I. THE RECORD OF THE FREI ADMINISTRATIONKEY POLITICAL FORCES
OUTLOOK FOR THE NEXT ADMINISTRATION
V. IMPLICATIONS FOR THE UNITED STATES APPENDIX
THE OUTLOOK FOR CHILE
A- Over the last fivealf years, President Eduardo Frei has initiated many changes in Chilean society, for the most part designed lo enhance tlic status and income of ihe poorer classes. The next administration, depending on its composition, may consolidate orthese changes, but it cannot sharply reverse them. Frei cannol Succeed himself and an election to determine his successor is scheduledeptember.
is not possible to single out any one of the threethe likely winner. None seems likely to win the majoritydirect election. In that event the Congress chooses betweentwo candidates.
Jorge Alcssandri, an aging and ailing conservative elder statesman type, is still the front runner. He has the smallest-bloc of supporters in the Congress, and even if he finishes first might be passed over unless he wins something likeercent of the popular vote.
Hadomiro Tomic. the leftist Christian Democratic candidate, would almost certainly be the victor in the secondary election if he finishes first, and wouldood chance if helose second.
Salvador Allendc, the Socialist who is supported by an electoral coalition strongly influenced by the Communists, must finish first in the popular vote to have much chance of election by the Congress.
of the presidential candidates is supported bythatajority in both houses of the Congress andcongressional election is not scheduled until Marchin particular, would have serious problems inorkable coalition to slow down the pace of reformconsolidate the changes Frei has initiated.
are measurable differences among the threethe kind of government they would provide. Alcssandri is the
only one wlio is well-disposed loward the Chilean private sector. The other two, although both strongly influenced by Marxist ideology, differ with regard to the kind of socialist state they want and the means for achieving it. Allendc's socialist state wouldhilean versionoviet style East European Communist state, secured with tlic help of the Chilean Communist movement. Tomics model, on tlic other hand, is Yugoslavia. He would attempt to use the present constitutional system to impose bis vaguely definedvstem, which envisages slate operation of Chile's basic economic enterprises.
we judge tbat Chilean democracy is likely lothe next two or three years, it will be tested in the nearwith even greater severity over the next decade. Theto stability and constitutional order would come fromof an Allende administration. Another threat might ariseextra-constilutional reactions of its opponents, including theNo matter who is elected, the tensions in Chilean societyto increase before they diminish.
would be strains in US-Chilean relations underor Tomic but both men appear persuaded of thegood relations with the US- Allende, however, would almosttake harsh measures against US business interests in ChileUS policies in the hemisphere. The hostility ofhis allies towards the US is too deeply-rooted to be easilykey international issues, which involved any kind of anan Allende administration would be openly hostileinterests or at best neutral.
I. THE RECORD OF THE FREI ADMINISTRATION
he administration of Eduardo Frei took of lice in4 amid widespread expressions of support for its declared program of "Revolution in Liberty" Its goal was io pursue far-reaching socioeconomic reforms whiledemocratic liberties and institutions. The adminUlration's efforts in housing, education, and agrarian reform, including rural unionization, were de-Signed to expand the active electorate and to increase social and economicto Chiles urban and rural poor. In fact, the growth in real income and social services for these groups has moved tlwm toward fuller participation in national life. Frei's programs have, however, come too fast for some elements of society
and loo slowly for others. They have been cosily, politically as well as
hile implementing its reforms, the Frei administration saw its financial situation substantially assisted by three developments; record-breaking copper prices averaging almost twice those prevailing in the, foreign assistance averaging0 million annually,izeable inflow of private investment capital The latter resulted from the agreements made with three US copper companieshich promisedfavorable lax and investment policyycar period in exchange for the companies' participationajorprogiam designed to double the production of copper. The Fieiobtained additional bevrflls9hased nationalization ofproducing mines and by substantially raiting tax rates on all majorcopper companies, actions which effectively ended7 agreements.'
