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98 • Eduardo
AJr Gamaua 6
nance. Every J,vernment in Bolivia will C?~tin.ue to be trapped by
numerous domestic and international ramifications of the counter- Chile: The Political
narcotics iSSU~ In 1995, confrontations with coca growers reached
their highest 1 vel ever, and given current trends t;here a~p~s no
short-term sol tion. This trend is likely to aggravate if U.S. msistence
Underpinnings of Economic
on eradication bersists. The state .ofsiege me~su:es that were inl~osed
in April 1995Jl"re but the beginnmg of what ISlikely to escalate mto a
full-blown confrontation between the government and coca growers.
All proposals t~ solve the problem, ranging from the Boli~ govern- Timothy R. Scully, C.S.C.
ment's zero option to Washington's renewed focus on targetmg tI:e sup-
plying countrits are infeasible and will invariably translate into a
major problem governance for any Bolivian president.

! In-terms of the two axes of economic and political liberalization, Chile

differs in a number of important ways from other contemporary cases
in Latin America. First, more than a "transition" to democracy, Chile
(along with Uruguay] should be considered a case of "redemocratiza-
tion," of reviving previously well-established democratic practices and
folitlc31 institutions. Institutional legacies from Chile's democratic
paStcontinue to Sffiipe contemporary politics in decisive ways. Second,
though comparatively tardy in returning to democratic rule, Chile's
'!love toward economic liberalization was by far the earliest and proba-
y e most ar-reac ill till erica. Moreover, wi respect to
sequencing, Chile constitutes e region s only unambiguous exam Ie
ofa re' e tr 0 0 su stann economic liberalization.
. This distinctive path serves notice that lessons from . e may be
difficult to draw in a way that travels comfortably from one context to
another. Rather than drawing lessons from the Chilean case, this chap
ter explores the political und inllings of Chile's rather com rehens- .
ive economi . ation. ore precise y, I seek to analyze the
relationship between Chile's democratic political heritage, its authori-
tarianinterlude and continuing authoritarian amarres (ties),and th~- .
emplary economic policies and performance of contemporary Chile.
'~Jri many ways, Chile has been exuaOldinarllY fortunate. I argoe that
the contemporary consensus over economic policymaking, and the
,: government's capacity to Implement these policies effectively, rest not y
Duly upon Chile's democratic heritage, nor entirely upon certain lega-
ciesof the authoritarian period, but rather precisely: l;'pO!!~ ~mbina- ""
tionof these experience;'IStrongpolitical institutions arising from the .Y
"\- dCinocratic-past, made'ni part more conducive to consensus policy-
making by authoritarian holdovers built into the 1980 Constitution,
have endowed Chile's democratic govermnent with4Jern"Ikable..!;;l-=..
.~ ~~?'_~O implem:~t and ~~jn coherent econo~lic!l
100 • Timothy R. Scully, c.S.c•. Chile: The Political Underpinnings ofEconomic LI1Jerolization • 101

After a brief review of the results of economic policies in today's billion and rising, a -'li/oming export sector (growing more than 25per-
Chile, this chapter explores key elements of the political context that . cent in 19941, and forelgrIinvestinent contip)Jing to oour~ Though Chile
have facilitated its success. I argue that Chile is able to sustain a pro- surely experienced a p3iilfUj and disruptive economic adjustment, in

. found process of economic liberalization un..der demo.crati.'c.con-
ditions than would have been possible under dictatorship, in part
• because of the reappearance of Q.hile's well-institutionalized party sxs-
tem, and in part because of a crucial shih in the ideological center of
~ty toward moderation. Ironically, certain nonde cratic limits
L bUilt mto the democratic game by the dictatorship of Au Pino-
1995 Chile had an economy that it was difficult to find fault with. In-I
deed, the Pinochet experience has raised larger comparative questions •
about the relationship between authoritarianism, democracy, and the
possibilities for successful economic restruc~.
~White-there-isiitdeargument that the opening of the economy and
the deliberate to pursue export-led growth have positivelx af-
chet, for the time being at least, have also contributed tg making de- fected E0wth. t!l;eM] is likewise no room for doubt about the effect& pf
mocracy and econom~ormboth possible and compatible in C!li!e. these changes on .stribution under Pinochet. As many authors have
Shown, there was a seamy side to Chile's "e'conomic miracle." By the
Beyond Liberalization: Growth with Equity end of the Pinochetperiod, income distribution had worsened consider-
ably: the poorest 40 percent of households in Santiago saw their share

(] By now the turbulent story of economic restructuring designed and car- of consumption fall from 19.4 percent in 1969 to 12.6 percent in 1988,
. ried out from the mid-1970s through the 1980s by the most repressive while the share of the richest 20 percent rose from 44.5 percent to
regime in Chile's history is familiar enough. The fruits of the relatively 54.9. percent. By all measurements, the Fromon of families defined
orthodox shock therapy applied to Chile's economy were first visible as livina in noverrv.and extreme_nOvertv..ha: .risen diama.tica
mostly in terms of the de~ economic and social dislocations it pro-
duced. After almost a deca of rather freeWheeling neoliberal experi-
me vearSora~thOritarianis" For example, in 1987, 44.7 percent ot a
Cliileans live in poverty; 6.8 percent were classified as indigent.'
ments in the 1970s and early 1980s, brief cycles of economic boom and From 1970 to 1988, total social expenditures pe.r capita fell 8.8 percent;]

