includes GAA 31

and GCE 32. The Second Group in Los Cerrillos is a special unit

operating Canberra PR-9s in the Reconnaissance Squadron (Escuadrilla de Reconocimiento) and Beech 99As in the Electronic War

Squadron (Escuadrilla de Guerra Electronica). The Tenth Group,

based at Pudahuel Airport, Santiago, is the FACh's main trans- port unit. The Eleventh Group, in Los Cerrillos, is primarily a

refresher training unit for flying personnel previously assigned to nonflying duties. The Second Group's inventory includes the two

Gates Learjet 35As of the Aerial Photogrammetric Service (Servicio Aereo de Fotogrametna—SAF) that are based at Los Cerrillos. The Eleventh Group controls both the Piper PA-28-326

Dakotas of the FACh Specialists' School and the Extra-300s of the

"Los Halcones" (The Falcons) aerobatics team.

The Third Air Brigade, headquartered at El Tepual Military

Air Base, Puerto Montt, covers the region between the Rio BfoBfo and Cerro San Valentin in southern Aisen Province. It consists of the Fifth Wing (Ala 5) at Puerto Montt, which in turn consists of the recentiy reactivated Third Group (Grupo 3), a light-strike

unit based at Temuco, and the Fifth Group (Grupo 5), a lighttransport unit based in Puerto Montt. The Fifth Wing also includes

GAA 25 and GCE 35. The Fourth Air Brigade, based at the Carlos Ibanez Military

Air Base, Punta Arenas, covers the region southward from Cerro

San Valentin to Cape Horn. It consists of the Third Wing (Ala

3), which is made up of the Fourth Group, the Sixth Group, and

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Chile: A Country Study

the Twelfth Group, all based at Punta Arenas. The Sixth Group

(Grupo 6) is a special operations unit. This brigade also controls

the Nineteenth Antarctic Exploration Group, based at Lieutenant

Marsh Military Air Base on King George Island in the Chilean

Antarctic Territory. The Third Wing, at Chabunco, includes GAA

23 and GCE 33.

Civic Action

All three armed forces participate in military civic-action programs, particularly in Chile's underpopulated northern and southern

extremes. Engineer units of the army engage in road construction

and maintenance. The navy provides lifesaving and emergency

transportation services, in addition to maintaining navigational aids

and regulating the activities of the Merchant Marine (Marina Mercante). The FACh provides emergency transportation and a

meteorological service and plays a major role in disaster relief. It also regulates civil aviation and the administration of airports. All

three of the armed forces jointly provide a comprehensive and upto-date cartographic service covering the national territory and its coastal seas. They also provide medical services to civilians living near military bases in the less developed areas of the country.

Defense Spending

The armed forces have been entitled, under Law 18,948, to a

level of funding out of the national budget at least equal to their

1989 level, which was US$640 million. From 1990 to 1993, the

defense budget amounted to US$1 billion annually, according to annual Military Balance surveys published by London's International

Institute for Strategic Studies. Personnel reportedly account for more than 70 percent of the defense budget.

According to the Copper Law enacted in 1954 by the government of Carlos Ibanez del Campo (1952-58), the armed forces are

entitled by law to 10 percent of the total copper earnings of the

state-run Copper Corporation (Corporacion del Cobre—Codelco).

The purpose of this legislation is to provide the armed forces with

stable funding and hard currency for major purchases abroad. In

1987 the military government changed the law, applying the 10

percent figure to all Codelco export earnings, including the sale of gold and molybdenum (the sale of which is insignificant compared with the copper sales). Between 1989 and 1993, Codelco

provided more than US$1 .2 billion to the armed forces, as follows: US$313 million in 1989, US$287 million in 1990, US$223 million in 1991, US$204 million in 1992, and US$197 million in 1993.

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These figures correspond to approximately 20 percent to 30 per- cent of the military budget.

Under the Codelco subsidy, the armed forces are guaranteed a minimum of US$189 million annually, plus accumulated inflation

(with 1987 as the base year). In 1993 the guaranteed minimum

was US$210 million, but 10 percent of all Codelco saloj totaled

only US$197 million, or US$13 million short of the guaranteed

minimum. The 1993 shortfall in Codelco revenues resulted from

the drastic fall in the price of copper. Codelco managers argued

that the public treasury was responsible for making up the shortfall, but there was no mechanism for such a measure. The 1993 shortfall in Codelco revenues intensified the debate

between those supporting the 1954 law (the armed forces and the

political right) and those opposed to such an arrangement (Codelco, the Ministry of Mining, and many within the center-left CPD

governing coalition). Those opposed to the Codelco subsidy to the

armed forces argued that it was an unacceptable burden for Codelco, making it unable to compete in the world market. Total profits for Codelco in 1992 were US$920 million; in 1993 they were esti- mated at US$480 million. This means that 22 percent of all Codelco

profit earnings in 1992 went to the armed forces and that approximately 41 percent went in 1993.

Those arguing for an end to the Codelco subsidy maintain that

the armed forces should be funded through the general budget.

In addition, there has been increasing pressure to privatize Codelco

altogether, a measure that would probably include the abolition

of the 10 percent subsidy. Those arguing against the Codelco subsidies for the armed forces have been careful to state that they are not trying to cut the resources of the armed forces but rather are giving them a more legitimate source. The armed forces oppose an end to their Codelco funds, fearing

that their budget would be politicized and reduced. Furthermore,

virtually all of the resources that the armed forces receive from

Codelco are already committed beyond the year 2000, mostly

through the purchase of armaments on credit. Ironically, the privatization of state firms that was initiated by the military government

could lead to the end of the Codelco revenues for the armed forces. Principal beneficiaries of the increased spending in the early 1990s were the navy and air force. Their projected acquisitions include

thirty British Harrier and twelve Sea-Harrier VTOL (vertical takeoff and landing) aircraft, which the Chileans hope to have in ser- vice by 1997. Up to 1992, however, interservice rivalries appeared

to have permitted the civilian administration, which favored cuts

in military purchases, to take minimal action on this procurement.

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Chile: A Country Study

Spending on the army, navy, and air force accounted for approximately 41 percent, 33 percent, and 21 percent, respectively, of total defense expenditures; the remaining 5 percent was accounted

for by costs under the general heading of national defense.

Accusations of corruption have been made against several leading figures of the military government and certain members of their

families. As a result of these problems, public attitudes toward the

armed forces have been adversely affected. An October 1991 sur- vey by CERC shows that 36. 1 percent of respondents picked military spending as a target for budget cuts. However, the military

government received an average score for its overall performance.

The CERC's survey of March 1991 shows that 57.9 percent of

respondents thought the military's performance was "neither good

nor bad"; 29 percent thought it was "bad"; and 11.2 percent

thought it was "good."

Manpower and Training

Recruitment and Conditions of Service

Historically, the profession of military science has been regarded as an honorable one in Chile. The army and to an even greater

extent the air force have traditionally drawn their officer corps from

among the middle classes, with a large portion coming from military families. Social elitism has been a traditional characteristic only

of the officer corps of the navy. In 1900 military service became

compulsory for all fit male citizens between the ages of eighteen

and forty-five. Traditionally, only a small proportion of those eligible would actually have been drafted for one year of training in

the army or air force or two years in the navy. The overwhelming

majority of the approximately 30,000 conscripts selected annually

served in the army. (Of the 121,000 who registered in 1993, only

29,400 were drafted.) Those not specifically exempted from ser- vice have had their names inscribed in a military register. Traditional government policy also dictates that 10 percent of the annual

conscript intake should consist of illiterate citizens, who are taught

to read and write during their period of military service. On completion of their period of training, conscripts are required to serve

in the Active Reserve for a period of twelve years and then in the

Second Reserve until the age of forty-five. However, apart from

the skeleton cadres of the regular armed forces, no effective reserve organization appears to exist. The three armed forces all have female members, who serve

voluntarily. They carry out subsidiary support functions, such as nursing and administrative work.

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Military personnel are well fed and well housed. The three armed

forces have an education program aimed at providing enlisted per- sonnel with useful skills for their return to civilian life. The navy

and air force have relatively high educational requirements, even

for compulsory enlistment, and impart technical skills to their conscripts.

Training

Each of the armed forces maintains its own complex of training

establishments, which are of uniformly high quality. These centers

attract large numbers of students, not only from Latin America

but also from countries such as the United States, Germany, Spain,

Israel, and Taiwan. In addition to the complex of training establishments maintained by each of the individual armed forces, the

Ministry of Defense operates the National Defense Academy

(Academia de Defensa Nacional), a triservice, university-level education establishment. Successful completion of its courses is a

prerequisite to promotion to senior rank in all three services.

The army's Military Academy, the War Academy (also known

as the War College, or Escuela Superior de Guerra—ESG), the

Army Aviation Command (Comando de Aviacion de Ejercito), and

the Noncommissioned Officers' School are all located in Santiago. Officer candidates must complete the five-year course of the

Military Academy successfully before being commissioned and must

complete an additional course at the War Academy to qualify for promotion to field rank or appointment to the General Staff. The

army has a comprehensive range of specialist schools, including

the Infantry School (Regimiento Escuela de Infanteria) in San Ber- nardo (near Santiago), the Mountain Warfare School (Regimiento Escuela de Montana) in Rio Blanco (near Los Andes), the Special

Forces School (Regimiento Escuela de Fuerzas Especiales y

Paracaidistas) in Peldehue, the Armored Cavalry School (Regimiento Escuela de Caballena Blindada) in Quillota, a subsidiary

Armored Forces School (Escuela de Fuerzas Blindadas) in Antofagasta, the Artillery School (Regimiento Escuela de Artillena)

in Linares, the Engineers' School (Regimiento Escuela de In- genieros) in Tejas Verdes, and the Signals School (Regimiento Es- cuela de Telecomunicaciones) in Santiago. There are also the

Military Polytechnical Academy (Academia Politecnica Militar)

in Santiago, the Women's Military School (Escuela Militar Femenina) in Cajon de Maipo, and the Physical Education School (Escuela de Educacion Ffsica) in Santiago.

The navy's Arturo Prat Naval School provides a five-year course

for naval officer cadets. Officers must complete postgraduate courses

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Chile: A Country Study

at the Naval War Academy for promotion to flag rank or appointment to the naval General Staff. Selected petty officers may qualify

for commissioned rank by completing a two-year course at the Arturo Prat Naval School but are ineligible for promotion beyond

the rank of captain. Noncommissioned personnel receive their train- ing at the navy's comprehensive range of specialist schools located

in Vina del Mar or Talcahuano. The creation in Valparaiso of the

Pilot Luis Pardo Villalon Antarctic Navigation School (Escuela de

Navigacion Antartica "Piloto Luis Pardo Villalon") was announced

in August 1991 by the director of the General Directorate of the

Maritime Territory and Merchant Marine.

The air force's General Staff controls the Air Force Staff College (Academia de Guerra Aerea). The FACh Personnel Command

controls the other schools: the Air Force Technical College (Academia Politecnica Aerea); the Specialists' School (Escuela de Especialidades), which is equipped with Piper Dakotas; and the

Captain Avalos Prado Aviation School (Escuela de Aviacion "Capitan Avalos"). The latter offers a basic three-year course to officer

cadets, followed by two years of specialized training before commissioning. It is equipped with the Enaer/CASA T-36 Halcon and

the Enaer T-35 Pillan. The Logistical Command controls the nonflying Supply Wing and the Engineering and Maintenance Wing,

headquartered at El Bosque.

Uniforms, Ranks, and Insignia

Army

The uniforms and insignia of the three services reflect mainly

British and German influence but also United States influence. The

German influence is predominant in the army's uniforms (which

are gray) and insignia, whereas the navy's uniforms (which are blue) and insignia and the air force's uniforms (which are bluegray) and insignia resemble those of their British and United States counterparts (see fig. 17; fig. 18). Noncommissioned officers' rank

insignia consist of combinations of chevrons, worn point downward as in the British Army.

The army's service and dress uniforms closely resemble those

of the old German Imperial Army. The uniform of the cadet corps

of the Military Academy still features a pickelhaube (tall, plumed

headgear) of the type worn by the Kaiser's Imperial Guard. The

gray service uniform, with its stand-and-fall collar buttoned to the

neck, worn with a plastic replica of the German "coal-scuttle" hel- met, also evokes memories of the Reichsheer (a German paramilitary force).

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Army rank insignia that are based on a series of gold or silver stars on shoulder straps or shoulder plaits are used for ranks up

to and including that of brigadier, an unusual transitory grade between that of colonel and brigadier general. According to the Santiago

newspaper Hoy, the rank of brigadier did not exist before 1981 , when

the reformulation of Chile's army ranks went into effect. Under

the new military rank structure, brigadier is not a rank but a category

that is assigned to senior colonels, including those slated for promotion to general. Although a brigadier has the rank of coronel and

wears the three stars of a coronel on the shoulder boards, a brigadier wears a general's national coat of arms and laurel leaves on the

collar. When the rank of brigadier was created, the names given to the generals were also changed, to include brigadier general (major

general) and mayor general (lieutenant general). General officers wear

rank insignia consisting of two to five gold or silver stars on shoulder boards similar to those used by general officers of the United

States Army. A president may designate officers who remain on

duty beyond the compulsory thirty-eight years with the quasi-rank

category of lieutenant general. The rank of capitdn general (captain

general), the armed forces' highest rank (held by General Pinochet),

is indicated by five stars. In summer a white tunic is substituted for the gray one. Combat uniforms in olive-green, khaki-drab, or camouflage pattern, worn with the World War II-style United States M-1942 steel hel- met, are virtually indistinguishable from those worn until the early

1980s by the United States Army. Mountain troops wear white

coveralls when operating in the snow. Navy

Naval officers' uniforms are virtually indistinguishable from their

British equivalents but, like rank insignia, are also similar to those

used by the United States Navy. However, officers' rank insignia, worn on the jacket cuff with the dark-blue winter service uniform and on shoulder boards with all other dress orders, follow

United States practice, with a five-pointed star above various combinations of horizontal stripes. Like their army counterparts, enlisted personnel wear rank insignia based on chevrons, worn point

downward. Enlisted personnel wear both a stiff white-topped dress cap, somewhat similar to that of the British Royal Navy although

with a much thinner ribbon, and a working cap identical to the

United States sailor's white hat. Marine enlisted personnel wear

dress uniforms reminiscent of those of the United States Marine

Corps (USMC), but with a stand-and-fall collar to the tunic. Marine officers wear the standard naval uniform and hold naval ranks.

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Chile: A Country Study

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Chile: A Country Study

All ranks have a range of blue and white service uniforms, plus a slate- gray working uniform. A United States- style khaki-drab uniform is sometimes worn with the ordinary naval cap; the Marines

also have olive- green, khaki-drab, and camouflage combat uniforms, almost indistinguishable from those of the USMC. The stan- dard steel helmet is the United States M-1942 pattern. Naval band

members wear the Germanic bird's-nest shoulder ornament on stan- dard blue uniforms.

Air Force

FACh uniforms closely resemble those of the United States Air

Force, although they are of a slightly darker shade of blue-gray.

The use of lapel ornaments to supplement rank insignia imparts

a Germanic flavor. Rank insignia, worn in gold on dress uniforms

and light blue on all others, resemble those of the navy. However,

the FACh emphasizes its status as the world's fourth oldest independent military air arm with its own peculiar rank designations. A

captain is referred to as capitdn de bandada, a major as comandante

de escuadrilla, and a lieutenant colonel as comandante de grupo. The

terms coronet de aviacion, general de brigada aerea, general de aviacion, and

general del aire are used for colonels, major generals, lieutenant generals, and generals, respectively. Various permutations and combinations of the basic blue uniform are worn. Shirtsleeve order is widely used, even for semiformal occasions, in summer and other

periods of hot weather. Air crew generally wear black leather flying jackets. Rank insignia are worn on shoulder boards with greatcoat, flying jacket, and shirtsleeve orders. Noncommissioned rank

insignia closely follow those of the navy, although army terminology is used. FACh ground troops use the United States Fritz Kevlar ballistic helmet.

Foreign Sources of Materiel

Traditional Chilean military procurement policies have faithfully mirrored the influences at work on the individual armed forces. Thus, the army has showed a distinct preference for weapons of

German design, if not necessarily German manufacture. For ex- ample, the German-designed French Hotchkiss machine gun was

standard in the 1930s. For similar reasons, the navy largely confined its patronage for new construction to British yards. The FACh,

again mirroring its formative influences, was initially equipped

largely with British materiel. However, large quantities of United

States-built aircraft, together with the products of the renascent

German aircraft industry, began to appear in the mid- 1930s.

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During World War II, large amounts of United States materiel

began to reach the army and FACh, but not the navy, as military

aid. All three of the armed forces continued to receive increased

quantities of United States equipment after the Rio Treaty of 1947.

For almost two decades, United States war surplus dominated the

inventories of the Chilean Armed Forces, as it did generally

throughout the region. Between 1950 and 1977, the value of United

States military assistance totaled US$97.4 million. Quantities of

progressively obsolescent materiel of pre-World War II manufacture and non-United States origins were still noted in service in

the early 1970s.

In the 1960s, as elsewhere in Latin America, when the United

States declined to supply modern materiel because of restrictions on exports of high technology, other markets were explored. The

army acquired the Swiss SG-510 rifle, which became standard,

and quantities of French and Swiss armored fighting vehicles,

together with Italian artillery pieces. The navy and FACh continued

to favor British equipment.

With the widespread boycott of the military regime follovving

the 1973 overthrow of Salvador Allende, Chile found many traditional sources of equipment closed. United States arms exports to Chile were formally terminated in 1976 after the adoption of the

Kennedy Amendment (see Glossary) in 1974. Procurement was

pursued on an ad hoc basis, and materiel was acquired from wherever available. This inevitably resulted in an increasingly heterogeneous and unbalanced equipment inventory. During this period,

the navy and FACh encountered particular difficulties in the ac- quisition of replacements and spares. Much ingenuity was applied

to prolonging the life of otherwise obsolete or worn-out materiel,

and local industrial potential was expanded dramatically.

Chile managed to acquire United States arms and technology

through third parties even while the United States prohibition of arms sales was in effect. In addition to spurring the Chileans to develop their own arms industry, the embargo prompted Chile to develop closer ties with arms-producing countries such as Brazil,

France, Germany, Britain, and Israel. With the return of democracy in 1990, the Aylwin government assured the United States that

it would continue to prosecute those responsible for the assassination of Chilean diplomat Orlando Letelier, an opponent of the mili- tary government, and his assistant, United States citizen Ronnie

Moffit, in Washington in 1976. As a result of these assurances, the

embargo was lifted, and United States arms sales to Chile resumed.

The return to civilian government in 1990 resolved most of the

procurement problems experienced during the period of military

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Chile: A Country Study

rule (1973-90). Nevertheless, future procurements probably will continue to be broadly based. The army's main priorities are to standardize its equipment inventory and replace obsolescent

weapons that are incapable of further upgrading, specifically its battle tanks and some of its artillery equipment. Missile air defense

used to be the exclusive responsibility of the FACh, with its Blowpipe and Mistral and its new French Mygale vehicle-mounted

antiaircraft system. However, in 1993 the army launched its own

international competition program for the acquisition of a new

surface-to-air missile (SAM) system. According to Military Technology [Bonn], the army was interested in two types of vehiclemounted systems—existing SAM systems or procurement only of

missile launchers and munitions. The latter option would entail

mounting the new systems on Chilean-made Piranha 6x6 or 8x8

armored personnel carriers (APCs). The new missile system will be integrated with the army's newly adopted, Chilean-developed

Lince C2 air defense system. In May 1992, the FACh, for its part,

tested its new French Mygale antiaircraft system, which has a computerized radar that seeks the target and is linked to four vehicles

that carry Mistral ground-to-air missile launchers to protect air bases

against supersonic aircraft attacks. Chile is the first and reportedly the only country in the region to own this system.

The navy requires at least one more Leander-class frigate, at

least two more modern Oberon-class submarines, and an additional

replenishment tanker. The retirement of the cruiser O'Higgins also

left the fleet without a major command vessel. Various possibilities, including the acquisition of the British destroyer leader Bristol, were being considered. The Bristol attempt failed, however, when

the British Royal Navy demanded that its Sea Dart system be re- moved prior to sale. The navy also hoped to establish a combat

air unit equipped with Sea Harriers, although this objective was

unlikely to be achieved in the foreseeable future.

The FACh requires some additional heavy-lift transport aircraft

and replacements for its diminishing number of aging Hunter

fighter-bombers. Possible replacements include the British Hawk

200, the United States F-16, and even the former Soviet Union's

MiG-29. The FACh commander in chief stated publicly in 1992

that no immediate Hunter replacement was contemplated and that

future procurements would focus on the acquisition of smaller numbers of higher-performance combat aircraft. For example, the FACh

purchased ten A-37 light attack aircraft that year through an agree- ment with the United States. Between sixteen and twenty Chilean Northrop F-5E Tiger

III fighter aircraft were upgraded with Israeli technology by the

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National Security

state-owned Israeli Aircraft Industries (IAI) in Tel Aviv in 1988-93.

Chile had purchased these aircraft from the United States in 1976,

but they were held for many years under the regulations of a 1976

addendum to the Kennedy Amendment. The jets' avionics were

greatly improved, and their electronic and navigation equipment

were fully replaced by IAI. The Israeli company was also upgrading Mirage 50 aircraft purchased by Chile from France many years

earlier to the Mirage 500C/Pantera standard, a configuration resembling the IAI's Kfir. In addition, the Israelis in 1993 were converting a FACh Boeing 707 to carry the Phalcon airborne early

warning system developed by an Israeli electronics company.

The Defense Industry

Chile has for many years produced its own small arms, ammunition, and explosives, but it did not have a real defense industry

until the 1970s. The almost universal boycott after the armed forces overthrew the Allende administration in 1973, and in particular

the 1974 Kennedy Amendment, which deprived Chile of maintenance support for its large inventory of United States- manufactured defense equipment, threw the Chileans back on their

own resources. At the time, war with Argentina over the Beagle

Channel seemed likely, and local industrial potential was expanding dramatically. Thus, Chile became a major producer of defense

equipment, the third largest in Latin America after Brazil and Argentina. In addition to small arms and ammunition, Chile manufactured infantry-support weapons, both armored and soft-skinned

vehicles, artillery pieces, ballistic rocket systems, antiaircraft artillery weapons, naval vessels, military aircraft, aerial bombs and

rockets, and radar and electronic warfare equipment. Nevertheless, according to defense analyst Daniel Prieto Vial, by 1991 Chile

supplied no more than 3 percent of its own defense needs and purchased the remaining 97 percent elsewhere.

As Chile became a successful exporter, the biennial International

Air and Space Fair (Feria Internacional del Aire y del Espacio

FIDAE) became its principal marketing event. First held in March

1980 as a modest flying display and exhibition of air defense

products to celebrate the fiftieth anniversary of the FACh's for- mation, what was then called the International Air Fair (Feria In- ternacional del Aire—FIDA) was an unexpected success. It was

decided to repeat what was originally conceived of as a one-time

event every second year. In 1990 the name was changed to FIDAE

to reflect the aerospace dimension. FIDAE continued to grow steadily both in size and in international importance and by 1992 was

the major forum for the display of military equipment in the

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Chile: A Country Study

Southern Hemisphere, attracting more than 300 exhibitors from

twenty-seven countries to Los Cerrillos Air Base. These included

not only other arms-producing nations in the developing world but

also the major manufacturers of defense equipment in the leading

industrialized nations.

Army Ordnance

Chile's major producer of ground-defense materiel, the Army

Factories and Yards (Fabricas y Maestranzas del Ejercito—Famae),

which is subordinate to the army's Military Industry and Engineering Command (Comando de Industria Militar e Ingenieria

CIMI), had been operating for 182 years in 1994. Famae employs

about 3,000 people in factories throughout the country and is in

charge of maintaining and renewing the army's equipment. Since

the 1960s, Famae has assembled both the Belgian FN FAL rifle and its close-support version, the FN FAP, locally known as the

FN FALO. More recently, Famae has also produced under license

the Swiss SG-542 assault rifle, which was replacing the SG-510

in service with the army. In addition, Famae is producing both

a .32-caliber revolver and a 9mm submachine gun, together with

60mm, 81mm, and 120mm mortars, based on Brandt prototypes.

An agreement with Britain's Royal Ordnance, signed in December 1989, provides for the joint development of the Rayo 160mm

multiple-rocket launcher system, beginning in 1994. The Rayo was

tested successfully in October 1991.

Famae produces ammunition for all these weapons, as well as hand grenades, Bangalore torpedoes, two types of antipersonnel

mines, and an antitank mine, together with ammunition for the

Oto Melara Model 56 105mm howitzer. Two types of antipersonnel bombs, two types of high-explosive aerial bombs, and one type

of cluster bomb also have been developed, in conjunction with the

FACh. These have been exported to Ecuador and Paraguay. Exports to Iran, Pakistan, and elsewhere also have been rumored.

The revelation of contraband arms sales to Croatia via Hungary

at the end of 1991 caused a minor political scandal early in 1992.

A new development beginning in early 1992 was the production of armored vehicles. Famae acquired a license to assemble the

Swiss Mowag Piranha 8x8 APC. Prototype variations mounting

either the Cockerrill 90mm or the Israeli HVMS 60mm highvelocity gun also have been produced. In 1992 Famae negotiated

for the local manufacture of the Cadillac-Gage Stingray light tank.

In early 1993, General Pinochet headed an official delegation

that visited China. During the visit, an important agreement on

military cooperation and coproduction of military equipment was

320
A freighter navigating Chile 's scenic coastal waters

Courtesy Embassy of Chile, Washington

signed between Famae and China's Northern Industrial Corporation (Norinco).

Naval Equipment

Naval Docks and Yards (Astilleros y Maestranzas de la Armada—Asmar) was established in 1895, with facilities at Talcahuano and Valparaiso. Asmar was reorganized on a commercial basis in 1960. In early 1992, Asmar Talcahuano accounted

for about 80 percent of the activities of the corporation, despite

the recent upgrading of repair facilities at Valparaiso and the in- auguration of smaller ship repair maintenance facilities at Punta

Arenas (the latter operated in collaboration with Sandok Austral

of South Africa). With more than 4,500 employees, Asmar Talcahuano has become the largest and most modern shipyard on the

Pacific Coast south of California. It has carried out repair and maintenance work for three foreign navies, in addition to its work for

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Chile: A Country Study

the Chilean Navy and Merchant Marine. Asmar has also performed

contract work on units of the merchant fleets of such countries as Canada and Denmark.

Over the years, Asmar has built a number of minor vessels for the Chilean Navy and Coast Guard. Extensive modifications were

also made to the four County-class missile destroyers purchased

from Britain in the early 1980s. A combination of economic difficulties and the ready availability of suitable craft on the secondhand

market had, however, prevented the construction of either a projected series of fifty-four-meter patrol craft, for which a license was

obtained from Fairey Brooke Marine of Britain in 1988, or the

P-400-type fast attack craft, for which a license agreement was

negotiated with Chantiers de Normandie in the same year. A project

to build at least four submarines was announced in 1990 but had

not progressed any further. However, Asmar displayed a humantorpedo-type midget submarine, developed in association with Cosmos of Livorno, Italy, at FIDAE '92. In early 1992, Asmar' s Talcahuano facility was building four

patrol boats for the navy, the first of which was scheduled to be

in service in 1993. Asmar was also preparing a program for four

helicopter-equipped offshore patrol vessels to police Chile's

200-nautical-mile exclusive economic zone. In addition to its own independent electronics division, Military

Manufacturers (Fabricaciones Militares—Fabmil), founded in

1982, Asmar has also established (in 1983) an electronics manufacturing and development subsidiary, Defense Systems (Sistemas

Defensas—Sisdef), located in Vina del Mar. This firm, a joint

venture with Britain's Feranti International, has developed a multipurpose radar system that is equally adaptable to use aboard ship or on land. Asmar itself has produced a naval gunnery control ra- dar, which was fitted aboard the Almirante-class destroyers and

other vessels of the Chilean Navy, a mortar-locating radar for the

army, and a land-based air early warning radar. A newer shipyard, founded in 1974 with its facilities located at the mouth of

the Rio Valdivia in southern Chile, is Naval Shipyards and Services (Astilleros y Servicios Navales—Asenav).

Aircraft Equipment

In the past, several types of light aircraft were developed in Chile

by the FACh-controlled National Aircraft Factory (Fabrica Nacional

de Aeronaves—FNA), although none of these entered production.

