Update on Chilean politics

Patricio Navia

December 2002


For the record, President Lagos is about to complete his 1000th day in office. Although he has fared much better than his socialist predecessor Salvador Allende (1970-73), overthrown in a military coup days before completing his 1000th day, Lagos is probably thinking that there must be a curse on socialist presidents in Chile. True, as the government spokesperson candidly reminded the press, Lagos’ 1000 days have been on average much better than the most recent 100 days. Yet, the president must find a way to get his government back on the right track if he wants to use his next 1000 days to build a lasting legacy.


The scandals that have continued to tarnish the Concertación coalition have made it all but impossible for the government to focus on its legislative agenda. Although the president continues to enjoy high approval ratings, he needs to score some important victories to avoid becoming a lame duck president before the third anniversary of his 6-year term. Because free trade negotiations with the U.S. are almost completed and the health reform is moving forward in parliament, the president will likely get two confidence boosters in the following months. But Lagos needs to put behind the scandals that have continued to capture news and public attention and he needs to rearticulate the Concertación to have enough seats in parliament to pass legislation.



Never ending scandals

After the vehicle emission test facilities scandal led to the jailing of prominent Concertación operatives (including a former under secretary of transportation) and to the impeachment of 5 of the 6 Concertación deputies accused, there were new embarrassing revelations. When seeking to clear his name against accusations of knowing about a public work contracts illegal scheme, a former Minister of Public Works acknowledged getting monthly cash bonuses for US$2,500 on top of his low official salary of US$1,800. The funds apparently came from the president’s reserved secret budget. Although subsidizing ministers with funds from the reserved budget was a practice long known since the mid 1950s, the revelations caused a new political earthquake. To be sure, the bonuses were not illegal but the revelations about their existence generated public uproar. When the president of the Central Bank tried to justify them claiming that the official salaries for ministries were ‘miserable’, many reminded him that about 80% of all Chileans make less than the official ministers’ salaries.  Although the embarrassment about the envelopes cash payments to ministers has subdued, its political costs remain to be seen.


The initial accusations of corruption in the Public Works ministry, that generated the unwise remarks by the former minister of public works, have not gone away. New revelations have implicated other high officials and there seems to be evidence that some of those funds were re-directed to finance electoral campaigns. The so-called GATE case involves contracts totaling between 2 and 5 million dollars given by the Public Works ministry to the GATE consulting company owned by a former public works undersecretary and influential socialist militant. By focusing on irregularities at the Public Works ministry, some newspapers are apparently interested in linking the corruption scandals to president Lagos himself. Yet, the GATE scandal has so far simply caused additional embarrassment to a heartbroken coalition and further worsened the leadership crisis within the government.



Corruption or Traffic of Influence?

The accusations of corruption were joined by allegations of traffic of influence. A controversial Fishing Law was recently approved by the legislature amid traffic of influence charged levied primarily against Senate president Andrés Zaldívar. The PDC Senator and several relatives had shares on a fishing company that will benefit with the new legislation and the senator’s brother worked as a high-ranking executive in the same company. Although Zaldívar denied any wrongdoing, he sold his shares and abstained on the vote.  The senator and his accusers exchanged angry words in the press and the Senate floor, where the only senator who denounced Zaldívar took advantage of Zaldívar's impolite response to declare that “when you can’t be accused of corruption, they call you faggot’. Although the bill cleared the Senate, it highlighted two concurrent processes. On the one hand, the Concertación is not operating as an effective coalition (more on this below). On the other, there is a more inquisitive and investigative press that dares to publish allegations. To be sure, some of the scandals and outrage of the recent weeks have more to do with the authorities’ inability to correctly deal with press revelations. Rather than seeking to produce an effective damage control strategy, the aggressive and sometimes inappropriate response by those implicated in the accusations has only worsened the situation. The series of scandals have led many to ask for a clear separation between business and politics. Although it is far from clear whether any progress will be made (in Chile or elsewhere), we can expect new questions to be raised when other conflict of interest situations are made public. 



No More Concertación?

After the conflict of interest accusation against Zaldívar was made, PDC leaders rushed to imply that La Moneda was plotting against the Zaldívars (younger brother Adolfo, also a Senator, is the PDC president). Though La Moneda was more interested in getting the fishing law through parliament than in worsening relations with the PDC, the accusations exemplified how little trust and willingness to work together exists within the government coalition. The PPD has repeatedly accused the PDC of seeking to destroy it. The PDC has argued that it is simply repositioning itself in its niche and warned the PPD against any new efforts to become a centrist party. The PS has wavered between supporting the PDC or the PPD, while the PRSD is in a total state of disarray. Most recently, PDC president Adolfo Zaldívar declared the Concertación dead, but he concurrently began meeting with PS leaders to create a new electoral and political coalition.  Although all parties vow loyalty to the president, Lagos has been unable to get all party presidents to meet with him in a Concertación summit. The president chose to reduce its influence in the Concertación when he first took office in 2000 and it now looks that he will not, or cannot, take on the role of Concertación leader.


Given the constraints posed by the electoral rules, there will likely be a Concertación ticket in the 2005 legislative elections, even if there is more than one Concertación presidential candidate. But the first test of unity will come in the 2004 Municipal elections, where the parties will be hard-pressed to run together to prevent a sweeping victory by the conservative opposition.


The situation is far from being a too much about nothing affair. As of today, the Concertación does not exist and the president cannot count on a legislative majority. Concertación parties are more interested in destroying each other than on supporting the president or putting together a common platform for 2005. Although most people believe it will happen, very few people would now dare to explain how the relations between Concertación parties will be healed to bring them back to the negotiating table to put together a unified slate of candidates for the 2004 municipal elections and, more importantly, to select a mechanism to choose the 2005 presidential candidate.