3 The aforementioned factors enabled Chile toubstantial surplus on its balance of payments in all but one year of the Frei administration, even with importsairly high level.esult. Clulcs net international reserve position improved0 million40 millionuring the same period, however, the foreign debt of the public sector doubled,otal2 billion. Moreover, Chile became even more dependent on copper exports, whose share of export earnings increased fromercent of the totalo SO percentSee Appendix for Figurehe Bole of Copper in Chile's)
ncreased revenues from both external and domestic sources have assisted in the initiation of programs aimed at improving the way of life of the nations lower classes. Some ol Frei's most impressive accomplishments have been in the field of education, where enrollment has increased nearlyercent, and the rate of illiteracy has been further reduced from someercent4 to aboutercentven though he has not met his stated goals in other fields, such as housing and agrarian reform, his administration has made substantia! progress despite the obstructionist tactics of his political opponents. Since Frei's program for expropriating and redistributing land did not receive congressional approval untile had little chance of providingew, family-sized farms he called for during his election campaign. The costs of the program have been far higher than anticipated, and haveown the pace of land reform. Nevertheless, by the end ol Frei's administration,0 landless familieshave beenon communal rather Ihat.farms. (See Appendix for TableReform in Chile."') In addition, his administration is exceeding the notable achievement
0 million espansim proems neatta* completion.and under_ a, contiIjuing
of his predecessor. Jorge Alessandri. tn the construction of urgently needed housing.
ne of the striking changes under Frci has been in the Status of rural labor. Until Frei took power, the unionization of agricultural workers was so severely handicapped by legislation that there were butural unionsotalof just. By9 thereural unions withembers. Bylie rural unions wereembership of.esult of unionization in the countryside, the traditionalof the patron over his workers is breaking down. Strikes to press salary and other demands are now legal and occur on abasis.
he pohticization of the rural populationesult of uruonization and agrarian reform continues apace Not surprisingly, these dcselocKnents have met with the strong resistance of tbe landed interests. Moreover, contrary to its promises, the Frei administration has expropriated efficiently ma farms II has been charged, not without some justification, with favoritism in selecting the farms to be expropriated. In recent months, sporadic incidents of rural violence, which have caused blood to be shed and property lo be destroyed, have become Involved in the bitterly partisan notional political contest to determine Frei's successor.
The Frei administration's record on both economic growth and pricedoes not compare favorably with lhat ol its predecessor (Jorgelthough Chile's rate ol economic growth roseercent. compared toercrnl under Alessandri. it fell to lessercent. only in part because of an extended drought which affected agricultural outputuring his fiist tiro years in office Freireduced tbe pace of inflationowever, the combination of rapidly rising wages, greatly increased government spending, excessive monetaryand stagnating output caused the nse in tbe cost-of-living to acceteraie. The official consumer price index shows an average annual increase ofercent over the past three years but other and more accurate official statistics! suggest3 rjetcent rate of inflation is closer to the mark, although that figure may also be too low.
The Frei administration hastgh priority to income redistribution in order to raise the living standards ol the nation's less privileged classes.Frei's first two years in office) real wages rose by an estimatedercent. Since then, however, as theof inflation quickened and Freito moderate further wage demands, there has been little furtherWe estimate that, although nominal wages Increased byercenteal wages probably did not rise by moreercent. Similarly,Seal wage* barely held their own. (See Figure 2:
6 the official prk*hich teemath lor wpKialine. <npt. IrsfeocWabK sbort of tha tree raM ol lanarmo. The private
eaore xraau meaiurr and an umi!Ih* beau lor th? dnevruoo of realepansraph
"Real Wages and Rates of Inflation in Chile Using Differentnder Frei many lower paid wage earners have received increases in real wages, as well as expanded social services, the more prosperous and better organized union workers have gained proportionately more because of their greatcr bargaining power,
a result of government policies whichontinuing shift of resources from the private to the publicprivate enterprise has lacked both the funds and Ihe incentivesPrivate investment from domestic sources diopped significantly inperiod, going fromercent toalfof CDP. Moreover, total fUid investment, excluding foreign copperwas in absolute terms no higher9 than it had beenndshare of CDP bad fallen to aboutercent. (See Appendix for Figureof Available) Net mvrstrncnt by the USincreased at in average annual rate5 million over theperiod while other direct foreign investment was negative.
reform programs have involved high political costs, probablyhis original expectations. Unlike most of his immediatewere elected from tlie left and ruled with the right. Freito carry out his campaign promises. Because Frei's changesbenefitted tho lower classes, tensions between the classes haveand have been carried over into national politics. Politicalalso intinisificd by Frci's decision not to follow the traditional patterngovernment, under which opposition parties secured cabinetgovernment posts in return for supporting the administration'sMoreover, a* was the case with Cleopatra, where Frei hashe has most aroused: the very success of his programs has led toeconomic demands and created political pressures for more radicaldetrimental economic effects of rapid reform in turn have limited theability to meet the expectations it aroused, and this has hurtDemocratic Party (PDC).
* Under live Frrl admuibtmbon public sector spending hai gone Irom aboutercent toecociit of pais domestic product0 public liiveibiwtilncluding iinjiK-inK of private investment) equaledl (row ilorneitic Invabneot contpaitil with leu. thanercentJ.