bust had resulted in virtually no growth in per capita income. However, . health expenditures alone fell by nearly 30 percent." As Eugenio Tironi
-../ . by the mid-1980s a more pragmatic set of economic policies had re- put it, by the end of the military regime, Chile had become in some
p. stored overall macroeconomic balance tu the economy, resulting in respects a "dual society" wherein a large portion of the population was
steady growth from 1985 onward. .- left without the benefits of the miracle.'
Though almost certainly more disruptive than it needed to be,' the Observers have emphasized the many ways in which post-Plnochet
overall program of economic liberalIzation carried out by the Pinochet economic policy simply mimics that initiated by the Chicago Boys.
government nonetheless endowed the country with a relatively solid. However, these asserttons, are unfair. A central component of the {,
1( foundation for economic growth. The expansion ana diversification ot Aylwin administration's economic strategy sought to demonstrate that
the export sector, and the emergence of a more dynamic and competi- l[Owth need not necessarily come at the exoense of equity. The first
X tive business class-largely legacies from the Pinochet era-contrib- major piece 0 . ion enacted by the new democratic government
uted decisively to the country's newfound status as the region's
showcase economy.I In 1992 the Chilean economy outperformed even
optimistic government predictions, growing at the brisk annual rate of
in 1990 wa tax reform, which collected an additional 2 percent of GNP
(gross natio pro uct and boosted tax revenues b a oximateI 15
perc~, ma . g it possible t2. increase government spending on Social, ~
10.3 percent, with unemployment at a remarkably low 4.9 percent of programs from 9.9 percent to 11.7 percent of GOP.' Between 1989 and
the work force and inflation at a reasonable level (12.7%). During 1993 1995, government social spending rose by 50 percent in real terms."
growth remained high at 6 percent, yielding an average growth rate for Chile's government was spending unprecedented resources on SOCialf
J the Aylwin period (1989-931 of more than 6 percent. By the end of the
Aylwin period, practically every macroeconomic indicator, including
programs, including training and vocational programs for youth, an
expanded public health program, and an ambitious public housing ini-
inflation (11.5%), unemployment (4.6%1, investment in fixed capital tiative. Perhaps most strikingly, at the same time that Aylwin's govern-
(27.2% of GOP [gross domestic productj], domestic savings (21% of ment sought to address the more urgent social demands inherited from
GDPI, productivity and wage rates (both growing more than 4.5 % an·. the Pinochet regime, th~lic sector exnerienced gr~~~ur-
1.; nually), all pointed to the same phenomenon: Chile is booming.' The pluses every xear he was in office. Income distribution improved during
"f first years of the Frei government have been marked by the same suc- the Aylwin administration, with the income share of the wealthiest
cess: inflation in single digits and falling, foreign reserves at U.S.$14.8

[1i". one-fifth of the population falling from 59.9 percent in 1989 to 54.7 per-

. 102' TimothyR. cully, e.S.C. Chile: The PoIitiC<J1 Underpinnings of Economic Liberalization • 103

as is the case In Brazil, Ecuador, and Peru, presidents may enjoy wide-
1990 and 1995 b~ more than one million people, t.:0~ 4~.1 percent of spread backing in congress-s-and therefore broad executive initiative
the population td 28 percent." Though far from eliminatlng the en~r. capacity-at moments of peak popularity. Yet such backing often eva.l
mous social debt ~curred during the military dictatorshi.'p, ~e ~yl~ nesces In the legislature with signs of diminishing public approval. l\
and Frei adminil(trations have made important progress m bnngmg Chile's ins' . . s stem b no means assUres c es·
about a more Ul Ie' tribution of the fruits of economic growth. SI?nalsuJ?pQ!t or ~veroment inim . , . y given its problem· ,
Chile's orn- am conversion to private initiative and the market a Ulti resIdential character, but it increases tIi likelihood. ' 7- --v . • J
has been remar bly complete, but it would be misleading to suggest e de ee to which a party system ISmstitutionalized rovides an /' "'~
that Privatizatio~has removed the state entirely from the ~ket Important key for understanding success or failure e orts at eco.7. ..v
scene. The conv ion to private initiative and markets requires a nomic restructuring in many Latin American countries. It is no acci-
strong state with ple initiative and regulatory capacity, and Chile is dent,for example, that the leadershipof Chile's Concertation government
endowed with a elatively coherent state a aratus ~th a long·stand· (as well as the political leaderships of Costa Rica and Uruguay) have

. . develo ment . .. e Chilean state continues to playa
key role in coor " ating economic activity, but it is undergoing its own
transition from e predominantly entrepreneurial state dating from
eschewed rule by executive decree (decretismo) fur carrying out eco-
nomic policy. Where parties and other political Institl!tions, such as
co ess and the iudici are w ' .
the years of imp r-substituting industrialization to the contemJlora;I. with em an negotiate maJOr olley diiections. These politi insti-
regulatory state'-i In fact, several fundamental aspects of the precise tutions help orient economic actorsoy la}'iJ:igdown clear and Iegiti-
role the state will play In Chile's future development, such as the na- mate rules of the, game, and for this reason the e
ture of state Involvement In the giant as et still nation . . an framework 0 redietabilifor economic decision'm . With Well'l)!!
copper industry, have yet to e resolved and still haunt the political esta .s e po ti ins ons sue as co erent an ell-organized
fandscape J.ike ghbsts from another era. p~es, actors are more likely to know the of the game and gener- V
I ally have some sense of how to pursue, ev sur- .
prises occasionally confront them. Ins'tutionalized parties are- Y
The Reemergenc~ of Strong Democratic Political Institutions certainly not a sufficient condition for explaining succes economic
, I argue hat the !restoration of what was previously a long·standing policymaking In new democracies, but they may be necessary. How- ,
e i::l:atic re .inie endowed the Aylwin administration with unusual ever, in additi~ to th~ degree of instituiio~ation [lI~~thin a 1, )(
everage to craft coherent economic policy. And, perhaps ~ore than party syste~, It 18 also Important to explore(th-.:,kinds of parties !In~ 'If
any other featu of this transition, .the recovery of strong, VIable, and ways they mteract., _-~--:-_.---::------::--
0/ ~_ _:...,

relatively well·trlstitutionalized political .P'?"~e:' provided the.A}'l~ , 'the reappearance of a highly institutionalized party system is a key i(

