In Chile, Stagnation and Stasis Despite Shifting Politics

Chile will hold a general election on November 19, 2017, and the outcome will say a great deal about the future of a political system that has remained largely unchanged since the military dictatorship of Augusto Pinochet ended in 1990. Conservative former President Sebastian Pinera (2010-2014) seems poised to retake the presidency. If he does, it would mark yet another country’s turn toward the right of center in what has become a continent-wide trend. Meanwhile, the nation’s economy remains stagnant, although an uptick in global copper prices suggests that fortunes may soon change, much to the benefit of the next president.

November’s elections will be the first conducted under a reformed national electoral system passed in 2015. Several changes merit attention.

First, Chile’s notoriously biased binomial system has been ended. Designed to keep conservative pinochetistas in power, it allowed both the first- and second-place vote-getting parties within each district to take a seat in the Senate, unless the first-place party received double the votes of the second-place party.

This threshold was rarely reached, so the Chilean Senate has remained almost evenly divided between leftists and rightists since the return to democracy, despite voting tallies that generally favored the center-left group Coalition of Parties for Democracy (referred to as Concertacion), that ruled from 1990 to 2010.

New rules

The binomial system has been replaced with an open-list proportional representation system, and the number of electoral districts and senate seats has been rationalized. Even under the new legislation, both Chile’s Senate and its Chamber of Deputies remain significantly malapportioned – many voting districts’ populations do not correspond to their representation in the legislature – but less so than in the past. For example, urban areas such as Santiago are underrepresented relative to their population.

The 2015 electoral reform also implemented a gender quota, the ramifications of which will be on display for the first time in the approaching elections. Though Chile has had a woman president, Michelle Bachelet, for eight of the last 12 years, progress toward gender parity in congress has been slow. Only 16 percent of deputies and 18 percent of senators are women. That is a considerably lower proportion of female representation than the Southern Cone regional average – other countries in the area have had gender quotas in effect for much longer.

The new legislation dictates that no party’s list of candidates to either chamber can be more than 60 percent male or female in any district. Moreover, successful female candidates will be reimbursed for their campaign expenses at a slightly higher rate than male candidates. These rules are currently set to expire after the 2029 elections. It remains to be seen how effective this system will be, however. In Chile’s open-list system, voters choose a specific candidate, not a party, so gender bias among voters could still favor men.

Familiar faces

Electoral rules may have changed, but many of the faces remain the same, most notably that of the front-runner in the current campaign, Sebastian Pinera, a billionaire businessman and Harvard-trained economist who heads the Conservative Let’s Go, Chile (Chile Vamos) coalition. He is best known for his emphasis on free-market policies and promotion of the private sector during his first term. Mr. Pinera finished his first presidential term deeply unpopular. This time, economic stagnation under President Bachelet, a rightward tendency throughout Latin America, and fractious disagreements in the governing coalition known as the New Majority (Nueva Mayoria) have helped his candidacy.

If Mr. Pinera is elected this year, he and Ms. Bachelet will have alternated as Chile’s head of state for 16 years, an unprecedented political stasis in democratic Chile and a powerful signal that the major parties, as much on the left as on the right, have been unable to bring a new generation and new ideas into the political process. This has been particularly significant among the left-leaning parties where a new group, known as the Broad Front (Frente Amplio) is led by a younger generation that is deeply unhappy with the traditional parties of the left.

The recently concluded primaries seemed auspicious for Mr. Pinera and Let’s Go Chile, although there are several complicating factors that could change the scenario before the elections in November. Most significantly, the ruling left-wing New Majority coalition sat out the primaries because coalition infighting and disorganization kept it from settling on a single candidate.

Meanwhile, the Broad Front put forward candidates, but only 327,000 voters participated in their primary, a quarter of the number who voted in that of Let’s Go Chile. This suggests a low level of enthusiasm for a party claiming to be charting a new, youthful course in Chilean politics. Mr. Pinera won his primary handily, defeating his nearest rival, Senator Manuel Jose Ossandon, with 58 percent of the vote.

The Broad Front nominated journalist Beatriz Sanchez. Meanwhile, a subset of parties from the New Majority has chosen Senator Alejandro Guillier as their candidate, while the centrist Christian Democrats (currently members of the New Majority coalition and previously of the Concertacion) have chosen Senator Carolina Goic. Because Mr. Guillier is officially running as an “independent,” rather than participating in a primary, he was forced to dedicate a substantial effort to the embarrassing task of collecting 30,000 signatures to appear on the ballot.

