January 8, 2009
1 Introduction
The Chilean state is structured on a representative and democratic sys-
tem which has been created after Pinochet’s constitution in 1980. It has
been reformed in 1989 in order to put the bases of the new Chilean state.
Chile is a decentralised state that is formed for 12 regions and the metrop-
olitan region of Santiago, that is its capital. However, the most important
decentralised institutions are the communities because they are elected di-
rectly by the citizens.
Chilean main resource is cooper and nitre. They are one of the most
important producers all around the world. Nowadays, Chilean economy is
more diversified than some years ago.
The history of Chilean relations with their neighbour has been charac-
terised by cycles. In summary, we could observe isolation and confrontation
periods. On the other hand we could find integrational time with them.
Latin America colonisation was legitimated by the Pope as a process of a
new Christianised world. Spanish Empire received the papal bull to impose
its sovereignty in that territory. The treaty of Tordesillas (1494) divided the
New World inequally between the two powers, Portugal and Spain, and gave
to this one the ma jor share of the Western Hemisphere [1].
As a mercantilism empire, Spain looked for extracting gold, silver and
other natural resources. Mercantilism was the economic thinking since five-
teen century. Colonies were desired to get materials for businesses to the
mother country [2].
However, Chilean territory didn’t have so much resource of gold and sil-
ver as their Peruan neighbour, therefore the Chilean conquest was slow and
complete. The conquest of Chile covered since 1541 to 1598, period that in-
volved different fights against Mapuches. But in general, Chile did not have
an economy based on a large indigenous labour supply ([3], p. 3).
The independence movement was influenced by French and North Amer-
ican revolution. Also Napoleon invasion provided the opportunity to start
their emancipation cycle to the new Creole society. Spains empire began a
process of disintegration while France established their new monarchy with
Jos´e I [1]. Chile institutions were forgotten by breaking to some considerable
degree with the colonial cultural and institutional legacy ([3], p.4).
As soon as the emancipation finished, Latin America became a geopolit-
ical issue of dispute in order to get the influence in this South Hemisphere.
Chile has suffered these hegemonies due to the powers increased their strate-
gical value because of the existence of Guano and Cooper. The different
affairs of Chile have been interfered by US and Britain for the last two cen-
turies.
In this paper we are going to analyse the different development models and
policies that Chile has been taking. We could find some sociological model
based on the exportation and dependency. On the other hand we might
find some neoliberal thinking that has made to decrease the intervention of
the state. We will also mix that policies with the hegemony that they have
provided and we will answer what was their real influences in the Chilean
affairs. The relations between Chile and their neighbours will be another
important topic to understand how the Chilean development was. In this
sense we will see how good relations might mean a step to development
2 From the creation of the state to Chilean
socialism
2.1 Consolidation of Chilean state, democratic state
and the basis of structural model
Chile was a strong state, built around democratic and republican values
based on US revolution. It was Diego Portales who established a constitu-
tional order that provided a stable dynamics and institutions. In this sense
the system was characterised by a high level competition and open partici-
pation which emerged because of the unability of the aristocracy to maintain
the colonial status quo . There are many factors that influenced on creation
of Chilean state.
First, the national identity avoided the transmission of foreign Latin
American ideas and strengthened Chilean republican values. Diego Por-
tales’s death during the war against Per´
u and Bolivia Confederation was
understood as a national injury and an interference from this confederation
leader, Santa Cruz. So the victory over them meant a union between the
different important Chilean families who had been fighting to get the power
since 1830 civil war.
Another important issue was state autonomy. Bulnes president inaugu-
rated (1841-1851) a liberal period where we find tree variants. First, Bulnes
permitted the growth of the Parliament which meant the beginning of power
balance between institutions. Second, the state gained autonomy from the
traditional land elite because of the increasing of exportation and mineral
searching. Balmaceda president(1886-1891) refused to give power to local
governments so as not to transfer power to notables. Third, he firmly ex-
changed his role as commander-in chief of the armed forces for that of civilian
president ([4], p. 72). That was a separation between military and civil at-
mosphere and it was a clear difference in comparison to other Latin-American
countries.
Plurality of parties was another mark of strength in this direction. In
1850s was the foundation of Conservative Party around lander elite against
Montt Administration, and tried to press to accelerate secularisation and
decentralisation in order to get local notables’ power. At the same time, the
liberalism emerged under the influence of 1848 France revolution. Radical
party was born in 1859 representing the anticlerical and mining interest. Dur-
ing Irrazaval Government, conservatives and the church accepted democracy
and its legitimacy [4]. In summary, the conservatives helped the system by
supporting democratic rules. This plurality entailed suffrage extension which
made possible the workers movement to become legal. In 1921 Chilean Com-
munist Party was officially founded. So extension of suffrage permitted to
extend the party system. The only party emerging after 1930 was Christian
Democratic party and then, as Linz said, Chile was configured as a complete
system which was polarised and multidimensional.
In spite of Congress control, Leadership was another important issue.
Balmaceda, Montt, Irrazazabal, etc., were elected as presidents since the
Creation of the state. In this sense Chile elected all its presidents since 1830
to 1973. It had just been broken in 1891 because of a civil war and in the
period between 1924-1932.
We also remark the Parliamentary control. We could see after the civil
war when Balmaceda dead. For more than 3 month Senate and Congress
were governing the republic and this inaugurated a parliamentary system
(1891-1927).
Concrete political and social agreements also built on this strong founda-
tion to consolidate the legitimacy of the state and in particular, contributed
to the early acceptance of compromise state ([5], p. 300). It was an agree-
ment between different class that lead the process towards and extension of
social welfare.
