Sunday, January 24, 2010

Chile elects center right President

Sources: The Economist: Pinera flies the flag / FT: A Change for Chile / NY Times: Right-Wing Businessman Wins Chile’s Presidency / The Santiago Times: Pinera Defeats Frei in Chile Presidential Election / OECD: Chile signs up as first OECD member in South America

Sebastion Pinera won the Chilean presidential election on January 17, 2010. President elect Pinera’s election marked the first time that Chile elected a center-right politician since 1958. Mr. Pinera defeated the center left Concertacion party’s Eduardo Frei with approximately 52 percent of the vote. Mr. Pinera won the urban areas whereas Mr. Frei fared better in rural Chile. Mr. Pinera, a Harvard educated economist, is a billionaire and the third richest individual in Chile. Mr. Pinera owns a television station, part of Chile’s most successful football team, and several other businesses.

President elect Pinera won despite the fact that the current center left President Michelle Bachelet had an approval rating of 81 percent at the time of the election. The center left coalition has ruled Chile democratically since Dictator General Pinochet stepped down in 1990. In 1988, Chile’s stock market index was at 100, by 2010, Chile’s stock market index reached 2,300. Mr. Frei called the election results “just a bump in the road” for the center left coalition. Mr. Frei asserted that his party was handing over the country in much better shape than it received it 20 years ago.

Mr. Pinera vowed after the election to continue the successful policies of center left President Bachelet. Mr. Pinera ran on strengthening Chile’s commitment to private investment and on the goal of creating one million new jobs. Mr. Pinera also vowed to increase Chile’s resources towards fighting crime. Mr. Pinera described his election as a breath of fresh air from the 20-year rule of the center left Concertacion party. Chile benefited from its conservative fiscal policy before the economic crisis that afforded it the ability to implement an aggressive stimulus program. The stimulus program kept unemployment relatively low.

Mr. Pinera faces pressure to continue Chile’s economic progress. One of the reasons Chile elected Mr. Pinera was because of his success as a businessperson. The Chilean people will expect further economic liberalization and success from Mr. Pinera as well as a responsible draw down of the stimulus funds. Mr. Pinera also faces pressure from the right to scale down the prosecutions of members of Dictator General Augusto Pinochet's government. Approximately 1,300 people disappeared during Mr. Pinochet’s dictatorship while another 27,000 people claimed they were tortured. Over the past 19 years, the center left Chilean government held over 700 human rights trials.

The OECD granted Chile membership with the OECD earlier this month. Admittance into OECD further signals Chile’s economic rise and political stability over the past two decades. Since 2007, Chile has reformed legislation surrounding tax information, corporate governance, and legal responsibility in bribery cases to gain admittance into the OECD. Further reform is necessary as it takes 27 days to start a business and 4 years to close an existing one, this is twice as long compared to its OECD peers. The Chilean economy has grown by over 5 percent over the past two decades. Countries throughout the region have modeled economic reform based on Chile’s success.

Discussion Questions:
Was this election a sign of a shift in Chilean politics to more center right policies?

How will the election of a center right coalition in Chile affect regional relations with center left regimes?

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