Lead & Rain in Santiago: A History of the Fragmented Democracy of the Republic of Chile from 1970-1982
The Chicago Boys: 1970-1976
The bitter, rancorous campaign of 1970 which had seen American backed rightist candidate Jorge Alessandri return to the presidency, was a marker of a semantic, polarising shift in Chilean politics, as the continued influence of the Cold War pulled at nations on it's periphery. The split between the left and right wings of the Christian Democrats that allowed Alessandri to take over the presidency grew wider over the course of his six years in power, eventually culminating in the Radomiristas [1] seceding from the party to form the Democratic Union [2]. This split in the centre was mirrored on the left as well with the fragile coalition of Salvador Allende's Socialists and Luis Corvalán's Communists collapsed into bitter infighting, which granted Alessandri's own relatively stable coalition of right-wing Christian Democrats and Liberals and the traditional conservatives of the National Party a distinct advantage in governing.
Despite the rightist bent of his government, and the monetarist policies it had adopted under influence from American educated economists (colloquially known as the Chicago Boys), Alessandri was initially reluctant to reverse much of his more radical predecessor's Eduardo Frei's policies, with the partial nationalisation of the copper industry [3] retained. Despite these cautious intial signs, the government soon introduced changes: General René Schneider was deposed as Commander-in-Chief of the Army by the rightist Camilo Valenzuela, whilst the expansion of primary and secondary education introduced during the 60s was largely abandoned, along with land reform. The shift to a monetarist economic approach, away from the state interventionism that had marked Chilean economic orthodoxy for the last few daces had a profound effect on the economy.
The abandonment of price controls and the liberalisation of imports had a profound impact on the economy, causing severe initial fluctuations in prices, though inflation began to decline. The government's decision to open other industries (notably coal) to foreign investment saw widespread protests and the calling of a miners strike in early 1971. As prices continued to rise several times above the average national wage, increased public anger saw several strikes happen throughout the year. A decline in both copper and coal prices further increased pressure on the government to abandon it's stringent adherence to fiscally conservative policies. Alessandri, wary of further increasing public anger, vetoed plans to privatise state pensions and healthcare, though the national social security budget was decreased.
By 1973 the economy had appeared to stabilise, though it performed somewhat sluggishly, despite increases in exports. This revival was shortlived however, and a depression caused by a global slump in copper lead to the call of a general strike as unions mobilised on a rising tide of popular anger, where they were supported by the leftist parties in congress as well as left-leaning elements within the Catholic Church. [4] The tide of popular anger would see the somewhat fractious opposition [5] (the Communists, Socialists, the left-leaning Democrats and the centrist Radicals) emerge with a combined majority as Alessandri's governing coalition slumped. Widespread violence over the course of the month long strike [6], notably the "Misery at Concepción" which saw twenty-four strikers and five policeman killed or wounded in vicious clashes, brought international condemnation.
As a result of this the government changed course: the fullblooded fiscal conservatism which had dominated for the first three years was quietly abandoned in favour of a pragmatic economic course. Capital controls were maintained, and the central bank was granted greater control over monetary policy. Inflation gradually declined and wages slowly rose, though still some way below their pre-1971 level. A global revival of the copper market allowed for an increase in exports, and as a concession to the unions in the aftermath of the strike, limited reforms were granted in land ownership and industrial working conditions. Despite the mild recovery, poverty had dramatically increased, with the cuts in social security, education and healthcare enacted by Alessandri, along with the economic depression largely cited as the root causes. The government's wariness towards antagonising the military (coups having overthrown governments in neighbouring Brazil and Argentina, while the military governed in Paraguay and neighbouring Peru) saw it rapidly increase investment into the armed forces, notably on the issue of wages, with military and police personnel one of the few groups to have their wages increase during the government's term in office.
