It's What Chile Wants

There is no more spectacular air flight than the one from Buenos Aires, Argentina to Santiago, Chile, a two-hour journey that begins over the muddy Rio de la Plata, continues over the expansive pampa, and then the lush vineyards of the pre-montane region around Mendoza.  The plane then winds through the snowcapped peaks of the Andes, on a clear day seemingly brushing against the highest mountain in South America, Aconcagua, before immediately descending over Chile’s fertile central valley and into Santiago’s airport, too often cloaked in the persistent Santiago smog.

Yesterday, March 11, 2014, we made this trip, after a wonderful visit to Buenos Aires and the Salta region in northwest Argentina where we tasted every brand of Argentina’s newest wine phenomenon, the Chardonnay-like Torrontés.  Wishing we could have stayed longer, we returned to Santiago to be present on the day Michelle Bachelet was sworn in again as Chile’s president.  We were afraid our flight might be delayed because there were many important invitees to this ceremony, including the presidents of Mexico, Peru, Ecuador, Bolivia, Brazil, Argentina, Colombia, and until the last minute when he cancelled, Venezuela.  U.S. VP Joe Biden and wife did show up.  But there was no delay and no problem in spite of the fact that Santiago’s airport has become way too small for the amount of traffic it is handling.  We cleared security and customs quickly.  (An aside:  I was pleasantly surprised to see that in the airport, the sign directing residents of certain countries to proceed to a special window to pay a “reciprocity” tax, most recently about US$ 160, no longer lists USA residents; product of the recent agreement between Chile and the US that Chileans no longer have to obtain costly tourist visas to enter the US.  Nice deal for everyone.)

 The taxi ride to our home revealed a city even calmer than on a normal workday, seemingly indifferent to the official goings-on, probably because the Bachelet swearing-in ceremony was held in Valparaiso, where the Pinochet regime moved the Parliament to get the troublesome legislators out of his hair. But following that, Bachelet was scheduled to make her first speech as president around six pm from the same window of the Presidential Palace in Santiago where Salvador Allende, in 1973, stood and watched as the Air Force Hawker Hunter jets put an end to his “empanadas y vino tinto” socialist revolution.

But prior to her short helicopter ride from Valparaiso to Santiago, Bachelet was sworn in as president in a terribly emotional ceremony laced with symbolism.  Prior to Bachelet’s swearing in, Isabel Allende, Salvador Allende’s daughter, was sworn in as president of the Chilean Senate.  In that role, it fell to her to take the presidential sash from outgoing President Sebastian Piñera, and place it on the new president.  The memory of their fathers permeated the moment, especially for the two of them but also for anyone who was around in 1973 when the long journey of these two really amazing women took a tragic turn.  The entire scene forced you to take a long look back in history and reflect on all that has happened from 1970 to now, and in looking ahead, begged the question:  Will this new socialist-led government, in the hands of the next generation of politicians, end up any different?  And the answer most Chileans I talk with is: Of course it will end differently.  The world has changed, Chile has changed, and these leaders have changed.  Some will differ from this view, but here are a couple of trends that seem to be relevant and indicative as to how Chile could progress politically and economically in the near future.

First, Chile has experienced a long period of economic growth and full participation in the global market of goods, services, and technologies, and as a result Chileans have become, for the most part, cognizant that growth is necessary for development.  However, in spite of the gift of copper, Chile is a relatively poor country (as compared to Argentina, a country rich in natural resources), so Chileans have had to work and study hard to grow the economy and learn to compete in the globalized market, developing a national capability Bachelet and her team recognize and want to sustain.  On the other hand, the Chilean society is a very inequitable one, such that while the economy shows impressive macro level economic numbers, the fruits of their labor are distributed badly, costs to individuals of health care and education are as high as anywhere in the hemisphere, affecting the middle class as well as the poor.  In her inaugural speech, Bachelet affirmed that “Chile’s only enemy is inequality”.  The program she ran her election on, and which she is now proceeding to implement, is directly and explicitly designed to decrease the level of inequality in Chilean society; better access to basic services across the board, more open political decision-making, and overall a less skewed distribution of the country’s wealth. 

Reacting to critics, she has stated firmly and repeatedly that she does not believe socio-economic justice has to be a tradeoff with economic growth.  In fact, she believes the level of inequality in Chile is inhibiting the next stage of growth.  She claims her tax system reform (one of her three key programs) even though it will raise the level of taxation in one way or another, will be designed not to present a drag on investment or economic growth.  Somewhat related to this is her first legislative action, which is to provide a bono, a subsidy to the most needy families every March when families are facing the expenses of the start of the school year for their children.  Surely, this infusion of money, most of which will go to retail purchases, will have a positive effect on the economy.  (By the way, this March bono was developed by the prior Piñera government, but Bachelet is presenting legislation that would make the bono permanent.)

Second, and directly related to her plans to reform the tax system so it takes in more revenue from businesses and the wealthy, is her plan to begin the process of educational reform.  Beginning with strengthening the public school system, for which she needs the increased tax revenues, she seems intent on ensuring that no public funds are spent in private educational institutions where many believe considerable profit-taking has occurred.  Again, one of her first actions upon taking office was to initiate the process of establishing two new public universities in outlying provinces, where families are hard-pressed to send their children away to school.  This educational reform will surely be as controversial as it is necessary; after all, it was this topic that provided the impetus to the student-led strikes and street manifestations over the past two years, even beginning before that in the prior Bachelet administration.  The new president may not get much of a honeymoon to get this project moving, and many will be expecting her to fulfill her promise to reform the system to provide free high quality education to all.  A student march was scheduled for March 22, even before Bachelet was sworn in.  When asked about the reason for the march, she suggested, tongue in cheek I hope, that it was most likely a march to show their support for her program and was probably directed more at the opposition party members of congress than at her.  We shall see.

