The Atacama Desert Dispute Over Resources and Its Consequences

Home , Atacama border dispute, Chincha Islands War, Juan Williams Rebolledo, Outline of Chile, Treaty of Lima (1929), War of the Pacific

Thesis By Jared Farnik Submitted in Partial Fulfillment of the Requirements for the Degree of Bachelor of Arts in International Relations and Economics State University of New York Empire State College 2014

Reader: Professor Max Hilaire

Abstract

In a world where there is only a finite amount of resources sustaining billions of people, countries are willing to go to great lengths to attain resources. Even renewable resources, such as fisheries and forests, are in places being depleted faster than they can recover. Adding to the pressure is that new deposits of certain mineral resources are becoming harder to locate and extract. Oil and natural gas, critical to economic development, are in short supply. In addition to their traditional value, diamonds and other important metals have industrial purposes and are vital to many economies. In areas where borders are not clearly defined, countries often try to profit from wealth that resources offer at the expense of other countries. Every continent in the world has ongoing disputes over resources. In light of the current situation, the focus of this paper will be one of the greatest resource disputes in South

America. The Atacama Desert Dispute shows just how far countries are willing to go in order to gain a particular resource.

From 1879 to 1883, Chile, Peru and Bolivia were at war because they wanted to profit from the sodium nitrate trade by gaining control of the Atacama Desert. Before the dispute, Chile gained permission to mine nitrate rich zones in the region, organized settlements, developed facilities to extract nitrates, pursued diplomacy with Bolivia to establish distinct borders, and sought financial backing from the British private sector. This ultimately led to their victory when war ensued. In this paper, I begin with a general historical and resource overview of

Chile, Peru and Bolivia in order to understand the context of the Atacama Desert Dispute. I explain where resource demand originated and how turmoil developed between the three new nation states. I then direct my attention towards the Atacama Desert, which was the main focus of interest for Peru, Chile and Bolivia. Nitrates will be identified as the primary reason why each of these countries made claim to the Atacama resources, having recently

observed how huge profits were gained through the export of another significant resource - guano.

I then systematically argue that Chile was successful in the nitrates related land dispute because of its calculated approach to achieving a nitrates monopoly in the Atacama Desert. I explain how political stability and popular support to go to war, rather than economic or military preparedness, were the defining characteristics that enabled Chile to be victorious in the War of the Pacific that ultimately settled the nitrates dispute. Both Chile and its foreign supporters then reaped the benefits of their labor and effort, taking in massive profits. This resource boom from nitrates was finite in its duration, lasting a mere 35 years. The conflict over resources in this region, however, had and continues to have far reaching consequences.

New alliances were formed after the dispute was resolved. The balance of power shifted away from the former confederation of Peru and Bolivia. Chile remained a strong military power in this region. However, in the 21st century, diplomatic discussions rather than war should be initiated to maintain peace in this region and accommodate the interests of all countries involved. Chile, Peru and Bolivia should pursue peace through economic integration.

This has been effective in the European Union because of democracy and economic cooperation between member states. If stronger economic ties were to exist between the countries, the danger of a resource war erupting again would be greatly diminished.

Territorial disputes have persisted in recent years, and Bolivia and Peru have both requested international arbitration. It is positive that all three of these Latin American countries recognize the authority of the International Court of Justice, but direct conflict resolution rather than international arbitration is preferable. Peru’s and Chile’s commitment to the

Treaty of Lima of 1929 is an indication that these countries can conclude negotiations successfully. If direct talks between Chile, Peru and Bolivia lead to the return of a Bolivian coastal corridor, then the chapter on the Atacama Desert dispute can be closed.

Table of Contents

I. Introduction

II. Historical and Resource Overview

A. Resource Demand 1. Conquest 2. Industrialization 3. Raw material B. Independence 1. Empire Collapses 2. War of Confederation C. Atacama Desert 1. Climate 2. Early Inhabitants 3. Unsettled Borders D. Guano 1. Rediscovery 2. Economic Bonanza 3. Chincha Island War

III. The Atacama Desert Dispute

A. Regional Rivalries 1. Arms Race 2. Diplomacy 3. Renegotiation 4. Talks Breakdown B. Importance of Nitrates 1. Nitrogen 2. Extraction and Fertilizers 3. Lifestyle Enabler 4. Gunpowder C. Lack of Economic Readiness 1. Peruvian Economy 2. Bolivian Economy 3. Chilean Economy

IV. War of the Pacific

A. Navy B. Land Invasion C. Guerrilla Warfare D. Outcome of the War 1. Treaty of Ancon 2. Treaty of Lima 3. Missed Opportunity 4. New Military Power E. Foreign Involvement 1. Britain supports Chile 2. USA Backs Peru 3. Foreign Labor Force

V. Chilean Monopoly of the Nitrate Market

A. International Popularity of Nitrates B. Profits C. Market Volatility D. Development of Synthetic Nitrates E. Discovery of Additional Resources

VI. Ramifications of the Atacama Desert Dispute

A. Blame Game B. Balance of Power Shifted C. Chileans Rallied Behind a Common Cause to Victory D. Economic and International Relations Shortsightedness

VII. Renewed Talks

A. Regional Negotiations 1. 1975 Proposal 2. ICJ Maritime Arbitration B. Economic Integration to Pave Way for Peace 1. Economic Integration 2. Prosperity Relieves Tensions C. Direct Negotiations Preferable, ICJ Secondary Choice

VIII. Conclusion

Chapter I

Introduction

Overall, it is important to understand that resources can be a major source of conflict. Disputes can arise over finite resources, such as oil, gas, diamonds, and lesser known resources, such as cobalt. Renewable resources, such as timber or water, are also a potential object of disagreement. Today the most significant commodities in the world are oil, natural gas and diamonds. Oil discoveries, or even the possibility of finding oil, have led countries to make competing claims. In the South China Sea,

China has been disputing the boundary of its maritime boundaries, primarily with

Vietnam, Malaysia and the Philippines over island groupings known as the Paracels,

Spratlys and Scarborough Shoal. The sea beds surrounding these islands are believed to contain natural gas and oil. This speculation is driven by the fact that both Malaysia and Brunei have found large deposits of natural gas and oil, and this is enough of a reason for China, Vietnam and the Philippines to seek to lay hold of these islands. The

South China Sea is not the only place where countries seek the redefinition of borders because they may hold mineral resources. For instance, as the Arctic continues to melt, opening up seas and continental shelves, Denmark (via Greenland), Russia,

Norway and Canada are in disagreement over claims submitted under the Law of Sea of Convention over parts of the Lomonosov Ridge. The U.S. and Canada have also not agreed on conclusive maritime boundaries in Beaufort Sea, which is a target of keen interest to oil drill interest. Previously inaccessible waterways and land is now causing a resource rush, as countries make their claims.

Oil, natural gas, diamonds, and other resources could also lead to renewed civil war and rekindle old hostilities. A fragile peace agreement is currently threatened in the new country of South Sudan because of domestic turmoil in oil drilling regions, the bloodshed could escalate in the Congo (Zaire) over a multitude of resources including diamonds, and Britain and Argentina have rehashed their rivalry concerning the

Falkland Islands, over natural gas and oil deposits. All four of these countries have already gone to war before, so the possibility of future conflict must be taken seriously. What underpins this pursuit of resources is scarcity. Resources that are in heavy demand by people and in limited supply can drive countries to make territorial counter claims and bring them to the brink of war in order to attain a particular resource or set of resources. If not resolved diplomatically, it can then spill into an international war. In light of the existence of so many disputes globally over resources, attention will be focused in this paper on a particular case study regarding the conflict over nitrates in the Atacama Desert.

In 19th century Latin America, nitrates were a major source of conflict. At that time, the three nations of Bolivia, Peru and Chile sought control of a barren piece of land, called the

Atacama Desert. Their dispute changed the power dynamic in the region, giving other countries the perception that Chile was a strong military presence and causing Peru and

Bolivia to decrease in status after the War of the Pacific. Bolivia lost access to the coast, tarnishing its sense of national pride and eliminating one of their significant sources of income.

