Chile: The Pendulum

CHILE

The Pendulum

Chile’s Nov. 19 presidential election will likely cement a trend in South America of right-wing business types ousting left-wing premiers who came to power at the turn of the millennium, according to the Brookings Institute.

But where Chile differs from its neighbors is that its swing to the right is a move toward a friendly and reliable face: former president and billionaire airline magnate Sebastian Pinera.

In 2010, Pinera became the first conservative to win the Chilean presidency since the fall of General Augusto Pinochet’s military dictatorship in 1990. Center-left parties have dominated Chile’s political scene for 23 of the past 27 years, Bloomberg reported.

Flash forward to 2017, and the political and economic conditions in this Andean nation – one of the continent’s most stable and open economies – mirror the situation that originally brought Pinera to power seven years ago.

If Pinera wins this year, he’ll once again succeed President Michelle Bachelet, whose first term from 2005 to 2010 was branded as undynamic and mired in party infighting.

Pinera’s fresh, pro-business platform at the time fueled investor confidence while prices for copper, the country’s largest export, skyrocketed. Average annual growth during his first tenure neared 5 percent, the Financial Times reported.

This time around, President Bachelet, in power since 2014, had another rough go of it.

The economy contracted with decreasing copper prices, which made her hefty, poorly managed labor and educational reforms divisive among her supporters, Reuters reported.

Investor confidence is low again, Bachelet’s ministers are at wits end over botched mineral deals, and her center-left coalition is fraying at the seams. Six separate left-wing candidates are running against Pinera for the presidency.

Observers are confident that Pinera will come out on top, if not in the first round on Nov. 19, then definitely during the second round planned for mid-December.

But while Chilean markets are already gearing up for Pinera’s second coming, there’s reason for pause, Forbes reported.

Voter turnout in Chile is one of the lowest among developed countries. In 2012, it bottomed out at an abysmal 42 percent, according to the International Institute for Democracy and Electoral Assistance.

A recent survey by Chilean pollster CEP found that this year won’t be much better, and that 60 percent of citizens are completely disenchanted with the political situation in the country. Voter apathy could work either for or against Pinera, depending on if the opposition unites behind a singular candidate in the second round, Voice of America reported.

And Pinera’s pro-business agenda could be curtailed by Bachelet’s lingering loose ends, like pension and tax reform, not to mention corruption allegations related to his various business interests in the state-run copper industry.

Pinera’s hated by many progressives, and some of his more radical policy proposals are already fielding major resistance, such as his plans to bleed the country’s anemic public sector, the Santiago Times reported.

Even with the pendulum predicted to swing Pinera back into the La Moneda Palace, conservatives should be wary of popping the cork too soon.