MercoPress. South Atlantic News Agency

Breaking News from Chile.

Headlines:
Clocks back one hour mark wintertime in Chile; Lan pays 50,000 US dollars fine; Chilean economy forecasted to grow 5,1%; Air and Space Show to promote stability; Controversy over copper surplus;

Clocks back one hour mark wintertime in Chile

Clocks in Chile were set back one hour Saturday night, officially signalling the beginning of winter time and giving Chileans an extra sixty minutes of Saturday night fever or an additional sleeping hour. The decision is based on a decree going back to 1970 when it was established that the official Chilean time would be advanced sixty minutes on the second Saturday of October and set back sixty minutes on the night of the second Saturday of March. The purpose of the change form summer time to winter time is to save energy and take advantage of natural light.

Lan pays 50,000 US dollars fine

Lan Chile, the country's main carrier finally paid a fine equivalent to 50,000 US dollars that had been imposed last July 2003 by the Chilean Finance Prosecutor for having contravened 37 times the air fares self regulatory agreement accepted by the company when she took over Ladeco in 1997, virtually eliminating all significant competition in domestic flights. The Santiago newspaper, "El Diario Financiero" reported that Chile's main airline paid in early March the fine recommended by Finance Prosecutor Pedro Mattar. The company had decided not to appeal the decision. Since 1997 particularly involving flights to the extreme areas of Chile, there have been growing claims that Lan Chile is acting in a "quasi-monopoly" attitude regarding air fares and time schedules. Specific complaints have been filed by Punta Arenas business organizations and from parents with students in Santiago, among others, which were later taken to Congress by Magallanes representatives forcing the intervention of the Chilean Finance Prosecution Office. Andres Pivcevic, CEO of Punta Arenas based family owned airline DAP which was forced out of the Punta Arenas-Santiago route in 1997, was rather ironic about Lan Chile's decision to pay the fine. "It's a mere formality, and a very bad signal", indicated Mr. Pivcevic recalling that the original recommendation of the Finance Prosecutor was a fine equivalent to half a million US dollars, "a tenth of what Lan Chile effectively paid; no way would they appeal". Mr. Pivcevic emphasized that Lan Chile persists with its attitude and bullying tactics recalling that the company's president recently visited Punta Arenas and "discovered we're isolated and suggested that the best solution for the problem was more competition, what's he talking about?, he's poking fun of us". DAP airlines have an eight year court litigation with Lan Chile that began after the Chilean flag carrier forced DAP out of business in the Santiago-Punta Arenas route with a "fares war". "It's hard to understand the "generosity" with fines; this only helps or incites Lan Chile to continue committing illicit actions or ignoring the self regulatory fares accord. They end paying a minimum fine and things remain unchanged, they continue to abuse Santiago and regional air commuters", highlighted Mr. Pivcevic.

Chilean economy forecasted to grow 5,1%

Chile is forecasted to grow 5,1% in 2004 according to a report from the Business Administration Department of the University of Talca. The report is based on the encouraging data from different variables, investment, employment, trade and opening of the economy which should spur the country's GDP. "The most relevant expansion sources for this year will be trade and investment that are forecasted to grow 9% and 4%, basically because of the higher commodities prices that are relevant for Chile in international markets, with employment growing 2,5% over last year bringing the average unemployment rate down to 8%2, point out Arcadia Cerda, dean of the Business Administration Department. Mr. Cerda further on points out that there's greater space for expansion given the improvement in employment, the advance in investment that is expected to reach 25% of GDP, plus the benefits of the free trade agreements with the US and EU. However the greater impact of the free trade agreements will only be felt strongly beginning 2005 after two consecutive years of relative growth, 2002 and 2003. "The reason for this is that the benefits of greater trade to not have an automatic impact in the economy and sometime must elapse before the positive aspects of greater trade trickle into the economy, as well as the direct consequences", said Mr. Cerda. The optimistic outlook extending well into 2005 however is conditioned to the continuing expansion of international markets and trade with the sufficient strength to keep a robust level of investment. Mr. Cerda finally cautioned that much will also depend on how the surplus income generated by the rising price of copper is employed.

Air and Space Show to promote stability

Regional stability and mutual trust among Latinamerican countries will be analyzed by experts from over thirty countries that will be present at the XIII International Air and Space Fair, (Fidae 2004) to be held at the end of the month in Santiago de Chile. "We expect 50,000 professional visitors and 200,000 general public while the fair is open", anticipated General Patricio Gaete Yantén, Fidae 2004 president, who added that 251 companies from 32 different countries plus fifteen Defence ministers and seventeen Air Force commanders will be participating. Scientific, technological and air industry development will be one of the highlights of the show, but "we also wish to contribute to generate mutual trust among Latinamerican countries". United Nations will be sponsoring several conferences emphasizing on stability and cooperation. The show will be made up of 51% of air industry equipment both civilian and military, "13% defence and 36% spares, robotics, flight simulators, technological advances", said General Gaete Yantén. Fidae 2004 will be located in the grounds of the military airport Los Cerrillos, 20 kilometres from downtown Santiago. Exhibitors will have 125,000 square meters of open space (for parking aircraft and equipment) and 20,000 roofed square meters. According to Chilean Air Force Colonel Alonso Lefno, Fidae 2004 CEO, 50% of exhibitors are from America, 32% Europe, 10% Africa, 7% Asia and 1% Oceania. Exhibitors will be bringing 115 aircraft to the show. Among the commercial units, Airbus 318; Dassault's F900 and the W3A Sokol helicopter built in Poland. Among combat units, the US built F-16; the British early alert E3D Sentry and the Hercules C-130 H3 a multipurpose cargo that can transport military equipment, troops and or aid and medical personnel. Colonel Lefno anticipated that Fidae 2004 expects business contracts during the show, particularly short range commercial aircraft and multipurpose helicopters, to reach 300 million US dollars. Among the scheduled entertainments to enjoy are the special acrobat groups of the Brazilian and Chilean Air Forces and a demonstration from the US parachutists "Wing of Blues".

Controversy over copper surplus

Congressional members from the Chilean opposition have requested the government to publicly inform how the unexpected surplus generated by government overseas sales of copper will be used. Conservative Deputy Carlos Vilches anticipated he will be demanding an alternative budget draft, to be discussed in Congress, clearly establishing how the "fresh" funds from copper will be invested. Mr. Vilches highlighted that the current Chilean budget was estimated based on an international copper price between 83 and 88 US cents the pound, but since the end of 2003 and so far in 2004, copper has jumped to an average of 119 US cents. Apparently every one cent increase is equivalent to an additional income of 120 million US dollars for the Chilean government since copper is still the country's main export and foreign currency earner. The Chilean government has said that the surplus income will be destined to repay debts and pending credits, and savings. Chile has a Copper Compensation Fund which generally manages the copper surplus and which in 1997 stood at 1,8 billion US dollars. However the later collapse of the international copper price, under president Eduardo Frei and the first half of current President Ricardo Lagos left the Fund with a mere 74 million US dollars. Congressman Vilches proposes the resumption of development projects, further incentives for the economy and strong "Buy Chilean" campaign to promote domestic industry. Under former dictator Augusto Pinochet the Chilean Armed Forces were entitled to a share of the surplus income from copper for re-equipment of military material.