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Breaking News from Chile

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Encouraging cruise season; Protecting livestock sanitary conditions; Chilean-Argentine integration; Controversial privatization; Bulging budget; More government responsibility; President Lagos bangs the table

Although the number is still not official, Empresa Portuaria Austral, EPA, that manages Punta Arenas port, announced that this coming season at least sixty cruise vessels will be stopping in Punta Arenas and Puerto Natales. Mr. Eduardo Manzanares, EPA's, Operations Manager said the numbers were very encouraging since they reflect an increase over last season. "We have sixty cruise vessels confirmed so far for the 2002/03 season, according to maritime agencies, which is most positive", indicated Mr. Manzanares. Last year Punta Arenas' inaugural cruise was the "Ryndam" on November 19th 2001, totalling 41 vessels plus another 29 from Terra Australis. Mr. Manzanares pointed out that last year cruise companies were very demanding regarding security measures, both for passengers and the vessels, "so this season in anticipation we have all prepared, which unfortunately I can't reveal for security reasons". EPA's Operations Manager added that the company will be investing one million US dollars in the coming five years to remodel the Arturo Prat jetty. "It's the main jetty for cruise vessels and it's seventy years old, so the refurbishing program should give us an additional horizon of 20/30 years".

Protecting livestock sanitary conditions

Conserving and protecting sanitary conditions of Magallanes Region cattle was considered the top priority for local farmers following two days of debate during a Livestock Conference held in the Puerto Natales campus of Magallanes University. "We're trying to create awareness among farmers that the introduction of cattle from other parts of Chile, or the world, could be hazardous or imperil sanitary conditions in our region", said Mario Vega vice-president of the Magallanes Farmers Association, one of the organizers of the conference. Mr. Vega said that the Chilean Livestock Service can't legally impede the introduction of animals from other regions, "at the most it can delay them", so the majority opinion among Magallanes farmers is that "we self impose a quarantine or strict introduction control so, hopefully, we can ensure the unique livestock sanitary conditions we enjoy". Magallanes farmers are divided as to ways of improving the commercial qualities of local cattle, either through artificial insemination or the introduction of animals from other regions or from the rest of the world. In either option, the risk of introducing exotic or unknown diseases to the area has been a permanent issue of debate. One of the invited speakers to the conference was a Uruguayan agronomist, Mr. Miguel Lázaro who gave an in depth description of how foot and mouth disease, in spite of the strict controls, managed to slip into Uruguay, causing tremendous losses in sacrificed cattle (with the sanitary rifle) and money, plus leaving the country out of the privileged non FAM circuit.

Chilean-Argentine integration

Once the "integrated border control" system in the main Argentine-Chilean crossing, Mendoza-Valparaíso, which begins next September, proves effective, it will be extended to Patagonia, according to Argentine Ambassador in Santiago, Mr. Carlos de la Rosa. During the discussions of the bilateral Argentine-Chilean Border Committee in the extreme south, identified as "Austral Integration", which took place last week in Ushuaia, it was announced that after a trial period in the Christ Redeemer pass, the system will be extended to crossings in Patagonia, "helping to promote physical integration, tourism, culture and energy complementation". The integrated border control system basically means that there's an only border check, on either side, but so far is only applicable to people. "Both countries have treaties and ample legislation, and regulations, approved by both Congresses so it's only a matter of moving forward", said Ambassador de la Rosa. Regarding complaints about lack of an appropriate Customs infrastructure in some Argentine crossings, Mr. de la Rosa indicated that at the moment "we're the most interested in improving them since tourism, particularly from Chile, has become so important for our recovery". Supplying Argentine natural gas to Chilean locations in Tierra del Fuego is another issue under consideration and apparently quiet advanced. "I don't have details of the Puerto Williams natural gas provision project but Argentina supplies Santiago and in the north to the Chilean mining industry, so why not also in the South", said Mr. de la Rosa. Chilean Consul in Ushuaia Pedro González added that another aspect of the Austral integration project is to offer a full "bilateral-package" to tourists. That is to include Puerto Williams in Chile, as a natural extension to Ushuaia visitors. "Puerto Williams is just across from Ushuaia so we could easily begin by supplying the place from the Argentine side instead of all the way from Punta Arenas", stressed Mr. Gonazález, who revealed that there are 4,000 registered Chileans living in Ushuaia. "Most of them are in the gas industry or in carpentry and they are much respected for their skills and commitment to the local community, which is a practical example of sound, people's integration for all of us". Ushuaia population is estimated in 50,000.

Controversial privatization

Chile's Congressional Energy Committee is collecting information on electricity rates in Magallanes Region, before and after privatization, given consumers constant rip off complaints about excessive rates. The findings of the Committee could have consequences for the current privatization process of the Punta Arenas water and sewage systems. Congresswoman Cristian Zarko Luksic in a long presentation to the Committee underlined that given the remoteness of Magallanes, the region has "basic services such as electricity, gas, running water, air transport, that in real terms operate under a monopoly system with perverse consequences for the consumers", and requested an in depth study before proceeding "to privatize the water works system". Ms. Zarko Luksic pointed out that before the privatization of the electricity system in Punta Arenas, in 1988, rates in Magallanes "were reasonable". However since then and particularly until 18:00 hour rates in Punta Arenas are 42% above those in metropolitan Santiago. "Our information to July 2002 indicates that a residential kilowatt hour in Santiago costs 54 Chilean pesos (less than ten US cents), while in Punta Arenas the privatized company is charging 77 pesos that is 42% dearer". Another important factor pointed out by the Congresswoman was that privatized Punta Arenas Edelmag generates electricity from natural gas supplied by ENAP, the oil government monopoly. "Edelmag purchases natural gas at 98 US cents per million BTU, while in central Chile the other privatized utilities have to pay between 2,6 and 3 US dollars per million BTU", said Ms Zarko Luksic adding that "it's hard to understand if natural gas costs a third here in Magallanes than in Santiago, how is it possible rates are much more expensive, which besides discourages investments in the area". Finally Ms. Zarko Luksic said that if the privatization of the water and sewage system finally goes ahead, re investment of revenue in the area, forecasted in the contract to be 10%, "should be increased to at least 20% and even 30%".

