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Viewing cable 06SANTIAGO2194, SOUTHERN CHILE -- FAR FROM SANTIAGO BUT DOING JUST

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Reference ID Created Released Classification Origin
06SANTIAGO2194 2006-10-18 18:54 2011-08-25 00:00 UNCLASSIFIED Embassy Santiago
VZCZCXYZ0000
PP RUEHWEB

DE RUEHSG #2194/01 2911854
ZNR UUUUU ZZH
P 181854Z OCT 06
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 0204
INFO RUEHAC/AMEMBASSY ASUNCION PRIORITY 2693
RUEHBR/AMEMBASSY BRASILIA PRIORITY 3348
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 3260
RUEHCV/AMEMBASSY CARACAS PRIORITY 1135
RUEHLP/AMEMBASSY LA PAZ OCT 4853
RUEHPE/AMEMBASSY LIMA PRIORITY 4763
UNCLAS SANTIAGO 002194 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD SOCI CI
SUBJECT: SOUTHERN CHILE -- FAR FROM SANTIAGO BUT DOING JUST 
FINE 
 
REF: SANTIAGO 1985 
 
1. SUMMARY.  Southern Chile is booming.  With unemployment 
rates half the national average or below, the south's busy 
cities can appear rundown physically but boast vibrant 
economies below the weathered surface.  Not all of southern 
Chile enjoys the same dynamism and infrastructure, however, 
as the island of Chiloe remains isolated and unconnected to 
the national economy.  In Patagonia, in the extreme south, 
regional identity remains strong even as the region opens up 
to tourism and business.  END SUMMARY. 
 
2. Senior Economic Officer visited the cities of Puerto Montt 
and Punta Arenas and Chiloe island October 2-6. He met with 
local mayors, tourism and business development officials, as 
well as university students and professors.  Puerto Montt is 
the capital of Chile's Lake District or Region X, about 600 
miles south of Santiago and with a population of 1.5 million. 
 Nearby Chiloe is South America's largest island after Tierra 
del Fuego and remains physically and economically 
disconnected from the mainland.  Punta Arenas in Patagonia is 
the capital of Region XII and sits at the tip of Chile and 
the continent.  It has a population of only 150,000 but 
enjoys a strong regional identity and a dynamic economy. 
 
Puerto Montt -- Back from the Dead 
---------------------------------- 
 
3. Puerto Montt appears at first blush to be what it once was 
-- a rundown fishing town.  The city, like many others in 
southern Chile, was devastated by a 1960 earthquake estimated 
at between 9 and 11 on the Richter scale.  Lost in the 
earthquake and subsequent tsunami was the physical evidence 
of the influx of German immigrants who largely settled the 
region in the mid-19th century.  After the Spanish were 
evicted by the indigenous Mapuche indians in November 1599, 
it was only through German immigration that southern sections 
of Chile around Puerto Montt were re-integrated into Chile in 
the mid-19th century.  As a result it is still easier to find 
someone in Puerto Montt who speaks German rather than English. 
 
4. More recently, the large expansion in commercial fish 
farms over the last decade has lead the economic recovery of 
the city and region, ending jokes about Puerto Montt being 
more appropriately called "Muerto" (dead) Montt.  In 2005, 
Chile exported nearly USD 1.5 billion in salmon and trout 
grown in fish farms in Region X.  The city enjoys a good road 
connection to the north via the Pan-American Highway (Route 5 
in Chile) and despite its distance from Santiago does not 
suffer from the sense of isolation that exists in much of 
Chile's remote regions in the north.  According to Major 
Quinteros, a Socialist Party major who has been in office for 
six years, the city enjoys an unemployment rate of 4.3 
percent, less than half the national average.  Given the 
employment boom, Quinteros' concerns are how to solidify the 
economic gains through social programs emphasizing spending 
on education and health.  Quinteros pushes enhanced 
infrastructure, better services and growing tourism as keys 
to continuing the region's economic growth. 
 
