With a growing middle class and one of Latin America’s most stable economies, Chris Moss looks at whether Chile has completed the journey from dictatorship to democracy.

The journey along Avenida Libertador Bernardo O’Higgins, from the historic downtown in the west to the glitzier suburbs beneath the Andes, reveals key facets of 21st-century Santiago, Chile’s capital. You can do the trip by cab; though to avoid contributing to the smog that temporarily shut down the city in 2015, look out for one of the 60 new electric taxis. Or hop on one of the new buses operated by Transantiago, arguably the most ambitious transport system found in a developing country.

Or do as I do, and walk. I like to walk off long-haul flights; and, let’s face it, most flights to Chile are long-haul.

Downtown is all civic HQs, Spanish-style plazas, colonial-era churches, a tiny characterful quarter known as Barrio París-Londres and grimy office blocks. On a typical afternoon, you’ll see politicians and civil servants, a changing of the guard at the La Moneda presidential palace, and brown-suited clerks gathering for coffee and a smoke in the cafés con piernas – literally, “cafés with legs”: staunchly un-PC coffee shops where the all-female staff serve treacly espressos in lap-dancing garb.

Over in the east lie the leafy barrios of Las Condes, Vitacura, El Golf, Nunoa and La Reina, overlapping with the huge commercial and residential district of Providencia. Headquarters for banks, multinationals and insurance firms tower above high-end flagship stores and flash restaurants. Manicured parks, golf clubs, embassies and mansions lie close by. The overall look is imported from the United States, as is the lifestyle: cars and country houses are commonplace. Up here, you get views of the snow-capped peaks – smog permitting.

Though only six miles from the old city centre, this affluent neighbourhood feels like a different world compared to the shanties and grim estates of the south and northwest metropolitan sprawl.

Of course, all cities are split along social and economic lines, emphatically so in developing nations; in Chile, however, the slick, aspirational aesthetics and the widening inequality gap are relatively new.

The Chilean “miracle”

In the Eighties, Milton Friedman used the term “miracle of Chile” to characterise the redirection of Chile’s economy as steered by a group of Chilean economists – mostly former Friedman acolytes – known as the “Chicago Boys”. It takes an economist to find good in a dictatorship: Friedman was celebrating the fact that Augusto Pinochet’s government (1973-1990) had put socialism, high inflation and protectionism behind it, and had embraced neo-liberalism.

Subsequent administrations were predominantly centre-left, but Chile continued to pursue a generally free-market approach to public spending and foreign investment.

“Since recovering democracy in 1990 every Chilean government has kept strong fiscal discipline policies,” says Viviana Giacaman, a political scientist at the progressive Chile21 think tank.

“In the year 2000, President Lagos introduced a fiscal rule to keep a structural budget surplus of one per cent of GDP, which has made the country resilient to strong headwinds coming from the international markets, and allowed [Chile] to keep low levels of inflation, relatively low unemployment rates and high and stable growth rates.

“This economic performance has allowed the well-being of large segments of the population to increase. Since 1990 poverty decreased from 68 per cent to 11 per cent, a much lower poverty rate than the Latin American average. Household income has increased, access to formal education has expanded, infrastructure has developed and democracy has grown stable. In fact, Chile has the highest rank in UNDP’s [United Nations Development Programme] Human Development Index in Latin America.”

In 2002 Chile signed an “association agreement” with the EU, ratified in 2005, which granted it most-favoured nation status; Chilean exports of agricultural and food products and services to the EU have since tripled. It was also the first South American nation to join the Organisation for Economic Co-operation and Development.

In 2006, Chile became the country with the highest GDP per capita in Latin America. In the same year, the country elected its first female president, Michelle Bachelet. An advocate for women’s rights, she made notable advances in pension reform, social justice and indigenous rights. She was re-elected in 2013. That administration established a long-term policy on renewables, with the goal to have 90 per cent of the country’s energy from renewable sources by 2050.

