BY KEVIN G. HALL
 Herald World Staff

 SANTIAGO, Chile -- Chile's new president, Socialist Ricardo Lagos, takes office
 Saturday facing the challenge of increasing social spending without interfering
 with the rebound of the country's free market economy.

 Looming in the background are rising tensions with the still-powerful military over
 the fate of former President Augusto Pinochet. An attempt to try Pinochet on
 human rights charges could reopen the thorny issue of who else might be held
 accountable for alleged abuses during his military rule from 1973 to 1990.

 Lagos is the first Socialist elected president since a bloody coup led by Pinochet
 toppled President Salvador Allende in 1973. Pinochet returned to Chile last week
 from house arrest in London, where he avoided extradition to Spain, Belgium,
 France or Switzerland for trial on human rights charges. The retired general's
 high-profile military welcome home is shadowing Lagos' inauguration, which
 Chile's left was anticipating as a mixture of revenge and closure.

 On Monday -- the first business day after Pinochet's return last Friday -- Judge
 Juan Guzman asked Chile's appeals court to lift the immunity from prosecution
 that Pinochet enjoys as a senator for life. The judge is investigating more than 70
 complaints against Pinochet for alleged human rights violations during his years
 in power. A date was expected to be set by the end of this week for a hearing on
 that request.

 During the election campaign and Pinochet's more than 16-month house arrest in
 London, Chile's new president continually begged off the issue, saying Chile's
 courts would decide whether the retired general, 84, should face trial and a
 potential death sentence.

 The warm welcome for Pinochet by top military officers came against government
 wishes. Lagos now is promising that the armed forces will serve the president and
 not their own interests. Early in his six-year term, he will have to set the tone for
 relations with the armed forces.

 ``This is something in which he is going to have to prove his abilities,'' said Jaime
 Castillo, a human rights lawyer in Santiago.

 Relations with the military may depend greatly on the question of Pinochet's
 immunity. Judicial experts including legislator Juan Bustos will tell the appeals
 court that the former military ruler does not have immunity because Chile is a
 signatory to the Geneva Conventions on war crimes. Those accords, Bustos
 argues, take precedence over the amnesty Pinochet engineered for crimes
 committed from 1973 to 1978 -- the bloodiest years of the military regime.

 Aside from dealing with the consequences of Pinochet's return, Lagos' pressing
 concern is how to quickly fulfill promises to increase social spending on health
 care, education and job-creating public works projects.

 ``People, regardless of the type of government, want results,'' said Marta Lagos, a
 pollster in Santiago for London-based Market Opinion Research International.
 ``People are not willing to wait for that.''

 ``I don't think the relationship with the military is the biggest worry of Lagos,'' said
 Armand Kouyoumdjian, a political risk analyst in Santiago. ``I think the biggest
 challenge is making Chile a fairer place, making sure there is a quality of life --
 and that is not just a matter of money.''

 Chile's prohibition on divorce and complicated legal status for illegitimate children
 are areas in which Lagos can make enormous inroads for the nation's working
 class without spending more, Kouyoumdjian said. Illegitimate children face legal
 obstacles ranging from enrolling in public schools to inheritance rights.

 Economic experts say Lagos has little room to maneuver on the economic front.
 They say he cannot raise taxes or take other steps that could stall the projected
 return to 6 percent economic growth this year. He has pledged to continue the
 free market reforms and fiscal discipline that transformed Chile's economy into
 the healthiest in Latin America and made Chilean grapes, plums and salmon
 staples in U.S. supermarkets. And with this year's budget already in place, he
 cannot redirect spending until next year.

                     Copyright 2000 Miami Herald