By Otávio Calegari
A few weeks ago, Codelco (National Copper Corporation of Chile) signed an agreement with the chemical and mining company SQM to exploit lithium in the Chilean Salar de Atacama. The permanence of SQM in the exploitation of the salar, which was set to end in 2030, will be extended until 2060 (from 2030 with majority participation of Codelco), on land belonging to the State (Corfo). Thus, the company of Ponce Lerou, former son-in-law of Pinochet, will continue to make huge profits from lithium production in Chile. To give you an idea, in 2022 alone, SQM had more than $4 billion in profits. As a result, Ponce Lerou is today the fourth richest person in Chile.
In addition to being one of the most lucrative companies in Chile, SQM has also been one of the most controversial. In 2015, a huge corruption scandal involving the company was made public. In the following months, SQM was found to have illegally financed more than 300 politicians; among them, several “rival” presidential candidacies, such as Piñera, Frei, Bachelet and Marco Enríquez-Ominami. The scandal led to the fall and imprisonment of its general manager (Patricio Contesse, Ponce Lerou’s right-hand man) and other figures in the company. It also led to the prohibition of Ponce Lerou and his children from being on SQM’s board of directors. However, Ponce Lerou was spared and was released. And not only that. He continued to be the main shareholder of SQM and today his grandchildren are on the boards that control the company.
Almost 10 years after the scandal, everything has remained the same. Ponce Lerou is getting richer every day and has more and more political influence. There is no doubt that he continues to finance, legally and illegally, different political parties. A reflection of this is that he will continue in the lithium business for 35 more years, which is a gift from Boric. The Chilean State could perfectly well have taken over the business after 2030, but the government did not want to do so. Ponce Lerou’s lobby prevailed.
This example of how one of the richest and most corrupt men in Chile has remained untouchable and a key influencer on state decisions, is only one of dozens that we could cite in recent decades. In all the corruption cases involving big businessmen, none of them ended up in jail. These include the tax evasion and finance fraud of the Penta case, the so-called “Cartel of Comfort” case responsible for the price-fixing of toilet paper and feminine hygiene products, the “Chicken Cartel” case that fixed prices on supermarket poultry, and fraudulent approval of the Fishing Law, just to name a few. Those responsible are still free and continue to amass huge fortunes.
The State is the business committee of the bourgeoisie
In the previous edition of La voz de los trabajadores, we described the functioning of the Chilean economy and how it benefits a few families who own practically all branches of the economy. The power of these families is based on the private ownership of large companies and banks. But these families do not directly govern the country. With the exception of Piñera, the big businessmen are not politicians. They stay behind the scenes. However, all major political decisions of relevance (free trade agreements, major reforms, tenders, candidacies, etc.) are determined by big business.
This is not a Chilean peculiarity either. In 1848, in the Manifesto of the Communist Party, the German revolutionary Karl Marx described the government of the modern state as “a board that administers the common business of the entire bourgeois class.” Thus, since the rise of capitalism, the bourgeoisie has controlled states in different ways, sometimes in more “democratic” ways and sometimes in more authoritarian ways. The only exceptions were the experiences of workers’ revolutions, when the bourgeoisie lost control of the state and the economy, but these receded after the restoration of capitalism.
Today, many engaged in the social struggle continue to believe that the State is a kind of empty shell and that it is enough to win elections for us to be able to transform it into a tool at the service of the people. But this is not the case.
The division of powers and the control of the bourgeoisie
Big business uses various mechanisms to control the State. The basis of this control is the so-called “division of powers”. If they lose the presidency, they control the parliament. If they lose the parliament, they control the justice system. If they lose control of almost everything, they always have the last coin left: the armed forces. For this reason, no government that claims to be “popular” is able to carry out great reforms and sustain them in time if it does not break the structure of the bourgeois state. Allende was the greatest example of this, believing that he could go against the bourgeoisie without destroying its state. We all know the result.
The division of powers also serves the businessmen to establish rules for their disputes, so that these do not have to be resolved permanently by means of violence. This is what we call “bourgeois democracy”.