Third, is the issue of a new constitution.  Bachelet is convinced that a new constitution, with its origins in democracy and not in dictatorship, will rid Chile of its undemocratic legacies, including emotional ones, of the Pinochet-produced constitution (even though it has been amended and the version now in effect is a document signed by prior president Ricardo Lagos and not Pinochet); a majority of Chileans seem to be willing to have this happen, if for only symbolic reasons, but many are leery of an open free-for-all process that at the worst could lead to chaos rather than resolution, and at the best take time and resources away from other priorities.  Wisely, I think, Bachelet has announced that she and the country need a broad process of consultation on this, and therefore she will not be making a decision about the process the development of a new constitution will take, not present any plan for this new constitution in the first six months of her tenure.

Fourth, is the role Chile plays in the international arena.  For the last few years, even before the Piñera presidency but especially during these last four years, Chile has looked outward, beyond South America and often with business, trade, and scientific exchange objectives.  Free trade agreements (many), student exchange programs with US and European universities (thousands), and presidentially led trade missions to the Pacific Rim countries most apt to buy Chilean copper, wine, wood products, and services led the agenda.  Chile joined with Mexico, Peru, and Colombia to form a Pacific trade alliance (that recently agreed to eliminate about 90% of the duties on products traded between these countries) at the same time it remained apart from the older but more troubled Mercosur alliance involving Brazil, Argentina, Uruguay, and Venezuela, where agreement on tariffs has been difficult.  These countries see the Pacific alliance as a group of more economically liberal countries breaking away in a divisive action to the detriment of “South American unity”.  Add this to Peru’s desire to redefine their terrestrial and maritime borders with Chile (resulting in the resent determination by the international court in The Hague that the maritime border between the two countries should be redrawn), and Bolivia’s persistent desire for a sovereign outlet to the Pacific, and you can understand why the incoming Bachelet government has the clear feeling that Chile’s fences with South America are in great need of some mending.

The newly appointed Minister of Foreign Affairs, Heraldo Muñoz, is off and running full steam ahead to redefine Chile’s role in South America.  His first challenge, which began even before he was sworn in as Minister, was to manage the “Venezuela situation” as it was evolving within the context of the Bachelet inauguration.  With most South American leaders arriving in Santiago for the party, much expectation was swirling around what Venezuelan President Maduro would do to drum up support in the face of the civil actions taking place in his country, and what kind of reception he would receive in Santiago where there were groups developing, both pro and contra, to greet him should he arrive.  Well, he didn’t show up, but the Chileans (aided and abetted by the Brazilians, it seems), wisely diverted a request for a meeting of Heads of State of UNASUR (the relatively new political organization of South American countries created to provide an alternative to the OAS as a space free of the USA to discuss their issues).  After all, this was supposed to be an event focused on Michele Bachelet and Chilean democracy, not Venezuela and Maduro.  Muñoz came out of this quite nicely, it would appear; the group agreed to send a commission of Ministers of Foreign Affairs to assist, advise, and support the Venezuelans carry out “a peaceful dialogue” to resolve their issues at the table rather than in the street.  All countries stated very vociferously that they would have nothing to do with any action that would lead to the removal of a democratically elected president of any member of UNASUR.  

Bachelet and Muñoz clearly see the relationship with Brazil and Argentina as priority for early attention, and to that point, Chile has invited Brazil to send a representative to the office Chile has established in New York to house their delegation to the Security Council where Chile is a non-permanent member right now, and Bachelet announced that her first visit outside of Chile would be to Argentina.

And where is the USA in all this, you might be wondering?  Well, a smiling Joe Biden was here with his wife, and there were a few pictures of them in the crowd mixing it up with the other VIPs, so surely he sampled some excellent premium Chilean wine.  The leading newspapers the day after the inauguration had very little pictorial coverage of Joe, and nothing of note in the text except for a reference to Jill's stylish dress and the fact that the visa waver program for Chileans would be advanced a month from the originally announced date, clearly the reason the USA was removed from the tax posters at the airport.  Joe did mention something upon his arrival to Santiago about the difficulties Maduro was having governing Venezuela, so of course this elicited an outrage in Caracas.  And while the South American leaders in Santiago were looking for ways to defuse the threat to one of their democratically elected colleagues, the US Secretary of State was making another empty threat related to sanctions that might result in Venezuela being removed from the OAS.  Hardly headline material.

As I entered the elevator in my apartment building to go down to the street for a walk, now one day later, a young Chilean professional rushed in apparently on his way off to work.  I asked him if he had been celebrating Bachelet’s inauguration.  He laughed and stated “No, no celebrating for me.”  He could tell by the look I gave him that I wanted him to say more, so he added “But it is OK, it is what Chile wants”.  And off he went, like so many others.  Yes, it is what Chile clearly wants.  We will have to wait a bit to see if it is what they were promised.  I think it will be, and more.

Posted in Santiago de Chile, March 13, 2014