Primary elections July 2, 2017: Risks and opportunities (I)
Country Risk Chile analyzed October 28, 2016, the early stages of the presidential race (Piñera, Lagos, and Guillier) and looked into the risks and opportunities each might bring in a post-transition era characterized by empowered middle classes, social demands over inequalities and economic slowdown. During the 25-year cycle of transition to democracy, top-down policymaking gave the country stability and governance, reduced poverty, increased growth, but failed to tackle disparities. Post-transition has seen the emergence of new actors shaping state preferences, in the wake of the 2013 electoral cycle, which brought back Michele Bachelet to the Presidency. Given the recent trend in a populist surge in the EU, the U.S.A and probably in other capitalist democracies, where growth has peaked but also inequality levels, discontent may tempt opportunist leaders to rally sympathizers to get to power. It is the view of Country Risk Chile that 2nd Generation Reforms launched by the Nueva Mayoría center-left coalition have diminished the risk of a greater threat to stability, posed by the students' mobilization. 2011 reached a peak in the social crisis over education and inequality. In line with the "all-Chileans-on-board" focus on inclusive growth proposed by OECD 2014, Chile embarked on a difficult road, to implement reforms to secure stability in an era of contestation. Against the constraints of economic slowdown, low-record copper prices, an appreciated dollar and the end of the boom of commodities, Chilean institutions have been heavily pressed to satisfy demands and comply with fiscal prudence. Country Risk Chile analyzes the series of events evolving since October 28, 2016, to give un update of the political spectrum and the candidates ahead of the primary elections (July 2) and the presidential elections November this year.
Ex-President Lagos' legacy & spillovers.
Former President Ricardo Lagos Escobar, could not see his bid for re-election come to fruition. Lagos had the backing from the "Partido Por la Democracia", PPD, the moderate socialist political party Lagos formed in the wake of Pinochet's demise in the 1988 referendum. Lagos could not rally the rest of the socialist wing (PS, PC, and PR - who ultimately favored Alejandro Guillier) to adhere to his programmatic proposal for 2018. The reason behind Lagos's failure to bring the socialist wing to back him were polls and surveys pointing to a Guillier far more popular than Lagos, and just second behind ex-President Piñera who leads the polls. Lagos eventually declined to participate in the primary elections, triggering a domino effect. Christian Democrats, DC, announced they would also decline, and instead, would be running in the presidential elections, November this year, with Carolina Goic as their candidate. The decision was taken at the Junta Nacional annual gathering April 28, where the candidate and DC President Goic accused the center-left governing coalition, Nueva Mayoría of the hegemonic power of the left on the coalition, leaving no space for the center-wing ideas.
That prompts to ask the inevitable question? Is the Nueva Mayoría coalition extinct? The answer is: Yes.
But is the center-left coalition dead? Not really. What comes next is probably a series of programmatic center-left short-lived coalitions or agreements on particular, clear-cut policy-making. When proposals should take a rather extreme leftist turn, DC will exert its influence to moderate them in Congress. And vice-versa. On issues of convergence, the coalition as we know it will re-group. Will this "new way of reaching consensus" cause irreparable frictions? Not really. With primary elections coming soon (July 2), the political scenario will be very different from the process of past elections. One of the biggest transitional enclaves, the Binomial Law has ended. Under the new Electoral Reform April 2016, pluralism enters the stage and with it goes new legislation to promote new party formation, facilitate the emergence of newcomers in politics and greater female representation in Congress. Therefore, for DC Goic to skip the primaries and go straight to the Presidential elections is a strategic move to concentrate center-wing voters from the competing coalitions.
Together with a new Electoral Reform, additional legislation in 2016 has warranted stringent levels of transparency and accountability.
On Lagos's failure to rally the left to back him as the Coalition Candidate, political scientist Patricio Navia asked if the young generation of voters in Chile who favor Guillier had just killed the father or had they witnessed him commit suicide. But Lagos's programmatic premises will remain as strategic legacy and/or spillovers for political parties. Just recently, DC and ex-Interior Minister, Burgos, met with Lagos to talk about Goic's presidential program, pointing that Lagos's main ideas will replicate in Goic's proposals. Without Lagos running for elections, the PPD resolved to back Guillier, on May 13, who, in turn, highlighted the statesman quality of Lagos and appreciated his contribution. Guillier also hailed Lagos's proposals on growth, and his forward-looking ideas on an innovative, value-added economic matrix. Also this week, center-right Evopolis candidate, Felipe Kast visited Lagos at his home and announced May 16 he would be using Lagos's ideas. And ex-president Sebastián Piñera has publicly said he would like to incorporate some of Lagos's novel proposals to further modernize the country.
