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Political
Status
Chile is a democratic
republic.
The President, at present Mr Ricardo Lagos Escobar
who was elected on 11th March 2000, serves in
office for 5 years.
The National Assembly is made up of the Chamber of
Deputies with 120 members and the Senate with 47
members (38 are elected and 10 are designated).
It sits in Valparaiso.
The constitution dates from 11th March 1981, later
modified in 1989 and 1991.
Ricardo Lagos is the first socialist president
since Salvador Allende.
He governs in the name of the democratic
Concertation, a centrist-left wing coalition which
has been in power since democracy was restored in
1990, and which unites the Christian democrats and
the socialists.
He will undoubtably pursue a liberal policy but has
also the difficult task of managing a heavy
political inheritance : Augusto Pinochet's return
to the country has divided popular opinion.
Judging the ancient dictator in Chile would help
the country to face up to its past but will also
stir up old ill-feelings.
Historical Outline
:
In earlier times Chile was
under the control of the Incas in the north and the
Araucanians in the south.
1541 Santiago was founded by
the Spaniard, Pedro de Valdivia.
1818 Chile won its independance from Spain
1836-39 War with Peru
1861-91 The liberals came into power
1879-83 The Pacific War with Peru and Bolivia
1891 Revolt led by Jorge Montt, departure of
Balmaceda, new dictatorship
1925 New constitution. Beginning of
industrialization. Formation of Marxist groups
1944 The President Juan Antonio Rios joined up with
the Americans
1969 Uprising of the army
4th September 1970 Mr Allende is elected, a left
wing President
11th September 1973 Failed coup d'état,
suicide of Mr Allende
26th June 1974 General Pinochet becomes head of the
nation
14th December 1989 Mr Patricio Sylwin, a Christian
Democrat is elected President of the Republic in
the first round
11th December 1993 Mr Eduardo Frei won the
presidential election with 58% of the vote
11th March 1994 President Frei Ruiz Tagle took up
the post of President and announced that the army
would be under the control of General Pinochet
until 1997.
3rd March 2000 General Pinochet returns to Chile
after being freed by the British government for
humanitarian reasons after 17 months of house
arrest in London.
In Santiago the ancient dictator faces 200
indictments for crimes perpetuated during his
military regime (1973-1990).
2 -
Geographical situation
Chile is part of South
America, bounded by Peru in the north and Argentina
and Bolivia to the east.
The Pacific Ocean runs down
the whole length of Chile, which is a long strip of
land (4300 kms long by 200 kms wide) between the
sea and the Andes.
There are islands and islets all down the
coastline.
From the Peruvian border in the north to the Tierra
del Fuego in the south Chile encompasses the
impressive Atacama desert, the Andes, volcanoes,
lakes, natural parks, glaciers and Cape Horn (424 m
high) on Horn Island in the extreme south.
This belongs to the Wollaston group.
Easter Island lies at 3218 kms to the west between
the Chilean coast and Polynesia.
The Juan Fernandez islands in the South Pacific are
644 kms from the mainland.
Apart from in the extreme
south of the country where narrow passages lead to
Patagonia, and in the north with its desert
coastlines and mountains, Chile is separated from
the rest of South America by the Andes, whose snow
covered peaks stretch for hundreds of
miles.
It is divided into 13 regions
and 2 territories.
The Atacama desert is in the north between the
coastal mountains and the Andes.
It is rich in minerals.
The northern region is a zone of wide plateaus and
mountains which go up to over 6,100 meters.
The highest peak in Chile, the Ojos del Salado
(6,893 m) is in this region.
In the centre there is a 1126 km long valley,
densely populated, between the Andes and the
coastal plateau.
The central plains, the pampa, separate the
cordillero des Andes from the coast, the population
is concentrated on the fertile lands around
Santiago in the centre of the country.
The topography of the southern Andes is marked by
glaciers, fjords, lakes and deep sea inlets.
The south is a land of ice where Punta Arenas, the
southernmost town in the world is to be found.
Beyond are the Magellan Straits and the Tierra del
Fuego (the Land of Fire), an island which belongs
to both Chile and Argentina.
The total surface of the
country is 756,945 sq.kms. with 1,250,000 sq. kms.
in antartic territory.
The country is a strategic
maritime point, ships pass from the Atlantic to the
Pacific and vice-versa when they go along the
Chilean coast.
