Chile Struggles to Lift Burden of Pinochet Years

HAMSTRUNG by a lack of funds and an uncooperative parliamentary opposition, Patricio Aylwin is having difficulty dealing with the legacy of social injustice left by 16 years of military dictatorship. But Chileans generally are showing patience and understanding of the limits Chile's new president faces, and are ready to give the government time, say government officials and independent observers.

``There are a lot of social problems to deal with, but we are not going to go into debt to solve them,'' says Reynaldo Ruiz, a Planning Ministry official. ``Our message that resources are scarce ... has got through.''

The social inheritance when Gen. Augusto Pinochet Ugarte left office last March was ``disastrous,'' says researcher Dagmar Raczynski. The ``economic miracle'' that gave Chile enviable stability, she says, was achieved at a woeful human cost.

In 16 years of military rule, spending on education, health care, and housing fell by one-third. The number of Chile's poor doubled to 43 percent of the population. Unemployment and underemployment rose from nearly 10 percent to about 30 percent.

Since taking office six months ago, Mr. Aylwin has tackled only the most glaring needs. He increased the minimum salary from $60 a month to $86, boosted pensions, and doubled family benefits for the poorest Chileans.

In November, the government plans to increase public sector wages by at least the annual inflation rate, expected to be about 25 percent. But beyond that, officials say, they cannot do much now.

This is not only because General Pinochet's men wrote the 1990 budget. Aylwin's economic policymakers are also absolutely insistent that they will do nothing that might risk Chile's prospects for economic growth.

``Other countries in transition to democracy have taken care of wealth distribution, but have failed on the growth front,'' says Economy Minister Carlos Ominami. ``We are going to avoid that trap.''

His eyes are clearly on neighboring Peru and Argentina, where raging hyperinflation destroyed presidents Alan Garc'ia P'erez and Ra'ul Alfons'in.

``The government is determined at all costs to avoid the mistake Peru made, of enjoying two good years and then suffering a disaster,'' says Jaime Ruiz-Tagle, who directs a church-backed social affairs think tank.

The government has raised the money to pay for its highest priority programs, such as the minimum wage, by increasing taxes to bring in an extra $150 million this year. That helped, for example, pay for medicines when the Health Ministry found in July that it had already used up all its annual medicine budget.

But hoped for aid from abroad has not materialized. When Aylwin toured Europe earlier this year as president-elect, he thought he had secured promises of about $100 million in donations and low interest loans. ``But what happened in Eastern Europe distracted people's attention'' and diverted their generosity, says Roberto Gimenez, a social services administrator. Only $30 million has so far arrived.

In the longer term, the government is counting on economic growth to fund social projects. The national budget being drawn up will grow about 6 percent next year, says Mr. Ominami, ``and social spending will grow even more significantly than that.''

Even so, he warns, ``there are a whole series of social problems that we will not be able to solve even in our four years of office.''

At the same time, the nine senators whom Pinochet named, ensuring the opposition a majority in the upper house, are proving an obstacle to the government's social reform plans. Every piece of legislation must be painstakingly negotiated. At the moment, bills to restore workers' rights and start reforming the judiciary are being held up in the Senate.

Aylwin can at least take heart from the fact that the trade unions ``speak the government's language of moderation,'' as a European ambassador puts it. ``There is a general consensus among the population about what needs to be done,'' says the ambassador, ``and a great deal of maturity.''

That gives the government breathing space, Ominami says. ``Most Chileans see that we are putting the poorest peoples' interests first.''

Support is unlikely to waver, says Mr. Ruiz, ``so long as we can maintain gradual improvements.''

Should the government falter, though, failing to push its labor reforms through, for example, or falling short of its growth targets, problems could loom. ``While people see that the change is sustained, even if it is gradual, the government is all right,'' says Dr. Ruiz-Tagle. ``But if things stagnate, then the situation could turn much more critical.''