MercoPress. South Atlantic News Agency

Chilean Armed Forces reap copper bonanza benefits

Chile's armed forces will receive 1.2 billion US dollars in 2006 from the state-owned copper company, Codelco.

Pinochet-era law mandates that Chile's armed forces automatically receive ten percent of Codelco's gross sales. Through the first nine months of 2006, the armed services have received over 971 million US dollars.

Codelco is benefiting from soaring copper prices as a result of a strong international demand for the red metal, led by China. Copper sold for 3.3 US dollars per pound at the London Metal Exchange on Tuesday.

Chile first tied copper exports and military funding together in 1958 when a law was passed placing a levy on mining companies' sales. The military government later extended the rule to Codelco, which was obliged to contribute a minimum 210 million annually to the armed forces the final year of the military regime.

This mandatory defense spending arrangement may soon end. A task force led by Defense Minister Vivianne Blanlot is currently reviewing the law and working on the future funding alternatives for Chile's Armed Forces.

Blanlot said in June that the government of President Michelle Bachelet will ask Congress in early 2007 to allow the earmarked funds to be used for other purposes.

"It's a lot of money. Not all of it should end up with the Armed Forces," said Deputy Francisco Encima, a member of the national defense committee in the Chamber of Deputies in October.

Encima believes Codelco's contributions to the military could be better spent to improve health care and schools.

By Morten Szygenda The Santiago Times