T.D.L.: Chile confirmed its economic recovery in 2004 by posting a 6% growth rate, bolstering its position as Latin America’s most stable economy. In November 2004, your country opened negotiations with China on a bilateral free-trade agreement. Has President Lagos’ drive for greater economic openness helped boost the Chilean economy? Given the wide potential of the mining sector, does the Chilean market offer foreign investors any special advantages?

H.E.H.S.: Economic development is the second key area targeted by the Lagos administration, which has encouraged greater economic openness and the development of new infrastructures. Chile has   successively signed free-trade agreements with the world’s major markets: Mexico, Canada, the United States, the European Union, and the countries of Central America. We are currently discussing the terms for agreements not only with China, but also with New Zealand and Singapore. Access to all these markets, unfettered by trade barriers, is very important for our country. Exports are the driving force behind the Chilean economy, accounting for 35% of GDP. Aside from the free-trade agreement with Mexico and Canada, our agreements with the United States and the European Union were signed under President Lagos.

This drive for greater economic openness has gone hand in hand with substantial investments in infrastructures, including the construction of new roads, ports and railways. We have also set up a concession system. Private investors are now financing the construction of new roads, for example. They   will be allowed to collect tolls for a period of twenty years, and thus recoup their investment. After that time, management of the roads will be handed back over to the State. This system was expanded to include the construction of prisons, and, more recently, of new hospitals. This keeps State funds from being tied up in sectors where there is no immediate return on investment, and use them instead to advance the government’s social policies.

With the country’s   faster economic growth, we will also be able to   count on a sharp rise in foreign investment flows in the coming years. This is true in the mining sector, as well as the agricultural and agroindustrial sectors. Investors from the European Union, along with the United States, account for a big share of this market. China is also interested in the investment opportunities offered by the Chilean mining sector, and is considering the possibility of either entering into partnerships to run already existing mines, or to begin mining new deposits. Copper accounts for 45% of Chilean exports. It has become a key economic mainspring, with enormous growth potential. Chile’s copper output has doubled since 1990, with exports continuing to rise thanks to strong world demand, spurred by the acceleration of the industrialization processes in China and India. We are consequently looking to open up new mines. However, there are no plans to privatize Codelco, because of its great profitability for the Chilean state as well as the fact that it is a key source of technological and scientific development for our economy.

T.D.L.: Could you tell our readers about the strides that have been made in the fight against poverty and unemployment?

H.E.H.S.: After 1999, like so many other countries, we felt the impact of the Asian financial crisis. Chile’s unemployment rate jumped all the way to 12%.   It has since dropped back down to around 8%. Our country’s employment problem is also the result of a structural gap between the modernization of the economy and the training level of its work force, much like the gap experienced in France. An entire segment of the population can no longer find work, because it lacks sufficient technical skills. Unemployment is however dropping off, due to an increase in demand for Chilean products around the world, which is boosting our economy and consequently creating new jobs. We hope that a 6% growth rate will push unemployment   back down to around 5-6% in 2006. The government has also launched an entire package of measures to create continuing education systems in order to meet our need for skilled laborers in a variety of activity sectors. From this standpoint, we also have great hopes that foreign investments will help adapt the Chilean economy to meet the new needs generated by the trade agreements we have signed. With customs barriers abolished, for instance, we could export value-added industrial products to the European market starting in 2013. This is a very important prospect for Chilean export products such as copper and seafood. The trade agreements signed by Chile in recent years, with the trade advantages they bring us, represent a powerful new driving force for the national economy, in that they are creating extensive investment needs and generating new job sources.  

The Chilean government set up a special program called «Chile solidario» that has enabled us to identify the country’s poorest 300,000 families. We now know where they live, their income, their social problems, and whether or not their children attend school. As part of this program, the government hired a professional to work directly with five families. It is his job to check if the subsidies they are supposed to receive actually arrive, and are indeed being used to meet their needs. He also sees to it that their children attend school regularly. In addition, some 1.4 million breakfasts and lunches are being served every day in Chilean schools. Organizations have even been set up in certain neighborhoods that enable local women to prepare the meals for these schools, in accordance with health standards set by an agency that is part of the Ministry of National Education. The «Chile solidario» program is designed mainly for single-parent families. In the great majority of cases, this means women caring alone for one to three children, who represent the poorest segment of our society. Both the nature and the objective of this policy have been designed to reduce our Gini coefficient, which measures internal income inequality. Chile ranks   among the ten lowest countries in Latin America in terms of its Gini coefficient. But if we include the subsidies given to our poorest families, their income doubles, which corrects Chile’s Gini coefficient.

