The Cabinet Reshuffle of January 7, 2002

Patricio Navia

January 20, 2002



The long awaited cabinet reshuffle took place when President Lagos returned from his weeklong trip to Torres del Paine. Although the cabinet restructuring was the chronicle of a death foretold, the names of who would stay and who would go were kept a mystery until the last minute. Weeks before the December 16 election, President Lagos hinted that some adjustments would be made after the vote. Naturally, as soon as the election results were in, speculation rose about how the new balance of power within the Concertación parties would shape the new cabinet and the new government policy initiatives. Little work was accomplished after December 16, as most government officials were more concerned with the new appointments than with their tasks in their unconfirmed jobs.


In the end, the reshuffle was less than anticipated by many who hoped for a drastic change in Lagos’s governing style and policy initiatives. Yet, it was also significantly more than what many close to president Lagos had anticipated. In many ways, the reshuffle appropriately reflected the electoral results. It was not enough to signal a drastic change of style but certainly it was an acknowledgment that the 48% obtained by the government in the election did not constitute a satisfactory result. In total, seven new appointments were made in the ministries of Secretaría General de la Presidencia (SegPres); Secretaría General de Gobierno (SeGeGob); Defense; Health; Public Works, Transportations and Telecommunications; Planning; and Mining.


Three major conclusions can be drawn from the cabinet reshuffle. First, Interior Minister José Miguel Insulza (PS) and Finance Minister Nicolás Eyzaguirre (PPD) have consolidated their already strong positions. Second, the president did not signal a drastic course change, a commitment to bring in new blood to his cabinet or a compromise to give Concertación political parties a greater role in his government. Third, by removing some of his closest allies, the president has finally decided to replace some members of his campaign-oriented war room with more government oriented experts, although he is still primarily surrounded by a strong circle of loyalists.


Defense Minister Mario Fernández (PDC) was appointed in SegPres, the ministry in charge of handling the government’s legislative agenda. In removing his close associate Álvaro García (PPD), the president gave in to charges of inefficiency and poor political maneuvering made against García. But it was also an indication of the increased influence exerted on Lagos by Finance Minister Eyzaguirre, who felt García competed with him as the president’s chief economic advisor, and Interior Minister Insulza, who perceived García as a competitor for political power within the cabinet.


Foreign Affairs Undersecretary Heraldo Munoz (PPD) replaced Claudio Huepe (PDC) in SeGeGob. First and foremost, Muñoz’s appointed came to solve the increased tensions generated between Foreign Relations minister Soledad Alvear and her undersecretary. While Muñoz is an expert on foreign affairs, Alvear is one of the most popular PDC figures. In March of 2000, she pressured the president to be appointed in Foreign Affairs because that ministry is considered one of the safest and popularity-boosting posts. As SeGeGob Minister, Muñoz is the new official spokesperson of the government. Because president Lagos and Minister Insulza often assume that role themselves, Muñoz will he hard pressed to work diligently with the president and the Interior Minister to prevent coordination failures and communication flops. Muñoz will also have to smooth out relations with the PPD parliamentary delegation. As the up-and-coming Concertación party, the PPD has shown more distance from the president than originally expected (after all, Lagos was the PPD founder). More than a spokesperson, Muñoz will be in charge of coordinating the 22-seat vociferous and strengthened PPD deputies. 


With the Fernández and Muñoz appointments, Lagos maintained the tradition of distributing the 3 political La Moneda ministries to the three largest Concertación parties, but the tasks for each minister will change somewhat.  Fernández’s primary task will be to line up PDC legislators behind the government’s agenda. That might prove a difficult task to accomplish. Even though the PDC parliamentary delegation fell from 38 to 24 deputies (out of 120) and from 16 to 14 senators (out of 48) after the December 2001 election, it is still the largest party in the Senate and the second largest in the Chamber. PDC militants believe the party has adversely suffered during Lagos’ administration and there is a strong desire within the party to voice their opposition to key legislation and show more independence from the government. Hoping to reposition themselves towards the 2005 presidential and parliamentary elections, the PDC will show less restraint in opposing part of Lagos’s legislative initiatives. For that reason, Fernández will be more of a mediator between the president and the PDC than an actual minister of legislative affairs. Yet, if Fernández successfully lines up the PDC legislators behind the government’s agenda, he will become a power broker and will acquire much more influence in defining legislative priorities. If he proves unable to control his party legislators early on, his influence in La Moneda will diminish rapidly.