government boill th~gitirnacy andthe l1lltlatlve. caJl~cIty.toa:O ~o.' legacyfrom Chile's democratic past, bnt the dynamics that character- "'"
Despite the va~t social~debtTeIi'liY'ilie PInocliet regime and .earlier ize the contemporary Rarty system differ in si '.. ant wa from its ),,;-
blistering critiq s of neoliberalism by those who now compnse the pre·coup predecessor." evera 0 ese di erences greatly affect the ca-
leadership of th Concertation Alliance, )he AylwIn government has pacrty e emocranc goveroment to formulate and pursue coherent
not deviated fro the authori' . ' 's fundame tal free t policy First current party leaders, with the exception of the commu-
nists an a minority of socialist leaders on the Left, and to some extent
orientation. 4 the Uni6n Democnitica Independiente (UDI, Independent Democratic celJ,.z,:s/'i
)C With the re of com titive olities after 1988 'es resumed
L their ro e as the backbone of the Chilean political sy~~em.15 The re-
a ce 0 . e's Institutionalized party system facilitated the pos-
SIb' 'ty or co e, t po 'cymiling In e pos~.p~ochet era e~use it
Union) on the Right, now try to emphasize the centrist nature of their V
positions and programs. Renovaci6n NacionaI (RN, NatiOnal Renova-]
tion)insists repeatedly that it is a "Center-Right" party, and the Uni6n
anowed lOr poll .cal articipation and cOilflict m ways that did not del Centro Centro (UCC, Center-Center Union] puts this notion into
~~erw elm e ,olitical system. l 6 Faced with seventeen years of pent- its very Iabel, ~!l toward tbe cen~ystrik-
up popUlar dem$ds, Chile's Institutionalized party system ~as been ing among a majority of the socialists. ,Whereas in the late 1960s and
(t" key, t~ether wi1ih organized labor, in helping .gov~rnment pohcyu;ak'
ers express and (jIiannefsocial conflict, dlrecdng It .toward r~cognized
~y 19708 the predominant group in the party was influenced by the
Cuban Revolution and espoused positions generally considered to be to
y institutions. Wh~e party systems are less well mstitutionalized, such the left of the communists, most-and in the case of the socialist-

104 • Timothy R. Scully, C.S.c. Chile: The PoIitico1 Underpinnings ofEconomic Liberalization • 105
inspired Party for Democracy (PPD), virtually all-c-are now close to the Front coalitions are that the Christian emocraes, and not e Radi.
current, more liberal outlook and policies of the Spanish socialists." As CiIs, now act as the fulcrum of the partySystem at tILe Center, and that ,
a result of these changes, the Chilean party system-at least during the the Communist Party, whose vote is a action of what it was then,

years of the democratic transition (from 1988 to the present}-is no
10l)ger characterized by the same sharp ideological cleavages berween
tile main parties as was the case before the 1973 breakdown, and therefore
is not currently subject to the centrifugal pulls of polarized pluralism."
,r~~ J( Crucially, tpday there is a rough consensus over fundamental i~~
• does not belong to the present coalition~edifferences separating e
~'two periods in terms of economic policy are far greater, replacing a
state-directed development model with Latin America's most lfberal,
market·oriented economy. p,Ji ,_
These changes m Chile's Iitical landscape have powerfully rein. 'I v'
{lJfV ...., v .,( pertaining to the nation's socioeconomic institutions, and voters are, forced the capacity of the democratic govetnment to pursue a strategy
g(JfJ'vOf?,l/ not asked to choose between radicall different models of devel of pactS'and acuerdos (agreements) leading to successful economic pol. : «
"uo/ )( ent. s gener ideologi convergence toward the Center and, in icies. The symbolic importance of Finance Minister Alejandro FoxIey, ' '~
'terms of economic policy, toward export.led growth and free markets, a Christian Democrat, and Economics Minister Carlos Ominami, a so.
has sharply reduced conflict, thereby rnakhlii it far easier to fOrmiiLite

cialist, both early and intractable opponents of the Chicago Boys, rein.
and implement coherent policies. This is not to suggest that dissenting forced the first Concertation goverrunent's efforts to strengthen Chile's '
voices, such as that of the (now greatly diminished) Communist Party export-led growth strategy. Their leadership lent to the current eso.
(MIDA), are completely absent. Notwithstanding, there is perhaps as nomic model legitimacy that It never enioyed under the militarY reo
much or more ideological consensus on the appropriateness of the cur- ~ Since both the ChriStian Democratic and socialist parties have
rent economic model in Chile today as there was correspondingly iTiiilffionally identified themselves as opponents of unbridled capital. ,
[ widespread agreement in the 1940s on the correctness of import- ism, the fact that they now find them,selves leading the efforts to sus.]
s c = industrialization led by a strong developmentalist state!' tain inherited liberal economic policies places them in some respects
econ ,and equally consequential for the Aylwin government's ca- in an even str!er position vis-a-vis economic liberalization than the
pacity to shape successful economic policy, the pattern of party alli- Chicago Boys! At home their economic policies commanded the sup.'

ances during the Aylwin years is very different from what it was in the port of practi y the entire spectrum of political opinion, and abroad
raterY60s and early 1970s. Whereas in the earlier period the Christian they became a model for developil)g countries undergoil)g economic
Democrats were at loggerheads with the parties of the Left and the Rad- and politicalliberalizati0i!
/iiJfr'Y'" !..? icals, and in the early 19708 the Christian Democrats struck an alliance
with the Right to oppose the Popular Unity goverrunent of Salvador
Allende, the Concerta . overnment is com . ed . . all of Recovering Democraey within the
)( Framework of the 1980 Clinstitution

ChristianDemocrats and parties at were formerly part ofthe P" ular.
\ nity goverrunent,except or the communists, Two decades ago the Democratic governance returned to Chile with the inauguration of
COiiIitronat patterns were determined mainly Iiy support or opposition Patricio Aylwin in March 1990, yet the battle toward full recovery of a
to the left-wing goverrunent of President Allende, while '!lore recently consolidated democratic political regime, has been a difficult and, to
~erminedbJl.,p""ty.'I£ce tance or e'ection of the mil· date, unfinished one. The institutional framework inherited by the' lM
)I [ .lliUY regime.