But Bachelet’s two terms were dogged by economic difficulties, the chaotic roll-out of Transantiago, and protests and strikes from sectors demanding speedier reforms. A corruption scandal in 2015 led to the resignation of her entire cabinet.

The current president, billionaire Sebastián Pinera, assumed office in March 2018 and is also serving a second term. According to Bettina Horst, of right-leaning think tank Libertad y Desarrollo: “He was re-elected as the candidate who would prioritise the role of the private sector as an engine of development and job creation.

“During his first term, economic growth and employment indices improved more than in either of the two Bachelet-led governments.”

Hiding behind the Andes

Almost everything about Chile sets it apart from the rest of South America – most obviously the Andes mountains, which it shares with Argentina and Bolivia. It’s a very long, extremely thin country, averaging only 110-miles wide with a 2,653-mile seaboard. It’s exposed to the sea – and invasion – as well as to tsunamis. The country lies on the Pacific Ring of Fire; earthquakes are frequent and occasionally ferocious, as in the 8.8-magnitude quake of 2010 that left 525 dead and damaged 370,000 homes. The extreme topography also means the 15 official regions are markedly different: Tarapaca, Atacama and Antofagasta are in the Atacama desert; Santiago is in a fertile subtropical zone; the south has cold winters and year-round rain, while southern Patagonia is separated from the rest of Chile by ice fields.

Chile was colonised by the Spanish and, following Independence in
1818, by creoles from north to south. The indigenous Mapuche offered fierce resistance and were never vanquished. Some 1.5 million still live in the area around the Chilean lakes – 500-plus miles south of Santiago. Most Chileans are a mix of European and Amerindian.

These and other factors contribute to a conflicted national identity. Mestizo Chileans will boast of their Anglophilia or wax lyrical about German ancestors. Chileans proud to be on excellent terms with the EU will decry Argentine hegemony and pour scorn on Bolivia’s persistent claim to a seaboard – which it lost in wars with Chile and Peru in 1879-84.

Most problematically, rather like Spain after Franco, Chileans readily fall into pro- and anti-Pinochet camps. A recent scandal involving a culture minister’s resignation over Santiago’s Museum of Memory and Human Rights threw into relief the entrenched polarisation.

Commodities are king

Chile’s population is around 18 million, more than a third of whom live in metropolitan Santiago. Consequently Chile is extremely centralised, with 90 per cent of all corporate headquarters, most transport and services and the best educated workers all in the capital. Santiago contributes about half of the country’s US$277.08 billion GDP. The provinces are largely cut off from these resources and, to date, decentralisation has been little more than a campaign slogan.

Commodities are both Chile’s power-base and Achilles heel. Copper accounts for 43 per cent of the country’s exports. China’s economic slowdown and its escalating trade war with the US present significant challenges to this high degree of dependence. Declining copper prices led to a fall in GDP growth from 6.1 per cent in 2011 to 1.5 per cent in 2017, according to the World Bank.

Diversification has been slow. Some 2,800 products, ranging from wine, fresh fruit and salmon to lumber, beans and wool, are exported to more than 120 different countries. The long country’s seven distinct macro-regions allows it to stagger harvests; it can also exploit the fact that harvest times fall during the northern hemisphere’s cold seasons.

There has been innovation in the technology sector and small service-oriented businesses. Since 2010, publicly funded seed accelerator Start-Up Chile has worked with more than 1,300 small businesses. “Chilecon Valley” has attracted entrepreneurs from 80-odd countries. The Ford Foundation funded the training of Chilean agronomists which led, in turn, to the introduction of new varieties of crops, such as yellow corn. But Chile has a risibly low research and development spend, slowing progress across all tech- and science-related sectors.

Desirable destinations

In 2012, Brazil’s largest airline Tam and Chilean flag-carrier Lan merged to form Latam, the largest airline in Latin America. With a fleet in excess of 300 aircraft and a dozen cargo and passenger subsidiaries across South America, it has a turnover of just under $8.5 billion.

