Nearly 10 years after its military seized power in a violent coup, Chile is caught up in the worst economic crisis of the century - and military control is suddenly being challenged openly.
Recent violent demonstrations in downtown Santiago, in which almost 300 people were arrested, suggest that the rule of Gen. Augusto Pinochet Ugarte may be in trouble.
General Pinochet, strong man for this decade of military rule, still rides firmly in the saddle, but the ride is getting bumpy.
Most of Pinochet's problems are economic, but they are becoming social and political, too. Cesantiam (unemployment) is the key problem. It's a word heard everywhere in Santiago, the capital. A quarter of Chile's work force is unemployed, and half of the remainder are underemployed.
It was this situation that prompted the recent demonstrations in Santiago.
Not since the final months of Salvador Allende Gossens' presidency, which the military coup snuffed out, has Santiago seen such public protests. The demonstrators chanted: ''Work, bread, justice, liberty!'' But they also screamed , ''Pinochet, assassin!''
This open contesting of Pinochet's rule, in the face of possible arrest and military vengeance, indicates the growth of opposition.
Although thousands, probably millions of Chileans oppose military rule, open opposition has largely been limited to denunciations of the regime by exiled politicians, the occasional clash between police and alleged terrorists, and leaflets and other propaganda distributed clandestinely throughout Chile.
But now, with the economy in deep trouble, the opposition has moved into the streets.
Purchasing power has declined under the weight of lower salaries, higher prices, and 100-percent-a-year inflation. It is getting harder and harder for average Chileans to pay their debts. The losses of many private banks exceed their credit. Business bankruptcies are at the highest level in a generation; an estimated 17 percent of Chile's businesses went belly up in 1982 and early 1983. The agricultural and business sectors of the economy are in a squeeze between cheap dollars and high interest rates.
The Pinochet government has seemed powerless to resolve these economic dilemmas. It devalued the peso last June by almost 30 percent. Then in January it announced the liquidation of three financial institutions and direct government control of seven others.
The trend toward increasing state control seems ironic for a government that came to power promising to take Chile along the road of free enterprise. In its early years, this military government divested itself of state-run companies and promoted unbridled capitalism. Now it has reneged on these policies.
The government controls 85 percent of all credit and is in the process of acquiring 60 percent of the bankrupt industrial concerns ''to preserve the sources of employment.''
General Pinochet's economic wizards argue that Chile's crisis is essentially the result of the worldwide recession. They say Chileans will simply have to tighten their belts.
Support for the government has eroded. The middle class, which applauded the 1973 ouster of President Allende and then profited from the ''Chilean miracle'' of the mid-1970s, bitterly resent the unemployment and the declining purchasing power.
Under increasing criticism, the government appears to have become more repressive. Human rights activists report an increase of violations, including torture, in 1982.