U. Although Frei has established himself as the most popular political figure in Chile he has not transinitted his personal popularity to hu party's candidate. Furthermore, his insistence on abiding by constitutional procedures andthe consequent delay and watering-down of his programs caused recurrent dusension within the PDC. More important,4 the PDC provided the only attractive alternative to the candidate supported by the Communists and even more extremist elements of the society. By contrast, the independent voters, and particularly tho nominally conservative voters who supported Fidow
idely-respected candidate, Jorge Alessandri.on-Marxist alternative to the PDC candidate.
developments have contributed to the difficulties Frei's partythe election to choose his successor scheduledeptember. Therecourse, other factors involved, which we propose to examine in theof the electoral contest, the character of the next administration andfor the US.
II. KEY POiniCAl FORCES
A. The Parties
The Christian Democratic Partyhe Chilean Christianmovement is noticeably to the left of its counterparts in Western Europe. Althoughonfessional party, it puts much greater emphasis on carrying out the socio-economic tenets of papal encyclicals than they do. An extreme leftist faction has been sharply critical of the pace and scope of Frei's "Revolution in Liberty" and some of its members have bolted the party. Another faction of the party also urges an acceleration of change but has remained within theand supports Radomiro Tomic. the party's candidate to succeed Frei.hen it emerged as the country's largest political party, the PDC had only limited and largely middle class support. Since then it lias woiTa sizeable following among the urban and rural working classes. While its share of the total vote in the lust two national elections fellfrom someercent5 to aboutercentt is still the country's largest political party.
The National Partyhe PN was formed6 from the remnants of Chile's traditional Liberal and Conservative Parties. It has some middle and lower class support but basically represents the large- and medium-si2edand industrial and commercial interests. The PN's principal political asset is the appeal of the candidate it is supporting, Jorge Alessandri. The PN. largelyesult of its identification with Alessandri, has revived from the stunning setback Liberal and Conservative candidates received when they won barelyercent of the total vote in5 congressional elections,9 the PN increased its following toercent of the votes cast, and is now Chiles second largest political party.
The ChUean Communist Partyince regaining legal statusS, the PCCh has developed the mos: effective political organization and leadership of any Latin American Communist party or any other Chilean party. It has been careful to play down its close adherence to the Moscow line and to avoid direct involvement in violent revolutionary action. This is in line with the party's emphasis on the via pacifica as the means for attaining power. Since the PCCh has not been able to win more than someercent of the total vote in national elections, its leaders have sought and obtained electoral alliances with other parties. This tactic has also enabled the PCCh to secure control of
a gre.il many combined lot.il campaignhoiis. andtilize to the hilt the capabilities of the parly meinlwrship which has expanded to
The Socialistho Chilean Socialisi movement has long been rent by pentonal rivalries as well as by differences over policies and tactics. Although die PS docsoie moderate faction, it has consistently been more radical than ihe Communist Party in its progiams and tactics; an important faction advocates the seizure of power by force as the only way the Marxists can conic to power in Chile. The PS draws its following largely from the lower classes, particularly organized labor, but also has some support among student and professional elements of society. In the last congressional electionhe PS increased its share of the total vote to someercent,light gain over theercent its candidates had received
The Radical Porti/hereariety of Other parties strung across the political spectrum in Chile. Ihe only one of any importance, however, is the PR. Until eclipsed by the rapid rise of the Christian Democratic movement, the PR had been the major centrist party in Cliilean politics, representing middle and some upper as well as lower class interests. In recent years the PR hits been beset by recurrent factionalism with respect to policies and tactics, which has been exacerbated by personal rivalries.esult the PR fell from first position in the congressional elections1 to fourth positionhctUt seemed just underercent of the total vote. Over the last year or so the partycourted the Communists and Socialists in the hope of securingadical candidate in thelections. This tactic of wooins the Marxist left seriously disrupted the party. When its leaders decided to go alongocialistown wasprominenl Radicals and many among the rank: and file bolted the PR and now support Alessandri.
B. The Security Forces*
the, the Chilean Armed Forces established anda generally apolitical position which has only recently beenquestion. The army, the predominant service, usually managed to makeknown to the top-level of the administration in power and whenIhcy were settled quietly on thai level. Since the Carabineroswere charged with the day to day task of maintaining internalsuffered the resentment engendered in putting down demonstrationsstaged by student and other political activists. Only when suchto get out ot hand did ihe army lake over to restore order.toespected position in Chilean society.