Starting in 1981, however, the FACh's Engineering and Maintenance Wing commenced the development of a variant of the Piper

236 Dakota light aircraft as a replacement for the Beech T-34.

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National Security

The result was the T-35 Pillan two-seater primary trainer. In 1984

Enaer, the National Aeronautical Enterprise, was set up in Santiago as a state enterprise with autonomous management to handle this project. Although Enaer's main contracts have been with

the FACh, by late 1991 it had sold forty Pillan training aircraft to the Spanish Air Force, fifteen to the Paraguayan Air Force, ten

to the Panamanian National Air Service, and sixty to the FACh.

(Those for the Spanish Air Force were built under license in Spain

under the name Tamiz.) The FACh proposed ultimately to build

up to 200 Pillans, mainly in the turboprop version unveiled in 1986

and originally designated the Aucan.

In a joint venture with Spain, Enaer developed a version of the

Spanish CASA 101 Aviojet fighter, called the T-36 Halcon (Falcon), to replace the Cessna T-37 in the advanced trainer/light- strike role. Fifty-six of these aircraft were in service with the FACh. A

radar-equipped maritime strike version, designated the A-36M and

armed with the British Aerospace Sea Eagle air-to-surface missile, was also developed; it was flown in prototype form in 1992. In 1993

Enaer and the Brazilian Aeronautics Company (Embraer) signed an agreement, as partners, to share the risks of the EMB-145 program, which will produce a minimum of 400 of these jets.

Employing about 2,000 people, Enaer has the capability to produce one aircraft per week, although the plant was not working to full capacity in early 1992. The engines for the Pillan and

the Halcon are imported from the United States and Spain, respectively. The airframes and most other parts, including such sophisticated items as ejection seats, are produced in Chile. Enaer also manufactures parts for the CASA 235 and the BAe 146.

Enaer's Electronics Division has developed and produced the

Caiquen I and II early warning radars, which are in full production. Enaer has also developed the Itata airborne electronic

intelligence-gathering system, the Medusa radio interception and

jamming system, and the Eclipse chaff/infrared decoy launcher.

Cardoen Industries

Despite the spectacular expansion of the public sector of the

Chilean defense industry since the mid-1970s, the privately owned

Cardoen Industries (Industrias Cardoen), owned by Carlos

Cardoen Cornejo, is the most successful Chilean defense manufacturer in the export field. In less than eight years, this firm developed from a modest operation manufacturing demolition charges

for the mining industry into a diversified industrial empire. In the

early 1990s, it employed more than 800 persons in six separate fac- tory complexes producing a variety of defense equipment, together

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Chile: A Country Study

with nondefense-related products, and had subsidiaries in Ecuador,

Italy, Spain, and Greece. Under a 1989 agreement with the

Guatemalan government, Cardoen Industries agreed to establish a plant for the manufacture of explosives, grenades, and mines in

Guatemala.

In 1979 Cardoen Industries took over the project of rebuilding

the Chilean Army's World War II-vintage M-3A1 half-track APCs,

which Famae had commenced five years earlier but had been forced

to drop for lack of funds. This venture resulted in the development

of an entirely new vehicle, the BMS-1 Alacran, a number of which were acquired by the Chilean Army.

Building on the experience gained in the Alacran project, the

Cardoen company commenced the assembly, under license, of the

Swiss Mowag Piranha 6x6 APC in the early 1980s. In 1993 there were 180 of these in service with the Chilean Army as the

Cardoen/Mowag Piranha. Several variants of this vehicle, including a mortar carrier and a fire-support version, with the turret- mounted 90mm Cockerill gun, were also developed.

Simultaneously with the Piranha project, Cardoen Industries also developed the VTP-1 Orca 6x6 APC/armored load carrier, the

world's largest vehicle of its kind, capable of carrying sixteen men

with their equipment. The Chilean Army eventually ordered 100

Orcas. Limited numbers of another tracked infantry vehicle, the

VTP-2 4x4 Escarabajo light APC, were in service with the FACh

for airfield defense. With Chinese collaboration, the company also produced a 6x6 all-terrain truck for both civilian and military purposes and a light two-seater hovercraft.

In keeping with its origins as a manufacturer of explosives,

Cardoen produces three types of demolition charges and a series

of detonators and Bangalore torpedoes, in addition to three types

of hand grenades, two types of antipersonnel mines, and an antitank mine. The company also produces 70mm ballistic rockets,

300-kilogram fragmentation bombs, and three types of generalpurpose aircraft bombs. Experiments with fuel-air bombs were

reported to have been carried out at the corporation's testing area

in the Atacama Desert. The most successful of all Cardoen products, however, and one

used extensively by Iraq against coalition forces in the Persian Gulf

War of January-February 1991, is the patented Cardoen cluster

bomb, a 227-kilogram bomb whose 240 "bomblets" create a lethal zone of up to 50,000 square meters. The company reportedly sold more than US$200 million worth of cluster bombs to Iraq between

1984 and 1988 and was described in early 1991 as the world's leading producer of this type of bomb.

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National Security

Cardoen Industries has also developed a low-cost combat helicopter, based on the Bell 206. A demilitarized version of this gained

a United States Federal Aviation Administration license in 1990.

Nevertheless, in 1992 the prototype remained impounded in the

United States on the grounds of the company's known involvement with Iraq, and Cardoen' s contract to service Bell helicopters was revoked.

In early 1992, Cardoen Industries and its various subsidiaries were finding the previously close association with Iraq, particularly the illegal export of zirconium for use in armor-piercing cluster bombs, highly embarrassing in the wake of the 1991 Persian Gulf

War. Consequently, the company was assiduously emphasizing its nonmilitary activities at the expense of the defense sector, on which

the prosperity of Cardoen Industries had been built. Following a two-year investigation of Carlos Cardoen, United States officials brought civil charges against him and moved to confiscate Cardoenowned properties in Florida valued at more than US$30 million.

These problems prompted Cardoen Industries to change its name

to Metalnor.

Minor Defense Manufacturers

Several Chilean companies not primarily engaged in the production of military materiel also have dabbled in this field. Longest

established of these is the General Society of Commerce (Sociedad

General de Comercio—Sogeco). Founded in 1941, Sogeco did not

enter the arms business until 1974. It was initially concerned with

the production of bomb trolleys for the FACh. Sogeco also developed the ejection seat for the Pillan and, through its subsidiary

Famil, has produced two models of a towed twin 20mm antiaircraft artillery gun, known as the FAM-2 and based on either the

Oerlikon KAD 20 or the Hispano-Suiza 820. The firm of Makina, which produces the armored bodies of the Cardoen vehicles,

itself developed the Carancho 180, a 4x4 airfield defense armored

vehicle, for the FACh. Ferrimar Limitada, a firm engaged mainly

in the construction of steel-hulled fishing craft and with no previ- ous experience in the defense field, developed an artillery computer,

designated Carmo, a light landing craft, and projects for modularized mobile command centers, in addition to its own Avispa cluster bomb in the mid-1980s. Despite some success on the export market, the Avispa appeared to be out of production in 1992, following litigation with Cardoen, which claimed infringement of

copyright. The interest of Ferrimar in the field of military production appeared subsequently to have lapsed.

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Chile: A Country Study

The Security Forces

Under the 1980 constitution, the police are referred to as the

Forces of Order and Public Security, their role being defined as the maintenance of law and order. There are two separate law en- forcement forces: the Carabineros and the Investigations Police,

both under the operational control of the Ministry of Interior. The

Carabineros constitute a national police force that forms a potential reserve for the army and has a paramilitary organization. The

Investigations Police is a national plainclothes organization comparable in some respects to the United States Federal Bureau of

Investigation (FBI).

The Carabineros

During the colonial period, there existed a fifty-man police unit

known as the Queen's Dragoons, which was responsible for law

enforcement in the Santiago area. This force changed its name to Dragons of Chile (Dragones de Chile) in the early years of the

republic and, by 1850, had increased in strength to 300. It was

subsequently incorporated into the army as a cavalry regiment.

By that time, civil police forces had also been set up in the major

population centers. In 1881 the Rural Police Law created a separate

rural police force in each province, and six years later each municipality was authorized to set up its own local police force. In 1902 four of the army's seven cavalry regiments were ordered

to detach a squadron apiece to form a new entity to be known as the Border Police (Gendarmes de la Frontera) and to be engaged

primarily in the suppression of banditry in the less developed regions

of the country. Despite being administratively and operationally

subordinate to the Ministry of Interior, this unit remained ulti- mately under the jurisdiction of the minister of war. Five years

later, it acquired a larger establishment and changed its name to the Carabineros Regiment (Regimiento de Carabineros).

Although still lacking a formal permanent institutional existence,

in 1909 the Carabineros established an Institute of Instruction and

Education, which admitted its first class of police cadets in August

of that year. Five years later, the responsibilities of the force were

extended to railroad security. Finally, in 1919, the force acquired

a formal independent existence under the Ministry of Interior, and

its title was changed again to the Carabineros Corps (Cuerpo de

Carabineros). Six years later, by which time the corps consisted

of 204 officers and 3,760 enlisted personnel, the Carabineros ac- quired a new organization that combined their various independent squadrons into five Rural Service Regiments, together with

326
Two members of

the Carabineros patrolling

during the 19th of

September Armed

Forces Day parade

in Santiago in 1985

Courtesy

David Shelton

a Railway Regiment, Training Regiment, and Customs Squadron,

the latter based at Valparaiso.

The strength, resources, and qualities of the various municipal

and rural police forces varied enormously. In 1924, in an effort to provide a degree of uniformity, the country was divided into

five police zones, with their headquarters at Antofagasta, Valparaiso,

Santiago, Talca, and Conception. The same law divided the police

functionally into three divisions: the Public Order Division, entrusted with general peacekeeping on a relatively passive level; the

Security Division, with a role of active law enforcement; and the

Identification Division, which embraced record keeping and general

crime detection. This arrangement provided for the coordination

of the activities of the various existing law enforcement agencies, on a zonal basis, with the General Directorate of Police (Direction General de Policia) at the national level. At that time, in the

mid- 1920s, the various police forces numbered 728 officers and

8,628 enlisted personnel.

Although now downgraded in importance, the provinces and the

municipalities continued to maintain their individual police forces. Only the municipal police of Santiago and Valparaiso seem to have

been effective, however, and in 1927 all law enforcement agencies were incorporated in a single national force, the Carabineros of

Chile. The force had a total strength of 1,123 officers and 15,420

enlisted personnel in 1929.

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Chile: A Country Study

In 1993 the Carabineros numbered 31,000, including officers,

noncommissioned officers (NCOs), and a significant women's ele- ment. Although normally under the jurisdiction of the Ministry

of Interior, the Carabineros were put under the Ministry of Defense

during the period of national emergency following the overthrow

of the Allende regime. Despite the return of civilian government

in 1990, the Carabineros remain subordinate to the Ministry of

Defense, but their operations are coordinated by the Ministry of

Interior. The Aylwin administration authorized an increase in

strength of 1,100 annually over the 1991-94 period.

Organization

The Carabineros are commanded by a director general and or- ganized geographically into three main zones—the Northern Zone,

the Central Zone, and the Southern Zone. Each of these zones is in turn subdivided into prefectures (prefecturas), subprefectures (subprefecturas), commissariats (comisarias) , subcommissariats {subcomisarias), lieutenancies (tenencias), reserves (retenes), and outposts (puestos

avanzados)

.

The Carabineros also include marine and air sections. The Air

Police, which ranks as a separate prefecture, dates from 1946, when

it was formed with a single Aeronca Champion aircraft. The Air

Police acquired its first helicopter in 1968; by 1993 its inventory

of helicopters had increased to fourteen (see table 46, Appendix).

Operationally, the Carabineros are divided into seventeen departments: analysis and evaluation, armaments and munitions, borders and boundaries, civic action, data processing, drug control

and prevention of offenses, finance, forestry, internal security, legal,

minors, police services, public relations, social action, supply, traffic control, and transport. In addition to their normal law enforcement and allied functions, the Carabineros perform extensive civic action, including the provision of medical and dental services to the populations of the less developed regions of the country and

the protection of forests and wildlife. The Carabineros are also

responsible for customs control and the Presidential Guard. Separate

prefectures deal with the Air Police, the Radio Patrol, and the Special Forces. The largest single concentration of Carabineros is in Santiago,

where apart from headquarters and administrative personnel, the

schools, and the Presidential Guard, there are five geographical

prefectures: the Central Prefecture, North Prefecture, South Prefecture, East Prefecture, and West Prefecture. These are in turn subdivided into twenty-six territorial and nine operational commissariats.

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National Security

Recruitment and Training

Service in the Carabineros is voluntary, and admission standards

are high. Applicants are required to have completed secondary

school and to have passed exacting physical examinations and psychological tests. A highly professional organization, the Carabineros

have enjoyed a prestige and universal respect that are almost unique

among Latin American police forces. The force's principal problem

at the beginning of the 1990s was the lack of adequate resources

to combat crime. Although budget appropriations for the Carabineros had risen steadily in the early 1990s (from US$37 million

in 1990 to US$78 million in 1993), low pay and even inadequate

clothing were a source of discontent within the ranks. The force

has its own cadet, NCO, and staff officer schools, in addition to a specialists' training center, all of which are located in Los Cerrillos, Santiago.

Uniforms

The Carabineros wear an olive-drab uniform with green trim, a high-crowned cap with brown leather visor, and brown leather

apparel. Motorcycle police wear white crash helmets and gauntlets with the standard service uniform. Riot helmets and shields are used by special units. Female members wear a version of the

male uniform with skirt and hard-crowned, kepi-type cap. Officers'

rank insignia are identical to those of the army but are worn on

silver rather than gold shoulder straps and plaits. NCO rank in- signia are in silver lace and worn on the upper sleeve. The Investigations Police

The Investigations Police, numbering about 4,000, is a plainclothes civilian agency engaged primarily in the detection and in- vestigation of crime. Headquartered in Santiago, the force has seven

substations in other parts of Chile. It functions throughout the country in support of the Carabineros. Operationally, its chain of com- mand runs from the director general through a deputy director to the inspectors in charge of the provincial substations. Functionally,

it is divided into a number of departments, including administration, foreign and internal police, health, justice, personnel, and

welfare. The force also includes the Air Police Brigade, responsible for airport surveillance; the National Identification Bureau,

which keeps records of all adult citizens and foreign residents and

issues identification cards that must be carried at all times; and

the Forensic Medicine Laboratory. In addition, the Special Units

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Chile: A Country Study

Prefecture comprises six brigades dealing with fraud, murder, robberies, vehicle theft, vice, and women's affairs. The Investigations Police functions in close collaboration with

the International Criminal Police Organization (Interpol) and with

the intelligence services of the army, navy, and air force. During

the military government, some Investigations Police agents became

involved in criminal activities. By early 1992, its new director,

Horacio Toro, a retired army general appointed by the Aylwin

government, had withdrawn more than 200 officers from duty be- cause of their alleged involvement in drug trafficking.

Internal Security Intelligence Organizations

In the immediate aftermath of the 1973 coup, a semiformal umbrella group, the National Intelligence Directorate (Direccion Nacional de Inteligencia—DINA), was formed, ostensibly to coordinate the activities of the intelligence services of the army, navy,

air force, Carabineros, and Investigations Police. From the beginning, DINA functioned as a secret police and was engaged in the

repression of dissidence within the state and the exaction of revenge on its enemies without. So notorious were its activities that of 957

identified "disappearances" of enemies of the Pinochet regime,

DINA was blamed by the Rettig Commission on human rights

abuses for perpetrating 392.

DINA has also been linked by prosecutors in the United States,

Italy, Argentina, and Chile to the murder of General Carlos Prats,

the former commander in chief of the army, in Buenos Aires in

1974; the attempted murder of Bernardo Leighton, the Christian

Democratic leader, in Rome in 1974; and the assassination of

Orlando Letelier, a former member of the Allende administration

and ambassador to the United States under the Popular Unity

(Unidad Popular) regime, in Washington in 1976. DINA was

abolished in 1977 and replaced by a new organization known as the

National Information Center (Centro Nacional de Informacion

CNI).

The functions of the CNI combined those functions carried out

by the United States Central Intelligence Agency (CIA), FBI, and

Secret Service. Although human rights abuses abated significantly after the abolition of DINA, its successor continued to draw criti- cism and was disbanded upon the return of civilian government

in 1990. Most of its approximately 2,000 operatives were absorbed

either by army intelligence or by a new coordinating body for mili- tary intelligence, operating under the aegis of the National Defense

Staff and known as the Directorate of National Defense Intelligence

(Direccion de Inteligencia de la Defensa Nacional—DIDN). The

330
National Security

DIDN concerns itself primarily with defense rather than with in- ternal intelligence.

The Aylwin government relied mainly on the Investigations

Police to combat terrorist groups. Technical assistance has been

obtained from Italy and Germany. The Carabineros created a new

countersubversive intelligence body in May 1990, the Directorate

of Carabineros Political Intelligence (Direccion de Inteligencia

Polftica de Carabineros—Dipolcar). Its previous unit was implicated in human rights violations. In early 1993, the government was finally able to enact new legislation, after more than a year

of congressional delays in approving the project, creating the Directorate of Public Security and Information (Direccion de Seguridad

Publica e Informaciones). The new directorate is under the Ministry

of Interior and allows the ministry to coordinate the intelligence

and anticrime and antiterrorist activities of the Carabineros and

Investigations Police.

Public Order and Internal Security

Incidence of Crime

Crime rates in the early 1990s remained far below those of the

United States. However, the notion that common crime was rare

in Chile until the 1970s and 1980s is a myth. Chile's rural areas were plagued with outlaw gangs in the early nineteenth century.

The most notorious gang, Los Pincheira, operated during the

1817-32 period, purportedly in defense of the cause of the king

of Spain. Based in the Andes and the heights of Chilian, the four

brothers who headed the gang—Antonio, Santos, Pablo, and Jose

Pincheira—wreaked death and destruction in the provinces of Nuble

and Concepcion. Nineteenth-century historian Benjamin Vicuna

Mackenna described their rural terror, and Los Pincheira became

the subject of novels as well. The gang grew to the size of an army,

requiring the government of Joaquin Prieto Vial (1831-36,

1836-41) to mobilize the army to eradicate the group. General

Manuel Bulnes was put in charge of combating Los Pincheira in

its own territory. At the command of 1,000 soldiers, Bulnes sur- prised Los Pincheira near the Palaquen lagoons, killing more than

200 bandits in a pitched battle. With the defeat of Los Pincheira

in 1832, the government was able to establish its authority in all of the national territory.

The crime situation was confusing to analyze under the military regime in the 1970s and 1980s because the government and

media tended to lump ordinary criminal behavior together with dis- sident violence. In the early 1980s, officials were prone to attribute

331
Chile: A Country Study

bank robberies, assassinations, and shootouts with police to left- wing extremist organizations, although skeptics often pointed to

rightist provocateurs or to government agents themselves as being

responsible for at least some of the incidents. Figures on crime and

criminals released by the National Statistics Institute (Instituto Nacional de Estadfsticas—INE) are not very enlightening as to the

actual status of crime in the country. There are no breakdowns

of figures according to gender in either the juvenile or the adult

category, and there are no statistics on prison populations.

News media have also contributed to a perception that crime

had increased in the early 1990s, but crime statistics are still difficult to obtain. Few, if any, published sources provide general crime

statistics, with the main exception of figures for arrests, readily avail- able in the INE's Compendio estadistico. According to sociologist J. Samuel Valenzuela, the general crime pattern did not appear to have changed markedly in 1992 from 1980-91. However, violent

crime was reported to have increased, and the average age of those

committing crimes had declined.

Available figures for 1980-91 show a mixed picture because some

forms of crime remained stable or declined, while others had in- creased (see table 47, Appendix). Of those that had increased, the

biggest jump occurred in the mid-1980s. Crime during the period

of democratic transition from 1989 to 1991 did not fall into a sin- gle pattern. The biggest jump in the rate of robberies occurred in

the mid-1980s. The average rate increased by 82.5 percent between

1986 and 1988, compared with the first three years of the decade.

Between 1989 and 1991, the rate increased by 7 percent over the

average in the previous three years. The trend between 1989 and

1991 , however, was steadily upward. There was no overall increase or decrease in the rate of burglaries. The average for the 1980-91

years was a 17 percent decrease over 1986-88. However, the rate of burglaries was higher between 1989 and 1991 than it was between 1980 and 1982. Like robberies, murders had increased significantly in the mid-1980s. In 1986-88 the average rate increased

by 27 percent over the 1980-82 years. In 1989-91 the average rate was a 9.1 percent increase over the previous three years. A poll conducted by the Center for Public Studies (Centro de

Estudios Publicos—CEP) and the Adimark Company in March

1993 in Osorno reveals the existence of a very real fear of crime

in the country. According to the CEP/Adimark survey, 59 per- cent of those polled perceived more crime than a year earlier. Only

13 percent felt that crime had dropped. Moreover, 76 percent said

that crime was more violent, whereas only 8 percent said it was

less violent. In a retrospective analysis, the study revealed that

332
National Security

citizen concern about crime rose sharply between December 1989

and March 1991 , with the figure approaching 65 percent in 1991

.

The study also reveals that 59 percent of those polled thought that

the Carabineros provided the needed assistance. Nevertheless, some

43.3 percent said they were dissatisfied with police protection in

their neighborhood; only 37.2 percent were satisfied. Narcotics Trafficking

Chile long remained relatively unaffected either by drug traffick- ing or by extensive drug abuse. Some expansion, both of drug

trafficking and of narcotics abuse, occurred during the late 1960s

and early 1970s, reflecting an international trend. By the early

1970s, Chile had become an important regional center for cocaine

processing. The problem had become sufficiently acute to occasion the passage of the country's first antinarcotics law by Allende's

Popular Unity government early in 1973. Later that year, the mili- tary government formed a special narcotics unit within the

Carabineros and began a big crackdown. This was highly effective, bringing the narcotics problem under control within a year. The Carabineros also pioneered the introduction of antinarcoticsoriented, youth education programs. A pilot project was set up in 1976, eight years before any comparable program was initiated in

the United States. Toward the end of the period of military rule, a new form of drug-related crime was noted in the northern Chilean

provinces adjoining the Bolivian and Peruvian frontiers: the illicit exporting to Peru and Bolivia of chemicals used in the processing

of cocaine.

Since the early 1980s, drug trafficking has been growing in Chile.

The country has become more prone to drug trafficking not only

because of its geographic configuration and location, bordering on

the world's two leading producers of coca—Peru and Bolivia

but also because of its economic stability. With its open-market

economy and bank-secrecy laws, Chile is an attractive haven for money laundering. A number of drug traffickers who were expelled

by the military regime after the 1973 coup cultivated contacts with

drug-trafficking groups while living in exile in the United States and Europe. On returning to Chile to reside, these traffickers, act- ing as finance men and heads of operations, profited from their

international contacts. Chile served as a good transit country

also because of its booming export activities. In mid- 1992 an

operational director of the Carabineros reported that money obtained through drug trafficking was being laundered through the

construction industry in central Chile and the fishing industry in

the far south.

333
Chile: A Country Study

In order to enhance the country's antidrug capabilities, the Aylwin government signed several antidrug agreements in 1992, in- cluding one with Italy in October (which also included antiterrorist

cooperation) and one with Bolivia in November. Chile's most seri- ous drug-related problems by 1992 reportedly involved transit

through the country along the northern corridor to Arica. In early

1993, a new cocaine/cocaine paste drug route reportedly came from

Bolivia through the Azapa Valley, an area with a sizable Bolivian

and Peruvian population located to the east of the city of Arica.

At that time, the Investigations Police began implementing a new

drug enforcement plan, with the aid of a turbo Cessna 206 for patrolling the area along the Bolivian and Peruvian borders, in coor- dination with motor vehicles and twenty powerful all-terrain Cagiva

motorcycles, donated by Italy.

After 1989 drug-related crime increased dramatically, particularly in the northern part of the country, to the extent that police

reportedly estimated in 1990 that 20 percent of the population of

the city of Arica between the ages of fifteen and thirty-four were

habitual drug users. Of 385 homicides (or 0.3 per 10,000) in Chile

during 1990, nearly 20 percent were classified as drug related. By

comparison, eight were classified as resulting from acts of terrorism.

During 1990 about 30 percent of robberies were also said to be

drug related. The size of drug seizures varied considerably. In 1991 some 220,000 kilograms of cocaine were seized, compared with

36,500 in 1988 and 798,000 in 1989. Police estimated that only

10 percent of the drug traffic was getting intercepted. Most of the

cocaine seizures occurred in the northern port of Arica.

Criminal Justice

The 1980 constitution establishes the independence of the

judiciary from the executive and legislative arms of government

(see The Courts, ch. 4). The legal system is based on Roman law.

There is no provision for trial by jury, and heavy reliance is placed on police evidence in criminal cases. Judges are required to be qualified not only in law but also in criminology and psychology. There

is provision for an annual review by the Supreme Court of the fit- ness of the members of the judiciary to continue to hold office. The Criminal Code of Chile, first drafted in 1870 after two unsuccessful attempts, was promulgated in 1874 and modified in 1928.

Its models were the criminal codes of Austria, Belgium, France,

and Spain. In 1930 extensive modifications were made, including

the abolition of the death penalty, although capital punishment was

reinstituted for certain crimes in 1937.

334
National Security

The Criminal Code is divided into general and special sections.

The former enumerates the general principles of criminal law relat- ing to jurisdiction, the concept of crime, attempted crime, second

party participation in the commission of crime, habitual criminals,

penalties, circumstances that exclude criminal responsibility, and

circumstances that extinguish criminal responsibility. The latter section defines specific offenses and their appropriate penalties. In

this respect, the courts are charged with ensuring that the penalty

is not merely appropriate to the crime but that it is also appropriate to the criminal's ability to discharge it. Crimes are divided into three basic categories: serious crimes

(crimenes), minor crimes (delitos), and misdemeanors (faultas). Crime

is defined as a voluntary act or omission for which the law imposes

punishment. Criminal responsibility is specifically excluded in cases in which defendants are insane or less than ten years of age. The

responsibility of minors ten to sixteen years of age is also excluded

unless it can be proven that they acted with full understanding of

their acts. Criminal responsibility is also excluded for violent acts committed in the defense of one's own person, property, or rights

and in defense of those of one's spouse or those of a third party.

Also excluded are violent acts committed accidentally in the exercise of a legal act, violent acts committed in the exercise of public

duty, violent acts committed under duress or fear, and the killing or wounding of the accomplice of an adulterous spouse. Criminal

responsibility is also excluded in the case of crimes of omission owing

to a legal or irresistible cause. Suicide and attempted suicide are

specifically decriminalized.

The Penal System

The penal system also has been standardized since 1930, coming under the jurisdiction of the minister of justice. The system

emphasizes the rehabilitation of the offender as its primary goal.

The normal prison regime is humane; the degree of confinement

is reduced progressively throughout the duration of the prisoner's sentence and ends, subject to good behavior, in conditional release

for periods up to 50 percent of the total sentence. The lengths of

the successive stages in the relaxation of the prison regime are varied

and are implemented on the basis of semiannual judicial review,

which takes into account behavior and perceived progress toward

rehabilitation.

Under the Criminal Code, all persons sentenced for periods between sixty-one days and five years are obligated to work. Prisoners

are remunerated for their work on a rising scale as they progress

through the penal system and are eligible for the benefits of social

335
Chile: A Country Study

insurance on the same basis as those in voluntary employment.

However, a percentage of prisoners' earnings is deducted to cover

their keep and the maintenance of the penal service and as a contribution toward the discharge of civil responsibility arising from

their offenses. Work can be either directly for the state, on contract, or on lease. Examples of work for the state include manufacture of such items as road signs or automobile license plates, or

public road construction and maintenance. Work on contract to private firms or individuals is still carried out within the penal in- stitution, but with tools and materials supplied by the contractor. Work on lease differs inasmuch as the private contractor is responsible for the housing and maintenance of the prisoner in secure

conditions. Prisoners may also undertake additional discretionary

work of a gainful nature within certain limitations laid down by

the prisons administration.

There are some 140 penal institutions of various types with a

capacity for approximately 15,000 inmates. Of these about sixtyfive are intended to house short-term (sixty-day maximum) or re- mand prisoners; six are intended for long-term prisoners; twentythree are correctional institutions for females and are supervised

by a Catholic order of nuns; one is an open prison, located on Isla Santa Maria, southwest of Concepcion; one is a special institution

for juvenile offenders; and the remainder house prisoners serving

sentences of between sixty-one days and five years. These are administered by the Gendarmerie, or Judicial Police of Chile (Gendarmeria de Chile), which reports to the Ministry of Justice and

numbers approximately 4,000 members.

A combination of social and political factors have inflated the

prison population relative to its capacity; in 1990 it exceeded 25,000

inmates. Some 60 percent of these were on remand awaiting trial. After the riots of 1980, the military regime was widely condemned

for crowding 1,800 inmates into Santiago's San Bernardo Prison.

However, the same institution, designed to hold 800, housed 3,300

inmates during the third quarter of 1990.

