CHILE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A003200060001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: October 26, 2001
• Sequence Number: 1
• Publication Date: October 1, 1966
• Content Type: CH

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October 1966
OCI No. 2164/66
Copy N2 334
Current Intelligence Country Handbook
CHILE
This revision supersedes the handbook dated September 1965,
copies of which should be destroyed.
DIRECTORATE OF INTELLIGENCE
SECRET/NO FOREIGN DISSEM
F.,I GRO UP 1
ud.d from automatic
downgrading and
d.darsifkatian
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Current Intelligence Country Handbooks are designed to give the
reader ready access to the salient facts about a county and its main
current problems. They are not intended to provide comprehensive
basic intelligence on a country or to speak with the authority of
coordinated national intelligence. The information presented is the
best available to the Office of Current Intelligence as of the date at
the top of the page.
This material contains information affecting the national defense
of the United States within the meaning of the E.pionage Laws,
Title 18, USC, Sees. 793 and 794, the transmission or revelation of
which in any manner to an unauthorized person is prohibited by law.
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October 1966 SECRET/NO FOREIGN DISSEM
1. Political
Chile traditionally has been one of the most stable, democratic
countries in Latin America. The election in 1964 of Christian Demo-
crat Eduardo Frei as President added a new dimension to Chilean
history by bringing into power a dynamic, reform-minded adminis-
tration claiming to be an effective alternative to communism.
The March 1965 congressional elections gave control of the Cham-
ber of Deputies to Frei's Christian Democratic Party (PDC), but
the administration has been hampered by lack of a working majority
in the Senate. The next congressional elections are not scheduled
until 1969. An important, continuing problem for the Frei admin-
istration is control of leftist elements, both inside and outside the
PDC, who tend to push too rapidly for more extreme reforms.
The Frei government policies reflect Christian Democratic philos-
ophy. Although definitely Western in orientation, the PDC mini-
mizes international Communist threats and places confidence in its
ability to defeat the Communists by coping with the "just grievances"
of the masses. On the other hand, the party has historically been
critical. of traditional capitalism and rejects it as a solution for Chile's
economic problems. Although the PDC administration has not fav-
ored nationalization as the primary solution, it asserts that the state
has the main responsibility for development and welfare, while en-
couraging efficient private enterprises.
Communist influence in the government presently is limited; how-
ever, though losing the presidential election, the Communist-Socialist
coalition Popular Action Front (FRAP) registered a percentage vote
increase and increased its percentage again in the 1965 congressional
elections. Strains have appeared within the FRAP in recent months,
however, because of disagreement between the Communists and the
Socialists as to how closely they should cooperate with the govern-
ment. The left-center Radical Party, although greatly weakened by
electoral losses and internal divisions, may also constitute an obstacle
to the government if its leftist wing collaborates with the FRAP.
The formation in May 1966 of the National Party (PN), a merger of
the old Conservative and Liberal Parties, has coalesced to some extent
the rightist political elements. This party has not yet, however,
exerted any substantial influence on the Chilean political scene. Al-
SECRET/NO FOREIGN DISSEM I
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SECRET/NO FOREIGN DISSEM October 1966
though disunited and generally weak, the opposition elements, both
rightist and leftist, nevertheless have a demonstrated ability to delay
passage in the Senate of much of Frei's program.
2. Economic
The Chilean economy has been plagued by inflation for more than
50 years, and one of the most important parts of Frei's program in-
volves stabilizing the rise in the cost of living which in 1964 was
38 percent. During 1965 the total increase in the consumer price
index was 25.9 percent, only slightly above the government's goal
of a 25 percent increase. The rise in 1966 will be higher than the
government's goal of 15 percent, and may even top that of 1965. The
government's price index is highly controlled, however, and does not
reflect the actual impact of all price rises on the consumer.
Copper remains the major factor in the Chilean export economy.
Recent price rises in international copper markets have increased
the government's revenue, but the continuing dependence of the econ-
omy on copper endangers over-all economic stability. Strikes at the
copper mines late in March 1966 between miners and the army
shocked the Chilean public, which is relatively unused to such in-
cidents. Frei's program of "Chileanization" of the copper industry
is progressing, and the first agreement between the government and
a large US company (Braden) was signed on 2 October. Conclusion
of agreements with all the large US companies is expected soon,
and should stimulate foreign investment in Chile.
Frei will try to move forward in several Alliance for Progress
goals-agrarian reform, tax reform, education, and housing. The PDC
views these objectives from the standpoint of social injustice as well
as economics, and is dedicated to distributing land to 100,000 families,
redistributing tax burdens onto the middle and upper classes, building
100,000 housing units annually, and embarking on a crash school
room building program. During the second half of 1966, however,
spending on reform programs will be curtailed.
