Active filters :
Discard Filter
News

Perth Branch Roving Report – December

Our Roving Reporter Richard Dewhirst brings you his December update from Chile.

Richard Dewhirst brings you his last update for the year!

 

Dear Member,

“It was the best of times; it was the worst of times….”. The opening lines of “A Tale of Two Cities”, but here I am referring just to one particular city – Santiago de Chile – a city I have come to know and love since my first visit back in 2006 and where I have found myself living on two separate occasions. In the early days of my initial stay, I witnessed at first hand the 8.8 magnitude earthquake of February 28th 2010, during which I experienced 90 seconds of terror from my swaying 13th floor apartment in the middle of the night. This last few weeks I have also been experiencing – albeit it primarily from TV footage and from the periphery of where it has all been happening – a city and a country visited by terror of a different sort and far more worryingly seemingly intent on destroying itself.

In 2010, despite the destruction and deaths (largely from the ensuing tsunami), I saw a people pulling together to overcome adversity; rebuild and get on with life. Chile emerged stronger and more united from that tough experience. That the damage to people and property was relatively light considering the extent of the earth's stretching pains is testament to the quality of engineering in this country in the design of buildings and structures. What rebuilding needed to be done was put into place relatively quickly and the opportunity taken in some instances to implement ambitious new projects such as with Santiago's airport (although it could be argued that it has taken a jolly long time to fix the shortcomings of this major hub!).

Like many of its neighboring South American countries, Chile has also been through coups and a military dictatorship that brought much death, pain and injustice. And yet in contrast to others, it has grown economically since those dark days and the country has grown strongly, especially during the mining “super-cycle” when it benefitted from its natural resources bounty and up until recently has been a shining light and leader in the region.

What perhaps few fully appreciated – although the signs were all there had one wanted to look – was the huge societal inequality bubbling below the surface. Poor pension plan systems which allowed few to retire with dignity and be able to live on their meagre entitlements. A monopolistic pharmacy system that puts some basic medicines out of the reach of many people. Poor public health and education systems and lousy pay for public servants and teachers. Corruption and heavy-handedness from the police force (the Carabineros) leading to a lack of trust and respect for that institution.

The final straw appears to have been a 30 peso (about US$ 4 cents) increase in late October in the cost of a Metro journey and that spark ignited terrible and violent protests in Santiago which quickly spread across the country. “Thirty years, not thirty pesos” was the cry, with reference to the time since the military dictatorship was abolished with Pinochet's defeat in a democratic election – the so-called “No“ vote. For the past month, Chileans – mostly young and certainly few of them even born during those past dark days of Chile's history – have taken to the streets in huge numbers and protests have quickly turned violent and become an excuse for destruction and looting in the name of righting injustices. Often known collectively as los encapuchados (the hooded ones) for their almost universal wearing of “hoodies” they seem indifferent to the plight of the small businesses they have burnt down and looted and the systems of transport they have trashed upon which so many of the poorer people of Santiago are dependent upon to make their long journeys to and from work each day.

However real those injustices, it has been so very sad to see genuine demands for a better society hijacked by a minority of criminals, anarchists, and others with their own vested interests. Rumours of such “agents provocateurs” include drug dealers, criminal gangs, representatives from pro-Maduro, Russia and others with strong socialist/communist leanings. Undoubtedly there are dark forces at work organizing protests to come together and in orchestrating the violent ways in which they develop, but it is hard for the Government to hold a dialogue as there is no one body responsible for it all.

 

Among all OECD countries, Chile is said to have the highest levels of inequality. Chile's existing constitution stems from the military rule of Augusto Pinochet, and many Chileans claim it to be a main source of the country's inequality today. Pinochet and his economic advisors followed the economic philosophy championed by U.S. economist Milton Friedman and the so-called “Chicago Boys”, where the government has a minor role when it comes to regulating the free market and providing public services. It is thus said that this approach has led to the current inequalities which Chilean governments from all sides have failed to address in recent years. On the other side, the approach has been responsible for Chile's up-until-now strong economy and mostly corruption-free and stable society in a region where this has been relatively unusual.

In the past couple of years, I have seen a lack of respect for the carabineros in some levels of society, albeit sometimes with good reason. During the riots there have been alleged cases of over-reaction to protesters. Some 200 have apparently received eye injuries from “rubber bullets” and tear gas canisters and there are claims that police deliberately aimed at protesters faces. This has further eroded confidence in forces of law to the extent that sensing blood, mobs have attacked police stations, vehicles, motorcycles and individual officers with Molotov cocktails, stones, poles, railings and just about anything they could get their hands on. Many forces of law and order have been badly injured in the stand-offs.

Returning to economic matters and reasons behind the protests, it is said that half of Chileans earn below just 400,000 pesos per month (about US$500), and only the top twenty percent earn more than they spend each month on food, transport, housing, and basic services. Thus, even a small increase in transport costs for a section of the population that is unable to get its head above water economically is hard for them to cope with.

A week or so ago there was a sign of hope in that Plaza Italia, was garbed with white sheets and the message “Paz” (Peace). This elegant statue-dominated monument surrounded by grassed areas which has been the centre of Santiago's protests has been reduced to a grafitti-daubed eyesore, its turf turned to barren earth and paving stones ripped up and used as projectiles.

The latest Economist said that “protests are starting to tail off”. Wishful thinking and this weekend in late November, there seemed no signs of protests abating and in some respects were getting more violent. Government messages of planned reforms and even the agreement to rewrite the existing Constitution were greeted with “too little, too late” reaction.

Chile's economy has been badly hit, with the peso hitting new lows and ever-escalating costs of repairing the physical damage done to much of the country's infrastructure. On the mining side, major unions went out on strike “in sympathy” and there was also a general strike hitting transport and other sectors in mid-November. Chile's reputation as a safe place to invest has also taken a beating and two major global conferences have had to be cancelled. It's sad to walk down the streets and see businesses boarded-up to avoid damage and garbage stacked up due to an ongoing strike from refuse collectors.

Where will it all end? Hard to tell, but returning to our novel, Dickens hypothesizes at the end that Sydney Carton might have predicted a future where his sacrifice would allow those “for which I lay down my life to be peaceful, useful, prosperous, and happy” and where France will be restored to peace and order, thus ending the tale with a sense of optimism rather than defeat. However, let us not forget that in the process Carton lost his head. Let us hope that Chile does not!

Saludos cordiales from Santiago, Richard F. Dewhirst FAusIMM(CP)

Related News

16.09.19

Last Chance to Register: Sydney Branch - September Technical Talk - From Nickel Laterites to Lithium Ion Battery Feedstock

Register now to join the Sydney Branch on Wednesday 18th of Septem...

29.10.18

Leadership of innovation in the mining industry - 19 November

AusIMM Mining Society and Southern Queensland Branch Distinguished Lecture Series

04.03.19

Perth Branch Annual Dinner Invitation

Please join us for the 2019 Annual Dinner on Thursday, 21st March with guest speaker Erica Smyth, AC FTSE FAICD, Non-Executive Chairman and Director