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Summary

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 its elected civilian democracy in 1990. A center-left coalition of parties known as the Concertacin has governed Chile for the nearly two decades since the end of the dictatorship. The coalition has enacted a number of constitutional changes to strengthen civilian control of the military and to undertake the prosecution of those alleged to be responsible for human rights violations during the Pinochet-era. Chile has made significant economic progress under the Concertacins free market economic policies and moderate social programs, which have produced notable economic growth and considerable reductions in poverty. Current President Michele Bachelet has faced a number of challenges since her 2006 election. Widespread demonstrations over education, increased militancy by indigenous groups, and opposition control of the legislature have hindered President Bachelets ability to govern. 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. Bachelet has won considerable support as a result of her handling of the crisis, with her approval rating rising to 74% in July 2009. The Chilean government will likely spend the rest of 2009 continuing to cope with the effects of the financial crisis while political parties prepare for the December presidential and legislative elections. Chile has enjoyed close relations with the United States since its transition back to democracy. Both countries have emphasized similar priorities in the region, designed to strengthen democracy, improve human rights, and advance free trade. Chile and the United States have also maintained strong commercial ties, which have become more extensive since the bilateral free trade agreement between them entered into force in 2004. Additionally, U.S. officials have expressed appreciation for Chiles leadership and moderating influence in a region increasingly characterized by political unrest and anti-American populism. This report provides a brief historical background of Chile, examines recent political and economic developments, and addresses issues in U.S.-Chilean relations.

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