Military dictatorship of Chile

After the 1973 coup in Chile, Augusto Pinochet, head of the new military junta, immediately initiated major social changes. The new regime set out to crush the representative institutions that had allowed Chile (in the 1970 presidential election) to become the first nation in the world to democratically elect a Marxist head of state [Roberts, 1995]. The long-standing democracy of Chile was now a dictatorship, and Salvador Allende's socialist experiment was over.

Suspension of all political activity

Following his ascension to power on September 11, 1973, Pinochet formally banned the leftist parties that had constituted former President Allende's Popular Unity coalition. On September 13, the junta dissolved the Congress and outlawed or suspended all political parties. All dissident labor and peasant leaders, as well as clergymen, were suspended. All political activity was declared in "recess".

Pinochet also expressed contempt for the Christian Democratic Party's call for a quick return to civilian democracy. However, he did not ban the party. Eduardo Frei, who is thought of having being later poisoned by DINA, initially supported the coup, with other Christian Democratic leaders. Later, they assumed the role of a loyal opposition to the military rulers, but soon lost most of their influence. Meanwhile, left-wing Christian Democratic leaders like Radomiro Tomic were jailed or forced into exile. The church, which at first expressed its gratitude to the armed forces for saving the country from the danger of a "Marxist dictatorship," became increasingly critical of the regime's social and economic policies. However, John Paul II has been criticized for his support to the Pinochet regime.

The military junta began to change during the late 1970s. Due to problems with Pinochet, Leigh was expelled from the junta in 1978 and replaced by General Fernando Matthei. Due to a scandal, Mendoza resigned in 1985 and was replaced by Rodolfo Stange. Chile's constitution was approved in a fraudulent national plebiscite held in September 1980. It came into force in March 1981. It established that in 1988 there would be another plebiscite in which the voters would accept or reject a single candidate proposed by the Military Junta. Pinochet was, as expected, the candidate proposed, and he was denied a second 8 year term by 55% of the vote.

Suppression of the Left

Pinochet's rule was characterized by systematic suppression of all leftist opposition, which led some to speak of a "politicide" (or "political genocide"). The worst violence occurred in the first days of the coup's aftermath, with the number of suspected leftists killed or "disappeared" soon reaching into the thousands. (Charles Horman, a US citizen who was killed during the coup itself and Chilean songwriter Víctor Jara were some of the most famous case of "desaparecidos"). As soon as October 1973, at least 70 persons were killed by the Caravan of Death (Caravana de la Muerte). The National Stadium was used as a concentration camp holding 40 000 prisoners. Approximately 130,000 individuals were arrested in a three-year period, with the number of dead and "disappeared" reaching into the thousands within the first few months.

Following Pinochet's defeat in the 1989 plebiscite, the 1991 Rettig Report, which listed a number of torture and detention centers (such as Colonia Dignidad, Esmeralda ship or Víctor Jara Stadium), found that at least 3000 people were killed or disappeared by the regime; later, the 2004 Valech Report would count 29 000 more being imprisoned and/or tortured (more than 35 000 were heard by the Valech Commission, and 400 000 persons in total can be said torture victims, following the UN definition of torture). According to the Latin American Institute on Mental Health and Human Rights (ILAS), "situations of extreme trauma" affected about 200,000 persons; this figure includes individuals killed, tortured or exiled, and their immediate families. While more radical groups such as the Movement of the Revolutionary Left were staunch advocates of violent Marxist revolution, it is universally accepted that the junta deliberately targeted nonviolent political opponents as well, making it an archetype of state terrorism.

Chile under Pinochet was a key participant in Operation Condor, a campaign of assassination and intelligence-gathering, dubbed counter-terrorism, conducted jointly by the Chilean security services and those of Argentina, Bolivia, Brazil, Paraguay, and Uruguay in the mid-1970s. The military governments of these respective countries contended that they were neutralizing leftist "subversives," but their definition of the term was extremely broad, and their operations were known to target any political dissidents. A lot of the Chilean exiles were followed and murdered by DINA or allied secret services.