The primary reason for the Atacama Desert dispute was the fertilizer trade. Chile gained a monopoly on the South American nitrates market because of its systematic and strategic quest to acquire nitrates for trade primarily with North America and Europe. Chile, Bolivia

7 and Peru all wanted control over the nitrate fields of modern day northern Chile. Chilean mining companies that developed the nitrate deposits were backed by the Chilean government so that they could maintain their holdings. Peru saw an opportunity in nitrates to transition from its shrinking guano fertilizer trade to a new resource and wanted to prevent competition from Chile. Finally, Bolivia considered the Chilean managed nitrate companies at work on their territory a source of taxable revenue that it did not want to give up. However,

Chile went to greater lengths than the other two countries demographically, in development, extraction, diplomacy and in war to attain its goal of becoming the primary nitrates exporter.

The war that determined the outcome of these countries’ economic ambitions in the region was known as the War of the Pacific. Lasting from 1879 to 1883, it was the largest scale amphibian war of the second half of the 19th century in South America.

This war had a significant impact on the region with ramifications for the future. Enduring alliances were established and the balance of power was redistributed. Chile became one of the strongest military powers in Latin America. The dispute officially ended with the war and the signing of various treaties. However, Bolivia remains dissatisfied, persisting in its territorial claim to at least a small section the Atacama Desert connecting it to the Pacific

Ocean. Bolivia has requested international arbitration to reclaim a sliver of the region. The international Court of Justice can attempt to assist them in their quest for resolution of this dispute. I don’t think much will come of it. Countries are willing to accept the ICJ ruling on maritime disputes, but not rulings on crucial land disputes. I see hope in establishing better economic ties and democratic stability, as a way to bring Chile, Bolivia and Peru back to the negotiation table. The three nations should resume discussions to attain a settlement that will restore a part of the Bolivian corridor, because this would appease Bolivia. It is better for

Chile and Peru to compromise and give Bolivia sea port access of its own. Settling the

Atacama Desert dispute once and for all is preferable to extending the dispute indefinitely.

Chapter II

Historical and Resource Overview

In general, civilizations have been in disputes over land and resources for centuries.

Historically, commodities such as gold and silver have been in high demand. For the Spanish conquistadors, gold and silver was a major driving force for conquering the Aztecs, the Incas and other tribes. For many Native Americans of the New World, arable and hunting grounds were considered worth going to war over. For example, the Mayans put their neighboring tribes in subjection in order to clear vast tracks of rain forests to grow their crops. Plains

Indians fought vigorously for the best bison hunting grounds. During the Age of Discovery, commodities such as gold and silver were traditionally in high demand. For the Spanish conquistadors gold and silver was a major driving force for conquering the Aztecs, the Incas and other tribes. In Asia and Africa, both finite and renewable resources were claimed by many European nations. However, when colonial powers started to lose their grip over their global holdings, new nations arose. As Spain, Portugal and France started to come to terms with the fact that their former colonies in North and South America were gaining independence; this created a vacuum in terms of who would take charge of the mineral wealth left behind. As nations started to develop in the 19th century, less wealth was being pocketed by European powers. Instead, more of the profits went to the local economies in the areas where the raw material was extracted. Of course, Latin America still had its traditional upper class and international investors, with great disparities between the rich and the poor. However, the simple fact that a large proportion of profits were staying in Latin

America was a positive change. Although this was a positive development, there was still a lot of instability politically in many countries, and nations were on the lookout for the next big economic sensation. This too often led to war on a national level over land rights and the

9 spoils of the land. Countries with great potential could be taken advantage of by neighbors slowly chipping away at their land one piece after another. This process would often lead to significant human suffering. Bolivia and Paraguay are extreme cases of this. These countries were left completely landlocked and deprived of many riches of their former territories, which they seceded.

Today vast numbers of democratic nations have moved past pursuing war over resources with their immediate neighbors. Some countries such as Austria or Hungary have found themselves landlocked and deprived of major empires. Nevertheless, they strive to build economies, which are not based primarily on exporting raw material. Economies in Europe and North America are now more service-based and also export technical finished products, such as automobiles and electronics. Industrialized countries have come a long way, while developing countries around the world are in a race to reach the same levels of industrialization. Whether this is a good thing or a bad thing is another matter. In the 19th century, Europe, Japan and the U.S. were at the beginning of the process of industrialization.

There was an insatiable hunger for minerals. The massive changes of urbanization, population growth and technological innovation also meant that commodities desired by the market were changing. The price of base metals, such as coal and iron were rising, as more people began working in factories and transportation. However, to keep the wheels of industry turning, more food needed to be grown. As a result, nitrates were sought after for their ability to nourish soil and increase the harvest.

As a result of the Industrial period in the 19th century, the export of raw material was the name of the game for former colonies,. To satisfy the demand for fertilizer, the eyes of the international community were focused on South America from the early 1840s to the mid-

1910s. Commodities were both the life blood and the temptation of the time. They could be a blessing and a curse. On the one hand they had the power to lift many people out of

10 poverty, but they could also lead to frivolous spending. The rigid societal structure meant that the lower classes did not suddenly become wealthy, but instead did most of the brunt work.

This allowed the upper classes to get wealthier. To make matters worse, governments in Latin

America often used commodities as collateral for taking huge debts from European and

American creditors. However, these conclusions are reached in hindsight. No generation fully comprehends the repercussions of their actions until they look back. The point is that individuals and governments in Latin America in the 1800s were short-sighted. Commodities were only seen as an economic opportunity.

Historically, Spain had controlled most of South America until the early 19th century, with the notable exception of Brazil, which was under Portuguese rule. However, revolution beset the Spanish empire, resulting in the independence of the vast majority of its territorial holdings. The quest for independence pinned separatists against loyalists across the South

American continent. The freedom fighters gained the liberty they sought. One holding after another fell from Spain’s grasp. This had a domino effect. Chile became an independent country in 1818, Bolivia in 1825 and Peru in 1826. However, firm borders had not been settled as countries were all trying to settle their territorial claims. Geographical barriers on the frontiers of newly created South American states made the determination of exact borders difficult. The original unclear borders of the colonial districts were last established by

Spain and Portugal in 1810. By 1848, the young nation states had challenged or changed these borders by use of military force. In the 19th century there were six declared wars, five military interventions, and about forty-two threats of military use. Paraguay’s war in the

1860s with Brazil, Uruguay, and Argentina was the continent’s bloodiest conflict involving land grabs. The result of all this fighting was that on a continent-wide basis, Brazil was clearly the most powerful nation by the 1870s. The former Spanish colonies, on the other hand, were still sorting out the eventual balance of power among them. Peru had been the original seat of power in the Spanish colonies. However, it was still unclear which countries would hold

11 most of the power in South America, since the Spanish Empire had dissolved. (Holsti, 147-

153)

Chile, Peru and Bolivia already had a history of conflict. Their first major war was the War of the Confederation. In this war Chile, Peruvian separatists, and Argentina sought to defeat a confederation led by Bolivia that included Peru. This war lasted from 1836-1839 and ended with the dissolving of the confederation. General Gemarra was then installed by the Chilean army as the president of Peru. However, Gemarra then tried to reunite the Confederation, but this time under Peruvian leadership. The Peruvian army was swiftly defeated at the battle of Ingavi and President Gemarra died of battle wounds. This was the last attempt to unite

Peru and Bolivia in the 19th century. There already was a level of hostility between all three countries prior to the War of the Pacific. The resolution of the hostilities created by the War of the Confederation had longstanding effects on the continent as a whole, but for our purposes we will be looking at the Atacama Desert territorial dispute.

The Atacama Desert is considered to be the driest place on earth. It stretches from north to south along the Pacific Ocean, between 19 degrees south to 25 degrees south latitude.

Other deserts pale in comparison to how little rainfall the Atacama Desert receives. The region goes without rain for decades at a time and then receives several inches of rain at a time. This brings its annual mean to about 1.27 cm of rain per year. The Humboldt Current, in combination with the coastal mountains of the Atacama, cause a weather pattern whereby clouds cover the sky and withhold moisture for long periods of time. In addition most of the runoff from the Andes Mountains feeds into the great tropical rivers of the Amazon rainforest to the east. For hundreds of miles, from north to south, the Loa River is only river that can make its way to the Pacific Ocean year around. The inhospitable climate of the Atacama

Desert is the reason why there has been very limited settlement there for centuries.

