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Following a violent coup against democratically elected Marxist President Salvador Allende in
1973, Chile experienced 17 years of military rule under General Augusto Pinochet before
reestablishing its elected civilian democracy in 1990. A center-left coalition of parties known as
the Concertación has governed Chile for the nearly two decades since the end of the dictatorship.
The coalition has enacted a number of constitutional changes to strengthen civilian control of the
military and to undertake the prosecution of those alleged to be responsible for human rights
violations during the Pinochet-era. Chile has made significant economic progress under the
Concertación’s free market economic policies and moderate social programs, which have
produced notable economic growth and considerable reductions in poverty.
Current President Michele Bachelet has faced a number of challenges since her 2006 election.
Widespread demonstrations over education, increased militancy by indigenous groups, and
opposition control of the legislature have hindered President Bachelet’s ability to govern. The
international financial crisis is President Bachelet’s latest challenge, though the government’s
timely decision to save recent fiscal surpluses will allow Chile to pursue counter-cyclical policies
and minimize the effects of the economic downturn.
Chile has enjoyed close relations with the United States since its transition back to democracy.
Both countries have emphasized similar priorities in the region, designed to strengthen
democracy, improve human rights, and advance free trade. Chile and the United States have
maintained strong commercial ties, which have become more extensive since the bilateral free
trade agreement between them entered into force in 2004. U.S. officials have also expressed
appreciation for Chile’s leadership and moderating influence in a region increasingly
characterized by political unrest and anti-American populism.
This report—which will be updated as events warrant—provides a brief historical background of
Chile, summarizes recent political and economic developments, and addresses issues in U.S.-
Chilean relations.
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Political and Economic Background ............................................................................................... 1
Allende Era................................................................................................................................ 1
Pinochet Era .............................................................................................................................. 1
Return to Democracy ................................................................................................................ 2
Recent Political and Economic Developments................................................................................ 3
2005 Presidential and Legislative Elections.............................................................................. 3
Loss of Concertación Control over Legislature ........................................................................ 3
2008 Municipal and 2009 Presidential and Legislative Elections ............................................ 4
Education Demonstrations ........................................................................................................ 5
Mapuche Activism .................................................................................................................... 5
Human Rights............................................................................................................................ 6
Energy Challenges..................................................................................................................... 7
Economic Challenges................................................................................................................ 7
Chile-U.S. Relations........................................................................................................................ 8
Free Trade Agreement ............................................................................................................... 8
U.S. Assistance.......................................................................................................................... 9
Regional Leadership.................................................................................................................. 9
Narcotics and Human Trafficking ............................................................................................. 9
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Figure 1. Map of Chile ...................................................................................................................11
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Table 1. Chilean Political Acronyms ............................................................................................. 12
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Author Contact Information .......................................................................................................... 12
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Chile declared independence from Spain in 1810, but did not achieve full independence until
1818. By 1932, Chile had established an electoral democracy, which endured until 1973. During
much of this period, Chile was governed by reform-minded presidents who pursued import-
substitution industrialization (ISI), the expansion of the welfare state, and other statist economic
policies. The pace of change quickened following the election of Eduardo Frei of the Christian
Democratic Party (PDC) in 1964. Frei’s government took majority ownership of the copper
mines, redistributed land, and improved access to education. Despite these actions, some Chileans
felt more radical change was needed. In 1970, Salvador Allende, a Socialist and the leader of the
Popular Unity coalition, was elected president. Allende accelerated and furthered the changes of
the previous administration by fully nationalizing firms, expanding land reform, and generally