As concerns our social policy, President Lagos’ government has also devoted considerable efforts to improving access to housing. 120,000 new publicly subsidized housing units have been built every year for the past five years. This policy has had a tremendous impact, making more low-cost housing available and easing the   housing shortage experienced in the past by our poorest citizens. These are quite modest, modular 35m2 dwellings, which allow homeowners with sufficient savings to add on another   slightly larger upper floor. In order to favor our poorest citizens and prevent speculation, we have banned the resale of these units for a given number of years.

In the educational arena, the number of classrooms has practically doubled. Schools have also been equipped with computers. We have also reformed our primary education system, and are now assessing the best way to reform secondary education. In the health care arena, the budget earmarked for this sector increased 60% between 2004 and 2005. Even more significantly, the portion set aside for primary health care jumped from 14% to 30%. We have also introduced a   reform that guarantees the reimbursement of medical expenses for a certain number of illnesses, according to a sliding scale based on personal income. With the previous co-pay system, someone suffering from an illness that cost 30,000 euros to treat, with a monthly income of 470 euros, would have spent his entire life in debt. Now he pays just 10% of his annual income. The rest is paid by the State or the health insurance plan. This is another area where the government has made radical changes, especially for Chileans with the lowest incomes.

T.D.L.: In a report issued last May, the OECD praised the great progress your country has made over the past ten years in protecting the environment. Will you be able to sustain these efforts with the economy growing so rapidly, especially in the mining sector? What is your country’s view on the best way to curb the negative impact of climate change on Antarctica, which has 90% of the planet’s ice?

H.E.H.S.: Chile has, indeed, made considerable progress when it comes to protecting the environment. The mining sector may well be the area that has made the most headway from this standpoint, following the lead of Codelco as well as private companies. The sulfur dioxide emitted by large smelting works is reprocessed into sulfuric acid, which is then reintroduced into the mining production chain. Environmental investments have proved to be profitable in this area. We have also launched a policy for reprocessing the industrial and toxic waste built up over the decades. Another major part of Chile’s environmental policy in the mining sector involves optimizing water use during the mining production process, especially in the desert regions in Northern Chile where the biggest mines have been opened and water is growing scarce.

In the agricultural sector, we have introduced new techniques that curtail soil erosion. The Chilean government has granted private investors subsides for the past twenty years, so they can plant new trees designated for industrial use on partially eroded lands. This policy has led to the creation of more than two million hectares of forestry zones, planted primarily with conifers and eucalyptus that are used in the pulp industry. Most of the pulp and paper produced in Chile is made from wood taken from these trees, and not from wood taken from native forests. In fact, the Parliament is currently debating a draft for a new law on native forests, which includes special incentives for rehabilitating zones that have already been logged. You must realize that Chile is losing roughly 0.5% of its native forests every year, which is a considerable amount. To curtail this trend, President Lagos has launched measures to create national parks in the regions where the forests have been spared. Six hundred thousand hectares of land have already been designated as national parks. A few years from now, Chile will have more temperate zone virgin forests than any other country in the world. On a wider level, this initiative helps preserve part of the history of the Earth that is still unspoiled by man. We have also taken steps to combat pollution from fertilizers and pesticides, though the problems we have encountered in this area are different than those experienced in Europe, which has wide plains and slow-flowing rivers. The rivers in Chile run very fast, rushing down to the sea from a cordillera that rises to a height of 3,000 meters, at a speed of 150 kilometers an hour, which flushes polluting agents out into the ocean. It is however true that we do have problems, such as ground water pollution. The extent of this problem is currently under study.

Under President Lagos’ administration, the volume of urban waste water that is being reprocessed has increased from 20 to 70%. These efforts have been accompanied by studies on water rehabilitation and on ways to control illnesses transmitted by humans. Considerable efforts have also been made to control air pollution, especially in Santiago. And while it is still a highly polluted city, pollution levels have been cut nearly in half by the past ten years. These measures are also starting to bear fruit in other major urban areas across Chile. Unfortunately, the crisis in Argentina, which supplies Chile with natural gas, has forced us to go back to using fuel oil for various activities, to the detriment of less polluting fuels. This is the case in our smelting works and a handful of thermoelectric plants. In that light, it is extremely important for us to find new supply sources for natural gas.

