Chile: Political and Economic Conditions and U.S. Relations

Following a violent coup against democratically elected Marxist President Salvador Allende in 1973, Chile experienced 17 years of military rule under General Augusto Pinochet before reestablishing democratic rule in 1990. A center-left coalition of parties known as the Concertacion has governed Chile over the two decades since the end of the dictatorship. In addition to addressing human rights violations from the Pinochet era, the coalition has enacted a number of constitutional changes designed to strengthen civilian democracy. Chile has made significant economic progress under the Concertacions free market economic policies and moderate social programs, which have produced notable economic growth and considerable reductions in poverty. Current President Michele Bachelet enjoys widespread popular support despite having faced a number of challenges since taking office in 2006. Throughout her term, Bachelet has been confronted by student demonstrations against the education system, increased militancy by indigenous groups, and opposition in the legislature. The global financial crisis is President Bachelets latest challenge, though the governments timely decision to save recent fiscal surpluses has allowed Chile to pursue counter-cyclical policies and minimize the effects of the economic downturn. On January 17, 2010, Sebastian Pinera of the center-right Alianza coalition was elected president in a second-round runoff vote, defeating former President Eduardo Frei 1994-2000 of the Concertacion. Pineras election was the first for the Chilean right since 1958, and will bring an end to 20 years of Concertacion governance. Throughout his campaign, Pinera pledged to largely maintain Chiles social safety net while implementing policies designed to boost the countrys economic growth. This report provides a brief historical background of Chile, examines recent political and economic developments, and addresses issues in U.S.-Chilean relations.