Chile

Today's watchword in Chile is multipartidaria. And it signifies something momentous for this thin strip of a country. The nation's political parties, angry but quiet during the past 10 years of military rule, now are joining forces in a bold show of opposition against military leader Augusto Pinochet Ugarte.

''It is time for all the parties, from the left to the right, to work together to build a democratic alternative to the military regime,'' Christian Democratic Party leader Gabriel Valdes Subercaseaux said on his release from jail on the third day of national protest July 12.

Although they are banned by the government, the parties now are demanding a right to exist and to play a role in pulling the country out of the worst economic and social crisis in its history.

''There is no time to lose,'' says Mr. Valdes. The parties are reemerging in a turbulent society that is already casting aside the rigid and disconnected organizational structures of the military regime.

''The three national 'days of protest' since May served to reunite the people and marked a spontaneous return to the traditional organizations of a civilian society,'' says Prof. Duncan Livingston, secretary of the Academy of Christian Humanism.

There are signs of the return everywhere: Trade unions - only a few weeks ago isolated within each factory - have united into a centralized structure. High school students have formed a national assembly. Residents of the poblaciones, the poorest urban areas, already have held a national congress of elected delegates. Merchants and managers of small- and medium-size industries have joined forces in a new organization. In the universities, students have elected representatives to a national congress to be held at the end the month.

A student leader says their demands include ''the abolition of the military rector, teaching freedoms, the free selection of professors, and sharp cuts in the high tuition rates that have halved the number of students.''

''Chile is no longer afraid and we are emerging from the barbarity of the dictatorship,'' according to writer Jorge Edwards.

Chile's newly found political fervor has developed in the last few months despite a ''state of emergency'' that has essentially lasted for a decade. The state of emergency gives General Pinochet the power to imprison suspects without trial and to ban political activity.

The symbol of the new grass-roots demand for a return to the democratic process is Chile's Supreme Court, the only institution in the regime that is free to elect its chief justice. A few weeks ago, General Pinochet's candidate for the post was defeated and the winner of the secret ballot was Rafael Retamar , an octogenarian who has become a popular hero.

Mr. Retamar's first official move was to receive the relatives of the estimated 2,500 desaparecidos (people who have mysteriously disappeared). And in a recent interview with the Santiago weekly Hoy, he said the state of emergency is illegal and that peaceful protest demonstrations are within the law.

The Supreme Court has become the forum for scores of petitions demanding the application of the legal code. Such petitions include: a document by the journalists guild calling for an end to censorship, a statement signed by 400 intellectuals urging respect of constitutional rights of free speech and protesting against torture of prisoners, a petition by Chile's human rights organization demanding that all political exiles (estimated at 70,000) be allowed to return.

In addition 1,250 prominent citizens signed and submitted a letter to the court saying they had violated the state of emergency; the move is seen as an attempt to force the court to say the state of emergency is illegal.

At the same time, the National Bishops Conference issued a document defending the right to dissent, freedom of speech, and the right to peaceful assembly. ''This is the only way to prevent violence and guarantee social peace,'' the document says.

The prospect of a popular revolt and violence lurks behind the nascent political debate. ''The mass participation in the three days of protest, in spite of a press blackout, caught everyone by surprise and is a sign of deep and overwhelming outrage,'' a trade union leader says.

The principal cause of Chileans' impatience is what Mr. Valdes calls the country's ''economic disaster.''

When General Pinochet came to power, he tried to couple an authoritarian rule with a dogmatic approach to the free-market theories of Prof. Milton Friedman of the University of Chicago. Chile's ''Chicago boys'' promised the ''broadest libertarian revolution in the world.'' The general claimed that ''by freeing the citizen from the state he would get rid of the poison of politics.''

But after 10 years, the economic scorecard is devastating. The nation's foreign debt is nearly equal to its gross national product. The debt is an estimated $29 billion. Unemployment is 30 percent (with 70 percent of jobless at barely above the poverty level), and inflation is 35 percent. Investments are down by 50 percent over the decade of military rule, the lowest level of investment in Chile's history. And the GDP dropped by 14 percent last year.

Humberto Vega, director of the economics department of Chile's Academy of Christian Humanism, says: ''The Chicago boys put everything in the private sector, even the social security system. They abolished all customs barriers, raised interest rates, but kept the dollar at a fixed parity for more than three years, and an undervalued dollar, which was worth less than the peso, transformed Chileans into unrestrained importers and consumers.''