The Spanish founded the port city of Cobija in 1587. Cobija was important because it was a hub for transporting silver from the inland of modern day Bolivia to the Atacama coast.

Nevertheless, during colonial times, population centers were established in Peru and Chile.

The desert that separated the two entities was so great that the main means of communication, trade and travel was by sea. Those who did settle in the Atacama Desert also had to face the continued threat of earthquakes and tidal waves. So at first glance, the

Atacama Desert seemed to have little value. However, people had learned to live here, way before the Spanish arrived. One of the first cultures that can be traced is the Chinchorro people. Incas made advances into the region as their empire expanded. However, the first known communities to really start taking advantage of fertilizer from the Atacama Desert were the Changos and Aymara. The Changos lived along the coast, forming fishing communities and exporting guano to the Aymara. Until the 1850s, the Atacama Desert remained sparsely populated. (Farcau 1-11)

In light of the previously mentioned wars, Peru and Bolivia were at odds over who would control the port of Arica. However, the bigger dispute for territorial claims in the Atacama

Desert was between Chile and Bolivia. Before the War of the Confederation, Chile did not challenge Bolivia’s claim all the way to the 26th Parallel along the Salado River. However, having won the war, Chile had a surge of patriotism and new found confidence to expand. On the surface, the Atacama Desert did not look desirable, but that changed very soon. Chile sent out an expedition in 1842 all the way to the 23rd parallel to the city of Mejillones. It found guano and sodium nitrates in large quantities. With the discovery of commercially viable guano and later sodium nitrates, Chile became more proactive in determining a border with Bolivia. Chile officially claimed all of the coastal areas up to the 23rd parallel, and in response Bolivia remained firmly committed to the 26th parallel as its southern border. The borders were defined according to the original colonial provinces. However, these borders in the Atacama Desert were not designed to be national borders. Legal documents from colonial

13 archives were vague since many of the parts of the Atacama Desert were not completely explored and detailed mapping of exact borders had not been made. To claim jurisdiction,

Chile established permanent settlements in virtually uninhabited or sparsely populated desert. Chileans began to migrate by the thousands to the Chilean, Bolivian, and Peruvian parts of the Atacama Desert. In cooperation with British experts who had the know-how to extract nitrates, mining towns sprung up. Bolivia took a more passive approach. Rather than bringing its own settlers to the Atacama Desert or limiting Chilean immigration, the Bolivian government sought to legitimize its right to the Atacama Desert on legal grounds and through negotiation. In the following decades, Bolivia sent a dozen missions to Chile to negotiate a settlement. It sought to legally justify its claim to the southern part of Atacama Desert, based on territorial divisions previously made by the Spanish. (Clayton year 1999, 51-73)

One wonders why the Chileans and their English business partners were so confident that nitrates would be a success. The answer is that another fertilizer had already been commercial mined so there was no reason to think that the same could not be done with nitrates. The substance that really proved that sodium nitrate was valuable economically was guano. The Aymara who lived in more hospitable areas inland had long used guano for farming. This shows that the indigenous inhabitants were familiar with the effects that guano had on agricultural products. However, the guano boom did not come from the mainland.

The Chincha Islands were the bonanza of guano. Like in the Atacama Desert, the Chincha

Islands have almost no rain. The warm climate allows for an abundance of fish that sea-birds can feed on. The sea-birds then for years excreted droppings that turned into guano.

Because of the lack of rain the substance remained in huge quantities. The Chincha Islands and the mainland off the west coast of South America were not the only areas where guano was discovered. Ichabo Island, Khuriya Muriya Islands and the island of St. Helens, for example, gave the British their own source of guano. Although these supplies were short- lived, they helped Peru in the long run. Prices dropped temporarily allowing more people to

14 give guano a try. In competition with Europe, Peru introduced guano to the United States of

America market. The abundance of guano and the temporary drop in prices resulted in more farmers getting an acquired taste for guano.

The guano boom was relevant to the Atacama Desert dispute, because it was the pioneer in the fertilizer business. It showed countries that money could be made from fertilizers. If guano had not caught on, it is unlikely that sodium nitrates in the Atacama would have attracted much attention. Guano was the first major fertilizer rush during the Industrial

Revolution. It was the Age of Guano. It has been estimated that Peru exported over 12.5 million metric tons guano between 1841 and 1879. The precise value of these sales is uncertain, but we can comfortably say that at least a 100,000,000 pounds sterling worth of guano was sold. There was also a military consequence of the guano trade that had ramifications in the War of the Pacific. The Chincha Islands War helped Peru and Chile realize that having a strong navy in the Pacific was the determining factor in who would have power over the region. Nitrate deposits lay on the mainland, strewn across three countries. This meant that unlike the Chincha Islands, land claims were bound to be contested. (Cushman 26-

74)

By the 1860s, Peru claimed several hundred miles of the Atacama Desert including the important regions of Tacna, Tarapaca and Arica. At the same time, Chile kept up pressure from the south and expanded its territory. This left Bolivia in a tight squeeze between Chile and Peru with its original boundary limited to the area between the Loa River and the 25th parallel. However, regional rivalries were interrupted for a while when the Chincha Islands

War broke out. It started with a local incident involving Basque labors in Lambayeque, Peru.

They were protesting labor conditions that they felt were not acceptable. However, during the protest one of the Spaniards was killed. The Spanish government wanted compensation and an apology. Peru responded by saying that it was an internal matter. In response, the

15 crown sent a Spanish squadron and held the Chincha Islands as ransom. For a brief period

Ecuador, Chile, Peru and Bolivia formed an alliance to confront the Spanish navy. However, none of these countries had a strong enough navy to stand up to the Spanish. Peru was in a helpless state against the Spanish navy. Therefore, Peru was forced to accept humiliating terms. In January, 1865, Peru agreed to pay Spain three million pesos in return for the

Chincha Islands. To make the settlement even more humiliating, Peru had to publicly state that Spain was the victim in the confrontation. There were also repercussions for Chile. Later that year, the Spanish squadron bombarded ports in Chile. An attack that Chile’s navy was helplessly ill equipped to stop. This was conducted in retaliation for Chile’s support of Peru during the Chincha Island War. Of course, the return of Spanish influence was only temporary. Still, there was also a military consequence of the Chincha Islands War that had repercussions in the War of the Pacific. The presence of a Spanish navy squadron made the importance of a strong navy in the Pacific Ocean all too clear to Chile and Peru The country that controlled the ocean would have the upper hand in the Atacama Desert as well. Orders were placed by both countries to build a navy. The Chincha Islands War helped Peru and Chile realize that having a strong navy in the Pacific was the determining factor in who would have power over the region. Peru’s helpless state against the Spanish navy was an indication that action needed to be taken. (Cushman 26-74)

Chapter III.

The Atacama Desert Dispute

After the colonial threat was minimized, it was back to regional rivalries. Solidarity for the common goal was put aside. Chile’s resolute step by step incremental takeover of the nitrate trade had thus far gone relatively smoothly in Bolivia. A sizeable Chilean population was in place and nitrates were being successfully exported. Replicating this same strategy in

Peru would not be enough. Peru had a large enough population in Tarapaca to enforce its will on Chilean businesses. In addition, the Peruvian government levied high export tariffs on nitrate exports frustrating foreign investors. A third step was necessary and that was military preparedness in the case that Chile’s interests in Peru would need to be protected. An arms race between Chile and Peru ensued. Since Peru was the wealthier of the two countries, it was able to order the ironclad Independencia and the monitor Huascar from British shipyards.

They also purchased surplus monitors from the U.S. after the Civil War. By the end of the decade, Peru had the most powerful navy of any South American country on the west coast.

Chile responded in the early 1870s by ordering the British made ironclads Almirante Cochrane and the Blanco Encalada. These ironclads were more formidable than the Huascar and

Indepencia, since they had stronger armor and more firing power.

