Publication: Eurasia Daily Monitor Volume: 3 Issue: 231

In Soviet times Chile’s General Augusto Pinochet, who died December 10 at the age of 91, was denounced as a ruthless dictator and a henchman of U.S. imperialists. On September 11, 1973, Pinochet led a bloody coup that overthrew the government of Salvador Allende — the democratically elected Marxist president of Chile. Allende and thousands of his leftist supporters were killed or imprisoned; many more were forced to emigrate. Before the 1973 coup, the Kremlin had planned to support a “proletarian revolution” and the establishment of a “socialist state” in Chile as the foothold of a Soviet military and political presence in the region. Pinochet dashed these plans and was very much disliked in the USSR.

After the fall of Soviet communism in 1991, Moscow’s attitude toward Pinochet changed dramatically. Liberal economic reformers as well as top brass from the military and intelligence communities believed that “the Chilean example” could provide a quick fix for Russia’s ills: the establishment of a “strong” (i.e., repressive) authoritarian dictatorship that would enforce painful liberal economic reform and swiftly transition Russia from communism to a market economy. In an interview with Izvestiya in August 1994, the late General Alexander Lebed, then considered by many in Russia as a potential “Russian Pinochet,” said he did not generally support Pinochet, but praised his role in silencing “loudmouths” while establishing order and discipline in Chile (Reuters, August 4, 1994).

This week much of the same sentiment emanated from Moscow to mark the passing of the Chilean dictator. RIA-Novosti quoted the deputy speaker of the State Duma, the flamboyant nationalist Vladimir Zhirinovsky, as saying that Pinochet was bad, “but the best of other evils” and that “Allende would have killed more people if he stayed in power.” Another deputy Duma speaker from the ruling United Russia party, Vladimir Pekhtin, added: “Pinochet is connected with repressions, terror, and dictatorship, but he indeed created an economic miracle and made Chile the most prosperous nation in Latin America.” A Kremlin insider and chairman of the Federation Council Foreign Affairs Committee, Mikhail Margelov, opined “Pinochet left Chile a model liberal state, wealthy and democratically stable. At the same time he ruthlessly suppressed any dissent” (RIA-Novosti, December 11).

In April 1994, I traveled to Chile to cover an Air Force exhibition at which the Russian defense industry was massively represented. Pinochet had relinquished the post of president of Chile in 1990, but he was still commander of the army and very much in charge. The Moscow fans of Pinochet gave me references and I interviewed Sergio de la Quadra — a libertarian economics professor from the Santiago Catholic University who had been minister of finance and Chile’s Central banker under Pinochet. In 1992, de la Quadra visited Moscow to give advice on liberal economic reforms.

I asked: “Why did the military junta decide to do free market reforms? As far as I know the professional military of any nation, they are all natural socialists at heart, since they use virtually only command and control to manage their armies.”

Sergio relied: “We were very lucky that the 1973 Arab-Israeli war that sent oil prices soaring happened less than a month after the coup. Chile has no oil and Pinochet soon figured that without radical reforms the new regime is doomed. The entire junta was anyway against reform, against privatization, they instead appointed colonels to run businesses, nationalized by Allende. Pinochet suppressed the resistance of the military and put my colleagues and me in key government positions, though he did not understand anything about a market economy. This was a miracle.”

The reform policy of the military government, while encouraging the development of free enterprise and a new entrepreneurial class, caused unemployment, declining real wages, and, consequently, a worsening of the standard of living among the lower and middle classes. Economic development began after Pinochet relinquished power, but today Chile is still an extremely socially divided and potentially unstable country. In any case, Pinochet and “the Chilean example” are unique and cannot be used as model, especially in Russia, I wrote in 1994.

The Pinochet fans in Moscow did not like that assumption and continued to look for a “Russian Pinochet” until they found their man — Vladimir Putin. After 2000 Putin began to adapt the Pinochet principles to Russia: strong nationalist government, repression of democracy and the freedom of the press, murdered journalists, and imprisoned opponents. At the same time, a liberal economic team was implementing sound monetary policies, keeping a budgetary surplus with the help of lots of petrodollars, creating a stabilization fund, repaying a substantial part of the national debt. Record high oil and natural gas prices have spurred consumption and GDP growth.

Other reforms — administrative, judicial, pensions, health care, and education — have been mostly unsuccessful, often counterproductive. In the absence of a free press and an independent judiciary, corruption has multiplied out of control, fully engulfing the top brass of the military, the intelligence community, and the Kremlin. The economy is progressively being renationalized, with former spies being put in charge.

The combination of authoritarian dictatorship with market economic reforms has not worked very well in Chile and is failing in Russia. The Kremlin and the government are torn apart by personal and money-induced rivalries. The longer this “Chilean” experiment lasts, the more dismal the results will be.