socializing the economy. While Allende’s supporters pushed him to move more quickly, the
political center, represented by the PDC, joined with the parties of the right to block Popular
Unity initiatives in the legislature. This ideological difference prevented the Chilean government
from addressing the faltering economy and served to further radicalize supporters on both ends of
Chile’s already polarized society. When the situation continued to deteriorate following the
indecisive 1973 Legislative elections, the military intervened.1
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On September 11, 1973, the Chilean military, under the control of General Augusto Pinochet,
deposed the Allende government in a violent coup and quickly consolidated control of the
country. The military junta closed Congress, censored the media, declared political parties in
recess, and regarded the organized left as an internal enemy of the state. Within the first few
months of military rule, at least 1,261 people in Chile were killed or disappeared for political
reasons, nearly 20,000 were imprisoned, and many of them were tortured. By the end of the
dictatorship in 1990, the number of killed or disappeared had risen to at least 2,279 and the
number of imprisoned and tortured is said to have exceeded 30,000.2 General Pinochet emerged
as the figurehead of the junta soon after the coup and won a tightly controlled referendum to
institutionalize his regime in 1978. Pinochet reversed decades of statist economic policies by
rapidly implementing a series of changes that liberalized trade and investment, privatized firms,
and dismantled the welfare state. Pinochet won another tightly controlled referendum in 1980,
which approved the Constitution that continues to govern Chile today. The new constitution
called for a plebiscite to take place in 1988 in which Chileans would have the opportunity to
reelect Pinochet to another 8-year term or reject him in favor of contested elections. Although the
Chilean economy enjoyed a period of rapid economic growth between 1976 and 1981, it
collapsed in 1982, sparking widespread protests. Following these initial demonstrations, Chilean
civil society groups became more active in criticizing the policies of the Pinochet regime. At the
same time, political parties began to reemerge to challenge the government. In 1988, several civil
1 Chile: A Country Study, ed. Rex A. Hudson, (Washington, D.C.: Library of Congress, 1994).
2 Report of the National Commission for Truth and Reconciliation, February 1991; Report of the National Commission
on Political Imprisonment and Torture, November 2004.
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society groups and political parties formed a coalition in opposition to Pinochet’s reelection. In
the plebiscite, 55% of the Chilean people voted against another 8-year term for Pinochet,
triggering the election campaign of 1989.3
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The 1989 elections created the political dynamics that prevail in Chile today. Two major
coalitions of parties were formed to contest the elections. The center-left Coalition of Parties for
Democracy, or Concertación, united 17 groups that were opposed to the Pinochet dictatorship.
The major parties in the coalition were the centrist PDC and the center-left Radical Party (PR),
Social Democratic Party (PSD) and Party for Democracy (PPD), which was created by Socialists
in 1987 to circumvent the Pinochet regime’s ban on Marxist parties. The center-right Democracy
and Progress coalition included the center-right National Renovation (RN) and the rightist
Independent Democratic Union (UDI). A third coalition, the Broad Party of the Socialist Left
(PAIS), was composed of leftist parties unwilling to participate in the Concertación, including the
Communist Party (PC). Patricio Alwyn, a Christian Democrat and the candidate of the
Concertación, won the presidency with 55% of the vote and the Concertación won majorities in
the Chamber of Deputies and among the elected members of the Senate.4
The Concertación coalition has governed Chile continuously since the transition to democracy
and has undergone few changes. The coalition is now composed of the PDC, the PPD, the
Socialist Party (PS), which officially began contesting elections as a part of the Concertación in
1993, and the Radical Social Democratic Party (PRSD), which was created through a merger of
the PR and PSD in 1994. The center-right coalition has consistently held a minority of elected
seats in both legislative houses and has never won the presidency. It has undergone a number of
name changes, most recently becoming the Alliance for Chile, or Alianza. The leftist coalition
that includes the PC is now called “Together We Can Do More” (JPM), and has never elected a
Member of Congress. Eduardo Frei Ruiz-Tagle of the PDC was elected president in 1993,
followed by Ricardo Lagos of the PPD in 1999, and Michelle Bachelet of the PS in 2005.
Concertación governments have pushed through a number of constitutional reforms that
strengthened civilian control over the military, eliminated the institution of unelected Senators,
and reduced presidential terms from 6 years to 4. They have been unable to eliminate the
binomial election system, which has historically inflated conservative representation as a result of
two-member districts that require a coalition to win by 2-1 margins in order to secure both seats.5
All of the Concertación administrations have generally maintained the open economic policies of
the Pinochet regime and promoted export-led development through their pursuit of free trade
agreements and encouragement of new export sectors such as forestry products, salmon, fresh
fruit, wine, and methanol. Chile now has 57 bilateral or regional trade agreements, more than any
other country, and has established a diverse economy much less reliant on its traditional copper
exports.6 Concertación administrations have also implemented some redistribution policies to
3 Alan Angell & Benny Pollack, “The Chilean elections of 1989 and the Politics of the Transition to Democracy,”
Bulletin of Latin American Research, Volume 9 (1), 1990.