In 1920’s decade, Chile had been suffering an instability age that started
with a young military coup (1924) against landowner. After Figueroa, Ib´
añez was elected. He was a military who tried to provide a nonpolitical option. It
was not a dictator but it was a repressive regimen. It became a democratic
crisis which finished with a socialist republic for nineteen days. Alessandri
came back and An effective democratic response to economic crisis was evi-
denced in Chile during the 1930’s when Alessandri brought the country out
of the great depression with firm austerity measures and a strong commit-
ment to democratic institutions, following a period of acute instability ([3],
p. 17).
2.2 Pacific war
Substantial wealth were created from rich resource of Guano, silver and
nitre which was extracted in deserted region of Atacama. On adjacent Tara-
paca zone in Per´ u, the situation turned out to be equal; there were big
deposits of natural resources to be exploited. However, the main difference
was that enterprise got profits from there so as to give it to several interest.
So, only 20 % of this enterprise were Chilean, in contrast with the other
side where a 50 % were peruan. In addition, the rest of the enterprise were
divided between german and British.
In 1876 the President of Bolivia Tom´ as Fr´ıas was resigned by a military
breakdown, which main role was Hilari´ on Daza. He stabilised a tax of 10%
for exported quintal in nitre by Nitre and Railway of Antofagasta company
that was Chilean and Britain capital. In this sense, this measure infringed
1874 treaty.
In Harold Blakemore words: “10 cents could have turned non economic
the operation of the company against Tarapac´
a nitre competition. So one can imagine that the real intention of General Daza was longer than get a big collect”. Therefore it was a manoeuvre in order to destroy Chilean nitre competitors. However one can see a imperialist hand in this issue because the Britain economic interest was involved in that operation. So, the success
that followed this process could be considered as a proof of the Britain empire
in Chile.
Another factor that increased the tension was a secret pact between Per´
u and Bolivia which entailed a defencive alliance. In this sense, as Manuel
Pardo told to his Brasilian equivalent, the ob jective of the pact was stop
Chilean expanding. As we observe this is an important issue and reclaim
against Chile from his neighbour. However, Argentina did not join it in spite
of Peruan attempt.
Moreover, there were another economic factors in this secret alliance.
Before war, Per´ u and Bolivia had together the global monopoly of Natural
nitre and guano production but with forty one percent of the companies in
Chilean, Britain or German hands.
Then Bolivia and Per´ u did not accept an arbitrage in order to solve this
issue as Chilean government claimed. So president Anibal Pinto, considering
that Bolivia broke 1874 treaty, ordered Chilean army to occupy the territories
where Chile was a state before the treaty. At the same time, General Daza
decreed the expropriation and sold of Chilean company properties. But that
decision could be completed because of Antofagasta occupation by Chilean
forces. Immediately Per´ u declared war against Chile because of Secret Al-
liance with Per´ u. A maritime and overland campaign started which finished
with Chilean conquest of Lima in 1883.
After the Battle of Arica, the victory completed Chile’s conquest of Ni-
trate Region and added another page of patriotism to Chilean school text-
books. IT also prompted the United States and England to offer mediation,
but when Per´ u knew of Chile’s territorial demands, it rejects the gesture ([6],
p. 101).
Chile got a big amount of natural resources that are situated in the new
sovereignty zone due to getting territories in the North of Arica. Nowadays,
Chile is the biggest cooper producer all around the world. For example El
teniente mine is situated in the zone that Chile got because of the Pacific
war.
There we also could find guano and nitre resource and a touristic impor-
tant landscape as Atacama desert. On the other hand Chile was forced to
ceded some places in Patagonia to Argentina in order to not to develop a
four countries war. In that process we observed one of the first American
intervention in their hemisphere when US tried to mediated between parts.
Pacific war is origin of limit conflicts between Chile and their neighbours
Per´ u and Bolivia and it is cause of territorial sovereignty reclaim from both
countries. In summary, we are able to say that this war has been influenced
by the relations of that countries for more than one century. Still now, it
represented an important issue in national policies.
In our opinion, as a consequence of this war, it was established a Chilean
national dynamics toward region about international relations. So this is the
real origin of Chilean way to understand and to apply diplomacy, foreign
policy and other issues. In addition, Chile has had a strong position against
land re-vindication for more than one century in order to external and inter-
nal consequences of this conflict. Moreover, it marked a Chilean way to solve
conflicts between nations. This means that Chile has practised a diplomatic
dynamics which understood only bilateral solutions and relations. This issue
is one of the reason of some Chilean isolation during his history.
2.3 Panamericanism vs bolivarianism
There have been two different point of view in South America. Panamer-
icanism which was impulsed by US, suggested governmental agreements be-
tween states in order to solve hypothetical problems.
US interest in the region emerged with Monroe Doctrine in 1823, which
originated protoimperialism because it was the first American issue about
foreign policy. Moreover, it meant the wish of US to turn into as a super-
power. It impulsed the idea of two different hemispheres as hegemonic zones
of US and Europe powers.
Monroe doctrine says that the American continents, by the free and in-
dependent condition which they have assumed and maintain, are henceforth
not to be considered as sub jects for future colonisation by any European
powers...”. We owe it, therefore, to candour and to consider any attempt
on their parts to extend their system to any portion of this hemisphere as
dangerous to out peace and safety[1]. In short, we could observe that it was
the origin of US interventionism because of national security.