Fragmentation and stagnation

The current political moment in Chile could very well signal a major change in the country’s politics. President Bachelet created the New Majority by adding the Communist Party and other independent groups to the Concertacion. The goal was to build a super-majority in the congress so that she could pass “transformational legislation.” But the fragmentation of the New Majority suggests that Chileans no longer feel bound by the groupings that have defined their politics since the fall of Pinochet. At the same time, the possibility of a second Pinera presidency and the potential for 16 years of uninterrupted rule by two individuals suggests apathy: Chilean voters feel uninspired by the dominant political order, but also seem uninterested in the revisions to it that Ms. Bachelet has proposed.

President Bachelet has had modest success in her efforts to get major changes through the legislature. Her education reforms were gutted, her tax reforms were cut back and her efforts to reform the complex pension system are still bogged down in the congress. Recently, she did win a victory in getting abortion legalized under certain conditions. In doing so, however, she alienated the Christian Democrats, who now threaten to run their own candidate in November.

As things stand today, the most likely scenario is that Mr. Pinera will win a plurality in the first round of voting in November. Various parties on the left will win close to 50 percent of the vote and the Christian Democrats will get about 25 percent. To many Chileans, this looks very much like the tripartite division of the electorate that led to Salvador Allende’s victory in 1970 and made the country ungovernable. The key to the second round of voting, on December 17, will be how the different parties on the left come together to back a single candidate and how the votes of the Christian Democrats will be divided between the left and the right. At the moment, given the lack of coherence in the candidacies of both Mr. Guillier and Ms. Sanchez, former President Pinera appears poised to win.

Economic outlook

Economically, Chile is neither thriving nor spiraling into decline. Its gross domestic product (GDP) growth this year has been around 1.5 percent, but may reach 3 percent in the third quarter of 2017. By comparison, during the global commodities boom in the early 2000s, Chile’s GDP grew at 7 percent per year. As recently as 2012, it exceeded 5 percent.

Copper production suffered earlier in the year because of strikes at Escondida, the largest copper mine in the world. By June, production remained down 5.7 percent relative to a year prior, largely due to weather-related stoppages. Now, though, investment in copper seems to be rising, following a gain in copper prices globally. Moreover, improvements in the economies of crucial partners like Argentina and Brazil are expected to spur growth.

That said, Chilean exports of goods and services are down 3.5 percent relative to last year, which suggests that exporters have struggled to reap the benefits of a global economic uptick. This mixed economic picture recently led Standard & Poor’s to downgrade Chilean debt to A+, though it remains the highest rated in the region. The Chilean central bank has held its benchmark interest rate steadily at 2.5 percent, and inflation remains below 2 percent this year.

Environmental transformation

Several important developments in environmental policy have made Chile a regional leader. Mercosur members, including Chile, have unanimously affirmed their commitment to the Paris Agreement in a declaration released in July. In addition, Chile has recently launched a National Climate Change Action Plan, which specifies 96 policies and adaptations designed to mitigate carbon emissions. It also specifies that climate change will be taught as part of Chilean school curricula. Moreover, in March, President Bachelet signed an agreement that would create 11 million acres of new national parkland in Chile, creating five new national parks and expanding many others throughout the country’s south. Ecotourism will likely be a growing force in the economy of the Chilean Patagonia, with over $270 million in revenue and 40,000 jobs currently linked to that sector.

One part of Chile’s climate plan that has significant geopolitical ramifications is the concerted effort to meet the country’s energy needs through alternative or clean sources of energy. Chile has few fossil fuel resources. It has tried to make up for that deficiency through hydroelectric power and importing natural gas from Argentina. However, in 2007, the Argentine government reneged on its contracts with the Chilean government. Bolivia has huge natural gas resources, which makes the territorial dispute between the two countries even more dramatic.

Now, energy independence is within reach. The peculiar geographic characteristics of the country have made solar, thermal and wind significant sources of energy, in addition to its rich hydroelectric resources. The country already produces 45 percent of its energy from clean or other renewable sources and is aiming for 90 percent by 2050.

This transformation will buttress the geopolitical position in South America and the international system that Chile has won for itself since the end of the dictatorship. President Bachelet and Foreign Minister Heraldo Munoz deserve credit for these achievements, even though they are not likely to translate into many votes for their progressive colleagues in the November elections.

Joseph Tulchin is a Senior Scholar of the Woodrow Wilson International Centre for Scholars.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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