Yet, Lagos needs Concertación votes in parliament

When the corruption scandals first broke out, President Lagos sought to distance himself from those implicated. When the scandals led to the outbreak of war within the Concertación, the president insisted on stressing his responsibility to lead over the entire country and his independence over the internal affairs of political parties. But when many Concertación deputies broke ranks with the government and voted against the Fishing Law, there was a rude awakening in La Moneda. If the president only cares about his own popularity, many Concertación legislators will do the same and vote against a bill that is opposed by their constituencies. 


For the Fishing Law, the president successfully lined up most Concertación senators and also reached an agreement with conservative legislators to secure safe passage. But Lagos will find it difficult count on the Concertación legislators' loyalty to the government in the future.  Some legislators have expressed their profound discontent with the pro-business orientation of many government initiatives. They would prefer more pro-labor measures. Others have stressed the need to balance the government's emphasis on growth with more redistributive policies. In addition, as Concertación parties continue to fight against each other, it is very likely that government legislative initiatives will become the new battlefield, especially between the PPD and PDC.  Lagos might not want to get involved with the Concertación party quarrels and fights, but he will need to if he wants to command a legislative majority in both chambers.



Will a cabinet reshuffle suffice?

The question is not if, but when. Many analysts believe that a cabinet reshuffle should come as early as January. Most agree in that there will be several new faces when president Lagos celebrates his third anniversary in power. The only minister considered indispensable is Nicolás Eyzaguirre, the finance minister.


Lagos must be careful not to hurt those ministers who are considered likely presidential candidates in 2005. Foreign Affairs Minister Soledad Alvear, Housing Minister Jaime Ravinet and Defense Minister Michelle Bachelet will likely retain their posts or be given more important positions. In the case of Alvear, it could only mean a transfer to a political ministry, a move that she has repeatedly rejected. Yet, if the Free Trade Agreement with the U.S. is signed, some believe Alvear would be willing to leave Foreign Affairs.


The key to any cabinet reshuffle lies in what will happen with powerful Interior Minister

José Miguel Insulza. Many believe that his disagreements with the president and the political costs he has had to pay in the past will lead Lagos to sack him. If he goes, nothing short of a major reshuffle will take place. If he stays, Lagos will have less room to maneuver, but several changes will be likely to occur. Lagos will need to make concessions to the PDC leadership by naming some people close to Adolfo Zaldívar. But because Lagos will need to avoid irritating the PS or PDC, a delicate balance of power must be kept to make sure that no faction within parties and no parties within the Concertación feel loosing power. Lagos might get a break because Zaldívar does not have any credible candidates for the cabinet, but some symbolic concessions will need to be made to satisfy the PDC leadership.


In addition to settling scores within the Concertación, the president will need to use the cabinet reshuffle to send a signal to the entire country that a new phase of his presidency is about to begin. While some advisors have openly talked about bringing in independents and conservative businessmen into the cabinet, Lagos will probably be less bold in his effort to signal the start of a new phase of his 6-year government. Whatever he does, the new cabinet will need to convey three messages to the Concertación, the general public and the opposition: a clear government agenda for the next three years, a strategy to deal with the conflicts within the Concertación and a vision for the 2005 presidential elections.



What is the opposition to do?

The only positive thing about the scandals is that the opposition has been left out of the political debate. And while the UDI-RN coalition, and its presidential candidate Joaquín Lavín, is certainly enjoying the demise of the Concertación, the challenge for the opposition is to play a constructive role and to avoid falling into the narrow role of political and judicial prosecutors.


Although it has escaped public scrutiny, the opposition is also facing some problems. In addition to the existing conflicts between RN and UDI, the recent Fishing Law highlighted the tensions between the two different strategies advocated by UDI leaders.  While UDI president, Deputy Pablo Longueira, initially lined all UDI deputies against the Fishing Law in the Chamber, UDI senators were strongly in favor of the legislation. In the end, Longueira had to concede and UDI deputies voted in favor of the revised law. The underlying conflict resulted from differences over the true ideological position of the UDI. Longeuira advocates transforming the UDI into a centrist party, taking over the position traditionally occupied by the PDC. His opposition to the Fishing Law responded to electoral promises made by him to poor fishing communities in Southern Chile. UDI senators seem to favor a more traditional conservative platform. While they fully support Joaquín Lavín's electoral strategy to cater to centrist voters, they would prefer to keep the UDI as a conservative, pro-business party. So far, the dispute has not produced major conflicts and Lavín has successfully stayed out of it. But it is likely that new tensions and conflicts will emerge when the government sends new pro-growth and pro-distribution legislation to parliament.


Although the conservative opposition is enjoying the corruption scandals, it also understands that the real reason behind the current Concertación internal disputes has to do with the 2005 elections and the need to take control of the political center and to cater to moderate voters. Many conservatives believe that because of the Concertación crisis, the 2005 elections will inevitably result in a conservative victory. They are tempted to adopt more rightist positions and to abandon some of the centrist views adopted by Lavín in the 1999 presidential election. Others argue that the Concertación will resurrect and make a powerful bid to recapture the center and if the Alianza moves to the right, the winner in 2005 will not be Joaquín Lavín.



What comes next?

 When the cabinet change is announced, the real question will be whether the new team conveys the message of a change in attitude in the Lagos government. Will the new team convey a cohesive vision to lay the foundations for the 2005 election and will it be strong enough and sufficiently capable of reconstructing the Concertación coalition? Ironically, although it would seem that Lagos would need to make the change as soon as possible to leave behind the corruption scandals, the closer the reshuffle to the March 11 third year anniversary, the more likely it will achieve its objective of signaling the start of the second half of the Lagos term.