FINAL DAY OF A FIVE-DAY SERIES

Chile’s a natural for ecotourism

Tension grows between developers, environmentalists

By JIMMY KLEPEK and EMILY WAKILD

Special to the Tucson Citizen

Chris Spelius went searching for the perfect river, and he’s pretty sure he found it a thousand miles south of Santiago, Chile.

Two years after the 1984 Olympic Games, the American kayaker got a call from the Olympic Committee to help develop kayaking in the South American nation.

A thousand miles south of Santiago, he found rivers fed by glaciers and 20 feet of annual rain pouring into Andean fjords. After seeing the rapids of a river named Futaleufú, he never left.

For the past two decades Spelius has made his living river-running there, and he’s not alone. As Chile seeks new revenue sources, it has begun to capitalize on the appeal of wilderness.

“People looking for special experiences are a very important economic sector. We are searching for these tourists,” said Gonzalo Salamanca of Fundación Chile, a state organization promoting global competitiveness.

Government and private entities view ecotourism as a sustainable alternative to industries such as forestry and fisheries, Salamanca says.

And in an era of global tension, Chile’s remoteness attracts growing numbers of visitors, and its expanses of untouched wilderness are increasingly rare in industrialized countries.

Entrepreneurs such as Spelius are trying to ensure these places continue to exist in Chile, but they have competition.

The forestry industry, looking to double Chile’s production by 2010, eyes these lands for hardwoods. The lucrative hydroelectric potential of Andean rivers has not escaped the notice of transnational energy corporations.

In a further twist of globalization, Douglas Tompkins, American founder of the outdoor equipment company North Face and co-founder of Esprit clothing, bought a pristine swath of southern Chile larger than Rhode Island to preserve it from development. His radical investment caused a firestorm of controversy over who is to control natural resources.

For Spelius and visitors to Futaleufú, the draw is the glacial water filtered by a series of lakes in shades of turquoise. It flows from small quiet eddies to technical Class 5 rapids that can toss and bend 14-foot rafts like plastic toys.

Towering conifers and a patchwork of pasture shelter the river while distant rolling hills merge into jagged mountains topped by white snowfields and pale blue glaciers.

More than half the town works in summer tourism from January through mid-March, said Arturo Carvallo, mayor of Futaleufú, population 1,800. They work as rafting, fishing, and hiking guides or in hotels and restaurants.

But the wet, nine-month winters and the town’s isolation prove a formidable obstacle to expanding tourism.

Futaleufú is only recently accessible by road without crossing into Argentina, and the bumpy 96-mile bus trip from the nearest airport takes longer than four hours. Buses run only sporadically in winter. Carvallo is seeking government subsidies to make the town accessible year round.

Transportation wouldn’t be a problem for international corporations wishing to harness the river’s energy.

During the 1980s privatization efforts by dictator Augusto Pinochet’s military regime, the state energy company was auctioned off. The purchaser, Spanish energy giant Endesa, also acquired rights for hydroelectric development.

Today, the company owns about 85 percent of the total water rights granted by Chile, including the entire flow of the Futaleufú.

One proposal is for a hydroelectric dam that would inundate the town of Futaleufú and the surrounding valley to produce cheaper electricity.

Daniel Gonzalez, executive director of FutaFriends, an organization dedicated to preventing the industrialization of the river, sees little economic justification at the moment. But with electricity demand increasing 7 percent a year and a new agreement allowing Chile and Argentina to exchange energy freely, this could change.

Estimates of when construction could begin vary from five to 10 years.

“The issue is not just about this incredible place being dammed,” Gonzalez said. “Doing so would set a dangerous model that would hurt the region as a whole.”

But the free market provides opportunities in surprising places. Just as a Spanish company may utilize privatized water rights for hydroelectric development, Douglas Tompkins seeks to privatize to prevent such things.

Tompkins visited the country for the first time in 1961 and fell in love with the Chilean wilderness. Cashing in his interest in the clothing business, he gave up his career in San Francisco and settled on an abandoned ranch in the coastal south.

Since then he has spent more than $50 million to buy nearly 750,000 acres to make sure it remains wild. The seventh largest of Chile’s protected areas, Parque Pumalín is managed by Tompkins’ foundation, the Conservation Land Trust.

Named for the resident pumas, the park contains a combination of temperate rain forests and fjords overlooked by the 7,887-foot volcano, Michinmahuida. The park is home to the deerlike pudu, sea lions and some of the last oceanside old growth forests on Earth.

“Most people desire to be out in nature although they cannot articulate why,” said Tompkins. “There is still a need inside of us to see not every square meter of Earth has been humanized.”

Tompkins hopes to ensure that this wilderness lasts forever, but his work isn’t without controversy. He has been accused of violating national sovereignty with a reserve that stretches almost from the Pacific Ocean on the west to Argentina on the east.

“If a foreigner came into the United States and bought a piece of land that stretched from California to Philadelphia, what would Americans say?” asks Francisco Perez of INFOR, a Chilean forestry research organization.

Juan Eduardo Corea, vice president of CORMA, a forestry trade group, concurs. “Tompkins earned his money as businessman. Now he comes to a poor country and is preventing the use of natural resources important for our development.”

Tompkins and a growing number of private conservationists are simply using the same provisions of Chilean laws that encourage foreign ownership of property to attract investment.

Some praise his efforts.

“We are very thankful that Tompkins has protected this wonderful area. We wish there were more people like him,” says park visitor Juan Ravilet Mariano.

Chilean botanist Adrianna Hoffman, who wrote a book on the flora of southern Chile, agreed.

Hoffman was appointed director of CONAMA, the Chilean environmental protection agency by Chilean President Ricardo Lagos. Hoffman was the first environmentalist to head CONAMA, but she said the organization had little power to influence government policy and left after six months.

Hoffman now heads the private foundation Defenders of the Forest.

“Today private investment is the only way to conserve areas that the government does not have the means to protect,” she said.

The logging industry, though, is eying Pumalín’s forests. It is home to Chile’s largest remaining stand of 4,500 year-old alerces, a native cypress. With trunks up to 12 feet in diameter, alerces are prized for wood resistant to insects and weather.

Chilean law forbids substituting old growth forests for tree plantations. Nevertheless, the industry envisions a renewed emphasis on the sustainable harvest of native forests in southern Chile, which includes Douglas Tompkins’s eco-reserve. Perez believes that more than 14 million tons of native forest, equivalent to the size of 7,000 full-sized redwoods, can be harvested annually without jeopardizing the environment.

“There is no doubt we can use native forest. We are in the process of evaluating its precise condition to make use profitable,” Perez says.

Although protected by the government, alerce wood still has value on the black market. Most foresters admit clandestine logging and trafficking happen, but their interest is with more profitable exotic species, such as eucalyptus or Monterey pine, which grow where native forests once stood.

Several types of eucalyptus, native to Australia and valued for firm pulp and rapid growth, flourish in reforested areas of Chile.

“Our main assets are the forests,” says Charles Kimber, the Chilean executive director of Arauco, the third largest forestry-products company in the world. Arauco controls 709 thousand acres of eucalyptus and Monterey pine plantations.

By carefully managing every step of a sapling’s life, plantations cultivate harvestable, defect-free trees in 15 years.

Many of the eucalyptus are turned into wood chips, which are processed into paper and cardboard. Monterey pines become paneling, plywood, particleboard and pulp for shipment all around the world.

Since tariffs have long been reduced for Chilean forestry products coming to the United States, the new free trade agreement will change little.

Project examines impact of free trade

Chile became the first South American country to become a free trade partner with the United States on Jan. 1.

That puts Chile on the same footing as Canada and Mexico in eliminating import tariffs, which makes goods traded either way cheaper. The agreement also creates a level playing field for investment, trade in services, government procurement, and intellectual property.

In a joint project among the University of Arizona’s journalism and Latin American Studies departments and the Tucson Citizen, nine students went to Chile to determine the effects of the free trade agreement of Chile.

The Tucson Citizen is publishing their reports.

PHOTO CREDIT: JIMMY KLEPEK/Special to the Tucson CItizen

A raft from Expediciones Chile travels on southern Chile’s Futaleufú River, a magnet for rafters from around the globe. Some Chileans – and American investors – believe tourism can create jobs and preserve natural resources.

Parque Pumalín, a private nature preserve that stretches nearly the width of Chile, is the brainchild of Douglas Tompkins, the American founder of outdoor gear company North Face.

Dock workers in Puerto Calbulco, Chile, prepare wood chips for shipment. Growers in Chile nurture Australian eucalyptus trees for years, then shred the trees into wood chips that become paper.

DAY FOUR OF A FIVE-DAY SERIES

World’s copper capital

Chile’s huge reserves have draw foreign firms such as Ariz.’s Phelps Dodge

By ISABEL SEPULVEDA and JENNIFER CARLSON

Special to the Tucson Citizen

Although Chile has become known for wine, fruit and salmon, mining accounts for nearly half the nation’s export income.