Terrorism

During the first five years of the Pinochet regime (1973-78), the

armed forces and security forces successfully contained left-wing

resistance against the government. Many members of Chile's oldest left-wing extremist group, the Movement of the Revolutionary Left (Movimiento de la Izquierda Revolucionaria—MIR),

which was founded in 1965 and had close ties to Cuba, were killed or exiled. Nevertheless, the MIR remnants, under the leadership

of the late Salvador Allende's nephew, Andres Pascal Allende,

336
National Security

continued to operate a small underground network in Chile. The

MIR's principal leader, Miguel Enriquez, returned clandestinely

to Chile in 1978 to revitalize the movement and organize for armed

struggle and was soon joined by newly infiltrated cadres who had

been trained in Cuba and Nicaragua. The security forces kept the

MIR off balance, however, and Enriquez was killed in September

1983.

Several new left-wing terrorist groups emerged in the early 1980s.

One was the United Popular Action Movement-Lautaro (Movimiento de Accion Popular Unitario-Lautaro—MAPU-L), a splinter

of the United Popular Action Movement (Movimiento de Accion

Popular Unitario—MAPU), a party founded in 1969 by a breakaway group from the Christian Democrats. Many MAPU leaders

embraced Marxist positions, but the party was not a terrorist group.

In December 1982, the MAPU-L established a youth group, the

Lautaro Youth Movement (Movimiento de Juventud Lautaro

MJL), and a group dedicated to the overthrow of the military

government, the Lautaro Popular Rebel Forces (Fuerzas Rebeldes

Populares Lautaro—FRPL). The Manuel Rodriguez Patriotic

Front (Frente Patriotica Manuel Rodriguez—FPMR), an armed

group affiliated with the Communist Party of Chile (Partido

Comunista de Chile—PCCh), was formed in 1983. In response

to increased armed attacks, the regime promulgated the 1984 Antiterrorist Law, which greatly expanded the list of crimes that could

be categorized as terrorism. In the second half of the 1980s, the FPMR became the dominant

terrorist group, emerging as a sophisticated, well-trained, and well- supported terrorist organization. Just how strong it was became

evident in August 1986 when the security forces captured a huge

FPMR arms cache that was traced to Cuba. That September

FPMR commandos nearly succeeded in assassinating Pinochet with

M-16 assault rifles and antitank rockets. In response to these two

events, Pinochet declared a state of siege and mounted an offensive against the FPMR and MIR.

Intensified police and security-service pressure on the FPMR

and MIR continued throughout 1987, inhibiting the groups' activities. That year the FPMR splintered as a result of the PCCh's

denunciation of violence; the breakaway Maoist-oriented FPMRAutonomous (FPMR-Autonomo—FPMR-A) became the most active left-wing terrorist group, whereas the FPMR followed the

PCCh's line and laid down its arms after the restoration of democracy in 1990. Mainly as a result of FPMR-A activities, terrorist at- tacks increased in the late 1980s.

337
Chile: A Country Study

Meanwhile, the security forces failed to apprehend any members of right-wing extremist groups, such as the Chilean AntiCommunist Action Group (Accion Chilena Anticomunista

AChA) and the Nationalist Combat Front (Frente Nacionalista de

Combate—FNC). The ability of these groups to operate with apparent impunity led to speculation in the late 1980s that their ac- tions were unofficially sanctioned by some officials in the security

forces. The rationale for continued left-wing subversion and right-wing

counterterror effectively vanished with the return of civilian government in 1990. Many left-wing extremists who had fled the country following the 1973 coup were allowed to return in 1990.

Nevertheless, left-wing terrorism did not disappear. Within a few

months after President Aylwin's accession to power, the FPMRA and MJL showed that they remained committed to armed struggle and were responsible for most of the increased number of ter- rorist incidents in the early 1990s. The total number of documented

terrorist actions during the first year of the Aylwin government was 207 (including 148 attacks on buildings and other properties),

compared with 465 similar actions during 1984 and 401 in 1985

two peak years for terrorist activity during the latter half of the

period of military rule. The Aylwin government's attempts to control terrorism were

quite successful. In 1991 it expanded training and increased

efforts by the Investigations Police and the Carabineros. Police

improved their counterterrorism capabilities, surpassing the effec- tiveness of the military government. This was made evident by their success in arresting numerous leaders and in uncovering several

safe houses and training sites used by Chilean terrorists. By early

1993, more than 200 terrorist militants were under indictment. The

capture of many top leaders of the MAPU-L and FPMR-A crippled these organizations, and terrorist incidents declined. The Aylwin government appointed special investigating judges to try the more serious cases of terrorism, such as the assassination of Senator Jaime Guzman Errazuriz on April 1, 1991.

National Security Outlook

Neither terrorism nor foreign military aggression posed a significant threat to Chilean national security in early 1994. The es- tablishment of democratic governments in both Argentina and Chile

has resulted in unprecedented economic, political, and even military cooperation between the two countries. By early 1994, both

countries had ratified the Tlatelolco Treaty, which bans the development of nuclear weapons.

338
National Security

Nevertheless, many Chileans believe there is a constant threat

from neighboring countries. Consequently, Chile is attempting to maintain a credible deterrent force. Occasional border disputes still occur, so Argentina, Chile, and Peru attempt to be prepared to use military force, if necessary, in defense of their perceived national interests. The overall situation of the Chilean Armed Forces

in early 1994 was positive, but modernization of their forces had

become a priority. Despite the lifting of the arms embargo, modernization was continuing to a significant extent within the framework

of the national arms industry and indigenous technology. At the same time, the armed forces were looking to the European and United States arms markets for more advanced equipment to compete,

for example, with the sale of thirty-six United States-made A-4M

Skyhawk bombers to Argentina. It would be ironic, however, if the democratic governments in Argentina and Chile were to become involved in an arms race over mutual fears that the other

side had a slight military supremacy.

Agustm Toro Davila's Sintesis historico militar de Chile provides

a good summary of Chile's military history from the earliest times

to the 1891 Civil War. Frederick M. Nunn's The Military in Chilean

History and Chilean Politics, 1920-1931 are highly recommended.

Despite its unwieldy title, Theodorus B.M. Mason's The War on

the Pacific Coast of South America Between Chile and the Allied Republics

of Peru and Bolivia, 1879-81 (published in 1883) provides a concise

history of the War of the Pacific. A much more recent and well- documented study is William F. Sater's Chile and the War of the Pacific. Roberto Querejazu Calvo's weighty Guano, salitre, y sangre is probably the best single-volume history of the War of the Pacific,

despite a slight pro-Bolivian bias. Daniel Prieto Vial's Defensa Chile, 2000 provides an interesting

insight into at least one geostrategist's views of the direction that

Chile's defense policies should take. A somewhat conflicting view

of the subject from an ostensibly economic viewpoint is Fernando

Bustamente, Miguel Navarro, and Guillermo Patillio's ^Cual debe

ser el gasto militar en el Chile de los 90? The best global treatment of

the contemporary Chilean defense structure is Raul Sohr's Para

entender a los militares. The same author's study of Chile's defense

industry in La industria militar chilena is also definitive.

On the subject of the Chilean Army, the "Chile" section ofJohn

Keegan's World Armies is useful, and Cuatro siglos de uniformes en Chile

by Alberto Marquez Alison and Antonio Marquez Alison, in

339
Chile: A Country Study

addition to being the definitive work within its own field, provides

a wealth of historical information beyond the limitations implied

by its title. The same may be said of RJ. Bragg and Roy Turner's Parachute Badges and Insignia of the World and, to a lesser degree,

of Bert Campbell and Ron Reynolds's Marine Badges and Insignia

of the World. Emilio Meneses Ciuffardi's El factor naval en las rela- ciones entre Chiley los Estados Unidos, 1881-1951 is essential reading on modern Chilean naval history and is much broader in scope

than its tide implies. Rodrigo Fuenzalida Bade's four-volume historical work, La armada de Chile desde la alborada al sesquicentenario,

1813-1968, is unmatched by any comparable history of the army

or air force. The history of the Carabineros remains to be written.

Even the English-language professional and technical press tends

to ignore the subject of Latin American defense, and the best sources of current and relatively objective information on the subject are

the Spanish monthly journal Defensa Latinoamericana and the

German-published, Spanish-language journal Tecnologia Militar,

which also has an English version, Military Technology. (For further

information and complete citations, see Bibliography.)

340
Appendix

Table

1 Metric Conversion Coefficients and Factors

2 Population by Selected Native American Group, 1992

3 Population by Region, Gender, Urban-Rural Breakdown, and

Persons of Foreign Birth, 1992

4 Area and Population Density of the Regions, Selected Years,

1980-93

5 Growth of Santiago's Population, Selected Years, 1865-1992

6 Distribution of Agricultural Landownership, 1965, 1973, and

1987

7 Composition of the Population and Labor Force, 1987-91

8 Employed Population by Sector, 1987-91

9 Index of Real Wages and Salaries, 1978-93

10 Average Monthly Wage by Wage-Earning Group, 1989

11 Evolution of Unemployment, 1960-92

12 Distribution of Personal Income by Decile in Metropolitan

Region of Santiago, 1969, 1979, and 1989

13 Distribution of Household Consumption by Quintile in Metropolitan Region of Santiago, Selected Years, 1969-91

14 Health Indicators, Selected Years, 1960-91

15 Public and Private Education by Education Level, 1981 and

1986

16 Population by Gender and Declared Religious Affiliation, 1992

17 Opinions Regarding the Legalization of Divorce, December

1990

18 Opinions Regarding Abortion, December 1990

19 Birthrates in and out of Wedlock, Selected Years, 1965-88

20 Gross Domestic Product (GDP) by Sector, 1989, 1990, and 1991

21 Index of Manufacturing Production in Selected Sectors,

1988-92

22 Mining Output, 1991 and 1992

23 Copper Production, 1987-92

24 Agricultural and Forestry Exports, 1989, 1990, and 1991

25 Fruit Production, Crop Years 1987-88 to 1990-91

26 Yields of Principal Agricultural Products, Crop Years 1986-87

to 1990-91

27 Fishing Industry Exports, 1987-91

28 Forest Area Planted by Public Sector and Private Sector,

1982-90

341
Chile: A Country Study

29 Electric Energy Production by Producer, 1988-92

30 Public-Sector and Private-Sector Construction, 1987-91

31 Key Economic Indicators, 1988-92

32 Direction of Trade, 1989-92

33 Public-Sector Finance, 1990-93

34 Electoral Results for the Chamber of Deputies, March 1973

35 Electoral Results of the Presidential Elections of December 14,

1989

36 Electoral Results for the Chamber of Deputies and Senate,

December 14, 1989

37 Presidencies, Cabinet Changes, and Ministerial Turnovers,

1932-41 and 1946-73

38 Administrative Divisions and Their Capitals, 1993

39 National-Level Results of the Municipal Elections ofJune 23,

1992

40 Ideological Orientation of Electorate, June 1990 to March 1993

41 Party Orientation of Electorate, December 1990 to March 1993

42 Regional-Level Electoral Results of the Presidential Elections

of December 11, 1993

43 Major Army Equipment, 1993

44 Major Naval Equipment, 1993

45 Major Air Force Equipment, 1993

46 Major Carabineros Equipment, 1993

47 National Crime Statistics, Selected Years, 1980-91

342
Appendix

Table 1. Metric Conversion Coefficients and Factors When you know Multiply by To find

Millimeters 0.04 inches Centimeters 0.39 inches Meters 3.3 feet Kilometers 0.62 miles Hectares (10,000 m2

) 2.47 acres Square kilometers 0.39 square miles Cubic meters 35.3 cubic feet Liters 0.26 gallons Kilograms 2.2 pounds

Metric tons 0.98 long tons

1.1 short tons 2,204 pounds

Degrees Celsius 1.8 degrees Fahrenheit

(Centigrade) and add 32

Table 2. Population by Selected Native American Group, 1992 * (in thousands of persons age fourteen and over)

Mapuche Aymara Rapa Nui Total Age-Group Males Females Males Females Males Females Males Females 14-24 125.2 119.0 6.8 5.9 2.6 3.413 4.7 128.3 25-39 176.5 166.5 8.4 7.9 3.3 4.318 8.2 178.7 40-49 73.9 70.1 4.0 4.0 1.3 1.77 9.2 75.8 50-64 65.7 67.0 3.7 3.7 1.4 2.0 70.8 72.7 65 and over 29.5 34.7 1.9 2.2 0.7 1.03 2.1 37.9 TOTAL 470.7 457.3 24.9 23.6 9.4 12.5 505.0 493.4

* Figures may not add to totals because of rounding. Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Resultados

oficiales: Censo de poblacion, 1992, Santiago, 1993, 69.

343
Chile: A Country Study

Table 3. Population by Region, Gender, Urban-Rural Breakdown,

and Persons of Foreign Birth, 1992

Region Males Females Total

I . . Tarapaca 171,356 168,223 339,579

II . . Antofagasta 206,786 203,938 410,724

Ill Atacama 117,835 113,038 230,873 IV Coquimbo 249,578 254,809 504,387

V . . Valparaiso 670,889 713,447 1,384,336 VI Libertador General Bernardo O'Higgins 353,379 342,990 696,369 VII . . Maule 420,800 415,341 836,141 VIII Bio-Bio 857,343 876,962 1,734,305 IX La Araucama 389,074 392,168 781,242 X . . Los Lagos 475,758 473,051 948,809 XI Aisen del General Carlos Ibanez del Campo 42,410 38,091 80,501 XII Magallanes y La Antartica Chilena 74,669 68,529 143,198 Metropolitan Region of Santiago 2,523,377 2,734,560 5,257,937 TOTAL 6,553,254 6,795,147 13,348,401 Urban 5,364,760 5,775,645 11,140,405 Rural 1,188,494 1,019,502 2,207,996 Persons of foreign birth 58,204 56,393 114,597

Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Resultados

oficiales: Censo de poblacion, 1992, Santiago, 1993, 68.

344
Appendix * H MM

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345
Chile: A Country Study

Table 5. Growth of Santiago's Population, Selected Years, 1865-1992

Percentage of Total Year Population Percentage Increase Population 1865 115,377 n.a. 6.3 1875 129,807 12.5 6.3 1885 189,332 45.8 7.6 1895 256,403 35.5 9.5 1907 332,724 29.8 10.3 1920 507,296 52.5 13.7 1930 712,533 40.5 16.6 1940 952,075 33.6 19.0 1952 1,350,409 41.8 22.8 1960 1,907,378 41.2 25.9 1970 2,730,895 43.2 30.7 1980 3,899,495 42.8 35.1 1992 * 5,170,293 32.6 39.0

n.a. —not available.

* Preliminary census figures. Source: Based on information from Ximena Toledo O. and Eduardo Zapater A., Geografia generaly regional de Chile, Santiago, 1989, 183; and Chile, Instituto Nacional de Estadfsticas, Santiago (various publications).

Table 6. Distribution of Agricultural Landownership,

1965, 1973, and 1987

(in percentages)

Area 1 1965 1973 1987 2

0-5 9.7 9.7 10.0 5-20 12.7 15.7 29.0 20-40 9.4 12.7 15.0 40-80 12.8 19.7 26.0 55.4 2.7 18.0 Reformed sector 3 0.0 39.9 0.0

1 In number of basic irrigated hectares.

2 Estimated.

3 For definition of reformed sector—see Glossary. Source: Based on information from Sergio Gomez and Jorge Echenique, La agricultura chilena, Santiago, 1991, 101, 106.

346
Appendix

Table 7. Composition of the Population and Labor Force, 1987-91 1 (in thousands of persons)

1987 1988 1989 1990 1991

Population

3,812 3,853 3,896 3,939 3,984

. 8,520 8,663 8,809 8,958 9,114

Total population 2 12,333 12,516 12,704 12,897 13,098 Working-age population Labor force 4,354 4,552 4,675 4,729 4,794

. 4,166 4,111 4,134 4,229 4,320

Total working-age population . . 8,520 8,663 8,809 8,958 9,114 Labor force Employed 4,011 4,266 4,425 4,460 4,540

1A A OQC ZjU O Z.A Total labor force 4,355 4,552 4,675 4,729 4,794 Unemployed

Laid-off 285 231 204 229 220

Seeking employment for the 59 55 46 40 34 344 286 250 269 254 Unemployment rate 3 7.9 6.3 5.3 5.7 5.3 6.5 5.1 4.4 4.9 4.6

1 Surveys conducted in October-December periods.

2 Figures may not add to totals because of rounding.

3 In percentages.

Table 8. Employed Population by Sector, 1987-91 1 (in thousands of persons)

1991 2 Sector 1987 1988 1989 1990 Number Percentage

Agriculture, forestry, and

fishing 837 865 857 866 881 19.2 Mining n.a. n.a. n.a. 101 n.a. 2.3 Manufacturing 607 670 746 716 753 16.0

Electricity, gas, and

water 25 25 23 21 21 0.5 208 276 299 286 321 6.4 690 731 756 788 774 n.a. Financial services 177 182 192 202 228 22.2 Transportation and

communications .... 253 274 301 309 308 7.0 1,132 1,155 1,150 1,178 1,173 26.4 Unspecified 1 1 1 0.0 TOTAL 3,930 4,179 4,324 4,467 4,460 100.0

n.a. —not available.

1 Surveys conducted in October-December periods.

2 Figures for number of employees and for percentages of employees are taken from different sources. Source: Based on information from Banco Central de Chile, Boletin Mensual [Santiago] (var- ious issues); and Chile, Instituto Nacional de Estadfsticas, Compendio estadistico, 1991, Santiago, 1991, Table 141-02.

347
Chile: A Country Study

Table 9. Index of Real Wages and Salaries, 1978-93

(1970 = 100)

Year December Index Year December Index 1978 76.0 82.2

89.3

97.3 97.6 86.9

87.1 83.2

1986 84.9 1979 , 1987 84.7 1980 1988 90.3 1981 1989 92.0 1982 1990 93.7 1983 . 1991 98.3 1984 1992 102.8 1985 1993 * 106.4

* April. Source: Based on information from Corporacion de Investigaciones Economicas para

Latinoamerica, "Set de estadfsticas economicas," Coleccion Estudios de CIEPLAN

[Santiago] , No. 92, July 1992, Table 11; and Corporacion de Investigaciones Economicas para Latinoamerica, "Set de estadfsticas economicas," Coleccion Estudios de CIEPLAN [Santiago], January 1994, Table 12.

Table 10. Average Monthly Wage by Wage-Earning Group, 1989

(in United States dollars) *

Wage-Earning Group Wage

Executives and top administrators 2,327

Professionals and technicians 858

Retail sales people 565

Specialized employees 526

Administrative personnel 444

Skilled workers 325

Unskilled workers 251 Domestic and other personal service workers 250

* Exchange rate 297 Chilean pesos = US$1

Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Compendio

estadistico, 1990, Santiago, 1990, 42-43.

348
Appendix

Table 11. Evolution of Unemployment, 1960-92

(in percentages)

Years Unemployment Rate of Unemployment 1

1960-69 6.4 6.4 1970-74 5.3 5.3 1975-79 13.4 17.6 1980-84 14.3 22.3 1985-89 8.1 11.6 1990 6.0 6.0 1991 6.5 6.5 1992 2 4.8 4.8

1 Includes the Minimum Employment Program (Programa de Empleo Mmimo—PEM) and the Employment Program for Heads of Household (Programa de Ocupacion para Jefes de Hogar—POJH),

which are makeshift work programs financed by the state to help the jobless.

2 Average for the first four months. Source: Based on information from Programa Economfa del Trabajo, Serie de indicadores economico sociales: Series anuales, Santiago, 1990, 51; and Corporacion de Investiga- ciones Economicas para Latinoamerica, "Set de estadfsticas economicas," Coleccidn Estudios de CIEPLAN [Santiago], No. 92, July 1992, Table 9.

Table 12. Distribution of Personal Income by Decile in Metropolitan Region of Santiago, 1969, 1979, and 1989

(in cumulative percentages)

Decile 1969 1979 1989

1 1.3 1.4 1.2 2 3.7 3.8 3.5

3 7.0 7.0 6.6 4 11.3 11.1 10.6

5 16.7 16.1 15.7 6 23.4 22.6 22.0

7 32.0 31.0 30.0 8 43.6 42.8 41.0

9 61.0 60.9 58.4

10 100.0 100.0 100.0

Source: Based on information from Programa Economfa del Trabajo, Serie de indicadores economico sociales: Series anuales, Santiago, 1990, 68.

349
Chile: A Country Study

Table 13. Distribution of Household Consumption by Quintile

in Metropolitan Region of Santiago, Selected Years, 1969-91

(in percentages)

Quintile 1969 1978 1988 1989 1990 1991

1 7.7 5.2 4.4 4.6 4.9 5.5 2 11.8 9.3 8.2 8.0 8.4 9.2

3 15.6 13.6 12.7 11.3 11.5 12.4 4 20.6 21.0 20.1 16.6 17.2 18.2

5 44.5 51.0 54.6 59.5 58.0 54.7

Source: Based on information from Joaquin Vial, Andrea Butelmann, and Carmen Celedon

Cariola, "Fundamentos de las polfticas macroeconomicas del gobierno democratico

chileno (1990-1993)," Coleccidn Estudios de CIEPLAN [Santiago], No. 30, December 1990, 60; and La Nation [Santiago], December 27, 1992, 15.

Table 14. Health Indicators, Selected Years, 1960-91

Indicator I960 1970 1980 1985 1991

Life expectancy at birth 1 57.1 63.6 71.0 71.5 72.0

Birthrate 2 37.5 26.4 22.2 21.6 22.4

12.5 8.7 6.6 6.1 5.6 119.5 82.0 33.0 19.5 14.6 Under age 5 mortality 4 n.a. n.a. 40.0 26.0 5 23.0 Maternal mortality 3 2.99 1.68 0.73 0.47 5 0.35

Infant diarrhea mortality 3 n.a. 14.6 1.9 0.7 5 0.2

Infant bronchopneumonia

mortality 3 n.a. 23.6 3.8 2.6 5 1.6 Percentage of dwellings with running water 59 67 72 n.a. n.a.

n.a. —not available.

1 In years.

2 Per 1,000 population.

3 Per 1,000 live births.

4 Per 1,000 in 0-4 age-group.

5 Figure for 1986. Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Compendio

estadistico, 1993, Santiago, 1993, Tables 122-03, 122-04, and 162-07; Chile, Instituto Nacional de Estadfsticas, Informe demogrdfico de Chile: Censo 1992, Santiago,

1993, 12, Table 2; and Ernesto Medina Lois, "Situacion de salud en Chile," in Jorge Jimenez de la Jara (ed.), Chile: Sistema de salud en transition a la democracia, Santiago, 1991, 32, Table 16.

350
Appendix

Table 15. Public and Private Education

by Education Level, 1981 and 1986 1 (in thousands of students)

Year and Education Level Public Private Total

1981

91 37 128

1,756 451 2,208

18 1 20 Secondary (science and humanities) 354 99 454 Secondary (technical and professional) , 141 46 187 u: „i c3 i iy Total 1981 , . . , 2,434 680 3,114 1986

115 95 210

.... 1,378 705 2,083

.... 17 13 30 Secondary (science and humanities) 370 232 602 80 63 142 Higher , 79 129 208

Total 1986 2,039 1,236 3,275

1 Figures may not add to totals because of rounding.

2 Basic is equivalent to primary. Source: Based on information from David E. Hojman, Chile: The Political Economy of Development and Democracy in the 1990s, Pittsburgh, 1993, 38.

Table 16. Population by Gender and Declared Religious Affiliation, 1992

(persons over fourteen years of age)

Religious Affiliation Males Females

Catholic

Other religion . , No religion

3,660,367 530,369

39,299

196,198 364,582

3,864,016 668,016

40,960 213,712

197,703 TOTAL 4,790,815 4,984,407

* For definition of Evangelical —see Glossary. Source: Based on information from Chile, Instituto Nacional de Estadisticas, Resultados

oficiales: Censo de poblacion, 1992, Santiago, 1993, 29.

351
Chile: A Country Study

Table 17. Opinions Regarding the Legalization ofDivorce, December 1990 * (in percentages agreeing or disagreeing with

the following statement: "In your opinion,

should Chile have a law permitting

divorce?")

Sector Yes No

Males 59.2 36.9

52.8 44.1 Ages 18 to 34 64.1 32.3 Ages 35 to 54 50.7 44.8 43.8 54.9 High socioeconomic status 70.1 15.5 55.8 41.7

52.1 45.4

All Catholics 54.6 41.1

All Protestants 47.2 51.0

39.5 57.1 35.5 62.9 CHILE 55.6 40.9

* Poll conducted by Centro de Estudios Publicos and Adimark. Percentages do not add to 100.0 be- cause remainder had no opinion. Source: Based on information from Centro de Estudios Publicos, "Estudio social de opinion publica, diciembre 1990," Documento de trabajo [Santiago], No. 151, February

1991, 61; and Arturo Fontaine Talavera and Herald Beyer, "Retrato del movi- miento evangelico a la luz de las encuestas de opinion publica," Estudios Publicos [Santiago], No. 44, Spring 1991, 95.

352
Appendix

Table 18. Opinions Regarding Abortion, December 1990 * (in percentages responding to the following

question: "There are different opinions

regarding abortion. Which of

these corresponds best with

what you think?")

Should Be Permitted To All Only in Special Women Qualified Should Not Be

Sector Who Want It Cases Permitted

5.8 45.3 47.4 Females 4.4 44.3 50.7 Ages 18 to 34 6.0 46.7 46.5 Ages 35 to 54 3.9 41.8 53.3

4.5 45.0 48.5 High socioeconomic status . 8.0 78.0 14.0 Middle socioeconomic status 5.7 47.1 45.8

3.2 33.5 62.5

All Catholics 4.4 48.6 46.3

1.9 27.7 69.3

Practicing Catholics 0.7 40.9 58.2

Practicing Protestants 0.1 17.6 82.3 CHILE 5.0 44.7 49.2

* Poll conducted by Centro de Estudios Publicos and Adimark. Percentages may not add to 100.0 be- cause remainder had no opinion. Source: Based on information from Centro de Estudios Publicos, "Estudio social de opin- ion publica, diciembre 1990," Documento de trabajo [Santiago], No. 151, February

1991, 63; and Arturo Fontaine Talavera and Herald Beyer, "Retrato del movi- miento evangelico a la luz de las encuestas de opinion publica," Estudios Publicos [Santiago], No. 44, Spring 1991, 96.

Table 19. Birthrates in and out of Wedlock, Selected Years, 1965-88

Births per 1 ,000 Population Percentage of Births Year In Wedlock Out of Wedlock out of Wedlock

1965 29.3 6.2 17.5 1970 21.5 5.3 19.8 1975 19.6 5.0 20.3 1980 16.3 5.9 26.6 1985 14.8 6.9 31.8 1988 15.6 7.8 33.5

Source: Based on information from Ernesto Medina Lois, "Situacion de salud en Chile,"

in Jorge Jimenez de la Jara (ed.), Chile: Sistema de salud en transition a la democracia, Santiago, 1991, 30.

353
Chile: A Country Study

Table 20. Gross Domestic Product (GDP) by Sector, 1989, 1990, and 1991

(in millions of 1977 Chilean pesos) 1

Sector 1989 1990 1991

39,737 40,194

3,964 4,294 35,629 35,378 37,060

98,983 99,043 104,451

Electricity, gas, and water 11,575 11,920 12,847 25,559 28,247 29,581 84,622 86,701 94,196

Transportation and communications 30,286 33,430 37,419

139,269 141,903 149,111 TOTAL 468,243 480,323 509,153 Rate of growth of GDP (in percentages) 10.0 2.1 6.0

1 For value of the Chilean peso—see Glossary.

2 Includes financial, education, and other services. Source: Based on information from Banco Central de Chile, Direction de Estudios, Santiago (various publications).

Table 21. Index ofManufacturing Production in Selected Sectors, 1988-92

(1979 = 100)

Sector 1988 1989 1990 1991 1992

139.5 149.8 142.1 144.7 169.3

Textiles 120.8 122.4 116.4 126.4 121.0 Footwear 71.4 79.7 75.5 89.6 92.7 279.6 319.7 329.6 329.8 322.0 Chemicals 118.2 119.8 120.1 129.7 138.6

122.1 172.9 171.8 187.3 214.8

85.2 107.8 119.4 114.6 170.9 Transportation equipment 59.4 75.3 65.6 70.2 81.7 ALL MANUFACTURING 126.4 137.2 136.3 144.5 165.5

Source: Based on information from Chile, Instituto Nacional de Estadfsticas, Santiago (var- ious publications); and Chile, Instituto Nacional de Estadfsticas, Compendio estadistico, 1993, Santiago, 1993, Table 233-01.

