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For Chileans political issues take second place to improvement in the economy


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By Claudio Campuzano
SPECIAL TO WORLD TRIBUNE.COM

July 24, 2000

Like a sophisticated multitask computer, Chile is processing simultaneously two heavy-duty programs. While the economy forges ahead towards towards a banner year that would accelerate the country’s recuperation from an 18-month recession, the political body is having to deal with proposed controversial reforms in labor laws and the thorny problem of what to do with former dictator-turned-president Augusto Pinochet, whose human rights record is now undergoing critical examination.

Following the military coup against Marxist president Salvador Allende he led in 1973, General Pinochet became the de facto ruler until 1980, when a plebiscite confirmed him as president for an eight-year term in 1980. Another plebiscite in 1988 denied him the right to continue as president beyond March 1990, In the election Pinochet called for in 1989, voters chose Patricio Aylwin as president. He, as well as his successor elected in 1993, Eduardo Frei, continued the free-market policies that under Pinochet served to extricate Chile from the economic chaos left behind by Allende. Both center-right presidents were Christian Democrats who ran as the candidates of the so-called “Concertacion,” an alliance of their party with the Socialist Party. Those policies remain basically unchanged under current president Ricardo Lagos, the Concertacion candidate from the Socialist Party elected late last year and in office since March.

It can be said that it is Pinochet’s legacy that has arguably made Chile’s economy the best-performing in South America. But he left another legacy from his time in power which Chileans now have to deal with: a campaign against leftists carried out during his 17-year rule in which more than 3,000 died and the human rights of thousands were abused.

Pinochet stepped down in 1990, and since then has been protected by a prearranged immunity from prosecution, first as head of the army until 1998 and then as a senator for life. However, when he returned to Chile after a long detention in London at the request of a Spanish court, who wanted him to answer charges that involved Spanish citizens, more than a hundred lawsuits were brought against him in Chilean courts seeking to make him responsible for the alleged atrocities. In May a lower court ruled that he should be stripped of his immunity because there was enough evidence to suggest he may have played a role in the events that sparked the first of the lawsuits brought against him.

This ruling was possible because Pinochet’s detention in London awakened Chile’s judicial system to the need of dealing with the issue, which it had regularly avoided. Also, members of Chile’s democratic government, who did not want to tangle with Pinochet in the past, felt it was incumbent upon them to press for legal action at home after promising British and Spanish authorities he could face trial in Chile if released.

The lower court decision was appealed by Pinochet’s lawyers, and is now under consideration by the 20-memberSupreme Court. Which way it will go now is far from certain. Even the date of its ruling is uncertain.

However, for now all these legal comings and goings have had scant public echo—not even a hundred demonstrators on either side have taken to the streets of Santiago, Chile’s capital—as Chileans are going on with their lives and hoping the economy lives up to generally optimistic forecasts.

Independent analysts say that Chile looks increasingly likely to meet the growth target of 6 per cent this year, with latest figures suggesting that manufacturers are finally stepping up production to meet improved internal demand.

Gross Domestic Product grew 7.4 per cent in May, its biggest year-on-year increase in two years. The figure, which was above most analysts’ forecasts, represented the ninth consecutive month of growth and confirmed the country’s recuperation from last year's deep recession. While the recovery has been fueled by improved prices and bigger shipments of commodities such as copper, demand for manufactured goods was starting to pick up.

Although the figures were welcomed by private sector economists, they cautioned that domestic spending would continue to lag production well into the second half of this year. They have revised down their full-year forecast for domestic demand, from growth of 9 per cent to about 7 per cent.

One reason is that last year’s recession was extraordinarily deep and left a lot of people unemployed., which is having a huge impact on internal demand, investment and saving. Though not too high by Latin American standards, unemployment, at 8.9 per cent at the end of May, is not expected to abate until after August, mainly because of the slowdown in agricultural activity during winter.

The remedy for core unemployment would be more investment in new enterprises or in the expansion of existing ones, but both foreign and local capital are reluctant to enter into commitments at this time. In part, in the case of foreign capital, because of more attractive opportunities elsewhere. But both foreign and local capital view with concern President Lagos’s campaign promise that he would revive and push through Congress a controversial leftist-oriented labor reform program giving semi-skilled or unskilled workers at small businesses the right to negotiate pay and conditions collectively with workers at bigger plants.

Business people, with the support of leading economists, argue that it would put small businesses at a competitive disadvantage if they had to pay the higher salaries that larger operations can afford to pay—and that eventually this would cause many sources of work to close and would increase unemployment. President Lagos could do away with this threat to growth by abandoning this ideological view, but is far from clear that he will.

Claudio Campuzano (claudio-campuzano@hotmail.com) is U.S, correspondent for the Latin American newsweekly Tiempos del Mundo and editorial page editor of the New York daily Noticias del Mundo. He writes weekly for World Tribune.com

July 24, 2000


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