Punta Arenas: Old Frontier In a New Chile

BEFORE the Panama Canal was built, this little Chilean city at the tip of South America was a stopping point on the fastest route from New York to San Francisco.

Today Punta Arenas, located on a desolate coast along the Strait of Magellan, barely feels like it's part of the civilized world. It is the southernmost large city on the planet, with a little more than 110,000 residents.

Punta Arenas is marooned on a rock-strewn, wind-blasted stretch of Chilean Patagonia; the forbidding Andes Mountains line the horizon to the north, and Cape Horn and the wild waters of the Drake Passage lie to the south. Crowds of grizzled dockworkers, Chilean Navy personnel, and cargo-ship pilots still give the port a bustling air. But things are far different from Punta Arenas's glory days at the turn of the century. Fortunes were made here from sheep, coal, and shipping. During its heyday, Punta Arenas had more millionaires per capita than any other city in the world.

Today, thousands of free-grazing sheep roam the rugged landscape outside the city. And while container ships and fishing vessels regularly stop in this harbor, the shipping traffic is tiny compared to the freewheeling days before the Panama Canal stole the East-West ship traffic for good.

Up the coast a little north of Punta Arenas is a huge coal mine, designated on maps simply as la mina. The port used to serve as a coaling station for steamships on long voyages. The replacement of coal by diesel as the primary shipping fuel helped to undermine Punta Arenas's shipping role. But coal is still exported from the region.

Oil fields here and in nearby Tierra del Fuego are currently being expanded, giving new vitality to an otherwise sheep-oriented economy. In addition to sheep hides and wool, frozen mutton is exported widely from processing plants here.

The fishing industry has provided a base for the local economy since the city was founded in 1849. Trawlers bring in a wide range of seafood for local use and export. A ship pulls up to the pier loaded to the gills with prickly sea urchins. The catch is shoveled quickly into crates for export to Japan, where the salty creature is eaten raw and considered a delicacy.

Back in the city center, elaborate mansions line Punta Arenas's carefully ordered streets and a park-like central square. The wrought-iron details on the stately homes of the prominent Menendez and Braun families hint at the prosperity of the city's turn-of-the-century golden age.

Though an invasion is not exactly imminent, every Sunday at noon the Chilean military marches in full dress - rifles bared - through the town center. The parade unfailingly brings out a respectful crowd.

Experienced Punta Arenas visitors joke that the weekly event is geared to send a message to any Argentinians who might happen to be in the neighborhood. After years of Chilean-Argentinian rivalry, the nations maintain cool and businesslike ties.

TO get here from the main part of Chile by land, visitors must travel through Argentinian Patagonia. Local observers say that it is unlikely that relations will warm up soon between the two countries, but they are not looking for things to sour either.

Though this is the warmest season of the year in Punta Arenas, with lots of sunshine, it still gets chilly. Gales roar down out of the mountains with gusts of up to 90 miles an hour - bending the gnarled trees into fantastic shapes. In addition to the well-insulated sheep, a surprising group of animals has adjusted to living in this harsh climate, including (pink) Chilean flamingos, black-necked swans, and lesser rheas, which look like small ostriches.