On November 21, Chileans went to the polls to vote for the first round of the presidential elections and have put 2 radical candidates in the lead: the right-wing José Antonio Kast, 55, against former social activist Gabriel Boric, 35. The second round, on December 19, reflects a deep political fragmentation that breaks with the traditional alternation between moderate presidents (center, left and right) to which the country had become accustomed since the end of the dictatorship of Augusto Pinochet (1973-1990).

Analysis

Considered as one of the rare stable countries of South America, Chile has been paralyzed by 3 years of social protests and riots, marked by the 2019 students protests demanding better education and pensions, as well as the end of an economic model, said to favor the country’s wealthiest. In a bid to regain stability, President Piñera organized a plebiscite on the establishment of a constituent assembly, which was elected in May 2021. This assembly is currently working on a new constitution to replace the current one, inherited from the Pinochet era.

However, after having elected a left-wing constituency led by Elisa Loncon, an academic from the Mapuche indigenous community, the country paradoxically just put former Conservative MP Kast at the head of the poll. Openly nostalgic for the Pinochet era and often compared to Donald Trump and Jair Bolsonaro, Kast is against same-sex marriage and is in favor of digging a three-meter trench on the Bolivian border to stop immigration. He is the complete opposite of Gabriel Boric who did not hesitate to express his support for the dictatorial governments of Venezuela and Nicaragua and believes that the most recent socialist presidents – Ricardo Lagos and Michelle Bachelet – were not left-wing enough.

Impact on the economy and businesses

As the world’s first copper producer, 1% of the population concentrates more than a quarter of the wealth (Report Cepal 2019). While the neoliberal policies in place since Pinochet have brought growth and stability to the country, Gabriel Boric’s program emphasizes the structural inequalities in Chile. Amongst his policies, he plans to increase taxes on the rich, reinforce public services and increase the minimum wage by putting greater pressure on employers. Thus, investments and businesses’ operations could potentially be disrupted, prompting several economists to qualify this strategy as an ‘anti-investment program’. For the largest contributors to GDP, Kast is a safer bet because it guarantees the continuity of the liberal model, albeit at the cost of social reform.

Forecast

Piñera’s mandate leaves behind a paralyzed political system, a weakened economy, and an undetermined Constitution; in addition to the Covid-19 pandemic still very much active in the country. Similarly, civil unrest is still very active with weekly riots in Santiago and the escalation of the Mapuche conflict causing President Piñera to declare a state of emergency in the face of a spiral of violence in the indigenous territories of southern Chile. In this context, it is difficult to see a future under each administration where stability could return. However, in the long term, the main driver of change will not be the presidential elections, but rather the new constitution, which is expected to bring better representation and structural changes to Chile’s political landscape.

By Annabelle Gouache, Risk Intelligence Analyst at Hozint – Horizon Intelligence.