'The Oulcan lecurityonsist of an amw ofavy oln air force ai0 and llie- Caratnneros ofbo Cnrahmcnii liave Initial responsibility maintaining internal oriier but In caw of emergency ihey uie placed under aroiv command.
ome army units led by Brigadier General Robertoover serious grievances involving salaries eroded by inflation,equipment, and dissatisfaction with Frei's appointees to the top militarymilitary leadership had tried earlier to paper over these problems byViaux from command of troops. The mutiny, known as thequickly contained and the military were calmed down by salarythe replacement of the Minister of Defense and some military leaders.in the military and apprehension among the political leadersupshot of all this is that the politicians can no longer lake for grantedof the Chilean Armed Forces of nol involving themselves directlypolitics. This is not to say that the armed forces are soon to goof repeated intervention in national politics as has been the case withLatin American security forces. It is clear, however, that IheForces, and perhaps the Carabineros as well,enewedtheir potential political powerreater inclination lo use it.
III. THE ELECTIONEPTEMBER
this campaign the electorate isumber of factorsor not as importanthis time the votershoicebetween the pace of reform (Frei and Allcndeut also(Tomic and Allende) and consolidationithin their minds, many may consider whether the election of Allendethe possibility of military intervention. So far the policy of ihe USpresence arc not nearly the important issue in this campaign that
A. The Candidates
A/essoiwiW. Although his early sizeable lead has been reduced, forge Alessandri, who preceded Frei in the. appears to be the front runner among the three major candidates. He draws suport from all classes in Chileanuccessful businessmanolitical conservative by Chilean standards', Alessandri has capitalized on the distrust many independent voters have for "politicians" by stressing his own politicalrusty,ear-old bachelor, he nevertheless hasfather image" withappeal to the distaff side of the electorate. Moreover. Alcssandrieputation for personal integrity, political honesty, and competence which rivals that of Frei himself. Alessandri is supported by the conservative PN, which sees him as the PM's only chance to regain power in Chile, by right-wing and centrist groups formerly aligned with the PR. and by nominally independent voters, including many from Ihe lower class.
During the present election campaign the deterioration in Alessandri's physical condition has become apparentublic which has seen relatively little of him sincelessandri has been unable to compete with his younger rivals in the vigor of his campaigning. Their more efficiently managed and smoother functioning political organizations also appear to have contributed to
a gradual erosion of liis large early Irad. lib candidacy ha* abo been affected by statement! and actions of some of his more reaenooary supporters in the PN. including statements and actions defending (he use of force in opposing agrarian reform.
Nonetheless, Alcssandri's basic appealan of integrity, who is above petty politics and can set things right, persists. While he obviously attracts those who feel he can reverse or at least slow down the pace of change, he also draws support from those who believe that Chile needs time Co consolidate and adjust to the changes wrought under Frei. rather than to accelerate the pace as the two other candidates promise. Moreover, the serious disturbances ol late June,urban terrorism by tlie extreme left and clashes between the Carabineros and students, is more b'kely to redound to Alcssandri's benefitlaw and order" candidate than to the benefit of his two leftist opponents. These incidents also bolster Alessandri'* emphasis on the "Kri'iuiifflnud" that he asserts prevailed when he was president, and which lie promises to restore.
AUende Salvador Allende, the Marxist Socialist running for the presidencyourth time, is supported by an electoral front, the Popular Unityhose major components are the country's Communist. Socuhst. and Radical Parties, Allende secured the nomination of the UP after some bitter infighting in his own Socialist Party and resistance from the Radicals who wanted one of their own us standard bearer. He received decisive support from thewho are lurnlshing most of the organization and leg work for hisHe also has the support of the United Popular Action Movementroup which bolted from the PDC. of some members ol other small political groups, andumber of tbe older labor unions that are strongly influenced by Cornmunist and Socialist leadership. Although his chances have beenreduced by diugreenseots within the UP. Allende still appears to bein second place.
The electorul platform of the UP does not differ markedly from that on which Allende his run in previous elections. It stresses the um'ficntton offorces in order to carry out extensive and radical reforms. High in itsaxe the rapid nationalization ol broad segments of tbe economy, including tbe remaining US ownership in the big copper mines. Although Allende has played down his identification with Fidel Castro, which proved tojiethingandicap in the electionie promises to establish diplomaticwith Cuba, North Vietnam, East Germany, Communist China, and North Korea, and to increase trade and other ties with these and other Communist nations.