354
Appendix

Table 22. Mining Output, 1991 and 1992

(in thousands of tons unless otherwise indicated)

Mineral 1991 1992 Percentage Change

1,363.7 1,445.0 6.0 Molybdenum (fine content) 11.1 10.4 -6.3 Zinc (fine content) 22.7 23.2 2.2 Manganese 33.2 37.4 12.7 6,238.1 5,230.5 -16.2

19.6 25.3 29.1

Silver (tons, fine content) 431.7 783.2 81.4 Lead (tons, fine content) 817.0 251.0 69.2

Source: Based on information from "Business Outlook: Chile," Business Latin America, De- cember 21, 1992, 3.

Table 23. Copper Production, 1987-92

(in thousands of tons, refined)

1987 1988 1989 1990 1991 1992 Refined 970.3 1,012.8 1,071.0 1,191.6 1,228.3 1,101.3

Blister 136.6 176.6 195.6 136.9 67.8 61.6 In bulk 311.2 261.6 342.7 259.9 518.2 781.0 TOTAL* 1,418.1 1,451.0 1,609.3 1,588.4 1,814.3 1,943.8

* Figures may not add to totals because of rounding. Source: Based on information cited by Sebastian Edwards from Comision Chilena del Cobre,

Santiago; and Chile, Instituto Nacional de Estadfsticas, Compendio estadistico, 1993, Santiago, 1993, Table 232-02.

355
Chile: A Country Study

Table 24. Agricultural and Forestry Exports, 1989, 1990, and 1991

(in millions of United States dollars)

Product 1989 1990 1991

Agriculture Fresh fruits Grapes 273.9 379.3 49.5 Other 69.6 361.5 941.5

343.5 740.8 991.0 Other 153.1 142.7 144.9 496.6 883.5 1,135.9

Forestry

Basic forestry 34.9 50.6 38.5 Pulp 39.2 16.5 25.8 Other 1.3 9.3 3.0 Total basic forestry 75.4 76.4 67.3 Paper products 422.5 423.2 445.6

291.5 370.3 427.5

789.4 869.9 940.4 TOTAL 1,286.0 1,753.4 2,076.3 Source: Based on information cited by Sebastian Edwards from Banco Central de Chile, Santiago.

Table 25. Fruit Production, Crop Years 1987-88 to 1990-91

(in thousands of tons)

Fruit 1987-88 1988-89 1989-90 1990-91

Apples 630.0 660.0 690.0 750.0

Apricots 14.5 16.0 19.5 11.2 Avocados 28.0 39.0 37.6 39.0 Grapes 516.0 547.0 660.0 650.0 Lemons 60.0 72.5 86.0 88.0 Oranges 96.0 99.0 97.2 99.0 Peaches 92.4 97.4 112.0 113.0 Pears 99.0 119.0 139.6 165.0 Plums 85.0 98.5 110.0 100.0 Source: Based on information cited by Sebastian Edwards from Chile, Instituto Nacional

de Estadisticas, Santiago.

356
Appendix

Table 26. Yields of Principal Agricultural Products, Crop Years 1986-87 to 1990-91

(in quintals per hectare)

Crop 1986-87 1987-88 1988-89 1989-90 1990-91

Barley 29.5 33.9 34.6 34.8 33.7 Beans 9.5 13.2 11.5 12.7 13.2 Corn 71.2 73.2 75.3 81.4 83.9 Peas 8.6 7.8 8.9 n.a. n.a. Potatoes 126.0 149.8 140.6 150.3 142.2 Rice 39.3 41.7 43.1 41.7 39.4 Sugar beets 493.6 511.6 544.5 537.5 554.6 Sunflowers 21.0 21.0 21.2 23.4 23.9 Wheat 27.1 30.1 32.7 29.5 34.1

n.a. —not available. Source: Based on information cited by Sebastian Edwards from Chile, Instituto Nacional

de Estadi'sticas, Santiago.

Table 27. Fishing Industry Exports, 1987-91

(in millions of United States dollars)

Product 1987 1988 1989 1990 1991 Agar 14 19 22 32 28 Crustaceans (canned) 4 6 29 28 26 Crustaceans (fresh and frozen) 31 25 3 3 2 Fish (canned) 29 32 42 42 36

Fish (fresh and frozen) 110 163 209 325 407 359 459 515 380 466

Fish oil 16 23 23 14 26 ... 49 49 41 41 58 Mollusks (fresh and frozen) 24 37 24 17 20

9 10 12 19 18 Other 6 13 11 15 17 TOTAL * 652 837 932 915 1,104

* Figures may not add to totals because of rounding. Source: Based on information from Chile, Ministry of Foreign Affairs, General Directorate of International Economic Relations, Export Promotion Department, ProChile [Santiago], No. 43, September-October 1992, 6.

357
Chile: A Country Study

Table 28. Forest Area Planted by Public Sector and Private Sector, 1982-90

(in hectares)

Year Public Sector Private Sector Total 1982 41 68,545 68,586 1983 21,811 54,469 76,280 1984 40,302 53,300 93,602 1985 24,193 72,084 96,277 1986 n.a. 66.193 66,193 1987 66,441 66,441 1988 72,944 72,944 1989 n.a. 86,704 86,704 1990 n.a. 94,130 94,130

n.a. —not available. Source: Based on information from Banco Central de Chile, Direccion de Estudios, Indicadores economicos y sociales regionales, 1980-89, Santiago, 1991, 58.

Table 29. Electric Energy Production by Producer, 1988-92

(in millions of kilowatts)

Company 1988 1989 1990 1991 1992

Chilectra 1 2,210.4 3,886.6 4,243.0 2,516.4 n.a. Colbun 2,510.7 2,005.4 1,926.4 2,818.3 n.a. ENDESA 2 7,420.0 6,648.9 6,607.5 6,434.1 n.a. Pilmaiguen 202.4 231.4 269.2 2.315.0 n.a. Pullingue 169.1 170.0 228.8 209.8 n.a. Other 4,384.0 4,785.2 5.046.5 5,514.0 n.a. TOTAL 16.896.6 17,727.5 18.321.4 19,807.6 22,167.3

n.a. —not available.

1 Compania Chilena de Electricidad (Chilean Electric Company).

2 Empresa Nacional de Electricidad (National Electric Company).

Source: Based on information cited by Sebastian Edwards from Chile, Instituto Nacional

de Estadisticas, Santiago; and Chile, Instituto Nacional de Estadisticas, Compendio

estadistico, 1993; Santiago. 1993. Table 234-01.

358
Appendix

Table 30. Public-Sector and Private-Sector Construction, 1987-91

(in square meters)

Sector 1987 1988 1989 1990 1991

Public sector Housing 91,677 98,797 72,550 13,396 35,357

Industry 14,512 6,347 9,125 24,696 24,581

Services 168,337 148,439 145,188 139,929 177,772

Total public sector . 274,526 253,583 226,863 178,021 237,710

Private sector 4,498,966 5,331,605 6,309,495 6,065,258 7,404,551 TOTAL 4,773,492 5,585,188 6,536,358 6,243,279 7,642,261

Source: Based on information cited by Sebastian Edwards from Chile, Instituto Nacional

de Estadfsticas, Santiago.

359
Chile: A Country Study

Table 31. Key Economic Indicators, 1988-92

1988 1989 1990 1991 1992 Gross domestic product (GDP; in millions of United States dollars) 29,698 32,289 33,297 35,297 33,700 Real GDP growth (in percentages) 7.4 10.0 2.1 6.0 10.4 Consumer price inflation (average annual percentage) 12.7 21.4 27.3 18.7 12.7 Population (in millions) 12.8 13.0 13.0 13.2 13.4 GDP per capita (in United States

dollars) 2,330 2,520 2,527 2,637 2,515

Exports, f.o.b. (in millions of United

States dollars) 1 7,052 8,080 8,310 8,929 9,986

Imports, f.o.b. (in millions of United

States dollars) 4,833 6,502 7,037 7,353 9,237 Current account (in billions of United

States dollars) -0.17 -0.77 -0.82 0.09 -0.50

Reserves, excluding gold (in billions of United States dollars) 3.16 3.60 6.07 7.04 9.17

Total external debt (in billions of United States dollars) 19.0 17.4 18.6 17.4 18.9 Debt-service ratio (in percentages) 26.9 27.7 25.9 21.5 18.6 Exchange rate (average, Chilean pesos

to United States dollar) 2 245.1 267.2 305.1 349.4 362.6 Investment (as a percentage of GDP,

in constant Chilean pesos) 17.0 18.6 19.5 18.2 23.0

1 f.o.b. —free on board.

2 For value of the Chilean peso—see Glossary. Source: Based on information from Economist Intelligence Unit, Country Report: Chile [London], No. 2, 1993, 3; Inter-American Development Bank, Economic and Social Progress in Latin America: 1992 Report, Washington, October 1992, 286; and Inter- American Development Bank (various other sources).

360
Appendix

Table 32. Direction of Trade, 1989-92

(in millions of United States dollars)

Country 1989 1990 1991 1992

Exports, f.o.b. 1 Argentina 110 114 257 462

243 235 172 487 448 451

Britain 499 559 408 572 China 53 31 79 262

9.QC oyo Germany 2 914 941 709 604

40 58 135

Italy 410 402 345 388 Japan 1 ,388 1 ,644 1,707 30J 334

74 146 1 73 South Korea ....... 258 259 263 243 oco zoo JO/

a nn OOA ZOU one 491 United States 1,456 1 ,469 1 ,596 1 ,649 mports, c.i.f. 3 Argentina 399 503 554 634

7ft*? JOt oyo QQfi yyo

180 163 187 Canada 107 224 157 149 China n.a. n.a. n.a. 146 France 223 297 241 282 Gabon 33 203 169 152 Germany 2 483 523 498 630

Italy 153 193 177 273 Japan 737 568 646 965 Mexico 117 101 138 178

141 259 199 324 South Korea 165 123 168 250

157 159 148 224

83 82 112 160 United States 1,348 1,373 1,582 1,985

n.a. —not available.

1 f.o.b. —free on board.

2 Includes only West Germany until July 1990; then includes former East Germany.

3 c.i.f. —cost, insurance, and freight. Source: Based on information from Economist Intelligence Unit, Country Report: Chile [London], No. 3, 1993, 7; and Business Latin America, April 1993, 11.

361
Chile: A Country Study

Table 33. Public-Sector Finance, 1990-93

(in percentages of GDP) 1

1990 1991 1992 1993 2

Central government Revenues

Current Tax revenues 14.5 16.9 17.5 18.5 Copper revenues (net) 1.6 1.1 1.3 0.8 Other 4.5 4.6 4.6 5.0 Total current 20.6 22.6 23.4 24.3 Capital 1.4 1.2 1.1 1.0 Total revenues 22.0 23.8 24.5 25.3 Expenditures Current 18.2 19.0 18.2 19.2

3.1 3.3 4.0 4.3 21.3 22.3 22.2 23.5 Overall surplus 0.7 1.5 2.3 1.8 Savings 2.4 3.6 5.2 5.1 2.8 0.6 0.7 0.5 Nonfinancial public sector, overall surplus 3.5 2.1 3.0 2.6 Operational deficit of Central Bank (cash basis) 3

. . . -2.2 -1.1 -1.2 -1.0 Consolidated public sector, overall balance 1.3 1.0 1.8 1.3

1 GDP—gross domestic product.

2 Preliminary.

3 For explanation of Central Bank—see Glossary. Source: Based on information provided by Sebastian Edwards from World Bank, Washington.

Table 34. Electoral Results for the Chamber of Deputies, March 1973 1 Number of

Ideological Orientation Number of Percentage of Deputies and Party Votes Total Votes Elected Right

National Partv 2 777,084 21.1 32 Center

Radical Partv 3 133,751 3.6 19 Christian Democratic Partv 4 1,049,676 28.5 55 1,183,427 32.1 74

Left

Socialist Party 5 678,674 18.4 15 595,829 16.2 22 Total left 1,274,503 34.6 37 TOTAL 2,535.014 87.8 143

1 Parties listed are those that obtained more than 5 percent of the total vote in more than one congressional election.

2 Partido Nacional (PN). In 1973 the National Party was the principal right-wing party.

3 Partido Radical (PR).

4 Partido Democrata Crisnano (PDC).

5 Partido Socialista (PS).

6 Partido Comunista de Chile (PCCh).

Source: Based on information from Chile, Direccion del Registro Electoral, Santiago.

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: s ^ * .S 2

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367
Chile: A Country Study

Table 39. National-Level Results of the Municipal Elections ofJune 23, 1992

Coalitions, Subpacts, and Parties Number of Votes Percentage Concertacion por la Democracia 1 Subpact PDC-PR-PSD-AHV

11 ,OvJxJ ftS^ ,1J/ 1 37 9H Q Partido Radical (PR) 3 314 759 4.9 Partido Social Democratico (PSD) 4 26,788 0.4 52 481 u.oP. Total Snhnart PDC-PR -PSD- AHV 2 249 165 35 1 Snhnart uuuuati PPD-PS x x J—/ x o

Partido por la Democracia (PPD) ^ 590,547 9.2 Partido Socialista (PS) 7 547,079 8.5 Independents 31,106 0.5 Total Subpact PPD-PS 1,168,732 18.2 Total Concertacion por la Democracia 3,417,897 53.3 Partido Comunista de Chile 8 '419|478 6.5 15,505 0.2 Participacion y Progreso 10 860,808 13.4 4,145 0.1 Union Democrata Independiente 13 652,668 10.2 Independents 383,066 6.0 -1,900,687 29.7 Union de Centro Centro 14 519,017 8.1 Independent candidates 136,826 2.1 TOTAL 15 6,409,410 100.0 Number of voting tables: 25,211 (each voting table contains approximately 350 voters) Number of voting sites: 1,626 Registered males: 3,791,364

Registered females: 4,048,644

Total registered: 7,840,008

1 Coalition for Democracy, an alliance of left-of-center parties.

2 Christian Democratic Party.

3 Radical Party.

4 Social Democratic Party.

5 Humanist-Green Alliance, a party.

6 Party for Democracy.

7 Socialist Party.

8 Communist Party of Chile, running under the Allendista Movement of the Democratic Left (MIDA).

9 Liberal Party.

10 Participation and Progress, an alliance of right-of-center parties.

11 National Renewal.

12 National Party.

13 Independent Democratic Union, a party.

14 Union of the Centrist Center, a party.

15 Figures may not add to totals because of rounding. Source: Based on information from Chile, Ministry of Interior, Santiago.

368
Appendix

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369
Chile: A Country Study

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370
Appendix

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371
Chile: A Country Study

Table 43. Major Army Equipment, 1993

Type and Description Country

of Origin In Inventory

Light tanks AMX-13 France M-41 United States M-24 -do- Medium battle tanks AMX-30 France M4A3/M51 Israeli-modified Super-Sherman United States/Israel Armored personnel carriers EE-9 Cascavel Brazil EE- 11 Urutu -do- M-113A1 United States Famae-Mowag Piranha 8x8 Chile/Switzerland Cardoen-Mowag Piranha 6x6 -do- Armored infantry fighting vehicles Mowag Piranha with 90mm gun -do- Mortar carriers Cardoen-Mowag Piranha 120mm -doMortars 60mm M-19 United States 81mm M-29 -do- Famae 60mm Chile Famae 81mm M-l -do- Famae 107mm -do- Famae 120mm (50 self-propelled) -doHotchkiss-Brandt MO-120-M65 France

Recoilless launchers (150 total) 57mm M-18 United States 75mm M-18 -do- 89mm M-20 3.5-inch -do- M40A1 106mm recoilless launcher -doLight antitank guided weapons (3,000 total) Milan 120mm France/Germany

Mamba Germany/South Africa Armbrust 300 80mm Germany

Air defense weapons HSS-639 single 20mm gun Switzerland Oerlikon K 63 twin 20mm gun -do- 35mm twin n.a. L/70 40mm (in storage) n.a. Blowpipe SAM missile launchers Britain

47

5060

21 150

200 300 60-100

50

180

20

50

n.a. 300

n.a.

n.a.15 110

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a. n.a.

100

10024

650

372
Appendix

Table 43. —Continued

Type and Description Country

of Origin In Inventory

Fire-support vehicles Cardoen-Mowag Piranha with 90mm

gun -do- 20

Artillery M-101 105mm United States 74 Oto Melara Model 56 105mm Italy 36 Soltam M-68 155mm towed howitzer . . . Israel 30 Mk F3 SPH 155mm France 10 LFH-18 105mm towed howitzer Germany n.a. Fixed-wing aircraft CASA CN-235 Spain 3 CASA C-212 Aviocar

. -do- 6 PA-31 Piper Navajo United States 3 PA-28 Piper Dakota , -do- 8 Cessna O-l -do- 4 Cessna 337G -do- 3 Cessna Citation (VIP) -do- 1 Cessna R172K -do- 16 Cessna R172 (training) -do- 16 Dassault-Breguet Falcon 200 France 1 DHC-6 Canada 4

Helicopters

Bell UH-1H United States 3

Bell 206B -do- 2 Hughes 530F (armed training) -do- 5 Aerospatiale AS-332B Super Puma .... France 3 Aerospatiale SA-330 Puma -do- 9 Aerospatiale SA-315B Lama -do- 10 Enstrom 280 FX n.a. 14

n.a. —not available. Source: Based on information from The Military Balance, 1993-1994, London, 1993, 179-80; and "World Defence Almanac, 1992-93: The Balance of Military Power," Military Technology [Bonn], 18, No. 1, January 1993, 44.

373
Chile: A Country Study

Table 44. Major Naval Equipment, 1993

In Inventory Country Type and Description of Origin Navy

Missile destroyers County-class Britain Almirante Williams-class (soon to be retired) -doMissile frigates Leander-class -do- Submarines

Oberon-class -do- IKL Type 209/1400 Germany

Fast transports Charles Lawrence-class United States

Missile attack craft Reshev (Sa'ar IV)-class Israel Sa'ar Ill-class -do- Torpedo attack craft Guacolda (Liirssen)-class Germany

Large patrol boats PC-1638-class submarine chaser United States Dabur-class Israel Project Taitao Micalvi-class Chile Corvettes

Abnaki-class former fleet tug United States Amphibious

Maipo (French Batral) medium

landing ship (LSM) France

Elicura-class LSMs Chile

Sail training ships Four-masted schooner Spain

Submarine depot ships 2,600 tons Germany

Transports

2,600 tons Chile Armed tugs Cherokee-class ATF United States Surveying vessels Cherokee-class ATF -do374
Appendix

Table 44. —Continued

Type and Description Country

of Origin In Inventory Naval Aviation

Aircraft EMB-111 AN Bandeirante Brazil EMB-110 CN Bandeirante -do- CASA-212 Aviocars Spain

A-36 Halcon (C-101) Chile/Spain

Piper PA-31 Navajo United States Pilatus PC-7 Switzerland Dassault-Breguet Falcon 200 France P-3 Orion n.a. IAI-1124 Israel Helicopters

AS-332 Super Puma France AS-365 Dauphins -doAlouette-III -do- SA-316 -do- SA-319B Alouette III -do- MBB Bo- 105 Germany

Bell 206B Jet Ranger United States

Bell 476 -do- EMB-111AN Brazil

Marines

Small patrol craft n.a. Amphibious

Transport landing vehicle, tracked, personnel (LVTP-5) n.a. Armored personnel carriers Mowag Roland with Blowpipe SAMs France Towed artillery M-101 105mm howitzers United States M-114 155mm -doCoast guns GPFM-3 155mm -doMortars 50mm -do- 80mm -doService craft n.a. Rescue craft n.a.

Coast Guard

Large patrol boats

Protector-class Britain/Chile Small patrol vessels Anchova-class Brazil

10

30

40

16

36

16

5050

313

10

375
Chile: A Country Study

Table 44. —Continued

Country Type and Description of Origin In Inventory

Ona-class Chile 2 Service launch for search-and-rescue at -do- 1 -do- 1 Fast launch -do- 1 Brazil 2 Chile 10

n.a. —not available. Source: Based on information from The Military Balance, 1993-1994, London, 1993, 179-80; Combat Fleets of the World, 1993, Ed., Bernard Prezelin, Annapolis, 1993, 79-86; and Jane's Fighting Ships, 1993-94, London, 1993, 103-13.

376
Appendix

Table 45. Major Air Force Equipment, 1993

Type and Description Country

of Origin In Inventory

Fighters Northrop F-5E

Northrop F-5F

Dassault Mirage 50CH

Dassault Mirage DCH

Dassault Mirage FCH (Panteras) . Enaer/Dassault Pantera 50C Hawker Hunter FGA-9

Hawker Hunter F-71 Hawker Hunter FR-71 Hawker Hunter T-72

Strike aircraft Enaer/CASA T-36 Halcon trainers and A-36 light-strike aircraft . . . Cessna A-37B

Reconnaissance aircraft Canberra PR-9

Gates Learjet 35A

King Air A-100

Airborne early warning

Boeing 707 Phalcon AEW system . Transports Boeing 707-320, 707-321, 707-331 Lockheed C-130B

Lockheed C-130H

Beech King E 99 King Air, 2 B 200 Super King Air DHC-6-300 Twin Otter CASA 212

Helicopters

Aerospatiale SA-315B Lama

Aerospatiale AS-330 Puma

Bell UH-1D, UH-1H

Bell 212 MBB BK-117

MBB Bo-105CB

Trainers Enaer/CASA T-36

Enaer T-35A, T-35B Pillan Cessna T-37B, T-37C

Support Beech Baron

Beech 99A Petrel Cessna L-19

Piper PA-28-326 Dakota

Extra-300

United States -doFrance -do-

-doChile/France

Britain -do-

-do-

-doChile/Spain United States

Britain United States -doIsrael/Chile

United States -do-

-do-

-do-

-do-

-do- Canada

Spain

France -doUnited States -do- Germany

-doChile/Spain

Chile United States

-do-

-do-

-do-

-do- Germany

13

36

186

8

184

3

2030

4

329

n.a.

314

2

5

1 14

n.a.

16

20

48

26

377
Chile: A Country Study

Table 45. —Continued

Country Type and Description of Origin In Inventory

Air defense 20mm S-639/-665 n.a. n.a. 20mm GAl-COl twin n.a. n.a. 35mm Oerlikon K-63 twin Switzerland 36 Oerlikon K63 twin 35mm gun systems . . -do- n.a. Samantha/Mistral/Mygale systems France 12 -do- n.a. 20mm Famil FAM-2M twin Chile n.a. AS- 11/- 12 air-to-surface n.a. n.a. AIM-90 Sidewinder, Shafir United States/Israel n.a.

Airfield defense vehicles VTP-2 Chile n.a. Carancho 180 -do- n.a.

n.a. —not available. Source: Based on information from The Military Balance, 1993-1994, London, 1993, 179-80; and International Military and Defense Encyclopedia, 2, Washington, 1993, 489.

Table 46. Major Carabineros Equipment, 1993

Type and Description Countryof Origin In Inventory Armored personnel carriers Mowag Roland (6x6) Chile/Switzerland 20 Mortars 60mm n.a. n.a. 80mm n.a. n.a. Fixed-wing aircraft Swearingen SA-226TC Metro United States 4

Piper Navajo twin -do- 4 Cessna 182Q -do- 4 Cessna 206 -do- 2 Cessna 210-M Centurion II -do- 2

Helicopters

MBB Bo-105C, B0-IO6CB, and Bo-105LS Germany 12

Bell 206L3 United States 2

n.a. —not available. Source: Based on information fron The Military Balance, 1993-1994, London, 1993, 181; and "World Defence Almanac, 1992-93: The Balance of Military Power," Military Technology [Bonn], 17, No. 1, January 1993, 47.

378
Appendix

Table 47. National Crime Statistics, Selected Years, 1980-91

Year Robberies Burglaries Rapes Murders 1980 31,679 15,514 694 213

1981 29,896 13,927 709 190 1982 36,570 14,292 820 290 1986 71,150 22,066 783 288

1987 67,775 22,949 829 285 1988 60,659 19,789 765 292 1989 61,018 17,646 582 269

1990 76,709 19,118 753 385

1991 * 87,546 20,132 735 339

* Annualized projections made in early November 1991. Source: Unpublished report submitted by the Carabineros to the government of Chile, November 1991.

379

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413
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Chile: A Country Study

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417

Glossary

Alliance for Progress—Established in 1961 at a hemispheric meeting in Punta del Este, Uruguay, under the leadership of President John F. Kennedy as a long-range program to help develop

and modernize Latin American states through multisectoral

reforms, particularly in health and education. Involved vari- ous forms of foreign aid, including development loans offered

at very low or zero interest rates, from the United States to

all states of Latin America and the Caribbean, except Cuba.

Andean Group—An economic group, also known as the Andean

Pact or the Andean Common Market, created in 1969 by

Bolivia, Chile, Colombia, Ecuador, and Peru (Venezuela joined

in 1973) as a subregional market to improve its members' bargaining power within the Latin American Free Trade Association (LAFTA

q. v.). Its commission meets three times a year

to encourage increased trade and more rapid development and

to plan and program economic subregional integration. Chile

left the Andean Group in 1976.

Andean PactSee Andean Group.

audiencia—A high court of justice, exercising some administrative

and executive functions in the colonial period.

balance of payments—An annual statistical summary of the monetary value of all economic transactions between one country

and the rest of the world, including goods, services, income

on investments, and other financial matters, such as credits or

loans.

binomial electoral system—In this unique system, which governs

Chile's congressional elections, political parties or groupings

form pacts and permit slates (two candidates per slate), from

which two senators and two deputies are elected from each district. By requiring each party to obtain two-thirds of the vote

in each district for the successful election of its two candidates

to the legislature, this system gives the opposition disproportionate representation in Congress.

capital account—A section of the balance of payments accounts

that records short-term and long-term capital flows.

capital formation—Creation of new capital or the expansion of existing capital, during a fiscal period, normally financed by

savings.

capital goods—A factor-of-production category consisting of manufactured products used in the process of production.

419
Chile: A Country Study

capital-intensive—A high ratio of capital to labor and other

resources used in the production process.

capital market—An institutional system of communications, vest- ed largely in the security exchanges, where lenders and bor- rowers interact with a view to transacting or trading.

Central Bank of Chile—Chile's Central Bank, as is usually the case with central banks in general, is a federal, government-related

institution entrusted with control of the commercial banking

system and with the issuance of the currency. Responsible for setting the level of credit and money supply in an economy and

serving as the bank of last resort for other banks. Also has a major impact on interest rates, inflation, and economic output. Under Article 97 of the constitution, the Central Bank

of Chile is an autonomous institution.

"Chicago boys" —A pejorative expression coined in the early years

of the Pinochet regime to refer to those University of Chicagotrained or -affiliated economists, including Milton Friedman

and Arnold Harberger, who recommended and implemented

the liberalization and stabilization policies of the military

government. However, because many other respected economists have since advocated free-market policies, the term has become misleading. Furthermore, economist David E. Hojman

has pointed out that the model advocated by the "Chicago

boys" characterized Chilean policy making for many decades

and thus was not particularly extraneous to Chilean institu- tions and traditions.

Chilean peso (Ch$)—Chile's currency. Replaced escudo on September 29, 1975, at a rate of 1,000 escudos per peso. Peso notes

are for 500, 1,000, 5,000, and 10,000 pesos; coins are for 1, 5, 10, 50, and 100 pesos. Official exchange rate of Chilean peso was pegged to United States dollar until July 3, 1992, at a rate adjusted at daily intervals and determined by monthly rates of national and world inflation. On January 26, 1992, the Central Bank of Chile (q.v.) revalued the peso, reducing the offi- cial dollar exchange rate by 5 percent, which meant it dropped

from 395 to 375 pesos. On July 3, 1992, the Central Bank,

in a move designed to halt currency speculation, announced

the peso would no longer be measured exclusively against the

United States currency, but rather would use a basket of the

United States dollar, the German deutsche mark, and the

Japanese yen in a 50-30-20 ratio. On September 13, 1994,

Ch$405.9 = US$l.

Christian Base Communities (Comunidades Eclesiasticas de Base

CEBs)—Groups consisting of mostly poor Christian lay people

420
Glossary

through which advocates of liberation theology (q.v.) mainly

work. Members of CEBs meet in small groups to reflect on

Scripture and discuss the Bible's meaning in their lives. They

are introduced to a radical interpretation of the Bible, one employing Marxist terminology to analyze and condemn the wide

disparities between the wealthy elite and the impoverished masses in most underdeveloped countries. This reflection often leads

members to organize and improve their living standards

through cooperatives and civic-improvement projects.

