LONG TERM damage to UK-Chile trade relations is likely to have been inflicted by the British Government's involvement in attempts to extradite the South American's country's former leader, General Augusto Pinochet.
Whether the ex-dictator is sent to Spain for trial or released, observers believe the UK's participation will have undermined the trust that has been built up between the two countries.
Deteriorating relations will hit consultants particularly hard, said a source close to the Department of Trade & Industry, who is representing a major UK contractor working on a transport project in Santiago.
'It is consultants' big stock in trade that we [the UK] are considered to be fair. Consultancy is all about being fair,' he said. Chileans are likely to view the UK's deliberation on Pinochet's fate as partisan, he added. Pinochet is held in affection by many Chileans for helping the country achieve an economic stability which is in stark contrast to other South American states.
NCE's source claimed that firms with ongoing work in Chile were unlikely to face immediate problems. However, he said repeat business may be more difficult to find and predicted Chilean clients would turn towards the US, Canadian or Asian consultants.
DTI export promoter for Latin America Oster Bane warned: 'As a new boy, this may not be the best time to go knocking on doors.'
Chile is in the process of privatisation, which is creating considerable work for infrastructure firms (NCE 22 October). Hyder is already taking part in the 600M water sector privatisation, while Mott MacDonald is pre-qualifying for a major new river crossing.
Knight Piesold director Peter Garrett voiced concern that the controversy was in danger of destabilising Chile. The consultant has an office in the capital Santiago, and Garrett said there is a danger the country's infrastructure development programme could be put on hold if there was any political unrest.
If the country is thrown off balance it could further damage South America, a region already feeling the impact of the east Asian crisis, he added.