J: The environment and the need for sustainable development emerged as issues of great concern at the recent Santiago summit. How will a country that relies as heavily as Chile on the export of raw materials make the shift towards sustainable development, as defined at Santiago?

    Insulza: Let me put the question even more directly. This is a country of about 750,000 square kilometers, with fourteen and a half million people: about fourteen of those fourteen and a half million live in the middle 250,000 square kilometers of the country. So I think that in the future we'll face strong pressure on some very basic issues, such as water supply and air quality - even land resources may become a problem. And of course the problem of resource management will be a big issue, especially since we rely so heavily on mining. Now, in recent years we have passed some very strict environmental regulations and laws — some Chileans are even beginning to complain that these laws are too strict. Any big project that you begin in Chile has to have environmental clearance, and you can be subject to at least two instances of appeal. So we have developed a legal foundation, but, of course, one must admit that we started very late. In the years of the dictatorship there were absolutely no environmental concerns. For example, the other day there was a big scandal in Chile, because one day the pollution levels in Santiago reached unacceptable proportions…But ten years ago, the same thing happened, let's say, twenty times a year. And the strange thing is that this scandal is actually proof of the high level of environmental concern in Chilean society. There is great concern for the environment; the population tends to give a lot of attention to the issue. So I think we're moving in the right direction, but the problem still exists. We have to develop a much more complete policy for the environment and the management of resources.

    J: Given that the Santiago declaration names education as its first priority, and the World Bank and other groups have pledged funds to improve world education, how do you envision the future development of Chilean schools? Does a tension exist in Chile, as it does here in the U.S., between a concern for public education and a trend toward privatization?

    Insulza: A tension does exist, to a certain extent. And let me explain how it developed. Chile - and not only Chile, but the countries of the Southern Cone of Latin America [Argentina, Uruguay, Brazil] — all thoroughly developed their public education systems only in the last twenty years. And so, early on there were situations where things were reversed: people having their children in private school, and wanting to get them into one of the important public schools in the country. And they [the public schools] were really excellent, very high quality education. Now, two things have happened in Chile in the last two decades. One is that education has spread: we have many more people going to school, and we have very, very, very low degrees of illiteracy. And the second is that the quality of education has declined. And that, joined to privatization and to decentralization, has created a problem for public education. Lots of local public schools have been privatized and given over to local administrators…But in practice, what has happened is that, since we have very stratified cities, in decentralizing and privatizing at the same time you get some municipalities in which the amount of money spent per student is twenty times as much as it is in others. I think that the country went too fast in the 70s and the 80s, from a centralized to a decentralized system. And of course that seriously affected the quality of public education. So the tension does exist.

    But we're doing a lot of things to change it. Educational reform in Chile is based around two or three basic things. One is increasing the number of hours that children spend in school: that will certainly favor public education, because private school students already spend most of their day in school. In public schools they spend the morning or the afternoon, but never both. Of course, this requires a lot of money, because in some places you have to build a lot of schools. In the second place, it will really benefit the public school children more than those in the private schools, because they are poorer, and have worse conditions at home in which to study and do their homework. Then there must also be a big increase in the training of teachers… We've heard a lot of protests from the teachers, and they're right, because they're very underpaid, but they're paid three times as much in real terms, on average, as what they were paid in 1990, when the democratic government arrived. But in spite of tripling their wages, you still have professors who are largely unpaid. We've done a lot to increase the quality of teaching. We have a big requalification program, which offers high school teachers the possibility to study abroad for 3 to 6 months. A lot of groups have taken advantage of this opportunity. Finally, we're also engaged in increasing the quality of education through the creation of a large number of public, high-quality high schools.

    So this is a very ambitious reform program in quality, in the size of the educational system, in the quality of education, and also in the equalization of public and private education. And that's probably why our president wanted very much to put the [education] clause in the summit declaration. Part of this reform has to do with technical skills — we are trying to ensure that by the year 2000 at least half of the public schools in the country will be fully linked to the Internet. I don't know exactly what the number is now, but we expect to have fully half of our schools linked by the year 2000. So this will mean changes in the curriculum. We have a very ambitious plan with the World Bank, to make changes in the curriculum for technical high-schools and secondary education, and to improve technical and professional education. Of course, part of our problem is solved by the fact that we have a young population: about 85 percent of the people who are working now will still be working in the year 2010. So this is not just a matter of educating children, but also of reeducating the labor force. There are some very ambitious programs in that area as well, even though thorough on-the-job training would require more generosity from the business sector. They have some interest and experience in this area; I'm not criticizing the entire business sector, but only some enterprises are willing to get involved in this kind of thing right now.

    Koreck: This raises another question, about the fit between this rethinking of the role of education, and the remaking of the labor force. Looking forward, what kind of labor force is Chile attempting to forge for the next century?