Contrarily to US wishes, it emerged bolivarianism in 1823 Panam´ a Conference as an integrational idea against North American expansionism. It
expected to be the union between Latin America state, as well as it defended
sovereignty with respect to uti possidetis iuri in 1810 and non intervention
principle. Hence, we could say that it was a collective security system that
was based on sovereign equality. Panam´ a Congress in 1826 where Chile and
US were absent, adopted four treaty inspired by principles as Latin American Union, Judgement as the way to keep peace, mutual defence and non
interventionism. This movement failed due to the rising of the nationalism
around Latin America. However, there were some subsequent attempts to
integration as Lima Congress (1848) or Chile Continent(1856). Integrational
ideas did not rise again until 1960s.
On the contrary, US foreign policy have had some continuity components
in their foreign policy towards Latin America:
•
They have shown it as a Security Interest but it was expressed as moral
doctrine.
•
They have had Double ob jective in order to stimulated stability and to
avoid external interventions.
•
They have been applying subregional politics.
Pan-Americanism emerged in 1880. It proposed a hemispherical frame of
free trade and pacific resolution of conflicts, as well as agreements leads by
US. In order to get it, they impulsed the bureau of the American republics
in 1989.
From this thinking emerged lately other organizations as ASO.
US became a global power in this hemisphere after 1898 war against
Spain which was justified by Platt amendment meaning a new imperialism
in the region. Roosevelt Corollary (1902) continued in this sense. It said:
..chronic wrongdoing, or and impotent which results in a general loosening of
the ties of civilised society, may in America, as elsewhere, ultimately require
intervention by some civilised nation, and in the western hemisphere the
adherence of the United States to the Monroe Doctrine may force the United
States. However reluctantly...to the exercise of an international power [1].
Later F.D Roosevelt impulsed the good Neighbour policy focused on a non
intervention as a pillar of USA foreign policy.
From our analysis we observe that Chilean state has ever been near to
panamericanism point of view. In fact we look some factors that configurated
it:
7
First, in spite of embrace in Maip´
u between Chilean liberators OHiggins
and Argentinean Jos´e de San Mart´ın, Chilean society considered them-self
as a nation before being a state. That was so because of their colonialism
status was as of a secondary importance. Hence, this pertinence feeling as a
nation came on top of hostility against old colonies considered as first level
by Spanish Empire, impulsed a rejection towards integrational organisms.
Thus it was difficult to Chilean state to transfer competencies and to start
an integrational process when Chilean society only recently had acquired
national sovereignt.
Second, another factor was a civil war that happened in Chile between
different factions including loyal Spanish forces. It is also to be remarked the
war between Chile and the Peruan-Bolivian confederation leaded by Santa
Cruz during this decade.
Third, we should remember the North American influence in Chilean
issue is an important cleavage about how Chilean decided their own foreign
policy. Moreover, the traditional way of face up the international relations
as a bilateral way might marke this instance.
2.4 The state as centre of development
State centric matrix had been established in Latin America since 1930s.
Thus means that it has been put into practise in several regimes. This
matrix was based on import substituting industrialisation, closed or semi-
closed economy, state regulation and a reasonable standard of inflation. It
had two different edges:
•
First, the relation between state and market where there was a balance
between dynamics and regulation. So, state was able to take part on
labour and goods markets as well as he might be able to produce goods
for the internal market.
•
Second, another fact was the relation between state and social society
either by direct or by indirect control. In direct ways we find it in
institutions and in culture when we speak about indirect [7].
Chile successfully pursed a model of state-led development mediated by
strong democratic political institutions, a powerful congress and an institu-
tionalised party system. The state was also effectively engaged in redistribu-
tive policies to create an early social welfare system ([5], p. 299).
8
In 1938, Frente Popular, a coalition between Centre and Marxist, won
the elections. Radical Pedro Cerda was elected and a young Salvador Al-
lende was elected as minister in his cabinet. They inaugurated state centric
matrix by social welfare policies. They created CORFO that was a fun-
damental institution to understand this model of development. It was an
important role of ISI as a state agent in industrialisation process. It was a
semi-autonomy institution because of its compromise social composition. It
was a new mechanism around Latin America.
In opposition to traditional economy model, Chicago school emerged as
another offer to getting development in 1950’s. The Chicago School of Eco-
nomics tried to transfer and to implant its knowledge to Chile. Eventually,
they went inside Chilean society across the Economic department in Catholic
University as a part of the Chile Pro ject. They were isolated until 1960s
about the discussion of economic issues. In fact, this intellectual model was
only supported by some North American universities and some US’s elite.
Before becoming a pressured group, the influence of the school was lim-
ited to attract students. However, businessmen, right-wings politicians and
university teaching stuff refused their theories so as to continue being confi-
dent that the structuralist model might reach the development. This meant
a clash between both points of view that involved a dialectic fight which was
started when Arnold Harberger arrived at Chile and started to confront the
ideas of Economic Commission for Latin America. It was based on Milton
Friedman’s ideas to be analysed later on.
During the government of Alessandri, the economic position of this School
became the main protagonist inside academician milieu after a strong doc-
trinaire fight. However, they couldt apply their ideas in this period, so they
were against economic policies that Alessandri governments carried out.
Alessandri government was certainly different: economic decisions were
adopted within a democratic political framework. During the first period,
emphasis was placed on the expansion of export and the attraction of foreign
investment. However, after a while the accent shifted to an increase in public
and private investment in industrial development. The main purpose was to
promote a policy of free external commerce with a stable rate of exchange in
order to create favourable conditions for the import of new technologies that
could allow national industry to compete in foreign markets [8]. Chicago
Boys were against that state intervention in the market so they were directly
opposite against the traditional economic policy.