The End of the Binomial Law that locked up the social effervescence in the 25-year transition in Chile
With Christian Democrats running in the presidential elections (Goic, 3% in the polls), and bearing in mind the bottom-up surge in Europe, the USA and maybe elsewhere in capitalists democracies, the emergence of Frente Amplio Coalition should not come as total surprise (Beatriz Sanchez from 2% in the polls has rapidly advanced to an 11% approval). The students' mobilization in 2011 over ruinous loans to pay for university fees, and recently the citizens' protests over the pension system in Chile, point to unequivocal levels of discontent. Add to this picture, the erosion of legitimacy that traditional political parties exhibit today over (1) omissions and failure to pass progressive reforms to curb the structural heterogeneity in the 25-year cycle (2) the "revolving door" whereby politicians leave office to occupy high-ranking positions in economic conglomerates and firms, and (3) the cases of tax evasion by companies which had been irregularly financing political campaigns, and you get a backlash.
Much of Frente Amplio's radical proposals make sense when inequality prevails. But much does not add up if prudence is not weighed in against the basic element of economics and politics. Narrowing the gaps requires the confluence of all actors to secure governance. Governance is produced on the basis of broad-based agreements to secure legitimacy. And, the money to spend on education and health as a right and not a commodity must be there. Chile faces not only the pressures from social demands, but also the pressures of an economic slowdown, and the end of the boom of commodities, an appreciated dollar, and our raw-material dependency path.
The risk and the opportunity of the backlash
Senator Alejandro Guillier (second in polls, with 14%) proclaims himself as an Independent Candidate but enjoys the backing from 4 big historic parties in the left wing who adhere to his candidacy: the Partido Radical, PR; the Partido Socialista, the PS, the Partido Comunista, PC; and the Partido Por la Democracia, PPD. Guillier needs to convince he can lead these parties in line with his proposals as well as display strong leadership to discipline them when dissident voices emerge. Guillier claims he can connect with citizens' demands and their ideas to solve problems such as decentralization. No matter how independent Guillier claims to be from politics, once a candidate and backed by traditional parties, Guillier will have to convince he can play the politician role at the service of his constituency with all the maneuvering he can possibly pull to exert leadership over the left-wing parties.
Frente Amplio's Sanchez and Mayol candidates sum up the bottom-up surge from citizens and student leaders, who have become fierce critics of traditional parties, and the politics of consensus, with a high dose of criticism over the economic model and gaps in social and educational inequalities. These are the young, highly driven political actors who can invigorate the political system with ideas for innovative progress and inclusiveness. The end of the Binomial Law will inject pluralism and the chance for newcomers to exert a voice. These actors bring the ethics of conviction but run the risk of downplaying and even despising the ethics of responsibility exerted by the traditional parties in the 25-year political transition to democracy. The challenge will be to accept trade-offs in policy-making and keep the prudence of predecessors as well as advance progressive reforms. Without prudence, intelligence will not strive. Pluralism offers chances to get to power, but governing is about reaching long-run agreements.
The risk and the opportunity for a conservative comeback
Ex-President Piñera leads the polls with 26% and he intends to focus on growth to revitalize the economy. The IPSA stock rally has seen a boost since the Municipal elections October 2016, with the overturn of the NM coalition's MP's and their replacement with right-wing opposition representatives. This is based on expectations that the presidential elections will bring positive changes to the economic slowdown and shift the focus on growth rather than reforms. Recent news over conflict of interest issues, such as Exalmar when he was the President of Chile and the Peruvian judicial demand over sea jurisdiction was being tried at the Hague, have put the damaging issue of money and politics again on the table. Piñera has pledged to go beyond what the new legislation on transparency stipulates. Piñera has vowed to adhere to a Blind Trust this time, but so far, the discrepancies on what he is reported to own (Forbes) versus what he has informed that he owns at SERVEL is food for his detractors and increases doubts amongst his opponents about his ability to separate the roles of a politician from the interests of the entrepreneur. His critical stance about second-generations reforms under Ms. Bachelet's second office, especially the controversial tax reform to pay for free education for students coming from the poorest quintiles of society could trigger another phase of mobilization. His announcement to revise free-tuition might spur angry students again and increase the risk to stability and governance. Felipe Kast, the candidate for Evopoli, the center-right party in the Chile Vamos center-right coalition backing Piñera said Monday on TV that one thing is to win the elections, quite another is to be able to govern.
Soledad Soza, May 25, 2017