Allende anil other UP spokesmen have not campaigned extensively against the US as they didllende, in particular, bas stressed biead-and-butter issues and hai skirted the more extreme proposals in the Basic Program of the UP in his attempt to present himselfnoderate. pragmatic leftist. In the last few weeks this strategy- has been undercut by the identification of individuals captured in guerrilla training camps at members of the PS. Furthermore, since
Allende is identified with the Marxist left, he has been adversely affected by the recent outbursts of terrorism and violence involving leftist extremistsociety where reliance on constitutional procedures for solving national problems is still generally supported. Allende has demonstrated his sensitivily to this kind of issue by efforts to explain away the statements of some of his supporters threatening harsh treatment for their opponents after Allende triumphs.
omic. Radomiro Tomiceteran Christian Democratic leader,Senator, and former Chilean Ambassador to the US. He accepted nomination by his party only after his grand strategy for bringing the PDC into an electoral coalition with the Communists and Socialists was rejected by the leaders of all three parties. Although heecord of solid achievement by the Freito run on, Tomic has continued to press still further leftward, insisting that he willon-capitalisl path, speed up agrarian reform, and nationalize various industries, including the holdings of the US copper companies during his first year in office. He apparently believes that his best campaign strategy is to talk sufficiently to the left to attract the large segment of die population that wants change hut hesitates to entrust itarxist candidate. Thus the principal difference between the domestic platforms of Tomic and Allende is that Tomic mingles some assurances to private enterprise with his calls foraguely defined variety of socialismonstitutional system; for example, he promises to negotiate compensation for the nationalized mining properties. In the field of foreign policy Tomic acknowledges the importance of close relations with the US, but stresses the necessity of an independent role.
2S. Initially, Tomic's campaign was slowed by the fact that some of his rivals for the PDC nomination and other more moderate party members, including Fret, gave him something less than enthusiastic support. He has recovered from that low point byost energetic campaign and by putting more stress on the positive achievements of the PDC in power. Tomic, however, still concentrates much of his campaign oratory against the right and Alessandri. His reluctance to come out forcefully against the disorders caused by leftist students, and the terrorist activities involving student and other extreme leftists, has embarrassed the Frei government and left the law and order issue to Alessandri by default. The hierarchy of the Roman Catholic Church, in contrast to itsof Fret and the PDCson-partisannd the failure of the Frei administration to maintain control over inflation has given Tomic'sut issue which both of them have hastened to exploit.
Before1lie hierarchy of the Boman Catholic Church had openly broken it* rormerly dote ties with the country's conservative forces. Although leaders or the Church maintained that it was iwutisl. their statements endorsing reform identified them with Frei and die PDC. which had adopted the hierarchy's Pastoral Utter of2 as tlte basis (or its patty platform. The hierarchy has put considerably more emphasb on Ihe non-partisan lole ol ihe Church toward this election than It did. among other things beeauie itat .egard Tomic asFrei
omic has certain valuable assets. He has the backing of the government apparatus and the country's largest political party, which is well-funded and well-
organized Ibi the campaign. He undoubtedly "ill attract much of his Support from the middle and lower-middle classes and from many of the new lower class voters who have benefited or hope to benefit from reforms associated with the Frei administration. Tomic probably also will be supported by someand moderates who cannot accept either the Communist -supported Allende or the aged and autocratic Alcssandri. Despite these assets, however, and the recovery he has made from his initial slow start, Tomic still appears to be running thirdhree-man race.
B. The Outcome
appear to be split fairly eienly between supper to* of1 and
At the present time, no candidate seems likely to win the majority needed for direct election. In that event the Congress would meet onctober to choose between the candidates who finish first and second. On four previous occasions when this has2. the Congress in effect ratified the popular vote by selecting the front-runner, regardless of howargin he obtained Tins time, however, there almost certainly will lie more political horsclrading than on previousla rly if ihe front-runner iso has onlyominal supporters amongembers ofnless his share of the vote approaches theercent mark, Alessandri might be passed over, particularly if Tomic is second andew percentage points in the popular vote. But if Allende isa closeinfluence, and perhaps that of the military, would be exerted on behalf of Alcssandri, ostensibly to honor Ihe Chilean tradition of ratifying the popular vote but in reality to block Allende. If Alessandri finishes second, his chances of winning Congressional approval arc virtually nil if Tomic leads the pack, and poor even if Allende edges himarrow- margin.
On the other hand, if Tomic were to securelim plurality in the popular vote, he wuuld almost certainly be elected. If he camelose second his chances for victory would be good agamst either of the two other candidates. Allende, however, must finishhe popular vote in order to have muchhance of becoming president. Even then, ifmargin over Tomic is narrow, enough of the PN and independents may vole against him to elect Tomic. If Allende'a margin over Alessandri is narrow, the outcome would be largely decided within the PDC Since Tomic has continued to court the UP. and Frei hassuch tactics, there mighthowdown between the two for control of the party's congressional bloc Frei may use his influencelock Allende if Allende leads Alessandri. And he might even support Alessandri if Tomic ran not tooecondeptember.
