THE HEMISPHERE: Cordillera Libre

Next January, Argentina’s Juan Perón and President Gabriel Gonzalez Videla of Chile will meet in the shadow of the Christ of the Andes, which was erected in 1904 to mark the peaceful solution of their boundary dispute. There they will sign a newer and more practical symbol of amity: the $175,000,000 trade agreement between Argentina and Chile completed last week in Buenos Aires.

Both countries were happy over the deal, biggest of its kind in South America’s history. The long-sought Cordillera Libre, a sort of limited trans-Andean customs union,* was established. Argentina agreed to lend Chile $175,000,000—$75 million for improving Chile’s rail, road and sea links with Argentina, $75 million for Chilean industrial development, the rest for a revolving credit to get trade started.

Tunnel to Friendship. Argentina is predominantly agricultural, Chile a mountainous country of mines and forests. Their economies do not compete, although both harbor enough young, hothouse industries to preclude a 100% customs union. Chile, fighting inflation (TIME, Dec. 16), welcomed the ready cash to expand her industries—lumber, power, coal—welcomed still more a chance to buy cheaply from Argentina’s ample supply of meat and other foodstuffs for her undernourished masses. Argentina badly needs Chile’s coal, iron and copper to carry out Peron’s ambitious five-year plan.

Through the grant of a free port at Chilean Valparaiso, Perón got another thing he dearly wanted: an outlet on the Pacific. There Argentines planned soon to build port installations and a big meatpacking plant. Another result of the accord: a vehicular tunnel will be driven right through the Andes.

The big deal revived talk of Juan Perón’s pet idea of an Argentine-led “Bloque Austral” (Southern Bloc), including Chile, Bolivia, Peru, Paraguay and Uruguay. The plan was temporarily shelved after Bolivians overthrew their pro-Perón Villarroel Government last July. But the Chileans, if they felt any fears of Argentine-domination, kept quiet about them. The press without exception praised the Argentine treaty, generally gave President González Videla high marks for starting the project. Said González himself: “There is absolutely no reason to fear Argentine economic penetration. . . .” Chileans obviously saw it all as a means to prosperity. Whatever the ultimate political significance, Argentines backed the treaty for the same reason.

* Because the agreement called for a “customs union” between neighbors, it did not violate either country’s most-favored nation agreement with the U.S., which provides specifically for such an exception.