The melting of Antarctic glaciers is clearly a serious problem. We have felt the impact of this shift directly, with Chile’s own glaciers shrinking by several kilometers. We have also felt the increase in ultraviolet rays pouring through the hole in the ozone layer located directly above our country. There is a risk that this could transform our flora, and, to a lesser extent, our fauna. It also spawns public health risks, with an outbreak of cancers linked to overexposure to ultraviolet rays. Chilean authorities have set up systems that monitor the intensity of ultraviolet rays, encourage prevention, and heighten public awareness of the problem. But we remain more or less helpless before this problem. All we can do is resolutely support all international control measures. Chile has signed the Kyoto Treaty. We are also working to preserve our forest zone, which helps regenerate the air. We would even be willing to sell pure air produced in our forests, as has been suggested. But we have very limited means for battling this problem, which concerns, first and foremost, the world’s big energy consuming economies.

T.D.L.:   Since his election as Secretary General of the Organization of American States (OAS) last May, former Chilean Interior Minister Jose Miguel Insulza has laid special focus on strengthening the body’s role in preventing and managing crises in the hemisphere. In the same vein, Chile sent troops into Haiti as part of the UN peacekeeping force. What is your country’s position on the best way to bolster democracy on the American continent?

H.E.H.S.: Generally speaking, Chile supports all democratization processes   in Latin America and all initiatives to preserve democracy on the continent, where all the governments have been democratic in the last ten years   despite several crisis that we had to adress within the framework of our republican institutions. Chile has also worked with the United Nations to stabilize Haiti, sending in both military contingents and police forces to help manage the crisis. The Organization of American States (OAS) is a regional body that focuses entirely on preserving democracy in Latin America. It does so by monitoring election processes and voter registration, as well as voting systems and balloting methods, in the various countries in this region. Chile is closely involved in these activities, which are monitored by Chilean observers. These rules are being enforced by sub-regional organizations as well as the OAS. Chile, for its part, will do its utmost to ensure these rules are respected and help South American nations maintain these standards. Intervening in the affairs of another country remains, nonetheless, an extremely difficult and tricky matter.

We hope to be able to help preserve democracy in Latin America without being forced to send multinational troops. It is true that peacekeeping forces are sometimes perceived as occupying forces. As I see it, the most important thing is to help governments preserve their democratic institutions using preventative measures, when the need arises. Consequently, there is no plan to set up a multinational intervention force to police Latin America at this time. Generally speaking, we have no plans to intervene, except in very rare cases such as Haiti, where we always work under the mandate of the United Nations or another international organization. Chile is determined to remain a staunch defender of multilateralism.

José Miguel Insulza’s election to the OAS illustrates our strong commitment towards the american continent.

T.D.L.: On 8 December 2004, South America’s twelve Heads of State gave rise to the South American Community of Nations. Given the frailty of the South American integration process, should we expect to see Chile working more closely with other regional organizations, starting with Mercosur? Has this project opened up new avenues for closer regional cooperation in the political arena and in the fight against organized crime, especially in the war on drug trafficking?

Chile has always supported efforts to boost economic and political ties between South American countries, an idea we hold dear to our hearts. However, our country’s economy has a production capacity that is not always equaled by markets in other Latin American countries. You can well understand that, as the world’s leading copper producer, it is very hard for us to target our exports solely to regional markets. As concerns the food sector, other countries in the region produce the same products as us, such as Argentina, Uruguay and southern Brazil. We cannot export our products to these regions at a good price. What’s more, our economic development model has made us ease our customs’ barriers considerably, which has not been done in other Mercosur countries.   We thus decided to sign an association agreement with this organization, while continuing to promote stronger political integration. We cannot exempt products from Mercosur countries from customs duties, while agreeing to let them slap a tax on our products to enter their markets. Given the imbalance between our economies, full economic integration is not possible at this time. In fact, it is going to take a good while to overcome this gap. Our efforts in the regional arena are thus focused on strengthening political integration. This is why President Lagos signed the Cusco Declaration and has strongly supported the position taken by Brazil, which is trying to further the South American integration process that we believe is a natural step forward. We must keep moving ahead in this direction, which Simon Bolivar deemed only “natural” a full two centuries ago.