The South American country boasts the largest open pit copper mine in the world, the half-mile deep Chuquicamata, and the world’s largest underground copper mine, El Teniente.

Few other countries are blessed with anything comparable to Chile’s financial cushion: more than a third of the world’s known copper reserves and exceptionally high-grade ore, amounting to 37 percent of world copper production.

By comparison, the United States follows with only 8 percent. More than half of that comes from Arizona, but since the 1970s a combination of labor issues, environmental laws, bureaucracy and depleted ore has diminished U.S. competitiveness.

And U.S. companies are in on the ride. Phoenix-based Phelps Dodge operates two of the 28 copper mines in the country.

The connections to Arizona are inescapable. A huge shovel that scrapes 70 tons of rock at a pass from the side of Phelps Dodge’s El Abra pit in the Atacama Desert, one of the driest in the world,, was once used in a PD mine in Morenci, 5,000 miles away.

The Copper State

U.S companies are looking to open mines outside our borders because the “United States is becoming a much more difficult place to do business because of the permitting process,” said Phelps Dodge spokesman Bruce Richardson, who works in Arizona.

For 10 years, Phelps Dodge has been working to arrange permits for the company’s planned Safford mine. The same process in Chile took 18 months.

“Other countries become much more attractive investments because the process is much more amenable to business,” Richardson said. “We’ve spent close to $50 million developing the Safford mine, and we haven’t turned one shovelful of earth.”

Since the 1970s, Arizona miners have lost their jobs and abandoned the profession, breaking generations of tradition in some cases.

It wasn’t always an easy decision.

“Mining is in our blood. My father was a miner, my grandfather, uncles, everybody,” remembers James Andazola, who worked for Phelps Dodge in Morenci for almost 20 years. “But we had to make a life.”

Andazola left the Morenci mine during the 1983 strike and now works as a refrigeration mechanic.

And while copper production in Arizona was nearly identical in 1974 and 2002, the number of people directly employed has fallen from 28,000 in 1974 to 6,200 today.

George Leaming, owner of the Western Economic Analysis Center and author of an annual report titled Economic Impact of the Arizona Copper Industry, has followed the industry for 40 years. He attributes the shift to high costs associated with Environmental Protection Agency regulations in the early 1970s.

“Environmental legislation made the standard sulfite smelting process quite expensive. (Labor) was one area where the industry was able to reduce its costs,” he said.

The future

The future is uncertain for foreign multinationals in Chile.

Under Chilean law, any company can avoid paying taxes if it pours profits back into the company. Only four of the 10 major multinationals paid Chilean taxes in 2003 for a total of $132 million.

However, a congressional bill supported by Chile’s President Ricardo Lagos would charge private mining companies up to a 3 percent royalty on gross sales for the extraction of nonrenewable natural resources. That could mean up to $300 million annually for the government.

Multinationals, fighting the royalty tax, respond that they are in complete compliance with the law, and that they do pay taxes, only at a later date.

“We invest in a country based on the rules and conditions presented to us. If (the royalty) passes, these conditions are not being honored,” says Richardson.

“It’s like budgeting for a 30-year mortgage on your house and 10 years down the road, the mortgage company comes back and says, ‘We decided that now you’re going to pay an extra $300 a month.’ It’s not fair that they are changing the rules midstream.”

But given the quantity and quality of Chile’s copper reserves, a royalty may not discourage multinationals from investing in Chile.

“We, the Chileans, direct copper in the world,” says Juliàn Aleoyaga of the Committee for the Defense of Copper, a coalition of Chilean labor and social organizations hoping to “re-nationalize” the industry.

“Who has the most weight to establish a royalty? The country with the most weight in the market. And that is us.”

Aleoyaga sits among 10 other middle-aged men in a stuffy Santiago meeting room late on a Monday night, plotting tactics. Each has an interest in passing the royalty.

One organization, The Corner Against Ignorance, spreads public awareness from a street corner in downtown Santiago. They also are trying to collect 30,000 signatures from Chileans in favor of the royalty. They will present the petition to President Lagos.

Their aim is to keep Chilean money in Chilean hands.

“Chile’s royalty,” declares Aleoyaga, “should be the largest in the world.”

Copper company shuts down town, opens another

By ISABEL SEPULVEDA and JENNIFER CARLSON

Special to the Tucson Citizen

In many respects, the Chilean town Chuquicamata resembles an old Arizona mining company town.

Children ride bikes and dogs play in the central plaza; trucks stop by the solitary kiosk to buy sodas, cigarettes or groceries.

The town is near the edge of Codelco’s Chuquicamata mine, the largest copper mine in the world. Trucks carrying 360 tons of rock look antlike as they wind up from the bottom of the the half-mile deep pit, which stretches more than two miles from rim to rim at its widest point.

Codelco provides housing, utilities, schools and medical care all at low or no expense to its 20,000 workers. But within three years, the Chilean mining town will vanish and its residents must move nine miles south to the city of Calama, northern Chile’s regional mining hub.

The thought of leaving is painful for many residents.

“Here at Chuquicamata, people lived, people existed,” says union director Grineldo Acuña, his eyes filling with tears.

Many Arizona towns met similar fates.

In the late 1960s, the company town of “old” Morenci was destroyed and its residents moved to “new” Morenci. The mine was expanding, and the town was in the way.

Things are not so clear in Chuquicamata. Codelco’s official reason for the move is an edict from Chile’s Environmental Ministry citing health hazards. But some residents are skeptical.

“We have been living in pollution for over 30 years,” says resident Nora Suarez. “Why do we have to move now? Living in Calama is another kind of pollution. I’d rather live amidst this pollution than down there.”

An underlying reason for the move, some believe, involves a plan to link Chuquicamata and other nearby pit mines to create a single pit 15 kilometers long. Codelco also has plans to expand the mine underground. The expansions would increase the mine’s lifespan at least another 50 years.

To accomplish those expansions, a lot of rock will be moved, and the cheapest place to put the tailings is where the town of Chuquicamata now sits.

Chuquicamata’s residents new town, Calama, has a completely different feel.

Although Calama has 138,000 residents, very few claim to be natives. Even those who’ve been here for decades see it as the place they come to work, not live.

The miners’ average income, 60 percent more than the monthly national average of $538, attracts many more than can be hired, leading to a 7.4 percent unemployment rate.

Last year, the company built a shopping mall to become a new “cultural center” for the city. Giant glass panels in the food court look out onto the new copper-clad Codelco administration building, giving shoppers a constant reminder of who signs their paychecks.

But a much more essential element of relocation remains incomplete: housing.

Originally, all Chuquicamata residents were to be in Calama by January 2003.

Now, complete relocation of the remaining 3,500 families is forecast for 2006. As in Chuquicamata, housing will be segregated by salary.

Mid-level workers will get four-bedroom houses, but the rooms are so small the master bedrooms can barely accommodate full-size beds.

Codelco will pay only $22,000 toward any house in Calama. Families moving into the larger, 1,500 square-foot homes will need almost $30,000 to make up the difference.

That’s a hard pill to swallow for many of the workers, who have never had to pay for housing and have never been in debt.

Project examines impact of free trade

Chile became the first South American country to become a free trade partner with the United States on Jan. 1.

That puts Chile on the same footing as Canada and Mexico in eliminating import tariffs, which makes goods traded either way cheaper. The agreement also creates a level playing field for investment, trade in services, government procurement, and intellectual property.

In a joint project among the University of Arizona’s journalism and Latin American Studies departments and the Tucson Citizen, nine students went to Chile to determine the effects of the free trade agreement of Chile.

The Tucson Citizen is publishing their reports.

PHOTO CREDIT: Photos by BRAD POOLE/Tucson Citizen

CUTLINE: This shovel at Phelps Dodge’s El Abra copper mine near Calama, Chile, was shipped from Morenci after low prices prompted the company to cut production at the Arizona mine.

CUTLINE: Trucks such as this one at Phelps Dodge’s El Abra copper mine near Calama, Chile, carry millions of tons of ore out of Chile’s open pit mines each year.

CUTLINE: The main pit at Chuquicamata, the largest copper mine in the world, is 2 1/2 miles wide. The truck in the foreground is the same type as the one on Page 1D.

CUTLINE: Codelco, the Chilean government’s copper company, built this mall to make the city of Calama more attractive to thousands of employees’ families who have to move because of pollution from a company mine.

DAY THREE OF A FIVE-DAY SERIES

Grape expectations

American eyes sparkle at cost of Chilean wine

By JAY SAGAR and ERIKA KOROWIN

Special to the Tucson Citizen

High-quality products at very attractive prices spur sales

The Franciscan monk in his coffee-colored robe poses for pictures and uncorks a bottle of chardonnay.

He swirls his raised glass to release aromas of fresh pear and berries, noting the honey-colored density that sets this particular blend apart from others he’s promoting today at the Rengo Wine Festival, one of a half-dozen held each fall in central Chile.

The festival is complete with live Andean folklore music, couples circling each other in the playful rooster-hen courtship of the national dance “la cueca,” and passionate grape stomping.