4 Ibid.
5 Peter M. Siavelis, “Electoral System, Coalitional Disintegration, and the Future of Chile’s Concertación,” Latin
American Research Review, Volume 40 (1), 2005.
6 Central Intelligence Agency, “World Factbook,” September 2008.
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address poverty and inequality in Chile. Although income distribution remains virtually
unchanged since the dictatorship, economic growth and the social programs of the Concertación
have been successful in reducing poverty. The percentage of Chileans living in poverty fell from
39% in 1990 to 13.7% in 2006. The World Bank classifies Chile as an upper middle income
developing country based on its 2006 per capita income of $6,980.7 Chile is also the only country
in Latin America and the Caribbean on pace to meet all eight of the United Nations (UN)
Millennium Development Objectives by 2015.8 The objectives work toward the goals of
eradicating extreme hunger and poverty, achieving universal primary education, promoting
gender equality, reducing child mortality, improving maternal health, combating disease, ensuring
environmental stability, and developing a global partnership for development.
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The most recent presidential and legislative elections were held in December 2005. Michelle
Bachelet, the Concertación candidate for president and a member of the PS, won 45.9% of the
first round vote. The Alianza split its vote, with the RN’s Sebastián Piñera taking 25.2% and
Joaquín Lavín of the UDI winning 23.2%. Since no candidate won a majority, a run-off election
was held in January of 2006 in which Bachelet defeated Piñera 53.5% to 46.5%. Bachelet is the
first female president in Chile’s history. The Concertación also won majorities in both legislative
houses, with 65 of the 120 seats in the Chamber of Deputies and 20 of the 38 seats in the Senate.9
As a result of the 2005 constitutional reform that eliminated the institution of unelected Senators,
the Concertación established true majorities in both legislative houses for the first time.
Presidents and Deputies are elected to 4-year terms, with Presidents ineligible to serve
consecutive terms. Senators are elected to 8-year terms, with half of the Senate up for election
every 4 years.
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The Concertación has struggled in the legislature since the 2005 election. A number of corruption
scandals involving missing public funds and falsified election campaign financial reports hit the
Concertación in late 2006. These scandals led to the Concertación losing two Deputies to
corruption charges, one from the PPD and one from the PS. Soon after, the PPD expelled one of
the party’s founders, Deputy Jorge Schaulsohn, for accusing the Concertación of having a culture
of corruption. This expulsion led to two other high profile members of the party, Deputy Javier
Etcheberry and Senator Fernando Flores, leaving the party and the Concertación. Senator Flores
and Deputy Schaulsohn have since created a new party, Chile Primero.10
7 World Bank, “World Bank Development Report,” 2008.
8 “Chile: Leading the Millennium Objectives League,” Latin News Latin American Regional Report: Brazil & Southern
Cone, September 2008.
9 “Chile: Country Report,” Economist Intelligence Unit, January 2006; February 2006.
10 “Chile: Concertación Faces Schism,” Latin News Weekly Report, May 10, 2007.
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In November 2007, President Bachelet requested a new public subsidy for the failing
Transantiago transportation system. Senator Adolfo Zaldívar of the PDC joined with Senator
Flores of Chile Primero, an Independent Senator, and the Senators of the Alianza to defeat the
proposal. The PDC expelled Senator Zaldívar from the party for his lack of party discipline on an
issue of importance to the ruling coalition, leading 5 Deputies from Zaldivar’s faction of the PDC
to leave the party and the Concertacíon.11
After all of the corruption charges, expulsions, and resignations, the Concertación was left with
only 56 of the 120 seats of the Chamber of Deputies and 18 of the 38 seats in the Senate.12 The
Alianza reached an agreement with the unaffiliated members of the Senate to make Senator
Zaldívar the Senate President in 2008 in exchange for making a member of the Alianza the Senate
President in 2009. In the Chamber of Deputies, the Concertación remained in control of the
Presidency in 2008 but handed control to the Alianza at the beginning of 2009.13 This is the first
time that the Alianza has had control of both houses since the transition to democracy.
