Early on the morning of Thursday 4 October 2007, Chileans awoke to the stunning news that the investigative judge Carlos Cerda had delivered a damning resolution on the case of the embezzlement of public funds by the late dictator Augusto Pinochet and his cohorts. A week after the Chilean supreme court had authorised the reopening of Cerda's enquiry, he issued twenty-four arrest warrants for members of Pinochet's immediate family and associates.

Justin Vogler works as a freelance journalist based in Chile, teaches political science in the socio-economics department of Valparaiso University and is studying for a PhD at the department of peace studies at Bradford University, England.

He has spent twelve years travelling and working on development projects in southeast Asia and Latin America and is a regular contributor to the English-language daily, the Santiago Times

Among Justin Vogler's articles in openDemocracy:

"Michelle Bachelet's triumph" (January 2006)

"Latin America: woman's hour" (17 March 2006)

"Mapuche: the other Chile" (20 June 2006)

"South America: towards union or disintegration" (20 July 2006)

"Augusto Pinochet: chronicle of a death foretold" (9 December 2006)

"Bienvenido, Señor Bush" (8 March 2007)

"Argentina and Britain: the lessons of war" (3 April 2007)

Cerda's investigation has built on the United States Senate enquiry of 2004 that unearthed multi-million-dollar accounts in Pinochet's name in the Riggs bank in Miami. The final report shows how, over thirty-one years, Pinochet and his henchmen systematically siphoned off millions from Chilean army reserve funds; used false passports to open foreign bank accounts; earned huge kickbacks in international arms deals; set up ghost companies and purchased a string of luxury properties. It concluded that after the family fortune was totalled up, there was $20,199,753.03 that couldn't be "reasonably accounted for".

By mid-afternoon, the entire Pinochet family, six retired generals, two serving colonels, the ex-dictator's lawyer and eight other members of his inner circle were in police custody. Predictably, the general's 83-year-old widow, Lucia Hiriart, had an attack of hypertension and was whisked to the secretive military hospital where her late husband so often took sanctuary.

Then came the indignation. "This is indescribable political persecution", Pinochet's daughter-in-law, Maria Soledad Olave, screamed at reporters. "Don Augusto is dead; let's leave the hate and vengeance behind." Meanwhile Lucia Hiriart's lawyer denounced "an illegal abusive resolution that violates the most essential of a person's fundamental rights".

But unlike political detainees during Pinochet's 1973-90 reign of terror, those accused of crime in Chile today do have rights; within twenty-four hours Judge Cerda had unexpectedly granted bail to all his prisoners. "Everyone has a right to liberty during their trail", he explained, adding that no reason existed to keep them in preventative custody and as "I shall shortly be leaving the country, I have decided to give them their liberty myself".

Thus, on Saturday 6 October, Cerda left the Pinochets' lawyers fuming and flew to Washington where he is to receive a $160,000 prize from the Gruber Foundation in recognition of his being "the only judge in Chile to pursue cases of human-rights abuses by the Pinochet regime while the general was in power". The prize neatly highlights world opinion's disdain for the dead dictator and his kin at a time when the supreme court will deliberate on the defence's arguments for dismissing the charges. Moreover, the judge's decision to leave his suspects free deprived their defence of the meagre victory they might have scored by persuading the supreme court to grant bail in his absence.

More importantly, Cerda's bombshell has obliterated any notion that, following "Don Augusto's" death in December 2006, the Pinochets would be left to quietly enjoy their ill-gotten gains. This is much needed evidence that Chile's legal system can work equitably. "No one in Chile should believe that anyone is above the law or able to ignore judicial orders", said Chile's president, Michelle Bachelet, on hearing of the arrests.

The rightwing opposition's reaction was inevitable. Ivan Moreira from the Independent Democratic Union (UDI) said: "There goes the judge on holiday to collect his succulent prize for the defence of human rights - and the more Pinochets he leaves in prison, the more money he will receive." Others questioned Cerda's political independence and accused him of throwing up a "smokescreen" to divert attention from the many difficulties of the current government of Michelle Bachelet.

People close to Cerda insist, however, that he has no political vocation and that his tireless defence of human rights and pursuit of justice is motivated by his unshakable Catholic faith. Furthermore, no one in government would dare pressure such an internationally renowned and notoriously principled judge.

Bachelet's Chile: from hope to anger

At the same time, a besieged President Bachelet may quietly welcome the temporary diversion that the latest chapter in the Pinochet saga represents. Her popularity among Chile's 15 million people has been waning. Polls published the day before the arrests showed her national approval ratings down to 35.3%. In Santiago, the figure is even lower at 26.9%; much of this can be attributed to the fallout of a disastrous and disruptive transport reform in the capital, as well as of the riotous demonstrations there to mark the anniversary of Pinochet's bloody 11 September 1973 coup which left one policeman dead, forty-two people injured and the cells full.

