Update on Chilean Politics

Patricio Navia

February 2003


Perhaps the most evident signal of Chile's rapid globalization is that the country can no longer afford to put a stop to most political activities during the summer month of February. The government spent much of January trying to move beyond the so-called Coimas and Gate scandals. But an agreement was hammered out in late January between La Moneda, the Concertación parties and the two leading opposition parties (UDI and RN) to reduce government discretionary funds, professionalize the civil service bureaucracy and regulate political campaign spending. The annual conclaves held by most parties to draw their political strategies for 2003 also helped make January a particularly active month in the political realm. For that reason, most political actors decided to cut their February vacations short, phase them out or take turns with other political leaders to keep the pace going during the summer. True, Congress officially closed its door for the entire month. But negotiations between legislators continued, political party leaders stayed on vying for television time and even the president chose to shorten his vacation.


The most important development in late January was the probity agreement announced by the president and Concertación, RN and UDI leaders. The agreement, that includes 49 different legislative initiatives, broadly calls for civil service reform that will drastically reduce the number of political appointments new presidents can make when winning office. Seeking to create a professional corps of civil service employees, the reform would restore trust on government effectiveness hurt by the recent scandals.


Naturally, there are strings attached. The media successfully, and apparently also correctly, tied the recent scandals to the unregulated area of campaign spending and contributions. Because the conservative opposition had sought to implicate the government in the scandals, La Moneda quickly moved to tie the necessary civil service and government discretionary funds spending reform to campaign finance reform and to the larger issue of state financing of political parties. The agreement includes a vague agreement to regulate campaign finance and to provide some government funding for campaign contributions. But above all, the agreement represents a credible commitment on the part of the government and the opposition to fix the system to prevent similar scandals from happening in the future.


The Probity Agenda, as it is known, allowed the president to put behind him the scandals, although the press continues to report on the fate of the 5 deputies who were stripped of their immunity to face corruption charges and investigations in the so called Coimas case. Yet, most damaging developments for the government might result from the so-called Gate case, involving a former Public Works minister and close associate of president Lagos. Although the probity agenda will likely shield the president against additional political costs, the investigations continue and new threads might put other Lagos's associates in trouble.


With the adoption of the new Probity Agenda, the president will need to divide his time between his health reform initiative, that continues to move slowly through parliament, and the opposition from the organized health workers unions and physicians guild.  The Pro-growth Agenda, announced with much fanfare a year earlier, has also advanced at a snail pace in the legislature. Finally, the constitutional reforms aimed to eliminate some remaining military tutelage provisions from the chart will need to be brought to the front burner if they are to pass before the next electoral cycle begins in 2004 with the municipal elections. Because the reforms include the elimination of the appointed senators (due to be replaced in December 2005), the shortening of the presidential period (from 6 to 4 years to make them concurrent with legislative elections) and changes to the electoral system (modifying the existing 2-seat per district rule), the closer the next election looms in the horizon, the more short-term considerations will come into play when legislators eventually vote on the reforms.


Despite everything, president Lagos was able to enjoy a few days of rest in early February, after the probity agenda was agreed upon and his leadership was reassured and legitimized. He had to pay a high political price, but it was worth it. UDI leader Pablo Longueira showed magnificent bargaining skills and gained credibility against those who warn about a lack of political experience in the conservative parties. Lagos also put himself above the bickering and finger pointing that has characterized his Concertación coalition for the past few months. The annual PDC meeting ratified its support for Adolfo Zaldívar and, tacitly, for his strategy to show independence from La Moneda and to strengthen his party at the expense of the other Concertación parties and of the coalition itself. The PPD conclave ratified president Guido Girardi, but the underlying theme of that party summit was to draw a plan to renovate the party and produce a leadership change that can reposition that party for the 2004 and 2005 elections. Because the corruption scandals have hurt the PPD more so than any other party, because corruption charges were first raised against that party as early as April and because that party had made a name for itself as a standard bearer against corruption, the PPD leadership change is correctly perceived as a necessary condition to prevent that party from suffering a catastrophic electoral defeat. The PS summit will be held in March, but a change in leadership in that party will depend from the much-awaited cabinet reshuffle to be announced in late February.


After the president succeeded in holding off a cabinet change in December, when the corruption scandals took its highest toll on the government, most analysts expect the president to make changes to his cabinet before the new legislative session begins in March. Free from immediate political pressure, Lagos will be able to appoint a cabinet that will look forward and not one charged with dealing with the corruption scandals. Although most analysts previously believed Interior Minister José Insulza would depart from the cabinet (and become the new PS president), the odds are that he will stay on, especially after he hammered out the probity agreement. Still, Lagos will make important changes that will respond to three main concerns. First, the president needs to make concessions to Adolfo Zaldívar by appointing some of his close associates to the cabinet. Although several names have been circulated, none seems acceptable to the president. Second, Lagos will need to give a new bust to some areas that have fallen out of the priorities list. Education, Justice and perhaps Health, are ministries where new blood will likely come in. Third, president Lagos needs to put together a three-person team of La Moneda ministers that combines representatives from the three political parties with the necessary skills to carry out the daily government operations, advance the legislative agenda and successfully communicate the message to the general public. Depending on the fate of minister Insulza, the new La Moneda team of ministers might be where the cabinet change is felt the strongest.


Lagos will announce his change of cabinet after his trip to Asia, scheduled to begin in mid February. Regardless of the composition of the new team, the president will face a complicated agenda in the coming months. Yet, a small window of opportunity will open up in parliament that could help him deliver important pieces of legislation before his state of the union address on May 21. There is every reason to believe that a good chunk of the probity agenda will quickly move forward through congress. Civil service reform will advance despite the opposition of labor unions with the reluctant support of government legislators who will see a more restricted access to pork barrel politics. Campaign finance will probably advance more slowly, but some basic level of government funding for political campaigns will become a reality. The less controversial items in the Pro-Growth Agenda will also move forward, although the focus on economic recovery will directly depend on the strength of the economic recovery. Finally, the divisive constitutional reform issues will eventually need to be dealt with and the president will be hard pressed to abandon its 'all or nothing' approach and accept a compromise with the conservative opposition that has successfully blocked constitutional reforms since 1990s.


The Probity Agreement, which marked the beginning of a new year, should not be seen as an indication of the unity between the government and the opposition or even within the government. As it happened with last year's Pro-Growth Agenda, the fate of the agenda will depend on the willingness of the government and opposition to compromise and bargain. If past experience is an indication, many of these initiatives will be blocked in Congress by inter and intra party bickering. The president will be more inclined to show results on the promises he made last year in his annual May 21 Address to Congress. Thus, health reform and the Pro-Growth might take precedence over the more complex issues of campaign finance and civil service reform. Yet, developments in the ongoing judicial investigations might continue to bring the Probity Agenda to the forefront. Whatever is the case, the following weeks will see the political elites more devoted to preparing for the opening of the new legislative session in March and La Moneda more concerned with finalizing the list of names for the awaited change of cabinet than with pushing forward any specific agenda. For 2003, the agenda items were defined before the president could announce his starting line-up. Deciding on his new cabinet is Lagos's next political task. The announcement will also represent the best opportunity to assess the president's priorities for this year.