Alessandri's shift to a more conciliatory approach following 1973 was due to political necessity, as his government formed a minority in the legislature following the '73 parliamentary elections. Despite his general unpopularity [7], the complete collapse in collaboration between Allende and Corvalán allowed Alessandri's government to scrape through to the end of it's term relatively unscathed, though it's widespread unpopularity and simmering public discontent over the sluggishness of the economy saw many predict that the National Party and it's allies would be wiped out in the upcoming presidential election.
Alessandri's legacy in the aftermath has remained much contested, with many on the right hailing him as making the necessary reforms to bring Chile fully into the market economy, whilst those on the left denounce him as a traitor to his original reformist goverment of the early 60s. Unlike his successor he would retire into relative peace as Chilean Ambassador to the United Kingdom.
Fear and Loathing in the Atacama: The 1976 Presidential Election
The election, would deepen the faultlines first exposed during the 1970 election. Eleven candidates stood to be President, and unlike in 1970, this time the left and right stood different candidates rather than form broader coalitions. Allende again stood for the Socialists, while Radomiro Tomic stood for the Democrats. Former president Eduardo Frei, who had shifted further to the right stood for the Christian Democrats. Other candidates included Corvalán for the Communists and Jaime Guzmán for the National Party, who had close ties to conservative elements within the military. [8]
Following the first two weeks of campaigning, four frontrunners clearly emerged: Corvalán and Allende on the left, Tomic in the centre and Frei on the right. The first round of voting gave Tomic a 3% lead over Frei, with the left vote having split between Allende and Corvalán. The congressional vote to determine the winner resulted in a clearer victory in 1970: Allende's Socialists and the Radical and Liberal Parties voted for Tomic giving him a majority of votes. The results would see a crossparty government formed with Tomic's Democrats joining Allende's Socialists the Radical and Liberal parties in a "Progressive Unity" government. [9]
Reconciliation, Reform and Rancour: 1976-1982
Tomic's government returned to the reformist policies of previous administrations: land reform returned to the agenda as did nationalisation. In contrast to the low tax, pro-business regime of Alessandri, the government adopted a progressive taxation programme, while adopting Keynesian economics, a widespread programme of public construction (notably housing) was implemented as a boost to the economy. The government, began a programme of gradual nationalisation of the copper industry, with the government's stake increasing from 51% in 1976 to 67% by 1979.
Wary of being solely at the mercy of the global price for copper, expenditure on agriculture, particularly subsidies increased as the government sought to diversify the economy. Large scale infrastructure projects, notably the reconstruction and investment into the railway [10] and road networks, saw unemployment gradually decrease, while wages began to slowly increase. The increases in income from the stronger market for copper as well as taxation increases, allowed the government to increase it's investment of national insurance and unemployment relief. New schools and hospitals were built in remote areas. These measures are generally credited with the government able to secure a majority in the 1977 elections. Tomic, who had in his campaign pledged to enact constitutional reform, was emboldened by the results and attempted to push his proposed reforms through: if passed they would have reduced the Presidential term to four years for six and allowed for two terms. These proposals were defeated following internal opposition within his coalition, which marked the beginning of the decline in relations between Allende and Tomic.
While domestically the government's Keynesian economics proved popular after the chaos of the monetarist years, internal tensions within the governing coalition remained sharply defined, notably in regards to proposed expansions of land reform and in foreign policy. Calls from the left of the coalition to expropriate church land caused deep debate amongst the government and was eventually rejected for fear of antagonising the influential Catholic establishment. Land reform itself saw the government compensate landowners before converting large estates into smaller private plots. While this proved popular the process of compensation itself caused controversy with both landowners and their representatives in the National Party decrying the money offered as "pittance."
Internationally the government maintained normal relations with both the US under the Democrat administration of Henry Jackson and the Soviets under Brezhnev. The government also pursued closer economic ties with it's neighbours, signing a trade treaty with Bolivia in 1977 and two treaties with Peru and Brazil in 1978. Relations with Argentina remained tense over the issue of the Beagle Channel, though economically ties remained close. Tensions over foreign policy were largely expressed over whether to approach the Americans or Soviets for economic aid: generally Tomic retained cordial relations with Washington, though his decision to pursue a trade deal with the Soviets [11] soured relations with both the Americans and within his government, with the Liberal deputies refusing to vote in favour of it in Congress.
