The Treaty of Lima (1915) was a treaty signed on June 17, 1915 between Chile and the Axis Powers of the United States, Argentina, Peru and Bolivia that formally ended Chile's participation in the Great American War. Chile, one of the four Bloc Sud powers, had entered the war in September of 1913 with a surprise attack against the Chimbote naval base where parts of the US Pacific Fleet and most of the Peruvian Navy were docked, destroying them together; seven months later, two American fleets sank the majority of the Chilean Navy at the Desventuradas in the Eastern Pacific. From then on, Chile had been on its back heels and suffered defeats on land starting in November of 1914 at Iquique (November), Antofagasta (December), and La Serena (early February). The advance of the Amero-Peruvian army inland from La Serena and the Argentines from the Andean passes, in addition to the collapse of the Chilean government of Juan Luis Sanfuentes and a three-way standoff over the fate of the capital between a conservative, liberal and military faction, effectively ended Chile's ability to defend itself.
The Treaty itself was designed to humiliate Chile, broadcast to other Bloc Sud members what would happen if they fought to the bitter end, and in the case of the South American members of the Axis correct what they viewed as territorial gains made by Chilean aggression during the Saltpeter War (1879-80) and a near-war in the Andes thereafter (1881). All of Chile north of the 25th parallel was ceded to Bolivia and Peru, with the latter regaining its territories up to the Loa River. Argentina, meanwhile, made small adjustments in the Andes to enjoy better control over critical mountain passes but then absorbed the entirety of southern Patagonia and the Tierra del Fuego by setting a new border at the Deseado and Baker Rivers, both of which flow from the same source at Leandro Alem Lake (at the time, Lake Buenos Aires). The United States set strict limits on allowable Chilean naval tonnage and the size of the Chilean Army, and then extracted ruinous financial penalties from Santiago.
The Treaty is viewed as the direct precursor to the Chilean Civil War that erupted soon after its completion, and the economic dislocation from the Great American War, civil war and punitive financial conditions imposed upon Chile took the country from one of the wealthiest per capita in the Americas (albeit grossly unequal) to one of the poorest, with it becoming one of the few South American states with net outmigration in the 1910s and 1920s. This crippling poverty and political instability was a direct cause of the final rise and consolidation of the Socialist Republic in 1924, which would last for the ensuing sixty-six years.