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In the municipal elections held on October 26, 2008, Chileans overwhelmingly voted for a change
of direction, with more than half of the country’s 345 mayors losing their seats. For the first time,
the Concertación split into two smaller coalitions to contest council seats, the Democratic
Concertación, composed of the PDC and PS, and the Progressive Concertación, consisting of the
PPD and the PRSD. The four parties contested mayoral races as a single coalition. A new
coalition, “For a Clean Chile,” which includes Chile First, the Regional Party of Independents,
and the Ecological Party, contested elections for the first time. The Alianza and JPM coalitions
also took part in the elections.
Although the Concertación won more council and mayoral seats than the Alianza, the Alianza
won a larger share of the national vote than the Concertación for the first time. With 95% of the
vote counted, the Alianza won 40.49% of the vote with 38.4% going to the Concertación, 6.4% to
JPM, 4% to For a Clean Chile, and 10% to Independents. When considering only votes for
council seats, the Democratic Concertación took 27.9% of the national vote and the Progressive
Concertación took 17.3%.14
These election results will figure prominently as parties broker their positions within the
coalitions and as the coalitions consider their candidates going into the December 2009
presidential and legislative elections. They also suggest the Alianza and its likely presidential
candidate, Sebastián Piñera, are in a strong position while the Concertación appears weaker than
it has at any point since the return to democracy. The Concertación will choose its presidential
candidate in an April 2009 primary. Now that former president Ricardo Lagos and current
Secretary General of the Organization of American States, José Miguel Insulza, have withdrawn
from the race, potential candidates include former President Eduardo Frei Ruiz-Tagle of the PDC
11 “Chile: DC Crisis Sets Scene for 2009 Contest,” Latin News Latin American Regional Report: Brazil & Southern
Cone, December 2007.
12 “Defections Leave Chile’s Ruling Coalition in Precarious Situation,” Latin News Latin American Regional Report:
Brazil & Southern Cone, January 2008.
13 “Chile: Zaldívar Assumes Presidency of Senate,” Latin News Weekly Report, March 19, 2008.
14 “Chileans Vote for Change,” Latin News Daily, October 27, 2008.
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and Senator José Antonio Gómez of the PRSD.15 A poll taken in December 2008 showed Piñera
maintaining double digit leads over each of his potential Concertación opponents.16
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Since the transition to democracy, many Chileans have called on the government to address the
inequality in the education system that activists contend is a result of Pinochet-era privatization
reforms. Despite successive Concertación governments’ lack of action, students had high hopes
following Bachelet’s election since she had based her campaign around themes of social justice.
When President Bachelet neglected to even mention education during a state of the nation speech
in May 2006, Chilean students organized the largest social demonstrations in the country since
the return to democracy. With nearly 75% of the public backing them, students filled the streets,
took over schools, and organized rallies that drew as many as 800,000 people.17 The resulting
street violence and near complete shut down of Chile’s education system forced President
Bachelet to shuffle her cabinet, replacing the education, economy, and interior ministers.
President Bachelet also increased education spending and created a commission to consider
education reform. The administration put forward the General Education Law (LGE), which was
designed to better regulate the current system. Student groups and teachers unions have protested
the new law, saying it fails to address the privatization of education, which they contend is the
root problem.18
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Confrontation with the Mapuche population has been a persistent problem for the Bachelet
Administration. The Mapuche are Chile’s largest indigenous group and comprise approximately
4% of the population or 660,000 of Chile’s 16.5 million citizens.19 They are mainly located in the
central and southern regions of Bíobío, Araucanía, Los Ríos, and Los Lagos (See Figure 1 for a
map of Chile). The Mapuche have long sought official recognition as a people, protection of
indigenous rights, and restoration of full ownership of their ancestral lands. Mapuche groups have
pursued these ends through a variety of means. Some, like the Council of all the Lands, have
pushed for the ratification of convention 169 of the International Labour Organization (ILO) on
indigenous rights. Others, such as the Coordinating Committee of Mapuche Communities in
Conflict Arauco-Malleco (CAM), have pursued more militant actions, occupying ancestral
Mapuche lands and burning vehicles, machinery, and buildings on them, frequently targeting
logging companies. Most recently, a number of Mapuche intellectuals formed their own political
party, Wallmapuwen. Despite promises from successive Concertación governments to rectify
Chile’s relationship with its indigenous groups, Mapuche groups maintain that action has been
slow, both in terms of the transfer of lands to Mapuche communities and land titling.