While copper had been steadily nationalised, bringing it further under government control, the continued reliance on copper exports in the economy despite attempts to diversify would cause further problems for the government in 1979-80. A decline in copper prices, along with coal, caused a stagnation in the country's steady growth and eventually tipped into recession. An increase in inflation in the peso further exacerbated matters and Tomic announced the introduction of several austerity measures, including a reduction in pay for workers in nationalised industries caused widespread anger both within government and outside. Press revelations of corruption relating to the railways expansion further increased pressure on Tomic, as did a coal miners strike following the reduction in working hours and pay in early 1980. Allende's public support for the strikers, splintered the coalition and in 1980 the Socialists departed the government, leaving Tomic with a slender legislative majority.
Through arbitration the coal strike was eventually settled in favour of the miners [12], but Tomic had lost some of his lustre with the public at large and within his own party. Opposition emerged from figures such as Bernardo Leighton from the left and Patricio Aylwin on the right [13], and Tomic became increasingly reliant on the support of his coalition partners in the Radicals and Liberals to pass legislation. By 1981, the economy had again begun to pick up and Tomic announced plans for a partial nationalisation of the coal industry, which would grant the government a 25% stake, though this was widely denounced in the rightist press and Tomic would leave office before it was fully enacted.
Notes
[1] Supporters of Radomiro Tomic, leader of the left-leaning faction within the Christian Democrats.
[2] The Democratic Union would eventually transition into the Democratic Party of Chile, merging with the Social Democratic Party and the Radical Democratic Union in 1972.
[3] By 1970 at the end of Frei's presidency, the state owned a 51% controlling stake in the copper industry.
[4] While wary of the threat of the Communists, the Church retained a strong liberation bent, particularly in urban areas and maintained close relations with several of the more moderate unions.
[5] The leftist opposition were largely split between the moderate and gradualist leadership of the socialist and communist establishments, and the more radical membership of their parties, as well as the trade unions, the student movements and the moderate centre-left contianed in both the Democrats and Radical Parties.
[6] The general strike against the government's economic measures brought together a broad coalition of trade unionists, students, the leftist congressional opposition, los campesinos and left-leaning elements of the church. The decison of the government to deploy the army and national police to break the strike lead to the increased violence that marked the Summer of Lead in 1973.
[7] A notable incident occured during Alessandri's attendance of the crucial 1974 World Cup qualifier in September 1973 between Chile and Peru where he was roundly booed during the national anthems, and widespread chanting against his govenment continued throughout the match. While Chile would win 2-1 to qualify, the febrile atmosphere would lead to sporadic violence in Santiago in the aftermath of the match. Alessandri would attend the World Cup, where he was greeted by boos from the Chilean contingent during their group games.
[8] Guzmán had been a conservative student activist and youth leader, and had enjoyed a meteoric rise through the ranks of the National Party, due largely to his close ties to military supporters such as Air Force General Gustavo Leigh.
[9] The coalition did not include the Communists though they formed an informal agreement to support the government on a vote by vote basis.
[10] The investment into railways saw the decision to build a railway stretching from Santiago to Pedro de Montt, as well as the reopening of several abandoned branch lines and the construction of a freight and passenger network connecting with neighbours Boivia and Argentina. Originally envisaged as being finished by 1994, by the time Tomic left office only 10 percent of the proposed initial construction had been completed with the project hampered by continuous allegations of corruption.
[11] The trade deal would've seen the export of agricultural goods and copper in exchange for Soviet equipment and credits, particularly concentrating on the agricultural and mining sectors.
[12] The miners would receive increased pay and improved working conditions, with union mandated conditions making it harder for the private mines to layoff union workers.
[13] Aylwin would emerge as the leading figure to succeed Tomic as Democrat leader, and aimed for rapporchement with Eduardo Frei's faction to reform the Christian Democrats as the main centrist bloc within Chilean politics.