Funded by 11 regional wineries, the event demonstrates locally what these companies excel at globally: making high-quality, inexpensive wines.

Chile is the seventh-largest wine producer in the world, exporting $576 million worth of bottled wine in 2003. This country of 15 million people is the fourth-largest supplier to the United States, behind Italy, France and Australia, and for three consecutive years Chile’s Concha y Toro brand has been the single leading U.S. import.

While only 25 percent of American adults drink wine, the number has been growing steadily over the past 10 years. Chilean wine is widely available in Tucson, from restaurants and bars to supermarkets and liquor stores.

At the Rum Runner in Tucson, wine seller Andy Ramirez said many customers buy Chilean wines because they’re well-priced.

Randy McCrea of the Wine Society of Tucson agreed.

“Chile is one of the main driving forces for good-value wines. I can’t remember a single bad one,” he said.

Along with rich soils and its favorable climate, cost savings in Chile help local winemakers compete globally and make Chile appealing to foreign investors.

While an acre of vineyard in California’s Napa County can reach $200,000, in Chile’s central valley a similar plot costs $8,000. An average grape picker in Napa County earns almost $10 an hour, but his counterpart in Chile brings home $10 a day.

U.S. winemakers Kendall Jackson and Franciscan Estates already own Chilean vineyards, and more U.S. investment is expected because of the 2004 Free Trade Agreement, which will gradually reduce U.S. import taxes on Chilean wines.

The economic reforms initiated during the 1973-90 Pinochet dictatorship set the stage for the free trade agreement, the first between the United States and a South American nation, and stimulated Chilean wine exports. Wine exports jumped from 4.8 million liters in 1975 to 395 million liters in 2003.

“This is the largest contiguous vineyard in all of Latin America,” explains María José Ramírez, who leads tours for San Pedro Vineyard. From a hill overlooking a swaying carpet of vines, she points toward a fertile 3,000-acre checkerboard of Merlot, Carmeneret, Chardonnay and other grape varieties that snake off through rolling green hills.

San Pedro is Chile’s second largest producer and exporter. Twenty-four hours a day, 360 days a year (the plant is closed for cleaning five days a year), three conveyor belts whisk 24,000 bottles an hour into waiting cases. These bottles – freshly corked, labeled and packed – are then shipped off to 66 countries around the world. Most go to the United States, Canada and Europe.

HISTORY

Spanish conquistadors first brought mission grapes to Chile in the 16th century so wine could be served at Catholic Mass.

Chile became the biggest exporter of wine to Spain’s colonies by the 17th century.

Two events set its destiny as a producer of high-quality wine:

In 1851, a Chilean winemaker began cultivating French grapes such as Cabernet Sauvignon, Merlot, Carmenere and Sauvignon Blanc. Then in 1870, an outbreak of a bacterial pest, phylloxera, hit Europe. While French growers witnessed the destruction of their crops, Chile – bounded by the world’s driest desert to the north, the staggering chain of Andes to the east, ice fields in the south and the Pacific Ocean to the west – remained insulated from a similar outbreak.

Their vines decimated, many important French winemakers migrated to Chile, bringing traditional techniques with them.

The second is the Mediterranean climate of Chile’s central valley, where most Chilean wine is produced. During the growing season, cool night air descending from the snowy Andes, warm days, and scarce rain yield the perfect climatic ingredients to create grapes with high levels of sugar, strong aromas and full-bodied color.

CHILEAN WINE LIST

Ready to step away from your West Coast wines and try something new? Here are some good buys in Chilean wine right now, according to Andy Ramirez, wine seller for Rum Runner Wine & Cheese Co., 3200 E. Speedway Blvd.

1) Montes Cabernet/Carmenere 2002: $13.99 per bottle. Ruby red with a delicate chocolate aroma with hints of vanilla, coffee and butterscotch.

2) Cousino Macul Antiguas Reservas Cabernet 2001: $17.99 per bottle. An Old World-style red with aromas of leather and spice and hints of dried cherries.

3) Casa LaPostolle Cuvee Alexandre Merlot 2001: $19.99 per bottle. From 60-year-old vines that produce the taste of dark cherries, spicy oak and a long silky finish. Aged for 12 months in French oak.

4) Santa Ema Carmenere 2001: $9.99 per bottle. Carmenere is a long-lost French Varietal rediscovered in the past decade growing almost wildly in Chile, which produces a wine with notes of berry fruits and herbs.

5) Santa Rita 120 Chardonnay: $6.99 per bottle. The chardonnay has aromas of tropical fruit, green apples and a hint of citrus and very light oak. Always a best buy.

6) Araucano Sauvignon Blanc 2003: $9.99 per bottle. Crisp and clean with notes of minerals, citrus and fresh-cut grass. Delicious.

7) Concha Y Toro Don Melchor 2000: $39.99 per bottle. A single vineyard bordeaux-style red. The best from this reputable producer.

8) Casa LaPostolle Chardonnay 2000: $11.99 per bottle. Barrel fermented and aged for eight months in French oak with notes of tropical fruits, peach and oak.

FREE TRADE AGREEMENT

Chile became the first South American country to become a free trade partner with the United States on Jan. 1.

That puts Chile on the same footing as Canada and Mexico in eliminating import tariffs, which makes goods traded either way cheaper. The agreement also creates a level playing field for investment, trade in services, government procurement, and intellectual property.

In a joint project among the University of Arizona’s journalism and Latin American Studies departments and the Tucson Citizen, nine students went to Chile to determine the effects of the free-trade agreement of Chile.

The Tucson Citizen is publishing their reports.

PHOTO CREDIT: Photo by JAY SAGAR

CUTLINE: Revelers dance at the Rengo Wine Festival in central Chile, home to many of the nation’s vineyards.

PHOTO CREDIT: Photo by ERIKA KOROWIN

CUTLINE: The vineyards of central Chile, such as this one at San Pedro Vineyard near Rancagua, have earned a reputation for producing high quality, affordable wines. For the past three years Chile’s Concha y Toro has been the top imported brand.

(cutout of bunches of grapes on a vine)

DAY TWO OF A FIVE-DAY SERIES

Chilean orchards feed 1/4 of world

The U.S. imported a record $752 million worth of Chilean fruit in ’03.

By ERIKA KOROWIN and JAY SAGAR

Special to the Tucson Citizen

The aging pickup groans, spraying mud as it maneuvers through an orchard in central Chile, named The Suffering of Christ.

While the radio blares American pop songs, Rodrigo Saavedra, the agronomist who oversees this 1,125-acre farm, spots some of the seasonal fruit pickers. Their day almost over, they hurry to fill the last of the 5-foot-long plastic crates.

Along with kiwis, grapes, peaches and 26 other varieties of fruit, these Autumn Pride plums will be packed and transported in less than 24 hours across the mountains to the coast, where they will be shipped to a quarter of the world’s countries.

Within two weeks of departing Chile, nearly a third will end up in U.S. supermarkets.

For centuries, this plantation fed the local population around the city of Rancagua in central Chile. Since the 1970s, along with farms in neighboring valleys, it’s been feeding people from Europe to East Asia.

Last year, the United States imported a record $752 million worth of Chilean fresh fruit, satisfying consumer demand for off-season produce.

And the quality of Chilean fruits “gets better every day,” notes Don Patella, a Phoenix produce buyer for Fry’s supermarkets in Arizona.

During the 1960s, Chile’s government devised a national Fruit Plan to survey orchards, increase production and research foreign demand. Under the Alliance for Progress, a Cold War U.S. aid program intended to prevent Cuban-style revolutions, Chileans were funded to study modern agricultural techniques at the University of California-Davis.

As U.S. consumption of fresh off-season fruit increased from 2 to 6 pounds per capita during the ’80s, Chile was uniquely poised to meet this demand. Its reversed seasons and length – the country stretches as far from north to south as the United States does from Los Angeles to New York – allowed it to produce fruit for export six months out of the year.

Chile exported $1.6 billion of fruit in 2003. With new free-trade agreements with the United States, the European Union, Canada, Mexico, South Korea and other agreements pending, this figure is not expected to drop.

Before checking on the progress of his workers, Saavedra examines a tree of plums for damage from the summer’s heavy rains. He chooses a few ripe fruits and carefully hands them to a seasonal worker in a New York Yankees cap.

“These are the last of the plums. Next week, we’ll move on to table grapes,” he says, gesturing toward nearby vines with plump bunches dangling from them.

Summer to winter

As morning fog climbs the steep hills surrounding Valparaíso’s enormous bay, Freddy Soto enters the cargo lanes of the port, humming a brisk Chilean folk song.

Soto, commerce manager for Davimar, a cargo company, encounters four lanes packed bumper-to-bumper with 18-wheelers. Standing by their rigs, drivers read newspapers or chat as they wait their turns to load apples, peaches, plums, nectarines and other fruits onto ships.

From February through May – Chile’s peak export months – trucks daily fill four 10,000-15,000 ton capacity ships.