15 “Descarta Insulza Candidatura a la Presidencia de Chile,” Agencia Mexicana de Noticias, January 5, 2009; For more
information on the Organization of American States, see: CRS Report RS22095, Organization of American States: A
Primer, by Clare Ribando Seelke.
16 “Mantiene Piñera Liderazgo en Pronósticos Electorales Chilenos,” Agencia Mexicana de Noticias, December 30,
2008.
17 Monte Reel, “Chile’s Student Activists: A Course in Democracy,” Washington Post, November 25, 2006.
18 Andrea Arango, “The Failings of Chile’s Education System: Institutionalized Inequality and a Preference for the
Affluent,” Council on Hemispheric Affairs, July 30, 2008.
19 Central Intelligence Agency, “World Factbook,” September 2008.
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CAM has increased its militant actions in recent years, because of its dissatisfaction with the
government’s efforts on indigenous issues. As a result, the Bachelet Administration has captured
and imprisoned many of CAM’s leaders. Nonetheless, conservative politicians and media have
accused the government of inaction and alleged connections between the Mapuche and foreign
terrorist organizations like the Revolutionary Armed Forces of Colombia (FARC) and Basque
Homeland and Freedom (ETA) in Spain. The government insists that there is no credible evidence
of operational links between these groups, and CAM denies having any foreign ties. Human
rights groups have also criticized the Bachelet Administration, accusing Chile’s carabineros
(police force) of arbitrary arrests, torture, and beatings of Mapuche people and criticizing the
government’s use of Pinochet-era anti-terrorism laws to prosecute Mapuche activists. In addition
to the arrests, Bachelet has replaced the governors of several regions with substantial Mapuche
populations, appointed a new interior minister, and created a special commission to reformulate
government policy towards the Mapuche. 20 In September 2007, Chile approved the United
Nations (UN) Declaration on the Rights of Indigenous Peoples and in September 2008, President
Bachelet promulgated ILO convention 169 on indigenous rights.21
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In recent years, Chile has continued to address human rights violations from the Pinochet era. In
September 2005, the Chilean Supreme Court upheld a court of appeals ruling that stripped
Pinochet of immunity and allowed him to stand trial for his role in the killing of 119 political
dissidents who were found dead in Argentina in 1975. In January 2006, an appeals court again
stripped Pinochet of his immunity from prosecution for his role in the killing of two of Allende’s
bodyguards in 1973. Pinochet was stripped of immunity a third time in September 2006 by
Chile’s Supreme Court so that he could stand trial for the abuses at the Villa Grimaldi detention
center, an infamous center for torture whose victims included President Bachelet. In December
2006, after having several charges dropped because of his failing health (but still under
indictment in two human rights cases and on tax evasion), Pinochet died of complications from a
heart attack.22
Other dictatorship-era officials have also been prosecuted for human rights violations. Former
intelligence chief, retired General Manuel Contreras, was sentenced to two life prison terms in
July 2008 for organizing the 1974 double assassination of General Carlos Prats and his wife in
Buenos Aires, Argentina. Contreras was already imprisoned as a result of convictions stemming
from other dictatorship-era crimes, including the 1976 assassination of former Ambassador to the
United States, Orlando Letelier and his American associate, Ronni Moffitt, in Washington, D.C.23
In October 2008, Sergio Arellano Stark, the commander of the so-called “Caravan of Death” that
executed 80 political prisoners of the dictatorship shortly after the coup in 1973, was sentenced to
6 years in prison.24 In all, over 100 former members of the Chilean military have been convicted
20 “Chile: Mapuche Party Born as Legislative Battle Rages,” Latin News Special Report, July 2007; “Chile: Bachelet
reacts to Challenge by Radical Activists,” Latin News Security & Strategic Review, January 2008.