South America is, indeed, facing a number of problems linked to drug trafficking. Chile has become a regional hub for exporting these products to markets in North America and Europe. Our country is helping fight drug trafficking by cracking down heavily on drugs coming over the border into Chile and even more so on drugs going back out. We are also making large drug seizures. The battle against money laundering is another key element in overcoming this problem. There is wide regional and international cooperation in this arena. We belong to the OAS’s Convention against corruption and   to special groups that focus on fighting corruption and money laundering, most notably within the OECD, where our country has observer status. This cooperation is important in that we know moneys have been funneled into Chile when our country has shown high returns in the stock and real-estate markets.

T.D.L.: As a non-permanent member of the UN Security Council, your country voiced its opposition to the US intervention in Iraq. That did not, however, prevent a free trade agreement signed by Chile and the United States from coming into effect on 1st January 2004. How would you describe current relations between Santiago and Washington?

H.E.H.S.: Chile and the United States have very good political and economic relations, bolstered by especially close ties in the trade arena.   In fact, the United States is our number one trading partner. US firms have made substantial investments in Chile, most notably in the mining sector but in other areas as well. In the political arena, we have differing views on a number of issues that we have not hesitated to voice. Multilateralism has become of paramount importance not only to our own country’s political life, but to that of numerous nations around the globe. We consequently voiced our opposition to the American intervention in Iraq, which brushed aside planned United Nations procedures for proving whether or not this country did indeed possess weapons of mass destruction. We voiced our position as matter of principle, to preserve the solidarity of the multilateral system. In a stroke of luck, or misfortune, Chile was a member of the Security Council when the crisis broke out. Our position was undermined, however, by the US government and the American Congress.

But to get back to your question, while the Chilean economy is small compared to its American counterpart, it nonetheless complements this larger economy very well. We have high quality and very competitive products. Our foothold in the American market is not a given. It is due, above all, to our hard work and to the determination of the Chilean government to carve out a share of the international market with quality products.

T.D.L.: What are your thoughts on the problem of nuclear proliferation, and more specifically the Iranian nuclear question?

H.E.H.S.: Chile was behind the enactment of the Tlatelolco Treaty for the prohibition of nuclear weapons in Latin America. Our position on this issue has always been crystal clear. We must prevent the proliferation of nuclear weapons at all cost, which means tightening control over the entire uranium enrichment industry. There is always a risk that a nuclear conflict could spark a worldwide conflict, which would affect our own country, even if it laid outside the theater of operations. We thus support the discussions and measures launched by the International Atomic Energy Agency, and the stance taken by the countries of Europe, with the goal of preventing Iran from becoming a new nuclear power. We want the European Union and the permanent members of the Security Council to continue working to curb nuclear proliferation.

T.D.L.: In an illustration of Chile’s heightened role on the international stage, President Lagos has joined a French-Brazilian campaign to find funding for the battle to wipe out hunger around the world. In light of the recent cancelation of the debt of the world’s poorest countries, what do you think should be done to foster these countries’ economic development? The debate over the proposed reform of the United Nations has given rise to ambitious plans. Are you pleased with the results of the 60th UN General Assembly?

H.E.H.S.: The cancellation of the debt of the world’s poorest countries is, without a doubt, an important step forward. But we must create effective mechanisms for managing development aid as well. I believe this is the biggest challenge facing us today. We must find a way to ensure that funds earmarked for development aid are really reaching those who need them the most and are helping create new development vectors. The other key aspect in resolving the problem of the poorest countries is creating trading conditions that foster their development and eventual integration into the international market. To that end, we must first of all do away with factors that create unfair competition, such as agricultural subsidies. President Bush recently announced that he was ready to stop subsidizing American agriculture, on the condition that other countries do the same. Taken at his word, Bush’s declaration opens up excellent prospects for moving in this direction. It is now up to Europe to take a stand. Just for your information: the European Union spends as much on agricultural subsidies in just one day, as it does on its global African aid package for an entire year.

The last United Nations summit is often alluded to as a failure. In my opinion, we need to take a more nuanced view that takes the advances that been made into account as well. At the United Nations Summit of Heads of State or Government, for instance, over sixty countries agreed to consider the Franco-Chilean initiative put forward by President Chirac at the beginning of the year that calls for a tax on airline tickets. At the summit, Chile finally announced the implementation of this measure starting 1 January 2006. Though clearly a modest move, at just two dollars per airline ticket, in comparison to the Chilean economy it is nonetheless a considerable amount. The measure will raise over three million dollars in funds, which can be used for initiatives that foster development in the poorest countries or combat terrible scourges such as AIDS. Who would have thought, back in September 2004, that such a measure was imaginable? Along the same lines, the initiative to fight hunger around the world, launched by presidents Lula and Chirac and later joined by President Lagos, has won support from the head of the Spanish government President Zapatero, former Chancellor Schroeder and President Bouteflika.

