History of Chile

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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 Mapuche's own name means "people (che) of the land (mapu)." Another meaning attributed to Chilli is the onomatopoeic cheele-cheele--the Mapuche imitation of a bird call. The Spanish conquistadors heard about Chilli from the Incas of Peru, who had failed to conquer the land inhabited by the Araucanians, of which the Mapuche in central Chile was the most warlike group. The few survivors of Diego de Almagro's first Spanish expedition south from Peru in 1535-37 called themselves the "men of Chilli."

As native American tribes became for the United States, the Araucanians, who mastered horsemanship and Spanish military strategy, became part of Chile's "noble savage" lore. This is exemplified by the legend of the Mapuche warrior Lautaro (the Chilean equivalent of the North American Apache Geronimo) in the epic poem "La Araucana," written, initially on bark, in the 1560s by Spanish soldier-poet Alonso de Ercilla y Zúñiga. This conquistador may have been the first to employ the term "Araucanian" (araucano, from arauca, the Inca word for enemy), which has been widely used as a general term for Chile's indigenous peoples. The Spaniards and their criollo successors continued to wage warfare against the Mapuche until 1883, when the government was forced to grant them autonomy. The Mapuche population has increased significantly in the twentieth century, to about 928,000 in 1992, but they have not had much cultural influence on the largely European and mestizo population of Chile.

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, after Uruguay, 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, particularly after adoption of the 1833 constitution. After a period of quasi-dictatorial rule in the 1920s and early 1930s, Chile developed a reputation for stable democratic government. Like Uruguayans, Chileans have benefited from state-run universities, welfare institutions, and, beginning in 1952, a national health system. Sociologist J. Samuel Valenzuela points out in "The Society and Its Environment" chapter that Chilean universities, for example, contributed to the Chileans' strong sense of national identity.

Throughout the 1970-90 period, however, 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 socialism, it ended the 1980s with a widely acclaimed free-market economy and a military government that had committed itself, albeit 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 works 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 Demócrata Cristiano--PDC), Chile's largest single party, began to view the Allende government's socialist economic policies as a threat to the constitutional order that the armed forces felt duty-bound to uphold, at whatever cost. 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 commander 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 by 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 became 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 Allende government's downfall to a large extent on its disregard of "many of the key principles of traditional economic theory." In their analysis, Allende's UP government did this not only in its monetary policies but also in its lack of attention 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 coup." Thanks in large part to the assassination myth that Cuban president Fidel Castro Ruz and Colombian novelist Gabriel García Márquez helped to create, the left-wing version is still widely believed. Available evidence, however, is adequate to reasonably conclude that Allende committed suicide with the AK-47 assault rifle given him by Castro. Scholars such as Paul E. Sigmund and James Dunkerley believe it was suicide, and reference sources and mainstream news media tend to use this version. For example, in a New York Times report on the twentieth anniversary of the coup, correspondent Nathaniel C. Nash states that Allende "killed himself rather than be taken."

It is fairly well known that Allende was a long-time admirer of Chilean president José Manuel Balmaceda Fernández (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 Congress. In contrast to Peruvian president Alberto Fujimori's bloodless "self-coup" in April 1992, in which he dissolved the National Congress for being "obstructionist," Balmaceda's attempt to establish a strong executive and destroy the National Congress (Congreso Nacional; hereafter, Congress) resulted in the deaths of 10,000 Chileans. Yet Balmaceda's economic nationalism made him a hero of the left. 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 François 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 Azócar (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 systematic 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, it avoided the corporatist economic policies often associated with authoritarian military rulers and favored by Chile's industrial bourgeoisie and landowning class. Instead, Pinochet listened to economic guidance offered by students of the University of Chicago's Milton Friedman, a spokesman for monetarists. This connection developed because of the Catholic University of Chile's exchange program with the University of Chicago, whose Chilean graduates won Pinochet's ear. Determined to transform Chile's statist economy, Pinochet embraced the free- market, export-oriented economic model recommended by the so-called "Chicago boys". These 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, 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 (Concertación 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 coalition was unable to offset the nine Pinochet-designated senators, making the CPD's plans to further reform 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 growth rate in 1990 was only 2.1 percent. In addition to continuing Pinochet's free-market policies, Aylwin enhanced the former regime'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 economic 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 percent 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's 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 distribution. More than 40 percent of the population, or about 5 million Chileans, remained poor, with 1 million of them living in extreme poverty. According to Chilean sociologists Cristóbal Kay and Patricio Silva, who was health undersecretary in the early 1990s, extreme poverty 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 of 0.64, according to the United Nations Development Programme.

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 visiting 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 virtual 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 accused 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 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, especially the well-regarded son of Eduardo Frei Montalva (1964-70), one of Chile's most respected presidents. Eduardo Frei Ruiz-Tagle entered politics only in 1989, when he ran successfully for a Senate seat from Santiago. Until the late 1980s, he had devoted his career to hydrology as a partner in Sigdo Koppers, an engineering firm. 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 inheritance, 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 earned a reputation as a fiscal moderate. His positive public rating, according to a Center for Public Studies (Centro de Estudios Públicos--CEP)-Adimark poll of July 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 nearly 58 percent of the vote, compared with 24 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 (Unión por el Progreso de Chile). Frei received the largest popular mandate of any Chilean leader since 1931. The election was a sort of reverse replay of the 1958 election, when Frei's father was defeated by Alessandri's uncle, Jorge Alessandri Rodríguez (president, 1958-64). Moreover, Frei Ruiz-Tagle allied himself with the PS, whereas his father joined in an alliance with the right, specifically the National Party (Partido Nacional). 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 Ruiz-Tagle, unlike his late father, is not distinguished for his public oratory, Chileans regarded his low- key, nonconfrontational, and statesmanlike campaigning style, as well as his penchant for consensus-building, 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. 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 eight "designated" Senate seats, 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 appeared to be inclined to reverse Chile's disinterest in regional trade pacts. In particular, his government was reassessing the potential benefits of joining the Southern Cone Common Market (Mercado Común del Cono Sur-- Mercosur; and expected that Chile would become an associate member by January 1995. After the United States Congress ratified the North American Free Trade Agreement in November 1993, Chile began lobbying to join a similar agreement with the United States (one which would drop the "North" from NAFTA), citing President Bill 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 nine 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 Chile's pre-coup democracy, its 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 (Corporación 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$190 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 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 did 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 may need to await the general's scheduled retirement in 1997. Even then, however, Chile's transition to democracy will not be fully consolidated until reform of constitutional anachronisms, such as the immunity of military commanders to presidential dismissal, the binomial electoral system, and the designated senators.

More Chile History

SOURCE: Area Handbook of the US Library of Congress

Mother Earth Travel > Country Index > Chile Map Economy History