Agrarian reform is a major part of Frei's program, and a great deal
of the government's effort has gone into implementing it. Constitu-
tional amendments required for enabling legislation to case the proc-
ess were approved by Congress in October 1966. The government
has already carried out some land resettlement and expropriation.
The PDC policy of relations with all nations and pursuit of eco-
nomic self-interest has led the Frei government to seek trade with
Communist countries, including China. A trade agreement is ex-
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October 1966 SECRET/NO FOREIGN DISSEM
petted to be signed with the Soviet Union late in 1966 or early in
1967 providing for $50-$75 million interchange. Chile has virtually
no export trade with Cuba, but during 1965 it imported about
$600,000 worth of sugar.
3. International Relations
The keystone of Chilean foreign policy for years has been close
relations with the US. The PDC, however, is extremely national-
istic and has stressed an "independent foreign policy," related to the
long established Chilean tradition of maintaining an "independent"
posture for domestic purposes and as a means of rapport with the
less developed "third world" countries between capitalism and com-
munism.
Chile often has had strained relations with its neighbors. A long-
standing border dispute with Argentina erupted in November 1965,
and was entrusted finally to a border commission for settlement.
Reports-possibly spurious-of border incidents during September 1966
have been played down by both governments. In addition, Frei has
developed close harmony in his dealings with the reform-minded
government in Peru. Diplomatic relations between Chile and Bolivia
have been suspended since 1962 when Bolivia protested Chilean di-
version of water from the international Lauca River. Chile's 19th
century annexation of the Bolivian littoral after the War of the
Pacific left a bitter heritage in Bolivia, and the Bolivian government
raises periodically the issue of its landlocked position, despite past
Chilean port and railroad concessions. During September and Oc-
tober 1966 there was a spate of rumors of infiltration of some private
Bolivians into northern Chile, but in general the dispute remains
low-key.
Chile is an active member of the OAS, UN, and various other in-
ternational bodies. In the OAS in 1964 Chile opposed action against
Communist Cuba, but finally broke relations after a majority of the
members so resolved at the 9th Meeting of Foreign Ministers in
July. Chile opposed U.S. intervention in the Dominican Republic
in April 1965. It has opposed the principle of intervention and an
Inter-American Peace Force. In November 1965 Chile, unlike the
other Latin American members, abstained on a UN motion that
would have admitted Communist China to the UN and ousted Na-
tionalist China.
The Soviet presence in Chile has increased since the re-establish-
ment of diplomatic relations in November 1964. Scientific and cul-
tural contacts have grown, as well as prospective trade. Soviet em-
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SECRET/NO FOREIGN DISSEM October 1966
bassy personnel are extremely circumspect in their contacts with
Chilean communists, however, and Soviet policy in general supports
the Frei government. Chile also maintains diplomatic relations with
Czechoslovakia, Poland, Bulgaria, Hungary, and Rumania. Although
trade with Communist China has increased, diplomatic recognition
does not seem to be imminent.
4. Subversion
There is no significant danger of insurgency in the country. The
Communist Party (PCCh), after a decade of proscription, was legal-
ized in 1958. Since then it has adhered to the policy of "via
pacifica" or peaceful road to power. Certain splinter extremist groups
favor violence, however, and the Socialist Party has shown signs of
moving toward a more extreme position. In any casse, the police
and army are capable of handling any foreseeable insurgent situation.
The PCCh, one of the largest Communist parties in the hemisphere,
has an estimated membership of about 30,000 with 100,000 sympa-
thizers. The Frei government is rather complacent toward the PCCh
which, by acceptable political behavior, has attained an image of
respectability. PCCh voting strength in the 7 March 1965 congres-
sional election stood at 286,000 or 12.77 percent, and the party now
controls 18 seats in the Chamber of Deputies and 6 in the Senate
(about 12 percent and 13 percent, respectively).
A few Socialists reportedly have had training in Cuba for clan-
destine operations. The PCCh is not known to have sent trainees;
it has instead developed its own action squads to protect meetings
and to carry out other tasks. The Communist embassies in Santiago
may be providing some indirect support for the PCCh,
The Army and Carabineros (national police) are respected profes-
sional forces. As a whole, Chilean security forces are among the
best in Latin America, and have benefitted from US assistance and
support.
Chronology of Key Events
1946 (September) With support of Communist Party (PCCh),
Popular Front elects Gabriel Gonzalez Vide?la of Radical
Party (PR) as President of Chile; PCCh given three cabinet
portfolios.