9
The US restarted intervention in the region because of Fruit Company
issue. The US concluded in January of 1952 a series of bilateral military
agreement with individual LA states in support of hemispheric defence. As
the decade progressed, Washington military assistance program expounded
to encompass US military missions in eighteen countries with up to 800 mil-
itary personnel, training of Latin American soldiers in US [9]. Due to Cuban
revolution and United States fearing to loss their influence zone, John F.
Kennedy proposed the Alliance for progress. It became the bridging mech-
anism for new efforts to seek social and economic change. US government
wanted to accelerate the economical and social development in the region
[1]. But it was not the main reason to propose it. Moreover, this revolution
broke the gentle agreement between superpowers, so the soviet Cuban lies
violated the precepts of Monroe doctrine, so as a new foreign policy in the
region: keeping out hostile foreign powers [9].
The US gave to South American countries this policy because of a na-
tional security problem despite they believe that internal conditions in Latin
America in the 1940s and early 1950s did not seem ripe for revolution [9].
The North American government believed they had to stop an hypothetical
social revolution that had began in Cuba. This process could have meant
the decline of American hegemony. Many countries as Per´
u, Bolivia and the
MRB or Costa Rica revolution, or Peron in Argentina were some examples.
So, in our opinion US didn’t impulse that program because of a development
interest, but they made it so as to traditional US foreign policy towards the
region. In summary, they wanted to conserve his status quo in the region
and they were afraid to loss it.
But we could find a social claim in many countries where the development
was imported. They were looking for a development what means an opposite
model to that of dependency development [10].
Chile was not different. In this way, the Government of the democrat
Christians is an example. It was leadered by Eduardo Frei Montalva (1964-
1970) and they had been trying to get solutions. This government was a
national popular whose governance was made on a previous state structure.
This period supposed the time for obtaining new rights especially with land
reform, women civil rights, etc.
There are two theories in South America which have tried to explain
the development during this period (1930-1980). First, the structuralism
theories took a main role about development in the zone. On the other
hand, neomarxist also adapted their thinking in the continent. However,
10
both theories have meant a response to development and have shared some
arguments.
They tried an internal market extension to be able to get a constant
development in order to finish industrialisation process. In this sense, some
financial mechanism appeared so as to reduce wealth gap. Moreover, some
means of public power became stronger due to the defence of export economy.
Stregnthening and modernisation of state appeared as necessary instruments
to obtain an efficient and effective develop policy [11].
Structuralist theories emerged in Latin America around the creation of
ECLAC. This school was influenced by Keyness method, but they added an
structural point of view about development. In short, they considered the
structural transformation of the society and the role of the state as the only
way to get develop. In that sense, they coincided with the dependency theory
which was created by Faletto and Cardoso. In the first place, the increasing
of the reduced domestic market was necessary in Latin America in order to
start an industrialisation process.
The weakness of the Latin American countries was originated from the
fact that their development could not be based on international demands
and exports [12]. Therefore, they focused the industrial growth as economic
strategy on importing substitution. It was the paradigm adopted by all the
Latin America countries as the main development matrix.
Neo Marxist were influence by the Latin American structuralists and their
analyse so it is common to find the same point of view in some issues.
Frank was an important theoretical who got on with the latin American
dependency theories. He considered that the international economic system
had a inequality distribution around a pyramidal structure with metropolis
and satellites, and he pointed out that the mechanism for extraction of the
surprise was trade. Moreover, inequality exchange of goods and services had
been their faults. In this pyramidal system, the productive forces were linked
in different relations and strata.
In this sense, Latin America was suffering an indirect economical imperi-
alism where the economical surpluses were drained away. Coinciding with the
Structuralism, and with Cardoso and Faletto, Frank thought that economic
profiles had to been invested in the origin country. In order to get that,
he proposed delinked from center economies and some socialist policies. In
that way we could find some Allende policies. In summary, he thought that
all the countries in Latin America would be better off if they disassociate
themselves, or totally broke the links with US and the other industrialised
11
countries [13].
Dependency theory considered that American continent had been suffer-
ing a strong and inequality distribution of incomes, as well as a economic
dependence from foreign investment.
Cardoso and Falleto pointed out that this relation must be understood
in the framework of economical, social and political organization as a center-
peripheral societies relation. Instead of other authors opinion, they didn’t
deal peripheral concept as one conceptual group. The origin of underdevel-
opment was the creation of the productive global system, due to the fact
that peripheral economies could be inserted in world economy as a colonial
term while other could be as a national way. In addition, economies were
inserted in different positions and with several functions inside the system
by the process of creation of world capitalism system.
The external factors may create different impacts depending on internal
conditions [13]. Agreeing with Frank, they proposed that dependency in-
volves a way of social domination. Moreover, it entails that the only gap to
get autonomy is to break links with this domination system without join up
to another.
Political domination was affirmed in the fact that the development pro-
cess depends –in a more or less measure– on transmission between hegemonic
groups in each industrialization step. So the relations between the interna-
tional and local elite and the main internal forces inside industrialization
could influence this process. Another important issue is the distribution of
internal power. Summarising, democracy is considered as the most important
condition for turning society development [14].
In disagreement with Frank, Cardoso regarded the national bourgeoisie
as potentially powerful and able of sharping development.
2.5 Allende’s democratic decline and coup
The workers movement in Chile was born in the early twenty century. At
the beginning they suffered so many repressions as Santa Maria de Iquique
incidents. They had been becoming more powerful at the same time as
Chilean economy was growing because of the increasing of exportation.
