“Chile is a success story. Viewed as a model of economic, political and social reform, Chile has well-developed democratic institutions, a robust market economy, a reputation as a reliable global trading partner, and an impressive record of accomplishments in social, labor and environmental standards.”[1]
INTRODUCTION
Chile, one of the most prosperous countries in Latin America, began to work on its economic reform when General Augusto Pinochet was in office, but its reputation as a model in the region started in the early 1990s. Pinochet‘s inspiration was Diego Portales, the first effective ruler who brokered a constitutional compromise among the various fractions of the oligarchy in 1829. He not only created a strong central government and Chilean constitution of 1833 but also set the Chilean geopolitical thought -after the war between Chile and Peru-Bolivia Confederation in 1839- that never those two countries should be kept as a single body, because of its richness and similarities that could threaten Chilean interests.
INTRODUCTION
Chile, one of the most prosperous countries in Latin America, began to work on its economic reform when General Augusto Pinochet was in office, but its reputation as a model in the region started in the early 1990s. Pinochet‘s inspiration was Diego Portales, the first effective ruler who brokered a constitutional compromise among the various fractions of the oligarchy in 1829. He not only created a strong central government and Chilean constitution of 1833 but also set the Chilean geopolitical thought -after the war between Chile and Peru-Bolivia Confederation in 1839- that never those two countries should be kept as a single body, because of its richness and similarities that could threaten Chilean interests.
In the 19th century, Chile -a strip shape country with scarce resources- prepared itself for more than 10 years not only to make war against Bolivia but also Peru, a country with no boundary with Chile in 1879 that owned rich saltpeter and guano lands in its southern region bordering with Bolivia. Chile attacked Bolivia because it failed to observe the Treaty of 1866 between the two countries by raising taxes on the export of nitrates from the region, primarily controlled by Chilean companies. Then Bolivia invoked its 1873 secret defense alliance with Peru, which compelled it to go to war totally unprepared due to a sharp cut in the defense budget. Neither Peru nor Bolivia had enough military power to succeed against Chile and after the fall of Lima in 1881 and three-year guerilla actions in Peruvian highlands, the war concluded in a peace “agreement” in 1883 with Chilean annexation of rich lands of both countries on the Pacific coast.
Eight years later, multiparty parliamentary regime began to rule in Chile however, the interests of the upper class, continued to predominate. After a short period of military rule (1924-1925), a new more progressive constitution came in force (1925). Left-wing parties, including the communist party, gained much influence from 1930s onward and played an important role in elections of several presidents. However, the right-wing parties remained in actual control.
A presidential candidate of the left-wing parties, Salvador Allende, won the election in 1970. Upon assuming office, he nationalized the mines, industries, and public services. Allende was deposed and died in a military coup in September 1973, which was followed by 16 years of military dictatorship by General Pinochet. Democratic elections were held in 1989 and democracy was restored in 1990.
CHILE INVESTMENTS IN FOREIGN COUNTRIES
In the first three months of 2003 Chile investments in foreign countries showed an important boost: US $ 236 million, 19% over the previous year. From 1990 to 2003 investments in foreign countries went up to US$ 26,895 million.[2] According to “Gestion”, (a business Peruvian newspaper) Chilean investments in Peru surpassed 45% in 2003[3]. In fact there are important, large and strategic Chilean investments in Peru. Chile’s single import tariff rate was cut from 7% to 6% at the start of 2003. “The effective trade-weighted average tariff rate fell to less than 3% in April 2003 owing to the schedule of tariff preferences granted through bilateral trade accords. The coming on stream of a free-trade agreement (FTA) with the EU, and the enactment of an FTA with the US in 2004”[4] will benefit Chile. A Chilean website designed to promote Chile-US free trade agreement mentions that the Agreement will boost annual GDP by an estimated $4.2 billion in the United States and $700 million in Chile. It also shows Chile as a reliable country, with a democratic tradition, special emphasis on the defense of human rights and democracy and committed to the peaceful and free exchange of ideas, goods and capital, which pursues these principles in its relations around the world[5].