Communist International (Comintern)-—The Russian Communist

Party founded the Communist International (Comintern) in

Moscow in March 1919 for the purpose of rallying socialists and communists. The Comintern adopted Leninist principles

and rejected reformism in favor of revolutionary action against

capitalist governments. Disbanded in May 1943 and replaced

by the Communist Information Bureau (Cominform) in September 1947.

communitarianism—The Christian Democrats supported unionization of the peasantry through communitarianism rather than

Marxism. According to political scientist Paul E. Sigmund,

whereas in the early decades of their party Chile's Christian

Democrats preferred to describe their program simply as communitarian instead of as socialist, after the election of Salvador

Allende Gossens as president in 1970 they described it as "communitarian socialism," as opposed to Allende's statist socialism. consumer price index (CPI)—A statistical measure of sustained

change in the price level weighted according to spending

patterns.

corporatism—A sociopolitical philosophy that is antithetical to both

Marxist and liberal democratic political ideals. It found its most

developed expression in Italy under Benito Mussolini. A corporatist would organize society into industrial and professional corporations that serve as organs of political representation

within a hierarchical, centralized polity controlled by the state. A corporatist society is elitist, patrimonialist, authoritarian, and

statist. Some social science theorists have argued that Latin

American political tradition has had a fundamentally corporatist

nature, but others argue that it is but one of many cultural in- fluences in the region.

Economic Commission for Latin America (EC LA)

See Economic

Commission for Latin America and the Caribbean (ECLAC).

Economic Commission for Latin America and the Caribbean

(ECLAC)—A United Nations regional economic commission

established on February 25, 1948, as the Economic Commission

421
Chile: A Country Study

for Latin America (EC LA). More commonly known in Latin

America as the Comision Economica para America Latina

(CEPAL). In 1984 it expanded its operations and name to in- clude the Caribbean. Its main functions are to initiate and coor- dinate policies aimed at promoting economic development. In

addition to the countries of Latin America and the Caribbean, ECLAC's forty-one members in 1992 included Britain,

Canada, France, the Netherlands, Portugal, Spain, and the

United States. There were an additional five Caribbean associ- ate members.

encomenderos—Colonial grantees, usually large landowners, to rights over native American labor and tribute in exchange for assuming responsibility to protect and Christianize these native

subjects.

encomienda—A system or legal arrangement adopted by Spain in 1 503

whereby the Spanish crown assigned rights over native American labor and tribute in the Spanish American colonies to in- dividual colonists {encomenderos—q. v. ) in return for protecting and

Christianizing their subjects. However, most native Americans

ended up as virtual slaves with no recognized rights. Not to be

confused with the landed estate (latifundio

q.v.), the encomienda system was not ended until late in the eighteenth century.

escudo

See Chilean peso. Evangelical—Term used in Chile to refer to all non-Catholic Christian churches with the exception of the Orthodox Church

(Greek, Serbian, and Armenian) and the Mormon Church.

Most Evangelicals are Pentecostal. Some would say "Protestant" refers to non-Pentecostal churches of the Reformation,

but they themselves (i.e., the Methodists and Presbyterians)

also identify with the term "Evangelical." The 1992 census used both "Protestant" and "Evangelical" to ask about

religion, but the difference is meaningless. Pastors of all denominations urged people to say they were "Evangelicals."

extreme poverty—The Chilean government defines poor people

as those who do not earn enough in a year to cover twice the

cost of the canasta bdsica (basic basket). The extremely poor are those who simply cannot buy the canasta bdsica. factor markets—Producer goods markets in which factors of

production—inputs such as land, labor, capital, entrepreneurship, and other material instruments used in the production

of goods and services—are procured.

Gini coefficient—A measure of inequality in a country's wealth

distribution. It contrasts actual income and property distribution

with perfectly equal distribution. The value of the coefficient,

422
Glossary

or index, can vary from (complete equality) to 1 (complete

inequality).

Great Depression—The 1929-34 economic slump in North America

and other industrialized areas of the world, precipitated by the

collapse of the United States stock market in October 1929.

The term "depression" denotes, in its economic sense, a cyclical phase of the economy with high unemployment of labor

and capital, business and consumer pessimism, accumulated

inventories, minimal investment, and, in some sectors, falling

prices. gross domestic product (GDP)—The broadest measure of the total value of goods and services produced by the domestic econ- omy during a given period, usually a year. GDP has mainly

displaced a similar measurement, the gross national product

(GNP

q. v.). GDP is obtained by adding the value contributed by each sector of the economy in the form of profits, compensation to employees, and depreciation (consumption of

capital). The income arising from investments and possessions

owned abroad is not included, hence the use of the word domestic to distinguish GDP from GNP. Real GDP adjusts the value

of GDP to exclude the effects of price changes, allowing for measurement of actual yearly increases or decreases in output.

gross national product (GNP)—Total market value of all final goods

(those sold to the final user) and services produced by an econ- omy during a year, plus the value of any net changes in in- ventories. Measured by adding the gross domestic product

(GDP

q.v.), net changes in inventories, and the income

received from abroad by residents, less payments remitted

abroad to nonresidents.

human development index (HDI)—A measurement of human

progress introduced by the United Nations Development

Programme (UNDP) in its Human Development Report, 1990. By

combining indicators of real purchasing power, education, and

health, the HDI provides a more comprehensive measure of

development than does GNP alone.

import-substitution industrialization—An economic development

strategy and a form of protectionism that emphasizes the growth

of domestic industries by restricting the importation of specific manufactured goods, often by using tariff and nontariff measures, such as import quotas. Theoretically, capital thus would

be generated through savings of foreign-exchange earnings.

Proponents favor the export of industrial goods over primary

products and foreign-exchange considerations. In the postWorld War II period, import-substitution industrialization was

423
Chile: A Country Study

most prevalent in Latin America. Its chief ideological proponents were the Argentine economist Raul Prebisch and the Economic Commission for Latin America (q.v.). The main

weaknesses in Latin America are as follows: the domestic markets in the region are generally too small; goods manufactured

domestically are too costly and noncompetitive in the world

market; most states in the region have an insufficient variety

of resources to build a domestic industry; and most are also too dependent on foreign technology.

Inter-American Treaty of Reciprocal Assistance of 1947 (Rio

Treaty)—A regional alliance, signed in Rio de Janeiro in 1947,

that established a mutual security system to safeguard the

Western Hemisphere from aggression from within or outside

the zone. Signatories include the United States and twenty Latin

American republics. In 1975 a special conference approved,

over United States objections, a Protocol of Amendment to the

Rio Treaty that, once ratified, would establish the principle

of "ideological pluralism" and would simplify the rescinding

of sanctions imposed on an aggressor party.

International Monetary Fund (IMF)—Established on December

27, 1945, the IMF began operating on March 1, 1947. The

IMF is a specialized agency affiliated with the United Nations

that takes responsibility for stabilizing international exchange

rates and payments. The IMF's main business is the provision of loans to its members when they experience balance of

payments difficulties. These loans often carry conditions that

require substantial internal economic adjustments by the

recipients. The IMF's capital resources comprise Special Drawing Rights and currencies that the members pay under quotas

calculated for them when they join. These resources are supplemented by borrowing. In 1993 the IMF had 175 members.

International Telecommunications Satellite Organization (Intelsat) —Created in 1964 under a multilateral agreement, Intelsat is a nonprofit cooperative of 1 16 countries that jointly own

and operate a global communications satellite system.

Kennedy Amendment—After evidence of severe repression by the

military regime following the overthrow of President Salvador

Allende Gossens in September 1973, the United States Congress in 1974 adopted the Kennedy Amendment, prohibiting

all security assistance and sales to Chile. This restriction was made much more general in the International Security Assistance

and Arms Export Control Act of 1976, prohibiting transfers to any country "which engages in a consistent pattern of gross

violations of internationally recognized human rights."

424
Glossary

latifundio—A large landed estate held as private property, which

may be farmed as a plantation, by tenant sharecroppers, or as a traditional hacienda. The latifundio system (latifundismo) is a

pattern of landownership based on latifundios owned by local gentry, absentee landlords, and domestic or foreign corporations.

Latin American Free Trade Association (LAFTA)—A regional

group founded by the Montevideo Treaty of 1960 to increase

trade and foster development. LAFTA's failure to make

meaningful progress in liberalizing trade among its members

or to move toward more extensive integration prompted the

leaders of five Andean states to meet in Bogota in 1966. This

meeting led to the creation in 1969 of the Andean Group

(q. v.) —consisting of Bolivia, Chile, Colombia, Ecuador, and

Peru (Venezuela joined in 1973)—to serve as a subregional

structure within LAFTA. LAFTA was replaced in 1980 by the

Latin American Integration Association (Asociacion Latinoamericana de Integration—ALADI), which advocated a regional tariff preference for goods originating in member states. ALADI has since declined as a major Latin American integration effort in favor of regional efforts, such as the Southern Cone

Common Market (q.v.).

League of Nations—An international organization whose covenant

arose out of the Paris Peace Conference in 1919. It was created

for the purpose of preserving international peace and security

and promoting disarmament by obligating nations to submit

their conflicts to arbitration, judicial settlement, or to the League

Council for consideration. The League of Nations contravened

traditional principles of neutrality and the right to employ force

to resolve disputes. By not signing the Treaty of Versailles,

the United States refused to join, but the organization had fiftythree members by 1923. Although the League of Nations considered sixty-six disputes and conflicts between 1920 and 1939,

it proved ineffective against German, Italian, Japanese, and

Soviet aggression in the 1930s. Formally disbanded in April

1946, its functions were transferred to the United Nations.

liberation theology—An activist movement led by Roman Catholic

clergy who trace their inspiration to the Second Vatican Council

(1962-65), when some church procedures were liberalized, and

the second meeting of the Latin American Bishops' Conference (Conferencia Episcopal Latinoamericana—CELAM) in

Medellin (1968), which endorsed greater direct efforts to improve the lot of the poor. Advocates of liberation theology

sometimes referred to as "liberationists" —work mainly through

Christian Base Communities (q.v.).

425
Chile: A Country Study

marginality—A concept used to explain the poor political, economic,

and social conditions of individuals within a society, social classes within a nation, or nations within the larger world community.

Refers often to poverty-stricken groups left behind in the modernization process. They are not integrated into the socioeconomic

system, and their relative poverty increases. Marginality is sometimes referred to as dualism or the dual society thesis. mayorazgo—Colonial system whereby the elder son inherited the titles and properties of the family.

Mercosur

See Southern Cone Common Market.

mestizo—Originally, term designated the offspring of a Spaniard

and a native American. It now means any obviously nonwhite

individual who is fluent in Spanish and observes Hispanic cul- tural norms. monetarism—An economic policy based on the control of a country's money supply. Monetarists assume that the quantity of

money in an economy determines its economic activity, particularly its rate of inflation. A rapid increase in the money

supply creates rising prices, resulting in inflation. To curb in- flationary pressures, governments need to reduce the supply

of money and raise interest rates. Monetarists believe that conservative monetary policies, by controlling inflation, will in- crease export earnings and encourage foreign and domestic

investments. Monetarists have generally sought support for their

policies from the International Monetary Fund (q. v.), the World

Bank (q.v.), and private enterprise, especially multinational cor- porations. The University of Chicago economist Milton Friedman is considered to be a leading monetarist.

North American Free Trade Agreement (NAFTA)—A free-trade

agreement comprising Canada, Mexico, and the United States. Tripartite negotiations to form NAFTA began among these

countries in June 1991 and were concluded in August 1992.

The United States Congress finally ratified NAFTA in November 1993, and the agreement went into effect on January 1, 1994. NAFTA was expected to create a free-trade area with

a combined population of 356 million and a GDP (q.v.) of more

than US$6 trillion. Chile was expected to be incorporated into

NAFTA on January 1, 1995.

Organisation for Economic Co-operation and Development

(OECD)—A Paris-based organization of twenty-four European

countries, Australia, Canada, and the United States that promotes economic and social welfare throughout the OECD area by assisting its member governments in the formulation of poli- cies designed to this end and by coordinating these policies.

426
Glossary

It also helps coordinate its members' efforts in favor of developing countries.

Organization of American States (OAS)—Established by the Ninth

International Conference of American States held in Bogota on April 30, 1948, and effective since December 13, 1951, the

OAS has served as a major regional organization composed

of thirty-five members, including most Latin American states and the United States and Canada. Determines common political, defense, economic, and social policies and provides for coordination of various inter-American agencies. Responsible

for implementing the Inter-American Treaty of Reciprocal Assistance (Rio Treaty

q. v. ) when any threat to the security of

the region arises. patronato real—The "king's patronage" was the absolute control

of clerical patronage in the colonies that the papacy gave to the kings of Spain. The Spanish crown maintained this extensive power over the church throughout the colonial period. It ended with independence, when the church lost the protection

of royal support.

Peronism—An eclectic Argentine political movement formed in

1945-46 to support the successful presidential candidacy ofJuan

Domingo Peron. The movement later splintered, with left- wingers forming the Montoneros urban guerrilla group.

Nevertheless, the fractious movement survived Peron 's death

in 1974 and made a good showing in the congressional elec- tions of 1986. The political, economic, and social ideology of

Peronism was formally labeled "social justice" (Justicialismo)

in 1949. It combines nationalism, social democracy, loyalty to the memory of Peron, and personalism, which is the dominance

of a nation's political life by an individual, often a charismatic

personality.

plebiscite—A device of direct democracy whereby the electorate can pronounce, usually for or against, some measure put before

it by a government. Also known as a referendum. A Chilean

president may convoke a plebiscite, under Article 117 of the

constitution, if the president totally rejects an amendment approved by Congress. Articles 118 and 119 further specify the

conditions under which a plebiscite may be held.

"popular" sectors—A term similar to popular culture, referring

to the masses of working-class, underemployed, and unemployed citizens. positivism—The theory that genuine knowledge is acquired by

science and that metaphysical speculation has no validity. Positi- vism, based largely on the ideas of the French philosopher

427
Chile: A Country Study

Auguste Comte, was adopted by many Latin American intellec- tuals in the late nineteenth and early twentieth centuries.

Chilean positivists promoted secular education, free inquiry,

the scientific method, and social reform.

real exchange rate—The value of foreign exchange corrected for differences between external and domestic inflation.

reformed sector—Under an unprecedented^ strong agrarian re- form law proposed by the administration of Eduardo Frei Montalva (1964-70) in late 1965 and adopted in July 1967, the

reformed sector, consisting of cooperatives, was created.

Richter scale —A logarithmic scale, invented in 1935 by United

States geophysicist Charles Richter, for representing the energy

released by an earthquake. A figure of 2 or less indicates the

earthquake is barely perceptible; a figure of 5 or more indi- cates the earthquake may be destructive, and a figure of 8 or more indicates the earthquake is a major earthquake.

Rio Group—A permanent mechanism for consultation and politi- cal coordination that succeeded the Contadora Support Group.

Founded in December 1986, the Contadora Support Group

consisted of Argentina, Brazil, Colombia, Mexico, Panama,

Peru, Uruguay, and Venezuela. Its second meeting, attended

by the presidents of the seven member countries (Panama's

membership was temporarily suspended in February 1988), was

held in Punta del Este, Uruguay, in October 1988. In 1990

Chile joined the Rio Group. In 1993 the Rio Group had twelve

members: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay, and Venezuela. The seventh summit of the Rio Group was held in Santiago, Chile, on October 15-16, 1993.

Rio Treaty

See Inter-American Treaty of Reciprocal Assistance.

Southern Cone Common Market (Mercado Comun del Cono

Sur—Mercosur)—An organization established on March 26,

1991, by Argentina, Brazil, Paraguay, and Uruguay for the

purpose of promoting regional economic cooperation. Chile was

conspicuously absent because of its insistence that the other four

countries first had to lower their tariffs to the Chilean level before Chile could join. Mercosur aimed to form a common market by December 31, 1994.

state of exception—States of assembly, siege, emergency, and catas- trophe that may be declared under Article 40 of the constitution by the president of the republic, with the consent of the

National Security Council, cover the following exceptional sit- uations, respectively: a foreign war, an internal war or internal

428
Glossary

commotion, an internal disturbance, and an emergency or public calamity.

structuralism—An economic policy that blames chronic inflation

primarily on foreign trade dependency, insufficient local production (especially in agriculture), and political struggles

among entrenched vested interests over government contracts.

Structuralists advocate encouraging economic development and

modernization through Keynesian and neo-Keynesian policies

of governmental stimulative actions, accompanied by organizational reforms. Structuralists contend that the policies of monetarism (q.v.) retard growth and support the status quo.

terms of trade—The ratio between prices of exports and prices of

imports. In international economics, the concept of "terms of

trade" plays an important role in evaluating exchange rela- tionships between nations. The terms of trade shift whenever

a country's exports will buy more or fewer imports. An improvement in the terms of trade occurs when export prices rise relative to import prices. The terms of trade turn unfavorable

in the event of a slump in export prices relative to import prices.

Third International—Created in 1921 by the Russian Bolsheviks,

its founding involved the emergence of separate communist parties sharply opposed to socialist or social democratic parties.

These new communist parties were organized along MarxistLeninist lines. value-added tax (VAT)—An incremental tax applied to the value

added at each stage of the processing of a raw material or the

production and distribution of a commodity. It is calculated

as the difference between the product value at a given state and

the cost of all materials and services purchased as inputs. The

value-added tax is a form of indirect taxation, and its impact on the ultimate consumer is the same as that of a sales tax. World Bank—The informal name for the International Bank for Reconstruction and Development (IBRD). The IBRD was con- ceived at the Bretton Woods Conference on July 22, 1944, and

became effective on December 27, 1945. Its primary purpose

is to provide technical assistance and loans at market-related

rates of interest to developing countries at more advanced stages

of development. The World Bank Group consists of the IBRD,

the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Invest- ment Guarantee Agency (MIGA). The IDA, a legally separate

loan fund administered by the staff of the IBRD, was established

in 1960 to furnish credits to the poorest developing countries on much easier terms than those of conventional IBRD loans.

429
Chile: A Country Study

The IFC, founded in 1956, supplements the activities of the

IBRD through loans and assistance designed specifically to en- courage the growth of productive private enterprises in developing countries. The MIGA, founded in 1988, insures private

foreign investment in developing countries against various non- commercial risks. The president and certain senior officers of

the IBRD hold the same positions in the IFC. The affiliated international organizations of the World Bank Group are owned

by the governments of the countries that subscribe their capital. To participate in the World Bank Group, member states must first belong to the International Monetary Fund (IMF

q.v.). In 1993 the World Bank Group included 174 member

countries. By the early 1990s, the Latin American and Caribbean region had received more loan aid through the World Bank

Group than any other region.

430
Index

abortion, 129-30, 245, 249, 256-57 Academia de Guerra. See War Academy

Academia de Guerra Naval. See Naval War Academy

Academia Politecnica Aerea. See Air Force Technical College

Academia Politecnica Militar. See Military

Polytechnical Academy

Accion Chilena Anticomunista. See Chil- ean Anti-Communist Action Group

AChA. See Chilean Anti-Communist Action Group

Aconcagua, 64

acquired immune deficiency syndrome

(AIDS), 106-7 Adimark, xli, 118, 119, 129 Administradoras de Fondos de Pensiones.

See Pension Fund Administrators Aeronautic Constructions, S.A. (Construcciones Aeronauticas, S.A.

CASA), 307 AFL-CIO. See American Federation of Labor-Congress of Industrial Organizations AFPs. See Pension Fund Administrators Agrarian Labor Party, 41, 42 agrarian reform. See land reform Agrarian Reform Corporation (Corporacion de Reforma Agraria—Cora), 145 Agrarian Reform Law (1962), 145

agricultural products {see also under in- dividual crops): demand for, 25; export

of, 72, 74, 140-41, 191; fruit, 71, 72,

74, 165-66; grapes, 84, 266; import of, 165-66; wheat, 141

agriculture, 163, 165-66; of Araucanians,

6; changes in, 90; employment in, 91; export crops, 20; in far north, 70; in near north, 71; as percentage of gross domestic product, 161-62; potential

for, 78; prices, control of, 144; privati- zation in, ; productivity of, 162; slash- and-burn, 6; unions, 33 Aguirre Cerda, Pedro, 31, 35 AIDS. See acquired immune deficiency

syndrome

air force, 305-8; aircraft of, 305, 307, 322-23; civic-action role of, 308; class

consciousness in, 29, 310; commander

in chief of, 297; commands of, 305; conditions of service in, 310-11; crea- tion of, 288; education requirements

for, 311; foreign influences on, 289, 290; insignia, 316; materiel, 290, 307, 309- 10, 316, 322-23; number of per- sonnel in, 278, 305; organization of, 305-8; ranks, 316; recruitment for, 310- 11; schools, 312; spending on, 309-10; training of, 264, 307; uni- forms, 316

Air Force Technical College (Academia

Politecnica Aerea), 312

airports, 178

Albania: relations with, 48

Alessandri Besa, Arturo, xli, 254

Alessandri Palma, Arturo, 4; as president, 30-31, 34-36, 123, 200, 217; support

for, 30

Alessandri Rodriguez, Jorge, 204, 250,

257; in election of 1958, 43-44; in elec- tion of 1970, 46, 47 Alessandri Rodriguez administration

(1958-64), 44-45

Allende Gossens, Salvador, xxxv, 31; career of, 35, 41; in election of 1958, 43-44; in election of 1964, 44; in election of 1970, 46, 47, 145, 199, 202, 247; suicide of, xxxvi-xxxvii, 51, 149, 203

Allende Gossens administration (1970-

73), xxxv, 47-51; analysis of, xxxvi, 51; businesses under, 258; economy under, 47-48, 139, 145-46; labor under, 259; land reform under, 47, 89; nationali- zation under, 218; opposition to, xxxv-xxxvi, 50, 249, 250, 265; over- thrown, xxxvi, 50-51, 139, 149, 203,

247, 278; public sector under, 219; re- lations of, with Catholic Church, 256;

relations of, with judiciary, 231

Alliance for Progress, 44 Almagro, Diego de, xxxv, 7, 279 Almeyda, Clodomiro, 146 American Federation of Labor-Congress

of Industrial Organizations (AFLCIO), 39 431
Chile: A Country Study

amnesty law, xl, 292-93 Anaconda Copper, 41, 42, 45; nationalized, 47, 218

Andlisis, 262 anarchism, 30

anarcho-syndicalism, 30 Andean Group, 46, 192 Andes Mountains, xxxv, 64-67, 70, 71,

74, 277 Aninat Ureta, Eduardo, 192 annulment (see also divorce), 129

Antiterrorist Law (1984), 337

Antofagasta: fishing in, 70; port of, 178

Apsi, 262 Araucanian people, 6-7; agriculture of, 6; living standards of, 7; mythologized,

7; population of, 6; on reservations, 25; resistance of, to Spanish conquest, 6, 7-8, 9, 25, 78, 279, 283, 187; as slaves, 9 Araucanian uprising of 1553-58, 7-8 Arauco, 78

Archi. See Association of Chilean Broadcasters Argentina (see also Viceroyalty of the Rio

de la Plata): border with, 25, 64; border

dispute with, 268, 278, 288, 339; ex- ports to, 168; Ibahez exiled to, 33; O'Higgins exiled to, 14; oil production

with, 173; relations with, 278; trade

with, 11-12, 191

Arica: port of, 178

aristocratic republicanism (1830-91), 16-27 Armada de Chile. See navy Armaments School (Escuela de Ar- mamentos), 302 armed forces: attempted coup by, xxxv,

50; attitudes toward, 25, 310; as au- tonomous branch of government, xl, 236-38; civic-action role of, 308; class consciousness in, 29, 310; commanders

in chief of, 236-37, 238, 297; command

structure, 296-99; under constitution of 1980, 205-7, 227, 236; control over, 297; corruption in, 292; development

of, 287-90; under Gonzalez, 40; head

of, 296-97; human rights abuses by,

xxxvii; impact of Great Depression on, 288-89; influences on, 287, 289; inter- nal security by, 295; intervention of, in

politics, 32-34; missions of, 295-96; modernization of, 339; origins of,

280-82; pay and benefits in, 53; under

Pinochet, 53; political role of, 3; profes- sionalization of, 25; relations of, with

Frei Ruiz-Tagle, xli-xliii; reserves, 278, 310; resistance of, to reform, xlixlii; restructuring of, 25; schools, 311;

size of, 178; subsidies for, 308-9; train- ing by, of foreign troops, 277, 311;

training of, 311-12; uniforms, ranks, and insignia of, 312-16; women in, 310 Armored Cavalry School (Regimiento Es- cuela de Caballeria Blindada), 311 Armored Forces School (Escuela de Fuerzas Blindadas), 311 army, 9, 299-302; aircraft of, 302; civic- action role of, 308; class consciousness

in, 29, 310; commander in chief of, 216, 226-27, 237, 278, 295, 297; conditions of service in, 310-11; divisions

of, 299-301; German influence on, 277, 287; insignia, 312-13; materiel, 290, 302, 320-31; military areas of, 299-

301; modernization in, 299; number of troops in, 264, 278, 284, 288, 299;

offenses committed by, 237; opposition

of, to constitutional reform, 294; ranks, 313; recruitment for, 310-11; restruc- turing of, 290-91; troops of, 301-2;

uniforms, 312 Army Aviation Command (Comando de Aviacion del Ejercito—CAE), 291, 311 Army Factories and Yards (Fabricas y Maestranzas del Ejercito—Famae), 320 Army of the Andes, 280

Arriagada, Genaro, 294

Artillena de Costas. See Coast Artillery

Artillery School (Regimiento Escuela de

Artillena), 311 Arturo Prat Naval School (Escuela Naval

Arturo Prat), 281, 302, 311 Asamblea de la Civilidad. See Assembly

of Civility Asenav. See Naval Shipyards and Services Asmar. See Naval Docks and Yards

Asociacion de Bancos e Instituciones Financieras. See Association of Banks and Financial Institutions Asociacion de Radiodifusores de Chile. See Association of Chilean Broadcasters Asociacion Gremial de Duenos de Camiones. See Truck Owners Association Assembly of Civility (Asamblea de la Civilidad), 98 432
Index

Association of Banks and Financial Insti- tutions (Asociacion de Bancos e Institu- ciones Financieras), 96

Association of Chilean Broadcasters (Asociacion de Radiodifusores de Chile—Archi), 179

associations (see also labor unions), 94-98;

business, 96, 258, 259; under constitu- tion of 1980, 207; formality of, 94; number of, 94; occupational, 94-95,

97; under Pinochet, 98; political role of, 97, 98; professional, 96

Astilleros y Maestranzas de la Armada.

