"A South American nation with a population of about 15 million, Chile returned to democratic rule in 1990 after 17 years of military government. The current administration of President Ricardo Lagos, inaugurated in March 2000 to a six-year term, is Chile's third elected government since the return to civilian rule. Chile has weathered the transition to democracy well, although civil-military relations have been tense at times. The October 1998 arrest of former military ruler General Augusto Pinochet in London on human rights violations exacerbated political schisms in Chile, but in the end, Chilean democracy appears to have emerged stronger with the civilian government more firmly in charge of the military. Chile is generally recognized as a model for the successful implementation of market-oriented economic reform measures, and there has been political consensus in the country on maintaining a liberal market economy and prudent fiscal and monetary policies. The Lagos government has continued the country's export-oriented economic strategy. The economy registered positive growth rates from the mid-1980s through 1998 but contracted in 1999 because of the Asian economic crisis. In 2000, the economy rebounded, but economic growth slowed in 2001 and in 2002 because of the global and regional economic slowdown. Economic growth is forecast to increase by 3.5% in 2003 and 4.5% in 2004, fueled by improvement in consumer and investor confidence and Chile's trade liberalization efforts. U.S. relations with Chile, which improved considerably with the nation's return to democracy in 1990, are close, characterized by strong commercial ties and extensive consultation between the two governments on bilateral and other issues of mutual concern."
CRS Report for Congress, RL30035
U.S. Department of State: http://www.state.gov/