WATER: AN IMPORTANT RESOURCE
The major exports that permitted Chile economic improvement are copper and fruits. Both of them need water as a main resource for their development. Water is becoming a scarce resource and it’ll turn critical in the next 5 to 10 years, particularly in the north and central part of Chile: Regions I, II, III, IV, V, and RM (Santiago)[6]. Humberto Rockit, Water Chief of a main Chilean directorate, addressed that current water availability - from the Metropolitan Region to the north- is inferior to 1,000 m3/hab/y, arriving in some regions to 500 m3/hab/y, figures considered internationally like highly restrictive for the economic development of the countries. “Las ultimas noticias” (Last news), a Chilean newspaper from Santiago, described in July 2003 a Chilean project to use water from Lake Titicaca through Lake Po po, Capasa and Uyuni located in Peru and Bolivia. Chile also demands water rights to Bolivia's Rivers Lauca and Silala Spring. GAS AND TERRITORIAL CLAIMS FROM BOLIVIA AND PERU Although Chile has 67.78 billion cu m proved reserves of gas, this natural resource is imported for domestic consumption. It is a Chile state policy that Bolivia’s gas from Tarija be exported to US through Chile, rather than Peru a country that also has an important gas deposit (Camisea) in its southeastern region. This issue caused turmoil and instability as well as the resignation of Bolivia’s President. Another important matter with Bolivia is its request to get an outlet to Pacific Ocean through the northern part of Chile. In the past this place belonged to Peru, and according to the Ancon Treaty, Chile cannot cede this land without the approval of Peru. When Chile says they are reliable, most of the Peruvians don’t believe it. In fact (After the 1879 war) Chile delayed almost 50 years to accomplish a plebiscite as is stated in Ancon Treaty, to decide if Tacna and Arica territories belong to Chile or Peru. Chile also failed in practice to build a dock for the use of Peru, as the 1929 Treaty established. Maritime borders between the two countries weren’t set, and Peru has been claiming 37.1K sq Km, but Chile has not recognized the request and had addressed that there is no issue to discuss at all.
In the first three months of 2003 Chile investments in foreign countries showed an important boost: US $ 236 million, 19% over the previous year. From 1990 to 2003 investments in foreign countries went up to US$ 26,895 million.[2] According to “Gestion”, (a business Peruvian newspaper) Chilean investments in Peru surpassed 45% in 2003[3]. In fact there are important, large and strategic Chilean investments in Peru. Chile’s single import tariff rate was cut from 7% to 6% at the start of 2003. “The effective trade-weighted average tariff rate fell to less than 3% in April 2003 owing to the schedule of tariff preferences granted through bilateral trade accords. The coming on stream of a free-trade agreement (FTA) with the EU, and the enactment of an FTA with the US in 2004”[4] will benefit Chile. A Chilean website designed to promote Chile-US free trade agreement mentions that the Agreement will boost annual GDP by an estimated $4.2 billion in the United States and $700 million in Chile. It also shows Chile as a reliable country, with a democratic tradition, special emphasis on the defense of human rights and democracy and committed to the peaceful and free exchange of ideas, goods and capital, which pursues these principles in its relations around the world[5].
WATER: AN IMPORTANT RESOURCE
The major exports that permitted Chile economic improvement are copper and fruits. Both of them need water as a main resource for their development. Water is becoming a scarce resource and it’ll turn critical in the next 5 to 10 years, particularly in the north and central part of Chile: Regions I, II, III, IV, V, and RM (Santiago)[6]. Humberto Rockit, Water Chief of a main Chilean directorate, addressed that current water availability - from the Metropolitan Region to the north- is inferior to 1,000 m3/hab/y, arriving in some regions to 500 m3/hab/y, figures considered internationally like highly restrictive for the economic development of the countries. “Las ultimas noticias” (Last news), a Chilean newspaper from Santiago, described in July 2003 a Chilean project to use water from Lake Titicaca through Lake Po po, Capasa and Uyuni located in Peru and Bolivia. Chile also demands water rights to Bolivia's Rivers Lauca and Silala Spring. GAS AND TERRITORIAL CLAIMS FROM BOLIVIA AND PERU Although Chile has 67.78 billion cu m proved reserves of gas, this natural resource is imported for domestic consumption. It is a Chile state policy that Bolivia’s gas from Tarija be exported to US through Chile, rather than Peru a country that also has an important gas deposit (Camisea) in its southeastern region. This issue caused turmoil and instability as well as the resignation of Bolivia’s President. Another important matter with Bolivia is its request to get an outlet to Pacific Ocean through the northern part of Chile. In the past this place belonged to Peru, and according to the Ancon Treaty, Chile cannot cede this land without the approval of Peru. When Chile says they are reliable, most of the Peruvians don’t believe it. In fact (After the 1879 war) Chile delayed almost 50 years to accomplish a plebiscite as is stated in Ancon Treaty, to decide if Tacna and Arica territories belong to Chile or Peru. Chile also failed in practice to build a dock for the use of Peru, as the 1929 Treaty established. Maritime borders between the two countries weren’t set, and Peru has been claiming 37.1K sq Km, but Chile has not recognized the request and had addressed that there is no issue to discuss at all.
