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Chile to halt financing of military spending with copper exports

The Santiago Times reported that Sebastián Pinera, president of Chile signed a bill which if approved by Congress, would eliminate a substantial source of revenue for Chile’s armed forces and at the same time relieve a massive burden on the country’s state mining company.

Under current legislation dating back to the Second World War, 10% of revenues from Chile’s National Copper Corporation, Codelco, are directed to the nation’s armed forces. Codelco is the world’s largest copper mining company and accounts for some 11% of global copper production, but the tax has contributed to years of underinvestment and the prospect of falling output at the miner just as copper prices hit record highs.

The Santiago Times report goes on to say:

“Military spending has come under increased scrutiny in a country still suffering from the effects of the global recession and outraged with a recent profiteering scandal involving lucrative contracts being put out to tender by the upper echelons of Chile’s Armed Forces.

Though its 2010 military budget of US$6 billion places it well behind Brazil and Colombia, with a population of 17 million Chile is the largest spender on a per capita basis. A 2010 study conducted by the Stockholm International Peace Research Institute also placed Chile as the largest arms importer in the region.”