Headquartered in Santiago, Latam has helped turn Santiago’s international airport into a promising hub – new services include nonstop to Melbourne and one-stop to Dubai – while enhancing the profile of both capital and country as a tourism destination.

What it lacks in culinary and cultural draws, Chile makes up for in alluring landscapes: the Atacama salt-flat, Elqui Valley and Torres del Paine national park are world-class attractions. In 2017, Chile announced a 2,400km Route of Parks linking up 17 national parks. Wine tourism, space tourism and adventure tourism are all growth areas.

According to Veronica Kunze, head of planning and research head at Fedetur, Chile’s main tourism trade body: “International tourism has grown constantly and this trend is expected to continue, particularly with regard to special interest tourism. More and more people want to encounter nature away from civilisation, which is precisely what we have to offer.”

Inbound tourism has more than doubled in the past ten years. From 2016 to 2017, there was a 14.3 per cent increase. While many visitors, both business and leisure, are from Argentina and other near-neighbours, Chile is now a mainstream rather than marginal destination for travellers.

Kunze says tourism is estimated to be directly responsible for 3.4 per cent of Chile’s GDP and 5.1 per cent of employment.

The social cost of stability

Chile’s private sector has a massive stake in schools and universities, exacerbating inequalities with regard to access. Between 2011 and 2013, Chilean students led a series of protests demanding more official support and funding for public education.

Both the protests and ensuing violence on the part of riot police stirred memories of the Pinochet era. They also reminded Chileans that the
general was an enthusiastic exponent of neo-liberalism, imposed “at the point of the bayonet” according to one academic. At the time, Pinera’s approval rating plunged.

Since then, there have been numerous marches, smaller in scale, against private education, anti-abortion laws, sexism and sexual harassment. In late July of this year, cost-cutting and planned job cuts prompted strikes at Codelco’s Chuquicamata open-pit mine in Calama in the Atacama desert. The mining union called for a strike at BHP Billiton’s Escondida, the world’s largest copper mine; at the time of writing, government-mediated talks with management were being extended.

Other problems lie in wait along Chile’s long border, from new cocaine-trafficking routes out of Bolivia to environmental challenges borne of the reliance on extraction industries.

The biggest obstacle of all, however, is the country’s abject failure to redistribute the newly acquired – and, in some quarters, very visible – new wealth. In terms of income, according to the World Bank, Chile is the 20th most unequal country in the world: the richest 1 per cent of the population gets 33 per cent of the national income, while the top 5 per cent pockets 51.5 per cent.

“Inequality is a malaise deeply ingrained in the system that not only has not been dealt with, but that has worsened over the years,” says Chile21’s Giacaman.

Between the two extremities of Avenida Libertador Bernardo O’Higgins is the laid-back, rather romantic barrio of Bellavista. Here you’ll find universities, bohemian bars, and Chilean poet and politician Pablo Neruda’s former Santiago home, La Chascona, now a museum.

This is the cultured, thoughtful face of Santiago, and definitely the place to stop for a coffee on your long hike. It remains to be seen whether Chile will continue to aim for the Andes, forgetting its bloody past and impoverished millions – or will seek a middle way.


Hotel Santiago Mandarin Oriental

This Las Condes tower boasts fabulous views of the Andes and a striking 24-storey atrium. Refurb is due for completion any day soon. From £152.

The Singular Santiago

Ultra-stylish contemporary 61-room hotel in the now buzzing Lastarria neighbourhood. There’s a beautiful terrace and pool on the ninth floor. From £230.

Noi Vitacura

Landmark designer building in the fashionable Alonso de Cordova area of Vitacura. The rooftop pool and bar are a popular meeting place. From £147.

W Santiago

Funky interiors enliven this business-friendly tower in the El Golf neighbourhood. Dramatic views from the upper floors. From £188.

Hotel Magnolia

Neo-industrial style meets neo-gothic heritage in this 42-room beauty at the foot of the Cerro Santa Lucía hilltop park. From £131.