Although the percentages of Ihe popular vote won by Ihe Ivvo final con-testants will be extremely importanteciding the winner, other factors will come into play if therelose one-two finish. The commander in chiel of the army has publicly and categorically announced military support for the
stitutional right of the Congress to select cither candidate. The unanswered question is whether he speaks for and can control the army, to say nothing of the navy, the air force and the Carabineros. In the event that public unrestaloneAlessandri finishes only slightly ahead of Allende or even tomic, there is at least some chance that Alessandri's backers would find allies among other military leaders in putting pressure on thewho might otherwise be inclined to vote against him.
the event that the decision goes to the Congress and Allende issupporters are likely to cairy out widespread public demonstrations.lead to violent street encounters with the security forces. If Allendefirst in the popular vote. Ibcy almost certainly would. Theextremist groups, including those which had nol supported .Allende,such an outcome as confirming the fallacy of the peaceful road tothe event of widespread and sustained disorders, the well-trained andChilean security forces would be sorely tested, but would be ablea forcible overthrow of the government by the extreme left.
IV. THE OUTIOOK FOR THE NEXT ADMINISTRATION A. General
Tlie race is still so closely contested thai we cannot singlc_ out any one of the three candidates as the likely winner. There arc various lactors, such as Alessandri's and perhaps Allende's health, which may influence not only that contest but also the course of the next administration. For example, one of the key problems will be the next president's relationsongress which blocked and then watered down Frei's efforts to strengthen the position of thein Ihe Chilean system. The CongresT is likely lo be no less recalcitrant toward similar attempts by his successor, and by Alessandri in particular.
There is almost no chance that the next president will begin his term with the kind of mandate Frei received. None of the three candidates is supported by political forces thatajority in both houses of theand the next Congressional election is not scheduled untillessandri. who commands the smallest bloc of congressional support, would probably have the most difficulty inorkable coalition, in partofgtime criticism of the Congress and his efforts to strengthen the Executivellende and Tomic would face lesser but still formidable problems, unless either was able to make operative Tomic's proposalrand coalition of the Christian Democratic, Communist and Socialist movements. The more likely prospect is that whoever heads the next administration will have to try and lind congressional support for his programseasure by measure basis. Civen the intense political partisanship that has been generated in the
' Thedministration could make useecent constitutions! amendment which will enable it toational plebetcilc If tlie Congressonstitutional amendment sought by the Executive Branch. This, however, involve* the riskefeat which would lurlhciresident's positkmhe Congnas.
current campaign, the Congr'ss may n'tt even follow it* post pattern otew administration special powers (torimited time) to cope with itsproblems.
At lesM initially, the next president will have the benefitavorable financial situation. Copper earnings probably will continue tlteii previoustrend0houghrate ol growth may be slowed by declining copperfter that the nest adation probably will have to adjusteveling off or possible decline in export earnings, little or no new investment by US copper companies, and. ateclining netof foreign assistance as rrp*>'merits more nearly offset new drawings. The ability of Chile to handle these problems will depend greatly on the political complexion of the new administration and the manner in which its policies are carried out. particularly regardingf copper and otherSimilarA. the course of ecottonuc and political doesoprnents on the domestic scene will he strongly ifiected by tlic next administration's policies regarding such issues as agrarian reform, redistribution of income, and the role of the state in the society. EvenOrable copper market, the next administration will encounter problems in maintaining present social welfare programs, let alone expanding them as Allende and Tomtc have promised.
There are measurable differences among the three candidates and the kinds of government they would provide. Alessandri is the only une who is well disposed toward the Chilean private sectoi The other hvu, thoughlearly differ with regiird to the kind of socialist state they want and the means for achieving it- Allende's socialist state wouldhilean versionoviet style East European Communist slate supported by the "popular unity" of the masses andleast-their interests. Allende owes his selection as the candidate of tlic UP to the Communists and he would also be heavily dependent upon them in carrying out his programs. He would move cautio'jsly. as his Communist allies have long advocated, in changing the present political system Nonetheless, he would exploit to the hilt the means at band for pressing forward with the locialiration of ihe economy, with tbe aim of destroying the economic bases of his political opponents and establishing tight control over the press, radio and television
omic's model is YugosU-ia. with which he has ideological sympathy as well as personal ties. He would attempt to use the present coristitutional system to impose his vaguely defined communitarian" system, which envisages state operation of all olic economic enterprises. Workers would share in the direction and profits ol these enterprises and of the smaller ones left in private hands. In contrast toily palitical opportunist who already has Communist support, Tomicincere idealisttill bidding for it.