The mechanisms used by big business to control and influence political decisions are many and varied. Here we will list five of the main ones in Chile:
1 – Financing of parties and candidates. The most important parties in the country receive direct financing from large companies and businessmen. The owners of the country such as Luksic, Matte, Angelini, the Piñera family, Ponce Lerou, Von Appen, Solari, and also the transnationals (Enel, Santander, etc.) donate a lot of money to the parties. Sometimes they donate to two or three parties, which appear different to the population, but which defend the same interests. The biggest bourgeois parties in Chile are the UDI, RN, the Socialist Party, the DC and then come other smaller ones: PPD, Evópoli, etc. The petty bourgeois based parties, like the Frente Amplio or the PC, although up to now they have not received large direct sums from the owners of the country, are also controlled by those businessmen, through the alliances they make with the bourgeois parties. As they have a program based on agreements and pacts to conquer reforms, they have to limit themselves to what the businessmen establish. Today this is evident with Boric and the PC approving the states of exception in Araucanía to benefit the Matte and Angelini families or closing the SQM-Codelco agreement to benefit Ponce Lerou.
2 – Corruption of public officials. Another very common and widespread form of business control over the State is the corruption of public officials. The recent case of Luis Hermosilla graphically demonstrates how a lawyer related to big business and political authorities put a price on the heads of officials of the Internal Revenue Service. There are countless other examples in recent years. Prosecutors, judges, police, military officers, customs officials, mayors and a long etc. have been corrupted.
3 – Study and lobbying centers. The big businessmen are owners of important study centers (think tanks or groups of experts) that daily influence the projects under discussion in parliament. Some examples are the Centro de Estudios Públicos -CEP- (linked to the Matte family, with the participation of other big businessmen), Libertad y Desarrollo (UDI/RN), Chile 21 (PS/PPD), and several others. There are also professional lobbyists, that is, people who work as articulators between the different parties and businessmen, such as Pablo Zalaquett, who recently invited Boric’s ministers and big businessmen for dinners at his house.
4 – Privileges and ideological training for the officers of the Armed Forces and the Armed Forces of Order. The owners of the country and imperialism know that the police and the Armed Forces guarantee order. For this reason, they keep these institutions under the strictest control and without any internal democracy. Luksic, the largest businessman in the country, “donates” scholarships to officers of the Armed Forces so that they can go to the United States for training. In addition, the officers receive very good salaries, have access to good houses, clubs and many other privileges. The police and the Armed Forces have their own pension system, different from the AFPs. These institutions also lack internal democracy and maintain a rigid discipline, determined by the chain of command. Thus, internal questioning is almost impossible, except in revolutionary periods;
5 – Threats of boycott and disinvestment. Finally, the capitalists are permanently threatening politicians that they will withdraw their money from the country if certain reforms are approved. They know that they are capable of generating economic chaos and they care very little that the population could suffer with shortages, inflation, etc. They did it in the 70’s and they could do it again. On the other hand, business groups habitually “take” money out of the country to invest in other countries with different laws and markets, because that is how capitalism works. Big business is organized in large associations that have enormous bargaining and blackmailing power, such as the Association of Banks, the Association of AFPs, the Mining Council, the Chilean Copper Society, the Chilean Chamber of Construction, and the Confederation of Production and Commerce. The first business associations date back to the beginning of the Republic, e.g., the National Society of Agriculture in 1838 or the Sociedad de Fomento Fabril since 1883. These organizations are the ones that ultimately determine what the parties do.
Conclusion
The Chilean state, like other capitalist states in the world, cannot be changed “from within”. In Chile, the interests of big business and its iron control over the State do not allow for major reforms or transformations. If in the 1970s they allowed Allende to go very far by nationalizing copper, banking and many industries, today they will not allow even a tenth of that. Their State apparatus is ready to divert, defeat and repress any profound attempt at social change, be it through bourgeois legality itself and its institutions (the Supreme Court, Constitutional Tribunal, Parliament, etc.), or be it through force, with the Armed Forces and the Forces of Order. All the political organizations that want to transform Chilean capitalism without breaking with the structure of the bourgeois State will arrive exactly where the Communist Party and the Frente Amplio have arrived at present.
- This article was first published in La Voz de los Trabajadores n° 33. Press of the International Workers Movement, Chilean section of the IWL. It is part of a series of articles of programmatic character that seek to answer the questions: Why Chile does not change? What must we do to change it?