Faraway Chiloe 
-------------- 
 
5. Chiloe, South America's second largest island after Tierra 
del Fuego, is the Chile that time forgot.  It is 
characterized by houses on stilts at the water's edge, wooden 
churches and small family-owned farms.  It is connected to 
the mainland, Puerto Montt being the nearest big city at a 
two-hour drive, by an efficient ferry system.  Plans to build 
a bridge across the Chacao canal have not moved forward, and 
the latest estimates on construction costs for the 2.6 km 
bridge are just under USD 1 billion.  With only 150,000 
residents and limited economic ties to the mainland, Chiloe 
cannot make the economic argument to support the costs of 
building the bridge. 
 
6. As opposed to the industrial scale fish farming near 
Puerto Montt, in Chiloe nothing is done on a large scale. 
Farms are small, exports even to the rest of Chile are 
minimal and tourism suffers from a lack of infrastructure. 
The island boasts only 2,500 beds in its hotels and 
guesthouses; hardly the capacity needed to encourage more 
visitors.  That being said, the island has extensive national 
parks and a cultural mix of Spanish and indigenous influences 
no longer found elsewhere in Chile.  Curiously, Chiloe was 
the site of the last stronghold of the Spanish empire in 
 
South America.  Fort San Antonio finally fell to Chilean 
forces in January 1826.  Cable TV and the Internet have now 
invaded Chiloe but the economic potential of 21st Chile 
remains as yet unrealized (and maybe unwanted) on Chiloe. 
 
Punta Arenas -- The End of the End 
---------------------------------- 
 
7. Punta Arenas sits on the Straights of Magellan, well aware 
of its position balancing on the tip of South America. 
Region XII comprises 17 percent of Chile's national territory 
but has only 1 percent of the country's population, a mere 
154,000 inhabitants.  The city of Punta Arenas is well 
preserved with historic buildings and none of the sense of 
the narrowly-averted decay of Puerto Montt.  Punta Arenas is 
an active city that is enjoying the economic opening and boom 
of southern Chile.  It does not have a direct land link with 
Chile (all overland travel must pass through Argentina) but 
its unemployment level is the lowest in all of Chile at 2.9 
percent.  There is a sense in Punta Arenas, among the mayor 
and civic leaders, that the success the city and region enjoy 
is the result of perseverance and hard work.  There is no 
sense of dependence for resources and attention from Santiago. 
 
8. The city has a diversified economy based on oil, shipping, 
tourism and a strong Chilean military presence.  The city has 
a strong tradition of immigration with a mix of Croatian, 
German and English immigrants who have given Punta Arenas 
more of an international flavor than many Chilean cities. 
Given the natural and unique beauty of Patagonia, Punta 
Arenas has found it easy to take advantage of its tourism 
potential.  About half a million tourists pass through the 
city every year, about two thirds of them European, en route 
to the national parks that dominate Patagonia.  According to 
tourism officials in Punta Arenas, just over half of the 
region's land mass is national park, which provides tourists, 
whether passing through on a cruise ship or spending weeks in 
the national parks, a wide variety of sights and activities. 
 
Regional Identity 
----------------- 
 
9. Southern Chile enjoys a strong but not arrogant sense of 
identity.  In Puerto Montt, the sense is of a city and region 
that have found new life in a Chilean economy opening up to 
the world.  In Chiloe, the identity is fueled by a unique 
history further punctuated by physical isolation from the 
national economy.  In Patagonia, the sense of regionalism and 
pride in southern Chile is palpable on the street.  Patagonia 
has its own regional flag that is displayed throughout Punta 
Arenas.  Not only do stores display the flag, it flutters in 
front of government buildings alongside the Chilean flag, and 
even judges fly the flag in the courtrooms. 
 
10. Chile has the reputation of being a Santiago-centric 
country.  While northern Chile at times resents the sense of 
isolation and neglect this might entail (reftel), the south 
has a different take.  Its identity is born of economic 
strength and an eagerness to open up to tourists and the 
world economy.  Despite sitting at the end of the end of the 
world, southern Chile is just beginning to realize its 
potential. 
KELLY