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Last Updated: Monday, 11 December 2006, 12:36 GMT
Did Pinochet kill or cure Chile?
BBC News business reporter Robert Plummer was the BBC's correspondent in Chile 10 years ago. In this analysis, he looks at Augusto Pinochet's legacy and its impact on the Chilean economy.

Pinochet supporter outside Santiago's Military Hospital on 10th November 2006
Many Chileans felt sadness at the death of their former military ruler

It was a member of Chile's board of film censors who first brought home to me how long a shadow General Pinochet had cast over his country.

The year was 1996 and I was interviewing him about the board's unexpected decision to reverse its ban on Martin Scorsese's controversial film, The Last Temptation of Christ.

The movie still failed to reach Chile's cinemas, because the following year, a right-wing pressure group successfully petitioned the High Court to prohibit its screening.

The whole episode speaks volumes about Chile's continuing social conservatism, which sets it at odds temperamentally with many of its South American neighbours.

But it was what my interviewee said once the microphone was switched off that has remained with me to this day.

He said that the 1973 coup by Gen Pinochet, who was still commander-in-chief of the Chilean army at the time of our conversation, had been necessary as "a massive antibiotic" for Chile.

Economic change

Like the faces of Pinochet supporters on Chilean television weeping for the death of their former military ruler, it's a reminder that many people in Chile see the ex-general as the man who saved their country from a great sickness.

Of course, relatives of the more than 3,000 people who were killed or "disappeared" during his 17-year rule will angrily attest that from their point of view, the cure was far worse than the disease.

Gen Pinochet seen on 25 November at celebrations for his 91st birthday
Gen Pinochet celebrated his 91st birthday last month

Although Gen Pinochet leaves Chilean society politically polarised, his economic legacy is arguably a more fortunate one.

Unlike many other military regimes in Latin America, the general's rule was marked by wide-ranging economic liberalisation, including a wave of privatisations.

This "free-market fascism", as some called it, undoubtedly brought social costs in its wake, including a big rise in unemployment and an erosion of workers' purchasing power.

But it also curbed Chile's rampant inflation, slashing rates from 1,000% a year to about 10%.

Chilean 'tiger'

The reforms were continued and deepened by the centre-left Concertacion, the coalition that has governed Chile since it returned to democracy in 1990.

Apart from a dip in 1998 and 1999, when the so-called "Asian contagion" sparked a worldwide financial crisis, Chile has enjoyed healthy growth rates in recent years, ranging from 5% to 7%.

A Chilean street
Chile's pension revolution was a quieter affair

Last year, according to the International Monetary Fund, it had the second-highest GDP per head in Latin America ($7,124) and is likely to have overtaken Mexico once this year's figures are finalised.

Chile has also had some success in reducing rates of poverty.

In 1987, 46% of the population were defined as having incomes below the poverty line, but by 2003, that had shrunk to about 19%.

The country's performance has led observers to see it as South America's tiger economy, outperforming sluggish Brazil and crisis-prone Argentina.

Even so, supporters and opponents of Pinochet argue fiercely over how much credit he should receive for the country's subsequent economic boom.

Copper subsidy

Whatever your views on that, there are two notable features of Chile's economic landscape that clearly have their roots in the years of military rule.

One is the country's widely-admired private sector pension system, which was introduced in 1981.

Under this system, all workers pay 10% of their salary into one of a number of privately-managed funds, known as AFPs.

Former camp for workers at Chile's El Teniente mine, the world's biggest subterranean copper mine
Copper is Chile's main export

The other is more controversial and has long been opposed by Concertacion leaders. Under a 1987 law, the Chilean armed forces are entitled to 10% of the earnings of the state-owned copper company, Codelco.

This money is divided equally between the army, navy and air force and is used to buy weapons. It is not subject to any government scrutiny.

As world copper prices have soared, Codelco - the world's biggest copper miner - has seen the value of its exports rise from $40.6bn last year to a projected $58.1bn for 2006.

As a result, the armed forces' share of the proceeds could top $1bn for the first time this year, increasing the government's determination to end the subsidy and fund the military on a more transparent basis.




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