    Insulza: Well, let me say this: it's very clear that we are leaning towards an economy which is grounded in mining and mining development, and services. Those are the sectors of the economy that are growing most quickly. It's not that we're not going to have industry, and we're probably going to continue developing our sea resources as well, but mining and services will always be a very large part of the economy. Working in these areas requires some very basic training, which many people do not have at present. It's probably easiest to give you an example from the field of mining. We have, as you know, the largest open mining venture in the world, Chuquicamata. Chuquicamata has the advantage of extracting copper at a cost of around 55 cents a pound, which is very low. Chuquicamata, for that kind of production, employs about 6000 workers. President Frei inaugurated a new mining venture the other day, called Radomiro Tomic, after a famous Chilean politician who fought for the development of the copper industry. Now, this new mine is basically the same as Chuquicamata, it will produce more or less the same amount of copper, but it will only employ 500 people.

    Koreck: …As opposed to 6000.

    Insulza: …As opposed to 6000. So you can assume it will have a much higher productivity, and that the cost of copper, instead of 55 cents, will probably be around 36 cents a pound. But this doesn't mean that the labor force will diminish, because there are possibilities for other, large ventures in Chile. But you have to train people in a different way: what those 500 people are doing has nothing to do with what the other 6000 were doing before them. The basic training of the people for that kind of work is completely different. And the situation is the same in the areas of financial services, transportation services, port building, etcetera. To put it clearly, we feel that we have two big obstacles to continued growth. One is infrastructure, and the other is education and job training.

    Levine: Could you say something about the prospects for regional integration at present, in the areas of export and investment?

    Insulza: Let me say first, as a political aside, that we trade most of our products with several regions of the world. We do about one third of our trade with Europe, one third with the Asian Pacific, and forty percent with the Americas: twenty percent of that forty is with Mexico, the rest is with the US, which is our first trading partner. Well, what does this mean? This means that we want to maintain those relationships. We also have real opportunities for economic complementation and integration with our neighbors. For us, integration with Argentina, with Brazil, with Uruguay, Paraguay, Peru and Bolivia is not just a matter of trade. We buy more than 50 percent of our oil from Argentina, through a pipeline from Argentina. We're in the process of switching part of our energy generation, which right now is basically electric, to natural gas, and that gas also comes from Argentina. But we in turn generate electricity which we send to Argentina - Chilean companies own a lot of Argentinean electricity… So, economic integration is growing very quickly, our trade with the Mercosur is growing very quickly, and we have put the Mercosur and the Southern Cone of Latin America at the center of our political and economic development process.

    That aside, we very much want to continue stable relations with our current trading partners, and that's why we look for agreements with the US, Canada, Mexico. We're not thinking of joining NAFTA in the traditional terms, we're not thinking of economic integration, we're thinking of NAFTA in terms of trade relations. I mean, whatever you say about NAFTA — you like it, you don't like it, it's good, it's bad — economic integration between Canada, Mexico and the United States is taking place. With or without NAFTA, it's taking place anyway. And we are not a part of that. We're just interested in good trade relations. However, relations among the American countries in general — the countries of Latin America, South America and the U.S. — are of the utmost interest to us, because we export to them in a much more diversified way. You see, the success story of Chilean exports can be told in two ways. One is to say that exports have tripled in the last ten years, and it's true, that has happened. I could point out that we export to 167 countries, we export more than 3000 products, and we export to several parts of the world. The other version says okay, that's true, but let's also agree that, if you take our exports to Europe, eight products comprise more than 70 percent of our export, and if you take the case of the Asian Pacific, to which we export 34 or 35 percent of our exports, about half of that goes to Japan. So we need a lot more diversification.

    Levine: Have you tried to promote exports since 1990?

    Insulza: Well, let's say that, since 1990, we've had an extensive system of export promotion, but it has concentrated very much on what we'd call the promotion of traditional exports. None of our exports of wine received any assistance, for example — the producers had to do it themselves. We try to help our grapes producers, apple producers, people who want to promote new exports, and we have emphasized that a lot, and worked a lot with smaller, private businesses. Close to 80 percent of the labor force in Chile is still employed in small- to medium-sized enterprises, and we've tried to support that. Thirty percent of the national budget is basically social investment. I'd say that's a big change from neoliberalism.

    Koreck: I think this raises an interesting question, now that you're coming back to the theme of neoliberalism. The growth of the Chilean economy from 1990 to 1995 was about 6.9 percent a year, which is outstanding. And yet, the fact remains that Chile is still exporting traditional raw products. So, how do you account for the fact that the economy is growing, even though not much has changed in terms of what the country is exporting? As you know, earlier dependency theory models ruled this out as a valid route to development.