Aylwin goverrunent is loaded with features built into the 1980 Consti- X
This change in the pattern of political coalitions is of the utmost tution that constrain and potentially undermine the authority of the
;,' Importance. By introducing a new dimension of party division along democratically elected govemmene.> Though much of the 1980 Con.
L l '
the lines of support or rejection of the military government, it has sub- stitotion restores. familiar republican elements to Chile's democratic X"
lb/(if~'PJ) merged-at least for the time being-i-traditional sources of conflict be-
tween the parties, contributing to the decrease in ideological distance
institutional order, it also includes Insntunonal privileges for the mili-
tary and its political allies that are iilimical to the democratic process:
",I {P LAL\f' between them. l l The current Chilean party system has been recreated . W,thlri the framework of the 1980 Constitution, Pinochet and fils
,;c- in a manner reminiscent of the Popular Front goverrunents in the late supporters ostensibly sought to craft a "protected" caPi,talist dernoc.~
' 1930s to late 194Os, when there was also a Center to Left alliance, but racy and to resolve once and for all the most fundamental conflicts that
l::"- an alliance in support of a very different socioeconoriiic model (that of had rocked twentieth-eentury democratic politics in Chile. While eco-
tmport-substitutmg industrialization). The principal differences in
terms of political support between the Concertation and the Popliliir
nomic managers Sergio de Castro and Miguel Kast were busy designing
and Implementing dramatic policies aimed at liberalizing the economy,

Ii :r N~"'Il'V..,..:,o!'JA<...
,I ~l'\.ewo i2. i..(
106 • Timothy R. Jcully, C.S.C.
I ~~\
the regime's chief lideologis~,Jaime Guzman, jUld others were drawing
Upthe legal framework to support tnI'm.
Perhaps more crucial than any other feature, the inviolability of pri-
cbiIe: The Political Underpinnings ofEconomic Liberalization
tive br~ches of the armed forces are subordinatl'.t\tthe.1'1"'sident,..tltc,
most cntteal ~ement of that subordination[ the power of appointment>"
----:@.dremovlil;;is absent for a period of eight years, thereby virtually ten;
• 107

vate property enshrined in the 1980 Constitution resolved, at least for . uring the entire command structure of the military until 1997. AI; a
the time being, a 4entral axis of decades of social and politieal conflict resUlt, the same militarY leaders who commanded the armed forces .
in Chile and a ket source of uncertainty in the economic arena. Ever <luring the dictatorship=including Pinochet himself at the head of the
since the new constitution took e~ect, the Supreme Court has co~~is­ army-have continued to do so since March 1990.
tently given a narrow interpretation to the constitutional prOVISIon . To assist the armed forces in carrying out their new tutelary role, the
that "protects the tight to private property of all persons" (article 19).In 1980<;;onstimtion (as ;ynended by plebiscite on July 30, 1989) created a t\l . c...
, contrast to the 19' Constitution, expropriation is now possible only (NatioiialSecurity counclllwhose purpose includes, in addition to en- . • S. . r

by legislation sp ifically "authorizing expropriation by virtue of pub- s~ national security, eY!!mining all matters that may "gravely un-I'
lic utility or natio al interest." "In all cases," the constitution contin- dermme the bases of the institutional system" (articles 95 and 96). Of
ues, "the owner have the' t to inde .. cation for any alienated the ei t ositions on the National Security Council four are to be 0<;-
property," e to compensation being fixed by common agreement c,.upied by the heads of I' air an atio olice.
or ad)uClicated by ~ decision of the appropriate court. Given the inter-
pretation of these! clauses by the Supreme Court, any expropriation
must be compensated at market value and with full cash payment in
advance:r--' r - ------
~':Qie satrosanct ran.1s of priv~te prop!lIty e~~hri~e 1?80 .C~n­
o 0

er members were

by the creati,?n of \
comprised of approximately
named, indirectly,

-time s
by General
fOreTelrving office. General Pinochet's control over this body was en-


at;' agency SA--· C--].

persons designed to
kdee~ watchPin0vehr every asPdieet of national policy and to give political

stitution, combin WIth constitutional provisions p acing s,mct Iimi~ a. VIce to . oc et, In ad .tion to its other responsibilities, the Na- .
on the role of the tate. as entr reneur, in a country where laws tradi-
tion y carry a gr t de 0 weight, s contributed mightily to resolv-
ing the problem f economic credibility and has contributed to a
tiona! Security Council is charged with designating two of the s e v e n ]
members of the Constimtional Court.
- The institutional autonomy"iif'ihe armed forces enshrined in the • •
positive clinlate f r d ' . stment. This provision, 1980 Constitution -. further e~anced by a number of policy domains 1/ 'I
toge er WI I' [creation WI I' constitution of an independent
central bank and if,portant changes in the ideological climate referred
to above, reinforced ,:!?nfidence among entrepreneurs that the parame-
reserved for the privileged action of the niilitary. AS J. samuel Valen-
ter of
notes, in contrast to the diffose and generally ambiguous charac-
tutelary powe~, reserved domains "remove specific areas Of]
l"" ters of economic policy will not fl'.'cruate un~ected1y. That no'.'e of governmental authonty and substantive policy making from the pur-
the major political actors in post-Pinochet Chile has challenged either . view of elect .. ",. '"or instance, the 1980 Constitution pre-
the fundamental ihviolability of private property or the limited role of scribes tha the bud et ay never fall below the amount spent
the state is a te11irlg indicator of just how much the nature of the polit- in real terms I' government in its last year. Lest there be
r.Ical agenda has changed, AI; a consequence, compared to the days of some misunderstanding, the law also states that funds to ensure these
factory takeovers fmd land seizureS. that pr~eded th.e 1973 cou~,.~

levels of military spending must be provided automatically from
stakes involved inlPolitics have been dramatically re~uced, resnltlng~ 10 p,,:,cent of all copper sales by the state-owned National Copper Cor- .6
a slii'iiikJiji! nf me poIiticii1 arena useli. poranon (CODELCO). Elected government officials cannot interfere in ~
---XdditIona! feat' es of the 1980 Constitution granted institutional . the pr aration of mili bud ts or I' a .sition of armaments, .~