Each ship leaves Valparaíso and head for foreign ports. Those bound for the U.S. market will dock primarily in Philadelphia and Los Angeles. Highly perishable fruit, such as blueberries and raspberries are flown overnight from Santiago to Miami.

The U.S. Department of Agriculture has maintained an inspection station at the port of Valparaíso since 1980.

USDA agronomists check for pesticide levels, diseases and pests. If USDA inspectors find a single diseased fruit, they reject the contents of the entire truck.

Inspection is random: three or four crates per truck. To keep traffic moving, however, agronomists usually inspect only if a truck comes from an unrecognized facility or if seals on crates have been broken.

In 1989, Food and Drug Administration inspectors in Philadelphia found two Chilean grapes containing small levels of cyanide. As a result, 2 million crates of grapes were impounded at ports of entry around the United States.

While the exact origin of the poison was not determined, about 2,400 growers and shippers of Chilean fruit sued the FDA for $240 million for having effectively decimated an entire season’s worth of Chilean fruit. The loss of $1 billion in revenues and 20,000 Chilean jobs demonstrated the power and influence of the USDA on Chile’s agricultural sector.

Standards

In his offices in Rancagua, Juan Pablo Torrealba declares in flawless English – perfected during an economics graduate program in Wisconsin – that the key to sustaining foreign demand is “to position Chilean fruit in the minds of consumers as safe and healthy.”

Torrealba is the manager of Andes Chile, a small fruit producer that exports to U.S. Wal-Marts and specializes in “stone” fruits – cherries, peaches, nectarines, plums and apricots. U.S. and European buyers insist on following rigid safety standards, he said.

“They’re demanding a lot more of us than of companies in the U.S. and Europe,” he says, indicating quality control checklists his company must fill out for each of its farms and pack-houses.

Conditions are improving for workers.

According to Chile’s Ministry of Labor, there are about 400,000 temporary workers in Chile’s agricultural sector, a number that has doubled in the past decade.

Due to high unemployment, Chileans from the southern lakes region have flocked to seasonal jobs throughout Chile’s central agricultural belt. Temporeros, as they’re called in Chile, are hired for a limited period and receive fewer benefits than regular, salaried employees.

Marcos Espinoza, a talkative young fruit farmer who supplies Del Monte, agrees with Torrealba that U.S. and European free trade agreements have imposed higher agricultural standards on Chilean exporters. For about two years small farms like his have had to make outhouses, showers, and lunch rooms available for fruit pickers, as well as strictly label and control pesticides.

Dr. María Moreno, who works in Rancagua Hospital’s Occupational Health Unit and oversees a pesticide vigilance program, said there has been a notable decrease in the past five years.

Torrealba emphasizes that the producer-consumer chain is ultimately one of trust: U.S. and European buyers build relationships with Chilean producers whose concern for the customer is reflected in the standards they maintain.

“Fresh fruit is a living being,” he says.

Whether his company’s harvest is destined for religious festivals in Taiwan or a winter peach pie in the United States, the goal is to continue satisfying foreign demand.

FREE-TRADE AGREEMENT

Chile became the first South American country to become a free-trade partner with the United States on Jan. 1.

That puts Chile on the same footing as Canada and Mexico in eliminating import tariffs, which makes goods traded either way cheaper.

In a joint project among the University of Arizona’s journalism and Latin American Studies departments and the Tucson Citizen, nine students went to Chile to determine the effects of the free-trade agreement of Chile.

The Tucson Citizen is publishing their reports.

PHOTO CREDIT: JAY SAGAR/Special to the Tucson CItizen

CUTLINE: Workers at a farm in central Chile sort peaches that will be shipped around the world. American companies such as Dole are growing crops in Chile to supply Americans with winter fruit.

CUTLINE: Workers in the Chilean port of Valparaiso load fruit for shipment. Chile’s reversed seasons offer winter fruit for American buyers.

Citizen Staff

Brad Poole

Chilean export explosion leaves some wreckage

Chile.

Four thousand miles south of Tucson and just as far from the collective American consciousness, the nation of 15 million conjures images of alpacas, adobe huts and craggy Andean peaks perpetually capped with snow. Patagonia’s frigid fjords and glacial streams may come to mind, or an active volcano.

And those things are there, to be sure.

But there is another Chile, and thanks to American-style financial flair, it is seeping into the United States through thousands of our hardware, grocery and liquor stores. The jewel of the South American economic crown is selling itself around the globe, and we’re buying.

Some people in Chile believe the nation is exporting itself to death. The country is not known for manufacturing. Foreign investors have their eyes on raw materials, such as copper, molybdenum and iron, wood chips that later become paper and lumber that ends up at your neighborhood Home Depot.

At Chuquicamata, the largest copper mine in the world, Chile is grinding itself up and spitting itself out in great heaps that soon will bury an entire town. Thousands of people will have to move to avoid the great clouds of smut spewing from the mine’s smelter, and a lot of them don’t want to.

The piles of rock left from mining are one byproduct of a Chilean export frenzy that has made the nation an economic powerhouse in recent decades.

And the copper bonanza is not likely to end soon for the world’s largest producer and exporter. The largest buyer of Chilean copper is China, and we have a long way to go before the most populous nation on Earth has an electrical outlet on every wall and a car in every monthly budget.

That will require a lot of copper.

Agriculture is another vehicle for Chile’s self-exportation. The nation is sprouting grapes, kiwis, strawberries and blueberries by the billions only to purge them at its ports for foreign consumption.

Vineyards – eyeing America’s thirst for high-quality, affordable wines – squeeze out huge vats of merlot, cabernet sauvignon and chardonnay for our dinner tables.

Millions of tons of the country are ground into wood chips every year and spit in the general direction of Asia. Many of the wood chips become boxes, which end up wrapped around computers and other gadgetry sold around the globe (some of which are sure to contain bits and pieces of Chilean copper). Bible makers seek out Chilean eucalyptus for the Good Book’s whisper-thin pages.

North American fruit growers realized decades ago that Chile was ripe for the picking. The nation’s fertile midsection and cheap labor couldn’t be resisted, and its reversed seasons put strawberries on America’s dinner table in dead winter.

Investors aren’t just pulling cash from Chilean soil; there’s plenty to be had from the waters, too. A species of Atlantic salmon evolved in Norway is grown in Pacific waters off the coast of Chile so Americans a thousand miles from the ocean can have fish for dinner every night if they choose.

All of this financial fervor has not been without controversy. Some Chileans resent the U.S. influence. The free market quest for profit has left the poor poorer and the rich richer and put some of the most beautiful and ecologically sensitive areas of the nation at risk, detractors say.

But all of this is nothing new.

The U.S.-Chile free trade agreement signed last year is just a rudder guiding a ship than has been steaming full ahead for more than 100 years. In a copper mine museum near Rancagua in central Chile is a wall hung with stock certificates dating to the early 20th century. Many of them are from American mining giant Phelps Dodge.

The threads connecting us to Chile wind through virtually every American town. With training from the University of Chicago’s school of economics, Chile’s modern monetary engineers began in the 1970s to weave the threads of kiwi and copper and salmon and wine into the fabric of Chilean and American life.

The two nations stitched that fabric together last year, snipping at a tax law here and trimming a tariff there. Only time will tell how this new cloth of international cooperation, spun from American economic theory and sewn with a thread of greed, will hold up.

If we look the other way, it quickly could become tattered and worn. With vigilance, the cloth can be crafted into an environmentally friendly grocery bag for the world, with enough left over for a warm cloak to protect our friends south of the equator from the elements.

Brad Poole is a Tucson Citizen assistant city editor who worked with a University of Arizona class to produce this week’s Citizen series on Chile.

DAY ONE OF A FIVE-DAY SERIES

Salmon bought here carries costs in Chile

Salmon farming affects lakes, fjords and Chilean society

By ANTON DAUGHTERS

Special to the Tucson Citizen

Project examines free trade’s impact

Chile became the first South American country to become a free-trade partner with the United States on Jan. 1.

That puts Chile on the same footing as Canada and Mexico in eliminating import tariffs, which makes goods traded either way cheaper. The agreement also creates a level playing field for investment, trade in services, government procurement, and intellectual property.

In a joint project among the University of Arizona’s journalism and Latin American Studies departments and the Tucson Citizen, nine students went to Chile to determine the effects of the free-trade agreement of Chile.

The Tucson Citizen is publishing their reports.

Patty Klawans reaches into the refrigerated seafood case at the Costco at Orange Grove and Interstate 10 and pulls out a 4-pound pack of filleted salmon.

“My family has been eating this at least once a week for the last 10 years,” she said. “It’s healthy and a great meat for grilling.”

Chances are that salmon is from Chile, the United States’ newest free-trade partner.

Klawans prefers the taste of wild salmon, but explained that the $3.99-a-pound farmed-raised variety is less expensive and easier to find.

From posh restaurants in Tucson, New York and Los Angeles to the nation’s supermarket chains, farm-raised salmon has become one of the fastest-selling seafood products of the past decade.

