CHILE'S MIDDLE CLASS CONTEMPLATES ALTERNATIVES, POSSIBLY MARXIST, TO ECONOMIC NIGHTMARE, CHAOS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605740026-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: May 3, 2012
• Sequence Number: 26
• Publication Date: February 11, 1985
• Content Type: OPEN SOURCE

STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605740026-5
WALL STREET JOURNAL
lit PZ'A Y H '.~ : ~,.
EARED 11 February 1985
hi1e'S Middle Class Contemplates Alternatives,
7 . 7
ossi
y Marxist, to Economic Nightmare, Chaos
Chile's riches-to-rags saga began when
By LYNDA SCHUSTER Gen. Pinochet did away with his predeces Others here, like the inspector for a
hi
fi
s
ng company, figure anything is better !
Staff Repor1BT of THE R~ALL STRL' ET JOURNAL sot's socialist economy and let free-market ,
than swee
SANTIAGO, Chile-While the debt crisis policies flourish. Foreign bankers flush pmg streets. Be bought a map
has eased in some Latin American coun- with petrodollars showed up around the three years back when he was laid off,
yellow-
tries, here in Chile its fallout is imperiling same time, touching off a wild borrowing Painted became arcabbie. He makes about $100
;:the 11-year-old dictatorship of Gen. Au- and spending spree wistfully remembered
gusto Pinochet? as "the boom." a month, enough to keep his wife and two
Like other Latin debtors, Chile has im- The foreign debt increased 133%, to children alive-but not to buy spare parts.
posed stiff austerity measures in response $15.6 billion, between 1978 and 1981, -rite With 80,000 miles already on the 'car, he
to lender pressure. The measures have boom years. Imports shot up about 200 reckons it will die in another year...
cleated an economic nightmare that is de- The country's rate of increase in the total "The government is killing us slowly,"
stroying the middle class, which accounts value of goods and services doubled to a he says.
for almost half the 11 million people of this whopping 7% annually. Chileans never had Medical experts worry that all the anxi-
Andean nation. Many Chileans fear all this seen anything like it. ety about the economy is creating a men-
is leading to spiraling chaos over the next "We could buy jeans," recalls Andres tal-health crisis. Sales of tranquilizers are
;
couple of years in which the country's Aliamand, a young lawyer who heads the up 40% this year at Santos Pharmacy,
Marxist parties could emerge the eventual center-right National Union Party. "My across the square from the presidential
victors. God, to grow up in a developing country palace. One psychologist says that marital
"Pinochet is turning Chile into another and suddenly be able to buy American separations among her middle-class clients
Nicaragua," warns a prominent engineer, jeans." have increased 50%. A spate of suicides,
referring to the 1979 overthrow of the late But bankers got nervous about Chile's crowded in next to the usual cheesecake
Gen. Anastasio Somoza by leftist Sandinist ability to pay all the billions and started cuties, is recorded on the front pages of the
iuuerrllas. (Like most people here, the en cutting back early in 1982. -Disaster fol- daily newspapers Gen. Pinochet still al-
glneer says he's too scared of government lowed: about 1,500 of the country's 4,000 lows to publish.
reprisals to have his name used.) "Somoza companies went belly up in two years. So The economy's disintegration has ere-
!choked off the moderate opposition and left did the banking system: bad loans totaled ated a new political perspective, for many
the middle class no choice but to join the 165% of capital and reserves. in the middle class. Explains one Santiago
Marxists. That's what Pinochet is do- Like other Latin countries that simi- manufacturer: "We knew this government
ir, g"
. larly indulged, Chile paid for its financial was repressive. When the economy was
This alarms the Reagan administration. I fiesta after'
fter it was over. Gen. Pinochet in good,. it was easy to ignore all that. Now
When the Marxists, were in power here in 1983 had to agree to-tough austerity meas- that the good times are over, the veil is off
the ea.rlv_1S70s, the U.S. covertly worked to ores in exchange for emergency loans and we want Pinochet out."