Pri . eges to 1':" tary and its allies. or example, it an an ereb are barred from m . c es in military octrme or ./::::
. chilean armed to es tutelary powers WIthin Chile's olitical arena.lS m alt' the curricnlum of srudies in the . _ aca emil's. Per- ~.
ereas I' ma I' to I' arme orees in the previous ps most Important, . tary intelligence, which was deep y mvolved ' /
constitution stat~ that "The armed forces are obedient and non- in human rights violations during the seventeen-year dictatorship, is
deliberative" (arti Ie 22 of the 1925 Co~timtion), the 1980 doc~ent
states that "The med forces ... exist m order to defend the nation,
alsoleft entirely in the hands of the armed forces.
The continuing presence of General Pinochet at the head of the army
has been a considerable source of concemfor both the Aylwin and Frei .
and are essential' order to procure national security and to guarantee ,
. I' institutional (] d of the republic" (article 90 of the 1980 herespec- governments. Though, at the outset of his presidential term in 1989
tion]. Though me constitution stipulates that the heads of the respec- Aylwin asked Pinochet to resigu his command "for the good of the
108 • Timothy R. Scully, C.S.c. Chile: The PoIitico1 Underpbmings ofEconomic Liberalization • 109

country," Pinochet openly refused to do so. While the other military Electoral systems in most democracies are biased in the sense of un-
branches, the navy, air force, and national police, have adjusted their

derrepresenting minority parties and candidates. However, the elec-
rhetoric and even much of their behavior to the reality of civilian rule, toral formula adopted by the Pinochet regime departs from this
, the army and its top leadership have at different times been openly crit- practice. The electoral law provides that, for the elections, of both dib:
ical of both the Aylwin and Frei governments. The army's hard-line g
uties and senators, each congressional votiii district lor region ill the
stanee has been especialI visible in its continuing and vehement ob- case of senators) elect two candidates. Parties are allowed to form elec-
lections to inves . ations of abuses committe y e toral alliances, or "lists," in order to maximize the vote obtained1iY4
the authoritarian period. In Decem er 1990, w ' e top ilitary eaders, given political tendency. For a single list to obtain both seats in a given
including Pinochet's son, were undergoing judicial and congressional voting unit, the list aclileving the majority is required to double the
review for misuse of government funds, the army garrisoned its troops, combined total of their nearest competitors, thereby allowing (at least
precipitating rumors of an impending coup. Again in May 1993, un- theoretically) a list obtaining minority support (33.4% or more in the
happy with the Aylwin administration's insistence thJt the constitu- case of only two lists; the percent decreases the more lists there are) to ~,~ )(
tion be amended to curtail the autonomy of the armed forces, and win one-half of the seats. This system was designed to provide maxi- . if
indignant at a new court interpretation of the 1978 amnesty law that mum representation of the second-highest lists, which in this case are ,
allowed courts to investigate human rights violations, Pinochet called partisans of Pinochet. -
army units to general quarters and surrounded public buildings in In addition to systematically favoring the candidacies of the minor- (,
downtown Santiago with soldiers dressed menacingly in battle fa- ity rightist candidates, the boundaries of electoral districts erected by
tigues. The drama of this event occasioned a finn public rebuke to the military regime made extensive use of gerrymandering. For example,
Pinochet by President Aylwin, who insisted that "no demonstration of s,inee OPPOsitiO,n to Pinochet in the plebiscite of 1988 tended to be ~"-
foree from state institutions, individuals, or private groups will lead to much more concentrated in urban areas, urban, electoral districts were Y
solutions. 11 iven far less representation pr ortionally th ar areas.:19 While
Aylwin later reflected sullenly that he may have been "overly opti- Santiago accounts or 40 percent of C . e s population, 1 IS rep esented
mistic" in 1991 when he had affirmed that the transition to democracy by only 26 percent of the nation's deputies. Whereas twenty small rural

I was complete in Chile. "Events have clearly shown that key institu-
tioual aspects have yet to be resolved in the Chilean transition."" Deep ,
unhappiness within the ranks of the army became perhaps most evi-
dent during June and Jnly 1995 when, after the arrest of the former head
districts containing one and a half million people elected forty deputies
in 1989, the six most densely populated urban districts, also accounting
for one and a half million people, elected fourteen deputies. The same dis-
tortion occurred in the design of senatorial regions. !!!..P!acticallyevery " '<r'
9f Chile's dreaded secret poliee, General Manuel Contreras, public case the lines of districts d re .0 • wa V
demonstrations of "off-duty" army personnel critical of the Supreme overre resent areas t vo or Pinochet in the 1988 lebiscite. so
Court's decision to put Contreras and his army accomplice behind bars The results of the 1989 elections emonstrated the effectiveness of
for the Washingron, D.C., murder of Orlando Letelier once again placed the military regime's electoral formula for rewarding the Right and
, in high relief the army's ambivalence toward the institutions of democ- punishing the Left. The law's most egregious effects were reflected in 1~

'j, " , racy. In sum. an important obstacle still blocking Chile's path to full t\te allocation of seats in the Senate. In the 1989 elections, whereas the I
4emocratic consolidation is the institutional autonomy granted to the Rig]it (National Renovation, the Independent Democratic Union, and
'i. military in the 1980 Constitution. various independent candidates) obtained 42.2 percent of the Senate
, .- The sharply increased role of the military within the state set forth seats with 33.9 percent of the vote, the L e f ~ ~ "
in the 1980 Constitution might well have been substantially mitigated
"if the electoral majorities won by the Concertation for Democracy in
me Senate wit1120.6 percent of the vote. The country's largest party,
the centrist Christian Democrats, were left largely unaffected, winning
1989, had translated into a proportional number of congressional seats. 34.2percent of the upper house with 32.3 percent of the vote."
[ mightsuch case, key elements of this "perverse institutionalization" It would be misleading, however, to focus the analysis of the Impact '
have been removed by way Qf;;"ongresslOnaI reforin," However, Of,th,e electoral formula exclusively on election results. In some waY1!i!.-l. ]' ?!
two 'mecbanisms-a heavily biased electoral formula and the presence ~e important consequence of the regime's electoral formufg is tbe
of Pinochet-des' ted members of the Senate-have prevented the aITnost mexorable bipolar logic the new electoral rnles intpose on all y
pre erenees of the electorate m being y represente m e compo- tpemajor !,olitlcaI actors. Since the rilles are designed to reward the "
, of the membership in Congress. two Lligest political alliances and at the same time puWsfi smal:l or