The country is divided into
the following provinces :
Aconcagua, Antofagasta, Arauco, Atacama, Aysen, Bio
Bio, Cautin, Chiloe, Colchagua, Concepcion,
Coquimbo, Curco, Linares, Llanquihue, Magallanes,
Malleco, Maule, Nuble, O'Higgins, Osorno, Santiago,
Talca, Tarapaca, Valdivia, Valparaiso,
Antarida.
A third of the population of
the country live in the capital,
Santiago.
3 -
Economy & Statistics
After having gone through its
first recession since 1983, the country is showing
signs of revival and should stabilize its growth
rate from 2000 on, due to a tightening up of its
monetary and budgetary policies, improvements in
its trading terms and a more competitive exchange
rate.
On 2nd September 1999, the Central Bank put an end
to its policy of fluctuation on internal profit
margins which had been set up in 1984, the exchange
rate is now determined by the market.
Chile is an exemplary case in
Latin America.
In spite of the rise in the price of petrol the
economic recovery should lead to an annual growth
rate of between 5% and 6%.
The balance of trade is good, with a rise in the
exports of copper and cellulose.
Chile was the first Latin
American nation to have reformed its economy in
depth.
The foundations remain solid : savings and
investment are high, inflation is moderate, debts
are contained and there is a comfortable level of
reserves.
The financial system is healthy.
In the banking sector several agencies have merged
to create bigger international sized banks which
will be more competitive.
Moreover, although it has
gone up, the level of the external debt remains
moderate.
Imports have dropped and
exports have risen permitting the current deficit
and the need for external financing to be
reduced.
Direct investment covers most of the
requirements.
The legislation concerning foreign investment is
flexible : there is a large spectrum of solutions
open to the potential investor, who draws up a
contract with the State, represented by the
committee of foreign investments.
Capital can be transferred and repatriated without
obstruction.
Following the 1999 boom of Spanish investors,
foreign investment has slowed down, but Chile still
remains the 4th biggest receiver of foreign
investments amongst developing countries, having
received 9.2 billion dollars.
The high amount invested in the country can be
explained by privatizations (water, electricity
etc) and foreign enterprises continue to invest in
the traditional sectors (particularly mining and
timber industries).
Social inequalities are still
strong, but in spite of a persistance in social
unrest, the political risk is low.
Unemployment continues to be
the major preoccupation as the level has only gone
down very slightly. President
Lagos had promised the creation of 200,000 jobs,
but only 60,000 have been created so far. An old
project of unemployment insurance was again brought
forward by the government but without success.
The minimum monthly wage is 1000 FrF and an average
salary is about 3500 FrF, with managers and
executives often earning high wages.
The employers' charges are low, only employees have
to contribute to pension funds and a health
insurance scheme.
In spite of a fairly high
Gross Domestic Product the distribution of income
is still very inequal. Although a middle class is
emerging, a quarter of the population still doesn't
enjoy a western style standard of
living.
The country has a wealth of
natural resources, a huge fish supply near its
coasts, a subsoil rich in minerals and abundant
forests.
The majority of its trade
concerns raw materials, copper still represents
nearly 40% of Chilean exports.
Importations of equipment are low.
The main clients for goods
from Chile are the United States, Japan, Argentina
and Great Britain.
Chilean suppliers are the United States 21.9%,
Latin America 26.7%, Japan 5%, Asia (apart from
Japan)
14,2% and the European Union 21.7%
The Chilean market is
particularly open, concerning both customs duties
and the near total absence of other obstacles.
The level of customs tariffs : one rate of 9% was
set on 1st January 2000, which will diminish by one
point on 1st January each year over the next three
years.
The real rate, taking into account the trade
agreements negotiated by Chile (Mercosur, Canada,
Mexico and most of the Latin American countries) is
in fact already 7%.
Chile will possibly integrate Mercosur, the South
American trade group, in 2002.
