Scandals Could Derail Chile’s Constitutional Rewrite

President Michelle Bachelet’s most ambitious reform could be at stake in a corruption scandal.

President Michelle Bachelet of Chile makes a speech, September 17
President Michelle Bachelet of Chile makes a speech, September 17 (Gobierno de Chile)

Last month, Chile’s president, Michelle Bachelet, announced the beginning of the long-awaited process of rewriting the Latin American country’s constitution.

Before her election in 2014, Bachelet campaigned on three issues: tax reform, education reform and, last but certainly not least, the introduction of a new constitution.

Chile made the transition to democracy in 1990 after seventeen long years of military dictatorship under Augusto Pinochet. Yet the constitution drafted by Pinochet and his junta in 1980 remained in place.

The legacy of the Pinochet dictatorship was one of extensive executive powers, unforgiving neoliberal reform and the loss of thousands of lives. Although his regime brought significant economic growth, through the privatization of state-owned companies and a liberalization of the overall economy, it came at the expense of wages, benefits and working conditions. Over 40 percent of Chile’s population was living below the poverty line by 1990.

Bachelet’s return to the presidency last year arrived on a wave of optimism with over 50 percent of the votes and a feeling that she would bring long-anticipated changes to address the fact that among developed countries Chile remains the most unequal in the world.

42 percent of Chile’s wealth is concentrated in the hands of the richest 1 percent of the population. Bachelet’s reforms were designed to tackle such startling inequality.

Tax reforms introduced last year were aimed at income redistribution, higher investment and reducing tax evasion. These measures were projected to raise $8.3 billion, or 3 percent of national income, which would then be put toward the introduction of free schooling.

The process of introducing a new constitution started around the same time with civic education: dialogue with citizens would follow, the results of which were to be presented to Congress by October 2017. The desire is for the final text to be put to the public in a referendum but it is accepted that the whole process will take years.

However, there are doubts over how a “fully democratic” decision shall be reached and what it will lead to.

All of this has been adversely effected by an economic slowdown due to a fall in commodity prices — chiefly that of Chile’s principal export, copper, which is at a six-year low. Growth forecasts this year have been revised accordingly, from 3.6 to 2.5 percent.

Criticism of Bachelet’s reforms has centred around the premise that they are overly ambitious and that the instability that comes with such ambitions will discourage investment. Thus tax reforms have been modified and the free-schooling target reduced.

In addition to the economic slowdown, the government has lost much political capital in a corruption scandal.

Bachelet’s own approval ratings have fallen to a low of 24 percent following revelations that her eldest son and his wife had been profiting, in the millions, from what appeared to be illegal real-estate transactions. This came on the heels of a number of other high-profile scandals whereby powerful businessmen were caught money laundering and falsifying receipts as a means to cover up political donations.

The subsequent loss of trust in Chile’s political class has come as something of a surprise, given that the relatively prosperous nation has otherwise been mostly unblighted by the corruption prevalent across the rest of Latin America.

The government has come down hard on misdemeanours and the strength of the judiciary has been highlighted by a spate of legal proceedings and arrests. But Bachelet’s reputation has still been tarnished.

She has admitted that the scandals may get in the way of constitutional reform. 77 percent of the public is still in favor. But a two-thirds majority is needed in Congress to rewrite the Constitution. That now looks like a tall order.

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