See Naval Docks and Yards

Astilleros y Servicios Navales. See Naval

Shipyards and Services Atacama Desert, xxxv, 69, 277; oil explo- ration in, 173

audiencia, 7 Aylwin Azocar, Patricio, xxxviii, 159-60,

215, 268-71; background of, 222; in elections of 1989, 215, 278; as negoti- ator for constitutional reforms, 213,

222; as opposition organizer, 209 Aylwin Azocar administration, 63, 292; antidrug agreements of, 334; and ap- pointed senators, 227; armed forces under, 295; Constitutional Tribunal

under, 235; economy under, xxxix, 93, 151, 159-60, 191, 271; education under, 114, 118; foreign relations under, 266; health system under, 107; housing under, 108; labor reform under, 161, 260-61; legislature under,

230; local government under, 239;

public sector under, 219; relations of, with judiciary, 233; social programs under, xl, 99, 160-61; tax reform under, 219 Aymara people, 79; as percentage of population, 80

balance of payments, xxxvi, 145, 152, 190-91 Balmaceda Fernandez, Jose Manuel:

downfall of, 26-27; opposition to, 26-27; suicide of, 27; support for, 26-27

Baltimore, U.S.S., 27 Banco Central de Chile. See Central Bank

of Chile

Banco del Estado de Chile. See State Bank

of Chile banking sector, 173-74; reform of, 151-53

banks: bankruptcies of, 150, 153, 173; commercial, 173; under Montt, 21; nationalized, 47; number of, 152, 174;

privatized, 152, 157-58; superinten- dent of, 32 Baquedano Gonzalez, Manuel, 286

Barros Luco, Ramon, 27

Battle of Ayacucho (1824), 281

Battle of Bum (1839), 283

Battle of Cancha Rayada (1818), 280

Battle of Casma (1839), 283

Battle of Chacabuo (1817), 280

Battle of Chorrillos (1881), 286

Battle of Junm (1824), 281

Battle of Lircay (1830), 16, 17, 19

Battle of Maipu (1818), 14, 280

Battle of Mataquito (1557), 7 Battle of Miraflores (1881), 286

Battle of Pisagua (1879), 286

Battle of Pozo Dolores (1879), 286

Battle of Rancagua (1814), 13, 280

Battle of Talcahuano (1818), 280

Battle of Tucapel (1553), 7, 279

Battle of Yungay (1839), 19, 283

Beagle Channel, 277

Beagle Channel Treaty (1985), 268, 278

Belgium, 320

Bilbao Barguin, Francisco, 20

birth control, 81, 103, 130-31 Bismarck, Otto von, 100

black market, 49, 149 Blanco Encalada, Manuel, 281, 282 Boeninger Kausel, Edgardo, 225

Bolivar Palacios, Simon, 281

Bolivia: antidrug agreements with, 334; border with, 25, 64, 334; immigrants

from, 25-26; territorial disputes with,

23, 268, 277; war with, 23, 284

Bolivian Army, 284

Bonaparte, Joseph, 13 Bonaparte, Napoleon, 13 border police (Gendarmes de la Frontera), 326

border problems, 268

borders, 64 Bossay Leyva, Luis: in election of 1958, 43-44 Bourbon rule, 11-13; reforms under, 11-13 433
Chile: A Country Study

Braden company, 31

Brazil: exports to, 168; oil production

with, 173; relations with, 278, 317

Brazilian Aeronautics Company (Erabraer), 323

Britain: immigrants from, 79; influence

of, 3; influence of, on navy, 264, 289, 302; investors from, 22, 25, 26; materiel from, 289, 309, 316, 317, 320, 322; military training by, 288, 289; re- lations with, 34, 264, 317; trade with, 22

British Aerospace, 323 Bryan Commission, 230

Buchi Buc, Herman, 156, 215, 251; in elections of 1989, 215 budget deficit: under Allende, 147, 148; eliminated, 149; under military junta,

156, 219; as percentage of gross domestic product, 148, 149, 217 budget surplus, 219; as percentage of

gross domestic product, 219

Bulnes Prieto, Manuel, 282, 331; intellec- tual life under, 20; as president, 19-20

Bush, George, 266

business, 257-59; under Allende, 258; un- der military junta, 258; role of, in politics, 257, 258, 259

Business and Production Confederation

(Confederation de la Produccion y del Comercio—Coproco), 96

cabildos, 1 cabinet, 221; duration of, 221; evaluation

of, 223-25

Caceres, Carlos, 214 CAE. See Army Aviation Command

Caja del Seguro Obrero. See Workers'

Security Fund

Camara Central de Comercio. See Central Chamber of Commerce

Camara Chilena de la Construction. See Chilean Construction Board

Camara de la Produccion y Comercio. See Chamber of Production and Commerce

Canada: investors from, 27 CAPE. See Politico-Strategic Advisory

Council Cape Horn, 64, 74, 75

capital account: liberalization of, 152 Captain Avalos Prado Military Aviation

School (Escuela de Aeronautica Militar "Capitan Avalos Prado" —EAM),

288, 312 Captaincy General of Chile, 7 Cardoen Cornejo, Carlos, 323, 325 Cardoen Industries (Industrias Cardoen), 323-25

Carrera, Juan Jose, 280 Carrera Verdugo, Jose Miguel, 13; ex- ecuted, 14 Carter, Jimmy, 53, 264

Carabineros (national police), 52, 209, 230, 236-37, 238, 326-29, 338; budget appropriations, 329; civic-action functions, 328; created, 33; director general of, 297; materiel, 328; number

of personnel in, 326, 327, 328; opinion

of, 329; organization of, 326-27, 328; recruitment for, 329; training for, 329; uniforms, 329; women in, 328; zones

of, 327, 328

Carabineros Corps (Cuerpo de Carabineros), 326

Carabineros Regiment (Regimiento de

Carabineros), 326

Carlos Ibahez Military Air Base, 307 CASA. See Aeronautic Constructions, S.A. CASI. See Internal Security Advisory

Council

Castro Ruz, Fidel, xxxvii Catholic Church, Roman, 118, 255-57; and abortion, 130; and birth control, 130; and Christian Democrats, 256; and Conservatives, 4, 17, 97; and

divorce, 129; number of parishes of, 120; as official state religion, 14, 18, 120, 122; opposition to, 4, 124; organi- zation of, 120; under Pinochet, 52; progressive theology in, 124, 255;

resistance of, to O'Higgins, 14; role of, in economy, 4; role of, in politics, 4, 8-9, 32, 50, 122, 124-25, 255, 256; role

of, in social affairs, 4, 52; separation

of, from state, 32; as source of divisive- ness, 16; support of, for Frei Montalva, 44

Catholics, Roman: percentage of, in population, 1 18; popular beliefs of, 128; practicing, 119, 257

Catholic University of Valparaiso (Universidad Catolica de Valparaiso), 115;

television station of, 263 434
Index

Cauce, 262

Caupolican, 7-8 CDT. See Workers' Democratic Federation CEBs. See Christian Base Communities

censorship, 17; under military junta, 52 Center for Contemporary Reality Studies (Centro de Estudios de la Realidad Contemporanea—CERC), 292 Center for Public Studies (Centro de Es- tudios Publicos—CEP), xli Center for Public Studies-Adimark polls,

xli, 118, 119, 129, 248, 332-33

Central Bank Council, 188-89, 235-36;

created, 174

Central Bank of Chile (Banco Central de

Chile), 188-89, 218, 220, 223, 235-36; autonomy of, 188; bailout by, 157-58;

created, 32; focus of, 189, 235; inter- national reserves of, 145; reform of, 188-89

Central Chamber of Commerce (Camara

Central de Comercio), 96

central Chile (Chile. Central), 71-72; cli- mate of, 71; size of, 71; topography of, 72; urban areas in, 83

Central Democratica de Trabaj adores. See Workers' Democratic Federation

Central Unica de Trabajadores de Chile.

See United Labor Federation Central Valley (Valle Central), 67, 72;

political affiliation in, 4; roads in, 177 Centro de Estudios de la Realidad Contemporanea. See Center for Contemporary Reality Studies Centro de Estudios Publicos. See Center

for Public Studies Centro de Reparaciones de la Aviacion

Naval. See Naval Aviation Repair

Center Centro Nacional de Informacion. See National Information Center

Centros de Formacion Tecnica. See Technical Training Centers CEP. See Center for Public Studies CEPAL. See United Nations Economic

Commission for Latin America

CERC. See Center for Contemporary

Reality Studies Cerro Mac, 74 Cerro Moreno Air Base, 307 CFT. See Technical Training Centers Chamber of Deputies, 225; commissions

in, 227; elections for, 242; members of, 226 Chamber of Production and Commerce

(Camara de la Produccion y Comercio—CPC), 257

Chantiers de Normandie, 322 "Chicago boys," xxxvii, 53, 157 Chilean Air Force (Fuerza Aerea de Chile—FACh). See air force Chilean Airlines (Linea Aerea del Cobre—Ladeco), 178 Chilean Antarctic Territory (Territorio Chileno Antartico), 271, 297 Chilean Anti-Communist Action Group

(Accion Chilena Anticomunista

AChA), 338

Chilean Armed Forces (Fuerzas Armadas

de Chile). See armed forces Chilean Construction Board (Camara

Chilena de la Construccion), 96 Chilean Electric Company (Compama

Chilena de Electricidad—Chilectra), 170 Chilean Navy (Armada de Chile). See navy

Chilean people: historical roots of, 75-80; homogeneity of, 80; racial characteristics of, 79 Chilean Student Federation (Federacion de Estudiantes de Chile—FECh), 29

Chile Austral. See far south region Chile Central. See central Chile

Chilectra. See Chilean Electric Company

China: materiel from, 320-21, 324; re- lations with, 48

Christian Base Communities (Comunidades Eclesiasticas de Base—CEBs),

124, 257

Christian Democratic Party (Partido Democrata Cristiano—PDC), 205,

241, 247, 248-50, 264, 294; associations identified with, 97; and Catholic Church, 256; divisions in, 149; in elec- tions of 1970, 46, 202; in elections of

1973, 49-50; founded, 124, 248; opposition of, to Allende, xxxv, 50; under

Pinochet, 52; political orientation of, 34, 42, 43, 244, 245, 249, 255; social

class membership in, 5, 45, 259 Chuquicamata copper mine, 70, 170 church and state, 17, 120, 255; conflict between, 122; separation of, 123, 255 CIM. See Navy Infantry Corps

435
Chile: A Country Study

CIMI. See Military Industry and Engineering Command

cities. See urban areas

civil-military relations, 294-95

civil service, 218

Civil War of 1891, 27, 200, 201, 287

civil wars of 1818-30, 14-15, 20-21, 282

Clarin, 261

Claro, Ricardo, 263

climate: of central Chile, 71-72; of far north, 69-70; of far south, 74-75; of near north, 70-71; of south, 72-74

Clinton, William Jefferson, xlii, 266 CNI. See National Information Center CNS. See National Trade Union Coordinating Board CNT. See National Telephone Company

CNT. See National Workers' Command

coal, 170

Coalition of Parties for Democracy (Concertacion de Partidos por la Democracia—CPD), xxxviii, 159-60, 215, 294

Coast Artillery (Artilleria de Costas), 290

Coast Guard, 302, 303-5; search and res- cue by, 305; vessels of, 303-5, 322

coastline, 67, 74, 277 Cochrane, Thomas Alexander (Lord

Dundonald), 281, 289

Codelco. See Copper Corporation Codelco Law (1992), 164 Colombia: military training for, 289; oil production with, 173; relations with, 278; trade with, 191

colonial rule: attempts at, 7; economy under, 10-11, 141; resistance to, 6, 7-8,

9, 25, 78 Comando de Aviacion del Ejercito. See Army Aviation Command

Comando de Industria Militar e Ingenieria. See Military Industry and Engineering Command

Comando Nacional de Trabajadores. See National Workers' Command

Comando Supremo de las Fuerzas Armadas. See Supreme Command of the Armed Forces Comintern. See Communist International Comision Economica para America Latina. See United Nations Economic

Commission for Latin America

Comision Nacional de Energia. See National Energy Commission

Committee for Free Elections, 254 Common Municipal Fund, 240

communications. See telecommunications Communist International (Comintern),

35 Communist Party of Chile (Partido Communista de Chile—PCCh), 5, 30, 43, 241, 264; in elections of 1970, 46; founded, 28, 201, 245; under Gonzalez, 39; legalized, 42; opposition of, to Alessandri, 35; opposition of, to Roman Catholic Church, 4; under

Pinochet, 52, 246; political orientation

of, 34, 35, 42, 43, 245; in Popular

Unity coalition, 145; social class membership in, 5; split in, 39; support for, 246 communitarianism, 5, 42 Compama Chilena de Electricidad. See Chilean Electric Company

Compama de Telefonos de Chile. See Telephone Company of Chile Compama de Telefonos de Coihaique. See Telephone Company of Coihaique

Compama Nacional de Telefonos. See National Telephone Company

Comunidades Eclesiasticas de Base. See Christian Base Communities

Conaf. See National Forestry Corporation Concepcion: climate of, 71; founded, 83; growth of, 28

Concertacion de Partidos por la Democracia. See Coalition of Parties for Democracy Confederacion de Duefios de Camiones

de Chile. See Confederation of Truck

Owners of Chile Confederacion de la Produccion y del Comercio. See Business and Production Confederation

Confederacion del Comercio Detallista de

Chile. See Federation of Retail Business

of Chile Confederacion de Trabajadores de Chile.

See Confederation of Chilean Workers

Confederacion de Trabajadores del Cobre. See Confederation of Copper

Workers

Confederacion Gremial del Comercio

Detallista y de la Pequeha Industria de

Chile. See Trade Union Confederation of Business Retailers and Small 436
Index

Industry of Chile Confederation Unitaria de Trabajadores.

See Unitary Confederation of Labor

Confederation of Chilean Workers (Confederation de Trabajadores de Chile (CTCh), 35 Confederation of Copper Workers (Confederation de Trabajadores del Co- bre—CTC), 260

Confederation of Truck Owners of Chile (Confederation de Duenos de Camiones de Chile), 96 Congreso National. See National Congress Congress. See National Congress

Consejo Asesor de Seguridad Interior. See Internal Security Advisory Council Consejo Asesor Polftico-Estrategico. See Politico-Strategic Advisory Council Consejo de Estado. See Council of State Consejo de la Pequena y Mediana Industria. See Council of Small and Medium

Enterprises

Consejo de Production, Transporte y Comercio. See Council of Production,

Transport, and Commerce

Consejo de Seguridad National. See National Security Council Consejo National de Television. See National Council of Television Conservative era (1830-61), 17-22

Conservative Falange (Falange Conservativa), 248

Conservative Party (Partido Conservador), 4-5, 124, 241, 248, 250; asso- ciations identified with, 97; class membership in, 5; defense of Roman

Catholic Church, 4, 17, 122, 255; formed, 22; geographical distribution

of, 4; opposition of, to Balmaceda, 26;

political orientation of, 34, 43; social

class membership in, 5 constitutional reforms of 1989, 211-16,

296; for local governments, 223, 239;

negotiations for, 212-14, 222; opposition to, 214, 294-95

Constitutional Tribunal (Tribunal Constitutional), 220, 227, 230, 234-35,

296; under Aylwin, 235; members of, 234; powers of, 234-35

constitution of 1828, 16

constitution of 1833, 17-18, 200; judiciary

under, 18; legislature under, 18; president under, 18, 200; religion under, 18, 120, 122

constitution of 1925, 31, 32-33, 200, 201; church under, 32, 255; citizens' rights under, 32; comptroller general under,

32; economy under, 32; judiciary under, 231; legislature under, 32, 225-26;

president under, 32; promulgated, 34; workers under, 32-33

constitution of 1980, 54-55, 204, 205-8; amendments to, xli-xlii, 207-8, 227, 228; armed forces under, 205-7, 236, 295-96; associations under, 207; Central Bank under, 235; designated senators under, 207; labor unions under,

207; local government under, 207, 223; National Security Council under, 206;

political parties under, 207; president

under, 205, 221; promulgated, 54-55,

204-5, 278; reforms to, 214

Construcciones Aeronauticas, S.A. See Aeronautic Constructions, S.A.

construction, 180-82; employment in, 91, 183; of housing, 107, 108, 182; as per- centage of gross domestic product, 162, 180; private-sector, 180-82 consumption: under Allende, 145, 147-

48; distribution of, 93; under Pinochet, 152 Coordinador National de Sindicatos. See National Trade Union Coordinating

Board

copper, 25; export of, 3, 21, 33, 54, 141-42, 143, 163; prices, 165; production, 141, 164-65; as source of foreign

exchange, 143 Copper Corporation (Corporation del Cobre—Codelco), xlii, 165; military

subsidies from, 308-9 Copper Law (1954), 308

copper mines, 170; Chilean control over, 44, 219; nationalized, 147, 218; workers' demands in, 29-30

copper mining, 78, 162, 260 Copper Stabilization Fund, 165 Coproco. See Business and Production Confederation Coquimbo: port of, 178; tourism in, 180 Cora. See Agrarian Reform Corporation

Cordillera de Nahuelbuta, 72 Corfo. See Production Development Corporation

Corporation de Fomento de la Production. 437
Chile: A Country Study

See Production Development Corporation Corporacion de la Vivienda. See Housing

Corporation 107 Corporacion del Cobre. See Copper Corporation

Corporacion de Reforma Agraria. See Agrarian Reform Corporation

Corporacion Nacional Forestal. See National Forestry Corporation

Corps of Army Generals, 292 Correa, Enrique Rios, 225

Correa, German, 254

corporatism, xxxvii, 5, 52, 239

corruption, 218; in government, 8, 310;

in Parliamentary Republic, 28, 201

Corvi. See Housing Corporation 107 Cosena. See National Security Council Cosmos, 322 Council of Commanders in Chief (Junta de Comandantes en Jefe), 299

Council of Small and Medium Enterprises

(Consejo de la Pequefia y Mediana

Industria—CPMI), 257

Council of State (Consejo de Estado), 204

Council of Production, Transport, and

Commerce (Consejo de Produccion,

Transporte y Comercio), 96 coup d'etat of 1973, xxxvi, 50-51, 139,

149, 247, 278; justification for, 51, 203 coups d'etat, attempted: of 1924, 31, 200;

of 1925, 31; of 1939, 36; of 1973, 50

courts, 231-33; appellate, 232-33; claims, 232; local, 232; members of, 232-33;

special, 232 CPC. See Chamber of Production and

Commerce

CPD. See Coalition of Parties for Democracy CPMI. See Council of Small and Medi- um Enterprises

CRAN. See Naval Aviation Repair Center

crime: categories of, 335; drug-related, 334; incidence of, 331-33

Criminal Code, 334-35

criminal justice system (see also courts; judiciary), 334-35; basis for, 334

criollos: ethnic conflicts of, 8; struggle for power by, 14 Croatia: materiel sold to, 237, 320 CSFA. See Supreme Command of the Armed Forces

CTC. See Confederation of Copper

Workers

CTC. See Telephone Company of Chile CTCh. See Confederation of Chilean Workers

Cuba: relations with, 48 Cuban Revolution (1959), 44, 241 Cuerpo de Carabineros. See Carabineros Corps

Cuerpo de Infanteria de la Marina. See Navy Infantry Corps

culture, 61; inequities in, 63; influences on, 61

currency: depreciation of, 31; devaluation

of, 92, 148; overvaluation of, 144, 151 current account, 190-91; deficit, 191 customs duties, 21-22, 140; under Aylwin, xxxix, 160, 191; under military

junta, 150-51 CUT. See Unitary Confederation of Labor CUTCh. See United Federation of Chilean Workers

Czechoslovakia: relations with, 39

debt crisis, 54, 55, 150, 156-58, 173; causes of, 152

debt servicing, xxxix Decree Law 2,200, 154 Decree Law 2,756, 154 Decree Law 2,758, 154-55 Decree Law 3,500, 187

defense industry, domestic, 265, 319-25

defense spending, 308-10

Defense Systems (Sistemas Defensas

Sisdef), 322 Democracia y

Progreso. See Democracy

and Progress democracy: under Alessandri, 34; under

Aylwin, 99; breakdown of, 203; de- velopment of, 200-203; transition to, 158-61, 200, 211-15, 216 Democracy and Progress (Democracia y

Progreso), 215

democratization: of Latin America, 56 Democratic Party (Partido Democratico),

28; formed, 22; opposition of, to Ro- man Catholic Church, 4; social class membership in, 5, 28, 29; support of, for Alessandri, 30; support of, for Balmaceda, 26 438
Index

demonstrations. See political demonstrations DIDN. See Directorate of National Defense Intelligence

DINA. See National Intelligence Directorate Dipolcar. See Directorate of Carabineros

Political Intelligence Direccion de Inteligencia Politica de Carabineros. See Directorate of Carabineros

Political Intelligence Direccion de Inteligencia de la Defensa

Nacional. See Directorate of National Defense Intelligence Direccion de Seguridad Publica e Infor- maciones. See Directorate of Public

Security and Information

Direccion General del Territorio Marti- mo y de la Marina Mercante. See General Directorate of the Maritime

Territory and Merchant Marine

Direccion General de Policfa. See General Directorate of Police Direccion Nacional de Inteligencia. See National Intelligence Directorate

Directorate of Carabineros Political Intel- ligence (Direccion de Inteligencia Politica de Carabineros—Dipolcar), 331

Directorate of National Defense Intelli- gence (Direccion de Inteligencia de la Defensa Nacional—DIDN), 330

Directorate of Public Security and Infor- mation (Direccion de Seguridad Publica e Informaciones), 331

divorce {see also annulment), 128-29, 245, 248, 249, 256-57 Dragones de Chile. See Dragons of Chile Dragons of Chile (Dragones de Chile), 326

Drake, Francis, 9 drug trafficking, 334 Duhalde Vasquez, Alfredo, 38

EAM. See Captain Avalos Prado Military Aviation School

earthquakes, 64, 83, 142

Easter Island (Isla de Pascua), 67, 179, 287; population of, 67 ECLA. See United Nations Economic

Commission for Latin America

ECLAC. See United Nations Economic

Commission for Latin America and the Caribbean

economic crisis of 1982-83, 92, 146-49,

150, 155; causes of, 152 economic depression of 1870s, 22 economic reform, 149-58, 162, 199; consolidation of, 150; inequalities caused

by, xxxix; obstacles to, 152 economics: free-market, 53; monetarist,

42; protectionist, 143; structuralist, 42, 146 economic stabilization program of 1972, 148-49 economy: areas of concern in, 192-93; un- der Alessandri, 34, 44; under Allende,

47, 49, 139; under Aylwin, 139, 151, 191; collapse of, in 1982, 55; under

colonial rule, 10-11; development, 61; free-market, 139, 223; under Gonzalez,

40; government role in, 6, 10; growth

of, 223; inequities in, 63; informal, 54, 88, 148, 149; under Pinochet, 139, 149- 58; policy, 63; recovery of, 209;

role of government in, 6 Ecuador: materiel sold to, 320; military

training for, 289; relations with, 278

education {see also schools): access to, 44,

45, 98-99; commitment to, 62; curric- ulum, 112; enrollments in, 108-12; government responsibility for, 239; government spending on, xl, 25, 98-99,

113-14, 118, 141, 182; higher, 114-18;

privatized, 63; reforms in, 115-16; in rural areas, 80 Edward VII, 288 Edwards family, 262

El Belloto Naval Air Base, 290

election, plebiscite, of 1988, xxxv, xxxviii, 55, 98, 199, 204, 211, 278; campaign

for, 210-11

election, presidential: of 1920, 31, 220; of 1927, 33, 220; of 1932, 34, 220; of

1938, 35, 220; of 1942, 37, 220; of 1946, 38, 220; of 1952, 41, 220; of 1958, 43-44, 220; of 1964, 44, 220; of

1970, 46-47, 145, 202, 220; of 1989,

xxxviii-xxxix, 55, 215-16, 220, 242,

278; of 1993, 252-55

election reform, 42, 45-46

elections: coalitions in, 220; congressional, of 1973, 49-50, 148; congressional, of 1989, 242; under constitution of 1925, 32; under constitution of 1980, 439
Chile: A Country Study

221; local, of 1992, 240-41; manipulation of, 17, 33, 201, 294

Electoral Certification Tribunal (Tribunal de Certificacion Electoral—TCE), 236

electoral system, 242-45; abuses of, 236; binomial, xlii, 243-44; boundaries for, 243

electric power, 170; generation, 170; nationalized, 142; stations, 170

elite class, 4; criticism of, 30; economic power of, 40; political affiliations in, 5, 43; political power of, 8, 16; support

of, for Alessandri, 30

Elizabeth II, 268 El Mercurio, 261, 262

El Mercurio Company, 262

El Salvador: military training for, 289

ElSiglo, 261

El Tepual Military Air Base, 307 Embraef. See Brazilian Aeronautics Company EMDN. See National Defense Staff employment, 182-83; under Aylwin, 183; distribution of, 91; in public sector, 217; rate of, 90-91, 183; of women, 90 Employment Program for Heads of Household (Programa de Ocupacion

para Jefes de Hogar—POJH), 156 employment programs, public, 155-56 Employment Security Law, 154 Empresa de Ferrocarriles del Estado. See State Railroad Company

Empresa Nacional de Aeronautica. See National Aeronautical Enterprise

Empresa Nacional de Electricidad. See National Electric Company

Empresa Nacional de Petroleo. See National Petroleum Enterprise

Empresa Nacional de Telecomunicaciones. See National Telecommunications Enterprise Enaer. See National Aeronautical Enterprise

ENAP. See National Petroleum Enterprise

encomenderos, 11, 141

encomienda system, 11; outlawed, 11 ENDESA. See National Electric Company

energy (see also electric power), 170-73;

privatized, 170

Engineers' School (Regimiento Escuela de

Ingenieros), 311 Enlightenment, 12-13 Ennquez, Miguel, 337

Entel. See National Telecommunications

Enterprise environmental pollution, 86, 193

Ercilla, 262

Errazuriz Talavera, Francisco Javier, 215; in elections of 1989, 215

Errazuriz Zahartu, Federico, 22, 251 Escuela de Abastecimientos y Servicios.

See Supplies and Services School

Escuela de Aeronautica Militar "Capitan

Avalos Prado." See Captain Avalos Prado Military Aviation School

Escuela de Armamentos. See Armaments

School

Escuela de Educacion Fisica. See Physical Education School

Escuela de Especialidades. See Specialists' School

Escuela de Fuerzas Blindadas. See Ar- mored Forces School

Escuela de Infanteria de Marina. See Marine Corps School Escuela de Ingenieria Naval. See School

of Naval Engineering

Escuela de Navigacion Antartica "Piloto Luis Pardo Villalon. " See Pilot Luis Pardo Villalon Antarctic Navigation

School

Escuela de Operaciones. See School of Operations

Escuela de Suboficiales y Clases. See Noncommissioned Officers' School

Escuela Militar Femenina. ^Women's

Military School Escuela Militar "General Bernardo

O'Higgins." See General Bernardo O'Higgins Military Academy

Escuela Naval. See Naval School Escuela Naval Arturo Prat. See Arturo

Prat Naval School

Escuela Superior de Guerra. See War

College

ESG. See War College Estado Mayor de la Defensa Nacional. See National Defense Staff Estado Mayor General. See General Staff ethnic groups: conflict among, 8; diversification of representation by, 78 Europe: immigrants from, 21, 25-26, 79; relations with, 18, 56; support of, for Frei Montalva, 44; trade with, 12 Europeans: relations of, with native Americans, 9-10 440
Index

European Space Agency, 179

Evangelical Pentecostal Church, 123 exchange rate, 150-51, 157; adjustments

to, 190; appreciation of, 190; importance of, 146; overvaluation of, 150, 157 exchange-rate policy, 156, 189, 190-91;

liberalization of, 140

executive branch (see also president): or- ganization of, 223-24

exports (see also under individual products), 33, 191-92; of agricultural products,

72, 140-41, 191; to Argentina, 168; of books and magazines, 168; to Brazil, 168; of copper, 3, 21, 33, 38, 54, 143,

163; dependence on, 28; diversification

of, 151; of fish products, 140; of for- estry products, 140, 191; to Germany,

168; impact of Great Depression on,

142; to Japan, 168, 192; of manufactures, 191; of materiel, 319, 320; of

metals, 21; of minerals, 21, 23-25, 191; under Montt, 21; of nitrates, 3, 22-25,

141-42, 201; nontraditional, 54, 157, 158; to Peru, 10; reliance on, 3; to United States, 38, 163, 168; of wine,

163

Fabmil. See Military Manufacturers

Fabricaciones Militares. See Military Manufacturers

Fabrica Nacional de Aeronaves. See National Aircraft Factory

Fabricas y Maestranzas del Ejercito. See Army Factories and Yards FACh. See air force Fairey Brook Marine, 322 Falange Conservativa. See Conservative Falange

Falange Nacional. See National Falange

Falcons. See Los Halcones Famae. See Army Factories and Yards

families, 131-33; extended, 131 FAO. See United Nations Food and Agriculture Organization

far north region (Norte Grande), 69-70;

agriculture in, 70; climate of, 69-70; mining in, 70; topography of, 69-70

far south region (Chile Austral), 74-75;

climate of, 74-75; size of, 74; topogra- phy of, 75

Fast Air, 178 Fatherland and Liberty (Patria y Libertad), 48, 49 FECh. See Chilean Student Federation Federacion de Estudiantes de Chile. See Chilean Student Federation

Federacion Obrera de Chile. See Workers'

Federation of Chile Federation of Retail Business of Chile (Confederation del Comercio Detallista de Chile), 257-58

Federico Santa Maria Technical University (Universidad Tecnica Federico Santa Maria), 115 Feminine Civic Party (Partido Civico Femenino), 243

Feranti International, 322 Ferdinand VII, 13 Feria Internacional del Aire. See International Air Fair Feria Internacional del Aire y del Espacio. See International Air and Space

Fair Ferrimar Limitada, 325 FIDA. See International Air Fair FIDAE. See International Air and Space

Fair

financial sector, 173-74; liberalization of, 152; under military junta, 151-53,

156-58; nationalized, 156; savings rate,

xl, 152; subsidies in, 156

fishing, 166-67; catch, 166-67; employ- ment in, 91 ; exports, 140, 165, 166; in

far north, 70; in southern region, 74 FNA. See National Aircraft Factory

FNC. See Nationalist Combat Front FNT. See National Labor Front FOCh. S« Workers' Federation of Chile Fonasa. See National Health Fund

Fondo Nacional de Salud. See National Health Fund

food: import of, 47; production, 47, 163 Forces of Order and Public Security. See police

Ford, Gerald R., 53

foreign assistance, xl; from the United

States, 38

foreign debt: under Alessandri, 44; conversion plans, 158; under Ibanez, 33; payments on, 33

foreign exchange, xxxvi, 38; abundance

of, 190; reserves, 149; sources of, 143

foreign investment, 42 441
Chile: A Country Study

foreign loans, 54

foreign policy, 44

foreign relations, 263-71

forestry, 166, 168-70; employment in, 91; exports, 140, 165, 168, 191; as percent- age of gross domestic product, 161-