I ;::.:
110 • TImothy R~ Scully, C.S.C. Chile; The Po/ftico1 Underpinnings ofEconomic Liberalization • 111

I nonallied parties arties are left with practically no choice but to join
. ,~ ~
Right. In effect, the former allies of the Pinochet regime have used the
'Sf" II together to form lar e co .tions an ces.·s lIDpOS ipO ar ¥resence ?f their elected colleaglles to veto legislation they consider )f
109!'c has resulted in several unintende,d con,s equences for the major po- { mcompati~lewi~ the instimtionallegacy of the military regime. The )(
litical parties. Fibt, intense pre-electoral negotiations between party Conc:rtation Alliance has found itself in a very difficult position: its
leaders within th~ same alliance playa decisive role in selecting candi- capacrry to respond effectivel to antidemocratic feaU1res of the inst!.
dates for office it\. each district. These often result in arcane intra- !!!d mtion amewor eft behind by the mi .tarv regime as been se.
interparty deals, jWherein popular candidates are sometimes saCrificed verely constrained by the stre of the Right in the Senate. Even with
fiy therr own p leade hi and prevented tr ' i n the inter- an e ector orm a t overrepresente more conservative rural areas if
l\sts 0 e ar anc t In some cases, ese practices have led the Senate had been free of designated members, parties loyal to Ayl..:rn
to revo ts amo:' oca party rank and file who view these as opportu- would have controlled 60 percent of the seats in the lower house an
nistic electoral c culations of national party leadership and an attempt 58 percent of the Senate, This would have permitted the government
to thwart popul choice. much broader freedom in enacting its legislative agenda. Ironically, how-
While this prJctice has had its costs for the various partners within ever, this feature of the 1980 Constitution and other constraints left
the Concertatio Alliance, it has been especially divisive among the behind by Pinochet have forced the new democratic government to
parties of the fr ctious . t, Tension within the . t s be • govern by seeking to gain the consent of its opponents thereby
ther he' tene two a tional factors. First, a nettlesome populist strengthening the political system's newfound culture of consensns,
ea ,anc avier rraz , an s Center-Center Party joined By the early 1990s, Chile had reaffirmed its commitment to a liberal
forces with the rightist alliance to compete in the 1993 elections, e,conomic regime, but important tutelary powers, electoral discrimina. ~
thereby further omplicatingthe already acrimonious relationship be' !ions, and re~erved domains stood in the path of a.consolidated democ. T
tween the two ~jor parties of ~e Right, National Renovation and the
Independent De ocratic U~on, Se~ond, whereas th~ logic of,competi- '
tion permits the Concertation t ann for both seats m any given elec-
l racy. Returning to the two dimensions that form the focus of thi
chapter's concerns, economic and political liberalization we are left in
post-Pinochet Chile with considerable asymmetry in'terms of the
toral unit, the (e anded) Center-Right alliance, termed the Union for government's capacity to pursue policies in these two, areas. Whereas
the Progress of dhile, could realistically ~op.e for only one seat in ~c~ the Aylwin go~erIlIt':~t ,,:as almo~t singularly empowered to pursue
district. The larger number of actors Within the alliance, combined li!J.eral e~normc PO~C1es, its capacity to consolidate a democratic po-
with the reduced stakes, hav~. made pre-elector~ negotiatio,ns ~d litical regime was quite constrained.
intra-alliance electoral competition among the parnes of the Right m-
tensely competitive.
The 1980 Constimtion: Ble§sing in Disguisel
The Ie .slativ~ "fail·safe mech;mism" of the Pinoche -inspired 1980
Constimtion is ts rovision fo nine esignated members 0 be added Perhaps not surprisingly, many of the same features of the 1980 eonstiJ"!Y
to the thirty-eigl:jt electe memll of e Senate. Accordi to article tution. that have made It difficult to consolidate fully the democratic
45 of the consti~tion,four of these "institutional" senators are cho.s.."ll

political regime in Chile have reinforced the choice to continue liberal V
by the National security Council @m among retired commanders in eco~omic policies. In fact, some have argued that once the opposition
Chief of the armJl, nary, air force, or natiOnal P?lice! ~o are chosen ,by .l2-.Pinocltet accepted the ~rall instimtional fr.inleWork set forth in if
justices of the Supreme Court from among retired lUStiC",", and a third the,1980 Constimtion, it was left little choice but to follow e conser:
\ must be chosen & the 'ustices frpm among retired attorneys general of ~ti'; hia~!1ll!timti0!1~.~Though this latter c '
\ the republic; on is to be c osen by the president 0 e republic from may e an exaggeranon, the provisions within the constitution that
among ex-recto of an officially recognized university; and finally, the overr:pres~t supporters of the Pinochet regime within the Congress,
\ L president selec one trom among former cabinet ministers.Tifteen ·f
combined W1~ ?ther reserved domains discussed above, have had ~1.f
\ ys after Pinoc~et ost is i to stay ~ power in October 1988, the effect of TequJ.J:!!)g the Center-I:eft government to seek conseniilli I,
names of those designated to hold posmons were announced to the am, 0 an even Wider array of political forces, pushing the government rl
j public. Not surprisingly, all of those chosen were unwavering support- to go bey~lU e p a compn e oncertation ceo I
ers of General~ocltet, ' , 'TlieRight holdS considerable power in the Senate owing to the pres- I
• Repeated ert&'by the Aylwin and Frei administrations to remove c;nce of destgnated senators, so that t:1ie AylWfu and Fret adininistiatioriS

nonelected menl.bers of the Senate filled' to gain the support of the oftenfulve bad to satisfY the minimaI demands of the representatives of

112 • Timothy R. Scully, C.s-c. Chile: The Political Underphwings ofEconomic Liberalizstion • 113

