Chile’s rise to success

On Saturday, another massive earthquake struck Latin America – this time on the coast of Chile.

The first was in Haiti – the western hemisphere's poorest country. Chile is South America’s wealthiest.

The difference in destruction and loss of life between the two has been seismic in itself.

Chile’s earthquake was 500 times more powerful than Haiti’s (8.8 versus 7.0 magnitudes). But only upwards of 700 people are feared to have died, compared with Haiti’s 220,000.

Granted Chile’s was far deeper in the ground (21 miles versus Haiti’s 8). But that doesn’t fully explain the contrasting outcomes.

The truth is Chile has minimised its damage by demanding earthquake-proof buildings, and making sure it’s people can afford it.

Chile’s rise to success

Chile, a country of 17 million, has been through its fair share of pain. In 1973, a dictator called Augusto Pinochet took over the country by force, supposedly to fix its economy.

During the 1970s and 80s, his American-educated economists, known as the ‘Chicago boys’, changed the course of the economy towards complete free market principles. It was a disaster. The economy plummeting 14% and unemployment rose to 33%.

Meanwhile, Pinochet’s military government crushed the opposition – kidnapping and murdering over 3,000 people.

Eventually, General Pinochet stepped down as president in 1990 and the country returned to democratic elections.

Since then, Chile has been slowly on the rise.

An unchanged coalition of parties, known as the concertacion, has been running the country for the 20 years since 1990 (it comes to an end when current President Michelle Bachelet steps down next week).

It’s a group of centre-left parties that have maintained some of the pro-business ideas of the Pinochet era, whilst providing basic social services and looking after the poor.

Michelle Bachelet, the country’s first female president, came into office at the beginning of 2006.

She gained respect from leaders around the world for the way she handled the country’s economy and social needs. She expanded healthcare, child care and pensions, but also managed to save US$35 billion from the government-owned copper industry in a ‘rainy day’ fund.

This money was used by the government to pay for its large economic stimulus package that helped Chileans out of the recession.

She leaves with an approval rating of 75% and would have been a shoe-in for re-election if Chilean law did not prohibit back-to-back presidents.

Rather, in January, Chile elected its first centre-right President since Pinochet, Sebastian Pinera, who takes over from Bachelet next week.

He is a Harvard educated economist and one of Chile’s richest businessmen, owning stakes in the country’s airline, largest football team, and one of its TV channels.

He promises to continue the same policies of the concertacion, but with a slightly harder line on crime and a new “sense of urgency” in the economy.

It’s all pretty unexciting really. But political success often is – much like a solid-performing referee who doesn’t get noticed. It shows how the Chilean people are happy with their current philosophy and direction (Bachelet can run again for president in 2013).

But in the current context, the most important thing is that it has created a society where its people are wealthy enough to afford the country’s strict earthquake-proof buildings.

This is just as well given Chile’s location. It sits right on the edge of the ‘Ring of Fire’, a collection of tectonic plates that surrounds the entire Pacific Rim.

Consequently, the region around Chile has experienced 13 earthquakes over magnitude 7 since 1973. In 1960, they suffered a 9.5 quake – the largest ever recorded instrumentally in the world.

So both the Chilean government and its people were well prepared for Saturday’s event. In fact, most of the damage was done by the resulting tsunami that poured into Constitucion and other coastal villages.

That was bitter sweet. But it’s fair to say the country has learnt from its traumatic past. It has enacted the right laws that have allowed its people to adequately prepare for a disaster of this nature.

Indeed, using the richest and poorest countries in the region, these earthquakes have demonstrated how good governance can make a big difference – albeit in a rather cruel manner.

By The Casual Truth

Photo – Michelle Bachelet