21 “Bachelet Makes Gesture to Chile’s Indigenous Groups,” Latin News Weekly Report, September 25, 2008.
22 Jack Epstein, “Augusto Pinochet: 1915-2006/Chilean Leader’s Regime Left Thousands of ‘Disappeared’,” San
Francisco Chronicle, December 11, 2006.
23 Helen Hughes & Jack Chang, “Ex-Chilean Intelligence Chief Gets 2 Life Sentences,” Miami Herald, July 1, 2008.
24 “Condenan a General Chileno por Crímenes de ‘Caravana de la Muerte’,” Agencia Mexicana de Noticias, October
15, 2008.
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for their dictatorship-era crimes.25 Family members of the disappeared and other human rights
advocates continue to push for greater transparency concerning the actions of the dictatorship and
for those responsible to be brought to justice.
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As a result of limited domestic energy resources and increasing demand due to its strong
economic growth, Chile has become heavily dependent upon foreign energy imports. Between
1990 and 2006, primary energy imports increased from 45% to 67% of the total supply. Chile
now imports about 99% of its crude oil, 72% of its natural gas, and 92% of its coal.26 While Chile
has tried to secure sufficient energy resources through its open economic policies, its supply has
been threatened by a number of regional developments, including the use of resource nationalism
in Bolivia. In 2004, Argentina cut its natural gas exports to Chile as a result of a domestic energy
crisis. Since then, Argentine natural gas exports to Chile have fluctuated between 50% and 80%
of their contracted volumes and have occasionally completely stopped flowing.27
These export cutbacks have adversely impacted Chilean economic activity and have forced Chile
to reconsider its energy options. Chile is now focusing on diversifying both its energy suppliers
and supplies. In 2005, Suez Energy International began a feasibility study to link Peru’s Camisea
natural gas project to northern Chile. This pipeline is part of a proposed natural gas ring to
connect Peru, Chile, Argentina, Uruguay and Brazil. The ring would allow greater South
American energy integration and would reduce several countries dependence on Bolivia, which
re-nationalized its gas industry in 2006. The Chilean government and private firms began
developing liquefied natural gas (LNG) terminals in 2006. Chile has also increasingly focused on
domestic renewable sources of energy, beginning construction on a number of new hydroelectric
plants, studying geothermal energy potential, and developing wind power plants.28
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The international financial crisis and economic slowdown has weakened Chile’s economy. Real
gross domestic product (GDP) growth slowed from 5.1% in 2007 to an estimated 3.9% in 2008.
Likewise, the Santiago Stock Exchange (IPSA), like those in many emerging markets, suffered
considerable losses in the months following the international recognition of the financial crisis in
September 2008. Additionally, the price of copper—which provides 40% of the government’s
revenues—fell below $2 per pound for the first time in three years in October 2008.29
Despite these trends, Chile’s economy remains stable. Foreign direct investment (FDI) for the
first seven months of 2008 reached $6.62 billion and Chile registered a $7.65 billion fiscal
25 “Familiares de Víctimas de Pinochet Mantienen Viva Demanda de Justicicia,” Agencia Mexicana de Noticias,
September 5, 2008.
26 Oscar Landerretche, “Chile’s Choices: Maintaining Growth and Securing Supply,” in Energy and Development in
South America: Conflict and Cooperation, eds. Cynthia J. Arnson et al., 27-34, (Washington, D.C.: Woodrow Wilson
International Center for Scholars, 2008).
27 Energy Information Administration, “Country Analysis Briefs: Chile,” September 2006.
28 Ibid.
29 “Ministro Chileno: Presupuesto Fiscal Sólido Pese a Baja Cobre,” Dow Jones Newswires, October 22, 2008; “Chile:
Country Report,” Economist Intelligence Unit, December 2008.