Economic
Statistics
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1997
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1998
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1999
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2000
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economic
growth (%)
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7.6
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3.4
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-1
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5
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inflation
(%)
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6
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4.7
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2.7
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3.4
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public
balance/GDP (%)
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2
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0.4
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-1
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-0.4
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unemployment rate
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6.1
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6.1
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6.9
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np
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exports
(billion $)
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16.7
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14.8
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15.3
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16.6
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imports
(billion $)
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18.2
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17.3
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15
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16.5
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balance of
trade (billion$)
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-1.6
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-2.5
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0.3
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0.2
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current
balance/GDP (%)
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-4.9
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-5.7
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-2.3
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-3.2
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external
debt (billion $)
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28.3
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33.5
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36.1
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39.9
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debt
services/exports (%)
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14.5
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18.3
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19.3
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21.2
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General statistics :
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Global GNP
1999
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69.71
billion $
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GDP per
capita
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4,930
dollars
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Purchasing
power parity (PPP)
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10,800
dollars
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Growth of
private consumption 1990-1997
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+9,3% per
annum
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Households
with PPP +$30000pa
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880,000 =
24%
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Households
with PPP+$15000pa
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1,890,000
= 51%
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Households
with PPP -$5000 pa
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330,000 =
9%
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Aid
1998
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4.656
billion $
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Foreign
investment 1999
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9.221
billion $
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Tourist
revenue 1998
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1.062
billion $
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GDP
by activity sector :
agriculture :
7.5%
industry : 14.5%
mining : 15.8%
services : 62.2%
Developing sectors : there
are numerous openings in the sectors of consumer
goods, agriculture, equipment and new technologies,
infrastructure and building and public works and
services.
There are also investment possibilities in the
sectors of foodstuff processing, timber, fish
farming and wine production.
The policy of giving concessions offers
opportunities in the building of roads and airports
and water distribution.
The labour force is
plentiful, whether it is for high level executives
or non-qualified labourers.
Technicians and qualified workers are more
difficult to find.
4 -
Agriculture
Chile uses its different resources according to the
way the country is divided geographically. In the
north because of the extremely dry climate there is
hardly any farming, the central area is mainly used
for raising livestock, and most of the forests are
in the south where the temperatures are
low.
As in most of the South
American countries there are two kinds of farm
owners, the large farms and the small plots for
subsistance farming.
At present Chile produces
most of the fresh fruit in South America.
It produces wheat, oats, maize, rice, colza,
potatoes, chickpeas, flageolets, and fruit :
grapes, pears, apples, melons, kiwis, peaches,
nectarines,avocados, strawberries,
raspberries.
Chile is the 12th biggest
wine producing country in the world. The wine is
excellent and sought after abroad.
The country has the third
biggest fishing industry in the world and now that
the effects from El Nino on the temperature of the
sea and the resulting fish banks have ended, the
income from fishing will definitely increase.
Tuna, sea trout, sardines, merlu, royal crab, maya
crab, shrimps, sea urchins and clams are
fished.
Agriculture
(in millions of tons, head, m³ for lumber)
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Production
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1996
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1997
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1998
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1999
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Rating
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wood
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29.831
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29.977
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31.670
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-
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22
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wheat
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1.227
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1.677
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1.682
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1.197
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maize
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0.932
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0.881
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0.943
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0.624
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-
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oranges
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0.110
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0.110
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0.115
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0.115
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-
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barley
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0.064
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0.081
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0.115
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0.081
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potatoes
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0.828
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1.114
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0.792
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0.995
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-
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rice
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0.382
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0.455
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0.547
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0.467
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-
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wine
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0.845
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0.811
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0.770
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0.878
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12
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cattle
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3.858
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4.142
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4.160
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4.134
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-
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sheep
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4.516
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3.835
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3.754
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4.116
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-
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pigs
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1.486
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1.655
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1.962
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2.221
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fishing
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6.909
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6.084
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-
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-
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4
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5 -
Industry
The Chilean economy is still
dependent on the mining sector.
The country is the biggest producer of copper in
the world, and it accounts for 40% of exports.
If you add that figure to the other minerals,
essentially silver, but also sulphur, zinc, natural
gaz, coal and iron ores, this proportion reaches
55%.
The rise of over 40% in the market value of copper
from 1998 to the beginning of 2000 represented an
enormous growth.
Mining production
1999
(in millions of tons, gold and silver in tons)
silver (1998) .... 1340
coal .................. 0.228
copper ............ 4.242
iron .................. 8.493
gold.................... 51
zinc .................. 0.027
The authorities are encouraging
diversification.
The manufacturing sector is concentrated on
foodstuffs (fish and wine processing), other
activities are small scale (chemicals and
equipment) and always linked to mining.
Some production sectors have
recently been developed, such as mechanical tools,
printing and editing, also the production of metal
products, professional and opthalmological
equipment, spare parts for vehicles and machines
for the timber industry.
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