Bulging budget

A bulging budget and a proliferation of contracted officials is the latest area of contention between Punta Arenas municipal authorities and the permanent staff, according to the city's press. Zaira Smith, president of the municipal employees association claims that a growing number of "contracted officials" are being incorporated to Town hall, mainly sponsored by the political system, while the city's finances are "in disarray", permanent staff is not receiving their incentive bonus, and when "we protest we're told they've run out of funds and are requesting assistance from Santiago". "The latest municipal resolutions, dated June 28th., indicate that 86, 14 and 13 people have been directly contracted under different systems, without any previous consultation, some with rotating three months contracts, but absorbing a considerable share of the funds appropriated for Personnel", said Ms. Smith. The situation apparently is not new. In 1999 a similar claim was done by the municipal employee's association arguing that the "excess contracts" amounted to 250 people, equivalent to an annual disbursement of approximately 1,5 billion pesos (equivalent to two million US dollars). However the number of "contracted staff" in 2002 has ballooned to 400 at an annual cost of 2,2 billion Chilean pesos, equivalent to almost three million US dollars. "Quiet a few of them end as "advisors" in different areas to the Mayor or cabinet members, with incomes that to a normal employee would involve 15/20 years of impeccable record", said Ms. Smith. "Political influence, political support, is the main ingredient for this situation that now faces a legal problem, since Chilean municipalities are banned from spending more than 35% of their revenue in staff payments", added Ms. Smith. Apparently Punta Arenas annual disbursement in staff this year will reach 5,8 billion Chilean pesos, equivalent to 37,93% of the total city's budget. When questioned about the claims by municipal employees, Mayor Juan Morano said he was unaware of an "excess of staff", adding that "this is not what Department Directors tell me", and "actually we even have less staff than legally allowed".

More government responsibility

A more responsible attitude from local and national government regarding employment promotion incentives for the Magallanes Region was suggested last Sunday by Prensa Austral in its main editorial. One of the incentives granted by the Chilean government to promote investment and employment in remote but strategic regions is a special bonus when contracting additional staff, based on the fact that in a market oriented economy the private sector has the initiative. However experience and several Court rulings, according to Prensa Austral, have limited this practice, curtailing employment and job creation opportunities. A similar limitative evolution has been experienced by D.L. 15 and the Austral Bill, legislation that supposedly should attract investments to the Magallanes Region with special incentives. This last week the Chilean Lower House Congress Extreme (remote) Zones Committee were in Punta Arenas in a fact finding and information gathering visit interviewing local residents and institutions regarding the issue since at the end of 2002 the special employment promotion expires and there are several proposals to extend it until 2005. If job creation is mainly the private sector's business, writes Prensa Austral, "it's indispensable that faced with Magallanes reality, governments act consequently recognizing and supporting this role. So far, experience involving the above mentioned stimuli, indicates the opposite".

President Lagos bangs the table

Chilean president Ricardo Lagos reaffirmed his authority and recommended the different parties of the ruling coalition, Concertación, to collaborate with his administration if the government is to be successful. Speaking during his regular weekend radio interviews Socialist Mr. Lagos addressed the recent infighting of the coalition, but also pointing out that "the President enjoys high levels of acceptance and popularity". "Support for the President is very high, and consequently I believe it'll be even better when there's a greater collaboration with the administration", warned subtly President Lagos. Chile's ruling coalition has been under strain over several issues mainly on how to stimulate the economy, be it by labour flexibility, pumping more money, lowering interest rates, promoting government paid jobs, plus a complete reform of the public health system mostly rejected by medical associations, who have anticipated a full stoppage for next November. Labour flexibility and the international bidding of Santiago's transport system, triggered a several days strike, isolated the country's capital and only ended when Mr. Lagos appealed to national security legislation. Privatization programs have been questioned, student protests against higher transport rates originated rioting and damages in Santiago estimated in over 50 million US dollars. Mr. Lagos electoral promise to create thousands of jobs has turned sour and unemployment in metropolitan Santiago particularly, is expected to exceed 10% before it begins to fall. His own Socialist party is divided as to how address a slower economic growth: follow Mr. Lagos and his market oriented, private investment promotion policies, or a strong government intervention and even possibly budget deficit. Mr. Lagos in his interviews also talked about the "leadership claims" from business associations during a recent economic forum and warned that next time "I bang the table I expect to have a greater level of support". "I make decisions", however Mr. Lagos admitted that this does not mean a "closed and automatic" support from all of the coalition legislators. Although still managing to avoid a major regional contagion from the Argentine situation, Chile's economy is declining and rock bottom copper prices, the country's main single export, have had an impact on activity and employment levels.