Chile's business and landholding groups in order to pass Ie .slation. opposition has generally manifested-a pragmatic attitude, often engag-I
" e c ear y a non mocranc eature 0 e new institutional order, ing in intense parliamentary negQt.iatlons to blunt legislation aimed at
this bias has rovided important guarantees to ca italists durin the .!lie mterests of capital, Conscious perhaps of the often high levels of
# an
, sition to democracy. e presence of constitutional restricti,ons un- popUlar support enjoyed by both presidents Aylwin and Frei throughout
friendly to the Center'Left alliance may have given economic policy- their tenure in office,".Jw.portant eleme1ltS..o.Lthl:..Rigbt have lent their '

>t makers within the Concertation government a necessary weapon to support to government-sponsored reforms ranging from key changes in
defend themselves from the pressures of populist demands from the ,e tax and i n d ' . co es to wi e-reac re orms of 10
Left upon the return to democracy." all m emment.
Also contributing to this climate of consensus, the 1980 Constitu- sum, w e e ConstitUtion is characterized by multiple
tion resolved Chile's perennial problem of what Genaro Arriagada has elements of perverse institutionalization, at least in the short term,
called the "double minority system" established by the 1925 Constitu- <some provisions of the new constitution may have provided a legal and
institu .onal framework to reinforce the policies of economic liberal- V
tionJFirst, whereas the earlier constitution allowed the president of the
repu~lic to gain election to office without the support of a majority of
the electorate, the 1980 Constitution requires election by a majority of
ization T e Ie al antees 'ven to private property an
o an . 'dependent central bank, as we as other constitutio
e creation
the votes cast either in the first round or in a runoff election}. Even ions, enhance tlie potential for government credibility and consistency. J(
ough the 1925 Constitution calle or e ections in e case of a no- The constitution also sought to resolve several destabilizing propensi-
majority winner} to be decided upon by a majority vote of a joint ses- ties inherent in the earlier institutional order, . , ollic )( .i
sion of Congress between the two leading candidates, it became a problem-ill an executive elected with 0 minori- 'su" ese fac-
political impossibility to elect anyone other than the candidate with 'ement o,f parliamentary Jorities (and I"
t<;'rs, com,bined with the reqUlf,
t I
the first plurality. Second, the earlier constitution enabled the presi-
dent to pass legislation with the support of a simple majority in either
sometimes a supermajority] to pass legislation, ~r~tripeta1 drives

within the political system and contribute to building consensus.
. I
house and only one-third plus one in the other. This attribute, com-
bined with other extraordinary executive powers, reinforced~­

Consensus: A Key Facilitating Condition
ous proclivity of presidents..1m many cases elected by a bare iJlur~ty}
,to gover:n wi,thout~ufficient poP'!!ar suppo:It;: aild'l1elped precipitate a Many of the ideological and institutional changes in Chilean POlitiCS] i
, deep crisis oITegitimacy during the government of Salvador Allende.
However, though tile current constitution eliminates the possibility of
discussed above suggest that collecti p I ' , can occur, ma .
~orpolitical ~ocompt'!lJ:nsc/~ '/
actors more toll!tant and
ec~ on tll1s potitiUd ''1 I
a president elected with minority popular support (with a second-round change, Aylwm;s fuUitlce minister, Al-
election), iEby no means ensures parliamentary support for the sitting ejandro Foxley, noted that," "the long authoritarian recess created,
president. Indeed, the pres1dent 1S fOrced to seek broad alliances with almost imperceptibly, a new political culture which made possible
I multiple parties in oraer to enact legislation. . " . agreements, accords, and consensus that had simply been unthinkable f' ,
The 1980 Constitution r!'9uires the president, Wh,O must be elected earlier. "sa The experience of seventeen years of dictatorship profoundly
by at least a majority, to ass Ie 'slation with a ma'ori in both
,ouses-and depen' on the policy area, substantially more than
majori t ere r~uiring road a eement on lic before Ie 'sla-
tton is enacted. Thou , as we ave seen, the requirement of achieving
sucli levels of support has prevented the Aylwin and Frei admimstra-
j altered belief systems and strategies among politicians in Chile and the ,
capacity of political leaders to engineer compromise. The greater de-
gree of consensus among political forces in Chile, aniltJieen11aiiCed
propensity for broad coalitions and alliances, have provided a propi-
tiOuS context for the continuation ,ot the dual processes of economic
tions from removing most elements of perverse institutionalization and political liberalization.
from the constitution, at the same time it has powerfully reinforced the The notion of "consensus" can be a slippery one. Giovanni Sartori
political logic behind the Concertation Alliance. And this newiound proposed a general definition of consensus to be "a sharing that s0jf,e-
Center-Left alliance, m turn, lias providedfor, in the worda of socialist how binds·" He then usefully identified three levelswhere sucll a sCar_
cabinet minister Enrique Correa, "a more solid political majority for ing may hold relevance for the existence of democracy: first, the level
social change than was possible under the government of Salvador Al- of "ultimate values (such as liberty and equality) which structure the
lende. "as Rather than adopting an openly and completely hostile pos-
I ture toward the initiatives of the democratic government, the rightist
belief system"; second, that of "rules of the game, or procedures"; and
finally, of "specific governments and governmental policies." He calls
114. TimothyR. Scully, c.le. Chile: The PoliticalUnderpinnings of Economic IJberolization • 115