Meanwhile, Bolivia and Chile were seeking a diplomatic solution to their woes. A settlement was reached in the 1866 Treaty of Mutual Benefits. The treaty stated that the official boundary would be at the 24th parallel. However, between the 23rd and 25th parallel both countries agreed to share profits and tax revenue from guano and sodium nitrate extraction. According to the so called “condominium clause”, both countries were to receive equal shares of the taxable income from the sale of nitrates between the 23rd and 24th parallel and the 24th and 25th parallel. Generally, this agreement was seen as more favorable to Chile

17 since Bolivia conceded its initial claim, which was all the way to the 27th parallel at the time of its greatest extent. Of course, if Bolivia had held on to its earlier claim, Chile would have been heavily disadvantaged and not the other way around. Some opposition leaders in Bolivia did protest the Treaty of Mutual Benefit, but what was done was done.

In light of Bolivia’s dissatisfaction, Chile resumed talks in 1873. In 1874, the Treaty of Sucre was agreed upon. This treaty was more favorable to Bolivia. It reaffirmed the 24th parallel as the border between the two countries, but Chile had to give up tax proceeds from Chilean nitrate companies north of the 24th parallel. Bolivia could continue to receive half of Chilean mining companies’ tax revenue south of the 24th parallel. Chilean mining companies did get a guarantee that north of the 24th parallel the Bolivian government would not increase taxes until the lapse of 25 years. The Treaty of Sucre was much more agreeable to both sides, and brought about a temporary peace.

Half a decade later, Bolivia’s National Assembly finalized its approval of the Treaty of Sucre in 1878, but added the clause that the Anglo-Chilean Antofagasta Nitrate and Railroad

Company would need to pay a new tax of 10 centavos per quintile of nitrate. When the

Bolivian government sought to enforce this stipulation, Chile viewed it as a violation of the treaty. From that point on, Chile and Bolivia prepared for war after talks failed to satisfy Chile.

Chile then proceeded to send its navy north and occupied strategic points at Antofagasta in

February of 1879. South America was on the brink of war. (St. John, 1-26) (Clayton year 1995,

51-73)

Once Chile established a military presence in the province of Antofagasta, Peru tried to mediate a truce. Peru asked Chile to return the province to Bolivia. Aware that Peru was not a neutral party, Chile called upon Peru to proclaim its neutrality in the matter. At that point,

Peru had to admit that it had a secret pact of mutual defense with Bolivia in the event that either country was threatened by war. Peru also hinted that it would honor its alliance with

Bolivia. Bolivia was therefore confident that its ally would come to its aid. Subsequently, on

March 14, 1879, Bolivia declared war on Chile, and called upon Peru to hold up its end of the bargain. Chile then declared war on both Bolivia and Peru on April 5, 1879. On April 6, 1879,

Peru in a sign of solidarity declared casus foederis, meaning that it would honor its alliance by joining forces with Bolivia against Chile.

The scenario outlined above is the generally accepted version of events. However, from a

Chilean perspective, it is possible that Peru wanted the war to start in order to clear Peru of its

Chilean and British influence. The fact that Chile declared war first might have been just what

Peru wanted. It is hard to know for cetain. However, one can argue that like guano, the

Peruvian government wanted to eventually make nitrate production in the northern Atacama

Desert state owned. Chile was not, after all, the military navy powerhouse it became by mid war. Although, Peru did not enter the War of the Pacific to take Bolivian land, there is a possibility it wanted to bring foreign owners under state control, and war was a convenient excuse to do so.

It is useful to look at the uniqueness of nitrates in order to understand why it was so important to all three countries. The key ingredient for fertilizer in nitrates is nitrogen.

Nitrogen is one of the few plant nutrients that does not come entirely from geological sources. Nitrogen makes up 79.1 percent of the world’s atmosphere. However, it is the extraction from the air by plants that makes it useful for plant rotation. Leguminous crops, for example, are able to extract nitrogen, as well as reverse the effect of nutrient depletion in the soil. Manures from animals also have the effect of increasing soil productivity in agriculture.

What makes nitrates unique from leguminous crops and manure is that they are a geological source of nitrogen. (Straaten, 242)

Sodium nitrate is similar to guano in that it is produced in very dry climates. Nitrates accumulate in places with low vegetation because otherwise they would be consumed by

19 plants. There are very few climates that support larger amounts of nitrates; among the few exceptions are parts of the Nevada Desert in the United States and deposits in Kenya. The

Atacama Desert, unlike Nevada and Kenya, has sufficient amounts of nitrate to be economically mined by companies. Sodium nitrates were found in patches in the plateau region of the Atacama Desert 100 kilometers inland. Sodium nitrate does not come from birds, but is found under a thin layer of rock, silt and sand up to 30 cm thick. A second layer covering nitrates is a brittle material two meters deep. Nitrates are found under this layer.

Since nitrates are harder to uncover, they are more labor intensive and required more technical expertise. Approximately sixteen tons of ore are needed to produce one ton of nitrate. In chronological order, ore is excavated, crushed, cooled, melted and then solidified into pellets in order to get the final nitrate product. Like guano, nitrates are a great additive for farming. The expenditures for producers to collect sodium nitrates and deliver them were less than the market price. Although profitable, nitrates were still cheap enough for farmers to afford. So it was beneficial for all parties.

We may think of the nitrate boom as far removed from us historically. However, the demand for nitrates is not dissimilar to our demand for oil. Interestingly, there are parallels between our lifestyle today and the past. In developed countries, people are used to satisfying their taste for meat and sugar. This requires an indirect supply of oil, for example, to raise a cow or transport foods to the grocery store. The 19th century was the start of the trend where previous luxuries like eating meat and having sugar started to become a reality, in part because of guano and nitrates. The excess crops from fertilizers were used in the production of grains for livestock and sugar beet growing. Also not unlike oil, guano and nitrates were an integral part of farming that agriculturalists were reluctant to part with once it became the established practice. For thousands of years, life expectancy was about half of what it is today. However, the industrialization and population growth that we experience today began in the 1800s. Population growth created a need for more agricultural products to

20 sustain the growth. Therefore, guano and nitrates created a perfect storm. As agricultural demand surged and new lands were cleared for farming in Canada and the U.S., farmers were willing to experiment with nitrates. In Europe, where land was in short supply, nitrates helped increase productivity and yields per hectare of land in England and Western Europe. Guano and nitrates were the solution to an agricultural revolution in the 19th century. It allowed countries to keep up to speed with their population boom. In fact, nitrates were so useful that eventually German scientists developed synthetic nitrates during World War I, when supplies of nitrate were in short supply. However, Peru’s guano and Chile’s nitrate were so revolutionary that they can be regarded as a predecessor to the Green Revolution of the

1960s and 1970s. (Cushman, 74)

Nitrates, unlike guano that was strictly used for fertilizer, could be used in the ammunition industry. Gunpowder was one of the technologies that helped empires maintain control over their subjects. Although Spain had already lost much of its holdings in the New World, colonialism was still very much alive in the rest of the world. Africa and Asia was the source of competition among the British, French, Germans, Italians and Belgians, to name just a few countries. Of course, the factors that allow a nation to maintain an empire are many.

However, in the 19th century it was technology that played a leading role. Steel, guns and steam engines could be built in European factories. Natural nitrates were needed for gunpowder because they contain nitrogen, which was the key element that sparks gunpowder. Sodium nitrate was a substance in nature that scientists were not yet able to produce artificially. Nitrates were therefore in great demand because of their use in the military.

By 1879, none of the countries involved were really prepared for war economically. In the

1870s, guano was still booming so Peru still wanted to squeeze as much out of that trade as was possible. Therefore, the Peruvian government tried to limit private company exports

21 from Peruvian nitrate fields, until guano was exhausted. Then it wanted to proceed with full on nitrate mining. However, corruption and overspending on public projects by the government meant that bankruptcy was declared in 1876. Another problem was that the majority of Peru’s economy was one dimensional, rising and falling with guano. At its height,

Peru far outperformed Chile economically. When guano began running its course, Peru did not make the switch to nitrates in time. However, comparatively speaking Peru was in a much better state organizationally than Bolivia. Its long standing rivalry with Chile meant that it had a standing army and through the years had purchased strong navy vessels with guano profits.

So realistically the war was mainly a showdown between Peru and Chile.

