Most Conservative South American Nation Balks at Liberal Crusade

  • Chile’s government struggles to pass reforms through Congress
  • Bachelet puts aside key healthcare, pension system reforms

Michelle Bachelet.

Photographer: SeongJoon Cho/Bloomberg

Chilean President Michelle Bachelet won the last election with promises to overhaul virtually every aspect of one of Latin America’s most unequal and conservative societies. Her state-of-the-nation address on Saturday showed she is scaling back her ambitions, two years into her term and with some key pledges unfulfilled.

QuickTake Chile’s Funk

Bachelet, a divorced socialist who was tortured and exiled under the military dictatorship of Augusto Pinochet, wanted to downgrade the economic legacy of that regime, raising taxes to fund education, bringing greater equality to the pension and health systems and bolstering the power of labor unions.

After initial success with a tax bill and education reform, other proposals have stalled as the opposition warns they threaten 30 years of economic prosperity in South America’s wealthiest nation. Every clause in bills has become subject to bitter debates in an atmosphere of mounting distrust. Even non-economic bills, such as one that would de-penalize abortion in the case of rape, have stalled in the nation that only allowed divorce 12 years ago. Many now see Bachelet’s election manifesto as hopelessly ambitious.

"The government’s strategy was to saturate the agenda of a Congress that had no capacity to process their demands," said political analyst Guillermo Holzmann, a professor at the Universidad de Valparaiso. "This generates more mistrust, more uncertainty and damages their credibility."

Bachelet mentioned the word reform 17 times on Saturday at the congress in Valparaiso, compared with 48 times in her first state-of-the-nation address in 2014, while warning that some projects would have to wait.

“There are initiatives that we will have to reprogram because we need to consider the limited resources and the need to reach broad agreements,” Bachelet said.

On the Shelf

The speech is the latest indication that the government is losing the will or capacity to push through controversial changes. After setting up a committee of 24 experts that held 65 sessions and produced a 240-page report on recommended changes to the pension system, Bachelet didn’t mention the reforms in her speech. Instead, she reiterated a pledge to push through the creation of a state-owned pension fund. Yet all sides agree the industry needs structural change.

Under the current private pension system, Chilean women on average reach retirement age at 60 with less than $30,000 in their pension fund, while men retire at 65 with less than $60,000 in their accounts. Life expectancy in Chile is 80.5 years, the highest in Latin America.

“Such reforms are a strategic priority, they are imperative," said Holzmann. "But these reforms need broad agreement even before they make it to the election manifesto."

Sick Industry

Neither did Bachelet mention structural reform to Chile’s health-care industry, stressing instead plans to increase government spending to narrow the inequalities in the system. Government spending currently represents 50 percent of health-care expenditure, even though the public system covers about 80 percent of the population.

There are 23 specialist doctors for every 10,000 members of private health-care schemes, compared with seven in the public system, Bachelet said Saturday, pledging to narrow the gap by 50 percent.

Still, there was no word on the committee that produced a 200-page report in April 2014, recommending a series of changes to the system. Neither did Bachelet mention labor reform, blocked by a ruling of the constitutional tribunal last month.

Broad Church

The president’s problems don’t just come from the opposition. The ruling coalition covers a large swath of the political spectrum, ranging from centrist Christians Democrats to the Communist Party.

“The president needs to show some that she is more of a reformist than she really has been; and prove continuity and stability to others," Robert Funk, a political analyst at Universidad de Chile, said by phone from Santiago. “She faces the opposition, and then opposition within her own coalition.”

While most of the coalition is backing a bill to legalize abortion in the case of rape or a threat to the life of the mother and child, many Christian Democrats are reticent, holding the bill up in congress.

Bachelet, the former head of the women’s unit of the United Nations, is unable to force it through more quickly, leaving Chile as one of only six countries that ban abortion under all circumstances. Again, she made no mention of the bill in Saturday’s speech.

Election Cycle

As a new election cycle looms, with local elections later this year and presidential elections at the end of 2017, the government is shifting its message, changing its focus to economic growth and a drive to boost productivity.

A timetable announced in October to redraw the constitution inherited from Pinochet pushes the final decision back to the next administration when Bachelet will have little say in the matter.

Government spokesman Marcelo Diaz says the administration has already achieved a lot, having passed more than 170 laws and measures during its first two years. He highlighted measures such as the civil union between same-sex partners, a reform of the electoral system and political parties, and the overhaul of the tax system.

"Many reforms presented by the President are of great technical complexity and others involve an intense political debate," Diaz said. "For the next two years, the government is giving priority to some projects to be able to advance in some key initiatives.”

In the meantime, Chile remains the second most unequal country within the 34-member Organization for Economic Co-operation and Development. According to the OECD’s latest research, the income of the country’s richest 10 percent is 26.5 times higher than the poorest 10 percent. The organization’s average is 9.5. 

“If we don’t do the changes together and now, tensions and obstacles will grow and we will frustrate our opportunity to progress,” Bachelet said Saturday. As she spoke, smoke began to billow over the city as protesters burnt municipal offices and a nearby drugstore.

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