Chile turns to Piñera to lead economic recovery

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Sebastián Piñera, Chile’s billionaire former president, won the presidential election on Sunday, returning to the office he held from 2010-14 in the latest swing to the right in Latin America. The 68-year-old former airline magnate — whose anticipated victory propelled the local stock market to record highs this year after six years of stagnation — received 54.5 per cent of the vote, leaving his center-left rival Alejandro Guillier, a former television anchor, with 45.5 per cent, after 92 per cent of ballots had been counted. Mr Guillier conceded after the decisive results of the presidential run-off vote.

The first right-of-center leader to win Chile’s presidency since the fall of General Augusto Pinochet’s dictatorship in 1990, Mr Piñera now joins Argentina’s Mauricio Macri as another successful businessman-turned-president in Latin America.

The shift to the right in Chile comes after a period of dominance for leftist governments that swept to power in the region during the commodities boom since the turn of the century. Brazil, Mexico, and Colombia are all due to hold closely-fought presidential elections next year that could consolidate this trend.

It is the second time that Mr Piñera succeeds outgoing President Michelle Bachelet in power, having followed her first 2006-10 term. This has raised concerns about the stagnation of Chilean politics that saw a low turnout on Sunday.

Mr Piñera’s victory was helped by disillusionment with the divided center-left coalition in power, which supported Mr Guillier, after Ms Bachelet’s ambitious reform programme aimed at lowering inequality
was widely criticised as poorly designed and implemented, hitting investment. That aggravated an economic slowdown after a steep fall in the price of copper, the linchpin of Chile’s economy — although rebounding copper prices are now likely to benefit Mr Piñera as they did during his first term.

Having presided over more than 5 per cent annual growth during his first presidency — compared to less than 2 per cent during Ms Bachelet’s second term — Mr Piñera promised voters that he would return the country to previous levels of growth that saw Chile become Latin America’s richest country, has been one of its poorest 40 years ago.

He has pledged to rein in Ms Bachelet’s reforms, halting the expansion of free university education and modifying her tax and labor reforms that were loudly criticised by the business elite. He has also promised to more than double economic growth, create 600,000 jobs and narrow the budget deficit. But Mr Piñera lacks a strong mandate for major reforms, without a clear majority in a more diverse and polarised Congress after Ms Bachelet’s electoral reform introduced proportional representation, helping to put an end to almost three decades of two-party dominance.

After new forces emerged such as the leftwing Frente Amplio in legislative elections last month, this heralds a new era for Chilean politics, with negotiation and compromise likely to play a more important role — but possibly harder to achieve given the polarisation and fragmentation of Chilean politics, with centrist forces losing ground.

Source: (This article was written by Benedict Mander and was published in the Financial Times on 18 December, 2017)

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