Bolivia was already a tempting target for its other neighbors because it had a weak government and a wealth of resources. Bolivia has some of the most prolific silver mines in the world, rainforests and vast open spaces. At one point or another, Brazil, Argentina, Peru and Paraguay had taken a piece of land from Bolivia. Its inability to function domestically made defense from outside threats very hard. Another reason why the central government could not come to the defense of its outline regions was because of their remoteness. The

Altiplano was the administrative heart of Bolivia, and very few Bolivians had the desire to relocate by crossing mountains, rivers and wilderness areas. So by 1870s Chilean immigrants and other foreigners, who came for the nitrates, outnumbered Bolivians in the Atacama

Desert by a ratio of 10 to 1. There was also a lack fortification against attacks. There was some prosperity among an elite few who held economic power over the silver and tin mines and controlled the government. However, due to corruption there was very little wealth to go around for the general populous, and the Bolivian government ran up a steep public debt. In light of this, Bolivia continued to allow Chilean and British entrepreneurs to exploit the nitrate bonanza that had started, because the government still needed revenue to fill government coffers. Arguably, if Bolivia had a less corrupt government and its financial house in order, it would not have been such a soft target. Then other countries might have possibly been less

22 daring in their advances. However that is a matter of speculation. The fact of the matter was that the Bolivians saw the discovery of sodium nitrates as their way to a stable source of income. By 1879, approximately 50 percent of Bolivia’s central government tax revenue came from Atacama Desert. However, it cannot be emphasized enough that a big mistake that the

Bolivians made was that they did not settle the Atacama Desert in large numbers. Instead, more than ten thousand Chileans settled the vast area before 1879. This gave Chile a population foothold in the Atacama Desert.

The Chileans were much smaller in population and land mass than Bolivia and Peru.

Prior to the War of the Pacific, its population was about two and a quarter million people. The total land mass was over 350,000 square kilometers. Despite being small in size, Chile was territorially a lengthy corridor of land from the southern tip of South America to about the middle of the continent. The geography of the country allowed it to have better access to the

Atacama Desert from the inland because Peru and Bolivia were separated from the corridor by the Andes mountain range. More importantly, Chile had the advantage that it had been democratically ruled since the 1830s and had honored its debt to creditors. For decades, Chile had a track record of having a more diversified economy than its northern neighbor.

However, going into the late 1870s the wheat and beef business experienced a downturn.

Australia, New Zealand and Argentina were quickly becoming agricultural and livestock rivals.

Consequently, with heavy competition, there was an economic downturn, which forced some

50,000 people to emigrate from the country. Many went to Bolivia’s and Peru’s sections of the Atacama Desert to make a living. So Peru had guano, Bolivia had silver, and all of the sudden after the recession of 1878; Chile needed an economically viable commodity of its own. They obvious choice was to stay the course and go after nitrates, right when they felt they need it most. (Morales, 71-83)

Chapter IV

War of the Pacific

The War of the Pacific was among the biggest conflicts South America experienced in the

19th century. It proved that nations would go very far to secure their guano and sodium nitrates economic interests. The initial navy military campaign against Peru also had to do with nitrates. The navy commander in charge, Juan Williams Rebolledo blockaded Iquique.

This was the primary port from which Peru exported nitrates. The objective was to put Peru under financial strain by cutting it off from its revenues. Naval superiority was a prerequisite to maintaining or acquiring control in the Atacama. Peruvian naval strength was in its monitor

Huascar and ironclad Independencia. Peru used these cutting edge ships to break the blockade. It succeeded on May 21, 1879 in the battle of Iquigue. The Chilean war ship, the

Esmeralda, sank, and the naval contest started out well for the Peruvian navy. However, it turned out to be a Pyrrhic victory. The Independencia was lured into shallow water by a

Chilean vessel, the Covadonga. In an attempt to ram the Covadonga, the captain of

Independencia crashed his ship on the rocky ground. The Covadonga then blasted cannon round after cannon round until the Huascar came and destroyed it. The Independencia was beyond repair. This meant that Peru was only left with its one powerful ironclad and support monitors. Peru, however, continued to raid and battle the Chilean navy at sea. President

Prado did not want a direct confrontation with the Chilean ironclads Almirante Cochrane and

Blanco Encalada. For this reason, Prado ordered the Huascar to raid port after port, while skillfully avoiding the ironclads. The Huascar wreaked havoc on Chile’s merchant ships and military transports, stalling Chile’s war plans from July through September of 1879. By

October, 1879, Chilean ironclads caught up to the Huascar. In an hour and a half gun battle the Peruvian forces lost 80 men. A group of engineers tried to then sink the Huascar, but not

24 before Chilean sailors boarded and intervened. The Chilean navy achieved a turning point in the war when they captured Huascar and the vessel Pilcomayo. With Chile’s two ironclads now unchallenged, Chile systematically took out remaining Peruvian naval resistance and blockaded Peru’s ports.

In November, 1879, staying consistent with its plan to control nitrate fields, Chile began its land stage. With an expeditionary force of 9,500 soldiers sent to Pisagua, Chile confronted two armies that were comprised of mixed units of Bolivians and Peruvians. In Tarapaca, the allies were defeat in a victory that took a heavy toll on the Chilean army due to many deaths.

However, this contributed to the seizing of the strategic city of Iquique. By May 1880, Chilean soldiers drove the alliance forces north to Tacna. Then the Chileans proceeded in the battle of

Arica to storm the fortified defenses at Morro. After heavy casualties, the Chileans overcame the 2000 soldiers inside. The Bolivian army retreated back to the Altiplano. This marked the end of the key objective of gaining control of the nitrate regions throughout the entire

Atacama Desert. By the end of June, 1880, Chile had driven out Peru’s forces.

Chile knew that it would have to do something more decisive than just take provinces.

Chile wanted a clear victory in order to have leverage to claim Peru’s part of the Atacama.

President Pinto ordered an attack on the capital Lima in January, 1881. With re- enforcements, 25, 0000 Chilean soldiers confronted defenses at Chorrillos and Miraflores.

Although the Peruvian army was larger, both strongholds were defeated. This left Lima exposed, and Chilean troops entered the capital. The capture of the city of Lima effectively ended the naval contest. For the second time, Chile had occupied Lima. (Rector 95-110)

However, the war was not over. The peace terms, of seceding all Peruvian holdings in the

Atacama Desert to Chile and paying reparations for war expenses, were seen as unacceptable from the Peruvian perspective. The taking of the capital had the opposite effect than the

Chileans expected. Instead of peace, it triggered a will to defend the homeland. This is similar

25 to what has happened in other places that are hard to conquer in conventional fighting, such as Afghanistan or the highlands of Scotland. Taking the cities and main areas of commerce has rarely broken those people’s will to fight. Similarly, the mountain terrain of Peru made rounding up resistance extremely challenging, especially for Chilean soldiers unfamiliar with the layout of the land. Peru’s government organized a resistance in the interior. Guerrilla warfare was waged on Chile from that point on. Small groups of Peruvian fighters harassed

Chile’s forces as they tried to move through the interior. The Battle of Concepcion resulted in the annihilation of an entire unit of 77 men, at the hands of a Peruvian army. Such attacks eventually depleted the expeditionary force to about 50 percent of its former size. As casualties increased, Chile realized that Peru would not surrender without a fight from city to city. However, Chile’s army, bitter with its losses in the Peruvian interior, wanted to defeat one of the leaders of the resistance, General Caceres. As a result the Battle of Huamachuco took place. In a final show of force, Chile killed nearly a thousand Peruvians. General Caceres barely escaped capture. The resistance continued. Although Chile did not have the means for total victory, the Peruvians were also getting exhausted by the war and wanted a way out.

Peru had kept up the guerrilla fighting for over three years in hopes of not losing territory or at least improving its negotiation potential. Therefore, Chile offered peace terms to Peru that would allow the Peruvian government to save face before its people. The Treaty of Ancon was signed and the greatest war over nitrates up to date was over.

