Chile’s Economy Strong Enough to Recover from Devastating Earthquake without International Aid

The earthquake and subsequent tsunami that ravaged Chile a few weeks ago has left an estimated $30 billion in damages. The amount is almost twice as much as economists have estimated for Haiti’s recovery from its devastating earthquake two months ago. University of Chile economist Joseph Ramos stated that "[R]ight now Chile isn't drawing at all on international relief funds." Chile’s new President Sebastian Pinera has stated that Chile does not need international aid or generous loans to recover, “we will draw on foreign credit with moderation." This is very impressive.


Chile’s economy is very strong, thanks in part to robust profits that previous Chilean presidential administrations saved away in better times. Chile has several sovereign wealth funds totaling in the billions from the sky-high copper prices over the years. Chile is the world’s biggest copper producer, accounting for about 35% of global output. As a result, Chile will be able to finance much of its own reconstruction from last month's disaster. President Pinera is, in part, benefiting from the financial acumen of Chile former President Michelle Bachelet, Chile's first woman president. During former President Bachelet’s administration, Chile's Government continued to save profits from record-high copper prices. The savings is currently totaled at approximately $11 billion of surplus revenue from copper exports. Chile Government’s multi-presidential-administration-savings-plan is perhaps a concept that “developed” countries should learn especially given the economic turmoil that has existed in the U.S. and Europe during the past two years. The concept of preserving the future by making sound fiscal decisions in the present is not a philosophy that is practiced in many "developed" nations. We need only look to the massive national debts of North American, and Europe nations for confirmation.


Carlos Felipe Jaramillo, the World Bank's director for the Andean region, applauded Chile’s financial condition, “I haven't seen a country in such a favorable position to address a natural disaster in a long time. They are in fabulous standing with us and have a tremendous capacity to respond." In addition, to Chile's $11 billion in surplus, Chile’s private sector is expected to recover more than $3.5 billion in insured damages. Furthermore, Chile also has strong domestic financial markets on which it can rely, before it needs to turn to foreign loans — and when it does reach out to international creditors, Chile can attract low interest rates with its excellent fiscal record and minimal debt.


President Pinera has made it clear that despite Chile’s sound economic footing, reconstruction will not be easy. He has called for "tremendous austerity" in government spending. Nonetheless, Chile’s ability to recover from such a devastating natural disaster without or limited international assistance should be applauded, studied and emulated as a model for developing and developed countries a like.

En Chile: Dónde están los peruanos?

Two of the first known victims of last month’s Chile earthquake were Lurde Margarita Arias Dias, a Peruvian immigrant and her infant daughter, who died when their apartment collapsed on them as they tried to escape. (See Frantic Rescue Efforts in Chile as Troops Seek to Keep Order, NYT. February 28, 2010). A large Peruvian immigrant population makes its home in Chile, mostly segregated in the workforce by gender. The women perform domestic work and the men work in construction. Now that Chile is starting to pull itself together after the earthquake, the question come to mind: Dónde están los peruanos? Where are the Peruvian victims? How many other Peruvian immigrants have been the victims of this natural disaster?

We all know immigrants are the most vulnerable of any population, and this is worse during natural disasters. Dean Kevin Johnson deftly told us the story of what happened to immigrants during Hurricane Katrina (see his 2007 piece, Hurricane Katrina: Lessons about Immigrants in the Modern Administrative State in the Houston Law Review.) The situation of the Peruvians in Chile is shaping up to be equally difficult. The influx of Peruvian migrant workers in Chile is widely known, as is their mixed reception from the native Chileans. At present there are an estimated 85,000 Peruvian immigrants in Chile, or about 21% of the total immigrant population. They arrived during the strong economic boom in Chile after 1996. They are the second largest immigrant group after the Argentines. Even with these large numbers, they are not full participants in Chilean society. There are two reasons why Peruvians are excluded from mainstream Chilean society—first, because of their perceived tight knit group (for exaple there is a section of the city of Concepción commonly called Pequeña Lima (“Little Lima”). Secondly, in comparison to the immigrants from Argentina and Ecuador, who are typically professionals, technical workers or students, the majority of the immigrants from Peruvian migrant is that of an unskilled laborer.

Last week, Peruvian President Alan Garcia visited some of the Peruvians in Chile. When he returned to Peru, he took with him approximately 30 of his compatriots back to their country. While this is fortunate for these Peruvians, help for the rest of the victims of the earthquake is slow in coming For example, according to news reports, an eleven day old baby and a one month old infant girl are not being provided any services because of their “lack of papers.” “There is no food, no cash, nothing..” is what some Peruvian immigrants are saying. No Peruvian consular officials have been to visit the immigrant victims. Many are living in tents, and winter in the Southern Hemisphere is soon approaching. The Peruvian and Chilean governments must act swiftly to meet the needs of this population. The fact that they are immigrants should not act to their detriment in these difficult times.