1942: Chile

'Non-Belligerency.'

Although the Chilean Foreign Minister prefers to apply the term 'non-belligerency' rather than 'neutrality' to his country's foreign policy, the fact remains that, down to the close of 1942, Chile continued to maintain diplomatic relations with the Axis, while at the same time it has conceded the United States non-belligerent status, is supplying it heavily with such war essentials as nitrates and copper, and is probably more sympathetic officially to the United Nations' cause than the only other isolationist country of Latin America, Argentina. Chile has explained its cautious position regarding the war on the grounds of the extreme vulnerability of its relatively undefended 2,600-mile coastline. The record business of its merchant fleet and the Japanese threats against Chilean shipping if neutrality should be abandoned may also be a deterring factor. A small but important German concentration in southern Chile suggests an additional explanation.

Axis Espionage Activities.

Resentment was sharp over the public rebuke contained in the charge made by Under-Secretary Sumner Welles in October that Chile and Argentina were allowing Axis agents to operate undisturbed in their territories. It subsided, however, following the publication by the Inter-American Advisory Committee for Political Defense of the Continent (see URUGUAY) on Nov. 3, of a 7,000 word memorandum which furnished the evidence on which Welles' charges were based. This document, which had been delivered to the Chilean President on June 30 by the United States Ambassador, Claude G. Bowers, proved that valuable information had been going from Chile to Germany by secret radio as the result of the work of a Nazi espionage organization, of which the Air Attaché of the German Embassy was a leading figure. The activities of the group, through whom facts covering the arrival and departure of Allied ships had been sent to Berlin, had been discovered through the interception of radio messages by the United States FCC. Following the publication of this evidence the Chilean Government took drastic steps to curb Axis espionage and sabotage activities. The fact remains, however, that for four months no official cognizance was taken of the revelations contained in the memorandum.

Neutrality a Political Issue.

As in Argentina, neutrality has become a major political issue, though it cuts across party lines. Political feeling ran high following the Welles incident. President Ríos' proposed trip to the United States, which had been anticipated as a possible prelude to a break with the Axis, was cancelled. The entire Cabinet resigned as a face-saving device for the elimination of the Foreign Minister, Ernesto Barros Jarpa. The new Foreign Minister, Joaquín Fernández y Fernández, is much more favorably inclined towards the United Nations' cause. Oscar Schnake, the Socialist Minister of Development (Fomento) and an outspoken advocate of a shift in foreign policy, had already resigned. The Socialists and Communists, and important elements in the Radical party, including Marcia Mora, who had resigned as President of the party over this issue, have conducted an active campaign for severing relations with the Axis. The Confederation of Chilean Workers has urged a break. Moreover, a large anti-Axis demonstration in Santiago in November indicates some public sentiment in favor of a decided stand against the Axis nations. In his inaugural address in April, however, President Ríos declared that there would be no change in foreign policy unless there should be a clear popular mandate for one. By continuing Chile's neutrality down to the end of 1942 the Ríos administration has, apparently, recognized no such mandate. The departure, on Dec. 12 for the United States, Brazil and Argentina, of Dr. Raúl Morales, Minister of the Interior, who has been active in curbing Axis operations in Chile, seemed to indicate that a break in relations with the Axis might be imminent. (In January 1943 Chile severed relations with the Axis.)

National Elections.

In the elections held Feb. 1 Juan Antonio Ríos, who had been imposed on the coalition by the dominant Radical party to fill out the unexpired term of the late Pedro Aguirre Cerda, was chosen President. His opponent, General Carlos Ibáñez del Campo, the Rightist candidate, was defeated by a decisive margin. The inauguration of President Ríos on April 2 put the Rightist branch of the moderate Radical party in control of the Government. Formerly director of the National Mortgage Bank, he has always been a middle-of-the-road member of the party. The presence in the Cabinet of two Liberals, a party which refused to cooperate with Aguirre Cerda's Popular Front, marks the more conservative character of the Ríos Government. In his campaign the President refused the support of the Communists, who had belonged to the Popular Front. Since the elections, strong nationalist and fascist elements in the country have formed a bloc called the Nationalist Union.

Foreign Trade; Economic Situation.

A 'preclusive' purchasing agreement was signed Jan. 30 by which the Metals Reserve Company of the United States undertakes to buy such amounts of copper, gold ore concentrates, manganese, lead, zinc, refined mercury and certain other metals as are not absorbed in the normal course of business with Western Hemisphere countries, and to take a minimum of 165,000 tons of copper ore concentrates. An unprecedented demand for copper sent the 1941 output to an all-time peak; figures for the first quarter of 1942 indicate that production in 1942 will exceed this. Chile's foreign trade is closely related to the mining industry, since mining products constitute 82 per cent of the total. The value of 1941 exports came to 781,500,000 pesos, representing an export surplus of 256,300,000 pesos. The actual balance of payment is much smaller than these figures indicate, however, since Chilean copper is controlled by foreign capital. An Export-Import Bank loan, signed in May, increased credits to the Chilean Fomento Corporation from $12,000,000 to $17,000,000, the money to be used for the purchase of United States merchandise. During the Rio Conference (see BRAZIL) a $5,000,000 credit for new railroad equipment was extended. In spite of Chile's maintenance of relations with the Axis, no such economic pressure as has been exerted on Argentina has been applied to the West Coast nation, and the United States has continued to ship military equipment and supplies and to advance credits to that Republic, no doubt because of its urgent need for Chile's minerals.

To meet rising living costs, ceilings have been placed on rents and some foodstuffs. A newly created Instituto Económico Agrícolo will try to solve the food problem. A recent agreement with Argentina provides for the exchange of Chilean copper and nitrates for Argentine meat, grain and scrap iron.