Chile wants loans, focuses on distributing aid


  • World
  • Friday, 05 Mar 2010

CONCEPCION, Chile (Reuters) - Chile will need international loans and three to four years to rebuild after a massive earthquake killed more than 800 people and demolished cities and towns, President Michelle Bachelet said on Thursday.

Saturday's 8.8-magnitude quake destroyed or seriously damaged hundreds of thousands of homes, wrecked bridges and highways, and cracked open modern buildings in the capital's suburbs. It shattered vats at Chile's famous vineyards and briefly shut down some of the world's richest copper mines.

Looting flared anew in one city on Thursday and bodies continued to wash ashore near the worst-hit town of Constitucion as rescuers feared the large number of missing people could push the death toll higher.

"We will undoubtedly need to turn to international lenders," Bachelet said on Thursday. "We are going to have to ask (for credit) and hope that via the World Bank or other mechanisms we can count on sufficient funds."

Bachelet's government initially said it would be able to cope with reconstruction costs out of its budget. But it misjudged the scale of the damage, which according to one estimate could reach $30 billion, or about 15 percent of the South American country's gross domestic product.

The economy of the world's top copper producer has a good chance of rebounding from quake damage in the second half of the year, analysts say. Ratings agency Standard and Poor's added to that optimism, saying the quake would have no immediate effect on Chile's credit quality.

The quake and the tsunamis it triggered demolished coastal towns and villages and caused serious damage across a vast area of south-central Chile, including the country's second-largest city, Concepcion.

President-elect Sebastian Pinera, a billionaire businessman who will take office on March 11, unveiled a four-phase plan on Thursday to rebuild the country and acknowledged the quake will alter the course of his government.

"The future government will not be the government of the earthquake, it will be the government of reconstruction," the silver-haired conservative said.

United Nations Secretary General Ban Ki-Moon will visit Chile on Friday to assess the damage with Bachelet and Pinera.

Bachelet, whose popularity is being tested by the government's initially slow response to the disaster, on Thursday visited Concepcion, where electricity was just starting to be restored six days after the quake.

Terrified by dozens of powerful aftershocks, survivors in some of the worst-hit towns are living in makeshift shelters and abandoned cars on hillsides as rescue workers search the rubble for survivors and troops patrol to quell looting.

Search teams with dogs scoured a small, tsunami-battered island near Constitucion where hundreds of people had been camping out for a festival marking the end of summer when the quake strick.

"Everyone died there, whole families of 10 to 12 people who were camping," said 30-year-old fisherman Mario Leal, who was unable to save his wife and two young children.

"I lost everything. All my family and my house."

In Talcahuano, a port city abutting Concepcion, dozens of giant fishing boats and smashed cars lined the town's muddy streets. The receding tide left a mangled waterfront and dark stains up to six feet (1.8 meters) on the sides of buildings.

"I'm living a second life," said Jorge Briones, a 67-year-old mechanic who survived the tsunami there.

Widespread looting broke out in the days following the quake but the country's defense minister told reporters the thousands of troops sent to stricken areas had succeeded in ending the "pillaging and vandalism."

Thefts have died down as aid with basic staples arrived in disaster areas, but looters raided stores again in Talcahuano on Thursday after curfew ended.

Soldiers strapped one looter to a stop sign with plastic handcuffs, but several got away before order was restored.

DEATH TOLL MAY RISE

So far, 802 people have been confirmed dead and hundreds more are feared missing, prompting Bachelet to warn that the death toll is likely to rise.

Friends and relatives at home and abroad used Facebook, Twitter and Google to post messages and pictures of the missing as well as of young children found alive without families. Radio stations broadcast names of those yet to be traced.

Officials in some areas said they had called off the search for survivors and were focusing on distributing aid. Very few survivors emerged from the water after enormous waves sucked them out to sea on Saturday.

"Our priority will be to tend to the living," said Jaime Toha, the most senior government official in the Bio Bio region, the worst-hit by the quake.

Chile, long one of Latin America's most stable economies, has about $18 billion in copper boom savings and only some of its mines were briefly affected by the quake.

State mining company Codelco said the quake compromised less than 0.5 percent of its annual output.

In a sign that investors are now betting on a smooth recovery, Chile's main stock index rose on Thursday for the first time since the quake and the peso closed at a five-week high.

Chile's top oil refinery was seriously damaged and could be shut down for a month, boosting the need for fuel imports in the country.

Another major refinery could be up and running by next week. But Chile, which produces almost no fossil fuels, was already stepping up imports from Asia and the United States.

(Additional reporting by Ignacio Badal, Fabian Cambero, Mica Rosenberg, Juana Casas, Rodrigo Martinez, Antonio de la Jara and Simon Gardner; Writing by Todd Benson; Editing by Stuart Grudgings and Todd Eastham)

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