Last year alone, nearly half a billion pounds were flown into the United States, an increase of more than 600 percent from 10 years ago. Most of those imports came in the form of salmon fillets, a market niche dominated by the Chilean-raised variety.

But the dizzying expansion of this global industry has had mixed results for Chile.

Salmon farming burst onto Chile’s entrepreneurial scene in the early 1980s. The idea of growing fish for export was hailed as a solution to the overexploitation of the ocean’s resources.

Within a decade, fast-growing Atlantic salmon – an exotic species imported from Norway – became this Pacific nation’s top fish export.

Chiloé, an island in southern Chile about the size of Puerto Rico, is home to many of Chile’s salmon farms. Chiloé – population 150,000 – grows enough salmon each month to feed every American at least once.

The industry has brought jobs, electricity and roads to island communities once largely isolated from the global economy. But as salmon farming’s explosive growth continues, many Chileans are now examining its costs.

“This industry is based on a flawed philosophy,” says Chilean economist Marcel Claude. “It has a single short-term goal – making money – with no thought of the environmental and social consequences.”

One consequence, Claude says, is the depletion of some of Chile’s most valuable fish species.

“Many people don’t realize that salmon is a carnivore,” explains Rodrigo Pizarro, director of Terram, a Santiago environmental group founded by Claude. “It eats other fish.”

Indeed, nearly half the food given to farm-raised salmon is composed of fishmeal: ground-up anchovies, jack mackerel and other wild species found in the waters off Chile’s 3,000-mile coastline.

“For every kilo of salmon grown, you need three to five kilos of some other fish,” says Pizarro, citing Chilean government studies. “This puts an unbearable strain on our ocean resources.”

Critics also claim that salmon farming has devastated the pristine lakes of Chiloé – where salmon are kept the first half of their lives – as well as fjords and bays where they are fattened for export.

With more than half a million salmon packed into individual farms no larger than football fields, the intense concentrations of feed, feces, and antibiotics deplete oxygen and create dead zones on the seafloors and lakebeds beneath, says Juan Carlos Càrdenas, director of the environmental watchdog group Ecoceanos.

The feces produced by such a farm can equal that of a town of more than 60,000 people, Càrdenas said.

Thomas Kehler, a retired American salmon grower living in Chile, said that Chiloé’s lakes have been hit hard by the salmon farms.

But many companies, he says, are changing to above-ground, artificial breeding tanks for the early phase of salmon growing.

Kehler also claims that the industry’s dependence on wild fish stocks for feed has been greatly exaggerated by “fanatic environmentalists” financed by coastal real estate developers for whom salmon farms would mean reduced sales.

Nonetheless, industry officials concerned about the long-term sustainability of salmon farming have tried to reduce dependence on wild species by mixing fishmeal with vegetable proteins. Today, fishmeal accounts for only 40 percent of feed ingredients.

Industry attempts to further limit fishmeal have led to jaw deformities. Fishmeal is also indispensable to produce omega-3 fatty acids – the much-touted health component shown in numerous studies to counter heart disease.

Intensifying these concerns is industry growth. Last year, Chilean salmon companies announced plans to triple production. This would catapult Chile past Norway as the No. 1 salmon-exporting country.

The industry justifies these expansion plans by pointing to its role in feeding the world. According to the Web site of Salmon of the Americas – an association of Canadian, American, and Chilean growers – farmed-raised salmon is “part of the answer to preventing world hunger.”

Critics disagree.

“The salmon produced here aren’t going to feed hungry people in Africa,” said Claude. “They’re going to chic restaurants in Tokyo and New York.”

Dependence on fishmeal, he explains, means depletion of the species harvested by Chile’s poorest fishermen.

“In fact, the industry is taking from the poor to make a product that it sells to the richest 10 percent of the world.”

Salmon industry changing culture

Chiloé residents have seen communal traditions replaced with salaried lifestyles.

By ANTON DAUGHTERS

Special to the Tucson Citizen

On the morning of March 23, salmon cutter and union president Mauricio Henríquez walked into AgroSuper’s salmon processing plant in southern Chiloé and, with the help of two other employees, brought the plant to a standstill.

AgroSuper is one of Chile’s multimillion dollar salmon-exporters.

“First we turned off the machinery. Then we went from room to room, office to office and told everyone in the building that if they weren’t with the union, they had to get out,” he says.

The gate was chained and barricaded with stacks of heavy plastic pallets.

Four members of the union clambered to the roof of the 60-foot, olive-drab building, dragging with them a crude effigy of plant supervisor Douglas Guzmàn. They slipped a noose around its neck, spray-painted “The Guilty One” across its chest, and slung it over the edge of the plant where it dangled all day.

Henríquez and the 150 other union workers who took control of the plant that morning were engaging in a decades-old protest action called a toma – the illegal seizure of company property. Their demand: a raise of $13 per week.

“They treat us like machines here,” says Cecilia, 30, a single mother of two who moved to Chiloé from Santiago a year ago for work packaging salmon. “They watch our every move, shout at us to hurry and pay us a salary that’s a joke.”

The Citizen is not using her last name because she fears reprisals from her employer.

She and other workers call the plant Alcatraz.

Cecilia’s wage of $200 a month is typical of salmon workers. By comparison, unskilled workers in Chile’s biggest industry, copper, make more than twice that amount. Her employer, AgroSuper, which exports to supermarket chains such as Wal-Mart and Cosmo Food, reported profits of $72 million last year.

“Cheap labor is one of the biggest reasons the salmon industry has grown so quickly in Chile,” explains Juan Carlos Càrdenas of Ecoceanos, an environmental watchdog group. “Not only is the minimum wage extremely low ($190 per month), but labor standards are rarely enforced here.”

While government studies estimate that 3 out of 4 salmon companies violate labor laws, Chile regularly inspects only 12 percent of salmon facilities.

“This creates conditions for total abuse,” says Càrdenas. He points to the low rate of unionized workers – 11 percent – and tactics such as hiring part-time labor or rotating employees into new positions just before a pay raise is due.

Industry officials argue that salmon farming has brought jobs to an area where a generation ago few options existed. They note the constant supply of willing workers as evidence that conditions are relatively satisfactory.

“No one is forcing anyone to take these jobs,” says seafood processor Marcelo Malagueño. “In fact, the average worker in Chiloé today has something he never had before: a choice. Before, you either worked on the farm, fished or left the island to look for employment.”

According to Malagueño, the salmon industry also has brought a higher standard of living to Chiloé.

“Drive around the countryside here and you’ll see a proliferation of satellite TVs in people’s houses.

“Before, just owning a TV was a thing of status,” he says.

Other longtime residents of the island question the industry’s tendency to measure its impact purely in terms of material well-being.

“More TVs will not make us a happier people,” says Chiloé historian Armando Bahamonde. “That is not what our culture is about here. We have a long and rich tradition of working together as a community, of neighbors helping neighbors.”

Bahamonde voices alarm at what he sees as the biggest impact on his island: the replacement of communal traditions with salaried lifestyles and consumerism.

He describes the centuries-old tradition of the minga, in which islanders would come together to till fields, collect shellfish or build each others’ houses.

Once the backbone of social relations in Chiloé, mingas are rare today because salmon workers get only one day off a week.

“Before salmon companies arrived,” Bahamonde says, “money didn’t mean much to us. We fished and farmed to survive, and we shared what we had. We didn’t have much, but lived well. Now there may be jobs, but at what cost?”

He answers his own question.

“Our oceans, our lakes, and our own sense of identity.”

FREE TRADE PARTNERS

Chile is in a select group of countries that enjoy free trade with the world’s largest economy.

A list of the countries:

• Canada

• Mexico

• Jordan

• Israel

• Singapore

www.tucsoncitizen.com

Read each day’s installment of the series on our Web site.

TODAY: Farm-raising salmon isn’t the salvation advertised. n Workers at processing plant feel ill-treated.

TOMORROW: Chile is uniquely positioned to fulfill growing demand for fruit year-round. Business • Rush to grow economy might be harmful to Chile’s future. Perspective

WEDNESDAY: Its rich soil and climate help the country compete in the global wine market. LIVING

THURSDAY: Permit process shorter in Chile, copper mining companies say. • Life in Chuquicamata much like Arizona mining towns. Business

FRIDAY: Ecotourism is helping the Chilean economy expand. Business

MAP: Chile

Source: Tucson Citizen

PHOTO CAPTIONS: Photos by ALAN WEISMAN/Special to the Tucson Citizen

At a salmon processing plant in southern Chile, workers prepare fillets for shipment. Last year the United States imported almost half a billion pounds of Chilean farmed salmon.

At a salmon farm in southern Chile, a worker pulls in fish for processing.

Salmon pens float off the coast of the island of Chiloé in southern Chile.

The remains of a fire block the gate of a salmon processing plant on the Chilean island of Chiloé after workers took over the plant for a day in a dispute over wages.

Citizen Staff
Michael Chihak COLUMN

Personal attacks, Chile, political season

Michael A. Chihak

Citizen Editor and Publisher

“I see your point of view, but I still think you’re full of crap.”