the first level of consensus! a "facilitating" condition for the existence an endless waiting game. This in turn could contribute in the not-so-
of democracy, ",hereas the second level he ar es is a fundam re-r distant future to political instability.
requisite. The' . d level, . t of specific governm.ents and government :/
polici,1s an area where ~ensus would be both unnecessary and in y
Finally, with regard to the level of policy, the Aylwin and Frei gov·
ernments succeeded in crafting delicate political understandings and
some ways undesirable f r democracy: the existence of dissenting skillfully engineered policies in three critical areas: the economy, the
views over specific . es at the heart of democratic govemmene.P] \( gradual consolidation of political democracy, and "human gghts.
In terms of th first leve "that of ultimate values that structure the Though sometimes a battleground, in general the terrain of economic
belief system, there IS a oR" t evidence that the transition in Chile . policy has been one of broad agreement between Chile's major social
has coincided wfthasubs I tial narrowing in ideolo .cal distance be- and political actors. Pursuing a strategy of "growth with equity," the
tween major socia. an po'ti actors. elief stems es eciall Q;mccrtation government has demonstrated to believers and skeptics
luno 0 onents to the di~tatorship, have reemer ed from the experi- alike that responsible and highly successful management of the econ-
ence of authoritarianism s bstanti y transformed. Chasteiie ytlie"'
de ea 0 e . e, an so er al collapse of in-
temational Leninism, the Left in Chile is barely recognizable as the X
omy is pOSSIble ill a democratic context.
. In the area of reform of political institutions, success has been more
limited. The democratic government has pursued a strategy of incre-
heir to its more ideological pre-coup predecessor. The policy agenda of . mental reform of the legacies of authoritarianism. Though the Con-
the Left; has taken a sharp in the direction of liberalism, based on I certation governments gained the support of the Right in securing
a thinkingof. eval eofpoliticaldemocracyan~s I some progress in this area (such as municipal reform], the more funda·
of the markej, mental problems of civil-mili relations, nonelected senators, and
• hi this new environme t, the centrist Christian Democrats no the re orm 0 e e ectorallaw have not been so ve as of mid-1995. It
longer advocate "commtarian socialism" but have resorted to the seems likely that these reforms can ouly be made in piecem@fashion.
language of their European ousins proclaiming support for a "socially . In perhaps the most painful policy area for the Concertation govern-
responsible" market. Comfaratively, the Right has traveled the least )( ment, the area of human rights, Aylwin consistently resisted pressures
ideological distance from ita pre-authoritarian counterpart, mainly be- from the Right and the military to enact legislation putting an end to
cause their oals in econo .co'cy ve arge y een r . e. e )t the investigation of past rights abuses (the so-called ptuito final. or ,
near-convergence 0 ese formerly irreconci e po tical actors has "end point" legislation). Instead, Aylwin insisted on a policy he called 1'1'

introduced a modera!ing dyj"amic into the political system that has un- iusticia posible, or "justice of the possible," a measure that required U
doubtedly served as a facilit~ting condition for the return of democracy. the clarification of the circumstances of the crime, moral rehabilitation /11"

The newfound capacity an~ willingness of political leaders to bridge of the victim, and material compepsation to the victim's family. Under I
long.standing animosities ~nd to forge coalitions and al1lances among this policy, most of the perpetratOrs of hUman rights abuses have not
key parties of the Center and Left (within the Concertation], and those Deen subject to either trial or punishment. Just as in the area of full
of the Center and the Right (within the Union for the Progress of Chile), democratization, in this third policy area, agreement between the par-
has supplied a useful lubricant within the political system. IX".. ties of the Concertation and the opposition has been elusive.
Sartori's second and most fundamental level of consensus, that of
basic agreement upon rules fmd procedures, has been more problematic
in the Chilean case. AJ; we ave seen, the legal framework established Conclusion
by the 1980 .. .ed as the "rules
Of the game" b ma"or ali ,. cal and social actors retains authoritarian

I have argued that the democratic government led by Patricio Aylwin,
oldovers that are unaceeptbhle to theparties of the Concertation Alli· and his successors in the Concertation Alliance under President
ance. Disagreement over th~institutiOnal framework of Chile's democ- Eduardo Frei R., have been uniquely positioned to consolidate a free
racy will doubtless intensif during the six-year presidential period of market, outward-oriented political economy. Since 1990 Chile's demo-
Eduardo Frei R. Since the f rces of the Concertation failed to gain the cratic government has successfully formulated and Implemented a set ,,:
seats necessary to remove e legacies of authoritarianism in the De- , :~
of coherent economic policies that have respected the genetal market
cember 1993 elections, p ies of the Concertation, especially those orientation pursued under Pinochet. However, it has been much less ~-' ,
most disadvantaged by the rovisions of the 1980 Constitution, such as successful in removing the legacies of authoritarianism that block the
the socialists and the PPD, ay lose patience with what appears to be full consolidation of democracy. In, some ways, perverse institutional
116 • Timothy R. Scully, C.S.C.
Chile: The PoliticoJ Undezpbmings ofEconomic Liberalization • 117"
legacies built into the 1980 Constitution have strengthened the new
~emocratic regune g hand in eCOl1onuc pollcV1I141Olli!. --- - - - - -
- historic agreement Wears off and the fabric of the implicit social pact
'" • $ • - • - --- upon which it rests becomes thin, will the major parties of the Center
and the Left be·willing and able to forge new agreements over programs
and POliticaI eaders that go beyond those created for the transition? As
the dominantissue Orw i Concertation was create rece es-- J'"
that is, the goal of defeating Pinochet in the 1988 plebiscite and win-
r... ning the presidency for the forces pressing for full democratization-tbe
I t;.
cleavagebetween supporters and opponents of the authoritarian regime
may increase as enthusiasm for maintaining current party alignment
~ diminishes. In this new situation, the political leadership within the
~- various parties of the Concertation will be tempted to try to strengthen
their own parties and political identities around issues other than are.
iection of the dictatorship, and may, for this reason, welcome morell
open, unstructured electoral competition.
With the December 1993 election of Eduardo Frei R. to succeed Pa-
tricio Aylwin at the head of Chile's second Concertation government,
1 -!!

the question arises !!2w the dual reality of relatively unencumber.ed

markets combined with a political regime still harnessed by the consti-
tntio constramts e in p ace y moe et evo ve, s e polit-
ical arena undergone a tU11da1IlentaI change, or has the consensus of the
Aylwin period been more a necessary truce to see parties through the
transition? Will renewed party competition revolve around such Spe-
cific policy-related issues that the fundamental consensus over basic
questions can be retained, thereby avoiding the reemergence of centrip,
etal tendencies in the party system and permitting the recreation of the
Concertation during the entire term under Eduardo Frei R.? Most prob-
ably, the pressure will mount during the Frei period to strip away, one
way or another, these }'onstraints. D..espite these presauzes, lessons.
fr~ the relatively recent P"'lt maybe powerful enough to ens1J!e that
p' divisions remain moderate, allowi the formation of ne~
ances between orces around the Center of the i eological~ectrurn
--- in Chile:---
I,:~ 1 .