Update on Chilean Politics

Patricio Navia

May 5, 2003


In a country where developments in the several judicial investigations of wrongdoing and corruption in the Ministry of Public Works are competing for news coverage with the president’s activities and legislative initiatives, it comes as no surprise that little headway has been made on getting the legislative agenda through parliament in a timely fashion.


Earlier this year, the government and the Alianza opposition had agreed on a set of legislative reforms to modernize the state apparatus. Surrounded by the leaders all of government and opposition parties with legislative representation, President Lagos announced that the legislative package should become law before his May 21st State of the Nation address. Yet, disagreements on the details of the legislative initiatives have slowed down the reforms. In some instances the government has not even sent the legislative initiatives to parliament and in others, tough bargaining by Concertación and opposition legislators has forced the government to alter the wording of some legislative initiatives. None of the important initiatives has yet been approved by both chambers of congress. Although the government is making a desperate effort to get some of the laws approved before May 21, it is unlikely that the bulk of the package will be approved by that date. After May 21, pressure to get the initiatives approved will decrease and some of those initiatives will likely join the much announced health reform legislation in the shelves of congressional committees.


The probity package, also known as the state modernization initiative, consists of a battery of bills intended to modernize the public sector and to regulate campaign financing and the financing of political parties in general. The two most important initiatives of the package—electoral campaign finance reform and an overhaul of the administrative system of the public sector—have been widely debated in the press and among the political elite. Despite the initial agreement reached by government and leaders of opposition parties, individual legislators have threatened to vote against those initiatives if their concerns are not properly addressed. Although the leaders of the Senate and Chamber of Deputies have promised to work non-stop until May 21, some analysts doubt that the initiatives will become law. Others are concerned that by rushing those complex legislation through the parliament, the government is simply creating problems for the future implementation of the new legislations.  At any event, if things turn out the way the president, the parliament and political parties are claiming it will, by the end of the months Chile will have adopted two major reforms. The Senate is currently discussing the Campaign Finance Reform. The Chamber is debating the State Modernization Initiative.


Intended to generate as little opposition as possible, the Campaign Finance Reform contains a little bit of what everyone wants to control and regulate campaign financing. The government had historically asked for state funding for political campaigns, full transparency on the identity of donors and campaign spending limits. The opposition had systematically opposed all those measures. Yet, the reform agreed upon includes some of the government’s initial concerns. There will be limited state funding for all campaigns. But there are still details to be worked out on whether the funding will be allocated based on the actual share of the votes received by each party/candidate or whether a lump sum will be guaranteed for all candidates who meet the necessary requirements to run for office. State funding will not be provided for presidential elections. Although the UDI had strongly opposed state funding, the main opposition party agreed to it when the government agreed to a rather weak enforcement mechanism for the spending limits.


Spending limits were set at 0.03 UF per voter (about US$ 0.80). A typical Chamber of Deputies district in Chile will have a spending limit of about US$100.000, while Senate districts will range from a minimum of $100.000 (regardless of district size) to a maximum of about $300,000 in larger districts. Presidential elections will have a spending limit of about US $2.5 million. The legislative initiative outlining enforcement mechanism for spending limits will be send after May 21 and it is very likely that any efforts to put real teeth into the enforcement agency will be blocked.


The initiative will also mandate that all donations to a political campaign above a certain amount will need to be made public and that all donations, regardless of the amount, will need to be recorded by the enforcement agency. But the exact amount over which transparency will be mandatory remains under debate. It is likely that it will be high enough that all those who wish to remain anonymous will find it convenient to play with the books to make sure that their names are not disclosed. In addition, the logistics of regulating campaign spending will be hard to develop and harder to enforce. Candidate will find it convenient to set up parallel accounting books where they will handle the bulk of their contributions and spending and just use the official books to demonstrate compliance with the new rules. Out of the three features of the Campaign Finance Reform, transparency is the one that will be most difficult to enforce. Without transparency, enforcing spending limits will be impossible. 