1947 (October) Chile breaks diplomatic relations with the USSR,
Czechoslovakia and Yugoslavia after their representatives
become involved in Communist-inspired strikes.
1948 (September) PCCh outlawed.
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1950 (November) Chile resumes diplomatic relations with Yugo-
slavia.
1952 (September) General Carlos Ibanez del Campo, authoritarian
president from 1927 to 1931, elected President of Chile,
marking the end of 14 years center-left coalitions, headed
by Radical Party presidents; electorate, frustrated by the
highest increase in cost of living since World War II, lured
by Ibanez demagogic appeal.
1953 (February) Ibaiiez and Peron of Argentina sign a prelimi-
nary agreement for economic union, which Chilean Con-
gress refuses to ratify because of the discovery of Peronist
infiltration efforts designed to promote Argentine hegem-
ony over Chile.
1957 (March) PR regains leading role in Chile's multi-party sys-
tem; strength of Christian Democratic Party (PDC) triples.
1958 (August) PCCh regains legal status with repeal of the "Law
for the Permanent Defense of Democracy," which had
been improperly applied.
(September) Jorge Alessandri, independent backed by rightist
Conservative-Liberal coalition, elected President by nar-
row margin over Socialist Salvador Allende, backed by pro-
Communist Popular Action Front (FRAP), in a 5-man race.
1960 (May) South-central area of Chile devastated by earthquakes
and tidal waves; the US provides sizeable emergency relief.
1961 (March) In congrcsssional elections, the FRAP obtains almost
as many votes as the two rightist parties which decline
slightly; the PDC registers further gains; results force the
Alessandri administration to bring the PR into the govern-
ment.
(March) US agrees to lend $350 million to help finance the
first part of a 10-year development plan (1961-70), on con-
dition that stabilization and Alliance for Progress reform
measures are undertaken.
1962 (April) Chile and Bolivia break diplomatic relations ostensibly
over Lauca River dispute; Chile bars Bolivian effort to in-
voke OAS mediation.
1963 (April) PDC obtains largest vote in municipal elections, sur-
passing that of the PR.
(October) Palena boundary dispute with Argentina provokes
sharp nationalist sentiments.
1964 (August) Chile complies with OAS resolution calling for a
break in relations with Cuba.
SECRET/NO FOREIGN DISSEM Chile - 5
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SECRET/NO FOREIGN DISSEM October 1966
1964 (September) Eduardo Frei, Christian Democrat supported
also by Conservatives and Liberals, elected President by
a wide margin over Allende, backed by FRAP; FRAP in
losing draws impressive 39% of vote.
(November) Chile resumes diplomatic relations with the
USSR; relations with Czechoslovakia, Poland, and Hun-
gary follow.
1965 (March) In congressional elections, Christian Democrats be-
come first party in this century to have a majority in Cham-
ber of Deputies; also rank first in Senate (13 of 45 seats).
(April) North-central area of Chile struck by earthquake; US
provides sizeable emergency relief.
(May) Chile opposes US policy in Dominica; Republic; also
opposes creation of an inter-American military force; calls
for a revision of the OAS.
(July) President Frei visits Italy, France, Great Britain, and
West Germany, increasing his prestige both at home and
abroad.
(November) Clashes between Chilean and Argentine police
near Lago del Desierto sets off demonstrations.
(November) Chile abstains on a UN motion to seat Commu-
nist China, becoming the first OAS country (except Cuba)
to break with the US position.
1966 (April) Eighty-seven day copper strike ends. This strike,
which hurt the industry, was marked by violence between
troops and strikers, resulting in several killed and wounded.