Peru and Bolivia were hoping to pay off their government debt by exporting nitrates, but instead ended up paying heavily for the War of the Pacific. In the Treaty of Ancon in October,

1883, Chile was awarded all of Bolivia’s coastal land. Hence, Bolivia has since then been in a landlocked state. Peru in the treaty lost the lands of the northern part of the Atacama Desert, at least for almost half a century. Consequently, Chile gained a monopoly on sodium nitrate deposits of the Atacama Desert. Chile not only gained permanent holdings in Tarapaca, but created a buffer zone in Tacna and Arica to protect its newly acquired nitrate fields. The

26 element of the Treaty of Ancon that gave Peru some element of dignity was that Chile agreed to negotiate a possible return of Tacna and Arica after a period of 10 years had lapsed. Since these provinces would be administered by Chile, this gave Chile time to solidify its stakes in

Tarapaca. It was also a tactical measure to assure that Peru would not try to take revenge.

However, this agreement did not lead to a full return of the north Atacama Desert after all. In

1893, neither country could agree on satisfactory terms. It was not until the Treaty of Lima on

June 3, 1929 that brought negotiations to a close. Tacna was returned to Peru, but Arica was kept by Chile. Chile also had to pay Peru six million dollars in compensation. The treaty of

Lima was important, because the borders between Chile, Peru, and Bolivia have remained unchanged, since then.

Bolivia’s policy in the Atacama Desert brought about its own undoing in the region. It allowed settlers from Chile to develop the land and make it their home. This would be fine if

Bolivia was able to enforce the coast. However, the Bolivian state was in such a weak position that it barely had the means of transportation from La Paz to Antofagasta and other cities. So being able to militarily enforce its claim to the Atacama Desert was not something that it could accomplish effectively. In the absence of substantial Bolivian involvement, the Bolivian

Atacama Desert region became Chilean in all but name. To better understand what was going on you can draw a parallel to Mexico and Texas relations. The Mexican government allowed pioneers to settle in Texas from the U.S. However, the settlers established themselves in

Texas to the point where they far outnumbered the local Mexican population. To make a long story short, the War for Texan Independence was fought, and Texas broke away from Mexico.

Texans won the war with very little U.S. support, other than some brave volunteers from the east. In contrast, Chileans in the Atacama Desert had the full backing of their government behind them. In fact, as we know Chile pressed hard to add region after region to its territory.

However, as with Texas, Chileans basically in day to day life made the littoral their own.

Chileans were the main labor force; they funded the development of the Atacama mines and

27 supplied the technology. Chile had vested interest in the littoral, whereas Bolivia had one mostly on paper. Bolivia’s claims did not match the reality on the ground, in the sense they sent very few Bolivians to develop the land to the west. Lacking military and jurisdictional preparedness, the few troops that Bolivia sent were swiftly defeated. Bolivia thought that an alliance with Peru would scare Chile into settling for peace. Bolivia relied on Peru to do most of the fighting to possibly win the war. However both these assumptions were costly miscalculations on the part of Bolivia. Thus, in the Treaty of Ancon Bolivia lost a staggering one fourth of its land mass. Cut off from the ocean, it would hence forth rely on its neighbors to transport goods west. To this day, Bolivia has lamented how the war ended up for her. It feels victimized because it is still landlocked. Once a war is fought countries in the world are generally reluctant to give back land. At the same time, the memory of lost territory runs deep. The land boundary status quo has remained up until the present day.

After the war, other than Brazil, Chile had the strongest navy in South America. Brazil and

Chile were also basically allies. Coming out of the conflict victorious further boosted Chile’s patriotism. The Bolivian littoral and Tarapaca was a bonanza of wealth for Chile. Chile’s government revenue increased two fold in the post war decade. From then on nitrate exports continued to accelerate. Chile’s newly acquired wealth meant that it had the means to maintain a strong navy. Along with Brazil, Chile kept Argentina’s power in check, as part of regional politics.

As with most international wars of the modern era, the big nations of the day pick sides in wars that are economically interesting. Foreign powers act behind the scenes and try to influence the outcome. The British had lent money to Peru and Chile. However, since Peru declared bankruptcy and nationalized its nitrate mines, British creditors were left without payment. Chile on the other hand kept up with its payment. However, more importantly

Chile’s government was more capitalistic, allowing both British and Chilean entrepreneurs to

28 operate and invest in privately owned mines. Therefore, when the War of the Pacific began, the British backed Chile. British investors felt that it would allow them to get a piece of the

“nitrate” pie. This was significant, because at a time when both Peru and Chile needed money, Chile had stronger financial backing. British investor in turn took control of 3/5 fifths of all nitrate mining companies operating in the Atacama Desert. (Burr, 130-144)

The choice by the Brits to go with Chile paid off. The most well-known investor was John

Thomas North who was nicknamed the Nitrate King. North, who was in Tarapaca, identified and setup operations for extracting nitrates eight months before the end of the war. His gamble was successful. After Tarapaca fell to Chile, North began producing 3000 tons of nitrates per month. As his fortune grew he gained a monopoly on all the water supply and railway transport of nitrate export from Tarapaca. Eventually, Chile’s government dissolved his monopoly, but not before North made a fabulous amount of money. Despite British involvement, allowing private ownership of nitrate companies did bring money to the government and the domestic economy. Chile had a composite surplus from the years 1895-

1902 amounting to 12.4 million pesos. The involvement of the U.S. and British private interests was a foreshadowing of the sleeping giant we now know as the corporate world.

Politics and business mixed. However, companies were beginning to exert more influence over the direction that countries headed in. Since private investors were state bond holders, it is no surprise that they were a hidden influence in policy making. (Rector, 95-110); (Rauch

72-81)

However, if one major power is involved, there is usually a counter weight. The United

States had long been Peru’s main trading partner. The United States was an eager buyer of guano. So when conflict over nitrates occurred it sided with Peru. U.S. administrations did not officially support Peru militarily or financially. It rather sought to prevent Peru from losing land to Chile in what it saw as an unfair agreement. Also in light of the Monroe doctrine, the

U.S. tried to keep Europe out of Latin American matters. So seeing the Britain behind Chile, the U.S. took the opposing side. Eventually, when the U.S. saw that Chile would be the clear winner of the war, it took a decisively more passive tone. It switched to a neutral stance by the early 1880s. However, this did not stop a private American entrepreneur from supplying

Peru with guns and ammunition to fight the guerrilla war with Chile. W.R. Grace, an Irish born

American, was the driving force behind weapon imports during the war. His company called

W.R. Grace and Co. was Peru’s main arms supplier. After the war he assumed Peru’s debt burden. At first glance what Grace did might seem altruistic in helping a country devastated by war. In reality, he had an agenda to enrich himself. The nickname that he earned was the

Pirate of Peru. In exchange for taking on Peru’s debt, Grace received concessions in guano deposits, silver, and other minerals. This made him one of the wealthiest men operating in

Peru. (Clayton 1995, 107-141)

Natural nitrates proved to be as popular of a fertilizer internationally as guano. As we know, the fertilizer trade was profitable as early as the 1840s. However, with guano out of the picture, the nitrates trade took off. Nitrates were the next monopoly nitrogen based fertilizer. The primary importers of nitrates were the U.K., Germany, France, the Netherlands, the U.S., and Belgium. After the war, exports of Atacama nitrates increased dramatically.

Over a million tons a year were being exported in the late 1880s alone. From 1909 to 1929 nearly 20, 000,000 tons of nitrates hit the market. To understand how immense nitrate exports were, it is beneficial to look at the big picture and the peak years of the export of nitrates. In 1884, Chile exported 67,000,000 pesos worth of nitrates. By 1913 it was

315,000,000 pesos. When profits from sodium nitrate exports were at their peak between

1910 and 1913, they accounted for seventy seven percent of total exports. The British,

Germans, and Americans were the recipients of eighty percent of all Chilean nitrates during the same period. (Miller, 228-269), (Albert 7-35)

There were not only foreign benefactors, but also victims of the guano and nitrate trade.

Chinese labors were employed in both the gathering of guano and mining the nitrate fields.

They flocked the west coast of South America in hope of a better life. They were valued for their hard work. Many Chinese worked on the western sea board because a large number of

Peruvians and Bolivians were reluctant to move to lowland areas because of the fear of disease. The Chinese were also willing to take on jobs in Peru that many locals did not want to do, such as the building of railroad tracks. So, primarily for the purposes of mining and construction, over 80,000 Chinese and other Oriental workers were brought over to Peru.

