Military dictatorship of Chile

After the 1973 coup in Chile, Augusto Pinochet, head of the resulting 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 the socialist experiment was over.

Suppression of the Left

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. He also expressed contempt for the Christian Democratic Party's call for a quick return to civilian democracy. However, he did not ban the party.

Pinochet's rule was characterized by systematic suppression of all leftist opposition. 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. Following Pinochet's defeat in the 1989 plebiscite, it was found that approximately 3000 people were killed or disappeared by the regime, with several thousands more being imprisoned and/or tortured. 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.

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 political dissidents.

Economy

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]

Inflation was a significant factor plaguing the Chilean economy during and after the Allende years. 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]. The long-term goal of reducing inflation was achieved in spite of the aforementioned costs.

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, 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]

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%.

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've been made without the hugely negative impact they had on poorer members of Chilean society.

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].

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.