With the military coup of 1973, Chile became isolated politically as a result of widespread human rights abuses. The return of democracy in 1990 opened Chile once again to the world. President Patricio Aylwin traveled extensively to Europe, North America, and Asia, reestablishing political and economic ties. Particularly significant was Chile's opening to Japan, which has become Chile's largest single trading partner.
In Latin America, Chile joined the Rio Group in 1990 and played an active role in strengthening the inter-American system's commitment to democracy as a cardinal value. However, Chile has shied away from regional economic integration schemes, such as the Southern Cone Common Market (Mercado Común del Cono Sur-- Mercosur), arguing that the country is better off opening its economy to the world, rather than building regional markets with neighboring countries. Where in the past Chile drew on the prestige of its democratic institutions to bolster its international standing, the extraordinary success of Chile's economic performance in the early 1990s has given Chile the status of a "model" country, with a global rather than regional focus.
Chile's relations with other Latin America countries have improved considerably with the return of legitimate governments in the region. However, serious border disputes still cloud relations with the country's three contiguous neighbors. Chile's victory over Peru and Bolivia in the War of the Pacific meant that Bolivia lost the province of Antofagasta and became landlocked, while Peru lost its southern province of Tarapacá. The quest to regain access to the sea became the major foreign policy objective for Bolivia and is still a source of tension with Chile. The two countries do not maintain full diplomatic relations. A treaty signed in 1929 resolved major boundary disputes with Peru that arose following the War of the Pacific, but many Peruvians do not accept the terms of the treaty. Tensions between the two countries reached dangerous levels in 1979, the centennial of the War of the Pacific.
Chile's most serious border conflict was with Argentina and concerned three islands named Picton, Lennox, and Nueva that are located south of the Beagle Channel. The two countries agreed to submit to arbitration by Britain's Queen Elizabeth II. In May 1977, the queen ruled that the islands and all adjacent formations belonged to Chile. Argentina refused to accept the ruling, and relations between the two countries became extremely tense, moving to the brink of open warfare. In 1978 the two countries agreed to allow the pope to mediate the dispute through the good offices of Cardinal Antonio Samoré, his special envoy. The pope's ruling resulted in the ratification of a treaty to settle the dispute in Rome in May 1985. With the inauguration of democratic governments in both countries, relations improved significantly. In August 1991, presidents Aylwin and Carlos Saúl Menem signed a treaty that resolved twenty-two pending border disputes, while agreeing to resolve the two remaining ones by arbitration. Chile continues to claim a wedge-shape section of Antarctica, called the Chilean Antarctic Territory (Territorio Chileno Antártico), that is also claimed in part by Argentina and Britain.
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