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Beyond Europe



25 October 2013

Latin American Switzerland before Elections

author Kinga Brudzińska

Chile is definitely a success story of the last systemic transformation. After going through economic, political and social change since the mid-1970s, the country now has one of the most liberal, open, and market-based economies in Latin America. According to the UN Economic Commission for Latin America and the Caribbean an average GDP per capita growth between 2000-2007 (3.2%) was higher than those of Argentina (2.5%), Mexico (2%), and Brazil (1.9%). In 2012 Chile economy grew at 5.6% (mainly due to the expansion of the business services, commerce, construction, personal services and manufacturing). The Economist Intelligence Unit expects Chile to grow on average 4.8% per year in 2013-17, given the strong levels of private consumption and investment. Chile is also a pioneer in the regions in terms of number of the Free Trade Agreements. As of 2013 it has 22 FTAs with 60 countries in the world (even more than Mexico which is four times bigger in terms of the GDP), with access to 4.2 billion consumers. In the near future Chile is expected to expand its FTAs network to i.e. Vietnam, and Hong Kong. It also negotiates the Trans-Pacific Partnership and the Pacific Alliance.

Before sitting on negotiation table, Chileans will however cast a vote in Presidential elections scheduled to take place on 17 November. The situation is unique as for the first time in the history; two women running for the office have the best chances to win. On the center-left former President Michelle Bachelet, a candidate of the coalition Nueva Mayoría, and on the center-right Evelyn Matthei from the ruling conservative Alianza por Chile coalition. Despite the fact that Matthei had high approval during her term as labor minister (58%), having such a powerful contra candidate as Bachelet, she is hardly a competitor. According to a poll released this month by the University Diego Portales, 37.7% of respondents said that they would vote for Bachelet, and only 12.3% for Matthei.

If Bachelet wins, she would make a return of the centre-left that was in power since Chile restored democracy. Even though it won’t make a difference for Europe, we can expect some changes toward the leftist governments (more positive) in the region. Therefore, it can shift a bit a dynamic of currently negotiated the Pacific Alliance, which aims at creating a free trade zone with Peru, Colombia and Mexico. Moreover if she wins, she again will be THE first. Precisely she will be the first president to return to office since the current Constitution took force in 1981. For the record Bachelet tends to pave the way for the female leaders. She was already the first female president to the South American country (2006-2010), the first woman minister of defense in Chile and Latin America (2002-2004), and the first head of the UN Women (2010-2013), which is the United Nations agenda dedicated to gender equality and the empowerment of women. She definitely is (and will be) the most successful Latin American female leader.

Bachelet’ robust popularity is given to her two achievement during her first term as a President. First - her handling of the economy during the global financial crisis. Second - her decision to start aggressive savings. The revenues saved from copper sales during the last commodity boom permitted to i.e. to implement ambitious program of social protections for women and children, and validate the private pension system. Her high approval was reflected in the pools. Bachelet recorded the highest levels of support since Chile’s transition into democracy. In October 2009 she obtained 78% of approval, while an average approval during her first mandate was 52% (to compare the incumbent President Sebastián Piñera has the approval around 30%).

The major challenge of Bachelet as a future President of Chile would be to assure the majority in the Congress. She will need at least 2/3, 3/5 or 4/7 (depending on the scope of the reform) of both Chambers to conduct, promised in her campaign, the constitutional reform. This can be difficult at least because of two reasons. First – the existing electoral system that does not translate voter preferences into an equal percentage of seats (the binomial electoral system). Second - the ideological differences within her coalition as it consists of i.e. a far-left Communist Party, the centrist Christian Democratic Party and the Socialist Party. The Chilean Constitution is of special consideration as it was drafted still under a Junta led by General Augusto Pinochet. Despite seven reforms that were implemented, they are still considered insufficient. The centre-left coalition call for a new Constitution as it will in their opinion leave behind the former regime’ legacy and conclude the process of the consolidation of democracy.

Other challenge would be to satisfy the demands of the students. Despite the low political mobilization that Chile witnessed in the aftermath of the dictatorship, the students unexpectedly launched the Penguin Revolution (2006-2008) calling for free and high quality public education. They restarted it in 2011 as they were not satisfied with governmental response. The rising expectations of Chile’s expanding middle class, which according to the World Bank increased between 2003-2009 by 12%, make that the civil disobedience more likely to continue if the government policy does not meet their demands.

If the new government does not push for a new constitution (or at least further reform the existing one) and the student protests continue, the image of Chile as one of South America's most stable and prosperous nations, may become a bit more blurred.

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