undermine the government and may have from the International Monetary Fund. He The general apparently isn't about to
had a hand in its eventual overthrow in has devalued the peso, the country's cur-. leave without a fight. For a while last sum-
1973. A Marxist surge now could encourage _ rency, by 70% against the dollar since 1981 mer, he flirted with the idea of holding
other anti-American forces fighting in and cut imports in half. Worse yet, prices early elections-he isn't scheduled to step
neighboring Peru or even El Salvador. The for copper-the country's main hard-cur- down until 1989-and allowed open political
turmoil also could jeopardize Chile's abil- rency earner-have dropped 40% in the debate. But in a brutal reversal last No-
it to pay its debt. li last three years. vember, he shut down opposition publica-
A Firm Leader As a result,- economic activity has tions, slapped on a curfew and tough cen-
People here are quick to point out that slowed to a snail's pace. And Chile, like sorship rules, and raided slums for alleged
there also are lots of differences between most other Latin nations, doesn't have un- troublemakers.
Chile and pre-revolutionary Nicaragua. employment compensation. The closest Gen. Pinochet's excuse for the state-of-
And despite popular unrest, the general thing to welfare is the government's make- siege measures-which were extended last
still has a grip on the nation, enforced by work program, where workers earn 70 week for another three months-was a
grimly efficient army troops and police. cents a day doing menial tasks. wave of bomb attacks by leftist terrorists.
But the increasing eagerness of white- Cry of Frustration Political analysts see the state of siege
collar workers to embrace almost any al For highly trained professionals, it can more as an attempt to crush his opponents.
ternative illustrates the close relationship be as humiliating as no job at all. Consider Whatever the motive, he also is crushing
in Latin America between economic dis- a 30-year-old chemical engineer who re- chances for a moderate opposition to
tress and political instability. Consider cently got such a government job after emerge. The centrist parties already were
Chile's economic catastrophe: a rash of three years. Anger etches taut lines in her a hodgepodge of bickering leaders. Now
-bankruptcies, 25% unemployment and face when she describes her tasks handling they have little hope of attracting strong
scenes straight out of North America's materials in a municipal warehouse. She support without the media to get their mes-
Great Depression of the 1930s. - lies to her friends about what she does; it's l sage across.
`I never have been so frightened in my too embarrassing. .
life," says one former auto executive, out "I can't imagine my future," she blurts
of work since 1982. "Every day my future out, choking back tears. "I'm so frus- Continued
gets darker and my pocket emptier. I've trated, so vulnerable, if someone came
reached a point where I've got to do some- along with a better idea for the country,
thing, to join those who are trying to. oust I'd listen."
this government."
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605740026-5
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605740026-5
Not so the Communists. who are old
hands at operating underground. Unlike
the other leftist parties that were deci-
mated by former President Salvador Al-
lende's downfall in 1973, the Communists
cultivated perhaps the most effective party
structure. And while no one here is sug-
gesting wholesale conversion of middle-
class people, many fear that the general is
pushing them toward that visible alterna-
tive.
What Way Out.?
Some in the middle class still see his
point of view, however. Leslie Cooper, an
economist, thinks the country needs a
strong hand. "How else are we going to get
out of this economic mess? We can't work
if Pinochet doesn't fight the terrorists," he
says.
Perhaps. But with foreign bankers un-
willing to. increase the $7F'O million they
loaned in 1984, government officials esti-
mate that the economy won't grow this
year and that unemployment could rise by
another five percentage points.
While that would be devastating enough
to the middle class, it would be pure disas-
ter in the labyrinth-like slums of south San-
tiago. These are places like La Legua,
where the stench of poverty hangs heavy
in the air and people lost hope a long time
ago.
A bunch of women sit.around a commu-
nity house, making little doodads to sell in
the local market. They talk to make them-
selves feel better. Stories of having enough
money to eat-only once a day. No meat, no
milk; just beans and potatoes. Tales of
Gen. Pinochet's soldiers storming their.
homes in middle of the night, dragging
away husbands and sons. Their knitting
needles clack furiously.
A dark-haired woman sits off to the
side, taking in the jabber. "When people
have hunger, ybu can stop them only for a
while,"-she says softly. "This is a civil war
now. We're just waiting for arms."
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605740026-5