- From the list: “Things you’d love to say in an argument”

Pardon that coarseness, but it is the best way I could find to explain the current phenomenon in the realm of free speech.

In short, the phenomenon is this: People with whom one agrees get to say whatever they want, but as for everyone else, shut up.

It manifests itself in a number of ways: the I’ll-outshout-you TV talk shows; the politicians who put more stock in their one-upmanship and ability to deliver one-liners than in being able to intelligently discuss an issue or answer a question; and those in the democratic discussion who won’t adhere to Sen. Jon Kyl’s notion that we ought to be able to “disagree without being disagreeable.”

Sometimes it shows up in letters to the editor. We’re careful to not allow personal attacks in letters, but occasionally they slip through.

So if the latest verbal diarrhea from a politician or rock star or commentator hits you right in the adrenal gland, do what Mark Twain said: “When angry, count to four; when very angry, swear.”

Just don’t do it in a letter to the editor.

o o o

The Citizen next week will run a five-part series about economic development in Chile. Why? you might well ask.

Because Chile is the first South American country to have a free-trade agreement with the United States; because if you ate a piece of salmon recently, it likely came from Chile; because if you enjoy a glass of wine, you may have tasted something of the product coming out of Chile.

And because we partnered with University of Arizona journalism teacher Alan Weisman and his students this year to take a look at the phenomenon of Chilean economic development and its impact in Chile and the United States.

Weisman’s graduate-level class was designed to marry expertise in Latin America with journalism in what we hope will be an ongoing part of the university’s journalism curriculum, given the importance of Latin America to our area.

Citizen Assistant City Editor Brad Poole worked with Weisman and the students on the series, including traveling to Chile with them this spring. Poole edited the series for the Citizen. His impressions of Chile and the project will appear in a column he wrote for the Citizen’s Perspective page on Tuesday.

o o o

Political season is upon us, manifesting itself in a number of ways:

• It rained balloons and confetti in Boston as the Johns – Kerry and Edwards – started their journey to the November election.

• Vice President Dick Cheney was scheduled to be in town today to stump for his boss, President Bush, and himself.

• The Citizen’s Editorial Board has begun interviewing candidates for contested races in the September primary election.

• A half-page dedicated to political news, geared toward local races, will run weekly in the Citizen, beginning Tuesday. The page will include a featured story each week from the campaign trail, a calendar of political events for the week and a notebook of tidbits from the various campaigns. That coverage will augment daily coverage from local, state and national races.

• The entire package also will appear online at www.tucsoncitizen.com, including links to national political coverage sites, a compilation of all local and state political news and an expanded run of political letters to the editor.

Michael A. Chihak’s column appears on Saturdays. Contact him by phone at 573-4646; fax 573-4569; e-mail: mchihak@tucsoncitizen.com

The Arizona Republic
Robert Robb COLUMN

Creativity could kick-start alternative to Social Security

Robert Robb

José Piñera was in Phoenix a couple of weeks ago, which is always an occasion of both inspiration and frustration.

As minister of Labor and Social Security, Piñera was the architect of Chile’s transformation to a system of personal retirement accounts from a government defined-benefit pension system. He is now an international evangelist for the idea.

Chile made the transformation in 1980. People were given the option of staying with the governmental pension system. But the alternative was structured very appealingly.

The governmental system was taking 10 percent of wages. Those establishing personal retirement accounts were given marketable government bonds for their past contributions. All of their future contributions were put in their personal retirement accounts. And they were guaranteed a minimum pension.

Today, 95 percent of Chileans choose to participate in the private alternative.

The national government, of course, had to finance the transition. It had to continue to pay benefits to those retired under the governmental plan and redeem the past-contribution bonds as those with personal accounts retired.

But the Chilean economy, fueled in part by the investment capital in personal retirement accounts, has done well. The transition has been financed while retaining one of the highest credit ratings in Latin America.

Over a dozen countries now have personal retirement account systems and the idea is even taking root in Western Europe.

The United States has a serious problem with its Social Security system. Dedicated taxes are projected to fall short of paying benefits by 2018, due to a declining ratio of workers to retirees. The Social Security Trustees estimate that bridging the gap during the baby boomers’ retirement would require a 15 percent increase in payroll taxes or a 13 percent reduction in benefits.

Piñera’s message and example are inspirational because they point to the way out. But frustrating, given how far what is being discussed in the United States lags behind what was accomplished in Chile.

In Chile, people were able to begin their personal retirement accounts with a sizable nest egg, thanks to the past-contribution bonds.

In the United States, unfortunately, starting out with an initial nest egg isn’t in most of the proposals. Most only contemplate a small contribution (2 percent to 4 percent of wage income) going into personal retirement accounts on a going-forward basis.

The risk with personal retirement accounts isn’t that they will start out too big, but that they will be too small to sufficiently attract participants and reduce future pension obligations.

Even with small donations, personal retirement accounts pencil out for very young workers. But they build slowly for middle-aged workers.

Unfortunately, past-contribution bonds or higher employee contribution rates seem outside the art of the politically possible in the U.S. right now.

There’s another potential source for initial nest eggs worth considering.

Right now, Social Security is generating a surplus. The general treasury uses the excess and gives the trust fund special notes that supposedly bear interest, currently running about 6.4 percent.

The treasury owes Social Security about $1.2 trillion. That’s expected to run up to around $4 trillion before the tide turns and benefit costs start draining the system.

Right now, the government owes the money to itself. It’s not truly a marketable asset.

What if workers were given the option of converting their share of this debt to their personal retirement accounts, as true marketable treasury notes carrying real interest that had to be paid annually?

At 2 percent of payroll, the maximum amount in aggregate that could be contributed to personal retirement accounts would be around $90 billion a year. Personalizing the Social Security debt could, therefore, provide about a 13-year kick-start.

Moreover, the debt would be much more secure, since the federal government would now owe the money to individuals rather than to itself. Federal accounting would also be more honest, since the interest on Social Security debt would actually have to be paid, rather than just being a book entry.

Not as good as recognizing all past contributions, as Piñera did in Chile. But perhaps a politically attractive way to fund at least something of an initial nest egg for personal retirement accounts in this country.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: robert.robb@arizonarepublic.com

Citizen Staff

By ROMANO CEDILLOS

cedillos@tucsoncitizen.com

A Tucson research center was praised yesterday by a Chilean who hopes his country can benefit from the center’s experience.

“I’ve often asked myself, ‘Why is the United States so developed, while (Chile) is so underdeveloped?’ ” said Esteban Tomic, ambassador to the Organization of American States.

“The answer is that when Americans see an opportunity, they take the initiative. And that’s what this law center is doing.”

Tomic made his comments to the members and directors of the National Law Center for Inter-American Free Trade, 440 N. Bonita Ave., during the center’s annual luncheon.

He credits the law center with helping make the U.S.-Chilean free-trade agreement a reality.

The agreement, signed by President Bush last month, is meant as a first step toward a trade agreement encompassing much of Central and South America, Tomic said.

The U.S.-Chilean agreement takes effect in January.

U.S. farmers and ranchers will gain not only from the ultimate elimination of Chilean tariffs, but also from new opportunities the agreement will open to American service industries, Tomic said.

The law center’s potential contribution toward implementation of the trade agreement is to eliminate the legal obstacles and harmonize trade laws between the two countries as it has done for the countries involved in NAFTA, said Boris Kozolchyk, director of the law center.

“We realize that in order to trade with countries throughout the Americas, you have to eliminate legal obstacles due to different rules, concepts, laws and methods of interpreting laws,” Kozolchyk said. “The center did that and made NAFTA possible.”

Tomic has persuaded the Chilean government and some universities to follow the Tucson law center’s lead, Kozolchyk said.

The U.S.-Chile agreement means Chile would receive “a virtual seal of international quality” by becoming a member of an exclusive trade club that involves the United states, Canada, Mexico, Israel and Jordan, Tomic said.

Citizen Staff

Time, surgery healing scars

Manny, 9, doesn’t complain about ‘growing’ skin.

By ANNE T. DENOGEAN

adenogea@tucsoncitizen.com

Most children don’t spend any time pondering the glory of their silky, unmarked skin.

But Manuel Eduardo Gutierrez, 9, doesn’t have the luxury of such innocence. For him, smooth skin is a precious material to be grown and harvested each year in discomfort until the scars of a heinous maternal act are gone.

He recently underwent the second of what will be three or more skin expansion procedures to erase the burn scars that covered a third of his body.

In a few years, after he completes his long medical journey, Manny may get noticed on the street for his good looks but never again because of his disfiguring scars.

At age 4, Manny – whom many Tucsonans will remember as the sweet-faced boy from Chile – was set on fire by his mother. She was drunk, out of control with rage and decided she couldn’t afford this child.

She threw gasoline on him and tossed a match, leaving the boy with third-degree burns that covered the front and back of his thighs and wrapped around his left flank, his throat and one arm.

Doctors weren’t sure he’d survive.