' Because ofS-copper compnnlrt' eipunilim program, tlic output of the Inrijemainly forexpected to iiieetric9etrK-toiKnder the xyxtciH Ini-Micd fay the Frei ndminiimtiim on the huge US con.-panici. the effective tat rate on these sales now avrraer* S3 percent.
He has repeatedly insisted that, in order to carry out his blueprint for theof Chile, he must have the cooperation of tlie countrys Marxist parties; despite the obvious distrust with which the Communists regard him. Tonne has managed in keep open his lines of communication with them. While he would attempt to work through the constitutional system, Tomic hasinclinations. He has said that if elected, he would brook no inter-fciencc with his plans for solving Chile's problems. Unlike Allende. however, he would be operating under the restraints imposed by the sector of the PDC most responsive to Frei. This sector strongly supports the Chilean traditionelatively Open society in which freedom of the press and individual liberties are respected.
b. Under Alessandri
Alessandri would attempt to consolidate the changes introduced under Frei by slowing the pace of reform and restoring the confidence of the private sector of the economy. He apparently realizes tha: agrarian reform is irreversible but would try to carry it out more efficiently and to make it lessartisan political issue.olicy, however, would not only be opposed by many in the PDC and UP who wish to push ahead but would cost him support witliin the PN. some of whose members want to turn back the clock. On the matter of nationalization of the holdings of the US copper companies. Alessandri has pledged lo honor the present accords, but he is capable of reversing himself should it prove politically expedient. In any case he would try to avoid precipilous action, such as expropriation without negotiating compensation.
Alcssandri would be more cautious than cither Allende or Tomic in his foreign policies. He would maintain the recenl tendency in Chilean forcigu policy to stress independence of US leadership and to urge Latin American unity in dealing with tlie US on hemispheric problems, particularly economic ones, lie has grumbled that his previous administration broke relations with Cuba under heavy pressure from the US. There hasecent limited re-newal of trade between Chile and Cuba, which is supported by right-wing agricultural interests as well as leftist ideologues. He probably would go along if the Congress urged that restoration of diplomatic relations follow.
The activists on the far left are more likely lo step up the level of their disruptive tactics against an administration headed by Alessandri than against one headed by either of the other two candidates. This could lead lo abetween extremes of the left and right, particularly if Alessandri were not able to control the exlrcmists among his own followers. Under such conditions certain military leaders might begin coup plotting; the unrest and dissatisfaction in the army, which surfaced inndicate that it can no longer be depended upon to eschew direct intervention in national politics. The chances of such intervention would be affected by the degree of unity among the key military leaders and their estimate of the reaction of the Carabineros. In the event of Alessandri's death or incapacitation, the security forces would probably
luppoit the Minister of the Inlrrtor In holding elections to determine th* auc-cession.
omic has promised lo accelerate and lo expand the relorms initiated under Frei. To do so he roust go to the Marxist left, which might involve attempting Ui bring the Communists and Socialists into his administration. The Socialists would be likely to refuse. The opportunities foi the Communists would be so attractive that they would probably be persuaded that it was in their interest to cooperate with Tomic in carrying out the non-capitalist way. While Tomic would beetter bargaining position in dealing with tlie Communists than Allende is. the price would still be high.
omic his emphasized inci.ased control of the economy by the state, and if is clear that ii be won the role of both domestic and foreign private enterprise would be further reduced. In view of hii reiterated intention to proceed quickly with complete lutionaliraiion of the remaining holdings of the US copperforeign investors would delay new investment until that issue was resolved and would be influenced by ihe way Tomic handled it. They would also be responsive to the style nnd content of Chilean foreign policy which, since Tomic has declared his intent to renew diplomatic relations with Castro's Cuba, would probably be at least as aggressively "independent" under Tomic aslt has been under Frei. Tomic, like Frei, would have difficulty in both satisfying theof his followers and keeping inflation under control.
reform wouldensitive issue for Tomic. He haspress forward rapidly on landany marked speed-up inpace would almost certainly encounter determined resistance fromas well as the larger landholders. The way in which Tomic setscampaign pledges such as this one wouldetermining factorover the next two or three years.