As a result of the weakness of the Communist and Socialist movements in
main part of Latin America countries, the class action needed to join nation-
alist and populist movements. However, Chile represented an exception. The
reasons for that difference was in the representative bases of the state which
12
provided to the Socialist party the opportunity to conserve his autonomy
[10].
Chile had been one of the countries where left parties went together dur-
ing more elections and more time. Unidad Popular was openly committed
to a revolutionary transformation in the socioeconomic order and the insti-
tutions framework of Chilean Politics [4]. However, Unidad Popular was so
heterogeneous because all the parties were not conformed on the same way
from the social viewpoint and they neither respond to the same interest nor
had the same ideology. It was a strong internal competition.
Allende was elected as President of the republic in September 9, 1970
when he obtained more than 36% of total votes. Although he did not get the
ma jority, he was elected by the congress due to a traditional rule in Chile.
The new government made a set of reforms, for example, land reform,
concept of mixed and social property, nationalisation of the copper, expro-
priation of foreign companies, some politics towards redistribution of wealth
as the extension of the primary, secondary and university education or the
unification of banks.
By the time of Allende administration, the structural development ap-
proach had been modified and extended so as to use the state as an agent
for socialist transformation [15]
In September 11, 1973, the military established an authoritarian regime
because of a coup that meant a breakdown of the legality and the country
lived the longest period without democracy. This coup was supported by
right-wings parties but also accepted by the Christian Democracy.
There are some causes that rushed the military breakdown.
•
Before Allende we could observe that some democratic mechanisms
which controlled the executive parliamentary were reformed. These re-
forms gave more autonomy to the President but on the other hand, they
diminished the capacity of the opposition. For example, the control of
the budgetary process in 1959 was given the executive and the congress
was restricted in its ability to allocate fiscal resources [4]. Moreover,
there was another important reform in 1970.
•
Also, Christian Democratic Party appearance began Chilean way to
socialism. That was so because of its ideological position which seemed
to be an intermediate step between the status quo and the marxism.
Nevertheless, this revolution in liberty opened a radicalization phase
on left elites, also pushed due to Cuban revolution.
13
•
The EEUU aid and fear of soviet threat promoted elites to become
hostile against government and moved them to form an aggressive op-
position that made demonstrations and strike, and created violent or-
ganizations as Patria y Libertad.
•
A polarised society emerged because of Allende’s way to govern. When
combined with some measures of questionable legality to bring private
business under state control, these policies alienated not only Chile’s
elite corporations, but also small businessman and much of Chile’s
middle class.
•
An Economic crisis.
•
Polarization of army.
But, the destabilisation of Democracy in Chile was caused not by the
decline in parties as such but by the polarisation of the complex relation
between them ([3], p. 22).
From our point of view, Gramsci theories had influenced in Unidad Pop-
ular de Chile. He focused his theories on culture where he observed that
occidental societies are not ready for revolution.
So he thinks that it was necessary to create an intellectual movement
with different levels of knowledge and initiative. In that sense we observed
that a large social net with several prepared, both governmental and organic
politicians, was created in Chile. We might see it looking at UP leaders:
Salvador Allende, Pablo Neruda, Volodia Teitelboim, V´ıctor Jara, Balm´es,
etc. It is a matter of fact that there were workers and wuth a weighted par-
ticipation but no so relevant as they said in the electoral program. However
some responsibilities and methods of workers participation were new. For
example, the council of management in mixed companies, land council or in-
dustrial cordon. Another important intervention mechanism was JAP which
emerged when inflation and shortage attacked Chile. So we believe that it
had been the unique way to get socialism by democratic system where they
had got the legitimacy because of the votes. Following this trend we should
remember that Allende and Popular Unity increased their electorate from
36% (1970) to 42% (1973) in parlamentary elections.
We consider that Allende government tried to put into practice demo-
cratic methods in order to apply socialist policies which represented an in-
novative way to protect the poor and to end with the inequality. For this
14
reason, they put into practice some delinking policies as Frank or Cardoso
said so as to make progress. But, it was a difficult international situation
inside a cold war where South America began an important issue for Super-
power competition. So the local elite and the US saw threatened their status
quo which had been remaining for more than 70 years. On the other hand,
the lack of unity inside Unidad Popular and internal debate turned out to be
a triggered of a political crisis that Chile lived.
Moreover, both internal and external economic situation are other impor-
tant factors that we consider to be as unfavorable to Allende government.
By the way, Chilean political system didn’t allow Allende to start all reforms
that he had in his electoral program.
3 PINOCHET
3.1 Chicago boys inaugurated a new age
The military constituted themselves as a Junta (old independence way
to govern) where Pinochet began to be Presiden as primus inter pares. They
had been a repressive and authoritarian system. In fact, they destroyed
the labour movement and their own parties inside the Condor Operation.
They also thought that left parties were enemies of the nation so they had
to eliminate them. Moreover, in order to get it they created some national
repressive institutions as DINA or CNI. Military Junta depoliticized Chilean
society in order to dismantling the social forces or democratic institutions
and created a new political state. It was a presidentialism based on Chilean
historical values. The president also was commander in chief inside army
institution. That meant a new total unification between civils and military
after 1840, the last time that it happened.
Pinochet became as the main member and was named as Supreme Chief
of the nation by a decret-law that established the legislative exercise and the
constitutional powers on Junta’s president. Pinochet was consolidated due
to four factors [4]:
•
Pinochet and his advisors were able to draw on the framework of tra-
ditional constitutional legality to justify one man rule.
•
They could rely on the discipline and nature of the armed forces on the
growing power of the secret police.