62

forests: exploitation of, 168; in far north,

70; in near north, 71; old-growth, 168-70; protection of, 328; rain, 71; regeneration of, 72, 75, 168

Fortin Mapocho, 262

Foxley Riesco, Alejandro, xxxix; candida- cy of, 252 FPMR. See Manuel Rodriguez Patriotic Front FPMR-A. See Manuel Rodriguez Patriotic Front-Autonomous

France: immigrants from, 79; materiel from, 303, 316, 317, 318; military in- fluence of, 287; relations with, 264, 317

Franco, Francisco, 204 FRAP. See Popular Action Front

Freire Serrano, Ramon: exiled, 16; as president, 15 Frei Montalva, Eduardo, xl, 124, 249; in election of 1958, 43-44; in election of

1964, 44; support for, 44, 265

Frei Montalva administration (1964-70), 45-47, 89, 202; economy under, xlii, 145; land reform under, 145; relations

of, with Catholic Church, 256; trade under, xlii Frei Ruiz-Tagle, Eduardo, xl-xli, 192, 248, 295; background of, 254; candidacy of, 252

Frei Ruiz-Tagle administration, xli-xliii; relations of, with armed forces, xli-xliii Frente de Accion Popular. See Popular Action Front

Frente Nacional de Trabajo. See National Labor Front

Frente Nacionalista de Combate. See Nationalist Combat Front

Frente Patriotica Manuel Rodriguez. See Manuel Rodriguez Patriotic Front

Frente Patriotica Manuel Rodriguez-Autonomo. See Manuel Rodriguez Patriotic Front-Autonomous

Frente Popular. See Popular Front

Fresno, Juan Francisco, 208 Friedman, Milton, xxxvii FRPL. See Lautaro Popular Rebel Forces

Fuerza Aerea de Chile. See air force Fuerzas Armadas de Chile. See armed

forces Fuerzas Rebeldes Populares Lautaro. See Lautaro Popular Rebel Forces

Garcia Marquez, Gabriel, xxxvii

gas, natural, 75, 170; pipeline, 173; re- serves, 173 GDP. See gross domestic product

Gendarmerfa de Chile. See Judicial Police of Chile Gendarmes de la Frontera. See border

police General Arbitration Treaty (1902), 288

General Bernardo O'Higgins Military

Academy (Escuela Militar "General

Bernardo O'Higgins"), 282; founded, 287 General Directorate of Police (Direccion General de Poliria), 327

General Directorate of the Maritime Territory and Merchant Marine (Direccion General del Territorio Maritimo y de

la Marina Mercante), 303, 312 General Fishing Law (1991), 167 General Society of Commerce (Sociedad General de Comercio—Sogeco), 325 General Staff (Estado Mayor General), 299

Generation of 1842, 20 geography, 63-75; natural regions in, 67-75; size, 68; territorial shape, 63-

64, 68, 277 German-Soviet Nonaggression Pact

(1939), 37 Germany: immigrants from, 21, 79, 122; materiel from, 303, 316, 317; military influence of, 277, 287, 289; military

training by, 288; military training for, 311; relations with, 34, 38, 264, 317;

technical assistance, from, 331 Germany, Federal Republic of (West

Germany). See Germany

Gini coefficient, xxxix GNP. See gross national product

gold: export of, 3; mining of, 10, 163

gold standard, 32, 33 Golfo de Ancud, 72 Gonzalez Videla, Gabriel, 31, 221 Gonzalez Videla administration, 38-41 442
Index

government: armed forces as branch of,

xl; branches of, 32; encouragement of immigration by, 78-79; labor unions

under, 32-33; military officers in, 51; model for, 219-20; proportional rep- resentation in, 32; role of, in econ- omy, 6, 10, 144; role of, in pension

funds, 187; separation of church from,

32 government, local, 238-41; autonomy of, 238, 239; under constitution of 1833, 238; under constitution of 1980, 207,

223; elections for, 239; form of, 238;

oversight of, 238; patronage in, 239,

239; responsibilities of, 240 government spending: under Allende,

147; as percentage of gross national product, 217 Gran Carretera Austral. See Southern Highway

Gran Colombia, 281 Grau, Miguel, 285 Great Depression, 33, 36, 142, 201; impact of, on armed forces, 288-89

gross domestic product (GDP): under Al- lende, 147; growth of, xxix, 139, 140,

144, 151; impact of Great Depression

on, 142; per capita, 140, 144, 145, 271

gross domestic product fractions: agricul- ture, 161-62; budget deficit, 148, 149, 217; budget surplus, 219; construction, 162, 180; forestry, 161-62; livestock

sector, 161-62; manufacturing, 162; mining, 162; nitrates, 141; pension

funds, 182, 188; social programs, 98, 99

gross national product (GNP), 139; government spending as a percentage

of, 217; manufacturing as a percentage

of, 151 Grove Vallejo, Marmaduke, 31, 33, 35, 147, 200 Guzman Errazuriz, Jaime, 251, 338

haciendas {see also latifundios), 10-11, 88; indentured labor on, 20 HDI. See human development index

health: causes of death, 106; under

Parliamentary Republic, 30; public, 103, 104-5, 106

health care: access to, 98, 103; under

Ri'os, 38

health care professionals: in National Health Service, 104

health care system, xxxv, 62, 103-7; under Aylwin, 107; components of, 104-6; enhancements to, 107; govern- ment spending on, xl; private practice

in, 106; privatized, xxxviii; redesigned, 104; reform of, 182; services of, 103

health facilities: military, 103

Hiriart, Lucia, 98, 210

housing, 44, 107-8; under Aylwin, 108; construction, 107, 108, 180-82, 210; shantytowns (poblactones), 87; of elite, 86; government responsibility for, xl; low-income, 45, 86, 87, 99, 107, 182, 210; ownership of, 87; under Pinochet, 107-8; reform, 184; under Rios, 38;

shortages, 86; subsidies for, 107-8, 184;

in urban areas, 86-87 Housing Corporation (Corporacion de la Vivienda—Corvi), 107

Hoy, 262, 312 Huayna Capac, 279 human development index (HDI), 99-

100 Human Development Report, 1993, 99-100 Humanist-Green Alliance Party (Partido Alianza Humanista-Verde), 248 human rights, 233; abuses, xxvii, xl, 52, 199, 223, 256, 264, 267, 278, 291-94,

330; advocacy for, 8-9, 52, 124-25,

264, 266; organizations, 52 Humboldt current, 67 Hydrographic Institute (Instituto Hidrografico), 302

IAI. See Israeli Aircraft Industries Ibahez del Campo, Carlos, 31 ; exile of, 33

Ibariez del Campo administration: first, 32, 33-34, 201, 308; second, 41-44

ideologies, 30, 244-45; competition among, 40; as source of social cleavage,

5 IMF. See International Monetary Fund

immigrants: acceptance of, 61; acculturation of, 79; countries of origin of, 21

,

25-26, 79 immigration: encouraged, 78-79

imports, 21, 141; of food, 47; of petro- leum, 170 443
Chile: A Country Study

Inca Empire, 6 income, xl, 90-94; under Allende, 147; per capita, 139 income distribution, 44, 93-94, 183-84; under Allende, 145; under Aylwin, 99; under Frei Montalva, 45; inequality in, 183 independence, 13 Independent Democratic Union (Union Democrata Independiente—UDI),

215, 251, 254, 294, 295

Industrial Development Association (So- ciedad de Fomento Fabril—Sofofa), 28-29, 162

industrialization, 29; import-substitution,

33, 36, 37, 40, 139, 142-43, 144, 146, 202, 219, 257

Industrial Patents Law, 230

industrial production, 144, 149, 151

Industrial Workers of the World (IWW),

30

Industrias Cardoen. See Cardoen Industries industry, 162-63; employment in, 183; nationalized, 47, 142; percentage of population working in, 37; privatized,

xxxviii, 63; promotion of, 34, 40, 141 INE. See National Statistics Institute infant mortality, xxxix, 30, 54

Infantry School (Regimiento Escuela de

Infanteria), 311

inflation, 144, 219; under Allende, 50, 145, 146, 147, 148, 149; under Alessandri, 31, 44, 144; attempts to reduce, 41-42, 53, 145, 189; under Aylwin,

139, 271; under Frei Montalva, 144; under Gonzalez, 40; under Ibahez, 43, 144; under Parliamentary Republic,

28; reduced, 149

infrastructure, 192-93

inheritance, 88

Inostroza, Alfonso, 146 INP. See Institute of Pension Fund Normalization

inquilinos (tenant farmers), 11, 20, 141

Institute of Instruction and Education, 326

Institute of Pension Fund Normalization

(Instituto de Normalizacion Previ- sional—INP), 102

Institute of Public Health and Preventive Medicine (Instituto de Salud y Pre- vencion—Isapre), 105-6

Instituto de Normalizacion Previsional.

See Institute of Pension Fund Normalization

Instituto de Salud y Prevention. See Institute of Public Health and Preventive Medicine

Instituto Hidrografico. See Hydrographic Institute

Instituto Nacional de Estadfsticas. See National Statistics Institute Institutos Profesionales. See Professional

Institutes

intellectuals: support of, for Alessandri, 30

Intelsat. See International Telecommunications Satellite Corporation

Inter-American Treaty of Reciprocal Assistance (1947) (Rio Treaty), 290, 317

interest rates, 173, 174

internal security, 331-38; intelligence

services, 330-31; as mission of armed

forces, 295

Internal Security Advisory Council (Consejo Asesor de Seguridad Interior

CASI), 297-99

International Air and Space Fair (Feria Internacional del Aire y del Espacio

FIDAE), 319-20

International Air Fair (Feria Internacional del Aire—FIDA), 319

International Criminal Police Organization (Interpol), 330

International Institute for Strategic

Studies, 308

International Monetary Fund (IMF),

157, 159

International Telecommunications Satellite Corporation (Intelsat), 179

Interpol. See International Criminal Police Organization

Investigations Police, 326, 329-30, 334,

338; missions of, 329; number of members of, 329; organization of, 329-30

investment, 271; from United States, 31

IPs. See Professional Institutes Iquique: fishing in, 70; massacre of miners in, 30; port of, 178

Iran: materiel sold to, 320

Iraq: materiel sold to, 324-25

Ireland: influence of, on navy, 289

irrigation: by Araucanians, 6; in far north, 70

Isapre. See Institute of Public Health and

Preventive Medicine

444
Index

Isla de Chiloe, 72

Isla de Pascua. See Easter Island

Isla Robinson Crusoe, 67

Islas Juan Fernandez, 67

isolation, xxxv, 9, 61; under Pinochet, 55, 199, 267

Israel: materiel from, 318, 320; military

training for, 311; relations with, 317

Israeli Aircraft Industries (IAI), 319

Italy: antidrug agreements with, 334; im- migrants from, 79; materiel from, 322;

relations with, 38; technical assistance, from, 331 IWW. See Industrial Workers of the World

Japan: exports to, 168, 192; relations with, 38; trade with, 267, 268

Jews, 123 John Paul II, 125

judges, 334

Judicial Police of Chile (Gendarmena de

Chile), 336

judiciary: under constitution of 1833, 18; corruption in, 231; under military junta, 231-32; model for, 231 Junta de Comandantes en Jefe. See Council of Commanders in Chief Junta Nacional de Auxflio Escolar y Becas. See National Council for School Aid

and Grants

Kemmerer, Edwin Walter, 32, 235

Kennecott Copper, 31, 41, 42, 45; nationalized, 47, 218 Kennedy Amendment (1974), 317, 319

Kissinger, Henry, 264

Klein-Saks Mission, 41, 42 Korea, Democratic People's Republic of (North Korea): relations with, 48

Korner, Emil, 25, 287

labor, forced: of mestizos, 11; of native Americans, 3; outlawed, 11 Labor Inspectorate, 154

labor laws: of 1924, 32, 100; of 1931, 226; under Pinochet, 63

labor market: efficiency of, 182; modernization of, 182

labor movement, 259-61; growth of, 28;

in mining camps, 25; under Popular

Front government, 36; weakness in, 261 Labor Plan (1979), 54, 154, 184, 259-60;

dismissals under, 184-85; modifications

to, 260-61

labor reform, 153-55, 161 labor unions, 4, 29-30, 94-95, 184-87; banned, 52, 98, 153, 161; collective bargaining by, 154, 184, 185, 186, 230, 259; conflicts of, 184-87; under consti- tution of 1980, 207; government control of, 32-33; membership in, 95, 154, 186, 260; under military junta, 98, 259-60; revival of, 54, 184; in rural

areas, 37, 38, 39, 95; suppression of, 3, 37 La Candelaria, 165 Ladeco. See Chilean Airlines La Epoca, 262 La Escondida copper mines, 170 LAFTA. See Latin American Free Trade

Association La Fuerza de Submarinos. See Submarine

Command

La Fuerza de Transportes. See Transport

Force Lago los Santos, 74 Lagos Escobar, Ricardo, xli, 247, 248, 254; candidacy of, 253-54

lakes, 72, 74 La Moneda, xxxvi LAN-Chile. See National Airline of Chile

land: conflict over, 3; distribution of, 89-90; redistribution of, 45, 153 landowners, 30; political power of, 8, 37,

38, 39, 40, 42; resistance of, to O'Higgins, 14 land reform, 3, 4, 44, 144, 226; under Allende, 47, 89, 147; church support for, 124; under Frei Montalva, 45, 89, 202;

reversal of, xxxix, 53, 89-90, 153 land use, 90 La Prensa, 261 La Reconquista (1814-17), 13 Larrafn Errazuriz, Manuel, 255 La Segunda, 261 La Serena, 180

Lastarria Santander, Jose Victorino, 20

Las Ultimas Noticias, 261 La Tercera de la Hora, 261, 262, 295

latifundios {see also haciendas), 88-89,

141; organization of, 88-89 445
Chile: A Country Study

Latin American Free Trade Association (LAFTA), 46 La Tirana, 125 La Tribuna, 261 Lautaro, 7, 279 Lautaro Popular Rebel Forces (Fuerzas Rebeldes Populares Lautaro—FRPL),

337 Lautaro Youth Movement (Movimiento

Juvenil Lautaro—MJL), 246, 337, 338 Law for the Defense of Democracy (1948), 39 Law of Political Parties (1987), 242 Law 19,010, 198 Law 19,069, 185 League of Nations, 33, 142

legislature, 225-31; under Aylwin govern- ment, 230; under constitution of 1833,

18; under constitution of 1925, 32 Leigh Guzman, Gustavo, 203-4

Leighton, Bernardo, 330 Lend-Lease program, 38

Letelier, Orlando, 53, 230, 265, 266, 317, 330

Liberal Alliance, 31; formed, 30

Liberal era, 22

liberalism, 5 Liberal Party (Partido Liberal), 241 , 250; formed, 22; opposition of, to Roman

Catholic Church, 4, 122, 255; political orientation of, 34, 43; social class membership in, 5; support of, for Balmaceda, 26

Lieutenant Marsh Military Air Base, 308

life expectancy, xxxix Lima: liberated, 281; occupation of, 23, 282 Lmea Aerea del Cobre. See Chilean

Airlines Lmea Aerea Nacional de Chile. See National Airline of Chile

Linz, Juan J., 215 Lion of Tarapaca. See Alessandri Palma,

Arturo

literacy rate, 30, 62; of native Americans,

80; of peasants, 90

livestock, 140; cattle, 71, 74, 141; exports, 165; as percentage of gross domestic

product, 161-62; sheep, 75

living standards, xxxix, 45 Longitudinal Highway. See Pan American Highway

Los Cerrillos Air Base, 320

Los Condores Air Base, 305 Los Halcones (Falcons), 307 Los Pincheira gang, 331 lower class: political affiliations of, 5 Liiders, Rolf J., 158 Luksic Group, 263

Magellan, Ferdinand, 7 Makina, 325

Malvinas/Falklands War (1982), 278 Manuel Rodriguez Patriotic Front

(Frente Patriotica Manuel RodriguezFPMR), 209, 246, 337 Manuel Rodriguez Patriotic Front- Autonomous (Frente Patriotica Manuel

Rodrfguez-Autonomo—FPMR-A),

337, 338

manufacturing, 162-63; under Allende,

147; development of, 162-63; employ- ment in, 91; exports, 191; growth of, 29, 147, 162; nationalized, 142; as per- centage of gross national product, 151, 162; restructuring of, 156 MAPU. See United Popular Action Move- ment MAPU-L. See United Popular Action Movement-Lautaro Mapuche language, 80 Mapuche people, 6, 7, 79, 279; Christian missions among, 123; land dis- tributed to, 153; military defeat of, 25;

as percentage of population, 80; rela- tions of, with Europeans, 10; on reser- vations, 25 Mapudungu language. See Mapuche lan- guage Marine Corps School (Escuela de Infanteria de Marina), 302

Maritain, Jacques, 248

martial law, 291 Marxism, 5, 124

massacres: of miners, 30; of National Socialists, 35 Massad Adub, Carlos, 193

materiel, 316; air force, 290, 307, 309-10,

316, 322-23; army, 290, 302, 320-31; from Britain, 289, 309, 316, 317, 320,

322; of Carabineros, 328; from China,

320-21, 324; to Croatia, 237, 320; development of, 322-23; domestic, 319-25; exports of, 237, 319, 320, 446
Index

324-25; from France, 303, 316, 317, 318; from Germany, 303, 316, 317; to Iran, 320; to Iraq, 324-25; from Israel, 318, 320; from Italy, 322; navy, 290,

303, 309-10, 318, 321-22; to Pakistan, 320; to Paraguay, 320; produced under license agreements, 320-21, 322,

323, 324; production of, 325; from

Soviet Union, 318; from Spain, 323; from Switzerland, 320, 324; from Unit- ed States, 290, 303, 317, 323

Matthei, Evelyn, 252 Maxivision (TV MAX), 263 Max-Neef, Manfredo, 254

mayorazgo inheritance system, 88 Medellm Conference of Latin American

Bishops (1968), 124

media, 80, 261-63; censored, 52, 261; un- der military junta, 261-62, 263 Menem, Carlos Saul, xxxviii, 268-71

Mensaje, 262 Mercado Comun del Cono Sur. See Southern Cone Common Market

Merchant Marine, 178, 322 Mercosur. See Southern Cone Common

Market

mestizos, 78; exploitation of, 3; origins

of, 8; in work force, 20 Methodist Church, 123 Mexico: trade with, 191 middle class, 4; under Allende, 48, 149; economic power of, 40; under Gonzalez, 40; growth of, 29; political affilia- tions in, 5, 42, 43; political assertiveness

of, 29; support of, for Alessandri, 30; support of, for Frei Montalva, 44 Middle East: immigrants from, 25-26, 79

Milicia Republicana. See Republican

Militia Military Academy, 311; uniforms of, 312

Military Balance, 308

military conscripts, 310

Military Industry and Engineering Command (Comando de Industria Militar

e Ingenieria—CIMI), 320

military junta, 203-5; associations under,

98; banking reform under, 151-53,

235; business under, 258; corruption

in, 310; debt crisis under, 156-58; destructive phase of, 52; economy under,

63, 149-58; education under, 115-16;

financial sector under, 151-53; housing under, 107-8; human rights abuses

under, xxvii, xl, 52, 199, 223, 256, 264,

267, 278, 291-94, 330; judiciary under, 231-32; labor reform under, 153-55;

labor unions under, 98, 259-60; land reform under, 53, 89-90, 153; local government under, 239; media under,

261-62, 263; members of, 51-52; opposition to, 52, 208-9, 210; political parties under, 242, 246, 250; privati- zation under, 99; public employment

programs of, 155-56; public sector under, 219; repression by, 291-94; trade

policy of, 150-51; unemployment under, 92-93

military justice system, 232, 233, 291

Military Manufacturers (Fabricaciones Militares—Fabmil), 322

military officers, 34; appointment of, 295, 297; in government, 51; human rights abuses by, xl Military Polytechnical Academy (Academia Politecnica Militar), 311

military tribunals, 291

militia, 280, 282

minerals: export of, 3, 21, 191; production of, 163-64

miners: massacres of, 30; treatment of, 3

minifundistas, 1

1

Minimum Employment Program (Pro- grama de Empleo Mfnimo—PEM),

155-56 mining {see also under copper; nitrates), 10, 163-65; in far north, 70; impact of Great Depression on, 142; as percent- age of gross domestic product, 162, 163; under Pinochet, 164-65

Ministry of Defense, 328

Ministry of Finance, 225

Ministry of Health, 193 Ministry of Interior, 225, 240, 326

Ministry of Labor and Social Welfare, 154 Ministry of Planning and Cooperation,

183 Ministry of Public Education, 112 Ministry of Transportation and Telecommunications, 178 MIR. See Movement of the Revolutionary Left missions, Christian, 123

Mitterrand, Francois, xxxvii MJL. See Lautaro Youth Movement

modernization: under Frei Montalva,

447
Chile: A Country Study

202; under Prieto Vial, 18

Moffitt, Ronnie, 317 monetarism, xxxviii monetary policy, 188-89 Montt Torres, Manuel, 20; as president,

21, 200

Morris, Raimundo, 281 mountains, 64-67 Mountain Warfare School (Regimiento

Escuela de Montana), 311 Movement of the Revolutionary Left (Movimiento de la Izquierda Revolu- cionaria—MIR), 46, 50, 246, 336-37; under Allende, 48 Movimiento de Accion Popular Unitario.

See United Popular Action Movement

Movimiento de Accion Popular Unitario- Lautaro. See United Popular Action Movement-Lautaro

Movimiento de la Izquierda Revolucionaria. See Movement of the Revolutionary Left Movimiento de Unidad Nacional. See National Unity Movement

Movimiento Juvenil Lautaro. See Lautaro Youth Movement

MUN. See National Unity Movement

Mutuales de Seguridad. See Security Assistance Institutions

NAFTA. See North American Free Trade

Agreement

narcotics trafficking, 333-34; control of, 333

National Accord for Transition to Full Democracy, 208, 256

National Aeronautical Enterprise (Empresa Nacional de Aeronautica

Enaer), 307, 323

National Agricultural Association (So- ciedad Nacional de Agricultura

SNA), 96, 258

National AIDS Commission, 107 National Aircraft Factory (Fabrica Nacional de Aeronaves—FNA), 322

National Airline of Chile (Lmea Aerea

Nacional de Chile— LAN-Chile), 178

National Association of Mining (Sociedad Nacional de Mineria), 96

National Commission on Truth and

Reconciliation (Rettig Commission),

xxxvii, 237, 292, 330

National Congress (Congreso Nacional),

84; closed, 52; under constitution of

1925, 32, 225-26; opened, 225; rela- tions of, with president, 230-31

National Council for School Aid and

Grants (Junta Nacional de Auxflio Escolar y

Becas), 108-10

National Council of Television (Consejo Nacional de Television), 263

National Defense Staff (Estado Mayor de

la Defensa Nacional—EMDN), 299, 330

National Education Law, 230

National Electric Company (Empresa Nacional de Electricidad—ENDESA), 170 National Energy Commission (Comision

Nacional de Energia), 223

National Falange (Falange Nacional), 42, 248; political orientation of, 34

National Forestry Corporation (Corporacion Nacional Forestal—Conaf), 168

National Health Fund (Fondo Nacional

de Salud—Fonasa), 105 National Health Service (Servicio Nacional de Salud—SNS): created, 103; physicians in, 104

national identity, 61-62

National Information Center (Centro Nacional de Informacion—CNI), 52, 204, 330

National Intelligence Directorate (Direction Nacional de Inteligencia—DINA),

52, 204, 291, 330

Nationalist Combat Front (Frente Nacionalista de Combate—FNC), 338

nationalization, 47-48, 145, 148, 218; of copper mines, 147 National Labor Front (Frente Nacional

de Trabajo—FNT), 251 National Party (Partido Nacional), 250;

in elections of 1970, 46; in elections of

1973, 49-50; formed, 22; opposition of, to Allende, 50, 250; opposition of, to Roman Catholic Church, 4 National Petroleum Enterprise (Empresa Nacional de Petroleo—ENAP), 173 National Renewal (Renovation Nacional), 212-13, 215, 239, 251, 252, 254, 294, 295

Nationals, 244

National Security Council (Consejo de 448
Index

Seguridad Nacional—Cosena), 206,

220, 296; under constitution of 1980,

227; members of, 296; role of, 214

National Security Doctrine, 51 National Socialist Movement, 35

National Statistics Institute (Instituto Nacional de Estadi'sticas—INE), 332

National Statute for Teachers, 114

National System of Health Services (Sis- tema Nacional de Servicios de Salud

SNSS), 104-5; public health under, 104-5

National Telecommunications Enterprise

(Empresa Nacional de Telecomunicaciones—Entel), 179 National Telephone Company (Compafria Nacional de Telefonos—CNT), 179 National Telephone Company of Spain

(Telefonica), 179

National Television Network of Chile

Channel 7 (Television Nacional de Chile—Canal 7), 263

National Tourism Service (Servicio Nacional de Turismo—Sernatur), 180 National Trade Union Coordinating

Board (Coordinador Nacional de

Sindicatos—CNS), 260

National Unity Movement (Movimiento de Unidad Nacional—MUN), 251 National Women's Service (Servicio Nacional de la Mujer—Sernam), 223, 230

National Workers' Command (Comando Nacional de Trabaj adores—CNT),

260

native Americans (see also under individual

cultures), 8, 79-80; forced labor of, 3; as percentage of population, 80; rela- tions of, with Europeans, 9-10; social definition of, 79 Naval Aviation Repair Center (Centro de Reparaciones de la Aviacion Naval

CRAN), 303 Naval Aviation Service (Servicio de Aviacion Naval), 288, 302, 303 Naval Docks and Yards (Astilleros y Maestranzas de la Armada—Asmar), 321-22 Naval School (Escuela Naval), 281 Naval Shipyards and Services (Astilleros y Servicios Navales—Asenav), 322 Naval War Academy (Academia de Guerra Naval), 302, 312

navy, 302-5, 322; civic-action role of,

308; class consciousness in, 29, 310; commander in chief of, 297; conditions of service in, 310-11; education re- quirements for, 311; expansion of, 288;

influences on, 264, 289, 302; insignia, 313; materiel, 290, 303, 309-10, 318, 321-22; mutiny of (1931), 288; naval zones of, 302-3; number of personnel

in, 278; organization of, 303; origins

of, 281; recruitment for, 310-11; spending on, 309-10; technical as- sistance to, 288; training, 311-12; uni- forms, 313, 316; vessels of, 281, 284, 318, 322 Navy Infantry Corps (Cuerpo de Infanteria de la Marina—CIM), 290, 302, 303 Nazca Plate, 64 near north region (Norte Chico), 70-71;

climate of, 71; size of, 70; topography

of, 71 Neruda, Pablo, 245 Nevado Ojos del Salado, 64 newspapers {see also media), 261-62

Nicaragua: military training for, 289

nitrate mines, 141, 284; demands of, 29-30; foreign investment in, 25, 27

nitrates: boom in, 25, 201; decline in, 31; dependence on, 28; export of, 3, 22-25, 141-42, 201; as percentage of gross domestic product, 141; taxes on, 25, 141 Nixon, Richard M., 48, 53, 265 Noncommissioned Officers' School (Es- cuela de Suboficiales y

Clases), 287, 311 Norinco. See Northern Industrial Corporation Norte Chico. See near north region Norte Grande. See far north region

North, John, 27 North American Free Trade Agreement

(NAFTA), xlii, 192, 267 Northern Industrial Corporation (Norinco), 320 North Korea. See Korea, Democratic People's Republic of North Vietnam. ^Vietnam, Democratic Republic of Nunez Munoz, Ricardo, 247

OAS. See Organization of American

States 449
Chile: A Country Study

oases, 70 OECD. See Organisation for Economic

Co-operation and Development

Office of the Comptroller General of the Republic (Oficina de la Contralona

General de la Republica),, 32, 214, 218, 233-34, 296; powers of, 220, 233-34

Oficina de la Contralona General de la Republica. See Office of the Comptroller General of the Republic

O'Higgins Riquelme, Bernardo, 11, 13, 280; exiled, 14; resignation of, 15; resistance to, 14-15; as supreme director, 14 O'Higgins y

Ballenary, Ambrosio, 11; re- forms under, 11 Old Fatherland (Patria Vieja) (1810-14),

13 Onofre Jarpa, Sergio, 251 Organic Code of the Tribunals, 232 Organic Constitutional Law on Municipalities (1992), 239-40

Organic Constitutional Law on the Armed Forces (1990), 237, 296

Organisation for Economic Co-operation

and Development (OECD), 98 Organization of American States (OAS),

46

Pachacuti Inca Yupanqui, 279

Pakistan: materiel sold to, 320 Panamanian Air Service, 323 Pan American Health Organization, 106 Pan American Highway (Longitudinal

