Chile's most important relationship remains with its main trading partner, the USA, which supplies 95% of materials for the critical copper industry. The relationship has not always been easy. Under Allende, the USA actively worked against the government, fearing that the spread of socialism would jeopardize its investments in Chile and the rest of Latin America. Pinochet's human rights record eventually became an embarrassment to the Reagan administration, which qualified its backing for him. Present relations are good; the Frei government concurs with US economic and regional policy in Latin America.
Chile's territorial dispute with Argentina over islands in the Beagle Channel, which almost led to war in 1978, was finally settled in 1984 with Vatican mediation. Chile was awarded 12 islands including Picton, Nueva and Lennox. International arbitration is still deciding ownership of the Laguna del Desierto region. Border disputes also continue with Bolivia and Peru.