15
•
They enjoyed the strong and uncritical support of many of the business
community and sectors of the middle class.
•
they were able to take advantage of continued sharp divisions among
the members of the opposition.
The prevailing matrix was broken after Allende because of a new mone-
tary orthodoxy which was inaugurated with opening trade and anti-isolationism
policies that altered this interventionist matrix since 1930 [7].
After the coup, General Pinochet decided to handpick some Chicago Boys
as responsibles of economic policy. As a result, they were allowed to carry
out their theory of development.
Chicago School began by accepting as sacrosanct the private property.
The state was going to the noninterventionism and to allow the market forces
to dominate. As the emphasis was on permitting the market to operate as
freely as possible, a minimum of government regulation and maximal priva-
tization were needed [15].
The Chicago boys inaugurated a new age that was a neoliberal process
which is divided in two different periods. The first one, more dogmatic,
covered until 1982 crisis. Then, Pinochet appointed another minister who
put into practise other readjusted policies.
Furthermore, Chicago boys inaugurated a neoliberal process where took
structural reforms as anti-inflation and adjustments in internal balance, as
well as fiscal reform, commercial opening, financial liberation, privatization,
labor and Social security reform.
Contrarily to Allende’s policies, who developed an economic politic in
order to create state and mixed companies, during Chicago Boys age there has
been a concentration of wealth in private economy due to the sell of national
companies by CORFO which was used to do it. So this process was based
on directly selling of companies towards domestic economic conglomerates.
However, external debt was multiplied by six for ten years so as a conse-
quence of neoliberal policies applied by Chicago Boys. It was so because of
the market opening with low taxes – in opposition to structuralism – which
involved a destruction of the national industry. Hence, the number of families
living under the poverty line increased from 30% to 40%.
From our point of view, the total breaking with the previous model of
development was traumatic for the poverty. So it opened a big gap between
the richest andthe poorest Chileans. Chile was managed to a permanent
16
situation inside social Chilean structure because of the total lack of the state
intervention about distributive policies.
This economic stratification has been inherited for more than three gen-
erations due to the absence of mechanisms and institutional lack of social
mobility, or at least some policies that did not give opportunities so as to
ease negatives effects of neoliberal policies towards weaker population.
In this sense we find nowadays a better situation in educational rates,
health rates or property access but it is consequence of the high level family
debts, as an investment from old to new generation by credit.
3.2 Regional isolation
An international conflict between Chile and Argentina was ready to
take placein 1978 because of the Beagle sovereignty. This problem had a
historical and geopolitical background. First, the canal of Beagle is situated
in Patagonia. On the other hand, this part of the world was not colonised
untilthe nineteenth century. Furthermore, there was an important trading
seaspace, as we could see in Malvinas colonisation by Britain in 1830.
General Galtieri proclaimed the Britain solution null. After Argentinian
refused the Queen solution, both started to move troops towards the South.
North American hegemony could not allow a war in his influence zone.
Then, they made pression to both states and also to the Vaticano in order
to get a mediation.
Finally, they joined to the Vaticano solution. However, the relations had
no longer been good until democratic transitions. It supposed a bad condition
to Chilean development. On that way, Malvinas war was again another time
of tension.
On the other hand, Pinochet had been trying to improve relations with
their neighbours in the North. The Diplomatic relations with Bolivia were
rebooted in 1975 by the military Junta due to the fact that another mili-
tary was governing. There were like an hypothetical transfer of sovereignty
between these two states.
The negotiations and the agreement were broken in 1978 once again by
Bolivia because of Peruan complaint which was based on a peruan right to
be consulted about that issue.
Once Banzer was overthrowed from the presidency, Walter Guevara founded
a new Bolivian policy about their bordering conflict against Chile. Then, he
17
focused his foreign policy on getting a new stage, involving Per´
u in a set-
tlement of the conflict. In a nutshell, Chilean isolation in the region was
evident.
3.3 Second age of Pinochet
The debt crisis started when Mexico announced that they were not going to
continue paying it. A bit early, Tequila crisis was extended to other South
American States. Therefore, from the economic perspective, the region lived
a non growth age which is called the lost decade. Chile was the exception
because of their sustained growth after 1984. It is to be remembered that
Chile was the unique country who continued receiving debt, as a sign of US
support to Pinochets policies. The crisis had devastating consequences for
the region. First it happened a double fiscal crisis because of the deterioration
of social policies and the negative rate in their balance of payments which
generated debt. It also increased the percentage of the population who lived
below the poverty line. Moreover, it triggered high rates of inflaction, as well
as high rates of unemployment and low level of national investment.
There were some external factors that hurried this crisis: partial break-
ing of commercial and financial Latin American links with world economy.
Furthermore, in the North emerged a critical theory against the state inter-
vention.
This economic crisis entailed a necessity of structural reforms from both
the economical and political point of view. Neoliberalism considered that
this set of structural policies werea necessary condition to growth [16].
Chile was the only one recovering the foreign investment in the early 90’s.
His annual growth from 1973 to 1990 was 1,5%. However, from 1983 to 1990
the growth was sound and share with 6,5% rates. But also Chile who was
the paradigm of neoliberal model had some deviations from the purity.
Chile was the first Latin American state that started privatizations, fi-
nancial liberalization, taxes reform, as introduction of Value Added Tax or
another indirect taxes, as well as a pension reform.
These reforms diminished the old predominant role of the Chilean state in
the economy in such a deep way that financial liberation and pension reform
made that private companies started to manages several competencies that
state had been managing before.
Until 1981 reform, the pension system was redistributive by the way of
intergeneracional transference.