The problems run deep. In March 2006, just three months after Bachelet's inauguration, a national strike by secondary-school students closed down schools throughout the country. In a textbook example of civic mobilisation, Chile's "penguin revolution" forced the forgotten issue of education reform to the top of the political agenda. However, in a country where the government's own, highly questionable, figures show the richest 10% earning thirty-one times more than the poorest 10%, the secondary-school kids were not alone in harbouring pent-up social grievances.

In September 2006 workers at Escondida, the world's largest copper mine, downed tools demanding a share in the windfall from sky-high copper prices. Shortly after, subcontracted workers at the state-run mines walked out complaining of disparity in their wages and conditions vis-à-vis regular workers. Meanwhile, Mapuche Indians protested for land and justice and university students called for a long-overdue higher-education overhaul.

At the same time, increasingly well organised groups are mobilising against wholesale environmental plunder that stretches from Barrick Gold's Pascua Lama Project in the far north, to energy giants Endesa Spain's and Colbun's plans to damn the Baker and Pascua rivers in the deep south. Then in September the trade-union confederation the Centro Único de Trabajo (CUT) clanked into gear and called a series of national strikes demanding an "end to neo-liberal hegemony and the construction of a social democratic state".

Also on Chilean politics and the Pinochet legacy in openDemocracy:

* Roberto Espíndola, "Chile's new era" (16 January 2006)

* Jorge Larraín
"Pinochet's death" (12 December 2006)

* Alan Angell, "The Pinochet regime: an accounting" (12 December 2006)

* Carlos Huneeus, "Pinochet's regime: the verdict of history" (13 December 2006)

These dispersed social movements lack force, cohesion and coherence. However, after thirty-four years of active repression and/or passive subservience, Chilean civil society is slowly awakening and demanding that Bachelet honour her fervent campaign pledges of social justice and citizen participation.

Yet instead of throwing the state's weight behind the social demands she encouraged, the president has prevaricated. Many in her unwieldy Concertación coalition do not share her penchant for social change and are highly suspicious of "citizen participation". They see their own interests indelibly linked to those of Chile's powerful economic elite. Trying to please everyone, Bachelet has appointed neo-liberals to head the economics, finance and energy ministries and reserved the "political" posts for her socially minded cronies. Far from generating consensus, the combination has proven inoperable. Two cabinet reshuffles have done nothing to improve coordination or stamp out the endemic infighting.

The Transantiago mess

Bachelet's woes are underpinned by the bungled Santiago transport reform. Chile's political class had come to pride itself on efficiently implemented up-to-the-minute public polices. Vast tracts of the state bureaucracy and public infrastructure have been successfully overhauled during the past decade. But with the Transantiago, Chile's technocratic elite - most of who hold higher degrees from ivory-league US universities and probably never ride on Chilean buses - came unstuck.

Blame has heaped on the finance minister, Harvard economics professor Andres Velasco. It was Velasco who apparently convinced Bachelet not to postpone the launch of the ill-fated plan, which almost halved the number of buses on the capital's streets from one day to the next. The neo-liberal think- tank Velasco heads, Expansiva, was instrumental in the Transantiago's designs. It also appears to have been Velasco who insisted that, unlike every other major urban transport system in the world, the Transantiago was to be self-financing.

"It's a system designed with a financing mechanism and that mechanism is operating", he insisted at the beginning of March 2007 as millions of weary Santiago residents waited hours to get home. The same week Benito Baranda, the social director of the Catholic charity Hogar de Cristo said: "The Transantiago has been the worst humiliation for the poor in a long time." People in the periphery were "getting home an hour later and leaving the house an hour earlier."

Yet despite repeated calls for Velasco to go, Bachelet has hung on to him. The business community see him as their man in cabinet. With Sofofa, the powerful Chilean business syndicate, now openly criticising Bachelet's lack of "leadership" and accusing her labour minister, Osvaldo Andrade, of stirring up union unrest, she may not dare ditch him even if, as is probable, she reshuffles her cabinet a third time before the end of 2007.

So yes, against this backdrop the mass arrest of Pinochet's cohorts has been a welcome distraction for Bachelet and a timely reminder to the governing coalition of the historic opposition to military dictatorship that welded them together. But Bachelet and the Concertación need more than a nostalgia-laden rest bite. They need a clear project to transform Chile socially and politically.

Moving on from the Pinochet years is not just about an end to impunity, corruption and fear. It needs to be about destroying the generals' legacy of social and economic injustice and turning Chile into the equitable, prosperous, culturally diverse, happy, sustainable and beautiful country it can be and that its people deserve.