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surplus through the first half of the year.30 Inflation, which had risen from 3.7% in 2005 to 9% in
2008, is expected to slow to 3.7% in 2009. The Chilean government has also taken a number of
proactive steps to prepare for and confront the crisis. It invested $22 billion in fiscal surpluses
generated by high copper prices in recent years in 2 sovereign wealth funds. These funds will
allow the government to pursue counter-cyclical policies and inject liquidity in the financial
sector as needs arise.31 In October and November 2008, President Bachelet pledged $2.7 billion to
support small businesses, inject liquidity in local banks, and provide subsidies to working and
middle class sectors to purchase homes.32 In January 2009, President Bachelet announced a new
$4.7 billion economic recovery package that will fund infrastructure projects to generate jobs,
provide subsidies to low income families, cut taxes, and provide capital to the state-owned copper
producer, Codelco.33
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The United States and Chile have enjoyed close relations since Chile’s transition back to
democracy. The countries maintain strong commercial ties and share common commitments to
democracy, human rights, and free trade. Both countries have demonstrated these commitments
by supporting the implementation of the Inter-American Democratic Charter as an instrument to
ensure democratic governance throughout the region. Chile and the United States also signed a
bilateral free trade agreement and have been proponents of the Free Trade Area of the Americas
(FTAA).34
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The United States and Chile signed a bilateral free trade agreement (FTA) on June 6, 2003.
Following the House and Senate passage of the U.S.-Chile Free Trade Implementation Act,
President Bush signed the bill into law on September 3, 2003 (P.L. 108-77). The FTA established
immediate duty-free treatment for 85% of bilateral trade in consumer and industrial products,
increasing market access for both countries.35 Since the agreement went into force on January 1,
2004, bilateral trade between the United States and Chile has nearly tripled, totaling $17.3 billion
in 2007. U.S. imports from Chile grew from $3.7 billion in 2003 to $9 billion in 2007 while U.S.
exports to Chile grew from $2.7 billion in 2003 to $8.3 billion in 2007. The United States is now
Chile’s top source of imports and the main destination for Chile’s exports while Chile was the
28th largest export market for U.S. goods in 2007.36
30 “Chile: Inflation Could Cost Concertación Elections,” Latin News Weekly Report, August 7, 2008.
31 “Chile: Country Report,” Economist Intelligence Unit, December 2008.
32 Eva Vergara, “Bachelet Crea Comisión para Enfrenter Desempleo por Crisis,” Associated Press, December 15, 2008.
33 “Chile Unveils Anti-Crisis Package,” Latin News Daily, January 7, 2009.
34 For more information on the FTAA, see: CRS Report RS20864, A Free Trade Area of the Americas: Major Policy
Issues and Status of Negotiations, by J. F. Hornbeck.
35 For more information on the U.S.-Chile Free Trade Agreement, see: CRS Report RL31144, The U.S.-Chile Free
Trade Agreement: Economic and Trade Policy Issues, by J. F. Hornbeck.
36 U.S. Department of Commerce statistics, as presented by World Trade Atlas; Office of the United States Trade
Representative, “Chile FTA Policy Brief,” September 2007.
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Given Chile’s relatively high level of development, it is not a major recipient of U.S. assistance.
In FY2007, Chile received $1.4 million in assistance and in FY2008, it received an estimated
$1.5 million. In FY2009, the Bush Administration requested $1.6 million for Chile.37 The
majority of U.S. assistance to Chile is focused on modernizing the Chilean military by improving
its capacity to act as a peacekeeping force and its ability to conduct joint operations with the U.S.
military. U.S. assistance also goes to programs that deter weapons of mass destruction, improve
civilian control over the military, and upgrade military equipment. The 110th Congress passed the
Naval Vessel Transfer Act of 2008 (H.R. 7177, P.L. 110-429, signed into law on October 15,
2008.), which contains a provision that authorizes the President to transfer by grant a Kaiser class
oiler, Andrew J. Higgins (AO-190), to the government of Chile.
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Chile has been an active participant and frequent leader in multilateral engagement at both the
regional and global levels. Chile has joined with the United States as part of the multinational
peacekeeping force in Haiti since 2004, first as a part of the Multinational Interim Force-Haiti
(MIFH) and subsequently as a part of the UN Stabilization Mission in Haiti (MINUSTAH). Chile
has committed more human and material resources to MINUSTAH than it has to any previous
peacekeeping mission and the country’s early presence in the MIFH encouraged a number of
other countries in the region to play a role in MINUSTAH.38 The United States and Chile also
worked together as members of the so-called “Group of Friends of Venezuela,” to foster
discussion between President Hugo Chávez and the political opposition.39
Chile has taken on the role of regional leader in fora that do not involve the United States as well.