18
It entailed an hypothetical deficit when the growth was low. Thus, Ne-
oliberal doctrine impulsed to reduce state deficit toward minimum which
supposed that it reduced monetary expansion, rather than increased import
taxes as structuralist said, and on the other hand, it entailed that pension
system started to be based on individual capitalization. From this moment,
pensions are a direct function of each worker contribution, as well as, from the
profitability of AFP investment that workers have joined during their labour
life. So the incentive to not to declare is lower and the savings increase [16].
After 1982 debt crisis, the second neoliberal period was opened by a low
change in macroeconomic politic orientation which continued being a neolib-
eral character, but it arised several deviations inside the model. Therefore,
the new minister set a new policy with an increasing of taxes over non tra-
ditional imported goods.
The concentration of wealth and deficient distribution of incomes contin-
ued. However, the minister disguised another privatization wave under the
name of people capitalism where the government offered to buy stock from
Chilean companies to every Chileans [15]. At the end, Chileans did not have
enough money to invest and big stock packets were bought by transnational
foreign companies.
In our opinion, this financially opened policy made good macroeconomic
results, but it also entailed some devastating consequences to the state which
lost the implementation and even decision power. In this sense, big transna-
tional companies from Europe and North America controlled telecommuni-
cations, roads and motorways, pensions, electricity and even water manage-
ment. It means that the size of state became smaller, with a loss capability
of initiative about development of policy agenda. For example we see it in
Pascua Lama Pro ject or Patagonia hydroelectric dam. In summary, the com-
panies often are in fact able to influence on agendas and policies in small size
institutional states.
We also observe that privatization process in developing countries might
leave traditional state competencies as education, health or pensions in transna-
tional hands. This is not possible in a welfare center state.
Contrarily to that, Chilean society is going away from the traditional
ways of governability- the representation feeling is decreasing- in order to
build social networks of protest which are able to manage towards a higher
governance.
19
3.4 Transition
The opposition against the Military Junta became stronger in 80’s decade.
Then, Christian Democrats turned their position so as to defend human rights
and they started to join some left party.
At the same time of economic crisis, a state crisis emerged. Social claims
started and elites readapted themselves. Elite groups, in addition to tra-
ditional political parties, mobilized the protest against the continuation of
authoritarian rules and to negotiate the military back to barracks. Civilian
elites met to negotiate pacts that would easy the transition to the civilian
and democratic regimes [17].
Since 1983, some demonstration tried to crack the authoritarian system.
In this sense it followed a chain of disturbance across Chilean society as
students strike which meant the rise of PROFESES, as well as labour and
‘desaparecidos’ demonstration.
The transition process were helped by the external financing to the oppo-
sition as from the international structure of the national parties, for example
the international socialist [10] as from US’s human right program [1]. We also
might show that the global opinion turned to be an important factor, as well
as the 1988 plebiscite meant a political opportunity. They formed a multi-
party Concertaci´
on according to 1980 Constitution. In fact, it was the unique
way which was establised to being a candidature. Christian Democrats, PPD,
PS and Radical Party were formed a coalition of parties so as to win the 1988
Plebiscite which was the chance to overthrow the regime. In the coalition,
the Communists appeared as an excluded force inside the game. However,
they supported the same position against Pinochet than the Concertaci´
on.
According to 1980 Constitution, General elections were announced, and
the process leaded to a presidential election where Patricio Aylwyn was
elected as the same time as the Concertaci´
on of parties became a hegemonic
coalition and they played a principal role.
The opposition of Pinochet were by far more rooted in society than the
military leaders had believed; they gradually rebuilt their lies to militants
and followers and slunned Pinochet by defearing him decisively in his own
plebiscite on September 11, 1988 [4].
However, it was not an easy process. As Linz and Caverrozi believed,
Chilean military entered in a strong position in the transition process rather
than other dictators of Latin America. It was so because they created the
constitution which established rules.
20
4 The democracy and the new way to get the
development
In march 1990, it carried out the transmission of the power. Aylwin
inherited state structures that the old regime imposed by 1980 Constitu-
tion. The involved strong difficulties in order to start reforms that knock
out Pinochet’s regimen remained. In addition, the new government had to
accept old rules. In this sense, transition was an unfinished process because
it did not mean a break with the previous state, it was just that, as well
as elites, it was reconverted. We may see it in the fact that Aylwin had to
share competencies with other institution wth a not really democratic rigin.
In this sense we remark that the constitution authorized Pinochet and the
armed forces to designated nine senators. Not surprisingly the designated
voted with the other conservatives to block many of Aylwin’s proposal ([18],
p. 214).
We also remark the fact that Pinochet had conserved the commandant
in chief position until 1998, as well as the senatorial immunity which didn’t
allow Garzon Spanish judge to extradite him.
Another factor of the democratic weakness was the ‘final point’ about the
purge of responsibility from the previous regimen which has been difficult and
hard so as to judge the violation of human rights. An additional difficulty
was that every new law or proposal had to be passed by Constitutional court
before its promulgation.
However, the power relations are never static. The relative power of
the democratic government vis a vis the military forces began to grow after
Aylwin inauguration because of its elected origin [19].
Presidential strategy had two faces: presidential appearance and decla-
ration and on the other hand they got some agreement with the right-wing
parties as for Municipal elections in 1992.
The democratic Chile put into practice an economic strategy that under-
pined a more active state in order to the persecution of growth and equality
simultaneously [16].