The economist adds that nearly 60 percent of the country's foreign debt derives from loans taken out by individual families, given the US currency's artificially low rate.

''Everyone rushed to get dollars for whatever they needed and when General Pinochet was forced to revalue the peso in 1982 the shock was dramatic and millions found their debts multiplied.''

Another shock was the revelation that the laissez-faire import policy had wiped out nearly 50 percent of domestic production capacity during the military's rule, and that wheat production had dropped from 13 to 3 million tons.

Bank deficits exceed reserves, deposits, and assets. ''Theoretically, the country is bankrupt,'' according to Mr.Valdes.

The middle class, the traditional backbone of Chilean society, has discovered it has completely lost its political leverage and its social identity. Overburdened by debts and with real income fallen to 1970 levels, many have emigrated (70,000 according to Mr. Vega), while many others, including doctors, lawyers, dentists, and business executives, quickly repainted their cars black and yellow and became taxi drivers overnight. The number of taxis throughout the country leaped from 12,000 to 40,000 in a few months.

The clearest barometer of the middle class's economic collapse can be found in the classified ads in the newspaper El Mercurio, a mouthpiece for the regime.

The once-affluent are now trying to sell all the symbols of their rapidly acquired and artificial well-being - cars, television sets, household appliances , jewelry. One person placed an advertisement in a newspaper for ''used rubber soles.''

Members of the middle class form bank lines stretching out into the streets. There are 450,000 homeowners here who are trying to reschedule their mortgages, unable to keep up current payments.

''Perhaps this is the only country in the world where poverty and unemployment cut across class lines,'' Mr. Vega says.

But in the poblaciones, where more than 40 percent of Santiago's population lives, wooden shacks are multiplying. Unemployment in these poor sectors has reached 70 percent. Some wage earners are employed by an emergency public works program, which absorbs nearly 15 percent of the Chilean work force at wages of $ 20 to $40 a month.

According to church estimates, in Santiago alone 180,000 families cannot pay their utility bills. At nightfall, thousands of people brazenly hook up their power mains to the city's high tension wires.

''In the poblaciones unemployment is destroying families. There are serious malnutrition and alcoholism problems. Drugs and adolescent prostitution are rampant,'' says the Roman Catholic priest who organized the first trade union for the jobless in his parish at Las Reinas section of Santiago.

In an 11th-hour bid to dampen the growing mood of rebellion, General Pinochet abandoned Milton Friedman's economics and dived into concerted state financial programs. The government took over bank debts, nationalized several finance companies, and is buying up bankrupt companies.

The cacerolas explosion - the rhythmic beating of pots and pans on the three days of protest - is the most blatant sign of the society's rejection of the regime.

Mr. Valdes warns, ''Time is running out. If we do not lend an ear to the country's indignation and create channels for dialogue, we risk a repetition of what happened in Nicaragua and El Salvador.''

A major fear is that the fragile party structures, which are only beginning to develop, will fail to control the growing popular protest.

The purpose of the multipartidaria is to unite all the democratic forces and ''strike a social pact between workers, management, and the state,'' Mr. Valdes explains, ''because the task of reconstructing the country cannot be achieved by one political force alone.''

While there is general agreement that this transitional phase requires the active participation of the armed forces, the Army is seen as an unknown element. One political leader observes that it is ''a class of its own.''

General Pinochet imposed drastic changes in the armed forces of the country. The autonomy of the four branches was abolished and power was centralized in the Army, which he purged of all potential dissidents.

He also deprived it of all political decisionmaking powers and nearly all generals entering the government are retired. This allows the military ruler to have a personal dictatorship - in a region where many countries are ruled by rotating junta leaders.

''Spoiled by high wages, special privileges, and the biggest defense budget in their history, Pinochet's loyal armed forces are a separate caste and it is impossible to predict their reaction to the current turmoil,'' says a European diplomat.

But the pressure of events is beginning to be felt also within the military hierarchy. A few generals have made cautious overtures to political leaders and General Pinochet reacted by summoning all the armed forces generals to the presidential palace.

This unprecedented ''military parliament'' has ended and no one knows yet what, if anything, was decided. But it marks the first time General Pinochet has had to seek a vote of confidence.

But Mr. Valdes makes it clear that ''neither dialogue nor negotiations are possible with Pinochet.''

''We will continue our peaceful demonstrations until it is finally understood that his army is nothing more than an occupation force,'' Mr. Valdes says.