Online NewsHour: The Economic Success of Chile -- February 26, 1997

CHILE'S ECONOMIC RECIPE

FEBRUARY 26, 1997

TRANSCRIPT

Like it's neighbors in South America, Chile has suffered decades of harsh economic times and many years of a brutal dictatorship. But now Chile is enjoying newfound democracy and economic growth, and the Chilean president, Eduardo Frei, is in Washington to discuss a possible trade deal with the United States. After this background report, Charles Krause discusses the state of affairs in Chile with a panel of experts.

A RealAudio version of this NewsHour segment is available.
February 26, 1997:
Charles Krause leads a discussion of Chile's successful transition from a socialist dictatorship to free-market democracy.
January 23, 1997:
Margaret Warner talks with Canadian Foreign Minister Lloyd Axworthy about his visit to Cuba and economic policy.
October 22, 1997:
A report on now president Arnoldo Aleman in Nicaragua: Favoring Capitalism.
Browse the Online NewsHour's coverage of Latin America.
Chile Information Project: a good source of information and links related to Chile.

CHARLES KRAUSE: It's not every day that the president of a small country like Chile receives the kind of attention that Eduardo Frei received today at the White House. But Frei's warm welcome was genuine, in part because Chile is viewed by many experts as Latin America's premier economic and political success story and also because President Clinton hoped to use Frei's visit to signal his determination to forge closer ties with Latin America in the near future. Indeed, this morning's ceremony for Frei marked the beginning of a year during which the President will make three separate trips to South and Central America, including one trip to Santiago, Chile's capital, in March of next year. Today Clinton called Chile a model for other Latin countries attempting to develop after years of leftist revolution and right-wing military rule.
PRESIDENT CLINTON: Chile's return to democracy, a heroic and courageous struggle, has helped to fuel freedom's march all across our hemisphere. Its economic reforms have set the standard for success throughout our region, with impressive growth, unmatched financial stability, and high rates of job creation, and the reduction of poverty.
CHARLES KRAUSE: This morning's ceremony was not the first time President Clinton and Frei have met. They were last together two years ago in Miami when Chile was formally invited to become the fourth member of NAFTA, the North American Free Trade Agreement that links the U.S., Canada, and Mexico into the largest free trade zone on earth. But despite the President's support, Chile's NAFTA membership has run into opposition in Washington from labor unions and others opposed to sweeping free trade agreements. Today, after two hours of private meetings at the White House, President Clinton said he would re-double his efforts to obtain fast-track legislation from Congress that would allow Chile's NAFTA negotiations to proceed.
PRESIDENT CLINTON: I believe we must have fast-track authority to conclude new trade agreements that open markets to America's products and that advance our values. The United States simply cannot afford to sit on the sidelines while others share in the fruits of Latin America's remarkable growth. Chile's strong record of reform, good government, and sound fiscal policies make it an excellent candidate for the first use of such authority.
CHARLES KRAUSE: For his part, President Frei said that despite concerns in Congress about Chile's record on the environment and its labor laws, he and his government are still committed to joining NAFTA.
EDUARDO FREI, President, Chile: (speaking through interpreter) We are interested, of course we are. Why? Because as I said before we have economic agreements with more than 30 countries. Our foreign trade is highly diversified in Asia, Europe, and America. Our trade with Latin America is very similar to the one we have with the United States. That is why we have aggressively sought these agreements allowing a small nation to consolidate those markets.
CHARLES KRAUSE: Frei is expected to make an even stronger statement when he addresses a joint session of Congress tomorrow. But whether Chile ultimately joins NAFTA or not, given its location and its history, just the fact of being considered for membership is a remarkable feat. Wedged between the Andes and the Pacific on South America's West Coast, Chile's 14 million people inhabit a tiny, oddly-shaped country that's about 2500 miles long but, on average, only about 100 miles wide. Historically poor but with strong democratic traditions, during the 1960's Chile was a laboratory for socialist economic experiments that eventually led to Salvador Allende's election as Chile's president in 1970. At the time Allende's was the first freely-elected Marxist government to assume power and in 1971 to celebrate his triumph Allende welcomed Fidel Castro to Chile. But as Allende veered further and further to the left and as he tried to nationalize more and more Chile's economy, his presidency ran into fierce opposition, both internally and from the United States. By September 1973, Chile bordered on chaos. It was then that Allende was overthrown and died in a bloody military coup led by the commander of Chile's armed forces, General Augusto Pinochet. Fiercely anti-Communist, Pinochet was viewed by his opponents and by many governments and human rights activists as a pariah because of the thousands of Chileans who were killed or disappeared during his years in power. Yet, despite his refusal to allow political freedom, Pinochet transformed Chile's moribund economy. Using so-called shock therapy, the general and his economic advisers replaced high tariffs and government subsidies with a free market system that's become the envy of many countries throughout the world.
CHILEAN VOTER: We started from absolute rock bottom finances, and we have gone up, up, up. We only have to look around. Go out of Santiago, schooling, education everywhere, housing. You only have to open your eyes.
CHARLES KRAUSE: Many middle and upperclass Chileans supported Pinochet but in 1989 he lost a hard fought plebiscite, relinquishing most of power in 1990 after democratic elections that resulted in a new civilian government. Chile's transition from dictatorship to democracy has been relatively smooth, in large part because Frei's Christian Democrats and their opponents to the left have agreed not to tamper with Pinochet's free market reforms. As a result, as President Clinton said today, Chile is both politically stable and booming, an economic powerhouse that has one of the fastest growing economies not only in Latin America but anywhere in the world.

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