It developed a more neostructuralist model but with the continuity of
certain neoliberal policies as the open market that gave so good results in
growing and investment perspective. Since the 1982 debt crisis the deficit
reduction has largely been archived at the expenses of less public investment
in infrastructure. This was possible because of the introduction of new financial ways such as concessions ([20], p. 64). For example, some Spanish companies have got in Chile concessions for more than 50 years if they build
a new infrastructure.
Therefore, Aylwin government got a better result in the economic sphere,
with a substantial increasing of productivity and a growth around 6,5%,
than in social aspects, because of trade union strengthness, a raise of salary,
increasing of investment, establisment of minimal pensions and reduction of
poverty.
Frei government started to create contra-cyclical policies- as neoestruc-
turalists had been demanding- reducing the rate of families who lived un-
der the poverty line. They also updated all military command, as well as
Pinochet left the position of chief of the army, and it even started some
judgment in order to recover the forgoten memory.
About International relations, the two first Concertación governments were able, under the hope from recovered democracy, to solve some problems
which were imbedded in his relation with his neighbor. Then, they signed
treaties and agreements that turned out to be an important factor in order
to improve the Chilean development. For example, oil agreement with Ar-
gentina, or the treaty of definite limits between Frei and Menem. Chile was
the first South American state to request membership of NAFTA ([21], p.
275). At the beginning Chile only wanted to be an associated member of
MERCOSUR. During these periods, Chile also went inside international or-
ganisations which played a main role in economical and political life in Latin
American. However, Asian Crisis in 1997 demonstrated that financial and
economical liberalization may generate deep instabilities in macro-economy
if they are not accompanied with an institutional frame.
Lagos government emphasized the social and contracycling policies as
CEPAL said, but it was not sufficient in order to grow the state size. His
foreign policy lived some tension moment with all of their neighbors but it
was overcomed by a presidential and personalist way. In this sense, Lagos
signed free trade agreements with the European Union, M´exico, Canada and
US [18]. Another success of Lagos government was the appointment of Jose
Miguel Insulza as a President of American States Organization.
Finally, Bachelet government has been spending a large amount of money
that state are getting from cooper profits in order to implement social policies
as university scholarships, bicentenary scholarship, etc. At the same time,
Bachelet has developed a foreign policy toward South America as we could
see in gas pipeline agreement or bioceanical corridor, the negotiation with
Bolivia so as to improve their relations about eighteen topics, her personal
relation with Cristina Kirchner or the Chilean presidency of UNASUR.
5 Conclusions
Chile has been able to combine successfully the democratic institution con-
solidation and the structural economic reform, so as to lead a good economic
dynamism. Therefore, is one of the regional countries who has more reduced
its poverty rates as well as its illiteracy rates that is less than 2,5%. However,
it is a matter of fact that the difference between the most and least incomes
population has increased, as one of the greater around the world. In spite
of contracyclical policies, it is necessary to implement the state investment
in public policies in order to have better distribute incomes. This request to
give value to national products by a competencial specification.
Peace, democracy and security -human rights- are basic conditions to get
the development. We could see it in the increasing of social and political
rights or in social stability, as well as in the improvement of regional and
integrational relations.
International relations in South America have changed from a bilateral
to a multilateral perspective due to globalization. Historically, Chilean gov-
ernments faced up the neighbor conflicts from a bilateral point of view which
meant a direct negotiation between states inspite of Treaty of peace and
friendship of Pacific War that established a tree scenario. The globalization
process has impulsed the improvement in neighbor relations because of a big-
ger interdependency and connections. So it is necessary to strength the new
regionalism and integrationism. Moreover, it is necessary to extend these
processes in order to get a better and strong insertion of South America, as
well as more equality, inside global market. The countries whose development
is based on export, are weaker against hypothetical turbulences in the global
market. In summary, it is because of the volatility of the change with respect
to Dolar or Euro. Thus, South America needs to strengh and to go deeper in
a free trade union that may molding as an important economic zone because
we consider that global world is going to be divided into free trade economic
zones. However, they must develop their own political institutions if they
want to get a better development because each zone will need different levels
of institutions. In this sense, Political institutions require to overcome old
conflicts between states and the wish of different states in order to transfer
certain competential levels is also required.
Chilean presidentialism system was more inefficient because of the in-
creasin of president power by Parliament reduction. In Allende’s case, had
the situation been remaining as years ago, it would had to require negotia-
tion in order to make reforms and it could represent a higher percentage of
Chilean population. In this case, the gap between classes might have been
alleviate. Moreover, according to Huntigton, high rates of participation and
mobilization had had negatives consequences in the institutional process in
developing countries. However, the new presidential system of coalition and
double round may generate more stability due to the reduction of the po-
litical spectrum. In spite of that, we can not forget that in Chile a switch
off process between civil society and party system is happening, what shows
certain crisis inside liberal and presidential system. This delinked groups are
looking for new ways of participation. So this new democratic process is been
demanded by them. In this sense, the state must return to be the negotiation
place between productive forces. Semipresidentialism could be the solution
in order to create a stronger Parliament. Moreover, the decentralisation pro-
cess could lead these non represented sectors to return inside politic again.
Participatory democracy might be one of this necessary reform in municipal
environment because local policies are legitimized by outputs which are more
visible for population. However, political reforms are difficult as we analysed
in the transition.
In this sense, the delinkage of this group is born in the transition because
of the communist and left parties isolation. The transition process was pro-
vided by US and other European countries due to the communism decline,
disintegration of Chilean labour movement, isolation of the communism party
due to coalitions of socialisst, radicals and christian democrats. So it was not
only a human right policy because political and economic structures were es-
tablised by the dictator supported by the US.
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