The problem was that many Chinese workers were treated very poorly as indentured servants on the Chincha Islands and on the nitrate fields. It got so bad that some Chinese people committed suicide, rather than work under the living conditions offered. The plight of many

Chinese immigrants was one of the dark chapters of the guano and nitrate booms. When the

War of the Pacific reached the land stage in Peru, Chinese laborers joined Chile to fight Peru.

They had already experienced enough bitterness in the harsh labor conditions under which they toiled, and they wanted change.

Chapter V

Chilean Monopoly of the Nitrates Market

Chile was the primary exporter of nitrates well into the early 20th century. Between the

1860s and the 1910s prior to World War I, Chile’s exports tripled in size. During this same time, nitrates on average accounted for a quarter of Chile’s gross domestic product. The government received revenue through export duties that was anywhere between 25 percent and 33 percent of the value of the exports. This brought in large sums to the government treasury. In fact, between 1880 and 1920, export duties on nitrates accounted for half of the annual government budget.

However, when a country depends on just one main commodity, it can bring cyclical instability. Similarly to oil rich countries today, in the late 19th and early 20th century the economic prosperity of Chile depended on nitrate prices and demand in any given year.

Although the government did invest in transportation and education, the upper class benefited the most. The trickledown effect was not enough to bring dramatic economic change to the lower and middle class. Also the remoteness of the Atacama Desert meant that economically it did not integrate with the majority of society near Santiago.

The event that really led to the downturn in the Chilean nitrate business was the development of synthetic fertilizers by British and German scientists during World War I.

Despite all its destruction, war can move innovation ahead very quickly. The pressing need for resources and ways to outsmart the opposing force can be a driving force in scientific discovery. The British and Germans tried to blockade or at least limit oceanic trade during the war. So it was hard to get Chile’s nitrates to Europe. The Hyber-Bosch process succeeded in developing synthetic fertilizer and the formula has been used for over a century now. This

32 then led to competition on the international markets. Finally, the demand for natural sodium nitrates dropped sharply. At that point it did not really matter how much nitrate was available in Atacama Desert since rapidly industrializing nations and the agriculture sector no longer had the need for it. As a result, a once booming industry shut down. Mines and railways were abandoned and some became ghost towns.

Ironically, there was a return to the initial status quo. Chile, Bolivia and Peru had not been in a rush to settle the Atacama Desert, prior to the 80 year boom of fertilizer demand. Since

1883, Peru wanted its territory back because it felt it had been wronged. Bolivia wanted, what it perceived as its dignity restored by being given access to the coast again. In other words with guano and nitrates out of the picture, Peru and Bolivia have kept their territorial dispute alive year after year to save face in front of their respective people and the international community. In reality, neither country is in a rush to try to take back parts of the

Atacama Desert. An all-out war also seems unlikely, especially in this day and age. Yet, there were differences in the 1920s that were not there in the 1830s in the Atacama Desert.

Although not as lucrative as guano or nitrates, Chile moved on to mining copper. Copper has since become the product that Chile is currently famed for. Silver was also found in abundance in parts of northern Chile. So countries are now wise enough to see that the

Atacama is not a worthless piece of desert. In regard to unforeseen value, a good comparison is Alaska in the northern hemisphere. Alaska was also discredited at first under the presumption that it was a cold waste land. Russia had a big enough empire in the 1800s under the Czar, and it sold Alaska to the United States. Seward purchased 1, 500,000 square kilometers for around 7, 200,000 dollars. That is a price of about 2 cents per acre. Seward was ridiculed for this move and the purchase was called Seward’s Ice Box. However decades later Alaska turned into one of the most mineral rich states the U.S. has ever had. The oil from Alaska is still a main staple of the U.S. economy to this very day. So it does not pay to discredit a land based on first impressions and popular belief. Chile not only recognized

Atacama’s short term prospects, but counted on the land to sustain the Chilean economy well into the future. However, in the case of Alaska only a few government officials and individuals under the leadership of Seward saw what could lie under the surface of Alaska. In Chile it was the majority of a nation.

The land of the Atacama Desert was not fought for cultural or demographic reasons. This land is in places so dry that it is sometimes compared to other planets in appearance.

Although not the most desirable land for life, resources can quickly make the region appealing. All it takes is the discovery of new deposits of whatever is currently in demand, and the claims to the Atacama Desert will be once again on the table. For this reason, the continued tension between Chile, Peru and Bolivia is not healthy. Chile should make diplomatic inroads toward a diplomatic solution that would be at least somewhat acceptable for all three parties. That way when the next mining boom hits in the region, there could be fewer hard feelings. If all three countries can share in the wealth, then all parties would be satisfied. (Richards 30-35)

Chapter VI

Ramifications of the Atacama Desert Dispute

Today, in justification for the War of the Pacific, each country plays the blame game. Chile is labeled by its opponents as the aggressor. It is seen by Bolivia and Peru as a nation that had planned for aggressive expansion north prior to the War of the Pacific. Chile was clearly after nitrates and other mineral wealth, but from its point of view it saw Bolivia trying to burden it with taxes. Chile also felt that Peru’s objective was to take over and dominate the nitrate trade. We can clearly establish that in pursuing nitrates, Chile was the aggressor. It is preferable that war be avoided as much as possible and only be waged out of necessity, mainly in self-defense. It is important to seek to understand the mood of the time. Chile was not a clear-cut aggressor, as we perceive invasions today. Chile did not prepare itself heavily for war ahead of time. At the start of the war, Chile looked like an underdog, especially when going up against Peru. For this reason, in some ways the War of the Pacific can also be partially seen as a defensive tactic by means of offense. As the saying goes, the best defense is offense. Chile had not yet fully capitalized on its victory in 1839 since there were still questions about who would have firm control of the central and southern part of the Atacama

Desert. Chile was also facing a dispute with Argentina over Patagonia and the Magellan Strait.

Chile was feeling particularly vulnerable with Argentina rapidly growing to become the bigger of the two nations. Argentina was more likely to take the land it wanted. Not to mention

Chile’s wheat production and livestock was going through a downturn. Argentina, on the other hand, had the vast Pampas for grazing. Chile was succeeding in nitrate production.

Nevertheless, there was no way to tell in the long term that Peru and Bolivia would expel

Chilean companies. Not knowing if income from nitrates was a certainty caused economic instability.

This war was really a decisive confrontation between Chile wanting to corner the market on nitrates, and Peru resisting such opportunist encroachment. Technically, Bolivia declared war first and was the biggest victim of the war. However, it did not play a big role in the conflict.

By winning the war, Chile was legitimizing its place as a sovereign country in South America. It was an important war, because it laid the foundation for later agreements and current claims.

Chile saw the potential in nitrates, and knew that it could be winner take all situation. Of course, Chile did not succeed in taking all the land it intended to. However, it essential took the critical areas of nitrate deposits right from both the Bolivia and Peru.

The war also transformed how other foreign countries looked at Chile. The U.S. for a period of time did not get as heavily involved in Chilean politics. Argentina saw that Chile was willing to fight for what it wanted. It sent Argentina the message, let’s compromise over land.

The outcome of their negotiations was that Argentina got Patagonia, but Chile retained the

Magellan Straits. One could speculate that if Chile lost the war, Peru might have been the country that profited most from nitrates and that Argentina would have got the Magellan

Straights. Chile, from that point on, became the leading power on the west coast of South

America.

Looking at the past, one can observe that focusing on one mineral or commodity is only a short term economic solution. In the long run a more diverse economy can weather a storm.

Peru had great prosperity with guano and Chile with nitrates. However, both commodities only offered a certain window of time. Peru and Chile both failed to sufficiently diversify their economies before the boom years were gone. Eventually, the guano and nitrates were either mined out or no longer in demand. However, the people of these countries remember the wars that took place and are reminded of it in their history books. Even though over a century has passed, the war has not been forgotten. The fight over nitrates gave Chile about 35 years of prosperity, but also brought with it disputes with their neighbors that felt they were

36 wronged. That is why the cost of war should be weighed heavily. If a nation takes that step, it has to be willing to accept the consequences. The Chilean government opted for the material well-being of its own people, at the expense of its neighbors. The result is that there is still a degree of tension, at least among a segment of Peru’s and Bolivia’s population, towards

Chileans.