Highway), 177 Paraguay: materiel sold to, 320; military

training for, 289 Paraguayan Air Force, 323 Parliamentary Republic (1891-1925), 27-31; corruption in, 28, 201, 231;

criticism of, 30; economy under, 28; repression under, 30

Parra, Violeta, 245

Partido Alianza Humanista-Verde. See Humanist-Green Alliance Party

Partido Cfvico Femenino. See Feminine

Civic Party

Partido Comunista de Chile. See Communist Party of Chile

Partido Conservador. See Conservative

Party

Partido Democratico. See Democratic

Party

Partido Democrata Cristiano. See Christian Democratic Party

Partido Liberal. See Liberal Party

Partido Nacional. See National Party

Partido Obrero Socialista. See Socialist Workers' Party

Partido por la Democracia. See Party for Democracy

Partido Radical. See Radical Party

Partido Social Democratico. See Social Democratic Party

Partido Socialista. See Socialist Party

Party for Democracy (Partido por la Democracia—PPD), 247-48

Pascal Allende, Andres, 336

Patria Vieja. See Old Fatherland

Patria y Libertad. See Fatherland and

Liberty

patron-client relations, 5 PCCh. See Communist Party of Chile PDC. See Christian Democratic Party

peasants, 4, 20, 37, 40, 41, 42; literacy

of, 90; support of, for Frei Montalva,

44 PEM. See Minimum Employment Pro- gram

peninsulares: ethnic conflicts of, 8 Pension Fund Administrators (Administradoras de Fondos de Pensiones

AFPs), 102, 187 pension system, 100-103; choices in, 101-2; costs of, 187-88; and health

care, 103; instituted, 102; loans through, 107; payments by, 102-3; as percentage of gross domestic product,

182, 188; privatization of, 101, 187; re- form of, xl, 101; regulation of, 187, 188

Pentecostal Methodist Church, 123 peonage, 3 Perez Mascayano, Jose Joaquin, 21

periodicals, 262

Peron, Juan Domingo, 41 Persian Gulf War, 324-25

Peru: border with, 25, 64, 334; exports

to, 10; immigrants from, 25-26; in- dependence of, 281; relations with, 278;

territorial disputes with, 268, 277, 339; war with, 284

Peru-Bolivia Confederation: destroyed,

18, 263, 283; war against, 17, 282

Peru-Bolivia Confederation War (1836-

450
Index

39), 17, 263, 282-84

Peru-Chile Trench, 64 Peruvian Army, 284

petroleum, 75, 170; consumption of, 173; exploration for, 173; imported, 170; nationalized, 142; pipelines for, 173; production of, 163, 170; reserves, 173 Phelps Dodge, 165

Physical Education School (Escuela de Educacion Fisica), 311

Pico Canas family, 262

Pilot Luis Pardo Villalon Antarctic Navigation School (Escuela de Navigacion

Antartica "Piloto Luis Pardo Villa- Ion"), 312

Pincheira, Antonio, 331

Pincheira, Jose, 331

Pincheira, Pablo, 331

Pincheira, Santos, 331

Pinera, Sebastian, 252

Pinochet Ugarte, Augusto, xxxvi, 51, 203-4; ambitions of, 204, 266; as army commander in chief, 216, 226-27, 237, 278, 295; assassination attempt on, 209, 246, 337; ousted in plebescite, 98;

as president, 52-53, 199; resistance of, to opposition, 208

Pinochet Ugarte administration {see also military junta), 3, 51-56; economic

policies of, xxxvii-xxxviii, xxxix,

149-58, 162; mining under, 164-65;

opposition to, 55; privatization under,

170; role of government under, 6; social security under, 101 Pinto Claude Group, 263

Pinto Diaz, Francisco Antonio, 15-16

Pinto Garmendia, Anfoal, 22

Pizarro, Francisco, 7 Pizarro Poblete, Eugenio, 254

plebiscite of 1988. See election, plebiscite, of 1988

poblaciones callampas (shantytowns), 86, 87; support of, for Alessandri, 41 ; support

of, for Christian Democrats, 45 POJH. See Employment Program for Heads of Household

police, national. See Carabineros

police, secret, 52, 204

political activity: of armed forces, 3, 32-34; of associations, 97, 98; cultural importance of, 241

political demonstrations: under Allende,

50; against Pinochet, 55, 208

political parties (see also under individual parties), 4, 199, 201, 202, 241-42; associ- ations identified with, 97; banned, 3, 52, 242; under constitution of 1980, 207; identification with, 244; under

military junta, 242; revived, 55

political reform: obstacles to, xl political stability, xxxv, 16; under Alessandri, 44

political system: corruption in, 8

politicization, 5 Politico-Strategic Advisory Council (Consejo Asesor Polftico-Estrategico

CAPE), 297-99

Pontifical Catholic University of Chile

(Pontifica Universidad Catolica de

Chile), 115; television station of, 263

Pontifica Universidad Catolica de Chile.

See Pontifical Catholic University of Chile Popular Action Front (Frente de Accion

Popular— FRAP), 42-43; formed, 42 Popular Front (Frente Popular), 35, 245 Popular Front government (1938-41), 36-37

Popular Unity (Unidad Popular), xxxv,

46, 145, 202-3, 246; in elections of 1973, 49-50; opposition to, 49; parties

in, 46, 48, 145

population, 81, 182; age distribution in, 81-82; of Araucanians, 6; density, 81; of Easter Island, 67; percentage of, in industry, 37; percentage of, in Santiago, 83-84; percentage of native Americans in, 80; of Punta Arenas, 75; of Santiago, 83, 84, 182; urban, 82-83,

182; working-age, 183

population statistics, 80-82; birthrate, 81;

fertility rate, 81; gender ratio, 81; growth rate, 81, 84, 182; infant mortality rate, xxxix, 30, 54, 81; life expectancy, xxxix, 81; mortality rate, 81

Portales Palazuelos, Diego, 17, 27, 282;

killed, 18 Portalian State (1830-37), 17-18; evaluation of, 19

ports, 177-78; labor organizations in, 29-30; modernization of, 18

positivism, 124

poverty, xxxix, xl, 30, 183-84; extreme,

xxxix, xl, 183; reduced, 141 PPD. See Party for Democracy

Prat Chacon, Arturo, 25, 281, 285451
Chile: A Country Study

Prats, Carlos, 330 pre-Columbian civilizations, 6-7

president (see also executive branch), 200-201; under constitution of 1833,

18; under constitution of 1925, 32; under constitution of 1980, 205, 220-25; election of, 221-22; as head of armed forces, 296-97; legislative

authority of, 228; personal require- ments of, 221; powers of, 220, 221, 222, 227; relations of, with Congress,

230-31; succession to, 228; term of, 22, 32, 201, 215, 221

press (see also media; newspapers): censorship of, 17, 261

prices: agricultural, 144; in urban areas, 37

Prieto Vial, Daniel, 319

Prieto Vial, Joaquin: as president, 18 prison camps, 291

prisoners, 335-36; number of, 336; political, 291

prisons, 335-36; confinement in, 335; number of, 336; work in, 335-36

privatization: of banks, 157-58; of energy, 170; of pension funds, 187; under

Pinochet, xxxviii, 53, 63, 101, 170 Production Development Corporation

(Corporacion de Fomento de la Produccion—Corfo), 37, 142, 218, 223, 226

productivity: increase in, 161

Professional Institutes (Institutos Profe- sionales—IPs), 111, 116 Programa de Empleo Mfnimo. See Mini- mum Employment Program

Programa de Ocupacion para Jefes de Hogar. See Employment Program for Heads of Household

Protestant churches: number of, 120; worship services in, 125-28

Protestants, 122-23; and abortion, 130; and divorce, 129; increase in, 257; per- centage of, in population, 118, 257;

practicing, 119, 257

public order, 331-38

public sector: under Allende, 219; employment in, 217; expansion of, 217, 218; under Pinochet, 219

public works: promotion of, 34, 141 Puebla Conference of Latin American

Bishops (1979), 124 Puerto Aisen, 74, 75

Puerto Montt: port of, 178 Puerto Williams naval base, 303 Punta Arenas, 75; climate of, 75; oil ex- ploration in, 173; population of, 75; port of, 178; ship repair maintenance

facilities, 321 Punta Arenas naval base, 303

Puro Chile, 261

Quadragesima Anno (1931), 255 Queen's Dragons, 326

t Que PasaP, 262

Radical Party (Partido Radical), 5, 28, 241; associations identified with, 97; formed, 22; opposition of, to Alessandri, 35; opposition of, to Balmaceda,

26; opposition of, to Roman Catholic Church, 4, 122, 255; political orientation of, 34, 43; in Popular Front government, 36; in Popular Unity

government, 46; social class membership in, 5, 28, 29; support of, for Alessandri, 30

radio, 262-63 Radio Agricultura, 262 Radio Chilena, 262 Radio Cooperativa, 262 Radio Mineria, 262 Radio Portales, 262 Radio Tierra, 263

railroads, 83, 174-77; modernization of, 18, 177; under Montt, 21; regulation

of, 174, 219 Rapa Nui. See Easter Island Rapa Nui people, 79; as percentage of population, 80 Reagan, Ronald, 265-66

rebellion of 1851, 20-21; put down, 21

rebellion of 1859, 21 Recabarren Serrano, Luis Emilio, 28, 30

recession, xxxix, 55, 92 Reconquest (La Reconquista) (1814-17), 13 Red Televisiva Megavision, 263 Regimiento de Carabineros. See Carabineros Regiment

Regimiento Escuela de Artilleria. See Artillery School 452
Index

Regimiento Escuela de Caballeria Blin- dada. See Armored Cavalry School Regimiento Escuela de Fuerzas Especiales y Paracaidistas. See Special Forces School Regimiento Escuela de Infanteria. See In- fantry School Regimiento Escuela de Ingenieros. See Engineers' School Regimiento Escuela de Montana. See Mountain Warfare School Regimiento Escuela de Telecomunicaciones. See Signals School Region Militar Austral. See Southern

Military Region

religion (see also under individual denominations): freedom of, 122-23; historical perspective of, 120-25; popular beliefs

in, 125-28; syncretic, 125

religious affiliations, 118-20; of women,

119-20 Renewed Socialists, 247 Renovacion Nacional. See National Renewal

Republican MDitia (Milicia Republicana), 34 Rerum Novarum (1891), 255

research institutes, 117

reservations, native, 25, 79

retirement, 102

Rettig Commission. See National Commission on Truth and Reconciliation Rio Bio-Bio, 72 Rio Calle Calle, 72, 178 Rio Group, 268 Rio Lauca, 70 Rio Loa, 70 Rios Morales, Juan Antonio, 37-39

Rio Treaty. See Inter-American Treaty of Reciprocal Assistance Rivera, Alonso de, 279

rivers: in central Chile, 71; in far north,

70; in near north, 71 roads, 177; rural, 90

Rodriguez, Manuel, 13 Roman Catholic Church. See Catholic Church, Roman

rural areas, 88-90; crime in, 331; education in, 80; labor unions in, 37, 38,

39, 95; political orientations in, 43, 256; workers in, 4, 20, 37, 40, 41, 42, 45, 89

rural enterprises, 89

Rural Police Law (1881), 326

rural-urban dichotomy, 5

Samore, Antonio, 268 San Antonio: port of, 178 San Bernardo Prison, 336 Sandok Austral of South Africa, 321 San Martin, Jose de, 14, 280

Santa Cruz y Calahumana, Andres de,

18, 282 Santa Maria Gonzalez, Domingo, 22

Santiago: air pollution in, 193; city ser- vices in, 86; climate of, 71; distribution of social classes in, 84-86; founded, 7, 83; growth of, 28, 84; housing in, 86-87; migration to, 84, 86; population

of, 83, 84, 182; public transportation

in, 84, 86; roads in, 177; suburbanization of, 86

Santiago College, 123 Santiago International Airport, 178

Schneider Chereau, Rene, 47 School of Naval Engineering (Escuela de

Ingenieria Naval), 302

School of Operations (Escuela de Operaciones), 302

schools: administration of, 112-14; and

associations, 97; attendance in, 62; enrollment in, 108-14; for girls, 110; under Montt, 21; preprimary, 111-12;

primary, 112-13; private, 110, 112-14; reforms in, 113-14; rural, 90; secondary, 110, 112-14; state, 113; subsidies for, 112-13, 118; vocational, 110, 114

secularization, 22

Security Assistance Institutions (Mutuales de Seguridad), 105

Selkirk, Alexander, 67

Senate, 225; designated senators, xlii, 161, 207, 216, 226, 227, 294, 296; members of, 226 Sernam. See National Women's Service Sernatur. See National Tourism Service

service sector: employment in, 91

Servicio de Aviacion Naval. See Naval

Aviation Service

Servicio de Seguro Social. See Social In- surance Service

Servicio Nacional de la Mujer. See National Women's Service 453
Chile: A Country Study

Servicio Nacional de Salud. See National Health Service

Servicio Nacional de Turismo. See National Tourism Service shantytowns. See poblaciones callampas shipping, 83, 178; regulation of, 174

ships: maintenance facilities, 321

Signals School (Regimiento Escuela de

Telecomunicaciones), 311

Silva, Patricio, 107

silver: export of, 3, 21; production of, 163 Simpson, Roberto, 283

Sisdef. See Defense Systems

Sistema Nacional de Servicios de Salud.

See National System of Health Services Sistemas Defensas. See Defense Systems

slavery, 7, 8, 9, 11, 78; abolished, 15, 78 smuggling, 10 SNA. See National Agricultural Association SNS. See National Health Service SNSS. See National System of Health

Services

Social Christian Conservative Party, 42

social class: and associations, 97; as divi- sive factor, 5, 63

Social Democratic Party (Partido Social Democratico), 248

Social Insurance Service (Servicio de Seguro Social— SSS), 100-101

socialism, 30

Socialist Party (Partido Socialista), xli, 5, 37, 39, 42, 43, 241, 264; under Allende,

48; in elections of 1970, 46; in elections of 1993, xli; established, 33, 201, 247;

factions in, 247; members of, 248; opposition of, to Alessandri, 35; under

Pinochet, 52; political orientation of, 34, 43, 245; in Popular Unity coalition, 145; social class membership in, 5

Socialist Republic of 1932, 33, 200

Socialist Workers' Party (Partido Obrero

Socialista), 245; founded, 28

social organizations. See associations

social programs, 160-61, 183-84, 245; emphasis on, 184, 193

social question, 28, 30

social reform: under Alessandri, 30, 31; under Frei Montalva, 202; under mili- tary junta, 199

social security law of 1924, 32, 226

social security system, 62, 100-103; under Aylwin, 63; expansion of, 100-101;

health care under, 103; inequities in, 100-101; under Pinochet, 101; privatized, xxxviii, 99, 101; reform of, 182; spending on, 99 Sociedad de Fomento Fabril. See Industrial Development Association Sociedad General de Comercio. See General Society of Commerce

Sociedad Nacional de Agricultura. See National Agricultural Association Sociedad Nacional de Mineria. See National Association of Mining

Society of Equality, 20

Sofofa. See Industrial Development Association Sogeco. See General Society of Commerce

Southeast Pacific Airline, 178 Southern Cone Common Market (Mercado Comun del Cono Sur—Mercosur), xlii, 192, 268

Southern Highway (Gran Carretera Austral), 177 Southern Military Region (Region Militar Austral), 297

southern region (Sur de Chile), 72-74; cli- mate of, 72-74; immigrants in, 122; topography of, 72-74

Southern University of Chile (Universidad Austral de Chile), 115

Soviet Union, 245; aid from, 48; materiel from, 318; relations with, 39, 46, 48

Spain: immigrants from, 79; influence of, 3; materiel from, 323; military train- ing for, 311 Spanish Air Force, 323

Spanish Civil War: neutrality in, 34

Spanish conquest, 7-10

Spanish language, 80

Special Forces School (Regimiento Escuela de Fuerzas Especiales y Paracaidistas), 311

Specialists' School (Escuela de Especialidades), 312

SSS. See Social Insurance Service

State Bank of Chile (Banco del Estado de

Chile), 218

State Railroad Company (Empresa de

Ferrocarriles del Estado), 177

State Technical University (Universidad Tecnica del Estado), 115

stock exchange, 173

Strait of Magellan, 75, 277; oil exploration in, 173 454
Index

strikes, 29-30; under Allende, 50; end of, 186; under Pinochet, 54; replacements

in, 186

structural adjustment program, 147, 156-

58; goals of, 157

students: associations of, 97; opposition

of, to Allende, 50; political activities of, 47, 209; support of, for Alessandri, 30 Subercaseaux Zafiartu, Benjamin, 63 Submarine Command (La Fuerza de

Submarinos), 303

subsidies: of debtors, 156; education, 115; housing, 107, 108; military, 308-9

Sucre, Antonio Jose de, 281

suffrage. See voting

Sumimoto Metal Mining Company, 165

Supplies and Services School (Escuela de

Abastecimientos y

Servicios), 302 Supreme Command of the Armed Forces (Comando Supremo de las Fuerzas Armadas—CSFA), 299 Supreme Court, 232, 334; under Allende, 231; under Aylwin, 233; functions of, 232; members of, 232, 233; under mili- tary junta, 232; reform of, 233 Sur de Chile. See southern region Switzerland: immigrants from, 79; materiel from, 320, 324

Taiwan: military training for, 311 Talcahuano: port of, 178

tariffs. See customs duties

taxes, 21; under Aylwin, xl, 93, 99, 219;

local, 239; on nitrate exports, 25, 141; reform of, xxxviii, 45, 160-61 TCE. See Electoral Certification Tribunal

teachers: tenure for, 112; training of, 110, 112, 1 14; working conditions for, 112, 114

Technical Training Centers (Centros de Formation Tecnica—CFT), 111, 116-

17, 182 telecommunications, 178-79; modernization of, 18; under Montt, 21; privatized, 179; reforms of, 178-79; service, 179

Telefonica. See National Telephone Company of Spain

Telephone Company of Chile (Compafria

de Telefonos de Chile—CTC), 179

Telephone Company of Coihaique (Compama de Telefonos de Coihaique), 179

television, 263

Television Nacional de Chile—Canal 7. See National Television Network of Chile—Channel 7 Territorio Chileno Antartico. See Chilean

Antarctic Territory

terrorism, 246, 336-38; frequency of, 338

Tlatelolco Treaty, 338

Tocopilla electric power station, 170 Tomic Romero, Radomiro, 46, 47, 249

topography: of central Chile, 72; of far north, 69-70; of far south, 74-75; of near north, 71; of south, 72-74 Torquemada Aeronaval Base, 303

Toto, Horatio, 330

tourism, 74, 180

trade {see also exports; imports): with Argentina, 11-12, 191; under Bourbon

rule, 1 1-13; with Colombia, 191; with Europe, 12; with Japan, 267, 268;

liberalization, 150; with Mexico, 191;

policy, xxxix, 150-51, 191-92; with United States, 12, 31, 267; with Venezuela, 191 Trade Union Confederation of Business

Retailers and Small Industry of Chile (Confederation Gremial del Comercio

Detallista y de la Pequeha Industria de

Chile), 96

transportation, 174-78; development

of, 25; infrastructure, 174; investment

in, 174; public, 84, 174; railroads, 83; reform of, 14, 174; regulation of, 174;

rural, 90; water, 83; to work, 87 Transport Force (La Fuerza de Transposes), 303

treaties, 227, 230, 268

Treaty of Ancon (1883), 22, 277

Treaty of Mutual Defense (Bolivia-Peru), 284

Treaty of Paucarpata (1837), 282 Treaty of Tacna-Arica. See Treaty of Ancon

Treaty of Versailles (1919), 288

Tribunal Constitucional. See Constitutional Tribunal Tribunal de Certification Electoral. See Electoral Certification Tribunal Truck Owners Association (Asociacion

Gremial de Duefios de Camiones), 257 TV MAX. See Maxivision 455
Chile: A Country Study

UCC. See Union of the Centrist Center UDI. See Independent Democratic Union

Ultima Horn, 261 unemployment, 182-83; under Alessandri, 34, 44; under Aylwin, 139, 183; under Ibanez, 33; under Pinochet, 3, 92-93, 150, 156, 260; rate of, 90 Unidad Popular. See Popular Unity

Unidad por la Democracia. See Unity for Democracy

Union de Centro Centre See Union of the Centrist Center Union Democrata Independiente. See In- dependent Democratic Union

Union for the Progress of Chile (Union

por el Progreso de Chile), xli Union of the Centrist Center (Union de Centro Centro—UCC), 241, 251-52, 254 Union por el Progreso de Chile. See Union for the Progress of Chile Unitary Confederation of Labor (Confederation Unitaria de Trabaj adores

CUT), 95-96, 259, 260 Unitary Socialists, 248 United Federation of Chilean Workers

(Central Unica de Trabajadores de Chile—CUTCh), 43; outlawed, 54 United Labor Confederation (Central

Unica de Trabajadores—CUT), 95 United Nations, 46 United Nations Development Pro- gramme, xxxix, 99-100

United Nations Economic Commission

for Latin America (Comision Economica para America Latina—CEPAL or ECLA), 146 United Nations Economic Commission

for Latin America and the Caribbean

(Comision Economica para America

Latina y el Caribe (EC LAC), 140, 183 United Popular Action Movement (Movimiento de Accion Popular Unitario

MAPU), 46, 337 United Popular Action MovementLautaro (Movimiento de Accion Popular Unitario-Lautaro—MAPU-L),

246, 337, 338 United Provinces of the Rio de la Plata, 280 United States: advisers from, 38, 39; aid from, 38, 46; covert operations by, 49,

265; exports to, 38, 168; influence of, 3; investors from, 25, 27, 31, 39, 46; loans from, 38, 39; materiel from, 290,

303, 317, 323; military assistance from,

38, 317; military influence of, 289, 290-91, 290-91; military training by,

264; military training for, 311; relations with, 18, 34, 46, 48, 53, 56, 264-67;

support of, for Balmaceda, 26; support

of, for Frei Montalva, 44; trade with,

12, 31, 38, 192, 266, 267 United States Export-Import Bank, 37 United States Federal Aviation Administration, 325 Unity for Democracy (Unidad por la Democracia), 215 Universidad Austral de Chile. See Southern University of Chile Universidad Catolica de Valparaiso. See Catholic University of Valparaiso

Universidad de Chile. See University of Chile Universidad de Concepcion. See University of Concepcion

Universidad del Norte. See University of

the North

Universidad de San Felipe. See University of San Felipe Universidad Tecnica del Estado. See State Technical University Universidad Tecnica Federico Santa

Maria. See Federico Santa Maria Technical University

universities, xxxv, 115; enrollments in, 111; inequities in, 113, 115, 117; pri- vate, 116; purged, 52, 115; reorganization of, 115-16; subsidies for, 115,

118, 230

University of Chile (Universidad de

Chile), 20; established, 62; student political activities in, 29; television station

of, 263; women in, 62, 131-32

University of Concepcion (Universidad de Concepcion), 115

University of San Felipe (Universidad de San Felipe), 115

University of the North (Universidad del Norte), 115 urban areas, 38, 82-88; communications

between, 83; defined, 82; development

of, 83; growth of, 28; labor organizations in, 29-30; planning of, 83; population in, 82-83, 182; prices in, 37 456
Index

urbanization: under Parliamentary Republic, 28-30 urban migration, 28, 82, 83, 84

Valdivia, Luis de, 8-9

Valdivia, Pedro de, 7, 279; killed, 7 Valle Central. See Central Valley

Valparaiso, 71, 84; Drake's raid on, 9; founded, 83; growth of, 28; port of, 178 Vatican Council II, 124 Venezuela: military training for, 289;

trade with, 191 Vicaria de la Solidaridad. See Vicariate of

Solidarity Vicariate of Solidarity (Vicaria de la Solidaridad), 124-25, 256

Viceroyalty of the Rio de la Plata (see also Argentina), 280; trade with, 11-12 Vicuna Mackenna, Benjamin, 331 Vietnam, Democratic Republic of (North

Vietnam): relations with, 48

volcanoes, 64-67

voter registration, 210, 246

voting, 35-36; expansion of, 200; by women, 4, 36, 242

wages, 63; under Allende, 48, 145, 147,

149; under Aylwin, 91, 139; depression

of, 3; under Gonzalez, 40; indexation

of, 153-54, 155, 185; under labor re- form, 161; minimum, 41, 226; real, 41 War Academy (Academia de Guerra),

277; founded, 287 War College (Escuela Superior de Guerra—ESG), 311 War of the Pacific, 22, 23-26, 64, 263,

268, 277, 283-87

wars of independence (1810-18), 13-14

welfare system, xxxv, 4, 62, 98-108, 202,

245; dismantled, 54; inequalities in, 62;

in Popular Front government, 36

wheat: export of, 3

Wheelwright, William, 18

wildlife, 74, 328 Williams Rebolledo, Juan, 284

wineries, 84, 163 women: in armed forces, 310; in Carabineros, 328; education of, 62, 131-32; employment of, 90, 131-32,

133, 260; as mothers, 133; political activities of, 242-43; political affiliation

of, 42, 242-43, 256; political influence

of, 5; radio station for, 263; religious

affiliation of, 119-20; rights of, 248;

roles of, 132-33, 256-57; support of, for Alessandri, 44; voting by, 4, 5, 242 Women's Military School (Escuela Militar Femenina), 311 workers (see also under labor), 62-63; exploi- tation of, 3; income of, 40; minimum

wage for, 41; political affiliations of, 5, 42; repression of, 63; rights of, 32, 259;

in rural areas, 4, 20, 37, 40, 41, 44, 45, 89; violence against, 4 Workers' Democratic Federation (Central Democratica de Trabajadores—CDT),

260

Workers' Federation of Chile (Federation

Obrera de Chile—FOCh): formed, 30 Workers' Security Fund (Caja del Seguro

Obrero), 100 work force, 90-84; participation rate, 90, 183; women in, 90 working class: under Allende, 48; de- mands by, 28; political affiliations of, 43; support of, for Alessandri, 30 working conditions, 63 World Bank, 157, 159 World War II: neutrality in, 38, 289

Yugoslavia: relations with, 39

Zaldfvar, Andres, 205

457

Contributors

Paul W. Drake is Professor of Political Science, Department of

Political Science; Adjunct Professor, Department of History;

and Adjunct Professor, Graduate School of International Relations and Pacific Studies, University of California at San

Diego, La Jolla, California. From September through December 1993, he was a Visiting Scholar at the Instituto Juan March,

Madrid, Spain.

Alejandra Cox Edwards is Professor of Economics at California

State University, Long Beach, and, in 1993-94, an economist

with the World Bank, Washington, D.C.

Sebastian Edwards is Henry Ford II Professor of International

Business Economics in the John E. Anderson Graduate School

of Management at the University of California, Los Angeles,

and, in 1993-94, Chief Economist, Latin American Division,

the World Bank, Washington, D.C.

Adrian J. English is Defence Consultant and Analyst, Dublin,

Ireland.

Rex A. Hudson is Senior Research Specialist in Latin American

Affairs with the Federal Research Division of the Library of

Congress, Washington, D.C.

Scott D. Tollefson is Assistant Professor of Comparative Politics

and Latin American Studies in the Department of National

Security Affairs at the Naval Postgraduate School in Monterey,

California. From August 1993 through April 1994, he lived

in Vina del Mar, Chile, while engaging in research as a Visiting Researcher at the Latin American School of Social Sciences

(Facultad Latinoamericana de Ciencias Sociales—FLACSO)

in Santiago, Chile.

Arturo Valenzuela is Deputy Assistant to Assistant Secretary for Inter-American Affairs Alexander F. Watson, United States Department of State. Prior to assuming that position on January 3, 1994, he was Director, Center for Latin American

Studies, and Professor, Department of Political Science, at Georgetown University, Washington, D.C.

459
J. Samuel Valenzuela is Senior Fellow at The Helen Kellogg Institute for International Studies, University of Notre Dame,

Notre Dame, Indiana, and Professor and Chair of Sociology

at the University's Department of Sociology. From September 30, 1992, until August 1993, he was a Visiting Fellow at Oxford University (St. Antony's College), Oxford, England.

460
Published Country Studies

(Area Handbook Series)

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550-150 El Salvador 550-35 Nepal and Bhutan

550-28 Ethiopia 550-88 Nicaragua 550-167 Finland 550-157 Nigeria 550-155 Germany, East 550-94 Oceania

550-173 Germany, Fed. Rep. of 550-48 Pakistan 550-153 Ghana 550-46 Panama

461
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550-51 Saudi Arabia 550--99 Yugoslavia 550-70 Senegal 550--67 Zaire 550-180 Sierra Leone 550--75 Zambia

550-184 Singapore 550--171 Zimbabwe

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550-179 Spain 550-96 Sri Lanka

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462



PIN: 004252-000