Allende administration would proceed as rapidlyarxist-Soda list state as the circumstances permitted. Allende'sol Ihe capitalist system is even mote categorical than Tomic's andnegotiating compensation for expropriated properties, Allende promisesonly what the government deems appropriate. He would move quicklynot only the copper mines and other properties with foreignbut also the private hanks and othei important elements of the privatelittle, rf any, coinpensation. Allende would substantially expand thewelfare services, in part to fulfill his campaign promises but also inofreater popular following.
n tbe political arena. Allende would he likely to move cautiously inout drastic changes in instinitioru, at least lor the first year or so, because of
the likely adverse reaction ol the security forces. While an open breach of the constitutional processirect attack on the armed forces institution would provide the impetusilitary coup, in an ambiguous situation that called for carefully graded responses the military leaders would find it difficult to unite and to act against the administration in power. Thus wc think Allende would follow tactics designed to give him time to bring more cooperative officers into key military and police posts and touch wider popular base than he now has. Inituation the Communists would have opportunities to extend their influence throughout all levels of the Chilean Covemmcnt and society, in pursuit of their goal of an eventual takeover of power. Allendeexpects that progress on basic bread-and-butter issues will afford him an opportunity to secure control of the Congress in3 elections and thereby enable him toocialist state of the Marxist variety by the viahis Communist allies have long advocated.
f Allende were to move adroitly enough he could takeong way down the Marxist Socialist road during the six years of his administration. He would, however, have to surmount some important obstacles. These include the necessity of bringing the security forces to heel, of obtaining congressionalto cany out the initial phases of his program, and of keeping the UP coalilion together. He would also encounter resistance from tiic moderate and conservative elements ol society, from the Catholic Church and some segments of organised labor, and particularly from the sector of the Christian Democratic movement that responds to Frei's leadership. Timely and effective resistance by the latter groupings, however, would be handicapped by the many divisions and uncertainties which would exist among them.
E. In Sum
4S. Chile isbananaountry with deeply ingrained democratic traditions. These are not only under strong attack from leftistbut from rightist elements as well. While we Judge that Chilean democracy is likely to survive over the next two or three years, it will be tested in the near future and with even greater severity over the next decade. The greatest threat to stability and constitutional order would come from the policies of an Allende administration. Another threat might arise from the extra-constitutional reactions of its opponents, including the military. No matter who is elected, the tensions in Chilean society are likely to increase before they diminish.
V. IMPLICATIONS FOR THE UNITED STATES
lthough an Allende administration would provide the most intransigent problems, there is scant solace for the future of US-Chilean relations, no matter who succeeds Frei. The trend towards more independence of the US is too deeply set to be easily reversed; that was apparent under Frei. who nonetheless went out of his way to maintain close nnd friendly relations with the US. There would be problems for US-Chilean relations under cither Alessandri or Tomic
but bolh men appear pe-si-aded of tbe value of good relations with ihe US. and probablyontinuation of US assistance. If Tomic followed through on his promise to negotiate settlement lor nationalization of the US-Owned copper
policy would almost certainly be of degree not of kind. On key issues in the UN. and in the event of an East-West confrontation, both Tomic and Alessandri would cither support the US or, at worst, remain neutral
I Allende wins, the problems created for the US would be much greater. These would arise from measures taken against US business interests in Cliile which would likely be compounded by statements and actions bothto the US and challenging to US policies in the hemisphere. Allcndc's use of the tactics of confrontation, particularly as the Congressional election of3 approaches, could set events in motion which would lead to an open break with the US, We do not believe, however, that Allende would deliberately seekreak over the next two years or so.
he problems created by an Allende administration in its conduct of foreign policy would be extremely difficult to manage. They would involve the strains inherentituation where an Allende victory would be hailed by anti-US forces and otherset-back for US interests, not Only in Chile but throughout the hemisphere. An Allende administration" woulderious challenge to US effoits at securing hemispheric cooperationide range of issues. For example, Allende may be, expected quickly to "normalize" relations with Cuba, and might well withdraw from the OAS. At the same time Chile's relations with Argentina probably would deteriorate because of Chile's increased ties with Communist countries. Finally, the hostility- of Allende and most of his allies in the UP toward the US is too deeply-rooted to be easily changed. When key issues in the UN, or in world affairs generally, involved any kind of an East-West confrontation, an Allende administration would be openly hostile to US interests or at best neutral.
CHILE: GOVERNMENT SHARE IN GROSS PROFITS
OF MAJOR COPPERPercent)
Dow not Include higherrates onproliw" (when copperound) which probably will be applied lo these companies as well.
AGRARIAN REFORM IN CHILE
Inckiding several hrfie boldtnei taken over front Hate entitle!
Permanent communal rujou only.Original document.