Selected Factual Data
LAND
Total sq. miles: 286,000, 2% cultivated, 6% other arable, 15%
permanent pasture and grazing, 29% forests, 48o barren moun-
tains, deserts, and cities
PEOPLE
Population: 8.8 million (January 1967); males 15-49, 2.2 million;
fit for military service, 1.1 million
Ethnic groups: 88% mestizo (mixed white-Indian, with white
strongly predominant); 81,/0 Indian; 47o Europeai s and Asiatics
Religion: predominantly Roman Catholic
Language: Spanish
Literacy: 84 %
Secondary school in session during March-December
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October 1966 SECRET/NO FOREIGN DISSEM
Colleges and universities in session during March-December
Labor force: 2.8 million
Organized labor: 20% of total force
GOVERNMENT
Type of government: unitary republic
Congress normally convenes on 21 May and adjourns on 18 Sep-
tember
Branches of government: president elected for 6-year term, strong
executive power; bicameral legislature elected by popular vote
through proportional representation; independent judiciary
President: Eduardo Frei Montalva (1964-70)
Attitude incumbent administration towards US: reserved friendly
Capital: Santiago (1964 pop: 2.4 million)
Political subdivisions: 25 provinces
Principal political parties and leaders:
National (PN), Victor Garcia
Christian Democratic (PDC), Patricio Aylwin
Radical (PR), Humberto Enriquez
Socialist (PS), Aniceto Rodriguez
Communist (PCCh), Luis Corvalan
Suffrage: universal (except enlisted military and police) and com-
pulsory; age limit 21
Qualified voters-3 million-1964 presidential
Actual voters-2,346,458-1965 congressional
Voting strength of parties by %o (1965 congressional election);
Liberal Party, 7.3; Conservative Party, 5.3; PR, 13.3; PDC, 42.3;
PS, 10.3; PCCh, 12.2; other, 9.3
Next elections: municipal, April 1967; congressional, 1969; presi-
dential, 1970
National holidays: 18 and 19 September
Member: UN, ECOSOC, OAS, LAFTA, IBRD, IMF, IDB
ECONOMY
GNP: US$4.0 billion (1965 est. in 1962 prices); 1965 US$475 per
capita (real increase of 3.5% over 1964)
Inflation: 25.9%, 1965; 20.0%, January-September 1966
Agriculture: wheat and other cereals; 80% self-sufficient
Major industries: copper and nitrates, foodstuffs, textiles, iron and
steel developing, fish processing
Electric power: 1.4 million kw, capacity 1964; 6.0 billion kw.-hrs.
produced (1965); 710 kw.-hrs. per capita (1965)
SECRET/NO FOREIGN DISSEM Chile - 7
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Exports (1965): US$685,000,000, up $61,000,000 over 1964; copper
(65%), iron ore (11%), nitrates (5%)
Imports (1965): US$604,000,000, down $3,000,000 from 1964; ma-
chinery and equipment, chemicals, petroleum, foodstuffs
Exports to US in 1965: $213 million (31% of total)
Imports from US in 1965: $237 million (39%, of total)
Trade/aid: unfavorable trade balance in most of the recent years;
although favorable in 1964 and 1965; economic assistance (US
and international organizations loans and grants): $1,271.5 mil-
lion authorized 1946-65
Exchange rate: 4.10 escudos per US$1.00 official rate; 4.76 escudos
per US$1.00 free rate
US direct private investment: $800-900 million (75j` of total foreign
investment); principal sector: copper mining
COMMUNICATIONS
Railroads: about 5,091 miles of various gages
Highways: 2,074 miles paved; 13,861 miles gravel; 20,490 miles im-
proved and unimproved earth
Inland waterways: 1,360 miles navigable
Ports: 3 principal, 7 secondary, 21 minor
Merchant marine: 66 ships totalling 369,927 DWT
Airfields: 290 total, 191 usable; 25 with permanent-surface runways;
1 with runway 8,000-11,999 feet; 47 with runways ?1,000-7,999 feet;
6 seaplane stations
Telecommunications: wire facilities inadequate
DEFENSE FORCES
Personnel: army, 23,100; navy, 13,150; national police, 23,770; air
force, 8,000
Loyalty to government: loyal, apolitical
Major ground units: 6 infantry divisions, 1 cavalry division
Ships: 2 light cruisers, 4 destroyers, 2 submarines, 7 patrol craft, 5
amphibious, 6 amphibious warfare craft, 17 auxiliary craft, 11
service craft
Aircraft: 161 (42 jet, 105 prop, 14 helicopter); navy has 17 aircraft
Supply: dependent upon foreign sources for heavier arms, equip-
ment, and supplies
US missions: army, navy, air
US military aid for FY 1966: $7.0 million
Defense budget: $96.7 million 1965, 2.37o of est. GNP (current 1965)
8 - Chile SECRET/NO FOREIGN DISSEM
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October 1966 SECRET/NO FOREIGN DISSEM
RELATIONS WITH COMMUNIST COUNTRIES
Resident bloc diplomatic missions: Hungary, Czechoslovakia, USSR,
Poland, Rumania (USSR and Rumania are only accredited mis-
sions)
Permanent commercial missions: USSR, Czechoslovakia, East Ger-
many, Communist China (information office)
Number of binational cultural centers: 24
Exports (1965): $7.4 million
Imports (1965): $2.7 million
25X6
SECRET/NO FOREIGN DISSEM Chile - 9
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SECRET/NO FOREIGN DISSEM October 1966
Map
The best available general reference map is: Esso Standard Oil Co.
(Chile) S.A.C.; Chile, Guia Turistica y Plano de Santiago; various
scales; 1963.
SECRET/NO FOREIGN DISSEM
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