Economy

Los Chicago Boys

The Chilean economy was still faltering in the months following the coup. As the military junta itself was not particularly skilled in remedying the persistent economic difficulties, Pinochet appointed a group of economists who had been educated in the United States at the University of Chicago. Given financial and ideological support from Pinochet, the U.S., and international financial institutions, 'Los Chicago Boys' advocated laissez-faire, free-market, neoliberal, and fiscally conservative policies, in stark contrast to the extensive nationalization and centrally-planned economic programs supported by Allende. [Valdes, 1995]

Deflation policy

Inflation was a significant factor plaguing the Chilean economy during and after the Allende years. Between September 1973 and October 1975, the consumer price index rose over 3,000%. In order to combat this persistent problem and pave the way for economic growth, the Chicago Boys recommended dramatic cuts in social services. The junta put the group's recommendations into effect, and cumulative cuts in health funding totaled 60% between 1973 and 1988. The cuts indirectly caused a significant rise in many preventable diseases and mental health problems. These included rises in typhoid (121%,) viral hepatitis, and an increase in the frequency and seriousness of mental ailments among the unemployed. [Contreras, 1986]. Exchange rate depreciations and cutbacks in government spending produced a depression. Industrial and agricultural production declined. Massive unemployment, estimated at 25% in 1977 (it was only 3% in 1972), and inflation eroded the living standard of workers and many members of the middle class to subsistence levels. The underemployed informal sector also mushroomed in size. The long-term goal of reducing inflation was achieved in spite of the aforementioned costs.

Foreign aid

The previous drop in foreign aid during the Allende years was immediately reversed following Pinochet's ascension; Chile received USD $322.8 million in loans and credits in the year following the coup [Petras & Morley, 1974]. There was considerable international condemnation of the military regime's human rights record, a matter that the United States expressed concern over as well. But the U.S. was significantly friendlier with Pinochet than it had been with Allende, and continued to give Chile substantial economic support between the years of 1973–1979, while simultaneously expressing opposition to the junta's repression in international forums such as the United Nations. The U.S. went beyond verbal condemnation in 1976, after Orlando Letelier's murder in Washington D.C., when it placed an embargo on arms sales to Chile that remained into effect until the restoration of democracy in 1989. Presumably, with international concerns over Chilean internal repression and previous American hostility and intervention regarding the Allende government, the U.S. did not want to be seen as an accomplice in the junta's "security" activities. Prominent U.S. allies Britain, France, and West Germany did not block arms sales to Pinochet, benefitting from the lack of American competition. [Falcoff, 2003]

Social costs

Under Pinochet, funding of military and internal defence spending rose 120% from 1974 to 1979. Due to the reduction in public spending, tens of thousands of employees were expelled from other state-sector jobs. [Remmer, 1989]

The economic policies espoused by the Chicago Boys and implemented by the junta initially caused severe damage the poorest sectors of Chilean society. Between 1970 and 1989 there were large cuts to incomes and social services. Wages decreased by 8%. Family allowances in 1989 were 28% of what they had been in 1970 and the budgets for education, health and housing had dropped by over 20% on average [Sznajder, 1996]. The massive increases in military spending and cuts in funding to public services coincided with falling wages and steady rises in unemployment, which averaged 26% in the years 1982–1985 [Petras and Vieux, 1990] and eventually peaked at 30%.

The economy grew rapidly from 1976 to 1981, fueled by the influx of private foreign loans until the debt crisis of the early 1980s. But despite high growth in the late 1970s, income distribution became more regressive. While the upper 5% of the population received 25% of the total national income in 1972, it received 50% in 1975. Wage and salary earners got 64% of the national income in 1972 but only 38% at the beginning of 1977. Malnutrition affected half of the nation's children, and 60% of the population could not afford the minimum protein and food energy per day. Infant mortality increased sharply. Beggars flooded the streets.

The junta's economics also ruined the Chilean small business class. Decreased demand, lack of credit, and monopolies engendered by the regime pushed many small and medium size enterprises into bankruptcy. The curtailment of government expenditures created widespread white-collar and professional unemployment. The middle class began to rue its early support of the junta but appeared reluctant to join the working class in resistance to the regime.

The junta relied on the army, the police, the oligarchy, huge foreign corporations, and foreign loans to maintain itself. As a whole, the armed services received large salary increases and new equipment. The oligarchy recovered most of its lost industrial and agricultural holdings, for the junta sold to private buyers most of the industries expropriated by Allende's Popular Unity government. This period saw the expansion of monopolies and widespread speculation.

Financial conglomerates became major beneficiaries of the liberalized economy and the flood of foreign bank loans. Large foreign banks received large sums in repayments of interest and principal from the junta; in return, they lent the government millions more. International lending organizations such as the World Bank, the IMF, and the Inter-American Development Bank lent vast sums. Foreign multinational corporations such as International Telephone and Telegraph (ITT), Dow Chemical, and Firestone, all expropriated by Allende, returned to Chile.