Manny’s mother was never prosecuted but lost custody of him and his two sisters. The boy ended up in an orphanage in Santiago, Chile, where he was isolated by other children who mocked him as “toast” and “scarface,” but where he also had the good fortune to meet an American teacher named Erik Andersen.

Andersen was quickly charmed by the good nature of the child, who asked him, on one outing, for money to give a beggar woman. Andersen worried about the future of the kind, intelligent boy. He learned there were no funds to get Manny the medical care he needed to address the massive web of scar tissue that would only become more constricting and crippling as Manny grew.

Told that Chile didn’t have the social programs or technology to help Manny, Andersen became his legal guardian and brought him to the United States for medical care in June 2001.

Tucson surgeon Dr. Jeffrey Nelson operated on Manny in Tucson in 2001 to improve his mobility and allow Manny to breathe easier – the scar tissue on Manny’s chest and neck was constricting his breathing.

Nelson injected steroids into Manny’s thighs to smooth out scarring, rearranged scar tissue to loosen skin around Manny’s neck and shoulders and rebuilt his left earlobe. Manny’s earlobe had essentially melted to the side of his face. Immediately following that surgery, Manny stretched and took a deep breath.

“Nueva (new). Suave (nice),” he told Andersen.

In late 2001, Manny was accepted as a patient of the Shriners, which provides free care to children with complex burns and orthopedic problems. Dr. Susan Kay at the Los Angeles Shriners Hospital is in charge of his care and has developed an extensive schedule of reconstructive surgeries.

It began last year with the first of at least three skin expansions – each of which involves two surgeries – to grow skin to replace Manny’s ruined skin.

Once all the expansion is completed, which will take another one to three years, Kay will do cosmetic sanding and laser treatments to minimize the scars left by the surgeries.

Kay recently completed Manny’s second skin expansion.

In the first surgery of the two-step process, the doctor inserts silicone bags adjacent to the scars. The first year, the bags were on Manny’s cheeks and shoulders. This year, Manny had bags on his shoulders, left hip, left arm and the right side of his abdomen.

Over three months, Andersen slowly inflates the bags at home with a saline solution, creating bubbles the size of baseballs or larger under the skin. The goal is to stretch and grow the skin.

During the second surgery, Kay removes the bags, cuts away the adjacent scar tissue, stretches the smooth, new skin over the area and stitches or staples it into place.

The method ensures a perfect skin color match, something Kay couldn’t be sure of with a donor skin graft.

Andersen said Kay was so happy with how much skin was grown in the recent procedure that the normally reserved surgeon greeted him after the surgery with a big hug, exclaiming, “Yes, I got so much!”

So far, Kay has replaced the scar tissue that rose on Manny’s neck like a turtleneck, much of the skin on his left arm and skin on his shoulders, chest and belly. Manny’s belly-button is slightly askew, but should scoot to its proper place after the next skin expansion.

That procedure will start in February, with Kay focusing on Manny’s back, armpit and chest.

It hasn’t been decided yet whether Manny will need skin expansion surgery for the scars on his thighs.

Andersen said Kay can be very aggressive and use many bags because Manny has a high pain tolerance and bounces back quickly from surgery. Just a day after his most recent operation, Manny insisted on getting out of bed and walking to the restroom.

The process hasn’t been easy for Manny, but he never complains, Andersen said.

He noted that Manny carried around three liters of liquid in the bags this year, the equivalent of the largest, party-sized bottle of cola. A bag on his shoulder broke through the skin, and Andersen had to pull it out while Manny watched white-faced in the bathroom mirror.

Asked about the discomfort of the skin expansion surgeries, Manny instead talks about how he himself removed some of the 120 surgical staples running up his chest and down his arm.

It wasn’t hard, Manny said. You push to clamp the staple and then pull, he explained.

Andersen said Manny is affected by the other children at the Shriners Hospital. What he has seen there has made Manny see himself as fortunate.

One of his fellow patients is scarred almost completely from the neck down because of a gasoline fire. A girl from Vietnam has facial burns. She has a tube where her mouth should be.

“He knows what life has been and he just knows you should appreciate what you got. He really appreciates what he has and what he is obtaining here in the United States,” Andersen said.

Andersen and Manny had moved from Tucson to Colorado, but recently decided they wanted to be closer to family in Arizona.

They moved to Lakeside, where Andersen’s sister and brother-in-law live. Andersen has accepted a teaching position with the White Mountain Apache Tribe. Manny will enter the third grade at Blue Ridge Elementary School this fall.

Their new home, a three-story Victorian, has a large yard that contains a 60-foot ponderosa pine under which Andersen plans to build a tree house for Manny. There’s also plenty of room for the dog Manny hopes to get soon.

Manny hasn’t had much fun this summer because the bags prevented him from most activities, including bicycling and swimming. But he is looking forward to starting soccer in August, if the doctor clears it.

The boy has never been told exactly what happened to him but he has asked.

Andersen said he will tell Manny everything when the boy is older.

He suspects Manny has vague memories of what happened and knows his mother did something bad.

When Manny talks to her on the phone, he doesn’t call her mom, mother or madre. He has dropped her last name and goes only by the surname of his father.

He never speaks of her.

Andersen, his sisters and brothers, their children and Andersen’s cousins have become Manny’s family. All that’s left is to formalize it.

“We’re filing an I-130, an immigration paper, to initiate the adoption process. What we wish to do is just make this official.

He is part of our family,” Andersen said.

PHOTO CAPTIONS: Photos by P.K. WEIS/Tucson Citizen

Last year, burn victim Manuel Gutierrez had bubbles filled with saline solution under his skin to stretch the skin so it could be harvested and used to replace scar tissue. In mid-July, Dr. Susan Kay of the Los Angeles Shriner’s Hospital cut away the scar tissue on his throat and stitched the new skin over it.

Manny is shown here with his legal guardian Erik Andersen, who plans to adopt Manny, after his surgery this summer. Eventually doctors will smooth the scars with a laser. Using this method to replace Manny’s damaged skin ensures an exact color match – something doctors can’t do with donor skin grafts. Manny was burned by his mother when he was 4.

The Arizona Republic
Robert Robb COLUMN

Personal retirement accounts sweeping globe, but U.S. stalls

Robert Robb

In the United States, the idea of personal retirement accounts as part of Social Security is generally regarded, and often attacked, as a radical, untested concept.

Last week, the Goldwater Institute gave its Goldwater Award for advancing the cause of liberty to José Piñera, a living refutation of that perception.

When Piñera was Chile’s minister of labor in 1980, he successfully introduced personal retirement accounts to that country’s version of Social Security.

He was motivated, in part, by the same finance problem virtually all government retirement programs face, unfunded and growing liabilities. But, perhaps more importantly, he saw the high payroll taxes required to finance such systems as a barrier to people of modest income acquiring wealth.

The system that Piñera instituted in Chile allowed current workers to stay in the governmental defined-benefit program if they wanted. But they also were given the option of putting 10 percent of their wages in a personal retirement account instead.

Those so choosing were also given government bonds for past payroll contributions, so they started out with a bit of a nest egg.

The personal retirement accounts remained part of a governmental program, but the participants owned the money and could direct the investments through a variety of private sector managers competing for the business.

New workers were required to establish personal retirement accounts. Remaining defined-benefit obligations were financed by a residual payroll tax and governmental debt.

Chile has now had personal retirement accounts for more than 20 years. Ninety-five percent of workers have them. While the government guarantees a minimum pension, a rate of return of over 10 percent has greatly exceeded it.

In this country, opponents cite the volatility of the stock market as part of the alleged riskiness of personal retirement accounts. But equities are not the only investment option. According to Piñera, about 70 percent of funds in Chile are actually invested in bonds paying a fixed interest rate.

As Piñera noted in his acceptance speech to the Goldwater Institute, why do politicians think people can make wise choices among candidates for office, but not among investment options?

Piñera, who has a doctorate in economics from Harvard, has become an evangelist for personal retirement accounts. For more than a decade, Chile stood alone. But that is no longer the case.

Peru was the first to join the club, in 1993. It also allowed workers to put 10 percent of their wages in personal retirement accounts and provided government bonds for past contributions. Unlike Chile, new workers have the option of joining the old defined-benefit governmental program.

The concept is spreading rapidly in Latin America. In 1997, Mexico made personal retirement accounts mandatory for private sector workers. Columbia, Argentina, Uruguay, Bolivia and El Salvador have adopted the reform to various degrees.

Recently-liberated Eastern Europe is also proving ripe for reform. Hungary, Poland and Kazakhstan have adopted personal retirement account systems.

The most severe government finance problems for defined-benefit programs are in Western Europe. And even there, the door is opening a little.

Britain allows workers to invest 4.6 percent of their wages in personal retirement accounts rather than the government defined-benefit pension. Sweden recently joined in at 2.5 percent.

All told, according to Piñera, there are 70 million people around the globe with personal retirement accounts as part of a government-operated pension system. This is now a proven alternative, not an untried, untested, radical idea.