The United Nations General Assembly has also created a Human Rights Council to replace the Commission on Human Rights, which had well known problems with representativeness. The Council will be more restrictive in some of its stances and more independent in its interventions. And while it is true that there is still no final agreement on how it will operate, the idea to create a Human Rights Council is already a major step forward.

Finally, the idea of reforming how the United Nations operates has spurred wide-scale criticism and a good deal of proposals, especially on ways to make the Security Council more representative. We have begun to examine nearly 4,000 observations, including some one hundred from the United States. In the multilateral arena, one must know how to move forward in tiny steps and how to make concessions. The outcome of the UN summit has not been negative at all, though it may not be as optimistic as we would have liked. More specifically, there has been no headway in the reform of the Security Council, but discussions are already underway on the Secretary General’s proposals. As for the great stakes of this reform, the fact of matter is that the process has indeed been launched. And while many negotiations will inevitably have to be held, there is no cause for pessimism.

T.D.L.: In November 2002, Chile became the very first Latin American country to sign a political and economic Association Agreement with the European Union. What can be done to further strengthen bilateral ties on both sides of the Atlantic, in the economic as well as the political arenas?

H.E.H.S.: Latin America has lost its market share in Europe. While several European countries, such as Spain, have made considerable investments in our region, in recent years most European investment has flowed into the East, for reasons that are only natural. The most effective way to improve our trade ties and help Latin America regain its market share in Europe would be to create a European market open to Latin American products. As to our own case, Chile and Europe have excellent economic ties. Our trade balance tips widely in our favor, which has allowed us to build up our currency reserves. This is not, however, true of all countries in the region. What’s more, a strong Europe would guarantee a truly multipolar world. It is of utmost importance for us to maintain the closest possible trade ties and political dialogue with a strong Europe.

T.D.L.: While Chile and France haven’t managed to build strong trade relations, they have forged extensive ties in the scientific and technical arenas. Could you describe some of the key cooperation successes for our readers? What could be done to expand bilateral exchanges and enhance Chile’s image in France?

H.E.H.S.: One of the lesser known aspects of Franco-Chilean cooperation has been the launching of an extremely active   cooperation program between our universities, run by our National Commission for Scientific and Technological Research. The program is designed to train doctoral candidates in a variety of disciplines, with special focus on exact sciences, mathematics and physics, as well as economics and agriculture. Nearly one-half of the scholarships granted by the Chilean government for higher studies or preparing a doctorate are awarded to students who chose to study in France. France is our leading partner when it comes to training our scientific and technical experts. Overall, it is the top foreign destination for Chilean university students who study abroad. As we speak, over five hundred Chilean master’s and doctoral candidates are studying in France. We hope to double that figure by the end of the decade. In an effort to make things even easier for doctoral candidates studying in France, we plan to create a special doctoral college between French and Chilean universities. This doctoral training program has already sparked a resurgence in the study of the French language in Chile. The number of students learning French dropped off considerably in Chilean high schools after the 1980s. The prospect of going to university in France has spurred renewed interest in French, which Chilean universities are once again teaching.

Chile and France have also established very strong scientific cooperation. The CNRS chose our country for its first research center on foreign soil. The center specializes in theoretical mathematics and is run in collaboration with Chilean universities and the National Commission for Scientific and Technological Research. We are working hard to heighten our

cooperation in this area even further.

We would also like to expand our cultural ties, especially as concerns cultural management, an area in which the French are renowned experts. We are currently looking at the best way to set up new training programs.

Chile and France therefore have very good relations in a wide variety of areas. President Chirac’s upcoming visit to Chile, which he announced at the last French Ambassadors’ Conference, holds out great hope for us. We hope it will help improve Chile’s image in France and boost not only our trade ties, but also our cultural and tourism exchanges. The tourism industry is starting to take off in Chile. And while the sector currently accounts for just 2 to 3% of GDP, it holds tremendous growth potential thanks to our people’s warm hospitality and the wide variety of landscapes and climates found along the long corridor that comprises our country. France is now our leading European trade partner. We hope to see your country retain this position, not only in terms of trade but also as regards investments, which are of utmost importance to our development and are also very profitable for French firms.