MILITARY POWER
Pedro Godoy, President of the Chilean Studies Center (CEDECH) said that after “Pacific War” in 1883 Chile committed Human Rights violation, expelling Peruvians from former Peruvian territories. He states that Chile has no pacific willingness, because it has problems with all its neighbors, but it is a strategy to present Chile besieged by foes and “it can be read in the school and universities textbooks where it is stressed that Chile has adversaries and must arm itself fatefully and necessarily… that’s what legitimizes Chile to break the balance of the military power in the region”[7]. Chile is a potential nuclear power and has postponed its signature of the Latin American Nuclear Non-Proliferation Treaty.
Pedro Godoy, President of the Chilean Studies Center (CEDECH) said that after “Pacific War” in 1883 Chile committed Human Rights violation, expelling Peruvians from former Peruvian territories. He states that Chile has no pacific willingness, because it has problems with all its neighbors, but it is a strategy to present Chile besieged by foes and “it can be read in the school and universities textbooks where it is stressed that Chile has adversaries and must arm itself fatefully and necessarily… that’s what legitimizes Chile to break the balance of the military power in the region”[7]. Chile is a potential nuclear power and has postponed its signature of the Latin American Nuclear Non-Proliferation Treaty.
In fact Chile has been developing an ambitious program to renew and increase its military power and has a large standing military, exceeding Bolivia and Peru. “Alcazar Plan” accelerated their purchases in the last years apparently with no reason. Chile’s armed forces includes more 102,000 personnel for a 15 million population, and has raised its defense budget (not including CODELCO[8]) up to $3.1 billion or 4.2% of GDP in the present year[9] permitting new purchases: Besides two new Scorpene submarines and “Williams” frigate from UK there are 4 other frigates to arrive. Destructors -type “Spruance”- are also next to come. Chile also will begin to build ships in 2006. There are 1,253 armored vehicles and recently the army bought 387 Leopard tanks and 40 AMX tanks. Lastly, the air force purchased from Lockheed Martin, 10 F-16.
INFFLUENCE
Chile has important commercial relations with US, UK, and several countries from EU, as well as large investments in Latin America. It has been incorporated as a temporary member in the UN Security Council[10]. Recently succeeded in negotiations with Venezuela, to make change Venezuelan policy towards Bolivia request for an ocean outlet. Finally, an amazing thing, different news media from Lima has accused Peruvian president Alejandro Toledo to develop a policy pro Chile due to the influence provided by his personal Chilean advisors.[11]
EL MERCURIO: RECENT EVENTS[12]
March 6, 2004: Editorial Page
“…For the necessities of gas in the northern Chile, another possibility – in a long far future – could be reached in the Peruvian project in the gas field of Camisea…”
March 7, 2004: National News
“Unexpectedly, and after several Chile’s negatives to speak about an issue considered closed, yesterday president Lagos opened Peru’s possibility to discuss about the maritime borders”
QUESTIONS
INFFLUENCE
Chile has important commercial relations with US, UK, and several countries from EU, as well as large investments in Latin America. It has been incorporated as a temporary member in the UN Security Council[10]. Recently succeeded in negotiations with Venezuela, to make change Venezuelan policy towards Bolivia request for an ocean outlet. Finally, an amazing thing, different news media from Lima has accused Peruvian president Alejandro Toledo to develop a policy pro Chile due to the influence provided by his personal Chilean advisors.[11]
EL MERCURIO: RECENT EVENTS[12]
March 6, 2004: Editorial Page
“…For the necessities of gas in the northern Chile, another possibility – in a long far future – could be reached in the Peruvian project in the gas field of Camisea…”
March 7, 2004: National News
“Unexpectedly, and after several Chile’s negatives to speak about an issue considered closed, yesterday president Lagos opened Peru’s possibility to discuss about the maritime borders”
QUESTIONS
1. Is Chile’s accelerated weapons purchase a threat to its neighbors?
2. If Chile neighbors are not well developed in military terms, what’s the threat Chile is preparing for?
3. Giving Chile geography, where are supposed to be used its large armored tanks units?
4. Does Chile foresee future nuclear development?
5. What’s the main purpose of Chile in the UN, what’s the link with its future plans?
6. Is Chile pretending to push Bolivia for the use of water from lakes served by Titicaca Lake?
7. How would react Chile if doesn’t arrive to an agreement with Bolivia for the use of water?
8. In the next years, how would the lack of water affect Chile’s economy?
9. Would Chile fail to observe Ancon Treaty with Peru in Bolivia request for an ocean outlet?
10. What would be Chile reaction if Bolivia, pursuing its population desire, exports its gas trough Peru connecting its resources with Peruvian gas deposit?
