Augusto Pinochet's Uncomfortable Legacy

Dead at 91, the former Chilean dictator is remembered for his intolerance and strong-arm tactics, but also for turning around a mismanaged economy

by Geri Smith

I'll never forget the early-morning phone call I received on Feb. 25, 1982. I was working in Santiago, Chile, as the bureau chief for United Press International, and I had an interview scheduled that day with Tucapel Jiménez, a labor union leader who a few days earlier had called on Chilean workers to form a united front to protest the economic policies of military President Augusto Pinochet. My interview, I was told, wouldn't be taking place: Jiménez's body had been found a few hours earlier, shot five times in the head. His throat had also been slashed.

Those were the dark days of Pinochet's 17-year dictatorship, which ended after Chileans, in a 1989 referendum, finally demanded that he step down. Few tears were shed when he died on Dec. 10 in a Santiago military hospital.

During Pinochet's long rule, dissent was not tolerated and was often punishable by death. Only when Chile returned to civilian rule were the secret police agents who killed Jiménez arrested and convicted for the crime.

Military Coup

Pinochet, whose dark glasses and stern demeanor made him the caricature of the classic Latin American dictator, had publicly warned Jiménez that a proposed national strike would not be permitted. "This government tolerates many things, but we will never tolerate a return to the past," he said in a speech days before Jiménez's death. "I would dare to tell those who are carrying out actions against the government—be very careful, sirs."

When Chile's military seized power in a bloody 1973 coup that ousted Socialist President Salvador Allende, the Chilean economy was in tatters—thanks in part to Allende's mismanagement, but, as we now know, thanks also to covert CIA operations aimed at destabilizing the regime and keeping Communism from spreading through the hemisphere.

I had been a high school exchange student in Chile in the months leading up to the coup, and I experienced first-hand the food shortages—waiting in line for scarce bread at 5 a.m. and watching the black-market chicken vendor dart from door to door in my host family's neighborhood with his precious packages of protein for sale to the highest bidder.

The Chicago Boys

Pinochet introduced bold economic reforms to turn around the Chilean economy, turning for advice to free-market economists trained under Milton Friedman at the University of Chicago. The "Chicago Boys," as they were called, advocated shock therapy: Slash import tariffs and force Chilean industry to compete. Introduce private pension fund schemes to replace the government's under-funded system. Privatize state-run companies.

Thousands of local businesses went belly-up, and unemployment climbed to 25%. Soup kitchens sprang up around the country to feed the poor, and housewives soon began banging spoons on empty cooking pots to protest the hardship. Jiménez was no radical revolutionary—two years before his murder he was welcomed to the White House by President Jimmy Carter. He was just articulating what many Chileans felt—that the shock therapy, like Pinochet's heavy-handed rule, was too harsh.

Indeed, shortly after Jiménez died, Chile went through a banking crisis that plunged the country into another recession and forced the Chicago Boys to adjust their economic formulas once again. Chile's economy turned in negative economic growth from 1980 to 1985.

An "Economic Miracle"

Yet, within three years of Jiménez's death, the economic pain turned to gain. The economy started growing briskly, averaging 6.3% annual growth from 1985 to 1990 and turning in a stellar 9% leap in GDP in 1995. Per capita income has continued to rise on average 4.1% annually over the past 15 years, compared to just 1.1% for the rest of Latin America.

Admirers, including the International Monetary Fund, widely praised the Chilean "economic miracle.