Chile was able to cope with the war domestically better than many of its rivals, because it had stronger political backing by its constituents than Peru and Bolivia. The War of the Pacific was also at the beginning supported by Chilean popular opinion. This popular opinion slowly eroded when there were heavy casualties, and the guerrilla warfare practiced by Peru began to frustrate military success. On the other hand, Peruvians did not have the same will power to fight, until after their heartland was attacked. The Peruvian government was in political turmoil, and soldiers and civilians were uncertain if gaining nitrates would only benefit the upper class. In other words, many soldiers and mutineers questioned what they were fighting for. Perhaps, that is the reason why Peru did not seek to claim territory from Chile during the war. Peruvian society was not behind the war, as much as the Chilean populous. Then in the case of Bolivia, its people were already dealing with poverty and social unrest. Being active in the War of the Pacific was not an option. Even though Chile had a small population, one should not underestimate the will power of people to see a war through until the end.

Chapter VIII

Renewing Dialogue

So what is the significance of the War of the Pacific and Chile’s settlement after

1929 up to the present? For one thing, Chile, Peru and Bolivia are no longer fighting wars over resources. The feeling of being wronged persists in Peru and Bolivia, while the War of the Pacific is a source of patriotism for Chile. Nevertheless, Peru and

Bolivia have greatly lessened their territorial claims. The last major land change proposal came from Chilean dictator Augusto Pinochet. He offered to give Bolivia a corridor of land stretching across the northern Atacama Desert, reaching the ocean north of the city of Arica along the LIuta River. This would be exchanged for a piece of

Bolivian land of equivalent size. Bolivia turned down this offer, because it felt that it should not have to give up any more territory in order to gain a strip of land extending to the coast. Another hindrance was that according to the Treaty of Lima any negotiations concerning the land previously owned by Peru would have to be consulted with Peru. Peru proposed sharing the aforementioned corridor by all three countries jointly. This was rejected by both Chile and Bolivia. In 2010, Peru gave

Bolivia a 99 year lease of a 1.4 section of the Tacna coast, which Bolivia can use to export its mineral resources. The desire to have a national coast is still engrained in many Bolivians. On April 24, 2013 Bolivia filed a suit against Chile claiming that despite agreements and commitments made in the past, Chile had not given Bolivia a way to the sea under Bolivian sovereign authority. (St. John 16-19)

Peru has, for the most part, come to terms with its land boundary with Chile and moved on politically. However, the maritime border was an area of contention, since the 1980s. Peru maintained that the maritime border was in violation of the Treaty of

Lima. Chile claimed the maritime boundary along the parallel line, whereas Peru claimed it should be along the equidistance line. However, much like the nitrates dispute, the maritime dispute was also over resources. The Humboldt Current makes the ocean between Peru and Chile valuable for sea life. Peru and Chile account for a large part of the international fish trade. In 2008 Peru filed with the International

Court of Justice to decide on a delimitation line. Both Chile and Peru agreed to comply with the ICJ ruling. In January 2014, the court ruled in Peru’s favor and awarded the nation 80 more nautical miles. Both Peru and Chile viewed the decision as agreeable.

(Burney)

A long term solution to keeping the peace between Chile, Peru and Bolivia is by deepening economic ties. Similarly to the European Union, there is a real possibility that the more countries are intertwined economically; the less likely they are to go to war with each other. Also if poverty levels could be lowered in Bolivia and people began prospering economically, they would likely be less insistent on a getting a port so badly. The fact remains that so many Bolivians are struggling to make a living.

Demanding a Bolivian coastal region is hailed as a national priority, but really serves as a distraction from domestic problems. If Chile, Peru and Bolivia instead had thriving trade ties, it would, perhaps, soften the stubbornness of these countries when it comes to land disputes. If a pattern of economic cooperation is set between Chile,

Bolivia, and Peru, then the tension will subside. So my hope for the future is that a full

39 scale war over the Atacama Desert is not repeated. A positive outcome of the War of the

Pacific was that it solidified the identity of national states in South America. It contributed to creating a sense of national self-identity. Patriotism and love for once country was instilled in countries during those war years. Thankfully, as in Europe, a major war has acted as a deterrent for future wars, thus far between Chile, Peru, and Bolivia. About 131 years of peace and counting. Having achieved the daunting task of national unity it is time to take next step by overcoming regional rivalries and promoting regional cooperation both on a government level and in the private sector. Time will tell, if present generations can learn from the events of the Atacama nitrate dispute.

Chile, Peru and Bolivia should be able to resolve disputes diplomatically on their own. In the case of the maritime dispute, the ICJ has proven to be a fair arbitrator that Peru and Chile both respect. Perhaps, the ICJ can restore Bolivia’s access to the ocean in a manner that is also acceptable to Chile and Peru. However, I think that only a treaty reached by direct negotiation will be successful. A treaty which is recognized by Chile, Bolivia and Peru, granting Bolivia a Pacific corridor, will lead to the final conclusion of the Atacama Desert Dispute.

Chapter VIII

Conclusion

On a global scale the Atacama Desert dispute is a warning of what can happen in other international disputes if diplomatic negotiations are not successfully concluded.

If talks breakdown in ongoing resource disputes, it could lead to war. Even the aftermath of wars over resources can cause tense relations for future generations.

Whether it’s the South China Sea, the Arctic, central Africa, or the Falkland Islands, the countries involved should think carefully about how they go about resolving their disputes. The Atacama Desert dispute provides a lot of insight into the entire process of a resource dispute, starting from discovery, to development, negotiations, war, and the aftermath of conflict. For this reason, the Atacama Desert Dispute can be relevant to today if governments and individuals alike can learn from what has taken place in the past and consider the issues that still persist. If diplomatic action is not taken seriously and international boundaries are not firmly established, the likelihood of conflict is increased in any resource conflict.

The primary objective of the Atacama Desert dispute was to gain control of nitrate deposits. Chile was successful in this task because it was far more active in gaining foreign support than Bolivia and Peru. It has been observed that the demand for resources on the international market was very strong. This encouraged the development of the nitrate trade.

Furthermore, the unclearly defined national borders, as well as the expansionist attempts of these countries to gain as much land for themselves as possible, led to their locking horns with each other. Chile sought to enlarge its territory most persistently. The guano boom spurred all three nations to want to replicate its success by tapping into the nitrates of the Atacama

Desert. In fact, nitrates turned out to be far more valuable than guano because of their many uses and there was a greater demand for them than for them. So even though Chile was one of the poorest countries in South America, its people settled the Atacama Desert, extracted nitrates from it, attempted to use diplomacy to keep these resources, but ultimately went to war alongside the British be a leader in the sale of nitrates. The War of the Pacific was a massive attempt to gain resources, backed by players behind the scenes, such as the United

States and Britain. Chile’s people were willing to go to war over nitrates because they believed it would secure their future. Peru and Bolivia were pulled into war by their government leaders. During the war, Chile attempted to annex nitrate-producing regions. As a result, Chile gained all of Bolivia’s section of the Atacama Desert and control of Tarapaca,

Tacna, and Arica for all the years that nitrate was profitable. Nitrates were only traded heavily between the 1830s and the 1920s, after which synthetic nitrates took their place. However, other minerals were discovered in the Atacama Desert in decades to come. So Chile’s victory in the Atacama Desert dispute benefited them far more than they had anticipated.

Looking forward, the dispute over nitrates has been settled. Peru and Bolivia have accepted Chile’s victory in the conflict. The maritime boundary, based on the Treaty of Lima, was successfully concluded in 2014 by the International Court of Justice. So the only main area of contention remaining is whether Bolivia should reacquire a small corridor of land with access to the ocean. Economic cooperation, inspired by the European Union model, will pave the way for a final territorial settlement. In democratic countries, economic prosperity tends to lead toward reconciliation. If Chile, Bolivia and Peru can set aside their differences engage in serious dialogue and show goodwill toward each other, a Bolivian corridor can once again become a reality. Then, the Atacama Desert Dispute, as we know it, can be ended for good.

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