11. Will Chile consider Peru’s claims to solve maritime borders as a provocation in the future?
12. How will Chile manage its demands on water rights from Bolivia’s Rivers Lauca and Silala Spring?
13. If tension increases between Chile and Peru-Bolivia, what would be Chilean strategic enterprises behavior in those two countries? Could they bring about a “cause” that provokes a conflict?
14. Is Chile preparing itself to make a war against Peru and Bolivia, just like in the 19th Century? What would it be its objective, gas from Tarija-Camisea?, some other resources from southern Peru, such as copper? Water?
15. If water scarcity affects Chilean economy, how will it affect Chile – US Free Trade?
16. If a conflict is developed between Chile and Peru and Bolivia, how would react US?
How would affect it to the region?
2. If Chile neighbors are not well developed in military terms, what’s the threat Chile is preparing for?
3. Giving Chile geography, where are supposed to be used its large armored tanks units?
4. Does Chile foresee future nuclear development?
5. What’s the main purpose of Chile in the UN, what’s the link with its future plans?
6. Is Chile pretending to push Bolivia for the use of water from lakes served by Titicaca Lake?
7. How would react Chile if doesn’t arrive to an agreement with Bolivia for the use of water?
8. In the next years, how would the lack of water affect Chile’s economy?
9. Would Chile fail to observe Ancon Treaty with Peru in Bolivia request for an ocean outlet?
10. What would be Chile reaction if Bolivia, pursuing its population desire, exports its gas trough Peru connecting its resources with Peruvian gas deposit?
11. Will Chile consider Peru’s claims to solve maritime borders as a provocation in the future?
12. How will Chile manage its demands on water rights from Bolivia’s Rivers Lauca and Silala Spring?
13. If tension increases between Chile and Peru-Bolivia, what would be Chilean strategic enterprises behavior in those two countries? Could they bring about a “cause” that provokes a conflict?
14. Is Chile preparing itself to make a war against Peru and Bolivia, just like in the 19th Century? What would it be its objective, gas from Tarija-Camisea?, some other resources from southern Peru, such as copper? Water?
15. If water scarcity affects Chilean economy, how will it affect Chile – US Free Trade?
16. If a conflict is developed between Chile and Peru and Bolivia, how would react US?
How would affect it to the region?
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[1]Chile – US Free Trade Agreement Web Site extracted from http://www.chileusafta.com/index.html
[2] Camara De Comercio de Santiago, ANALISIS SECTORIAL, 12 Mayo 2003
[3] Gestion, Nov 07, 2003
[4] Chile foreign trade as published in Economist.com March 1, 2004
[5] Chile – US Free Trade Agreement Web Site extracted from http://www.chileusafta.com/index.html
[6]Ernesto Brown and Juan Saldivia “Chile National report on water” Jan 2000
[7] “The conflict is not for an outlet on the ocean, but development” extracted from www.chileradio.cl Jan 26, 2004.
[8] Copper National Corporation (CODELCO) provides 10% of its profit to the Chilean armed forces as it is stated in 1980 Contitution
[9] Italo Oberto Besso, “The real power of Chile” extracted from www.larazon.com.pe Jan 26, 2004
[10]Ollanta No 34, “When Mediterraneanity is mixed with gas and betrayal: Tension increases in the South”, extracted from www.prensa-ollanta.com
[11] La Razon, “Chile supported Toledo to become president” extracted from www.larazon.com.pe Feb 22, 2004
[12] “El Mercurio”, is the most influent newspaper in Chile.
[2] Camara De Comercio de Santiago, ANALISIS SECTORIAL, 12 Mayo 2003
[3] Gestion, Nov 07, 2003
[4] Chile foreign trade as published in Economist.com March 1, 2004
[5] Chile – US Free Trade Agreement Web Site extracted from http://www.chileusafta.com/index.html
[6]Ernesto Brown and Juan Saldivia “Chile National report on water” Jan 2000
[7] “The conflict is not for an outlet on the ocean, but development” extracted from www.chileradio.cl Jan 26, 2004.
[8] Copper National Corporation (CODELCO) provides 10% of its profit to the Chilean armed forces as it is stated in 1980 Contitution
[9] Italo Oberto Besso, “The real power of Chile” extracted from www.larazon.com.pe Jan 26, 2004
[10]Ollanta No 34, “When Mediterraneanity is mixed with gas and betrayal: Tension increases in the South”, extracted from www.prensa-ollanta.com
[11] La Razon, “Chile supported Toledo to become president” extracted from www.larazon.com.pe Feb 22, 2004
[12] “El Mercurio”, is the most influent newspaper in Chile.