Frankly, the danger isn’t that the United States will go too far with personal retirement accounts as part of Social Security reform, but that it will not go far enough.

Social Security taxes are now 12.4 percent of payroll. President Bush’s Social Security reform commission identified three options, with personal retirement account opportunities ranging from just 2 percent to 4 percent of payroll. That’s enough to finesse the government finance problem, but sharply limits the ability of workers to acquire wealth.

As Piñera pointed out in his address, real retirement security doesn’t come from depending on politicians to keep their promises. It comes from being able to use the fruits of your own labor to provide for yourself.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: robert.robb@arizonarepublic.com

Citizen Staff

By OSCAR ABEYTA

oabeyta@tucsoncitizen.com

About 70 business people attended a presentation yesterday at the University of Arizona Science and Technology Park to learn about business opportunities in Chile.

Chilean Trade Commissioner Alejandro Moya from the Trade Promotion Bureau of Chile in Los Angeles said the country’s burgeoning manufacturing and high-tech industries provide opportunities for U.S. companies.

“The most important exports from the U.S. to Chile are capital goods: machinery, computers, high-tech equipment,” Moya said.

The forum was sponsored by UA, the Tucson Export Assistance Center and the Sunbelt World Trade Association.

Moya said Chile has an educated population and a developed information infrastructure.

Mike Arnold, the founder and former chief executive of Modular Mining Systems, said his main concern when he began doing business with Chile was having to export mining experts from Tucson. This fear was unfounded.

“Our best workers came from Chile,” he said.

Because there was so much local talent, he said he was able to use Chile as a base to expand into other South American countries.

Chile has had one of the most stable economies in South America over the past decades.

James Collop, international trade representative for the Kansas Department of Commerce, said that state is hoping to expand its office in Santiago at some point to keep up with demand.

“Chile is the country we’ve seen most interest in from our companies,” he said.

By JOSÉ PIÑERA

The captain of the ship has seen the iceberg, and sounded the alarm. Another ship is waiting close by, ready to escort the passengers to safety. The only question is whether the crew will let the passengers get off the imperiled ship before it sinks.

In this case, the ship is the U.S.S. Social Security, and the captain of the ship is President George W. Bush.

As the President’s Commission to Strengthen Social Security has made clear, the U.S.S. Social Security is on a collision course with the iceberg of a rapidly aging population. In a post-industrial society like that of the U.S., there are increasingly fewer workers paying into the Social Security system, and increasingly more retired persons whose benefits are paid directly by those workers’ payroll taxes. The number of workers per retiree in the U.S. is projected to fall from 3.9 today to only 2.2 in 2030.

The visible part of the iceberg is the impending bankruptcy of the system, currently forecast by the Social Security trustees to occur in just fifteen years. The fatal flaw of the pay-as-you-go system is that the federal government does not actually save or invest any funds for payment of future benefits.

Instead, the federal government spends every penny it receives on current retirees – and on other government programs. Beginning in 2017, the system’s disbursements will exceed revenue, and politicians will be forced to choose among several unpalatable options: raising taxes, increasing debt, or reducing benefits to the elderly.

But the most dangerous part of any iceberg is the portion that is invisible. With Social Security, the greatest danger is that the system is already a bad deal for today’s retirees, and will be an even worse deal for coming generations of workers. For the workers of Generation X and beyond, the returns from their withheld taxes may actually be negative – which means that a worker would actually be better off putting his payroll taxes in a savings account at the corner bank at one or two percent interest.

Worse still, Social Security makes the federal government the gatekeeper of individual retirement security, taking something that is private and intimate – how individuals plan for their futures – and subjecting it to endless political decisions. In strict moral terms, the system is fraudulent: if private managers tried to run this sort of pyramid scheme, they would be prosecuted and sent to jail.

I know about the dangers faced by Social Security because I was Chile’s Secretary of Labor 22 years ago when that country went through a similar crisis. In 1981, Chilean workers were given the option of staying in the pay-as-you-go public system or putting their withholding into personal retirement accounts. Some 25 percent of the work force opted for the new system in just the first month. Today, 95 percent of workers use the private system. As a result, Chile’s savings and investment rates increased dramatically, and the long-term economic growth rate of the country nearly doubled. Thanks to the increased economic growth, Chile was also able to pay all of the benefits promised to retirees under the old system.

In other words, Chile successfully transferred its passengers to a ship that is iceberg-proof. For the last decade, it has been my mission to travel the world, showing leaders how to save their countries from the awful fate of pay-as-you-go pension systems.

To his credit, President Bush has sounded the alarm and urged America to begin moving its passengers to the new ship.

Congress should allow American workers to escape from the sinking ship of Social Security by putting some or all of their payroll withholding into personal retirement accounts. By giving workers the power and freedom to control their own destinies, America can provide its people with real retirement security.

José Piñera is the president of the International Center for Pension Reform, based in Santiago, Chile. On Saturday, at the Goldwater Institute’s 15th Anniversary Gala, he will receive the Institute’s 2003 Goldwater Award.

Freelance
Richard Salvatierra COLUMN

Poet’s words might lift our saddened hearts

Richard Salvatierra

Citizen Columnist

The late Chilean poet Pablo Neruda, winner in 1971 of the Nobel Prize for Literature, was a man who helped shape an entire generation of writers in Latin America and Spain. He has been translated into dozens of languages, and his works fill numerous volumes. Neruda died in 1973.

For my column today I have selected three poems of his that, indirectly it seems to me, speak to the tragic events of Sept. 11, offering tribute to those who died and to the families and friends left behind – a remembrance on this eve of a Christmas that surely harbors a twinge of sadness in the heart of each of us.

These are Neruda’s poems, with his titles:

Loneliness

The not-happening was so sudden

that I stayed there for ever,

without knowing, without their knowing me,

as if I were under a chair,

as if I were lost in the night -

so was that which was not,

and so have I stayed for ever.

I asked the others after,

the women and the men,

what they were doing with such confidence

and how they had learned their living;

they did not actually answer,

they went on dancing and living.

It is what has not happened to one

that determines the silence,

and I don’t want to go on speaking

because I stayed there waiting;

in that place and on that day

I have no idea what happened

but now I am not the same.

Still poise

I would like not to know, not to dream.

Who could show me how not to be,

how to live without going on living?

How does water continue?

What heaven do stones have?

Still, at the point where migrating birds

hang in their apogee,

and then fly on in their arrows

to the icy archipelagos.

Still, with a secret life

like a subterranean city,

and the days sliding by like ever escaping drops;

nothing exhausted or dying

on the way to our rebirth,

to our own return to life

in the steps of the buried spring,

of all that lay deep and lost,

interminably still,

and which now swims up from unbeing

to become a branch in flower.

I Remember You As You Were

I remember you as you were in the last autumn.

You were the grey beret and the still heart.

In your eyes the flames of the twilight fought on.

And the leaves fell in the water of your soul.

Clasping my arms like a climbing plant

the leaves garnered your voice, that was slow and at peace.

Bonfire of awe in which my thirst was burning.

Sweet blue hyacinth twisted over my soul.

I feel your eyes travelling, and the autumn is far off.

grey beret, voice of a bird, heart like a house

towards which my deep longings migrated

and my kisses fell, happy as embers.

Sky from a ship. Field from the hills:

Your memory is made of light, of smoke, of a still pond!

Beyond your eyes, farther on, the evenings were blazing.

Dry autumn leaves revolved in your soul.

Richard Salvatierra is a Tucsonan and a retired career U.S. foreign service officer. His column appears Fridays.

The Associated Press

The Associated Press

TUCSON – A severely burned Chilean 7-year-old who underwent extensive surgery in Tucson flew home to Santiago where his family waited today.

Just before boarding a plane in Tucson, Manuel Eduardo Gutierrez Sotomayor waved a miniature American flag and held up a poster thanking Tucson for caring about him.

Residents had donated nearly $5,000 for his care, along with numerous toys and stuffed animals.

Waiting in line with him yesterday to board was Erik R. Andersen, the international educator who had obtained temporary guardianship and had brought him to Tucson in June for medical treatment.

When Manuel was 4, his drunken mother doused him with gasoline and set him on fire, burning more than 30 percent of his body. Police decided it was an accident, but authorities took custody of Manuel and his two sisters.

In August, Dr. Jeffrey Nelson, director of the burn unit and chief of plastic surgery at St. Mary’s Hospital, operated on Manuel for free, rebuilding the boy’s left ear lobe.

Nelson also released skin tension on his neck and at his left armpit that prevented movement, and he injected steroids into his thighs to help smooth the skin.

Dr. Stan Foutz, the anesthesiologist, donated his services, and the hospital covered the other expenses.

Manuel is expected to undergo 10 or more operations as he continues to grow. The next may be next year, and the Shriners Hospital has offered to help Andersen in providing Manuel with long-term care.

Andersen, who was to return to Tucson tomorrow, will keep an account open for Manuel at Bank of America. Donations will be used for costs, including medical care and education for Manuel in Chile.