Insofar as actual policies are concerned, little should change. Lagos will still dominate the legislative agenda with Insulza and Eyzaguirre. Fernández will play a less visible role than García, but he will probably be more efficient in making sure that the government’s slim majority in the Chamber of Deputies holds up every time there is a close vote.


Michelle Bachellet’s appointment in Defense captured the attention of the domestic and foreign press for being the first woman to hold that post in Latin America. As the daughter of an Air Force General who served as Allende’s minister and who was later imprisoned and tortured by the military government. Bachellet, a physician by training, has specialized in military affairs and served as consultant and advisor to previous Defense ministers in the 1990s. Although Lagos appointed her as Health Minister in March of 2000, her expertise in defense is widely recognized. Her appointment is a signal of normalization in civil-military relations. The first socialist party militant to hold the position since 1973, Bachellet will have to deal with two controversial arms acquisition deals, the US$600 million purchase of 12 F-16 jet fighters from Lockheed Martin in the U.S. and the US$900 million construction of 4 navy vessels by Blohm & Voss, a German company. Facing increased opposition to both projects, which now includes even the pro-military UDI, Bachellet actually has little saying on those matters. Because the Copper Law—that assigns 10% of CODELCO copper sales directly to arms acquisitions—provides for an additional budget for arms purchases, the government cannot reassign those funds to social programs as many have requested. Despite her legal constraints, handling of military acquisitions will probably constitute a bigger challenge for the new ‘ministra’ than pending human rights issues.


Public opinion also welcomed the appointment of physician Osvaldo Artaza in the Health Ministry. A hippie-style, longhaired physician, Artaza achieved national recognition a few years ago when siamese twins were born in the public hospital where he worked as Chair. Although one of the children died, Artaza became an immediate celebrity. Yet, rather than separating twins, Artaza will need to unify opposing groups if he wants the controversial health-reform to succeed. Interests of physicians, hospital workers, public sector patients, health providers (known as ISAPRES), left-wing welfare-oriented politicians, and the general public are often at odds. Building consensus and support for the reform proposal the government finally chooses to put forth will be even more important for its passage than the actual reform. Artaza will likely reduce the scope of the reform from what was originally announced by President Lagos in his May 21, 2001 State of the Union address. Yet, his ability to deal with the opposition from the Concertación leftwing if the reform does not provide for a strong safety net or from the Concertación rightwing if it calls for too much government involvement will likely determine the fate of one of president Lagos’s key electoral campaign promises.


Poor management by his predecessor is said to be the main reason behind the appointment of former Tax Collection Agency (SII) head Javier Etcheverry as Minister of Public Works, Transportation and Telecommunications. Etcheverry has a well-earned reputation of efficiency and fiercely fought corruption during his 12-year tenure in SII. His appointment should not negatively affect the ambitious public works programs launched by President Lagos. Yet, important procedural changes and a more decisive stance against corruption and waste in that well-financed ministry should be expected. Some believe that the ministry will be split into a Public Works and Transportation Ministry and a Telecommunications and Technology Ministry in March of 2002. 


The appointment of former Antofagasta Intendente Alfonso Dulanto as Mining Minister was widely expected. President Lagos’s decision to join Economy, Energy and Mining in March of 2000 did not work out well. The Economy and Energy Minister will now concentrate in the regulatory frameworks while the Mining Minister will oversee Chile’s largest industry.


With the appointments, President Lagos put an end to the growing speculation about a cabinet change that filled political gossip since March 2001. Perhaps more than the new appointees—none of them controversial—the president sent a signal by ignoring some of the favorite candidates to join his cabinet. PPD Senator Sergio Bitar was widely perceived as a shoe-in for Public Works and many expected PDC heavyweight Gutenberg Martínez to receive a ‘political’ ministry. Arguing that Senator Bitar and Deputy Martínez were constitutionally prevented from being appointed until their parliamentary terms end in March 2002, the president chose not to bring more heavyweights or potential presidential contenders to his cabinet.  In short, this was more of a reshuffle than a drastic cabinet change.