In September 2008, President Bachelet called an emergency summit of the Union of South
American Nations (UNASUR) to resolve the domestic turmoil in Bolivia. Following the summit,
UNASUR released a statement of support for the constitutional government of President Evo
Morales, condemned the political violence, and sent commissions to investigate a massacre of
farm workers and facilitate dialogue between President Morales and the political opposition.40
These actions led to an end to the violence and identification of those responsible as well as a
resumption of talks among President Morales and the Bolivian opposition.
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Chile has worked with the Drug Enforcement Administration (DEA) to address the increased
narcotics trafficking taking place within its borders that has resulted from interdiction efforts in
the Andean region. Although Chile is not a drug producing country, it is increasingly used as a
transshipment point for cocaine and heroine destined for the United States and Europe and is a
source for chemicals used in the processing of cocaine. The United States provides support for
37 U.S. Department of State “FY2009 International Affairs Budget,”2008.
38 Enzo Di Nocera García & Ricardo Benavente Cresta, “Chile: Responding to a Regional Crisis,” in Capacity Building
for Peacekeeping: The Case of Haiti, eds. John T. Fishel & Andrés Sáenz, 66-90 (Dulles, VA: Potomac Books, 2007).
39 Juan Forero, “Friends of Venezuela Are There to Help,” New York Times, January 31, 2003.
40 Patrick J. McDonnell, “Regional Summit Calls on Bolivians to Avoid Strife,” Los Angeles Times, September 16,
2008; “Bolivia’s Morales Receives UNASUR backing,” Latin News Daily, September 16, 2008.
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training prosecutors, police, judges, and public defenders in the administration of justice as well
as enhanced investigation and intelligence capabilities in Chile. 41
Chile is also a source, transit, and destination country for trafficking in persons for commercial
sexual and labor exploitation. The U.S. Department of State’s 2008 Trafficking in Persons (TIP)
Report states that Chile does not fully comply with the minimum standards for the elimination of
trafficking because it’s statutory framework does not specifically prohibit labor trafficking.
However, Chile made significant efforts to fully comply with the U.S. standards during the 2007-
2008 reporting period, introducing anti-trafficking legislation, opening a significant number of
trafficking investigations, and improving assistance for trafficking victims. As a result, the U.S.
Department of State designated Chile a “Tier 2” country.42
41 Bureau for International Narcotics and Law Enforcement Affairs, “Counternarcotics and Law Enforcement Country
Program: Chile,” July 14, 2005.
42 U.S. Department of State Office to Monitor and Combat Trafficking in Persons, “Trafficking in Persons Report,”
June 2008.
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Figure 1. Map of Chile
Source: Map Resources. Adapted by CRS.
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Table 1. Chilean Political Acronyms
Acronym Political
Organization Description
CAM
Coordinating Committee of Mapuche Militant Mapuche organization
Communities in Conflict Arauco-
Malleco
JPM
Together We Can Do More
Leftist coalition of parties
PAIS
Broad Party of the Socialist Left
Leftist coalition of parties at return to
democracy
PC
Communist Party
Leftist member party of JPM
PDC
Christian Democratic Party
Centrist member party of the
Concertacióna
PPD
Party for Democracy
Center-left member party of the
Concertación
PR
Radical Party
Center-left member party of the
Concertación at return to democracy
PRSD
Radical Social Democratic Party
Center-left member party of the
Concertación, merger of PR and PSD
PS
Socialist Party
Center-left member party of the
Concertación
PSD
Social Democratic Party
Center-left member party of the
Concertación at return to democracy
RN
National Renovation
Center-right member party of the
Alianzab
UDI
Independent Democratic Union
Rightist member party of the Alianza
Source: Compiled by CRS
Notes:
a. The Concertación is a center-left coalition of parties.
b. The Alianza is a center-right coalition of parties.
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Peter J. Meyer
Analyst in Latin American Affairs
pmeyer@crs.loc.gov, 7-5474
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