    Insulza: When I talk about "adding value" to exports, I'm not imagining Chile as a new Hong Kong, or a South Korea. I would say that what we have to do is to move in the same direction we've been moving, but to add value. We can do better in our export of molybdenum than to simply export raw molybdenum: we should be able to process it, and export it enriched with iron, which would pay about three times better than raw ore. We have to export more elaborated copper, and we have to refine more copper, and we have to improve our capacity to export processed wood, because lumber exports are running into more and more environmental problems throughout the world every day. If you don't process it, you don't sell it, and that's going to be a factor ten years from now. Nobody's going to buy it. Processed goods play an increased role in the second phase of our exporting model, which is now underway. Fifteen years ago, 70 percent of our exports were copper. Now it's about 45 percent. Not what we would like, but much better than 15 years ago. It's about improving the four big sectors: mining, forest, sea products, and fruits and vegetables. Those are the basic exports, and that's where we're going to continue improving quality, and our capacity to add value. Our salmon industry is a success story. We're the second largest salmon exporters in the world, even though we have no salmon in Chile: our salmon is all completely farmed. Which proves that you can do things in the area of natural resources without damaging the environment: in fact, the fishing in the south of Chile is much better now than it was a few years ago. And we're going to continue this trend. Industry in Chile today is still less a factor than it was 25 years ago - it has improved in the last 7 or 8 years, but the blow of an abrupt opening of the economy in '75 is something that our industry hasn't really recovered from. In 1975 the government didn't just say "we're going to raise tariffs by one percent a year over the next 20 years," it said "we're going to raise all our tariffs to 10 percent, starting Monday." Try to see how you work with that. That's what happened in the middle of the 70s, and I don't think that it's easy to recover from. We're not going to close the economy, but we have to take into account that most of our local industries suffered a very severe blow from that.

    J: Jumping from the natural environment to the human environment, let's talk a bit about culture, and about the tension between globalization on the one hand, and efforts to protect or foster local cultural development on the other. Are there cultural initiatives, either in Chile or within the context of Mercosur and the FTAA [Free Trade Agreement of the Americas], which take this tension into account?

    Insulza: Well, I very much share the sentiment in what Fidel Castro said about a week ago: that standing against globalization is like saying you stand against supply and demand. Globalization is taking place, and that affects our countries: Chile is an open country, and at the same time it's local, it's provincial. So, many of the cultural effects of globalization are not very clear yet. But I think it's a fact that even though you couldn't really talk of a cultural policy in the last ten years, Chilean cultural activity has developed a lot in the years of democracy. It was never fully dead, because as you know, the art of discontent is something which is really very productive. To some extent that happens today: many of our people from cultural sectors don't like the things that are happening in Chile now. But one thing that is happening is that we are becoming much more productive and creative. We have an important literature.

    From the point of view of the government, the president called an initial commission on cultural matters, which included central people from the opposition, and they produced a very good report, and we are now in the process of generating some kind of institutionality, some national directives. We are trying to develop ways in which we can support — but never direct — cultural activity. But that's a field in which we are going to need some institutional change, because right now the government sponsors a lot of small institutions which work on cultural matters… So there's a lot of movement in that direction, too. In other cultural activities, which I like very much, like theatre, things are not going at the same speed, but I think that there is a clear cultural awakening. I am willing to assert that most of this development has taken place because of the new cultural freedom and democracy. But most of the people doing that creative activity probably wouldn't agree. They would say that it's not enough. But from the point of view of culture, it's more open, in a general way.

    Jose Miguel Insulza was appointed Minister of Foreign Relations for the Republic of Chile in September 1994. Prior to that time, he was Undersecretary of the Ministry of Foreign Relations (March-September 1994), Ambassador for International Cooperation, Director of Multilateral Economic Affairs of the Foreign Ministry (1990-94), and Vice President of the Agency for International Cooperation. He has also served as professor of Political Theory at the University of Chile, and of Political Science at the Catholic University of Chile. Mr. Insulza is a graduate of the Law School of the University of Chile, the Latin American School of Social Sciences, and the University of Michigan, where he was granted a Master of Arts degree in Political Science in 1973. The Minister was in Ann Arbor on May 25-26. His trip, originally planned as an informal visit, was subsequently modified to include a presentation on "Regional Integration and Political Cooperation in Latin America," in order to publicize Chile's desire for inclusion in the ongoing NAFTA talks. Among those present during the interview excerpted below were Mr. Fernando Ayala, Consul in Chicago of the Chilean Republic; Ms. Odette Magnet, Press Attaché of the Chilean Embassy in Washington DC; Mrs. Georgina Insulza, Mr. Insulza's wife; Terri Koreck, Program Associate at the Program in Latin American and Caribbean Studies (LACS); Professor Daniel Levine of the Political Science department; and Jim Reische, Journal editor.