Yet, despite the shortcomings of the initiative and despite the necessary doubts about its effectiveness, raised by the apparent overall consensus that this legislative initiative seems to be gathering among government and opposition leaders, there might be some progress in controlling what is thought to be one of the most expensive electoral campaign markets in Latin America. At least, the debate over who pays for the different campaigns will likely come up in future elections in a way that has not been present in the Chilean political debate in years past. Yet, as in other democracies in the world, the issue of Campaign Finance will be likely to emerge again when new scandals are discovered.


The State Modernization initiative includes a number of bills designed to modernize and bring more efficiency into the state apparatus. Yet, there are two distinct features of the initiatives that have drawn most attention. First, the initiative will drastically reduce the president’s ability to personally appoint hundreds of high public officials. A new system will be set up to appoint a number of high public officials. Seeking to promote meritocracy and to reduce political patronage, the new system will be designed to reduce the discretionary power of elected officials in appointing high public officials. Although the system might in the end turn out to be ineffective in reducing the political patronage in government positions, its adoption will force the government to adopt a clear criteria for the appointments of high government officials. It is said that the new system will reduce the president’s discretionary power dramatically. Currently, the president can appoint more than 2500 high officials. With the new system, the president’s discretionary power will be reduced to appointing no more than 700 high officials. Although both government and opposition leaders had nominally supported this reform since it was first proposed several years ago, nobody had made it a priority. With the Concertación fearing losing power in 2005, the government found it attractive to reduce the discretionary power of future presidents. Although the Alianza opposition would prefer greater discretionary power, it became politically untenable to oppose the reform. In addition, despite running ahead in the polls, the Alianza does not have a guarantee on the presidency after 2005 and thus reducing the president’s discretionary power was an attractive choice.


The second feature in the State Modernization Initiative is the professionalization of public service. Many public sector employees are not well qualified for their posts and a good number of them received their positions as political patronage. The Concertación inherited a large payroll of public sector employees from the military dictatorship. Many of those were individuals loyal to the outgoing regime. The Concertación governments could not fire public sector workers and to meet the demands of the time, it simply sought to increase the payrolls. The professionalization of public service will create a system of merit-based appointments and promotions. Logically, public sector employees unions have strongly opposed the reform. A one-day strike was held the last week of April and new demonstrations are scheduled for the coming days. Yet, it is unlikely that the government will back down on this reform. Although its price might increase if enough incentives are given to current employees for early retirement, the reform should ultimately help make the public sector more efficient and it should introduce real merit-base appointment and promotion criteria for the public sector.


President Lagos is working hard to get these two initiatives through parliament before May 21. He needs to show results in his May 21st State of the Nation address. After the Health Reform was unofficially shelved a few weeks ago, the main subject of his State of the Nation address in 2002 will be conspicuously absent this year. In addition to some progress on the educational and judicial reforms, the president will likely underline the signs of economic recovery and the efforts made by the government to help those out of work and the poor. Yet, president Lagos will not be able to announce a final date for the signing of the Free Trade Agreement with the U.S. Although the agreement is ready to go, the U.S. government has not announced a date for its signing and Chile will need to wait a few more months before the agreement can become operational. The much awaited constitutional reform initiative, shelved in the Senate since late 2002, got off to a bad start in late April when the conservative parties rejected the inclusion of wording into the constitution recognizing the indigenous peoples as nations within Chile. More thorny issues, like the electoral law reform, the elimination of designated senators and the subordination of the military to civilian authorities will likely face similar difficulties in the next few weeks. For that reason, getting the most symbolic pieces of the Campaign Finance Reform and the State Modernization Initiative through parliament before May 21st is a priority for President Lagos.


His fourth State of the Nation address will likely be his most difficult. It will be the first time that the president will be hard pressed to refer in length to the several corruption scandal crises that have hurt his government during the past 9 months. President Lagos will be able to address those concerned with the slowdown of government initiatives and the accusations that he has lost control of the political agenda. Yet, he will also need to lay out his legislative and government initiatives for the remaining three years of his administration.