Chile Copper Windfall Makes Bachelet Unable to Placate Laborers

Nov. 6 (Bloomberg) -- Pablo Troncoso calls out to prospective customers in Santiago's O'Higgins Park. He's hoping to lure them to one of the hundreds of food stalls that spring up in the capital during Chile's independence festivities in September. Troncoso's regular job is selling health insurance. He's got debts to pay, and his company told him he would have to take a pay cut -- at a time of rising living costs. So he's working a 17-hour shift flogging empanadas and an alcoholic drink called chicha to earn extra cash.

For Troncoso, Chile's status as Latin America's richest country and poster child for emerging-market development doesn't wash. ``That's what they say overseas, but here it's not noticeable at all,'' he says. ``Those that see it are the owners of companies, not the employees.''

Troncoso's disenchantment, and that of thousands of his countrymen, is giving Chilean President Michelle Bachelet a political headache. She took office with great fanfare in early 2006 as the first woman president of Chile and the second ever elected in South America. A pediatrician by training, Bachelet, 56, had a 62 percent approval rating in an April 2006 survey by Santiago-based polling firm Adimark GfK.

Since then, the Socialist leader's popularity has plunged - -it was 35 percent in September -- and Chile has been rocked with unrest. One reason: Bachelet's government has refused to spend billions of dollars in revenue from Chile's biggest export, copper, and has instead put the money in savings funds to prepare for the time when the price of copper falls.

Hundreds Arrested

In June and July, copper output was cut as workers blockaded mines in northern and central Chile and pelted police with rocks after demanding a bonus based on record mining profit. In August, hundreds were arrested during a march by labor unions in Santiago.

In September, a police officer was shot dead as armed youths took to the streets to mark the anniversary of the Sept. 11, 1973, military coup that brought Gen. Augusto Pinochet to power.

Bachelet's administration also suffered a blow when the introduction of a new transit system for Santiago resulted in long delays for commuters. And rising food and electricity prices have stretched household budgets for workers such as Troncoso.

``People see that Chile as a country has a lot more money, and they want their piece of the pie,'' says Valentin Carril, who oversees $3 billion as chief executive officer of Principal Asset Management SA in Santiago and lectures in economics at Santiago's University of the Andes.

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