Macroeconomics

Pinochet's policies led to substantial GDP growth, in contrast to the negative growth seen in the final year of the Allende administation. The upper 20% of income earners ultimately benefitted the most from such growth, receiving 85% of the increase [Schatan, 1990]. Foreign debt also grew substantially under Pinochet, rising 300% between 1974 and 1988.

Pinochet's policies were lauded internationally for transforming the Chilean economy and bringing about an "economic miracle". British Prime Minister Margaret Thatcher credited him with bringing about a thriving, free-enterprise economy, while at the same time downplaying the junta's human rights record, condemning an "organised international Left who are bent on revenge." Pinochet certainly did achieve macroeconomic success with his reforms, hindered somewhat by recession in the early '80s. GDP growth remained steady, and Chile began a process of integration into the international economy. However, there is debate to this day over whether these sweeping economic changes could have been made without the hugely negative impact they had on poorer members of Chilean society. Moreover, economic science has yet to take into account the economic cost to Chile of the political suppression of the left-wing part of the population (let alone its unestimable human cost). A possible future of Chile has been annihilated by what some dub a "politicide".

Following the restoration of Chilean democracy and during the successive administrations that have followed Pinochet, the Chilean economy has prospered, and today the country is considered a Latin American success story. Unemployment stands at 8.5% as of 2003, with poverty estimated at 20.6% for 2000, both low numbers for the region. [1] Supporters of Pinochet's economic policies contend that the three successive administrations following him contributed to this success by maintaining and continuing the reforms initiated by the junta, but the link between Pinochet's policies and the '90s boom remains a subject of controversy.

The "Chilean Variation" is still seen by many as the potential model for nations that fail to achieve significant economic growth. The latest is Russia, for whom David Christian warned in 1991 that "dictatorial government presiding over a transition to Capitalism seems one of the more plausible scenarios, even if it does so at a high cost in human rights violations" [Christian, 1991].

1982-1990

Chile's main industry, copper mining, remained in government hands, but new mineral deposits were open to private investment. Capitalist involvement was increased, pension funds and healthcare were privatized, and Superior Education was also placed in private hands. One of the junta's economic moves was fixing the exchange rate in the early 1980s, leading to a boom in imports and a collapse of domestic industrial production; this together with a world recession caused a serious economic crisis in 1982, where GDP plummeted by 14%, and unemployment reached 33%. At the same time a series of massive protests were organized trying to cause the fall of the regime, without success.

After the economic crisis of 1982, Hernan Buchi became Minister of Finance from 1985 to 1989. He allowed the peso to float and reinstated restrictions on the movement of capital in and out of the country. He introduced banking legislation, simplified and reduced the corporate tax. Chile pressed ahead with privatizations, including public utilities plus the re-privatization of companies that had returned to the government during the 1982–1983 crisis. Under these new policies, the rate of inflation dropped from about 1,000% per year to about 10% per year. While this was still a high rate of inflation, it allowed the economy to start recovering. From 1984 to 1990, Chile's gross domestic product grew by an annual average of 5.9%, the fastest on the continent. Chile developed a good export economy, including the export of fruits and vegetables to the northern hemisphere when they were out of season, and commanded high prices.

Foreign relations

Apart of operation Condor which linked South-American dictatorship, problems with Argentina coming from the 19th century reached a high in 1978, with disagreements over the Beagle Canal. The two countries agreed to papal mediation over the canal. Chilean-Argentine relations remained bad, however, and Chile helped the United Kingdom during the Falklands War.

References

David Christian (1991). "Perestroika and World History", Published in Australian Slavonic and East European studies Macquarie University (Sydney, Australia).
Falcoff, Mark (2003). "Cuba: The Morning After", p. 26. AEI Press, 2003.
Petras, J., & Vieux, S. (1990). "The Chilean 'Economic Miracle"': An Empirical Critique", Critical Sociology, 17, pp. 57-72.
Roberts, K.M. (1995). "From the Barricades to the Ballot Box: Redemocratization and Political Realignment in the Chilean Left", Politics & Society, 23, pp. 495-519.
Schatan, J. (1990). "The Deceitful Nature of Socio-Economic Indicators". Development, 3-4, pp. 69-75.
Sznajder, M. (1996). "Dilemmas of economic and political modernisation in Chile: A jaguar that wants to be a puma", Third World Quarterly, 17, pp. 725-736.
Valdes, J.G. (1995). Pinochet's economists: The Chicago School in Chile, Cambridge: Cambridge University Press.